<PAGE> 1
As filed with the Securities and Exchange Commission on May 12, 1997.
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------
INTERNATIONAL WIRE GROUP, INC.
(and Certain Subsidiaries Identified in Footnote (1) Below)
(Exact Name of Co-Registrant as Specified in Its Charter)
DELAWARE 3357 43-1705942
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
DAVID J. WEBSTER
101 SOUTH HANLEY ROAD, SUITE 400 101 SOUTH HANLEY ROAD, SUITE 400
ST. LOUIS, MISSOURI 63105 ST. LOUIS, MISSOURI 63105
(314) 719-1000 (314) 746-7780
(Address, Including Zip Code, and (Name, Address, including Zip Code,
Telephone Number, Including and Telephone Number,
Area Code of Co-Registrants' Principal Including Area Code, of Agent For
Executive Offices) Service)
Copies to:
R. SCOTT COHEN
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT
SUITE 1300
DALLAS, TEXAS 75201
(214)746-7700
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of the Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT OFFERING AGGREGATE
TITLE OF EACH CLASS TO BE PRICE OFFERING AMOUNT OF
OF SECURITIES TO BE REGISTERED REGISTERED PER UNIT(2) PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
14% Senior Subordinated Notes due 2005 . . . . . $10,000,000 100% $10,000,000 $3,030.30
- -------------------------------------------------------------------------------------------------------------
Senior Subordinated Guarantees(3) . . . . . . . .
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(1) The following direct and indirect subsidiaries of International Wire
Group, Inc., are Co-Registrants (the "Subsidiary Guarantors"), each of
which is incorporated in the state and has the I.R.S. Employer
Identification Number indicated: Camden Wire Co., Inc., a New York
corporation (16-1075193); ECM Holding Company, a Delaware corporation
(35-1937759); Omega Wire, Inc., a Delaware corporation (04-3030938);
OWI Corporation, a New York corporation (16-1405230); Wire Harness
Industries, Inc., a Delaware corporation (43-1769493); Wirekraft
Employment Company, a Delaware corporation (35-1937760); Wirekraft
Industries, Inc., a Delaware corporation (35-1741595); and Wire
Technologies, Inc., an Indiana corporation (35-1753924).
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The 14% Senior Subordinated Notes due 2005 are unconditionally
guaranteed by the Subsidiary Guarantors on an unsecured, senior
subordinated basis. No separate consideration will be paid in respect
to these guarantees.
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-
REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2
INTERNATIONAL WIRE GROUP, INC.
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING THE LOCATION IN THE
PROSPECTUS OF THE INFORMATION REQUIRED BY PART I OF FORM S-1
<TABLE>
<CAPTION>
Form S-1 Item Number and Heading Location in Prospectus
-------------------------------- ----------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus . . . . . . . . . . . Cover Page of Registration Statement; Outside Front Cover
Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . . . . . . . Inside Front Cover Page of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges . . . . . . . . . . . . . . Summary; Risk Factors; Selected Financial Data
4. Use of Proceeds . . . . . . . . . . . . . . . . . . . Use of Proceeds
5. Determination of Offering Price . . . . . . . . . . . Not Applicable
6. Dilution . . . . . . . . . . . . . . . . . . . . . . Not Applicable
7. Selling Security Holders . . . . . . . . . . . . . . Summary; Selling Securityholders and Plan of Distribution
8. Plan of Distribution . . . . . . . . . . . . . . . . Front Cover Page of Prospectus; Summary; Selling
Securityholders and Plan of Distribution
9. Description of Securities to be Registered . . . . . Description of the Notes
10. Interests of Named Experts and Counsel . . . . . . . Legal Matters
11. Information with Respect to the Registrant . . . . . Cover Page of Registration Statement; Summary; Risk Factors;
Capitalization; Selected Financial Data; Management's
Discussion and Analysis of Financial Condition and Results
of Operations; Business; Management; Outstanding Voting
Securities of Holding and Principal Holders Thereof; Certain
Relationships and Related Transactions; Description of
Senior Bank Facility; Description of the 11 3/4% Notes;
Legal Matters
12. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 3
PROSPECTUS
$10,000,000
14% SENIOR SUBORDINATED Notes DUE JUNE 1, 2005
INTERNATIONAL WIRE GROUP, INC.
This Prospectus relates to (i) $10,000,000 in aggregate principal
amount of 14% Senior Subordinated Notes due June 1, 2005 (the "Notes") of
International Wire Group, Inc., a Delaware corporation (the "Company"), which
are being registered under the Securities Act of 1933, as amended (the
"Securities Act"), on behalf of the holders thereof (the "Selling
Securityholders") in order to permit their public sale or other distribution
(see "Selling Securityholders and Plan of Distribution"), and (ii) the
Subsidiary Guaranties (as defined herein) relating to the Notes.
Interest on the Notes is payable semiannually on June 1 and December 1
of each year. The Notes will mature on June 1, 2005. Except as described
below, the Company may not redeem the Notes prior to June 1, 2000. On or after
such date, the Company may redeem the Notes, in whole or in part, at the
redemption prices set forth herein, together with accrued and unpaid interest,
if any, to the date of redemption. In addition, at any time and from time to
time on or prior to June 1, 1998, the Company may, subject to certain
requirements, redeem up to $3.0 million of the aggregate principal amount of
the Notes with the net cash proceeds of one or more Equity Offerings (as
defined herein) at a redemption price equal to 110% of the principal amount to
be redeemed, together with accrued and unpaid interest, if any, to the date of
redemption, provided that at least $5.0 million of the aggregate principal
amount of the Notes remains outstanding after each such redemption. The Notes
are not subject to any sinking fund requirement. Upon the occurrence of a
Change of Control (as defined herein), (i) the Company will have the option, at
any time on or prior to June 1, 2000, to redeem the Notes, in whole but not in
part, at a redemption price equal to 100% of the principal amount thereof plus
the Applicable Premium set forth herein, plus accrued and unpaid interest, if
any, to the date of redemption, and (ii) if the Company does not so redeem the
Notes or if such Change of Control occurs after June 1, 2000, the Company will
be required to make an offer to repurchase the Notes at a price equal to 101%
of the principal amount thereof, together with accrued and unpaid interest, if
any, to the date of repurchase. See "Description of the Notes."
The Notes are unsecured and are subordinated to all existing and future
Senior Indebtedness (as defined herein) of the Company. The Notes rank pari
passu with all existing and any future Senior Subordinated Indebtedness (as
defined herein) of the Company and rank senior to all other subordinated
indebtedness of the Company. The Notes are unconditionally guaranteed (each a
"Subsidiary Guarantee," and collectively, the "Subsidiary Guaranties") on an
unsecured, senior subordinated basis, by each subsidiary of the Company (other
than foreign subsidiaries) on the date hereof and will be unconditionally
guaranteed by each subsidiary of the Company (other than foreign subsidiaries)
acquired in the future (collectively, the "Guarantor Subsidiaries"). The
Company is a holding company that derives all of its operating income and cash
flow from its subsidiaries, the capital stock of each of which constitutes the
Company's only material assets and is pledged (except that only 65% of the
capital stock of foreign subsidiaries is pledged) to collateralize the
obligations under the Senior Bank Facility (as defined herein). See
"Description of the Notes" and "Description of Senior Bank Facility." As of
March 31, 1997, (i) the aggregate amount of the Company's outstanding Senior
Indebtedness (excluding unused commitments) and Senior Subordinated
Indebtedness (including the Notes) were approximately $373.0 million and
$160.0 million, respectively, and (ii) the aggregate amount of Guarantor Senior
Indebtedness (as defined herein) were approximately $380.3 million (including
guaranties of the Senior Bank Facility) and $160.0 million (consisting of the
Subsidiary Guaranties and guaranties of the Company's 11 3/4% Notes (as defined
herein)), respectively. See "Description of the Notes -- Ranking."
The Notes may be sold from time to time by the Selling Securityholders
through underwriters or dealers, through brokers or other agents, or directly
to one or more purchasers, at market prices prevailing at the time of sale or
at prices otherwise negotiated. The Company will receive no portion of the
proceeds of the sale of the Notes and will bear the expenses incident to the
registration of the Notes. The Selling Securityholders and any broker-dealers,
agents or underwriters that participate with the Selling Securityholders in the
distribution of the securities to which this Prospectus relates may be deemed
to be "underwriters" within the meaning of the Securities Act, and any
commissions received by them and any profit on the resale of such securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Selling Securityholders and Plan of
Distribution" herein for indemnification arrangements between the Company and
the Selling Securityholders.
There is currently no public market for the Notes and there can be no
assurance that an active public market for the Notes will develop.
FOR A DISCUSSION OF CERTAIN RISKS OF AN INVESTMENT IN THE NOTES OFFERED
HEREBY, SEE "RISK FACTORS" BEGINNING ON PAGE 7.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 4
No person has been authorized to give any information or make any
representations, other than those contained in this Prospectus, in connection
with the offering made hereby, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company or any other person. This Prospectus does not constitute an offer to
sell or solicitation of an offer to buy any securities other than those to
which it relates or an offer to any person in any jurisdiction in which it is
unlawful to make such an offer or solicitation. Neither the delivery of this
Prospectus nor any offer or sale made hereunder shall, under any circumstances,
create any implication that the information set forth herein is correct as of
any time subsequent to the date hereof.
Until , 199 , all dealers affecting transactions in the registered
securities, whether or not participating in this distribution, may be required
to deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
TABLE OF CONTENTS
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Page Page
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Available Information . . . . . . . . . . . . . . . . 2 Outstanding Voting Securities Holding and
Summary . . . . . . . . . . . . . . . . . . . . . . . 3 Principals Holders Thereof . . . . . . . . . . . . . . . . . 38
Risk Factors . . . . . . . . . . . . . . . . . . . . 7 Certain Relationships and Related Transactions . . . . . . . 41
Use of Proceeds . . . . . . . . . . . . . . . . . . .11 Description of Senior Bank Facility . . . . . . . . . . . . 42
Capitalization. . . . . . . . . . . . . . . . . . . .11 Description of the 11 3/4% Notes . . . . . . . . . . . . . . 43
Selected Financial Data . . . . . . . . . . . . . . .12 Description of the Notes . . . . . . . . . . . . . . . . . . 43
Management's Discussion and Analysis Selling Securityholders and Plan of Distribution . . . . . . 67
of Financial Condition and Results Certain United States Federal Income Tax Consideration . . . 69
of Operation . . . . . . . . . . . . . . . . . . .17 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . 71
Business . . . . . . . . . . . . . . . . . . . . . .22 Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Management . . . . . . . . . . . . . . . . . . . . .30 Index to Financial Statements. . . . . . . . . . . . . . . . F-1
</TABLE>
AVAILABLE INFORMATION
The Company and the Guarantor Subsidiaries have filed with the
Securities and Exchange Commission (the "SEC") a registration statement under
the Securities Act (the "Registration Statement") (which term includes any
amendments thereto) with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto, to which reference is hereby
made for further information with respect to the Company and the securities
offered hereby. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
for a more complete description of the matter involved and each such statement
shall be deemed qualified in its entirety by such reference.
Pursuant to the indenture governing the Company's 11 3/4% Notes (as
defined herein), the Company has agreed to comply with the informational
requirements of the Exchange Act, and in accordance therewith files reports with
the SEC. The Registration Statement, as well as such reports and other
information filed by the Company with the SEC, may be inspected at the public
facilities maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the SEC located at Seven World Trade
Center, 13th Floor, New York, New York 10048 and Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
materials may be obtained from the Public Reference Section of the SEC, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The SEC
maintains a World Wide Web site that contains reports, proxy and information
statements and other information that are filed through the SEC's Electronic
Data Gathering, Analysis and Retrieval System. This Web site can be accessed at
http:/ /www.sec.gov.
The Company will furnish holders of the securities offered hereby with
annual reports containing, among other information, audited financial
statements audited by an independent public accounting firm and the Company
will also furnish such other reports and other information as it may determine
or otherwise required pursuant to Section 13 of the Exchange Act or, in the
case of the Notes, the indenture relating thereto.
2
<PAGE> 5
SUMMARY
The following summary is qualified in its entirety by, and should be
read in conjunction with, the more detailed information and financial
statements, including the notes thereto, appearing elsewhere in this
Prospectus. This Prospectus contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. When used in this Prospectus, the words "believe," "intends,"
"anticipates" and other similar expressions are intended to identify forward-
looking statements. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected, including the actions of the Company's competitors and customers,
and those discussed under the caption "Risk Factors." As used in this
Prospectus, unless the context requires otherwise, all references herein to (i)
"Wirekraft" mean Wirekraft Industries, Inc. and its subsidiaries (and any
predecessor to any of the foregoing), (ii) "ECM" mean Electro Componentes de
Mexico, S.A. de C.V., a wholly-owned subsidiary of Wirekraft and certain
related assets acquired by Wirekraft in December 1994, (iii) "Omega" mean Omega
Wire, Inc. and its subsidiaries, (iv) "Dekko" mean the businesses of Hoosier
Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc.,
a group of affiliated companies operating together under the trade name "Dekko
Wire Technology Group," (v) "Camden" mean Camden Wire Co., Inc., (vi) "Holding"
mean International Wire Holding Company and (vii) the "Company" mean
International Wire Group, Inc., a wholly-owned subsidiary of Holding, and where
appropriate, its subsidiaries.
THE COMPANY
The Company is engaged in the design, manufacture and marketing of (i)
non-insulated bare and tin-plated copper wire, (ii) insulated copper wire and
(iii) wire harnesses. The Company's products are utilized by a wide variety of
customers primarily in the appliance, computer and data communications,
automotive and industrial equipment industries.
o Non-insulated copper wire products (or conductors) are used to
transmit digital, video or audio signals or conduct electricity
and are sold to a variety of insulated wire manufacturers.
o Insulated wire products (copper conductors insulated with
plastic, rubber or other polymeric compounds) are incorporated in
wire harnesses that control and distribute electrical current in
automobiles, trucks, and appliances.
o Wire harnesses (assemblies of wires that are terminated with
connectors, switches or other electrical devices) are sold to
major U.S. manufacturers of household appliances and utilized in
refrigerators, washers, dryers, ranges and dishwashers.
The principal executive offices of the Company and each Guarantor
Subsidiary are located at 101 South Hanley Road, Suite 400, St. Louis, Missouri
63105 and its telephone number is (314) 719-1000.
RECENT DEVELOPMENTS
On February 12, 1997, the Company acquired all of the issued and
outstanding common stock of Camden, a wholly-owned subsidiary of Oneida LTD.
(the "Camden Acquisition"), for total consideration of $65.0 million, including
fees and expenses, consisting of cash and the assumption of approximately $15.5
million of debt. Camden is engaged in the design, manufacture and marketing of
non-insulated bare and tin-plated copper wire.
In connection with the Camden Acquisition, Holding and the Company
entered into an Amended and Restated Credit Agreement dated as of February 12,
1997, with The Chase Manhattan Bank ("Chase"), Bankers Trust Company and the
other lenders party thereto (the "Credit Agreement"). The Credit Agreement
provides senior secured financing of up to $428.5 million, consisting of an
$111.0 million, five year term loan (the "Tranche A Loan"), an $115.0 million,
seven year term loan (the "Tranche B Loan") and an $127.5 million, eight year
term loan (the "Tranche C Loan," and together with the Tranche A Loan and the
Tranche B Loan, the "Term Facility") and a $75.0 million revolving loan and
letter of credit facility (the "Revolver," and together with the Term Facility,
the "Senior Bank Facility"). See "Description of Senior Bank Facility."
3
<PAGE> 6
THE NOTES
Issuer . . . . . . . . . . . . International Wire Group, Inc.
Securities Offered . . . . . . $10,000,000 principal amount of 14% Senior
Subordinated Notes due 2005.
Maturity . . . . . . . . . . . June 1, 2005.
Interest Payment Dates . . . . June 1 and December 1 of each year.
Sinking Fund . . . . . . . . . None.
Optional Redemption . . . . . . Except as described below, the Company may
not redeem the Notes prior to June 1, 2000.
On or after such date, the Company may
redeem the Notes, in whole or in part, at
the redemption prices set forth herein,
together with accrued and unpaid interest,
if any, to the date of redemption. In
addition, at any time and from time to
time on or prior to June 1, 1998, the
Company may, subject to certain
requirements, redeem up to $3.0 million of
the aggregate principal amount of the Notes
with the net cash proceeds of one or more
Equity Offerings by the Company or Holding
(to the extent, in the case of Holding,
that such net proceeds are contributed to
the Company) so long as there is a Public
Market (as defined herein) at the time of
such redemption, at a redemption price
equal to 110% of the principal amount
to be redeemed, together with accrued
and unpaid interest, if any, to the date
of redemption, provided that at least $5.0
million of the aggregate principal
amount of the Notes remains outstanding
after each such redemption. See "Description
of the Notes -- Optional Redemption."
Change of Control . . . . . . . Upon the occurrence of a Change of Control,
(i) the Company will have the option, at
any time on or prior to June 1, 2000, to
redeem the Notes, in whole but not in
part, at a redemption price equal to
100% of the principal amount thereof
plus the Applicable Premium set forth
herein, plus accrued and unpaid interest,
if any, to the date of redemption, and (ii)
if the Company does not so redeem the
Notes or if such Change of Control occurs
after June 1, 2000, the Company will be
required to make an offer to repurchase
the Notes at a price equal to 101% of
the principal amount thereof, together
with accrued and unpaid interest, if any,
to the date of repurchase. See "Description
of the Notes -- Change of Control."
Subsidiary Guaranties . . . . . The Notes are unconditionally guaranteed on
an unsecured, senior subordinated basis, by
the Guarantor Subsidiaries. See
"Description of the Notes -- Subsidiary
Guaranties."
4
<PAGE> 7
Ranking. . . . . . . . . . . . . The Notes are unsecured and are
subordinated to all existing and future
Senior Indebtedness of the Company. The
Notes rank pari passu with all existing and
any future Senior Subordinated Indebtedness
of the Company and rank senior to all other
subordinated indebtedness of the Company.
The Subsidiary Guaranties are general,
unsecured obligations of the Guarantor
Subsidiaries, subordinated in right of
payment to existing and future Guarantor
Senior Indebtedness (as defined in
"Description of the Notes") of the Guarantor
Subsidiaries. As of March 31, 1997, (i) the
aggregate amount of the Company's
outstanding Senior Indebtedness and Senior
Subordinated Indebtedness (including the
Notes) were approximately $373.0 million
(excluding unused commitments), and $160.0
million (including the Notes),
respectively, and (ii) the aggregate amount
of Guarantor Senior Indebtedness (as
defined herein) were approximately $380.3
million (including guaranties of the Senior
Bank Facility) and $160.0 million
(consisting of the Subsidiary Guaranties
and guaranties of the Company's 11 3/4%
Notes), respectively.
Restrictive Covenants . . . . . The indenture under which the Notes were
issued (the "Indenture") limits (i) the
incurrence of additional indebtedness by
the Company and its subsidiaries, (ii) the
payment of dividends on, and redemption of,
capital stock of the Company and its
subsidiaries and the redemption of certain
subordinated obligations of the Company and
its subsidiaries, (iii) investments, (iv)
sales of assets and subsidiary stock,
(v) transactions with affiliates and (vi)
consolidations, mergers and transfers of
all or substantially all the Company's
assets. The Indenture also prohibits
certain restrictions on distributions
from the Company's subsidiaries. However,
all of these limitations and prohibitions
are subject to a number of important
qualifications and exceptions. See
"Description of the Notes -- Certain
Covenants."
PLAN OF DISTRIBUTION
This Prospectus relates to $10,000,000 in aggregate principal amount
of Notes, which are being registered under the Securities Act on behalf of the
Selling Securityholders in order to permit their public sale or other
distribution. See "Selling Securityholders and Plan of Distribution."
The Notes may be sold from time to time by the Selling Securityholders
through underwriters or dealers, through brokers or other agents, or directly
to one or more purchasers, at market prices prevailing at the time of sale or
at prices otherwise negotiated. The Selling Securityholders and any broker-
dealers, agents or underwriters that participate with the Selling
Securityholders in the distribution of the securities to which this Prospectus
relates may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commissions received by them and any profit on the resale of such
securities purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
There is currently no public market for the Notes and there can be no
assurance that an active public market for the Notes will develop.
USE OF PROCEEDS
The Selling Securityholders will receive all proceeds from the sale of
the Notes. The Company has agreed to pay all expenses related to the
registration of the Notes, which are estimated at $143,000.
5
<PAGE> 8
RISK FACTORS
See "Risk Factors" for a discussion of certain factors to be considered
prior to making an investment in the securities offered hereby.
6
<PAGE> 9
RISK FACTORS
Prospective investors should carefully consider the following factors in
addition to other information included in this Prospectus before purchasing any
of the Notes.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged and has indebtedness that is substantial
in relation to its total stockholder's equity. As of March 31, 1997, the
Company and its consolidated subsidiaries had an aggregate of $532.8 million of
outstanding indebtedness and a stockholder's deficit of $42.7 million. See
"Capitalization." For the year ended December 31, 1996, the Company's
deficiency of earnings available to cover fixed charges (consisting principally
of interest on its long-term debt) was $88.2 million and for the three months
ended March 31, 1997, the Company's ratio of earnings to fixed charges was 1.3
to one. See "Selected Financial Data -- The Company."
The Company's high degree of leverage could have important consequences
to the holders of the Notes, including the following: (i) the Company's
ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate purposes or other purposes may be
impaired in the future; (ii) a substantial portion of the Company's cash flow
from operations must be dedicated to the payment of principal and interest on
its indebtedness, thereby reducing the funds available to the Company for other
purposes; (iii) certain of the Company's borrowings are and will continue to be
at variable rates of interest, which exposes the Company to the risk of
increased interest rates; (iv) the indebtedness outstanding under the Senior
Bank Facility will be secured and matures prior to the maturity of the Notes;
and (v) the Company's substantial degree of leverage may limit its flexibility
to adjust to changing market conditions, reduce its ability to withstand
competitive pressures and could make it more vulnerable to a downturn in
general economic conditions or its business. See "Description of Senior Bank
Facility" and "Description of the Notes."
ABILITY TO SERVICE DEBT
The Company's ability to make scheduled payments or to refinance its
obligations with respect to its indebtedness will depend on its financial and
operating performance which, in turn, is subject to prevailing economic
conditions and to certain financial, business and other factors beyond its
control. If the Company's cash flow and capital resources are insufficient to
fund its debt service obligations, the Company may be forced to reduce or delay
planned expansion and capital expenditures, sell assets, obtain additional
equity capital or restructure its debt. There can be no assurance that the
Company's cash flow and capital resources will be sufficient for payment of its
indebtedness in the future. In the absence of such operating results and
resources, the Company could face substantial liquidity problems and might be
required to dispose of material assets or operations to meet its debt service
and other obligations, and there can be no assurance as to the timing of such
sales or the proceeds which the Company could realize therefrom. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."
SUBORDINATION
The payment of principal of and interest on, and any premium or other
amounts owing in respect of, the Notes is subordinated to the prior payment in
full of all existing and future Senior Indebtedness of the Company, including
all amounts owing under the Senior Bank Facility. As of March 31, 1997, the
aggregate amount of such Senior Indebtedness of the Company (including the
issuance of letters of credit to support borrowings by certain of its
subsidiaries in connection with the Senior Bank Facility) was approximately
$373.0 million. Consequently, in the event of a bankruptcy, liquidation,
dissolution, reorganization or similar proceeding with respect to the Company,
assets of the Company will be available to pay obligations on the Notes only
after all Senior Indebtedness has been paid in full, and there can be no
assurance that there will be sufficient assets to pay amounts due on all or any
of the Notes.
7
<PAGE> 10
Similarly, the Indebtedness evidenced by the Subsidiary Guaranties are
subordinated to the prior payment in full of all existing and future Guarantor
Senior Indebtedness, including all amounts owing pursuant to the guaranties of
the Senior Bank Facility. As of March 31, 1997, the aggregate amount of
Guarantor Senior Indebtedness and Guarantor Senior Indebtedness were
approximately $373.0 million (including guaranties of the Senior Bank facility)
and $160.0 million (consisting of the Subsidiary Guaranties and guaranties of
the 11 3/4% Notes), respectively. See "Description of the Notes -- Ranking"
and "-- Subsidiary Guaranties."
INTEREST RATE SENSITIVITY
As borrowings under the Credit Agreement (approximately $350.3 million
as of March 31, 1997) bear interest at floating rates that fluctuate over time,
the Company is particularly sensitive to prevailing interest rates. A change in
interest rates of 1/8 of 1% would result in a change of approximately $438,000
in the Company's annual interest expenses. A substantial increase in interest
rates would adversely affect the Company's annual income and cash flow that
would be available to meet its debt service obligations, including the Notes.
In order to minimize this risk the Company has entered into two interest rate
agreements. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources -- Financing
Arrangements."
HOLDING COMPANY STRUCTURE
The Company is a holding company that derives all of its operating
income from its subsidiaries. The Company must rely upon dividends and other
payments from its subsidiaries to generate the funds necessary to meet its
obligations, including the payment of principal of, premium, if any, and
interest on the Notes. The ability of the Company's subsidiaries to make such
payments may be restricted by, among other things, applicable state and foreign
corporate laws and other laws and regulations.
Indebtedness of the Company under the Senior Bank Facility is guaranteed
by Holding and each of its direct or indirect subsidiaries (except foreign
subsidiaries), including the Guarantor Subsidiaries, and secured by a pledge of
all the capital stock of the Company, all of the capital stock and the tangible
and intangible assets of such subsidiaries, and 65% of the capital stock of
foreign subsidiaries. Therefore, the rights of holders of the Notes to
participate in any distribution of assets of any Guarantor Subsidiary upon its
bankruptcy, liquidation, dissolution, reorganization or otherwise will, as is
the case with other unsecured creditors of such subsidiary, be subject to prior
claims of senior creditors of that Guarantor Subsidiary (including holders of
Indebtedness under the Senior Bank Facility and holders of other Guarantor
Senior Indebtedness. See "Description of Senior Bank
Facility" and "Description of the Notes."
FRAUDULENT CONVEYANCE
The Subsidiary Guaranties may be subject to review under relevant federal
and state fraudulent conveyance and similar statutes in a bankruptcy or
reorganization case or a lawsuit by or on behalf of creditors of any of the
Guarantor Subsidiaries. Under these statutes, if a court were to find that
obligations (such as the Subsidiary Guaranties) were incurred with the intent of
hindering, delaying or defrauding present or future creditors, that a Guarantor
Subsidiary received less than a reasonably equivalent value or fair
consideration for those obligations or that such Guarantor Subsidiary
contemplated insolvency with a design to prefer one or more creditors to the
exclusion, in whole or in part, of other creditors and, at the time of the
incurrence of the obligations, the obligor either (i) was insolvent or rendered
insolvent by reason thereof, (ii) was engaged or was about to engage in a
business or transaction for which its remaining unencumbered assets constituted
unreasonably small capital or (iii) intended to or believed that it would incur
debts beyond its ability to pay such debts as they matured or became due, such
court could void such Guarantor Subsidiary's obligations under the Subsidiary
Guaranties, subordinate such Guarantor Subsidiary's obligations under the
Subsidiary Guaranties to other indebtedness of the Guarantor Subsidiaries or
take other action detrimental to the holders of the Notes.
The measure of insolvency for purposes of a fraudulent conveyance claim
will vary depending upon the law of the jurisdiction being applied. Generally,
however, a company will be considered insolvent at a particular time if the sum
of its debts at that time is greater than the then fair value of its assets or
if the fair salable value of its assets at that time is less than the amount
that would be required to pay its probable liability on its existing debts as
they become absolute and mature.
8
<PAGE> 11
RESTRICTIVE DEBT COVENANTS
The Credit Agreement, the indenture, dated June 12, 1995 (the "11 3/4%
Indenture") pursuant to which the Company issued its 11 3/4% Senior
Subordinated Notes due 2005 (the "11 3/4% Notes") and the Indenture contain a
number of significant covenants that, among other things, restrict the ability
of the Company and its subsidiaries to dispose of assets, incur additional
indebtedness, incur guarantee obligations, repay other indebtedness or amend
other debt instruments (including the Indenture and the Subsidiary Guaranty),
pay dividends, create liens on assets, enter into leases, make investments,
loans or advances, make acquisitions, engage in mergers or consolidations, make
capital expenditures, enter into sale leaseback transactions or engage in
certain transactions with subsidiaries and affiliates and otherwise restrict
corporate activities. In addition, under the Senior Bank Facility, the Company
will be required to comply with specified financial ratios and tests, including
minimum interest coverage and maximum leverage ratios and a trailing four
quarter minimum EBITDA (earnings before interest, taxes, depreciation and
amortization) test. See "Description of Senior Bank Facility" and "Description
of the 11 3/4% Notes."
The Company's ability to comply with the covenants and restrictions
contained in the Credit Agreement, the 11 3/4% Indenture and the Indenture may
be affected by events beyond its control, including prevailing economic,
financial and industry conditions. The breach of any of such covenants or
restrictions could result in a default under the Credit Agreement, the 11 3/4%
Indenture and/or the Indenture, which would permit the senior lenders or the
holders of the 11 3/4% Notes or the Notes, as the case may be, to declare all
amounts borrowed thereunder to be due and payable, together with accrued and
unpaid interest, and the commitments of the senior lenders to make further
extensions of credit under the Senior Bank Facility could be terminated. If
the Company were unable to repay its indebtedness to its senior lenders, such
lenders could proceed against the collateral securing such indebtedness as
described under "Description of Senior Bank Facility."
CHANGE OF CONTROL
Upon a Change of Control, as defined in the Indenture, (i) the Company
will have the option at any time on or prior to June 1, 2000, to redeem the
Notes, in whole but not in part, at a redemption price equal to 100% of the
principal amount thereof plus the Applicable Premium, plus accrued and unpaid
interest, if any, to the date of redemption, and (ii) if the Company does not
so redeem the Notes or if such Change of Control occurs after June 1, 2000, the
Company will be required to offer to purchase all of the outstanding Notes at a
price equal to 101% of the principal amount thereof to the date of repurchase
plus accrued and unpaid interest, if any, to the date of repurchase. There
can be no assurance that the Company will have funds available to repurchase
the Notes upon the occurrence of a Change of Control. In particular, a Change
of Control may cause an acceleration of, or require an offer to repurchase
under, the Senior Bank Facility, the 11 3/4% Indenture and other indebtedness,
if any, of the Company and its subsidiaries, in which case such indebtedness
may be required to be repaid in full before repurchase of the Notes. See
"Description of the Notes -- Change of Control" and "Description of Senior
Bank Facility." The inability to repay such indebtedness, if accelerated, and
to purchase all of the tendered Notes would constitute an event of default
under the Indenture.
DEPENDENCE ON CERTAIN INDUSTRIES
A substantial portion of the Company's wire and wire harness products
are ultimately used in the appliance, computer and data communications and
automotive industries. Accordingly, a downturn in those industries could
adversely affect the Company. Furthermore, an overall softening in the economy
could adversely affect generally all the markets the Company serves.
DEPENDENCE ON KEY CUSTOMERS
One customer accounted for approximately 18% of the Company's total
sales in 1996, and certain other customers of the company account for
significant portions of the Company's sales. The loss of any such account,
whether as a result of general or regional economic conditions, a diminished
demand for the Company's products, or any other reason, could adversely affect
the Company's results of operations. See "Business-Key Customers."
FOREIGN OPERATIONS
The Company manufactures certain of its products in Mexico. Foreign
operations are subject to special risks that can materially affect the cash
flows and financial position of the Company, including currency exchange rate
fluctuations, inflation, exchange controls and political and other risks.
9
<PAGE> 12
COMPETITION
The wire and cable and wire harness markets in which the Company
operates are highly competitive. Some of the Company's competitors are larger
than the Company and have greater financial and other resources available to
them and there can be no assurance that the Company can compete successfully
with such other companies.
CONTROLLING STOCKHOLDER
All of the common stock of the Company is owned by Holding. The
majority stockholder of Holding is Hicks, Muse, Tate & Furst Equity Fund II,
L.P. ("HM Fund II"), an affiliate of Hicks, Muse, Tate & Furst Incorporated, a
private investment firm headquartered in Dallas with offices in New York, St.
Louis and Mexico City, specializing in strategic investments, leveraged
acquisitions and real estate equity investments ("Hicks, Muse"). Hicks, Muse
has a proxy to vote substantially all the outstanding common stock of Holding
for the election of the directors of Holding and certain other matters.
Therefore, Hicks, Muse is able to direct the management and policies of the
Company.
ENVIRONMENTAL MATTERS
The Company's operations are subject to federal, state, local and
foreign laws and regulations relating to the storage, handling, generation,
treatment, emission, release, discharge and disposal of certain substances and
wastes. While the Company believes that it is currently in material compliance
with those laws and regulations, there can be no assurance that the Company
will not incur significant costs to remediate violations thereof or to comply
with changes in existing laws and regulations (or the enforcement thereof).
Such costs could have a material adverse effect on the Company's results of
operations and financial condition. Currently, the Company is involved with
environmental monitoring or remediation activities at its Camden, New York and
Jordan, New York facilities. See "Business -- Environmental Matters."
LACK OF PUBLIC MARKET
The Company does not intend to apply for a listing of the Notes on a
securities exchange. There is currently no established market for the Notes
and there can be no assurance as to the liquidity of markets that may develop
for the Notes, the ability of the holders of the Notes to sell their Notes or
the price at which such holders would be able to sell their Notes. If such
markets were to exist, the Notes could trade at prices that may be lower than
the initial market values thereof depending on many factors, including
prevailing interest rates and the markets for similar securities.
The liquidity of, and trading market for, the Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity, and trading markets
independent of the financial performance of, and prospects for, the Company.
10
<PAGE> 13
USE OF PROCEEDS
This Prospectus has been prepared for use by the Selling Securityholders
in sales of the Notes. The Company will receive no proceeds from the sales of
the Notes by the Selling Securityholders, but will bear all expenses (estimated
at $143,000) relating to the registration of the Notes.
CAPITALIZATION
The following table sets forth the unaudited capitalization of the
Company at March 31, 1997.
<TABLE>
<CAPTION>
MARCH 31, 1997
----------------------
(IN THOUSANDS)
<S> <C>
Long-Term Debt (Including Current Maturities):
Revolving Facility . . . . . . . . . . . . . . . . . . . . . . $ 18,800
Term Facility . . . . . . . . . . . . . . . . . . . . . . . . . 331,488
11 3/4% Senior Subordinated Notes due 2005 . . . . . . . . . . 150,000
14% Senior Subordinated Notes due 2005 . . . . . . . . . . . . 10,000
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,474
--------
Total Long-Term Debt . . . . . . . . . . . . . . . . . . . $ 532,762
Stockholder's (Deficit) Equity:
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . $ --
Contributed Capital . . . . . . . . . . . . . . . . . . . . . . 114,080
Carryover of Predecessor Basis . . . . . . . . . . . . . . . . (67,762)
Accumulated Deficit . . . . . . . . . . . . . . . . . . . . . . (88,977)
---------
Total Stockholder's (Deficit) Equity . . . . . . . . . . . $ (42,659)
---------
Total Capitalization . . . . . . . . . . . . . . . . . . . $ 490,103
=========
</TABLE>
11
<PAGE> 14
SELECTED FINANCIAL DATA
THE COMPANY
The selected financial information below presents the financial
information for the seven months ended December 31, 1995, for the year ended
December 31, 1996, the three months ended March 31, 1996 and for the three
months ended March 31, 1997. The data for the seven months ended December 31,
1995 and for the year ended December 31, 1996 are derived from the audited
consolidated financial statements of the Company. The data for the three
months ended March 31, 1996 and March 31, 1997 are derived from the unaudited
consolidated financial statements of the Company, which, in the opinion of
management of the Company, include all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation. The selected
financial data should be read in conjunction with the consolidated financial
statements of the Company and notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations," included elsewhere
herein. Certain financial information regarding the Company's industry segments
is provided in the notes to the consolidated financial statements of the
Company.
<TABLE>
<CAPTION>
THREE MONTHS
SEVEN MONTHS ENDED
ENDED YEAR ENDED MARCH 31,
DECEMBER 31, DECEMBER 31, ------------------------
1995 1996 1996 1997
------------ ------------- ----------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales . . . . . . . . . . . . . . . . . . . $ 245,583 $ 546,981 $ 118,807 $176,153
Cost of goods sold . . . . . . . . . . . . . . 195,221 420,823 93,475 137,913
Selling, general and administrative . . . . . . 17,129 43,885 9,721 13,308
Depreciation and amortization . . . . . . . . . 11,020 31,341 6,044 7,511
Impairment, unusual and plant closing charges . 1,750 84,250 4,000 500
Inventory valuation adjustment . . . . . . . . -- 8,500 2,000 --
---------- ----------- --------- --------
Operating income (loss) . . . . . . . . . . . . 20,463 (41,818) 3,567 16,921
Interest expense . . . . . . . . . . . . . . . (19,931) (43,013) (9,572) (12,011)
Amortization of deferred financing costs . . . (1,468) (3,701) (723) (995)
Other (expense) income . . . . . . . . . . . . (158) 312 89 11
---------- ----------- --------- --------
Income (loss) before income tax provision . . . (1,094) (88,220) (6,639) 3,926
Income tax provision . . . . . . . . . . . . . 2,197 1,262 255 1,620
---------- ----------- --------- --------
Net income (loss) . . . . . . . . . . . . . . . $ (3,291) $ (89,482) $ (6,984) $ 2,296
========== =========== ========= ========
Other Data:
EBITDA (1) . . . . . . . . . . . . . . . . . . $ 33,233 $ 82,273 $ 15,611 $ 24,932
Capital expenditures . . . . . . . . . . . . . $ 5,751 $ 15,849 $ 2,537 $ 3,038
Total assets . . . . . . . . . . . . . . . . . $ 427,920 $ 531,020 $ 617,784 $634,307
Long-term obligations (including current
maturities) . . . . . . . . . . . . . . . . . $ 338,677 $ 447,667 $ 469,977 $532,762
Ratio of earnings to fixed charges (2) . . . . -- -- -- 1.3x
Deficiency of earnings available to cover fixed
charges (2) . . . . . . . . . . . . . . . . . . $ (1,094) $ (88,220) $ (6,639) --
</TABLE>
- ------------------------
(1) Earnings before interest, taxes, depreciation and amortization ("EBITDA")
includes operating income adjusted to exclude depreciation, amortization
of intangible assets, impairment, unusual and plant closing charges, and
other one-time charges. The Company believes that EBITDA provides
additional information for determining its ability to meet future debt
service requirements. However, EBITDA is not a defined term under
generally accepted accounting principles ("GAAP") and is not indicative
of operating income or cash flow from operations a determined under GAAP.
(2) For purposes of calculating the ratio of earnings to fixed charges and
the deficiency of earnings available to cover fixed charges, "earnings"
represent earnings before income taxes plus fixed charges. "Fixed
charges" consist of interest on all indebtedness amortization of deferred
financing costs
12
<PAGE> 15
and the portion (approximately one-third) of rental expenses that management
believes is representative of the interest component of rent expense.
WIREKRAFT (A PREDECESSOR COMPANY)
The selected financial information presented below represents the
financial information of Wirekraft and its predecessor, Kirtland Indiana,
Limited Partnership ("KILP/Wirekraft" of the "Predecessor"), for the periods
indicated. The data for the year ended November 30, 1992 and for the period
December 1, 1992 through December 21, 1992 are derived from the audited
financial statements of the Predecessor. The data for the period December 22,
1992 through November 30, 1993, the year ended November 30, 1994 and the six
months ended May 31, 1995 are derived from the audited consolidated financial
statements of Wirekraft. In connection with the December 2, 1994 acquisition
of ECM and certain assets of GE (the "ECM Acquisition"), WB Holdings Inc.
became a wholly-owned subsidiary of Wirekraft, and, accordingly, references to
Wirekraft shall include WB Holdings Inc. The following information should be
read in conjunction with the audited consolidated financial statements of
Wirekraft and the Predecessor and the notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere herein.
<TABLE>
<CAPTION>
PREDECESSOR WIREKRAFT
------------------------------ ---------------------------------------------
December 1, December 22,
1992 through 1992 through Year Ended Six Months
November 30, December 21, November 30, November 30, Ended May 31,
1992 1992 1993 (1) 1994 1995
--------------- -------------- --------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Net sales . . . . . . . . . . . $ 174,684 $ 9,714 $ 181,188 $ 240,972 $ 168,053
Cost of goods sold . . . . . . 146,597 8,339 150,092 201,602 138,851
Selling, general and
administrative expenses . . . 10,869 505 10,582 14,319 13,301
Depreciation and amortization . 5,141 218 4,496 6,435 6,474
Compensation expense . . . . . -- -- -- -- 895(2)
Expenses related to sale . . . -- 6,929(3) -- -- 501(4)
Expenses related to plant
closings . . . . . . . . . . -- -- -- 2,000
------------ ---------- ------------ ----------- ----------
Operating income (loss) . . . . 12,077 (6,277) 16,018 18,616 6,031
Interest expense . . . . . . . (4,761) (1,418)(5) (8,645) (10,565) (8,020)
Amortization of deferred
financing costs . . . . . . . -- -- (1,677) (1,995) (1,657)
------------ ---------- ------------ ----------- ----------
Income (loss) before income
taxes and extraordinary item 7,316 (7,695) 5,696 6,056 (3,646)
Income tax provision
(benefit)(6) . . . . . . . . -- 3,155 3,023 (2,114)
------------ ---------- ------------ ----------- ----------
Income (loss) before
extraordinary item . . . . . -- -- 2,541 3,033 (1,532)
Extraordinary item . . . . . . -- -- (7,835)(7)
------------ ---------- ------------ ----------- -----------
Net income (loss) . . . . . . . $ 7,316 $ (7,695) $ 2,541 $ 3,033 $ (9,367)
============ ========== ============ =========== ==========
OTHER DATA:
EBITDA (8) . . . . . . . . . . $ 17,218 $ 870 $ 20,514 $ 25,051 $ 15,901
Capital expenditures . . . . . $ 2,122 $ 136 $ 3,705 $ 6,248 $ 2,914
Total assets . . . . . . . . . $ 81,074 $ 80,421 $ 146,671 $ 178,488 $ 241,277
Long-term obligations
(including current maturities) $ 45,294 $ 42,143 $ 93,123 $ 111,639 $ 148,386
Ratio of earnings to fixed 2.5x -- 1.5x 1.5x --
charges (9)
Deficiency of earnings
available to cover fixed
charges (9) -- $ (7,695) -- -- $ (3,646)
</TABLE>
- ----------------
13
<PAGE> 16
(1) On December 21, 1992, WB Holdings Inc., through a series of acquisitions
and mergers (the "Original Wirekraft Acquisition"), acquired all of the
issued and outstanding common stock of Bristol Holding Corporation and
Burcliff Holdings Corporation, the parent companies of the general
partners of the Predecessor.
(2) Represents payments to senior management of Wirekraft for the redemption
of employee stock options in connection with the acquisitions of
Wirekraft/Omega (the "Wirekraft/Omega Acquisitions").
(3) Represents non-recurring expenses associated with the Original Wirekraft
Acquisition, which included exit bonuses, severance arrangements and
brokerage and legal fees.
(4) Represents expenses of Wirekraft associated with the Wirekraft/Omega
Acquisitions.
(5) Includes write-off of deferred financing fees of $1,211 associated with
the Original Wirekraft Acquisition.
(6) The results of operations for the years ended November 30, 1991 and 1992
and the period from December 1, 1992 through December 21, 1992 did not
include a provision for income taxes since the net income for the
Predecessor is included in the income tax returns of its partners.
(7) Extraordinary item in 1995 represents a $7,835 loss on early
extinguishment of debt (net of income tax of $4,930).
(8) EBITDA includes operating income adjusted to exclude depreciation,
amortization of intangible assets, impairment, unusual and plant closing
charges, and other one-time charges. The Company believes that EBITDA
provides additional information for determining its ability to meet
future debt service requirements. However, EBITDA is not a defined
term under GAAP and is not indicative of operating income or cash flow
from operations as determined under GAAP.
(9) For purposes of calculating the ratio of earnings to fixed charges and
the deficiency of earnings available to cover fixed charges, "earnings"
represent earnings before income taxes plus fixed charges. "Fixed
charges" consist of interest on all indebtedness amortization of deferred
financing costs and the portion (approximately one-third) of rental
expenses that management believes is representative of the interest
component of rent expense.
14
<PAGE> 17
OMEGA (A PREDECESSOR COMPANY)
The selected financial information below presents the financial
information of Omega and its predecessor for the periods indicated. The data
for the years ended December 31, 1992, 1993 and 1994 and the three months ended
March 31, 1995 are derived from the audited consolidated financial statements
of THL-Omega. The data for the two months ended May 31, 1995, are derived from
the audited consolidated financial statements of Omega. The following
information should be read in conjunction with the audited consolidated
financial statements of THL-Omega Holding Corporation, which was acquired by
Omega in March 1995, ("THL-Omega") and Omega and the notes thereto, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," included elsewhere herein.
<TABLE>
<CAPTION>
THL-OMEGA OMEGA
------------------------------------------------- -----------
THREE TWO
MONTHS MONTHS
YEAR ENDED DECEMBER 31, ENDED ENDED
----------------------------------- MARCH 31, MAY 31,
1992 1993 1994 1995 1995 (1)
---------- ---------- ---------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Results of Operations:
Net sales . . . . . . . . . . . . . . . . $ 108,312 $ 107,004 $ 134,457 $38,736 23,295
Cost of goods sold . . . . . . . . . . . 82,008 80,276 98,012 29,401 17,512
Selling, general and
administrative expenses . . . . . . . . 8,925 12,061 10,839 2,651 1,639
Depreciation and amortization . . . . . . 5,488 5,191 5,761 1,459 1,233
Compensation expense . . . . . . . . . . -- -- -- 9,715 (2) --
Expenses related to sale . . . . . . . . -- -- -- 1,689 (3) --
--------- --------- --------- ------- ------
Operating income (loss) . . . . . . . . . 11,891 9,476 19,845 (6,179) 2,911
Interest expense . . . . . . . . . . . . (6,526) (6,026) (5,932) (1,478) (1,797)
Amortization of deferred
financing costs . . . . . . . . . . . . (285) (289) (262) (50) (238)
Other income . . . . . . . . . . . . . . 1,015 772 296 32 --
--------- --------- --------- ------- ------
Income (loss) before income
taxes and extraordinary item . . . . . 6,095 3,933 13,947 (7,675) 876
Income tax provision (benefit) . . . . . 2,550 1,892 5,787 484 171
--------- --------- --------- ------- ------
Income (loss) before
extraordinary item . . . . . . . . . . 3,545 2,041 8,160 (8,159) 705
Extraordinary item . . . . . . . . . . . -- -- -- (1,148)(4) (4,044)(5)
--------- --------- --------- ------- ------
Net income (loss) . . . . . . . . . . . . $ 3,545 $ 2,041 $ 8,160 $(9,307) $(3,339)
========= ========= ========= ======= =======
OTHER DATA:
EBITDA(6) . . . . . . . . . . . . . . . . $ 17,379 $ 14,667 $ 25,606 $ 6,684 $4,144
Capital Expenditures . . . . . . . . . . 1,947 3,683 8,667 1,597 581
Total assets . . . . . . . . . . . . . . 87,342 85,868 101,675 97,657 176,659
Long-term obligations
(including current maturities) . . . . 64,554 58,174 56,093 54,615 128,116
Ratio of earnings to fixed
charges (7) . . . . . . . . . . . . . . . 1.8x 1.6x 3.1x -- 1.4x
Deficiency of earnings
available to cover fixed
charges (7) . . . . . . . . . . . . . . . -- -- -- $(7,675) --
</TABLE>
- --------------------
(1) On March 31, 1995, Omega acquired all of the issued and outstanding
common stock of THL-Omega.
(2) Represents payments to senior management for the redemption of stock
options and stock that was issued immediately prior to the acquisition
of THL-Omega for consideration less than the fair value.
(3) Represents expenses of the sellers associated with the acquisition of
THL-Omega.
(4) Extraordinary item in March 1995, represents a $1,148 loss on early
extinguishment of debt (net of income taxes of $765).
(5) Extraordinary item in May 1995, represents a $4,044 loss on early
extinguishment of debt (net of income taxes of $2,082).
(6) EBITDA includes operating income adjusted to exclude depreciation,
amortization of intangible assets, impairment, unusual and plant closing
charges, and other one-time charges. The Company believes that EBITDA
provides
15
<PAGE> 18
additional information for determining its ability to meet future debt
service requirements. However, EBITDA is not a defined term under GAAP
and is not indicative of operating income or cash flow from operations
as determined under GAAP.
(7) For purposes of calculating the ratio of earnings to fixed charges and
the deficiency of earnings available to cover fixed charges, "earnings"
represent earnings before income taxes plus fixed charges. "Fixed
charges" consist of interest on all indebtedness amortization of deferred
financing costs and the portion (approximately one-third) of rental
expenses that management believes is representative of the interest
component of rent expense.
16
<PAGE> 19
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
To facilitate a meaningful comparison, the following discussion and
analysis includes combined results of operations of the Company, Wirekraft,
Omega and ECM for the years ended December 31, 1994 and 1995. These combined
results of operations have not been prepared in accordance with GAAP, which
do not allow for the aggregation of financial data for entities that are not
under common ownership. Nevertheless, management believes that the aggregate
financial information shown below, for the years ended December 31, 1994 and
1995, is helpful in understanding the past operations of the companies
combined in the Wirekraft/Omega Acquisitions. The results of operations
reflect the elimination of inter-company sales and cost of goods sold between
Wirekraft and Omega pertaining to purchases of non-insulated wire by Wirekraft
from Omega in the amounts of $1.8 million and $4.2 million for the years ended
December 31, 1994 and 1995, respectively.
Included in the year ended December 31, 1994 is the year ended November
30, 1994 of Wirekraft, the year ended December 31, 1994 of THL-Omega, which
was acquired by Omega in March 1995, and the eleven month period ended November
30, 1994 of ECM. Included in the year ended December 31, 1995 is the five
months ended May 31, 1995 of Wirekraft, the three months ended March 31, 1995 of
THL-Omega, the two months ended May 31, 1995 of Omega, and the seven months
ended December 31, 1995 of the Company. Included in the year ended December 31,
1996 is the year ended December 31, 1996 of the Company, which includes the
results of operations of Wire Technologies, Inc., a wholly-owned subsidiary of
the Company ("Wire Technologies"), from March 5, 1996, the date of the
acquisition of Dekko by Wire Technologies (the "DWT Acquisition"). Included in
the three months ended March 31, 1996 are the results of the Company, which
includes the results of operations of Wire Technologies from March 5, 1996, the
date of the DWT Acquisition. Included in the three months ended March 31, 1997
are the results of the company, which includes the results of operations of
Camden from February 12, 1997, the date of the Camden Acquisition.
The Company conducts its operations through two segments: wire products,
which includes both non-insulated and insulated wire, and wire harness
products. The following table sets forth the major components of the results of
operations on a historical combined basis and should be used in reviewing the
discussion and analysis of results of operations and liquidity and capital
resources.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED ENDED
DECEMBER 31, MARCH 31,
----------------------------------- ----------------------
1994 1995(1) 1996 1996 1997
--------- --------- ----------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Wire sales . . . . . . . . . . . . . . . . $272,414 $293,572 $385,627 $ 77,868 $131,436
Harness sales . . . . . . . . . . . . . . . 174,716 161,121 161,354 40,939 44,717
-------- -------- -------- -------- --------
Net sales . . . . . . . . . . . . . . . . 447,130 454,693 546,981 118,807 176,153
Cost of goods sold . . . . . . . . . . . . 348,633 362,677 420,823 93,475 137,913
Selling, general and administrative . . . . 39,746 32,843 43,885 9,721 13,308
Depreciation and amortization . . . . . . . 13,310 19,333 31,341 6,044 7,511
Impairment, unusual and plant closing -- 3,750 84,250 4,000 500
charges . . . . . . . . . . . . . . . . . .
Inventory valuation adjustment . . . . . . -- -- 8,500 2,000 --
Compensation expense . . . . . . . . . . . -- 10,610 -- -- --
Expenses related to sale . . . . . . . . . -- 2,190 -- -- --
--------- -------- -------- -------- --------
Operating income (loss) . . . . . . . . . . $ 45,441 $ 23,290 $(41,818) $ 3,567 $ 16,921
======== ======== ======== ======== ========
</TABLE>
- ---------------------------
(1) The results of operations data related to Wirekraft for the five months
ended May 31, 1995 excludes the one month period ended December 31,
1994. Loss from operations of Wirekraft for the one month period ended
December 31, 1994 was $64.
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Net sales for the three months ended March 31, 1997 were $176.2 million,
representing a $57.3 million, or 48.3%, increase compared to the first three
months of 1996. Wire segment sales increased $53.6 million, or 68.8%, in the
three months ended March 31, 1997 as compared to the three months ended March
31, 1996. This increase was primarily the result of the DWT Acquisition, the
Camden Acquisition, and growth in the Company's computer and electronics,
control signal and security and alarm accounts. The three months ended March
31, 1997 included the operations of Wire Technologies for the full quarter,
while the same period in 1996 included the operations of Wire Technologies from
March 5, 1996. Wire Technologies' sales increased $26.9 million for the three
months ended March 31, 1997 as compared to the three months ended March 31,
1996. In addition, the first quarter of 1997 includes $25.4
17
<PAGE> 20
million of net sales from Camden. This growth was partially offset by a
decline in the average price of copper during the three months ended March 31,
1997 compared to the same period in 1996. In general, the Company prices its
products based upon a spread over the cost of copper, which results in a
decreased dollar value of sales when copper prices decrease. The average price
of copper based upon the New York Commodity Exchange, Inc. ("COMEX") declined
to $1.11 per pound over the three months ended March 31, 1997 from $1.18 per
pound over the three months ended March 31, 1996. Within the harness segment,
sales increased $3.8 million, or 9.2%, for the three months ended March 31, 1997
compared to the same period in 1996. This increase was due to higher sales to
General Electric Company ("GE") and most other major harness customers.
Cost of goods sold as a percent of sales decreased to 78.3% for the
three months ended March 31, 1997 from 78.7% for the three months ended March
31, 1996. This decrease reflected lower current-period costs achieved through
the transition of certain harness segment business to lower cost Mexican
facilities, savings realized from plant consolidation actions taken in 1996, as
well as the impact of declining copper prices. Because the Company's products
are typically priced at a spread over the cost of copper, a lower copper price
leads to a higher gross margin percentage but generally has no impact on gross
margin dollars.
Selling, general and administrative expenses were $13.3 million in the
first quarter of 1997 compared to $9.7 million for the first quarter of 1996.
This $3.6 million dollar increase reflected the addition of Camden and the
effect of including Wire Technologies for the entire first quarter of 1997.
Expressed as a percent of sales, selling, general and administrative expenses
decreased from 8.2% for the three month period ended March 31, 1996 to 7.6% for
the three-month period ended March 31, 1997. This improvement as a percent of
sales reflected synergies created in the DWT Acquisition and increased sales
volume.
A $2.0 million pre-tax inventory valuation charge was recorded in the
first quarter of 1996. This was the result of an adjustment to the LIFO
valuation of copper in inventory, reflecting the decrease in the copper cost per
pound from December 31, 1995 to March 31, 1996. During the first quarter of
1997, a similar decrease did not occur. A $4.0 million pre-tax charge to
operations was recorded in March 1996, representing plant closing cost. The
plant closing costs relate to shutting down and consolidating several wire
segment facilities. During the same period in 1997, the Company recorded a $.5
million pre-tax charge to operations for consolidating a wire segment facility.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net sales for the year ended December 31, 1996 were $547.0 million,
representing a $92.3 million or 20.3% increase over the year ended December 31,
1995. This increase occurred substantially within the wire segment, where
sales increased $92.1 million, or 31.3%, over the year ended December 31, 1995.
This increase reflected $139.7 million of net sales from Wire Technologies, as
well as continued growth in the Company's automotive, cable and control signal
market accounts. These increases were partially offset by a decline in copper
prices. In general, the Company prices its products based upon a spread over
the cost of copper, which results in a decreased dollar value of sales when
copper prices decrease. The average price of copper based upon the COMEX
declined to $1.06 per pound over the year ended December 31, 1996 from $1.35
per pound during the year ended December 31, 1995. Within the harness segment,
sales remained constant at $161.4 million during the year ended December 31,
1996. This constant level of sales represented strong sales from most major
harness customers other than Whirlpool. Sales to Whirlpool declined during the
year due to the expiration of a transition supply agreement in October 1995.
Cost of goods sold as a percent of sales decreased from 79.8% to 76.9%
for the year ended December 31, 1996. This decrease was due to the result of
negotiated price reductions for certain purchased materials and the elimination
of the majority of outside purchases of non-insulated wire subsequent to the
acquisition of Omega in 1995. Wirekraft's purchases of non-insulated wire from
outside suppliers declined as Omega's non-insulated wire production for
Wirekraft increased. In addition, the change in cost of goods sold as a
percent of sales reflected cost reductions achieved within both the wire and
harness segments resulting from plant consolidation actions taken in 1995 and
1996, as well as the impact of declining copper prices. Because the Company's
products are typically priced at a spread over the cost of copper, a lower
copper price leads to a higher gross margin percentage but generally has no
impact on gross margin dollars.
Selling, general and administrative expenses were $43.9 million for the
year ended December 31, 1996 compared to $32.8 million during the year ended
December 31, 1995, an increase of $11.1 million. Expressed as a percent of
sales, selling, general and administrative expenses increased from 7.2% during
the year ended December 31, 1995 to 8.0% during the year ended December 31,
1996. This increase, as a percent of sales, was partially attributable to the
effect on net sales of higher copper costs during the year ended December 31,
1995, as compared to the year ended December 31, 1996. Other cost increases
included operating expenses from Wire Technologies, volume related items and
cost inflation.
18
<PAGE> 21
Commencing in the first quarter of 1996, the Company began a
comprehensive review of the strategic position of its individual business
units. In connection with this review the Company completed its assessment of
the carrying value of goodwill, resulting in a one-time, non-cash charge to
pre-tax earnings of $78.2 million. This write down of the carrying value of
goodwill related to the loss of a major customer in 1995 and the effects of key
changes in the appliance and automotive wire industries. These changes and the
DWT Acquisition necessitated the closing of certain facilities in both the wire
and harness segments. A $6.0 million pre-tax charge to operations was recorded
during the year ended December 31, 1996, representing plant closing costs. The
plant closing costs relate to shutting down and consolidating six facilities.
An $8.5 million pre-tax inventory valuation charge was recorded during
the year ended December 31, 1996. This charge was the result of an adjustment
to the last-in, first-out ("LIFO") valuation of copper in inventory reflecting
the decrease in the copper cost per pound during fiscal 1996.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net sales for the year ended December 31, 1995 were $454.7 million,
representing a $7.6 million, or 1.7%, increase over the year ended December 31,
1994. This increase in net sales was primarily attributable to an increase in
sales of wire products which grew to $293.6 million in 1995 from $272.4 million
in 1994, an increase of $21.2 million, or 7.8%. The increase was largely due to
rising copper prices. In general, the Company prices its products based upon a
spread over the cost of copper, which results in an increased dollar volume of
sales when copper prices increase. The average price of copper based on the
COMEX rose to $1.35 per pound during the year ended December 31, 1995 from
$1.07 per pound during the year ended December 31, 1994. The increase in wire
sales was also bolstered by growth in specialty accounts which primarily
occurred in the security, alarm, data communications and fine wire businesses.
The increase in sales of wire products was offset somewhat by a slowdown in the
automotive industry as well as by several model related changeovers at key
automotive customers. Within the harness segment, sales decreased $13.6
million or 7.8% for the year ended December 31, 1995 as compared to the year
ended December 31, 1994. This decrease reflects a decline in sales to
Whirlpool. This decline was pursuant to an agreement effective October 1,
1994, whereby Whirlpool began transitioning certain wire harness purchases to
its own captive operation in Mexico and other third party suppliers. The
harness segment, however, retained Whirlpool's dishwasher harness business.
Cost of goods sold as a percent of sales increased to 79.8% from 78.0%
for the year ended December 31, 1995 compared to the year ended December 31,
1994. The change was primarily due to the increase in the average price of
copper. Because the Company's products are typically priced at a spread over
the cost of copper, a higher copper price leads to a lower gross margin
percentage but generally has no impact on gross margin dollars. The increasing
cost of materials used to insulate wire, which include resins and plasticizers,
and the impact of producing to shorter average runs during the mid-year
automotive slowdown and customer inventory adjustment period also had dampening
effects on margins.
A $3.8 million charge to operations was recorded in 1995 related to
plant closing costs. The plant closing costs primarily related to shutting
down and consolidating harness segment facilities. During 1995, six harness
plants were closed.
Selling, general and administrative expenses were $32.8 million for the
year ended December 31, 1995 as compared to $39.7 million for the year ended
December 31, 1994 -- a decrease of $6.9 million or 17.4%. Expressed as a
percentage of sales, selling, general and administrative expenses decreased to
7.2% for the year ended December 31, 1995 from 8.9% for the comparable period
ended December 31, 1994. The decrease in selling, general and administrative
expenses was primarily attributable to cost containment efforts, movement away
from commissioned sales representatives to a captive sales force and
consolidation in administrative positions. The decrease in selling, general
and administrative expenses also reflected the devaluation of the peso relative
to the U.S. dollar.
19
<PAGE> 22
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Cash Flows
Net cash used in operating activities was $4.6 million for the three
months ended March 31, 1997, compared to $.7 million used in operating
activities for the three months ended March 31, 1996. The fluctuation is
primarily due to changes in working capital. Net cash used in investing
activities was $62.0 million for the first quarter of 1997 and includes (i)
acquisition costs of $59.0 million, related to the Camden Acquisition and (ii)
capital expenditures of $3.0 million. Net cash used in investing activities
was $162.8 million for the first quarter of 1996 and represented (i)
acquisition costs of $160.3 million related to the DWT Acquisition and (ii)
capital expenditures of $2.5 million. Net cash provided by financing
activities was $70.5 million for the three months ended March 31, 1997 and
includes (i) proceeds of $65.0 million from the issuance of long-term
obligations, (ii) net borrowings of $10.1 million under debt obligations, (iii)
payments of $3.2 million related to financing fees and (iv) cash dividends of
$1.4 million related to the Company's Series A Senior Cumulative Exchangeable
Redeemable Preferred Stock (the "Preferred Stock"). Net cash provided by
financing activities was $168.5 million for the three months ended March 31,
1996 and includes (i) proceeds of $173.2 million from the issuance of equity
securities and long-term obligations, (ii) net borrowings of $3.1 million under
debt obligations and (iii) payments of $7.8 related to financing fees.
For the year ended December 31, 1996, the Company generated $32.0
million in cash from operations and $13.0 million of net proceeds from the
issuance of equity securities and long-term debt obligations related to the DWT
Acquisition. During 1996, the Company made net repayments of $21.3 million
under debt obligations, spent $15.8 million on capital projects and used $7.8
million to pay financing fees.
For the year ended December 31, 1995, on a historical combined basis,
the Company generated $25.2 million in cash from operations and $23.0 million
of net proceeds from the issuance of equity securities and long-term debt
obligations related to acquisitions. During 1995, the Company made net
repayments of $17.6 million under debt obligations, spent approximately $10.5
million on capital projects and used $21.0 million to pay financing fees.
For the year ended December 31, 1994, on a historical combined basis,
the Company generated $13.4 million in cash from operations and $3.8 million
from the issuance of certain notes. Cash was used in 1994 primarily to fund
capital expenditures of $14.9 million.
Financing Arrangements
The Credit Agreement provides senior secured financing of up to $428.5
million, consisting of the $111.0 million, five year Tranche A Loan, the $115.0
million, seven year Tranche B Loan, the $127.5 million, eight year Tranche C
Loan and the $75.0 million Revolver. The Company is obligated to make
principal payments in respect of the Term Facility of $20.3 million in 1997,
$23.1 million in 1998, $28.3 million in 1999, $42.6 million in 2000, $56.6
million in 2001, $73.2 million in 2002 and $92.4 million in 2003. The Revolver
is available for working capital purposes including letters of credit. The
Tranche A Loan commitments terminate and all amounts under the Revolver then
outstanding mature on September 30, 2002. The Tranche B Loan commitments
terminate on September 30, 2002, and the Tranche C Loan commitments terminate on
September 30, 2003. As of March 31, 1997, there was $331.5 million outstanding
under the Term Facility and $42.7 million of unused borrowing capacity under
the Revolver.
The Company's obligations under the Credit Agreement bear interest at
floating rates and require interest payments on varying dates depending on the
interest rate option selected by the Company. At March 31, 1997, the weighted
average interest rate on outstanding borrowings under the Credit Agreement was
8.64%.
As of March 31, 1997, the Company had entered into two interest rate
agreements to assure the net interest cost to the Company on at least 50% of
the sums of the aggregate principal amount of the Term Facility. These
agreements provide ceilings of 7.0% on $55.5 million of indebtedness through
May 1997, 8.0% on $63.5 million of indebtedness through May 1998, 7.0% on $32.5
million of indebtedness through March 1998 and 8.0% on $32.5 million of
indebtedness through March 1999.
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<PAGE> 23
In connection with the Wirekraft/Omega Acquisitions, the Company issued
the 11 3/4% Notes. The 11 3/4% Notes require semi-annual interest payments of
$8.8 million on each June 1 and December 1. The 11 3/4% Notes are not subject
to any sinking fund requirements. The Notes require semi-annual interest
payments of $700,000 on each June 1 and December 1. The Notes are not subject
to any sinking fund requirements.
Liquidity
The principal raw material used in the Company's products is copper.
The market price of copper is subject to significant fluctuations. Increased
working capital needs occur whenever the Company experiences a significant rise
in copper prices. A $0.10 per pound change in the price of copper changes the
Company's working capital by approximately $2.8 million. The Company enters
into contractual relationships with most of its customers to adjust it prices
based upon the prevailing market prices on the COMEX. This approach is
patterned after the Company's arrangement with its copper suppliers and is
designed to remove the risk associated with fluctuating copper prices.
The Company's primary source of liquidity are cash flows from operations
and borrowings under the Revolver, which are subject to a borrowing base
calculation. The major uses of cash in 1997 are expected to be for debt
service requirements and capital expenditures. In 1997, debt service
requirements are estimated at $68.0 million while capital expenditures are
estimated at $23.0 million. Management believes that cash from operating
activities, together with available borrowings under the Revolver, if
necessary, should be sufficient to permit the Company to meet these financial
obligations.
21
<PAGE> 24
BUSINESS
GENERAL
The Company is a holding company which owns all of the outstanding
capital stock of the Guarantor Subsidiaries and two foreign subsidiaries. All
of the outstanding capital stock of the Company is held by Holding. Holding
and the predecessor of the Company were incorporated in Delaware in April 1995
by an investor group led by Hicks, Muse and Mills & Partners, Inc. ("Mills &
Partners") to facilitate the Wirekraft/Omega Acquisitions in June of 1995.
Mills & Partners is a group of senior operating executives who manage a
portfolio of companies in a variety of industries.
WB Holdings Inc. was formed in September 1992 by Hicks, Muse and Mills &
Partners to participate in the acquisition of KILP/Wirekraft. On December 21,
1992, WB Holdings Inc., through a series of acquisitions and mergers acquired
all of the issued and outstanding common stock of Bristol Holding Corporation
and Burcliff Holdings Corporation, the parent companies of the general partners
of KILP/Wirekraft. KILP/Wirekraft was engaged in the design, manufacture and
marketing of insulated copper wire and wire harnesses.
In December 1994, WB Holdings Inc., through a series of mergers, became
a wholly-owned subsidiary of Wirekraft. Wirekraft was formed to participate in
the ECM Acquisition. On December 2, 1994, Wirekraft acquired the stock of ECM
and certain related assets from GE. ECM was engaged in the manufacture of wire
harnesses.
Omega was formed in March 1995 by Hicks, Muse and Mills & Partners to
participate in the acquisition of THL-Omega. On March 31, 1995, Omega acquired
all of the issued and outstanding common stock of THL-Omega. THL-Omega was
engaged in the design, manufacture and marketing of non-insulated bare and tin-
plated copper wire.
On March 5, 1996, Wire Technologies, a wholly-owned subsidiary of the
Company, consummated the DWT Acquisition. Wire Techologies is engaged in the
design, manufacture and marketing of non-insulated copper wire and insulated
copper wire.
On February 12, 1997, the Company consummated the Camden Acquisition.
Camden is engaged in the design, manufacture and marketing of non-insulated
bare and tin-plated copper wire.
PRODUCTS AND MARKETS
The Company is engaged in the design, manufacture and marketing of (i)
non-insulated bare and tin-plated copper wire, (ii) insulated copper wire and
(iii) wire harnesses. The Company's products are used by a wide variety of
customers primarily in the appliance, computer and data communications,
automotive and industrial equipment industries.
The following is a description of the Company's primary products and
markets served:
Non-Insulated Wire
The Company's non-insulated copper conductors are primarily used to (i)
transmit digital, video and audio signals that generally control motor
functions in appliances and industrial equipment, HVAC systems, safety control
systems and switching equipment and (ii) conduct electricity. The Company's
non-insulated wire products are primarily sold to wire insulators, who apply
various insulating materials to the conductors through an extrusion process.
These wire insulators, in turn, sell the insulated wire to a variety of
customers, many of which are in the computer and data communications industry.
Within this industry, the Company's non-insulated wire is generally used in
wire and cable products that (i) connect circuit boards inside personal
computers ("PCs"), (ii) join PCs to
22
<PAGE> 25
peripheral equipment and (iii) link PCs in local area and wide area networks.
The Company also manufactures non-insulated wire that is used in a variety of
industrial markets including appliance, fine wire automotive, mining and mass
transportation.
The Company manufactures a broad array of non-insulated copper
conductors including the following:
o Single End Wire. Single end wire is an individual wire drawn to
the customer's size requirements ranging from .08 to .002 inches
in diameter. Single end wire is used to transmit digital, video
and audio signals or low voltage current in a variety of wire
products used in motor controls, local area networks, security
systems, television or telephone connections inside homes and
buildings, and water sprinkler systems. Single end wire is
capable of transmitting signals or electrical current only
between two distinct end points (terminals) such as between an
on-off switch and the starter to a motor. Single end wire is
generally the least expensive form of wire to produce due to its
simple configuration.
o Stranded Wire. Stranded wire is comprised of a number of single
end wires, twisted together in a specific geometric pattern,
where each individual wire's relative position is preserved
throughout the length of the strand. Like single end wire,
stranded wire transmits digital, video and audio signals or low
voltage current but is capable of connecting multiple terminals.
This type of wire is the primary wire used in appliance and
automotive wire harnesses. In addition, stranded wire is
typically used in wire and cable products that (i) connect
peripherals such as printers to a computer, (ii) connect the
internal components of a PC, and (iii) control HVAC, security and
other functions inside buildings.
o Bunched Wire. Bunched wire is comprised of a number of single
end wires that are twisted in a random pattern rather than a
specific geometric pattern. Bunched wire is commonly used for
transmission of electrical current in lighting fixture cords,
extension cords and power cords for portable power hand tools.
This type of wire provides improved flexibility (versus single
end wire) while maintaining its ability to carry electrical
currents.
o Shielding Wire. Shielding wire is comprised of varying numbers
of single end wire which are wound together in parallel
construction around a bobbin. Shielding wire does not transmit
signals or voltage but rather shields the signal traveling
through the core conductor from outside interference. This type
of wire is primarily used in data communication applications.
o Cabled Wire and Braided Wire. Cabled wire and braided wire are
combinations of single, bunched or stranded wire twisted together
in various patterns and thickness. These wires transmit
electrical current and are typically used in mining, mass
transportation, automotive and other industrial applications.
Insulated Wire
The Company's insulated wire products are primarily sold to companies
that assemble wire harnesses for installation in automobiles or appliances.
The Company manufactures a diverse array of insulated wire products including
the following:
o PVC Lead Wire and Cable. PVC lead wire and cable is copper wire
that has been insulated with polyvinyl chloride ("PVC"). This
product is used primarily in automotive wire harnesses located
behind the instrument panel or in the vehicle body that control
certain functions including turn signals and air bags.
23
<PAGE> 26
o JIS Wire. JIS wire is copper wire insulated with PVC that is
produced according to Japanese Industrial Standards ("JIS"). The
primary difference between domestic PVC wire and JIS wire is that
JIS wire is manufactured to metric dimensions and generally has
thinner insulation than products manufactured according to U.S.
Society of Automotive Engineers Standards. JIS wire is used
primarily in automotive wire harnesses located behind the
instrument panel or in the vehicle body.
o XLPE Insulated Wire. Cross-linked polyethylene ("XLPE") wire is
copper wire insulated with polyethylene that is subjected to heat
and steam pressure ("cross-linking") to make the wire resistant
to high temperatures. This product's primary application
includes use in high temperature environments such as the engine
compartment of vehicles and in electric ranges.
o PVC Insulated Cord. PVC insulated cord is insulated wire that is
surrounded with fillers and then jacketed with PVC insulation.
This product is used primarily for wall-plug applications (cord
sets) in the appliance and power tool industries.
o Appliance Wire. Appliance wire is copper wire primarily
insulated with PVC and used in producing harnesses for a variety
of appliances. The Company also manufactures high temperature
wire, insulated with silicone, used primarily in electric ranges
and niche applications such as resistance heaters, motor leads
and lighting products.
Wire Harnesses
The Company supplies wire harnesses to all of the leading domestic
appliance manufacturers, including GE, Frigidaire, Maytag, Whirlpool, and
Raytheon (Amana). A wire harness is comprised of an assembly of wires with
connectors and terminals attached to their ends that transmit electricity
between two or more points. For example, a wire harness used in a washing
machine links the washing machine's control panel with its other electrical
components, such as the motor.
The Company also participates in several niche businesses oriented
around its expertise and marketing presence in the appliance industry,
including water inlet hoses for washing machines and resistance and appliance
heaters. In addition, the Company produces truck trailer cable assemblies that
transmit electrical current from the tractor to the trailer.
INDUSTRY TRENDS
In recent years several key trends and events developed within the
automotive and appliance industries which caused the Company to develop and
execute new business strategies to maintain customer volume levels and meet
competitive pressures. The trends and events included the implementation of
the North American Free Trade Agreement ("NAFTA"), geographic relocation of
production facilities and changes in customers' ordering patterns to match
just-in-time inventory management practices.
With the NAFTA agreement and competitive pressures, the automotive and
appliance industry accelerated the shifting of production of harness assemblies
to lower cost Mexican operations. In order to address the market's demands,
the Company purchased ECM in December 1994 and began moving production from the
Midwest to the Southwest and Mexico to retain its long-standing relationship
with certain major customers and to achieve cost efficiencies. As the Company
increased the transition of harness production to Mexican facilities it began
closing several domestic harness facilities in fiscal 1995.
At the time of the acquisition of KILP/Wirekraft in 1992, the automotive
marketplace accepted KILP/Wirekraft's manufacturing philosophy and approach to
customer service. KILP/Wirekraft's manufacturing
24
<PAGE> 27
philosophy was geared toward meeting long lead-time orders for large quantities
of certain types of automotive insulated wire. However, due to overall
economic trends and changes within the automotive industry, KILP/Wirekraft's
customer base began to decrease the number and frequency of long lead-time
orders and increased the number and frequency of short lead-time orders for
small quantities of insulated wire. This allowed customers the ability to
further reduce their on-hand inventories and led to more demanding customer
service expectations and a change in KILP/Wirekraft's production philosophy to
fill the small orders and meet stringent delivery schedules. As a result,
KILP/Wirekraft's operating costs increased, because shorter production runs
created more downtime, an increased number of setups and higher scrap rates.
This shift was a significant factor in the Company's decision to acquire Dekko,
which utilized product line focused facilities which were geared for shorter
production runs and had a history of superior customer service and on-time
delivery operating on that basis. In addition, several of these facilities
were strategically located near the Southwest and Mexico. As the Company began
integrating facilities purchased in the DWT Acquisition, it closed several
insulated wire facilities during 1996.
MARKETING AND DISTRIBUTION
The Company sells its products through a combination of direct (Company-
employed) sales people, manufacturer's representatives and distributors. The
Company's sales organization is supported by an internal marketing staff and a
customer service group. Collectively, these departments act as a bridge
between the Company's customers and its production and engineering staff. The
Company's engineers work directly with customers in designing the wire or wire
harness product that best fits their needs. In addition, engineers work
closely with the Company's production managers, quality supervisors and
customer service representatives to ensure the timely delivery of quality
products.
KEY CUSTOMERS
The Company sells its products primarily to major appliance
manufacturers, automotive wire harness manufacturers and copper wire insulators
who then sell to a diverse array of end users. A substantial percentage of the
Company's total sales are to GE. Sales to GE accounted for approximately 18%
and 19% of the Company's total sales in 1996 and 1995, respectively. In
connection with the acquisition of ECM, the Company entered into a supply
agreement with GE, which expires December 31, 2006, pursuant to which the
Company supplies substantially all of GE's domestic wire harness requirements
for major kitchen and laundry appliances.
RAW MATERIALS
The principal raw material used by the Company is copper, which is
purchased in the form of 5/16 inch rod from the major copper producers in North
America. Copper rod prices are based on market prices, which are generally
established by reference to the COMEX, plus a premium charged to convert copper
cathode to copper rod and deliver it to the required location. As a world
traded commodity, copper prices have historically been subject to fluctuations,
however, the Company generally passes the copper cost through to its customers.
Management has no reason to believe that this practice will change.
Other major raw materials consumed by the Company include: PVC resin,
plasticizer, XLPE compound, and a wide variety of electro-mechanical
components. The Company enters into long term supply agreements on a wide
variety of materials consumed. Supplies on all critical materials are
currently adequate to meet market needs.
MANUFACTURING
The Company is committed to the highest quality standards for its
products, a standard maintained in part by continuous improvements to its
production processes and upgrades and investments to its manufacturing
equipment. The Company's equipment can be adapted to satisfy the changing
needs of its customers. The
25
<PAGE> 28
Company maintains advanced quality assurance and testing equipment to ensure
the products it manufactures will consistently meet customer quality
requirements. The following is a description of the Company's manufacturing
facilities and processes for its major product lines.
Non-Insulated Wire. As of March 31, 1997, the Company had nine
facilities dedicated to the production of non-insulated wire. Five of these
facilities are located in New York, two are located in Arkansas, one facility
is located in Indiana and one facility is located in Texas. The manufacturing
of non-insulated wire consists of three processes: wire drawing, plating and
bunching and stranding.
o Wire Drawing Process. Wire drawing involves a multi-step process
in which 5/16 inch copper rod is drawn through a series of dies
of decreasing diameters.
o Plating Process. After being drawn, the Company's wire products
may be plated through an electro-plating process. The Company
has the capability to plate copper wire with tin and other
metals. Approximately 30% of the Company's non-insulated wire
products are plated with tin. The plating process prevents the
bare copper from oxidizing and also allows the wire to be
soldered, which is an important quality in many electrical
applications.
o Bunching and Stranding Process. Bunching and stranding is the
process of twisting together single strand wires to form a
construction ranging from seven to over 200 strands. If the wire
is bunched, the individual strands of wire are twisted together
in a random pattern. Bunched wire is typically used in power
cords for lights and appliances. Stranded wire is composed of a
number of single end wires twisted together in a specific
geometric pattern where each strand's relative position is
maintained throughout the length of the wire. Stranded wire is
typically used in security systems, audio systems and intercom
systems.
Insulated Wire. As of March 31, 1997, the Company had thirteen
manufacturing facilities used to insulate wire. Six of these facilities are
located in Indiana, four are located in Texas, two are located in Alabama and
one is located in Mexico. The production of insulated wire starts with non-
insulated wire (primarily manufactured internally) and involves the following
two processes:
o Compounding Process. The Company produces PVC, polyethylene,
rubber and silicone insulation formulations from basic components
utilizing its own computerized mixing and blending systems and
utilizes purchased compounds. The Company is capable of
producing polymeric insulation compounds that meet specific
customer requirements.
o Extrusion Process. The Company insulates wire products with a
polymeric insulating compound through an extrusion process.
Extrusion involves the feeding, melting and pumping of insulating
compounds through a die to shape it into its final form on the
wire. In order to enhance the insulation properties of certain
products, certain polymeric compounds can be cross-linked
chemically after the extrusion process. The Company has
extensive chemical cross-linking capabilities.
Wire Harnesses. As of March 31, 1997, the Company had five wire harness
manufacturing facilities in the U.S., most of which are located in the Midwest
region of the nation, and two facilities located in Mexico. The manufacturing
of wire harnesses involves the following four-step process:
o Cutting and Stripping. Insulated copper wire, obtained primarily
from internal sources, is fed through cutting machines that are
programmed to cut wire to a certain length, strip the end of the
wire and attach terminals or connectors.
26
<PAGE> 29
o Splicing and Connecting. In the second process, the lengths of
wire are spliced or joined together and additional connectors
and/or terminals are attached. Splicing, like cutting and
stripping, lends itself to automation.
o Harness Assembly. Once these two preparatory stages have been
completed, the cut and spliced wires are brought to the assembly
area. Assembly boards are used to guide each employee on the
assembly line in the placement of designated wires.
o Quality Control. After assembly, each harness is tested for
continuity and analyzed by a trained inspector. Every assembly
board is equipped with 100% continuity testers that are designed
into the assembly board. These testers will pinpoint any
defective circuits for repair or rework.
COMPETITION
The Company generally competes with various suppliers in each of its
business segments. The number and size of these competitors varies depending
on the product line. Within its targeted segments, the Company competes
primarily on the basis of quality, reliability, price, reputation, customer
service and delivery time.
BACKLOG
Due to the manner in which it processes its orders, the Company has no
significant order backlog. The Company follows the industry practice of
producing its products on an ongoing basis to meet customer demand without
significant delay. Management believes the ability to supply orders in a
timely fashion is a competitive factor in its market, and therefore, attempts
to minimize order backlog to the extent practicable.
PATENTS AND TRADEMARKS
The Company has seven patents, nine registered trademarks and three
trademark applications. The Company does not believe that its competitive
position is dependent on patent protection or that its operations are dependent
on any individual patent or trademark or group of related patents or
trademarks.
EMPLOYEES
As of March 31, 1997, the Company employed approximately 7,400 full time
employees, of which approximately 3,600 were located in Mexico and 186 (all
located at the Company's plant in Rolling Prairie, Indiana) were represented by
a labor union. The Company believes that it has a good relationship with its
employees.
ENVIRONMENTAL MATTERS
The Company is subject to a number of federal, state, local and foreign
environmental laws and regulations relating to the storage, handling, use,
emission, discharge, release or disposal of materials into the environment and
the investigation and remediation of contamination associated with such
materials. These laws include, but are not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act, the Water Pollution
Control Act, the Clean Air Act and the Resource Conservation and Recovery Act,
the regulations promulgated thereunder, and any state analogs. The Company's
operations also are governed by laws and regulations relating to employee
health and safety. The Company believes that it is in material compliance with
such applicable laws and regulations and that its existing environmental
controls are adequate. Further, the Company has no current plans for
substantial capital expenditures in this area.
27
<PAGE> 30
As is the case with most manufacturers, the Company could incur costs
relating to environmental compliance, including remediation costs related to
historical hazardous materials handling and disposal practices at certain
facilities, although it does not believe that such costs would materially and
adversely affect the Company. In the past the Company has undertaken remedial
activities to address on-site soil contamination caused by historic operations.
None of these cleanups have resulted in any material liability. Currently, the
Company is involved with environmental monitoring or remediation activities at
its Camden, New York and Jordan, New York facilities.
The Company currently does not anticipate that compliance with
environmental laws or regulations or the costs to remediate the sites discussed
above will have material adverse effect on the Company's operations, financial
condition or competitive position. As mentioned above, however, the risk of
environmental liability and remediation costs is inherent in the nature of the
Company's business and, therefore, there can be no assurances that material
environmental costs, including remediation costs, will not arise in the future.
In addition, it is possible that future developments (e.g., new regulations or
stricter regulatory requirements) could result in the Company incurring
material costs to comply with applicable environmental laws and regulations.
PROPERTIES
The Company uses owned or leased properties as manufacturing facilities,
warehouses and offices throughout the United States and Mexico. The Company's
principal executive offices are located in St. Louis, Missouri. The Company
considers its plants and equipment to be modern and well-maintained and
providing adequate production capacity to meet expected demand for its
products. All of the Company's owned properties are pledged to secure the
Company's indebtedness under the Credit Agreement.
28
<PAGE> 31
Listed below are the principal manufacturing and distribution facilities
operated by the Company as of March 31, 1997:
<TABLE>
<CAPTION>
LOCATION SQUARE FEET OWNED/LEASED PRIMARY PRODUCTS/END USE
-------------------------- ------------ ------------ ----------------------------------------------------
<S> <C> <C> <C>
NON-INSULATED WIRE
Camden, NY . . . . . . . 450,000 Owned Single End, Bunched, Stranded, Cabled and
Electroplated Wire
Williamstown, NY . . . . 210,000 Owned Single End, Bunched, Stranded and Cabled Wire
Bremen, IN . . . . . . . 175,000 Owned Bunched Wire
Camden, NY . . . . . . . 150,000 Leased Single End, Bunched, Stranded and Cabled Wire
Pine Bluff, AR . . . . . 130,000 Owned Single End, Bunched, Stranded and Cabled Wire
Jordan, NY . . . . . . . 120,000 Leased Single End, Bunched, Stranded, Shielding and Cabled
Wire
Cazenovia, NY . . . . . . 60,000 Owned Braided Wire
El Paso, TX . . . . . . . 57,000 Owned Bunched Wire
Elk Grove Village, IL . . 23,000 Leased Distribution
Pine Bluff, AR . . . . . 20,000 Owned Shielding, Fine Pigtail and Braided Wire
Salisbury, NC . . . . . . 20,000 Leased Distribution
Cerritos, CA . . . . . . 19,000 Leased Distribution
INSULATED WIRE
Rolling Prairie, IN . . . 200,000 Owned Automotive and Appliance
Avilla, IN . . . . . . . 119,000 Owned Appliance
Elkmont, AL . . . . . . . 115,000 Owned Automotive
Corunna, IN . . . . . . . 72,000 Owned Appliance
El Paso, TX . . . . . . . 72,000 Owned Automotive
El Paso, TX . . . . . . . 70,000 Leased Automotive
Kendallville, IN . . . . 61,000 Leased Appliance and Automotive
El Paso, TX . . . . . . . 60,000 Owned Automotive
Corunna, IN . . . . . . . 58,000 Owned Appliance
Ardmore, AL . . . . . . . 45,000 Owned Automotive
Nogales, Mexico . . . . . 42,000 Leased Automotive
Albion, IN . . . . . . . 39,000 Owned Appliance and Automotive
El Paso, TX . . . . . . . 28,000 Leased Automotive
WIRE HARNESSES
Chihuahua, Mexico . . . . 195,000 Owned Dishwashers, Laundry and Ranges
Juarez, Mexico . . . . . 145,000 Leased Refrigerators, Dishwashers and Ranges
Bucyrus, OH . . . . . . . 47,000 Leased Truck Trailers and Farm Machinery
Mishawaka, IN . . . . . . 38,000 Owned Water Inlet Hoses
Manning, IA . . . . . . . 33,000 Owned Laundry
Mishawaka, IN . . . . . . 29,000 Owned Refrigerators, Dishwashers and Laundry
Erin, TN . . . . . . . . 25,000 Owned Laundry, Ranges and Microwave
</TABLE>
The leases on the Company's Camden, New York and Jordan, New York
facilities have remaining terms of approximately 15 years. The Company has an
option to renew each of these leases for two terms of five years each or to
purchase the facilities at their respective fair values or 90% of their
respective fair values, depending on the time of exercise of the option to
purchase. The lease on the Company's Nogales, Mexico facility has a remaining
term of approximately three years. The lease on the Company's Juarez, Mexico
facility has a remaining term of approximately six years. The leases on the
Company's Kendallville, Indiana and El Paso, Texas facilities have remaining
terms of approximately two years. The lease on the Company's Bucyrus, Ohio
29
<PAGE> 32
facility expires in November 1997. The leases on the Company's distribution
facilities in Elk Grove Village, Illinois, Salisbury, North Carolina and
Cerritos, California have remaining terms of approximately two, four and three
years, respectively.
The Company believes its facilities are suitable for their present and
intended purposes and adequate for the Company's current level of operations.
LEGAL PROCEEDINGS
The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operations of the Company. In the opinion of the Company's management, such
proceedings and actions should not, individually or in the aggregate, have a
material adverse effect on the Company's results of operations or financial
condition.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
Set forth below are the names and positions of the directors and
executive officers of Holding and the Company. All directors hold office until
the next annual meeting of stockholders of Holding and the Company, and until
their successors are duly elected and qualified. All officers serve at the
pleasure of the Board of Directors.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
James N. Mills . . . . . . . . . . . . . . 59 Chairman of the Board and Chief Executive Officer of
Holding and the Company
Thomas P. Danis . . . . . . . . . . . . . . 50 Director of Holding and the Company
Jack D. Furst . . . . . . . . . . . . . . . 39 Director of Holding and the Company
John A. Gavin . . . . . . . . . . . . . . . 65 Director of Holding and the Company
Charles W. Tate . . . . . . . . . . . . . . 52 Director of Holding and the Company
Richard W. Vieser . . . . . . . . . . . . . 69 Director of Holding and the Company
Joseph M. Fiamingo . . . . . . . . . . . . 47 Director, President and Chief Operating Officer of
Holding and the Company
Rodney D. Kent . . . . . . . . . . . . . . 49 Director of Holding and the Company, President and Chief
Executive Officer of Omega
Robert C. Kozlowski . . . . . . . . . . . . 49 President - Wire Technologies, Inc.
James J. Mills . . . . . . . . . . . . . . 34 President - Wire Harness Industries, Inc.
David M. Sindelar . . . . . . . . . . . . . 39 Senior Vice President and Chief Financial Officer of
Holding, Senior Vice President of the Company
Larry S. Bacon . . . . . . . . . . . . . . 50 Senior Vice President - Human Resources of Holding and
the Company
W. Thomas McGhee . . . . . . . . . . . . . 61 Secretary and General Counsel of Holding and the Company
Glenn J. Holler . . . . . . . . . . . . . . 49 Vice President - Finance of the Company
Thomas B. Falcofsky . . . . . . . . . . . . 52 Vice President - Purchasing and Logistics of the Company
</TABLE>
James N. Mills is Chairman of the Board and Chief Executive Officer of
Holding and the Company and has held such positions since April 1995. Mr.
Mills serves as Chairman of the Board, President and Chief Executive Officer of
Mills & Partners. Mr. Mills is also Chairman of the Board and Chief Executive
Officer of Berg Electronics Corp., Chairman of the Board of Berg Electronics
Group, Inc., Chairman of the Board and Chief Executive Officer of Crain
Holdings Corp., Crain Industries, Inc., Viasystems Group, Inc. and Copy USA
30
<PAGE> 33
Holdings Corp. Mr. Mills was Chairman of the Board and Chief Executive Officer
of Jackson Holding Company and Jackson Products, Inc. from February 1993
through August 1995. Mr. Mills was Chairman of the Board and Chief Executive
Officer of Thermadyne Holdings Corporation from February 1989 through February
1995 and Chairman of the Board and Chief Executive Officer of Thermadyne
Industries, Inc. from 1987 to 1995. Mr. Mills was Executive Vice President of
McGraw-Edison Company, a company engaged in the electronic, industrial,
commercial and automotive industries, from 1978 to 1985, and served as
Industrial Group President and President of the Bussmann Division of the
McGraw-Edison Company from 1980 to 1984. Mr. Mills also serves as a director
of Hat Brands Holding Corporation.
Thomas P. Danis is a director of Holding and the Company and has held
such positions since June 1995. Mr. Danis has been Chairman of the Board of
AON Risk Services of Missouri, Inc., a company engaged in the insurance
brokerage business, since 1993. In 1979, Mr. Danis co-founded an insurance
brokerage firm, a joint venture with Corroon & Black, which was ultimately
purchased by Corroon & Black in 1984. Mr. Danis also serves as a director of
Commerce Bank, N.A.
Jack D. Furst is a director of Holding and the Company and has held such
positions since April 1995. Mr. Furst is a Managing Director and Principal of
Hicks, Muse and has held such position since 1989. Mr. Furst has
approximately 15 years of experience in merchant and investment banking. At
Hicks, Muse, Mr. Furst is involved in all aspects of its business and has been
actively involved in originating, structuring and monitoring of investments.
Mr. Furst is primarily responsible for managing the relationship with Mills &
Partners. Prior to joining Hicks, Muse, Mr. Furst was a vice president and
subsequently a partner of Hicks & Haas Incorporated from 1987 to May 1989.
From 1984 to 1986, Mr. Furst was a merger and acquisition/corporate finance
specialist for The First Boston Corporation in New York. Before joining First
Boston, Mr. Furst was a financial consultant at Price Waterhouse. Mr. Furst
serves on the board of directors of Neodata Corporation, Desa International,
Crain Industries and Cooperative Computing, Inc.
John A. Gavin is a director of Holding and the Company and has held such
positions since June 1995. Mr. Gavin is the founder and Chairman of the Board
of Gamma Services, an international venture capital and consulting firm
established in 1968, and is the Managing Director of Hicks, Muse, Tate & Furst
(Latin America), Incorporated and has held such position since 1996. From 1987
to 1990, Mr. Gavin was President of Univisa Satellite Communications, a part of
a Spanish-speaking broadcast network. Prior thereto, Mr. Gavin served as a
Vice President of Atlantic Richfield Company from 1986. From 1981 to 1986, Mr.
Gavin served as the United States Ambassador to Mexico. Mr. Gavin also serves
as a director of Atlantic Richfield Company, Dresser Industries, Inc.,
Pinkerton's Inc., and the Hotchkis and Wiley Funds.
Charles W. Tate is a director of Holding and the Company and has held
such positions since April 1995. Mr. Tate is a Managing Director and Principal
of Hicks, Muse. Before joining Hicks, Muse in 1991, Mr. Tate had over 19 years
of experience in investment and merchant banking with Morgan Stanley & Co.
Incorporated, including ten years in the mergers and acquisitions department
and the last two and one-half years as a managing director in Morgan Stanley's
merchant banking group. Mr. Tate serves as a director of The Morningstar Group
Inc., DESA Holdings Corporation, Hat Brands Holding Corporation, Berg
Electronics Corp., International Home Foods, Inc., Seguros Comercial America
S.A. de C.V., and Vidrio Formas S.A. de C.V. He also served as a director of
Berg Electronics Group, Inc. until August 1996 and Jackson Holding Company
until August 1995.
Richard W. Vieser is a director of Holding and the Company and has held
such positions since September 1995. Mr. Vieser is the retired Chairman of the
Board, Chief Executive Officer and President of Lear Siegler, Inc. (a
diversified manufacturing company), the former Chairman of the Board and Chief
Executive Officer of FL Industries, Inc. and FL Aerospace (formerly Midland-
Ross Corporation), also diversified manufacturing companies, and the former
President and Chief Operating Officer of McGraw-Edison Co. He is also a
director of Berg Electronics Corp., Ceridian Corporation (formerly Control Data
Corporation), Dresser Industries, Inc.,
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<PAGE> 34
INDRESCO Inc., Sybron International Corporation and Varian Associates, Inc. He
also served as a director of Berg Electronics Group, Inc. until August 1996.
Rodney D. Kent is a director of Holding and the Company and has held
such positions since April 1995. Mr. Kent also serves as President and Chief
Executive Officer of Omega and has held such position since 1983. Mr. Kent
served as Assistant to the President of Omega from 1974 to 1983. Prior to
joining Omega, Mr. Kent was employed with Flexo Wire from 1973 to 1974 and
Camden Wire Company from 1970 to 1973. Mr. Kent also serves as a director of
Oneida Savings Bank.
Joseph M. Fiamingo is a director of Holding and the Company and has held
such positions since October 1996. Mr. Fiamingo also serves as President and
Chief Operating Officer of Holding and the Company and has held such positions
since September 1996. Previously, Mr. Fiamingo held the position of Vice
President of Operations and Technology of the Company from June 1996 and
President and Chief Operating Officer of Wirekraft from October 1995. Prior
thereto, Mr. Fiamingo was employed by General Cable Corporation from 1972 to
1995 where he held various senior management level positions including
President and Vice President and General Manager of several divisions of
General Cable and most recently, Executive Vice President of Operations.
Robert Kozlowski is President of Wire Technologies and has held such
position since March 1996. Prior thereto, Mr. Kozlowski held various senior
management level positions with the Group Dekko companies from 1983.
Previously, Mr. Kozlowski spent ten years in the wire industry serving in
various positions with Wyre Wynd and Laribee Wire.
James J. Mills is President of Wire Harness Industries, Inc., a wholly-
owned subsidiary of the Company, and has held such position since December 1996.
Prior thereto, Mr. Mills served in various capacities at Clarke Holding
Corporation, including Vice President of Sales and Marketing. Mr. Mills is the
son of Mr. James N. Mills.
David M. Sindelar is Senior Vice President and Chief Financial Officer
of Holding and Senior Vice President of the Company and has held such positions
since April 1995. Mr. Sindelar is also Senior Vice President and Chief
Financial Officer of Mills & Partners, Berg Electronics Corp., Crain
Industries, Inc. and Crain Holdings Corp., Viasystems Group, Inc., Copy USA
Holding Corp. and Senior Vice President of Berg Electronics Group, Inc. Mr.
Sindelar was Senior Vice President and Chief Financial Officer of Jackson
Holding Company from February 1993 through August 1995. From 1987 to February
1995, Mr. Sindelar held various other positions at Thermadyne Holdings
Corporation including Senior Vice President and Chief Financial Officer, Vice
President -- Corporate Controller and Controller.
Larry S. Bacon is Senior Vice President - Human Resources of Holding and
the Company and has held such positions since April 1995. Mr. Bacon is also
Senior Vice President -- Human Resources of Mills & Partners, Berg
Electronics Corp., Berg Electronics Group, Inc., Crain Industries, Inc., Crain
Holdings Corp., Viasystems Group, Inc., and Copy USA Holding Corp. Mr. Bacon
was Senior Vice President -- Human Resources of Jackson Holding Company from
February 1993 through August 1995. Previously, Mr. Bacon was Senior Vice
President -- Human Resources of Thermadyne Holdings Corporation from September
1987 until February 1995.
W. Thomas McGhee is Secretary and General Counsel of Holding and the
Company and has held such positions since April 1995. Mr. McGhee is also a
partner in the law firm of Herzog, Crebs and McGhee and has held that position
since 1987. In addition, Mr. McGhee serves as Secretary and General Counsel of
Berg Electronics Corp., Berg Electronics Group, Inc., Crain Industries, Inc.,
Crain Holdings Corp., Viasystems Group, Inc. and Copy USA Holding Corp.
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<PAGE> 35
Glenn J. Holler is Vice President-Finance of the Company and has held
such position since August 1996. Prior to joining the Company, Mr. Holler was
employed by Vigoro Industries, Inc. as Vice President, Finance from 1994 to
1996 and Moog Automotive, Inc. as Senior Vice President, Finance from 1983 to
1994.
Thomas B. Falcofsky is Vice President-Purchasing and Logistics of the
Company and has held such position since November 1995. Previously, Mr.
Falcofsky was employed by General Cable Corporation as Corporate Vice
President, Purchasing and Transportation from 1992 to November 1995. Prior
thereto, Mr. Falcofsky was employed by Carol Cable Corporation as Vice
President -- Purchasing from 1989 to 1992.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation decisions are made by the Board of Directors. James N.
Mills served as both an executive officer and director during 1996 and is
expected to serve in such capacities in 1997.
COMPENSATION OF DIRECTORS
Directors who are officers, employees or otherwise an affiliate of
Holding or the Company receive no compensation for their services as directors.
Each director of Holding and the Company who is not also an officer, employee
or an affiliate of Holding or the Company (an "Outside Director") receives an
annual retainer of $12,000 and a fee of $1,000 for each meeting of the board of
directors at which the director is present. Directors of Holding and the
Company are entitled to reimbursement of their reasonable out-of-pocket
expenses in connection with their travel to and attendance at meetings of the
board of directors or committees thereof.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the cash and noncash compensation earned
by the Chief Executive Officer, the four other most highly compensated
executive officers of Holding and the Company and a former executive officer of
the Company. Such compensation was paid by or on behalf of Wirekraft and Omega
during the year ended December 31, 1994 and the first five months of 1995 and
was paid by or on behalf of the Company during the remaining seven months of
1995, and during the year ended December 31, 1996. As of the date hereof, the
Company has not granted any stock appreciation rights.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL COMPENSATION(1) ------------
---------------------- SECURITIES ALL OTHER
YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)
---- --------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
James N. Mills . . . . . . . . . . . . . . 1996 485,281 548,000 412,188(2) --
Chairman of the Board and Chief 1995 250,000 97,500 988,725(2) --
Executive Officer of Holding 1994 186,425 150,000 -- --
Joseph M. Fiamingo . . . . . . . . . . . . 1996 202,166 123,337 600,000(3) --
President and Chief Operating Officer of 1995 32,685 8,500 400,000(3) --
Holding and the Company 1994 -- -- -- --
Rodney D. Kent . . . . . . . . . . . . . . 1996 323,911 193,714 -- 142,289(4)
President and Chief Executive Officer of 1995 285,479 70,000 400,000(3) 129,766(4)
Omega 1994 240,419 2,340 -- 124,072(4)
Robert C. Kozlowski . . . . . . . . . . . . 1996 194,609 98,066 400,000(3) --
President - Wire Technologies 1995 -- -- -- --
1994 -- -- -- --
David M. Sindelar . . . . . . . . . . . . . 1996 201,422 121,000 309,143(2) --
Senior Vice President and Chief 1995 108,833 48,000 741,547(2) --
Financial Officer of Holding, 1994 26,234 25,000 -- --
Senior Vice President
of the Company
William J. Kriss (5) . . . . . . . . . . . 1996 368,956 -- -- --
President and Chief Operating Officer of 1995 312,330 100,000 1,000,000(3) --
Holding and the Company 1994 -- -- -- --
</TABLE>
- ----------------
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<PAGE> 36
(1) Holding and the Company provide to certain executive officers, a car
allowance, reimbursement for club memberships, insurance policies and
certain other benefits. The aggregate incremental cost of these
benefits to Holding and the Company for each officer do not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported
for each officer.
(2) Reflects Performance Options (as hereinafter defined) granted by
Holding. For a description of the material terms of such options, See
"Management -- Benefit Plans -- Performance Options."
(3) Reflects options to purchase Holding Common Stock granted under the
Option Plan (as hereinafter defined). The options vest in five equal
annual installments commencing on the first anniversary date of the
grant, subject to acceleration under certain circumstances, including a
Change of Control (as defined in the Option Plan).
(4) Represents (i) $45,792, $43,347 and $43,347 in premiums paid on life
insurance policies for the benefit of Mr. Kent in 1996, 1995 and 1994
respectively and (ii) $51,797, $41,536 and $42,300 in annual deferred
compensation and $44,700, $44,883 and $38,425 in annual interest
accruals thereon earned by Mr. Kent in 1996 and 1995 respectively,
pursuant to his employment agreement.
(5) As of September 25, 1996, Mr. Kriss resigned as President and Chief
Operating Officer of Holding and the Company.
OPTION GRANTS IN LAST FISCAL YEAR
The following table summarizes option grants made during fiscal 1996 to the
executive officers named above.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF STOCK
NUMBER OF OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO OPTION TERM (1)
UNDERLYING EMPLOYEES IN EXERCISE EXPIRATION -----------------------
NAME OPTIONS(#) FISCAL YEAR PRICE($/SHARE) DATE 5%($) 10%($)
- ------------------------------ ------------ ------------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
James N. Mills . . . . . . . 412,188(2) 11.8% $1.00(3) 03/05/06 0(4) 0(4)
Joseph M. Fiamingo . . . . . 600,000(5) 17.1% $1.00 11/08/06 378,000 954,000
Rodney D. Kent . . . . . . . -- -- -- -- -- --
Robert C. Kozlowski . . . . . 400,000(5) 11.4% $1.00 03/05/06 252,000 636,000
David M. Sindelar . . . . . . 309,143(2) 8.8% $1.00(3) 03/05/06 0(4) 0(4)
William J. Kriss . . . . . . -- -- -- -- -- --
</TABLE>
- ----------------
(1) The potential realizable value portion of the foregoing table
illustrates the value that might be realized upon exercise of the option
immediately prior to the expiration of its term, assuming the specified
compound rates of appreciation of Holding Common Stock over the term of
the options. These amounts represent certain assumed rates of
appreciation only. Actual gains on the exercise of options are
dependent on the future performance of Holding Common Stock. There can
be no assurance that the potential values reflected in this table will
be achieved. All amounts have been rounded to the nearest whole dollar
amount.
(2) Reflects Performance Options granted by Holding. For a description of
the material terms of such options, see "Management -- Benefit Plans --
Performance Options."
(3) The exercise price for the Performance Options is initially equal to
$1.00 per share and, effective each anniversary date of the grant date,
the per share exercise price for the Performance Options is equal to the
per share exercise price for the prior year multiplied by 1.09.
(4) The Performance Options are exercisable only in the event that Hicks,
Muse, Tate & Furst Equity Fund II, L.P. ("HM Fund II") realizes a 35%
overall rate of return, compounded annually, on its equity funds
invested in Holding. Accordingly, there is no potential realizable
value to the Performance Options at compound appreciation rates of 5%
and 10%.
(5) Reflects options to purchase Holding Common Stock granted under the
Option Plan. The options vest in five equal annual installments
commencing on the first anniversary date of
34
<PAGE> 37
the grant, subject to acceleration under certain circumstances,
including a Change of Control (as defined in the Option Plan).
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
The following table summarizes the number of options exercised during
fiscal 1996 and the value of unexercised options as of December 31, 1996. The
per share fair market value of the Holding Common Stock used to make the
calculations in the following table is $1.00, which is the per share price at
which Holding Common Stock was sold in connection with the Wirekraft/Omega
Acquisitions and the DWT Acquisition. Accordingly, the table indicates that
the options had no value at the end of 1996 because the exercise price was
equal to such fair market value.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FISCAL YEAR END AT FISCAL YEAR END
ACQUIRED VALUE ----------------------------- -------------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- ---------- ------------ -------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James N. Mills . . . . . . 0 0 0 1,400,913 0 0
Joseph M. Fiamingo . . . . 0 0 80,000 920,000 0 0
Rodney D. Kent . . . . . . 0 0 80,000 320,000 0 0
Robert C. Kozlowski . . . . 0 0 0 400,000 0 0
David M. Sindelar . . . . . 0 0 0 1,050,690 0 0
William J. Kriss . . . . . 0 0 0 0 0 0
</TABLE>
EMPLOYMENT AGREEMENTS
James N. Mills Employment Agreement. Mr. James N. Mills entered into an
employment agreement with Holding and the Company on June 12, 1995. Pursuant
to such employment agreement, Mr. Mills will serve as the Chairman of the Board
and Chief Executive Officer of Holding and the Company through June 11, 2000.
Mr. Mills is required to devote such business time and attention to the
transaction of the Company's business as is reasonably necessary to discharge
his duties under the employment agreement. Subject to the foregoing limitation
on his activities, Mr. Mills is free to participate in other business
endeavors.
The compensation provided to Mr. Mills under his employment agreement
includes an annual base salary of not less than $300,000, subject to adjustment
at the sole discretion of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and the Company for as
long as the employment agreement is in force. In addition, Mr. Mills is
entitled to an annual bonus in an amount to be determined at the sole
discretion of the Board of Directors of Holding.
Mr. Mills' employment agreement also provides that if Mr. Mills'
employment is terminated without cause, Mr. Mills will continue to receive his
then current salary for the longer of the remainder of the employment period or
18 months following such termination. In addition, Mr. Mills' employment
agreement provides that if Mr. Mills is terminated due to death or disability,
Mr. Mills' estate, heirs, or beneficiaries, as applicable, will receive, in
addition to any other benefits provided under any benefit plan, his then
current salary for a period of 18 months from the date of termination.
Joseph M. Fiamingo Employment Agreement. Mr. Joseph M. Fiamingo entered
into an employment agreement with Holding and the Company on September 25,
1996. Pursuant to such employment agreement, Mr. Fiamingo will serve as
President and Chief Operating Officer of Holding and the Company through
September 24, 1999.
35
<PAGE> 38
The compensation provided to Mr. Fiamingo under his employment agreement
includes an annual base salary of not less than $260,000, subject to adjustment
at the sole direction of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and the Company for as
long as the employment agreement is in force. In addition, Mr. Fiamingo is
entitled to an annual bonus in an amount to be determined by the Chairman of
the Board of Holding of up to sixty-five percent of his base compensation.
Mr. Fiamingo's employment agreement also provides that if Mr. Fiamingo's
employment is terminated without cause, Mr. Fiamingo will continue to receive
his then current salary for the remainder of such employment agreement. In
addition, Mr. Fiamingo's employment agreement provides that if Mr. Fiamingo is
terminated due to death or disability, Mr. Fiamingo's estate, heirs, or
beneficiaries, as applicable, will receive, in addition to any other benefits
provided under any benefit plan, his then current salary for a period of 12
months from the date of termination.
Rodney D. Kent Employment Agreement. Mr. Kent entered into an
employment agreement with Omega on March 14, 1995. Pursuant to such employment
agreement, Mr. Kent will serve as President and Chief Executive Officer of
Omega through March 28, 1998. Mr. Kent is required to devote substantially all
of his business time and attention to the performance of his duties under the
employment agreement.
The compensation provided to Mr. Kent under his employment agreement
includes an annual base salary of not less than $286,000 for the period ended
March 31, 1996, not less than $302,000 for the period ended March 31, 1997, and
not less than $325,000 thereafter, subject to increase at the sole discretion
of the Board of Directors of Omega, and certain other benefits for as long as
the employment agreement is in force. In addition, during each year of
employment, an additional 15% of the annual base salary is credited to a
deferred compensation account for the benefit of Mr. Kent, which deferred
compensation account is annually credited with an interest accrual of 8% on the
balance of the account for the prior year. Further, Mr. Kent is entitled to an
annual bonus in an amount to be determined at the sole discretion of the
Chairman of the Board of Holding of up to sixty-five percent of his annual base
salary.
Mr. Kent's employment agreement also provides that if Mr. Kent's
employment is terminated without cause or due to disability or death, Mr. Kent
or his estate, heirs or beneficiaries, as applicable, will receive, in addition
to any other benefits provided him or them under any benefit plan, Mr. Kent's
then current salary for a period of 24 months from Mr. Kent's termination
without cause or his disability or death. In the event that Mr. Kent terminates
his employment and receives a bona fide offer of employment from a competitor of
the Company, Mr. Kent will receive, in addition to any other benefits provided
under any benefit plan, Mr. Kent's then current salary for a period of 24 months
from such termination, but only in the event that Omega elects to enforce
certain non-competition provisions of the employment agreement.
Robert C. Kozlowski Employment Agreement. Mr. Robert C. Kozlowski
entered into an employment agreement with Holding and the Company on March 5,
1996. Pursuant to such employment agreement, Mr. Kozlowski will serve as
President of Wire Technologies through March 4, 1999.
The compensation provided to Mr. Kozlowski under his employment agreement
includes an annual base salary of not less than $190,000, subject to adjustment
at the discretion of the Chief Executive Officer of Holding and the Company, and
such benefits as are customarily accorded the executives of Holding and the
Company for as long as the employment agreement is in force. In addition, Mr.
Kozlowski is entitled to an annual bonus in an amount to be determined by the
Chief Executive Officer.
Mr. Kozlowski's employment agreement also provides that if Mr.
Kozlowski's employment is terminated without cause, Mr. Kozlowski will continue
to receive his then current salary for the remainder of such employment
agreement or 12 months, which ever is shorter. In addition, Mr. Kozlowski's
employment agreement provides that if Mr. Kozlowski is terminated due to death
or disability, Mr. Kozlowski's estate, heirs, or
36
<PAGE> 39
beneficiaries, as applicable, will receive, in addition to any other benefits
provided under any benefit plan his then current salary for a period of 12
months from the date of termination.
David M. Sindelar Employment Agreement. Mr. David M. Sindelar entered
into an employment agreement with Holding and the Company on June 12, 1995.
Pursuant to such employment agreement, Mr. Sindelar will serve as the Senior
Vice President and Chief Financial Officer of Holding and Senior Vice President
of the Company through June 11, 2000. Mr. Sindelar is required to devote such
business time and attention to the transaction of the Company's business as is
reasonably necessary to discharge his duties under the employment agreement.
Subject to the foregoing limitation on his activities, Mr. Sindelar is free to
participate in other business endeavors.
The compensation provided to Mr. Sindelar under his employment agreement
includes an annual base salary of not less than $150,000, subject to adjustment
at the sole discretion of the Board of Directors of Holding, and such benefits
as are customarily accorded the executives of Holding and Senior Vice President
of the Company for as long as the employment agreement is in force. In
addition, Mr. Sindelar is entitled to an annual bonus in an amount to be
determined by the Chairman of the Board of Holding of up to sixty-five percent
of his base compensation.
Mr. Sindelar's employment agreement also provides that if Mr. Sindelar's
employment is terminated without cause, Mr. Sindelar will continue to receive
his then current salary for the longer of the remainder of the employment
period or 18 months following such termination. In addition, Mr. Sindelar's
employment agreement provides that if Mr. Sindelar is terminated due to death
or disability, Mr. Sindelar's estate, heirs, or beneficiaries, as applicable,
will receive, in addition to any other benefits provided under any benefit
plan, his then current salary for a period of 18 months from the date of
termination.
William J. Kriss Employment Agreement. Mr. William J. Kriss entered
into an employment agreement with Wirekraft on February 6, 1995. Mr. Kriss
resigned as of September 25, 1996, but will continue to receive an annual base
salary of $300,000 pursuant to the terms of such agreement, until February 6,
1998.
BENEFIT PLANS
Stock Option Plan
Holding's qualified and non-qualified stock option plan (the "Option
Plan") provides for the granting of up to 4,795,322 shares of Common Stock, par
value $.01 per share, of Holding ("Holding Common Stock") to officers and key
employees of Holding and the Company. Under the Option Plan, Holding has
granted options to purchase 4,565,249 shares of Holding Common Stock, 3,550,000
at $1.00 per share, 65,249 at $1.625 per share and 950,000 at $1.40 per share,
the fair market value of Holding Common Stock at the date of grant as determined
by the Board of Directors of Holding. Such options vest ratably over a five
year period commencing on the first anniversary date after the date of grant,
subject to acceleration in the discretion of the committee appointed to
administer the Option Plan in the event of a Change of Control (as defined in
the Option Plan). Generally, an option may be exercised only if the holder is an
officer or employee of Holding or the Company at the time of exercise. Options
granted under the Option Plan are not transferable, except by will and the laws
of descent and distribution. Except as expressly provided otherwise in any
optionee's agreement relating to the grant of options under the Option Plan, in
the event an optionee's employment with Holding, the Company or a related entity
terminates at any time, Holding or its designees shall have the right to
repurchase from the optionee (or optionee's representatives) (i) the number of
shares of Holding Common Stock acquired upon exercise of an option and (ii) the
optionee's right to acquire that number of shares of Holding Common Stock which
an optionee can acquire upon exercise immediately prior to such repurchase. The
purchase price to be paid is calculated on the basis of the fair market value
(as defined in the Option Plan) of Holding Common Stock multiplied by the number
of shares of Holding Common Stock to be acquired (less the aggregate
37
<PAGE> 40
exercise price in the event such repurchase option is exercised by Holding with
respect to the optionee's right to acquire Holding Common Stock).
Performance Options
On March 31, 1995, Omega granted options (the "Performance Options") to
purchase 1,958,762 shares of common stock of Omega ("Omega Common Stock"). Mr.
Mills was granted Performance Options to purchase 652,921 shares of Omega
Common Stock, and Performance Options to purchase the remaining 1,305,841
shares of Omega Common Stock were granted to certain officers of Omega who are
also affiliated with Mills & Partners. In connection with the Wirekraft/Omega
Acquisitions and pursuant to the terms of the option agreements (the
"Performance Option Agreements") related to the Performance Options, the
Performance Options became options to purchase an identical number of shares of
Holding Common Stock.
On June 12, 1995, the Company granted Performance Options to purchase
1,007,416 shares of Holding Common Stock. Mr. Mills was granted Performance
Options to purchase 335,804 shares of Holding Common Stock, and Performance
Options to purchase the remaining 671,612 shares of Holding Common Stock were
granted to certain officers of the Company who are also affiliated with Mills &
Partners.
On March 5, 1996, the Company granted Performance Options to purchase
1,236,566 shares of Holding Common Stock, Mr. Mills was granted Performance
Options to purchase 412,188 shares of Holding Common Stock, and Performance
Options to purchase the remaining 824,378 shares of Holding Common Stock were
granted to certain officers of the Company who are also affiliated with Mills &
Partners.
The Performance Options are exercisable only in the event that HM Fund
II has realized an overall rate of return of at least 35% per annum, compounded
annually, on all equity funds invested by it in Holding. Subject to the
foregoing, the Performance Options are exercisable (i) immediately prior to a
Liquidity Event (as hereinafter defined), (ii) concurrently with the
consummation of a Qualified IPO (as hereinafter defined), or (iii) on December
31, 2004 (with respect to the Performance Options granted on March 31, 1995 and
June 12, 1995) or on December 31, 2005 (with respect to the Performance Options
granted on March 5, 1996). A "Liquidity Event" generally means (i) one or more
sales or other dispositions of Holding Common Stock if, thereafter, the amount
of Holding Common Stock owned by HM Fund II is reduced by 50%, (ii) any merger,
consolidation or other business combination of Holding pursuant to which any
person or group acquires a majority of the common stock of the resulting
entity, or (iii) any sale of all or substantially all of the assets of Holding.
A "Qualified IPO" means a firm commitment underwritten public offering of
Holding Common Stock for gross proceeds of at least $25.0 million.
The exercise price for the Performance Options is initially equal to
$1.00 per share and, effective each anniversary of the grant date, the per
share exercise price for the Performance Options is equal to the per share
exercise price for the prior year multiplied by 1.09. The exercise price of
the Performance Options and the number of shares of Holding Common Stock for
which the Performance Options are exercisable is subject to adjustment in the
event of certain fundamental changes in the capital structure of Holding. The
Performance Options terminate on the tenth anniversary of the date of grant.
OUTSTANDING VOTING SECURITIES OF HOLDING
AND PRINCIPAL HOLDERS THEREOF
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the issued and outstanding shares of capital stock of the Company
are held by Holding. The following table sets forth as of March 31, 1997
certain information regarding the beneficial ownership of the voting securities
of Holding by each person who beneficially owns more than 5% of any class of
Holding voting
38
<PAGE> 41
securities and by the directors and certain executive officers of Holding,
individually, and by the directors and executive officers of Holding as a
group. The Holding Class A Common Stock votes together with the Holding Common
Stock as a single class and is entitled to one vote for each share.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED (1)
-------------------------------------------------------------------------
HOLDING CLASS A
HOLDING COMMON STOCK COMMON STOCK
--------------------------- ---------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF PERCENT OF
SHARES CLASS SHARES CLASS TOTAL
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
5% Stockholders:
HM Parties (2) . . . . . . . . . . . 117,050,000 100.0% -- -- 90.0%
c/o Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Officers and Directors:
James N. Mills (3) . . . . . . . . . 1,702,034 1.5% 13,000,000 100.0% 11.3%
Thomas P. Danis . . . . . . . . . . . 100,000 * -- -- *
Jack D. Furst (2) . . . . . . . . . . 117,050,000 100.0% -- -- 90.0%
John A. Gavin . . . . . . . . . . . . 135,957 * -- -- *
Charles W. Tate (2) . . . . . . . . . 117,050,000 100.0% -- -- 90.0%
Rodney D. Kent (4) . . . . . . . . . 5,780,000 4.9% -- -- 4.4%
Richard W. Vieser . . . . . . . . . . 135,957 * -- -- *
Joseph Fiamingo (5) . . . . . . . . . 80,000 * -- -- *
David M. Sindelar (6) . . . . . . . . -- -- 3,648,482 28.1% 2.8%
Larry S. Bacon (7) . . . . . . . . . -- -- 875,507 6.7% *
W. Thomas McGhee (8) . . . . . . . . -- -- 875,505 6.7% *
Robert C. Kozlowski (9) . . . . . . . -- -- -- -- --
William J. Kriss . . . . . . . . . . -- -- 514,124 -- *
All executive officers and directors 117,050,000 100.0% 13,000,000 100.0% 100.0%
as a group (10 persons) (10) . .
</TABLE>
____________
* Less than one percent.
(1) Holding Class A Common Stock is convertible into Holding Common Stock
(i) at the option of any holder thereof at any time, (ii) at the option
of Holding upon the occurrence of a Triggering Event (as defined below),
and (iii) mandatorily at March 31, 2005. A "Triggering Event" means any
sale of substantially all of the assets of Holding or any merger,
consolidation or other business combination of Holding in which Hicks,
Muse and its affiliates cease to own at least 50% of the resulting
entity. Each share of Holding Class A Common Stock is convertible into
a fraction of a share of Holding Common Stock equal to the quotient of
(i) the fair market value of a share of Holding Common Stock at the time
of conversion less the sum of $.99 plus imputed interest thereon at a
rate of 9% per annum, compounded annually, at the time of conversion,
divided by (ii) the fair market value of a share of Holding Common Stock
at the time of conversion. Because the fraction of a share of Holding
Common Stock into which Holding Class A Common Stock is convertible is
determinable only at the time of a conversion, shares of Holding Common
Stock are not included in the shares of Holding Common Stock
beneficially owned in the foregoing table.
(2) Includes (i) shares owned of record by HM Fund II, a limited partnership
of which the sole general partner is HM2/GP Partners, L.P., a limited
partnership of which the sole general partner is Hicks, Muse GP
Partners, L.P., a limited partnership of which the sole general partner
is Hicks, Muse, Tate & Furst Fund II Incorporated, a corporation
affiliated with Hicks, Muse; (ii) shares owned of record by
HM2/Wire/Hunt Partners, L.P., HM2/Wire/Sunwestern Partners, L.P. and
HM2/Wire/Hubbard Partners, L.P., limited partnerships of which the sole
general partner is HM2/GP Partners, L.P.; and (iii) shares owned of
record by certain individuals subject to an irrevocable proxy in favor of
Hicks, Muse. Thomas O. Hicks is a controlling stockholder of Hicks, Muse
and serves as Chairman of the Board, President, Chief Executive Officer,
Chief Operating Officer and Secretary of Hicks, Muse. Accordingly, Mr.
Hicks may be deemed to be the beneficial owner of Holding Common Stock
held by HM Fund II. John R. Muse,
39
<PAGE> 42
Charles W. Tate, Jack D. Furst, Lawrence D. Stuart, Michael J. Levitt
and Alan B. Menkes are officers, directors and minority stockholders of
Hicks, Muse and as such may be deemed to share with Mr. Hicks the power
to vote or dispose of Holding Common Stock held by HM Fund II. Each of
Messrs. Hicks, Muse, Tate, Furst, Stuart, Levitt and Menkes disclaims
the existence of a group and disclaims beneficial ownership of Holding
Common Stock not respectively owned of record by him.
(3) Includes shares of Holding Class A Common Stock held by James N. Mills
and shares of Holding Class A Common Stock that Mr. Mills has the power
to vote by proxy. Does not include 1,400,913 shares of Holding Common
Stock issuable to Mr. Mills upon the exercise of Performance Options
that are not currently exercisable. See "Management -- Benefit Plans
-- Performance Options."
(4) Includes 80,000 shares of Holding Common Stock issuable to Mr. Kent upon
exercise of options granted under the Option Plan that are currently
exercisable. Does not include 320,000 shares of Holding Common Stock
issuable to Mr. Kent upon exercise of options granted under the Option
Plan that are not currently exercisable. See "Management -- Benefit
Plans -- Option Plan."
(5) Includes 80,000 shares of Holding Common Stock issuable to Mr. Fiamingo
upon exercise of options granted under the Option Plan that are
currently exercisable. Does not include 920,000 shares of Holding
Common Stock issuable to Mr. Fiamingo upon exercise of options granted
under the option plan that are not currently exercisable. See
"Management -- Benefit Plans -- Option Plan."
(6) Does not include 1,050,690 shares of Holding Common Stock issuable to
Mr. Sindelar upon exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Performance Options."
(7) Does not include 700,457 shares of Holding Common Stock issuable to Mr.
Bacon upon exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Performance Options."
(8) Does not include 700,456 shares of Holding Common Stock issuable to Mr.
McGhee upon exercise of Performance Options that are not currently
exercisable. See "Management -- Benefit Plans -- Performance Options."
(9) Does not include 400,000 shares of Holding Common Stock issuable to Mr.
Kozlowski upon exercise of options granted under the Option Plan that are
not currently exercisable. See "Management -- Benefit Plans --
Performance Options."
(10) Includes shares of Holding Class A Common Stock which Mr. Mills has the
power to vote by proxy. Does not include 5,652,516 shares of Holding
Common Stock issuable to executive officers of Holding upon the exercise
of Performance Options and options under the Option Plan that are not
currently exercisable. See "Management -- Benefit Plans -- Performance
Options."
40
<PAGE> 43
CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS
RELATIONSHIPS WITH HICKS, MUSE
Monitoring and Oversight Agreement
On June 12, 1995, Holding and the Company entered into a ten-year
agreement (the "Monitoring and Oversight Agreement") with Hicks, Muse & Co.
Partners, L.P. ("Hicks Muse Partners"), a limited partnership of which the sole
general partner is HM Partners Inc., a corporation affiliated with Hicks, Muse,
pursuant to which they pay an annual fee of $500,000 for oversight and
monitoring services to Holding and the Company. The annual fee is adjustable
at the end of each fiscal year to an amount equal to 0.1% of the consolidated
net sales of the Company, but in no event less than $500,000. Hicks Muse
Partners also will be entitled to receive a fee equal to 1.5% of the
transaction value (as hereinafter defined) for each add-on transaction (as
hereinafter defined) in which the Company is involved. The term "transaction
value" means the total value of any add-on transaction, including, without
limitation, the aggregate amount of the funds required to complete the add-on
transaction (excluding any fees payable pursuant to the Monitoring and
Oversight Agreement and any fees, if any, paid to any other person or entity
for financial advisory, investment banking, brokerage, or any other similar
services rendered in connection with such add-on transaction) including the
amount of any indebtedness, preferred stock or similar items assumed (or
remaining outstanding). The term "add-on transaction" means any future
proposal for a tender offer, acquisition, sale, merger, exchange offer,
recapitalization, restructuring, or other similar transaction directly or
indirectly involving Holding, the Company, or any of their respective
subsidiaries and any other person or entity. On March 5, 1996, in connection
with the DWT Acquisition, Holding and the company paid Hicks Muse Partners a
cash financial advisory fee of approximately $2.5 million as compensation for
its services as financial advisor. On February 12, 1997, in connection with
the Camden Acquisition, Holding and the Company paid Hicks Muse Partners a cash
financial advisory fee of approximately $900,000 as compensation for its
services as financial advisor.
Messrs. Tate and Furst, directors of Holding and the Company, are each
principals of Hicks Muse Partners. In addition, Holding and the Company have
agreed to indemnify Hicks Muse Partners, its affiliates and shareholders, and
their respective directors, officers, agents, employees and affiliates from and
against all claims, actions, proceedings, demands, liabilities, damages,
judgments, assessments, losses and costs, including fees and expenses, arising
out of or in connection with the services rendered by Hicks Muse Partners in
connection with the Monitoring and Oversight Agreement.
The Monitoring and Oversight Agreement makes available the resources of
Hicks Muse Partners concerning a variety of financial and operational matters.
The services that have been and will continue to be provided by Hicks Muse
Partners could not otherwise be obtained by Holding and the Company without the
addition of personnel or the engagement of outside professional advisors. In
management's opinion, the fees provided for under this agreement reasonably
reflect the benefits received and to be received by Holding and the Company.
Stockholders Agreement
Each investor in any class of common stock of Holding has entered into a
stockholders agreement (the "Stockholders Agreement"). The Stockholders
Agreement, among other things, grants preemptive rights and certain
registration rights to the parties thereto and contains provisions requiring
the parties thereto to sell their shares of common stock in connection with
certain sales of Holding Common Stock by Hicks, Muse ("drag-along rights") and
granting the parties thereto the right to include a portion of their shares of
common stock in certain sales in which Hicks, Muse does not exercise its drag-
along rights ("tag-along rights"). In addition, the Stockholders Agreement
contains an irrevocable proxy pursuant to which all parties to the Stockholders
Agreement
41
<PAGE> 44
grant to Hicks, Muse the power to vote all shares of Holding Common Stock held
by such parties. The Stockholders Agreement terminates on its tenth
anniversary date, although the preemptive rights, drag-along rights and tag-
along rights contained therein terminate earlier upon the consummation of a
firm commitment underwritten public offering of Holding Common Stock.
DESCRIPTION OF SENIOR BANK FACILITY
The description set forth below does not purport to be complete and is
qualified in its entirety by reference to certain agreements setting forth the
principal terms and conditions of the Company's Senior Bank Facility.
Capitalized terms used but not otherwise defined in this "Description of Senior
Bank Facility" shall have the meaning to be ascribed to them in the Credit
Agreement.
The Credit Agreement provides senior secured financing of up to $428.5
million, consisting of the $111.0 million Tranche A Loan, the $115.0 million
Tranche B Loan, the $127.5 million Tranche C Loan and the $75.0 million
Revolver.
The Tranche A Loan amortizes quarterly over five years, the Tranche B
Loan amortizes quarterly over seven years and the Tranche C Loan amortizes
quarterly over eight years. Optional prepayments under the Term Facility will
be allocated among the loans made thereunder as the Company may elect (other
than certain installments of the Tranche B Loan and the Tranche C Loan) in
connection with the first $10 million of such prepayments, and any amount of
such optional prepayments in excess of $10 million and any mandatory
prepayments will be allocated, on a pro rata basis, among the Tranche A Loan,
the Tranche B Loan and the Tranche C Loan and thereafter applied in accordance
with the then remaining number of scheduled principal installments of the
Tranche A Loan, the Tranche B Loan and the Tranche C Loan, respectively.
The Company is obligated to make principal payments in respect of the
Term Facility of $20.3 million in 1997, $23.1 million in 1998, $28.3 million in
1999, $42.6 million in 2000, $56.6 million in 2001, $73.2 million in 2002 and
$92.4 million in 2003.
The obligations of the Company under the Senior Bank Facility are
unconditionally and irrevocably guaranteed by Holding and the Domestic
Subsidiaries (the "Guarantors"). In addition, the Senior Bank Facility is
secured by first priority or equivalent security interests in all capital stock
and all tangible and intangible assets of the Company and the Guarantors,
including all the capital stock of, or other equity interests in, each other
direct or indirect domestic subsidiary of the Company and 65% of the capital
stock of, or other equity interests in, each direct foreign subsidiary of the
Company or any Guarantor (to the extent permitted by applicable contractual and
legal provisions).
At the Company's election, the interest rates per annum applicable to
the loans under the Senior Bank Facility are either the Eurodollar Rate plus
2.5%, 3.0% or 3.5% based upon a formula described in the Credit Agreement or
the Alternate Base Rate plus 1.5%, 2.0% or 2.5% based upon a formula described
in the Credit Agreement. The Alternate Base Rate is the highest of Chase's
Prime Rate, the Secondary Market Rate for Certificates of Deposit plus 1.0%,
and the Federal Funds Rate plus 0.5%.
The Company pays a per annum fee equal to the interest rate margin
applicable to loans under the Revolver, which bear interest at the Eurodollar
Rate, of the average daily face amount of outstanding letters of credit under
the Revolver and a per annum fee equal to 0.5% on the undrawn portion of the
commitments in respect of the Revolver.
The Senior Bank Facility contains a number of covenants that, among
other things, restrict the ability of the Company and its subsidiaries to
dispose of assets, incur additional indebtedness, incur guarantee obligations,
repay other indebtedness or amend other debt instruments, pay dividends, create
liens on assets, enter into leases,
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<PAGE> 45
make investments, loans or advances, make acquisitions, engage in mergers or
consolidations, make capital expenditures, enter into sale and leaseback
transactions, or engage in certain transactions with subsidiaries and
affiliates and otherwise restrict corporate activities. In addition, under the
Senior Bank Facility the Company is required to comply with specified financial
ratios and tests, including minimum interest coverage and maximum leverage
ratios and a trailing four quarter minimum EBITDA test.
The Senior Bank Facility also contains provisions that prohibit any
modification of the Indenture in any manner adverse to the lenders under the
Senior Bank Facility and that limit the Company's ability to refinance the
Notes without the consent of such lenders.
DESCRIPTION OF THE 11 3/4% NOTES
The 11 3/4% Notes were issued pursuant to the 11 3/4% Indenture, which
contained terms that are identical in all material respects to the terms
contained in the Indenture, other than with respect to interest rates and
principal amounts.
DESCRIPTION OF THE NOTES
GENERAL
The Notes are issued under an Indenture, dated as of February 12, 1997,
between the Company and IBJ Schroder Bank & Trust Company, as Trustee (the
"Trustee"). The following summary of certain provisions of the Indenture and
the Notes does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Indenture (including the
definitions of certain terms therein and those terms made a part thereof by the
Trust Indenture Act of 1939, as amended) and the Notes.
Principal of, premium, if any, and interest on the Notes is payable, and
the Notes may be exchanged or transferred, at the office or agency of the
Company in the Borough of Manhattan, The City of New York (which initially
shall be the corporate trust office of the Trustee, at One State Street, New
York, New York), except that, at the option of the Company, payment of interest
may be made by check mailed to the address of the holders as such address
appears in the Note Register.
The Notes were issued in fully registered form, without coupons, in
denominations of $1,000 and any integral multiple of $1,000. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any transfer tax or
other similar governmental charge payable in connection therewith.
TERMS OF NOTES
The Notes are unsecured senior subordinated obligations of the Company,
limited to $10 million aggregate principal amount, and will mature on June 1,
2005. Each Note bears interest at a rate of 14% per annum from the most recent
date to which interest has been paid or provided for, payable semiannually on
June 1 and December 1 of each year to holders of record at the close of
business on the May 15 or November 15 immediately preceding the interest
payment date.
OPTIONAL REDEMPTION
Except as set forth below, the Notes are not redeemable at the option
of the Company prior to June 1, 2000. On and after such date, the Notes are
redeemable, at the Company's option, in whole or in part, at any time upon not
less than 30 nor more than 60 days prior notice mailed by first-class mail to
each holder's registered address, at the following redemption prices (expressed
in percentages of principal amount), plus accrued
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<PAGE> 46
and unpaid interest to the redemption date (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date):
If redeemed during the 12-month period commencing on June 1 of the years
set forth below:
<TABLE>
<CAPTION>
REDEMPTION
PERIOD PRICE
------ -------------
<S> <C>
2000 . . . . . . . . . . . . . . . . . . 105.875%
2001 . . . . . . . . . . . . . . . . . . 103.917%
2002 . . . . . . . . . . . . . . . . . . 101.958%
2003 and thereafter . . . . . . . . . . 100.000%
</TABLE>
In addition, at any time and from time to time prior to June 1, 1998,
the Company may redeem in the aggregate up to $3.0 million principal amount of
Notes with the proceeds of one or more Equity Offerings by the Company or
Holding (to the extent, in the case of Holding, that the net cash proceeds
thereof are contributed to the equity capital of the Company) so long as there
is a Public Market at the time of such redemption, at a redemption price
(expressed as a percentage of principal amount) of 110%, plus accrued and
unpaid interest, if any, to the redemption date (subject to the right of
holders of record on the relevant record date to receive interest due on the
relevant interest payment date); provided, however, that at least $5.0 million
aggregate principal amount of the Notes must remain outstanding after each such
redemption.
At any time on or prior to June 1, 2000, the Notes may also be redeemed
as a whole at the option of the Company upon the occurrence of a Change of
Control, upon not less than 30 nor more than 60 days prior notice (but in no
event more than 90 days after the occurrence of such Change of Control) mailed
by first-class mail to each holder's registered address, at a redemption price
equal to 100% of the principal amount thereof plus the Applicable Premium as
of, and accrued and unpaid interest, if any, to, the date of redemption (the
"Redemption Date") (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date).
"Applicable Premium" means, with respect to a Note at any Redemption
Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (A) the present value at such time of (1) the redemption price of
such Note at June 1, 2000 (such redemption price being described under "--
Optional Redemption") plus (2) all required interest payments due on such Note
through June 1, 2000, computed using a discount rate equal to the Treasury Rate
plus 100 basis points, over (B) the principal amount of such Note.
"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519)
which has become publicly available at least two business days prior to the
Redemption Date (or, if such Statistical Release is no longer published, any
publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to June 1, 2000; provided, however, that if the
period from the Redemption Date to June 1, 2000 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average
yields of United States Treasury securities for which such yields are given,
except that if the period from the Redemption Date to June 1, 2000 is less than
one year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
Selection. In the case of any partial redemption, selection of the
Notes for redemption will be made by the Trustee on a pro rata basis, by lot or
by such other method as the Trustee in its sole discretion shall deem to be
fair and appropriate, although no Note of $1,000 in original principal amount
or less will be redeemed in part.
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<PAGE> 47
If any Note is to be redeemed in part only, the notice of redemption relating
to such Note shall state the portion of the principal amount thereof to be
redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note.
RANKING
The payment of the principal of, premium (if any), and interest on the
Notes is subordinated in right of payment, as set forth in the Indenture, to
the payment when due of all Senior Indebtedness of the Company. However,
payment from the money or the proceeds of U.S. Government Obligations held in
any defeasance trust described under "Defeasance" below is not subordinate to
any Senior Indebtedness or subject to the restrictions described herein. At
March 31, 1997, the outstanding Senior Indebtedness of the Company was $373.0
million (exclusive of unused commitments), and the liabilities of the Company's
subsidiaries (including trade credit but excluding subsidiary guarantees of,
and borrowings backed by letters of credit issued pursuant to, the Senior Bank
Facility) totalled approximately $152.0 million. Although the Indenture
contains limitations on the amount of additional Indebtedness that the Company
may Incur, under certain circumstances the amount of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Senior Indebtedness.
See "-- Certain Covenants -- Limitation on Indebtedness" below. All the
operations of the Company are conducted through its subsidiaries. Each
Subsidiary of the Company (other than foreign subsidiaries) have guaranteed the
Company's obligations under the Senior Bank Facility. Although the Indenture
limits the incurrence of Indebtedness of the Company's subsidiaries, such
limitation is subject to a number of significant qualifications; moreover, the
Indenture does not impose any limitation on the incurrence by such subsidiaries
of liabilities that are not considered Indebtedness under the Indenture. See
"-- Certain Covenants -- Limitation on Indebtedness."
"Senior Indebtedness" is defined, whether outstanding on the Issue Date
or thereafter issued, as the Bank Indebtedness and all Indebtedness of the
Company, including interest and fees thereon, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that the obligations in respect of such Indebtedness are not
superior in right of payment to the Notes; provided, however, that Senior
Indebtedness will not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, foreign, local or other taxes
owed or owing by the Company, (3) any accounts payable or other liability to
trade creditors arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities), or (4) any
Indebtedness, Guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, Guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness
and any Subordinated Obligations.
Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the Notes in accordance with the provisions of the Indenture. The
Notes will in all respects rank pari passu with all other Senior Subordinated
Indebtedness of the Company, including the 11 3/4% Notes. The Company has
agreed in the Indenture that it will not Incur, directly or indirectly, any
Indebtedness that is subordinate or junior in ranking in any respect to Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
In addition, the Company's Subsidiaries are prohibited from guaranteeing any
Indebtedness of the Company that is not Senior Indebtedness without providing
equal (or superior) guarantees for the Notes. Unsecured Indebtedness is not
deemed to be subordinate or junior to Secured Indebtedness merely because it is
unsecured.
The Company may not pay principal of, premium (if any), or interest on,
the Notes or make any deposit pursuant to the provisions described under
Defeasance below and may not otherwise purchase or retire any Notes
(collectively, "pay the Notes") if (i) any Senior Indebtedness is not paid when
due or (ii) any other default on Senior Indebtedness occurs and the maturity of
such Senior Indebtedness is accelerated in accordance with its terms unless, in
either case, the default has been cured or waived and any such acceleration has
been rescinded or such Senior Indebtedness has been paid in full. However, the
Company may pay the Notes without regard to the foregoing if the Company and
the Trustee receive written notice approving such payment from the
Representative
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<PAGE> 48
of the Senior Indebtedness with respect to which either of the events set forth
in clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the second preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as
may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company may not pay the Notes for a period (a
"Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to the Company) of written notice (a "Blockage Notice") of such default
from the Representative of the holders of such Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice, (ii) because the default giving rise to such
Blockage Notice is no longer continuing or (iii) because such Designated Senior
Indebtedness has been repaid in full). Notwithstanding the provisions
described in the immediately preceding sentence, unless the holders of such
Designated Senior Indebtedness or the Representative of such holders have
accelerated the maturity of such Designated Senior Indebtedness, the Company
may resume payments on the Notes after the end of such Payment Blockage Period.
Not more than one Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated
Senior Indebtedness during such period.
Upon any payment or distribution of the assets of the Company upon a
total or partial liquidation or dissolution or reorganization or bankruptcy of
or similar proceeding relating to the Company or its property, the holders of
Senior Indebtedness will be entitled to receive payment in full of the Senior
Indebtedness before the holders are entitled to receive any payment, and until
the Senior Indebtedness is paid in full, any payment or distribution to which
holders would be entitled but for the subordination provisions of the Indenture
will be made to holders of the Senior Indebtedness as their interests may
appear. If a distribution is made to holders that, due to the subordination
provisions, should not have been made to them, such holders are required to
hold it in trust for the holders of Senior Indebtedness and pay it over to them
as their interests may appear.
If payment of the Notes is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness or the Representative of such holders of the acceleration.
The Company may not pay the Notes until five Business Days after such holders
or the Representative of the Designated Senior Indebtedness receive notice of
such acceleration and, thereafter, may pay the Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.
By reason of such subordination provisions contained in the Indenture,
in the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the Noteholders, and creditors of
the Company who are not holders of Senior Indebtedness or of Senior
Subordinated Indebtedness (including the Notes) may recover less, ratably, than
holders of Senior Indebtedness and may recover more, ratably, than the holders
of Senior Subordinated Indebtedness.
SUBSIDIARY GUARANTIES
Each Subsidiary Guarantor unconditionally guarantees, jointly and
severally, to each holder and the Trustee, subject to subordination provisions
substantially the same as those described above, the full and prompt payment of
principal of and interest on the Notes, and of all other obligations under the
Indenture. The Subsidiary Guarantors are Camden, ECM Holding Company, Omega,
OWI Corporation, Wire Harness Industries, Inc., Wirekraft Employment Company,
Wirekraft Industries, Inc. and Wire Technologies. The only Subsidiaries of the
Company which are not Subsidiary Guarantors are ECM and Wirekraft Industries de
Mexico, S.A. de C.V. ("Wirekraft Mexico"). As of March 31, 1997, ECM and
Wirekraft Mexico had assets of approximately $11.9 million and $5.2 million,
respectively, and had insignificant revenues from third party sales.
The Indebtedness evidenced by each Subsidiary Guaranty (including the
payment of principal of, premium, if any, and interest on the Notes) will be
subordinated to Guarantor Senior Indebtedness on the same basis as the Notes are
subordinated to Senior Indebtedness. As of March 31, 1997, there was
approximately $373.0 million Guarantor Senior Indebtedness (relating to
guarantees of the borrowings under the Senior Bank Facility). See "-- Ranking"
above.
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<PAGE> 49
The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor (including without limitation, any
guarantees under the Senior Bank Facility) and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor
under its Subsidiary Guarantee or pursuant to its contribution obligations
under the Indenture, result in the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Subsidiary Guarantor without limitation. Each
Subsidiary Guarantor may consolidate with or merge into or sell all or
substantially all its assets to a corporation, partnership or trust other than
the Company or another Subsidiary Guarantor (whether or not affiliated with the
Subsidiary Guarantor). Upon the sale or disposition of a Subsidiary Guarantor
(or all or substantially all of its assets) to a Person (whether or not an
Affiliate of the Subsidiary Guarantor) which is not a Subsidiary of the
Company, which is otherwise in compliance with the Indenture, such Subsidiary
Guarantor shall be deemed released from all its obligations under the Indenture
and its Subsidiary Guarantee and such Subsidiary Guarantee shall terminate;
provided, however, that any such termination shall occur only to the extent
that all obligations of such Subsidiary Guarantor under the Senior Bank
Facility and all of its guarantees of, and under all of its pledges of assets
or other security interests which secure, Indebtedness of the Company shall
also terminate upon such release, sale or transfer.
Separate financial statements of the Subsidiary Guarantors are not
included herein because such Subsidiary Guarantors are jointly and severally
liable with respect to the Company's obligations pursuant to the Notes, and the
aggregate net assets, earnings and equity of the Subsidiary Guarantors are
substantially equivalent to the net assets, earnings and equity of the Company
on a combined basis.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), each holder will have the right to require the Company to repurchase
all or any part of such holder's Notes at a purchase price in cash equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date):
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company and its Subsidiaries to any Person or
group of related Persons for purposes of Section 13(d) of the Exchange
Act (a "Group") (whether or not otherwise in compliance with the
provisions of the Indenture), other than to Hicks, Muse, Mills &
Partners or any of their Affiliates, officers and directors (the
"Permitted Holders"); or
(ii) a majority of the Board of Directors of Holdings or
the Company shall consist of Persons who are not Continuing Directors;
or
(iii) the acquisition by any Person or Group (other than
the Permitted Holders) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of Holding or the Company.
Within 30 days following any Change of Control, unless the Company has
mailed a redemption notice with respect to all the outstanding Notes in
connection with such Change of Control, the Company shall mail a notice to each
holder with a copy to the Trustee stating: (1) that a Change of Control has
occurred and that such holder has the right to require the Company to purchase
such holder's Notes at a purchase price in cash equal to
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<PAGE> 50
101% of the principal amount thereof plus accrued and unpaid interest, if any,
to the date of purchase (subject to the right of holders of record on a record
date to receive interest on the relevant interest payment date); (2) the
repurchase date (which shall be no earlier than 30 days nor later than 60 days
from the date such notice is mailed); and (3) the procedures determined by the
Company, consistent with the Indenture, that a holder must follow in order to
have its Notes purchased.
The Company will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Notes pursuant to this
covenant. To the extent that the provisions of any securities laws or
regulations conflict with provisions of the Indenture, the Company will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in the Indenture by virtue thereof.
The occurrence of certain of the events that would constitute a Change
of Control would constitute a default under the Senior Bank Facility. Future
Senior Indebtedness of the Company and its Subsidiaries may contain
prohibitions of certain events that would constitute a Change of Control or
require such Senior Indebtedness to be repurchased upon a Change of Control.
Moreover, the exercise by the holders of their right to require the Company to
repurchase the Notes could cause a default under such Senior Indebtedness, even
if the Change of Control itself does not, due to the financial effect of such
repurchase on the Company. Finally, the Company's ability to pay cash to the
holders upon a repurchase may be limited by the Company's then existing
financial resources. There can be no assurance that sufficient funds will be
available when necessary to make any required repurchases. Even if sufficient
funds were otherwise available, the terms of the Bank Indebtedness will
prohibit the Company's prepayment of Notes prior to their scheduled maturity.
Consequently, if the Company is not able to prepay the Bank Indebtedness and
any other Senior Indebtedness containing similar restrictions or obtain
requisite consents, as described above, the Company will be unable to fulfill
its repurchase obligations if holders of Notes exercise their repurchase rights
following a Change of Control, thereby resulting in a default under the
Indenture.
CERTAIN COVENANTS
The Indenture contains certain covenants including, among others, the
following:
Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any of its
Subsidiaries to, Incur any Indebtedness; provided, however, that the
Company and any of its Subsidiaries may Incur Indebtedness if on the
date thereof the Consolidated Coverage Ratio would be greater than 2.00
: 1.00, if such Indebtedness is Incurred on or prior to the second
anniversary of the Issue Date, and 2.25 : 1.00, if such Indebtedness is
Incurred thereafter.
(b) Notwithstanding the foregoing paragraph (a), the Company
and its Subsidiaries may Incur the following Indebtedness: (i)
Indebtedness Incurred pursuant to (A) the Credit Agreement (including,
without limitation, any renewal, extension, refunding, restructuring,
replacement or refinancing thereof referred to in clause (ii) of the
definition thereof) or (B) any other agreements or indentures governing
Senior Indebtedness; provided that the aggregate principal amount of all
Indebtedness Incurred pursuant to this clause (i) does not exceed $240.0
million at any time outstanding, less the aggregate principal amount
thereof repaid with the net proceeds of Asset Dispositions (to the
extent, in the case of a repayment of revolving credit Indebtedness, the
commitment to advance the loans repaid has been terminated); (ii)
Indebtedness represented by Capitalized Lease Obligations, mortgage
financings or purchase money obligations, in each case Incurred for the
purpose of financing all or any part of the purchase price or cost of
construction or improvement of property used in a Related Business or
Incurred to Refinance any such purchase price or cost of construction or
improvement, in each case
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<PAGE> 51
Incurred no later than 365 days after the date of such acquisition or
the date of completion of such construction or improvement; provided,
however, that the principal amount of any Indebtedness Incurred pursuant
to this clause (ii) shall not exceed $10.0 million at any time
outstanding; (iii) Permitted Indebtedness; and (iv) Indebtedness (other
than Indebtedness described in clauses (i)-(iii)) in a principal amount
which, when taken together with the principal amount of all other
Indebtedness Incurred pursuant to this clause (iv) and then outstanding,
will not exceed $25.0 million.
(c) The Company shall not Incur any Indebtedness under
paragraph (b) above if the proceeds thereof are used, directly or
indirectly, to Refinance any Subordinated Obligations unless such
Indebtedness shall be subordinated to the Notes to at least the same
extent as such Subordinated Obligations.
(d) In addition, the Company shall not Incur any Secured
Indebtedness which is not Senior Indebtedness unless contemporaneously
therewith effective provision is made to secure the Notes equally and
ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
Limitation on Layering. The Company shall not Incur any Indebtedness if
such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness unless (i) such Indebtedness is Senior Subordinated
Indebtedness or is expressly subordinated in right of payment to Senior
Subordinated Indebtedness and (ii) no Subsidiary of the Company shall Guarantee
any Indebtedness of the Company that is not Senior Indebtedness without
providing an equal (or superior) and ratable Guarantee for the benefit of the
holders of the Notes.
Limitation on Restricted Payments. (a) The Company shall not, and shall
not permit any of its Subsidiaries, directly or indirectly, to (i) declare or
pay any dividend or make any distribution on or in respect of its Capital Stock
(including any payment in connection with any merger or consolidation involving
the Company or any of its Subsidiaries) except (A) dividends or distributions
payable in its Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to purchase such Capital Stock, and (B) dividends or
distributions payable to the Company or a Subsidiary of the Company (and, if
such Subsidiary is not a Wholly-Owned Subsidiary, to its other stockholders on
a pro rata basis or on a basis no more favorable to such other stockholders),
(ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock
of the Company held by Persons other than a Subsidiary of the Company or any
Capital Stock of a Subsidiary of the Company held by any Affiliate of the
Company, other than another Subsidiary (in either case, other than in exchange
for its Capital Stock (other than Disqualified Stock)), (iii) purchase,
repurchase, redeem, defease or otherwise acquire or retire for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of satisfying
a sinking fund obligation, principal installment or final maturity, in each
case due within one year of the date of acquisition) or (iv) make any
Investment (other than a Permitted Investment) in any Person (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment"), if at the time the Company or such Subsidiary makes such Restricted
Payment: (1) a Default shall have occurred and be continuing (or would result
therefrom); or (2) the Company is not able to incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) under "Limitation on Indebtedness"; or
(3) the aggregate amount of such Restricted Payment and all other Restricted
Payments declared or made subsequent to the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period (treated as
one accounting period) from the Issue Date to the end of the most recent fiscal
quarter ending prior to the date of such Restricted Payment as to which
financial results are available (but in no event ending more than 135 days
prior to the date of such Restricted Payment) (or, in case such Consolidated
Net Income shall be a deficit, minus 100% of such deficit); (B) the aggregate
Net Cash Proceeds received by the Company from the issue or sale of its Capital
Stock (other than Disqualified Stock) or other cash contributions to its
capital subsequent to the Issue Date (other than an issuance or sale to a
Subsidiary
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<PAGE> 52
of the company or an employee stock ownership plan or similar trust); (C) the
aggregate Net Cash Proceeds received by the Company from the issue or sale of
its Capital Stock (other than Disqualified Stock) to an employee stock
ownership plan or similar trust subsequent to the Issue Date; provided,
however, that if such plan or trust Incurs any Indebtedness to or Guaranteed by
the Company or any of its Subsidiaries to finance the acquisition of such
Capital Stock, such aggregate amount shall be limited to such Net Cash Proceeds
less such Indebtedness Incurred or Guaranteed by the Company or any of its
Subsidiaries and any increase in the Consolidated Net Worth of the Company
resulting from principal repayments made by such plan or trust with respect to
Indebtedness Incurred by it to finance the purchase of such Capital Stock; (D)
the amount by which Indebtedness of the Company is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a Subsidiary of
the Company) subsequent to the Issue Date of any Indebtedness of the Company
convertible or exchangeable for Capital Stock of the Company (less the amount
of any cash, or other property, distributed by the Company upon such conversion
or exchange); and (E) the amount equal to the net reduction in Investments
(other than Permitted Investments) made by the Company or any of its
Subsidiaries in any Person resulting from repurchases or redemptions of such
Investments by such Person, proceeds realized upon the sale of such Investment
to an unaffiliated purchaser, repayments of loans or advances or other
transfers of assets by such Person to the Company or any Subsidiary of the
Company; provided, however, that no amount shall be included under this clause
(E) to the extent it is already included in Consolidated Net Income.
(b) The provisions of paragraph (a) shall not prohibit: (i) any
purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee
stock ownership plan or similar trust); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from clause (3)(B) of paragraph (a); (ii) any purchase or redemption
of Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company; provided, however, that such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments; (iii) any
purchase or redemption of Subordinated Obligations from Net Available Cash to
the extent permitted under "Limitation on Sales of Assets and Subsidiary Stock"
below; provided, however, that such purchase or redemption shall be excluded in
the calculation of the amount of Restricted Payments; (iv) dividends paid
within 60 days after the date of declaration if at such date of declaration
such dividend would have complied with this provision; provided, however, that
such dividend shall be included in the calculation of the amount of Restricted
Payments; (v) [intentionally omitted]; (vi) payments by the Company to fund (A)
out of pocket expenses of Holding for administrative, legal and accounting
services provided by third parties, or to pay franchise fees and similar costs;
provided, however, any such administrative expenses shall not exceed an
aggregate amount of $1,000,000 per annum, and (B) taxes of Holding; (vii)
payments by the Company to Holding pursuant to the Monitoring and Oversight
Agreement; (viii) payments of dividends on the Company's common stock after an
initial public offering of common stock of the Company or of Holding in an
annual amount not to exceed 6% of the gross proceeds (before deducting
underwriting discounts and commissions and other fees and expenses of the
offering) received by the Company (directly or as a common equity contribution
from Holding) from such initial public offering; (ix) payments by the Company
to repurchase, or to enable Holding to repurchase, Capital Stock or other
securities of Holding from members of management of Holding or the Company in
an aggregate amount not to exceed $7,500,000; (x) payments to enable Holding to
redeem or repurchase stock purchase or similar rights granted by Holding with
respect to its Capital Stock in an aggregate amount not to exceed $500,000;
(xi) payments, not to exceed $100,000 in the aggregate, to enable Holding to
make cash payments to holders of its Capital Stock in lieu of the issuance of
fractional shares of its Capital Stock; and (xii) payments made pursuant to any
merger, consolidation or sale of assets effected in accordance with the
"Merger, Consolidation and Sale of Assets" covenant; provided, however, that no
such payment may be made pursuant to this clause (xii) unless, after giving
effect to such transaction, the Consolidated Coverage Ratio of the Company
would be greater than 3.5 to 1.0; provided, further, that in the case of
clauses (vii), (viii), (ix), (x), (xi) and (xii) no Default or Event of Default
(in
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the case of clause (vii) such Default or Event of Default shall be limited to
items (i) and (ii) under "-- Defaults") shall have occurred or be continuing at
the time of such payment or as a result thereof.
Limitation on Restrictions on Distributions from Subsidiaries. The
Company shall not, and shall not permit any of its Subsidiaries to, create or
permit to exist or become effective any consensual encumbrance or restriction
on the ability of any such Subsidiary to (i) pay dividends or make any other
distributions on its Capital Stock or pay any Indebtedness or other obligation
owed to the Company, (ii) make any loans or advances to the Company or (iii)
transfer any of its property or assets to the Company; except: (a) any
encumbrance or restriction pursuant to an agreement in effect at or entered
into on the Issue Date, including the Credit Agreement; (b) any encumbrance of
restriction with respect to such a Subsidiary pursuant to an agreement relating
to any Indebtedness issued by such Subsidiary on or prior to the date on which
such Subsidiary was acquired by the Company and outstanding on such date (other
than Indebtedness issued as consideration in, or to provide all or any portion
of the funds or credit support utilized to consummate, the transaction or
series of related transactions pursuant to which such Subsidiary became a
Subsidiary of the Company or was acquired by the Company); (c) any encumbrance
or restriction with respect to such a Subsidiary pursuant to an agreement
evidencing Indebtedness Incurred without violation of the Indenture or
effecting a refinancing of Indebtedness issued pursuant to an agreement
referred to in clauses (a) or (b) or this clause (c) or contained in any
amendment to an agreement referred to in clauses (a) or (b) or this clause (c);
provided, however, that the encumbrances and restrictions with respect to such
Subsidiary contained in any of such agreement, refinancing agreement or
amendment, taken as a whole, are no less favorable to the holders in any
material respect, as determined in good faith by the senior management of the
Company or Board of Directors of the Company, than encumbrances and
restrictions with respect to such Subsidiary contained in agreements in effect
at, or entered into on, the Issue Date; (d) in the case of clause (iii), any
encumbrance or restriction (A) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) by virtue of
any transfer of, agreement to transfer, option or right with respect to, or
Lien on, any property or assets of the Company or any Subsidiary not otherwise
prohibited by the Indenture, (C) that is included in a licensing agreement to
the extent such restrictions limit the transfer of the property subject to such
licensing agreement or (D) arising or agreed to in the ordinary course of
business and that does not, individually or in the aggregate, detract from the
value of property or assets of the Company or any of its Subsidiaries in any
manner material to the Company or any such Subsidiary; (e) in the case of
clause (iii) above, restrictions contained in security agreements, mortgages or
similar documents securing Indebtedness of a Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such security
agreements; (f) any restriction with respect to such a Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition and (g) encumbrances or restrictions
arising or existing by reason of applicable law.
Limitation on Sales of Assets and Subsidiary Stock. (a) The Company
shall not, and shall not permit any of its Subsidiaries to, make any Asset
Disposition unless (i) the Company or such Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair market value, as
determined in good faith by the Company's senior management or the Board of
Directors (including as to the value of all non-cash consideration), of the
shares and assets subject to such Asset Disposition, (ii) at least 75% of the
consideration thereof received by the Company or such Subsidiary is in the form
of cash or cash equivalents and (iii) an amount equal to 100% of the Net
Available Cash from such Asset Disposition is applied by the Company (or such
Subsidiary, as, the case may be) (A) first, to the extent the Company or any
Subsidiary elects (or is required by the terms of any Senior Indebtedness), to
prepay, repay or purchase (x) Senior Indebtedness or (y) Indebtedness of a
Wholly-Owned Subsidiary (in each case other than Indebtedness owed to the
Company) within 180 days from the later of the date of such Asset Disposition
or the receipt of such Net Available Cash; (B) second, within one year from the
receipt of such Net Available Cash, to the extent of the balance of such Net
Available Cash after application in accordance with clause (A), at the
Company's election either (x) to the investment in or acquisition of Additional
Assets or (y) to prepay, repay or purchase (1) Senior Indebtedness or (2)
Indebtedness of a Wholly-Owned Subsidiary (in each case other than Indebtedness
owed to the Company); (C) third, within 45 days after the
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later of the application of Net Available Cash in accordance with clauses (A)
and (B) and the date that is one year from the receipt of such Net Available
Cash, to the extent of the balance of such Net Available Cash after application
in accordance with clauses (A) and (B), to make an offer to purchase 11 3/4%
Notes at par plus accrued and unpaid interest, if any, thereon in accordance
with the provisions of the 11 3/4% Indenture; and (D) fourth, to the extent of
the balance of such Net Available Cash after application in accordance with
clauses (A), (B) and (C), to (w) the investment in or acquisition of Additional
Assets, (x) the making of Temporary Cash Investments, (y) the prepayment,
repayment or purchase of Indebtedness of the Company or Indebtedness of any
Subsidiary (other than Indebtedness owed to the Company) or (z) any other
purpose otherwise permitted under the Indenture, in each case within the later
of 45 days after the application of Net Available Cash in accordance with
clauses (A), (B) and (C) or the date that is one year from the receipt of such
Net Available Cash; provided, however, that, in connection with any prepayment,
repayment or purchase of Indebtedness pursuant to clause (A), (B), (C) or (D)
above, the Company or such Subsidiary shall retire such Indebtedness and shall
cause the related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions, the Company and its Subsidiaries
shall not be required to apply any Net Available Cash in accordance herewith
except to the extent that the aggregate Net Available Cash from all Asset
Dispositions which are not applied in accordance with this covenant at any time
exceed $10 million. The Company shall not be required to make an offer for
Notes pursuant to this covenant if the Net Available Cash available therefor
(after application of the proceeds as provided in clauses (A) and (B)) is less
than $10 million for any particular Asset Disposition (which lesser amounts
shall be carried forward for purposes of determining whether an offer is
required with respect to the Net Available Cash from any subsequent Asset
Disposition).
For the purposes of this covenant, the following will be deemed to be
cash: (x) the assumption by the transferee of Senior Indebtedness of the
Company or Indebtedness of any Subsidiary of the Company and the release of the
Company or such Subsidiary from all liability on such Senior Indebtedness or
Indebtedness in connection with such Asset Disposition (in which case the
Company shall, without further action, be deemed to have applied such assumed
Indebtedness in accordance with clause (A) of the preceding paragraph) and (y)
securities received by the Company or any Subsidiary of the Company from the
transferee that are promptly converted by the Company or such Subsidiary into
cash.
(b) In the event of an Asset Disposition that requires the purchase
of Notes pursuant to clause (a)(iii)(C), the Company will be required to
purchase Notes tendered pursuant to an offer by the Company for the Notes at a
purchase price of 100% of their principal amount plus accrued and unpaid
interest, if any, to the purchase date in accordance with the procedures
(including prorating in the event of oversubscription) set forth in the
Indenture. If the aggregate purchase price of the Notes tendered pursuant to
the offer is less than the Net Available Cash allotted to the purchase of the
Notes, the Company will apply the remaining Net Available Cash in accordance
with clause (a)(iii)(D) above.
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Notes pursuant to the
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this covenant, the Company will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under the Indenture by virtue thereof.
Limitation on Affiliate Transactions. (a) The Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, enter into
or conduct any transaction (including the purchase, sale, lease or exchange of
any property or the rendering of any service) with any Affiliate of the Company
other than a Wholly-Owned Subsidiary (an "Affiliate Transaction") unless: (i)
the terms of such Affiliate Transaction are no less favorable to the Company or
such Subsidiary, as the case may be, than those that could be obtained at the
time of such transaction in arm's-length dealings with a Person who is not such
an Affiliate; (ii) in the event such Affiliate Transaction involves an
aggregate amount in excess of $2.5 million, the terms of such transaction have
been approved by a majority of the members of the Board of Directors of the
Company and by a majority of the
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disinterested members of such Board, if any (and such majority or majorities,
as the case may be, determines that such Affiliate Transaction satisfies the
criteria in (i) above); and (iii) in the event such Affiliate Transaction
involves an aggregate amount in excess of $10.0 million, the Company has
received a written opinion from an independent investment banking firm of
nationally recognized standing that such Affiliate Transaction is fair to the
Company or such Subsidiary, as the case may be, from a financial point of view.
(b) The foregoing paragraph (a) shall not prohibit (i) any Restricted
Payment permitted to be made pursuant to the covenant described under
"Limitation on Restricted Payments," (ii) any issuance of securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the
funding of, employment arrangements, stock options and stock ownership plans
approved by the Board of Directors of the Company, (iii) loans or advances to
employees in the ordinary course of business of the Company or any of its
Subsidiaries, (iv) any transaction between Wholly-Owned Subsidiaries, (v) the
payment of fees and indemnities to directors, officers and employees of the
Company and its Subsidiaries in the ordinary course of business, (vi)
transactions pursuant to agreements as in existence on the Issue Date, (vii)
any employment agreements entered into by the Company or any of its
Subsidiaries in the ordinary course of business, (viii) the issuance of Capital
Stock of the Company (other than Disqualified Stock), and (ix) any obligations
of the Company pursuant to the Monitoring and Oversight Agreement.
Limitation on Preferred Stock of Subsidiaries. The Company will not
permit any of its Subsidiaries to issue any Preferred Stock (other than to the
Company or to a Wholly-Owned Subsidiary of the Company) or permit any Person
(other than the Company or a Wholly-Owned Subsidiary of the Company) to own any
Preferred Stock (other than Acquired Preferred Stock); provided that at the
time the issuer of such Acquired Preferred Stock becomes a Subsidiary of the
Company or merges with the Company or any of its Subsidiaries, and after giving
effect to such transaction, the Company shall be able to incur an additional
$1.00 of Indebtedness pursuant to paragraph (a) of "Limitation on Indebtedness"
(treating the amount of all obligations of such Subsidiary with respect to the
redemption, repayment of other repurchase of such Acquired Preferred Stock (but
excluding any accrued dividends thereon) as Indebtedness solely for purpose of
such calculation, but only to the extent that such obligations arise on or
prior to the first anniversary of the Stated Maturity of the Notes).
Limitation on Capital Stock of Subsidiaries. The Company will not
permit any of its Subsidiaries to issue any Capital Stock (other than Preferred
Stock) to any Person (other than to the Company or a Wholly-Owned Subsidiary of
the Company) or permit any Person (other than the Company or a Wholly-Owned
Subsidiary of the Company) to own any Capital Stock (other than Preferred
Stock) of a Subsidiary of the Company, if in either case as a result thereof
such Subsidiary would no longer be a Subsidiary of the Company; provided,
however that this provision shall not prohibit the Company or any of its
Subsidiaries from selling, leasing or otherwise disposing of all of the Capital
Stock of any Subsidiary.
SEC Reports. Notwithstanding that the Company may not be required to be
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act, the Company shall file with the Commission, and within 15 days after such
reports are filed, provide the Trustee and the holders (at their addresses as
set forth in the register of Notes) with the annual and quarterly reports and
the information, documents and other reports which are otherwise required
pursuant to Section 13 of the Exchange Act. In addition, following the
registration of the common stock of the Company pursuant to Section 12(b) or
12(g) of the Exchange Act, the Company shall furnish to the Trustee and the
holders, promptly upon their becoming available, copies of the Company's annual
report to stockholders and any other information provided by the Company to its
public stockholder generally.
Merger and Consolidation. The Company shall not consolidate with or
merge with or into, or convey, transfer or lease all or substantially all its
assets to, any Person, unless: (i) the resulting surviving or transferee Person
(the "Successor Company") shall be a corporation organized and existing under
the laws of the United States of America, any State thereof or the District of
Columbia and the Successor Company (if not the Company)
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shall expressly assume, by supplemental indenture, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Notes and the Indenture; (ii) immediately after giving effect
to such transaction (and treating any Indebtedness that becomes an obligation
of the Successor Company or any Subsidiary of the Successor Company as a result
of such transaction as having been incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default or Event of Default
shall have occurred and be continuing; (iii) immediately after giving effect to
such transaction, the Successor Company would be able to incur at least an
additional $1.00 of Indebtedness pursuant to paragraph (a) of "Limitation on
Indebtedness"; and (iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with the Indenture.
The Successor Company will succeed to, and be substituted for, and may
exercise every right and power of, the Company under the Indenture, but the
predecessor, the Company, in the case of a lease of all or substantially all
its assets will not be released from the obligation to pay the principal of and
interest on the Notes.
Notwithstanding the foregoing clauses (ii) and (iii), (1) any Subsidiary
of the Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (2) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction to realize tax or other benefits.
DEFAULTS
An Event of Default is defined in the Indenture as (i) a default in any
payment of interest on any Note when due, continued for 30 days, whether or not
such payment is prohibited by the provisions described under "Ranking" above,
(ii) a default in the payment of principal of any Note when due at its Stated
Maturity, upon optional redemption, upon required repurchase, upon declaration
or otherwise, whether or not such payment is prohibited by the provisions
described under "Ranking" above, (iii) the failure by the Company to comply
with its obligations under "Certain Covenants -- Merger and Consolidation"
above, (iv) the failure by the Company to comply for 30 days after notice with
any of its obligations under the covenants described under "Change of Control"
above or under covenants described under "Certain Covenants" above (in each
case, other than a failure to purchase Notes which shall constitute an Event of
Default under clause (ii) above), other than "-- Merger and Consolidation," (v)
the failure by the Company to comply for 60 days after notice with its other
agreements contained in the Indenture, (vi) Indebtedness of the Company or any
Subsidiary is not paid within any applicable grace period after final maturity
or is accelerated by the holders thereof because of a default and the total
amount of such Indebtedness unpaid or accelerated exceeds $10 million and such
default shall not have been cured or such acceleration rescinded after a 10 day
period (the "cross acceleration provision"), (vii) certain events of
bankruptcy, insolvency or reorganization of the Company or a Significant
Subsidiary (the "bankruptcy provisions") or (viii) any judgment or decree for
the payment of money in excess of $10 million (to the extent not covered by
insurance) is rendered against the Company or a Significant Subsidiary and such
judgment or decree shall remain undischarged or unstayed for a period of 60
days after such judgment becomes final and nonappealable (the "judgment default
provision"). However, a default under clauses (iv) and (v) will not constitute
an Event of Default until the Trustee or the holders of 25% in principal amount
of the outstanding Notes notify the Company of the default and the Company does
not cure such default within the time specified in clauses (iv) and (v) hereof
after receipt of such notice.
If an Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the outstanding Notes by notice
to the Company may declare the principal of and accrued and unpaid interest, if
any, on all the Notes to be due and payable. Upon such a declaration, such
principal and accrued and unpaid interest shall be due and payable immediately.
If an Event of Default relating to certain events of bankruptcy, insolvency or
reorganization of the Company occurs and is continuing, the principal of and
accrued and unpaid interest on all the Notes will become and be immediately due
and payable without any declaration or
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other act on the part of the Trustee or any holders. Under certain
circumstances, the holders of a majority in principal amount of the outstanding
Notes may rescind any such acceleration with respect to the Notes and its
consequences.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, if an Event of Default occurs and is continuing, the Trustee will be
under no obligation to exercise any of the rights or powers under the Indenture
at the request or direction of any of the holders unless such holders have
offered to the Trustee reasonable indemnity or security against any loss,
liability or expense. Except to enforce the right to receive payment of
principal, premium (if any) or interest when due, no holder may pursue any
remedy with respect to the Indenture or the Notes unless (i) such holder has
previously given the Trustee notice that an Event of Default is continuing,
(ii) holders of at least 25% in principal amount of the outstanding Notes have
requested the Trustee to pursue the remedy, (iii) such holders have offered the
Trustee reasonable security or indemnity against any loss, liability or
expense, (iv) the Trustee has not complied with such request within 60 days
after the receipt of the request and the offer of security or indemnity and (v)
the holders of a majority in principal amount of the outstanding Notes have not
given the Trustee a direction that, in the opinion of the Trustee, is
inconsistent with such request within such 60-day period. Subject to certain
restrictions, the holders of a majority in principal amount of the outstanding
Notes are given the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee. The Trustee, however, may refuse to
follow any direction that conflicts with law or the Indenture or that the
Trustee determines is unduly prejudicial to the rights of any other holder or
that would involve the Trustee in personal liability. Prior to taking any
action under the Indenture, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
The Indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the
Default within 90 days after it occurs. Except in the case of a Default in the
payment of principal of, premium (if any) or interest on any Note, the Trustee
may withhold notice if and so long as a committee of its Trust officers in good
faith determines that withholding notice is in the interests of the
Noteholders. In addition, the Company is required to deliver to the Trustee,
within 120 days after the end of each fiscal year, a certificate indicating
whether the signers thereof know of any Default that occurred during the
previous year. The Company also is required to deliver to the Trustee, within
30 days after the occurrence thereof, written notice of any events which would
constitute certain Defaults, their status and what action the Company is taking
or proposes to take in respect thereof.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, the Indenture may be amended with the
consent of the holders of a majority in principal amount of the Notes then
outstanding and any past default or compliance with any provisions may be
waived with the consent of the holders of a majority in principal amount of the
Notes then outstanding. However, without the consent of each holder of an
outstanding Note affected, no amendment may, among other things, (i) reduce the
amount of Notes whose holders must consent to an amendment, (ii) reduce the
rate of or extend the time for payment of interest on any Note, (iii) reduce
the principal of or extend the Stated Maturity of any Note, (iv) reduce the
premium payable upon the redemption of any Note or change the time at which any
Note may be redeemed as described under "Optional Redemption" above, (v) make
any Note payable in money other than that stated in the Note, (vi) impair the
right of any holder to receive payment of principal of and interest on such
holder's Notes on or after the due dates therefor or to institute suit for the
enforcement of any payment on or with respect to such holder's Notes or (vii)
make any change in the amendment provisions which require each holder's consent
or in the waiver provisions.
Without the consent of any holder, the Company and the Trustee may amend
the Indenture to cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor corporation of the obligations of the
Company under the Indenture, to provide for uncertificated Notes in addition to
or in place of
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certificated Notes (provided that the uncertificated Notes are issued in
registered form for purposes of Section 163(f) of the Code, or in a manner such
that the uncertificated Notes are described in Section 163(f)(2)(B) of the
Code), to add further Guarantees with respect to the Notes, to secure the
Notes, to add to the covenants of the Company for the benefit of the
Noteholders or to surrender any right or power conferred upon Company, to make
any change that does not adversely affect the rights of any holder or to comply
with any requirement of the Commission in connection with the qualification of
the Indenture under the Trust Indenture Act. However, no amendment may be made
to the subordination provisions of the Indenture that adversely affects the
rights of any holder of Senior Indebtedness then outstanding unless the holders
of such Senior Indebtedness (or any group or representative thereof authorized
to give a consent) consent to such change.
The consent of the holders is not necessary under the Indenture to
approve the particular form of any proposed amendment. It is sufficient if
such consent approves the substance of the proposed amendment.
After an amendment under the Indenture becomes effective, the Company is
required to mail to the holders a notice briefly describing such amendment.
However, the failure to give such notice to all the holders, or any defect
therein, will not impair or affect the validity of the amendment.
DEFEASANCE
The Company at any time may terminate all its obligations under the
Notes and the Indenture ("legal defeasance"), except for certain obligations,
including those respecting the defeasance trust and obligations to register the
transfer or exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in respect of the
Notes. The Company at any time may terminate its obligations under covenants
described under "Certain Covenants" (other than "Merger and Consolidation"),
the operation of the cross acceleration provision, the bankruptcy provisions
with respect to Significant Subsidiaries and the judgment default provision
described under "Defaults" above and the limitations contained in clauses (iii)
and (iv) under "Certain Covenants -- Merger and Consolidation" above ("covenant
defeasance").
The Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If the Company exercises its
legal defeasance option, payment of the Notes may not be accelerated because of
an Event of Default with respect thereto. If the Company exercises its
covenant defeasance option, payment of the Notes may not be accelerated because
of an Event of Default specified in clause (iv), (vi), (vii) (with respect only
to Significant Subsidiaries), or (viii) under "Defaults" above or because of
the failure of the Company to comply with clause (iii) or (iv) under "Certain
Covenants -- Merger and Consolidation" above.
In order to exercise either defeasance option, the Company must
irrevocably deposit in trust (the "defeasance trust") with the Trustee money or
U.S. Government Obligations for the payment of principal, premium (if any) and
interest on the Notes to redemption or maturity, as the case may be, and must
comply with certain other conditions, including delivery to the Trustee of an
Opinion of Counsel to the effect that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit and defeasance and will be subject to Federal income tax on the same
amount and in the same manner and at the same times as would have been the case
if such deposit and defeasance had not occurred (and, in the case of legal
defeasance only, such Opinion of Counsel must be based on a ruling of the
Internal Revenue Service or other change in applicable Federal income tax law).
CONCERNING THE TRUSTEE
IBJ Schroder Bank & Trust is the Trustee under the Indenture and has
been appointed by the Company as Registrar and Paying Agent with regard to the
Notes.
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GOVERNING LAW
The Indenture provides that it and the Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the law of another jurisdiction would be required thereby.
CERTAIN DEFINITIONS
"Acquired Preferred Stock" means Preferred Stock of any Person which was
issued and outstanding at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries and not issued by such Person in connection with, or in
anticipation or contemplation of, such acquisition, merger or consolidation.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock
of a Person that becomes a Subsidiary as a result of the acquisition of such
Capital Stock by the Company or a Subsidiary of the Company; (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Subsidiary of the Company; or (iv) Permitted Investments of the type and in the
amounts described in clause (viii) of the definition thereof; provided,
however, that, in the case of clauses (ii) and (iii), such Subsidiary is
primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any sale, lease, transfer, issuance or other
disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by
the Company or any of its Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or by the Company or a Subsidiary to a Wholly-Owned
Subsidiary, (ii) a disposition of inventory in the ordinary course of business,
(iii) a disposition of obsolete or worn out equipment or equipment that is no
longer useful in the conduct of the business of the Company and its
Subsidiaries and that is disposed of in each case in the ordinary course of
business, (iv) dispositions of property for net proceeds less than $2.5 million
in the aggregate in any calendar year, and (v) transactions permitted under
"Certain Covenants -- Merger and Consolidation" above.
"Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Notes, compounded annually) of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction (including any period for which
such lease has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness, the quotient obtained by dividing (i) the sum of the products
of the numbers of years from the date of determination to the dates of each
successive scheduled principal payment of such Indebtedness or redemption
multiplied by the amount of such payment by (ii) the sum of all such payments.
"Bank Indebtedness" means any and all amounts, whether outstanding on
the Issue Date or thereafter incurred, payable by the Company under or in
respect of the Credit Agreement and any related notes, collateral documents,
letters of credit and guarantees, including principal, premium (if any),
interest (including interest
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accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not a claim for post filing
interest is allowed in such proceedings), fees, charges, expenses,
reimbursement obligations, guarantees and all other amounts payable thereunder
or in respect thereof.
"Capitalized Lease Obligations" means an obligation that is required to
be classified and accounted for as a capitalized lease for financial reporting
purposes in accordance with GAAP, and the amount of Indebtedness represented by
such obligation shall be the capitalized amount of such obligation determined
in accordance with GAAP, and the Stated Maturity thereof shall be the date of
the last payment of rent or any other amount due under such lease prior to the
first date such lease may be terminated without penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any
Preferred Stock, but excluding any debt securities convertible into such
equity.
"Consolidated Cash Flow" for any period means the Consolidated Net
Income for such period plus the following to the extent deducted in calculating
such Consolidated Net Income: (i) income tax expense, (ii) Consolidated
Interest Expense, (iii) depreciation expense, (iv) amortization expense, (v)
exchange or translation losses on foreign currencies, and (vi) all other non-
cash items reducing Consolidated Net Income (excluding any non-cash item to the
extent it represents an accrual of or reserve for cash disbursements for any
subsequent period prior to the Stated Maturity of the Notes) and less, to the
extent added in calculating Consolidated Net Income (x) exchange or translation
gains on foreign currencies and (y) non-cash items (excluding non-cash items to
the extent they represent an accrual for cash receipts reasonably expected to
be received prior to the Stated Maturity of the Notes), in each case for such
period. Notwithstanding the foregoing, the income tax expense, depreciation
expense and amortization expense of a Subsidiary of the Company shall be
included in Consolidated Cash Flow only to the extent (and in the same
proportion) that the net income of such Subsidiary was included in calculating
Consolidated Net Income.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated Cash Flow for the period of
the most recent four consecutive fiscal quarters ending prior to the date of
such determination and as to which financial statement are available to (ii)
Consolidated Interest Expense for such four fiscal quarters: provided, however,
that (1) if the Company or any of its Subsidiaries has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need calculate Consolidated Coverage Ratio
is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (A) such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period (provided that if such
Indebtedness is Incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that constitutes the one year projected
minimum balance of such Indebtedness (as determined in good faith by senior
management of the Company and assuming a constant level of sales) shall be
deemed outstanding for purposes of this calculation) and (B) the discharge of
any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if since the beginning of such period any
Indebtedness of the Company or any of its Subsidiaries has been repaid,
repurchased, defeased or otherwise discharged (other than Indebtedness under a
revolving credit or similar arrangement unless such revolving credit
Indebtedness has been permanently repaid and has not been replaced),
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Indebtedness had been repaid, repurchased,
defeased or otherwise discharged on the first day of such period, (3) if since
the beginning of such period the Company or any of its Subsidiaries shall have
made any Asset Disposition or if the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio is an Asset Disposition, Consolidated
Cash Flow for such period shall be reduced by an amount equal to the
Consolidated Cash Flow (if positive) attributable to the assets which are the
subject of such Asset Disposition for such period or increased by an amount
equal to the Consolidated Cash Flow (if negative) attributable thereto for such
period, and
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Consolidated Interest Expense for such period shall be (i) reduced by an amount
equal to the Consolidated Interest Expense attributable to any Indebtedness of
the Company or any of its Subsidiaries repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing
Subsidiaries in connection with such Asset Disposition for such period (or, if
the Capital Stock of any Subsidiary of the Company is sold, the Consolidated
Interest Expense for such period directly attributable to the Indebtedness of
such Subsidiary to the extent the Company and its continuing Subsidiaries are
no longer liable for such Indebtedness after such sale) and (ii) increased by
interest income attributable to the assets which are the subject of such Asset
Disposition for such period, (4) if since the beginning of such period the
Company or any of its Subsidiaries (by merger or otherwise) shall have made an
Investment in any Subsidiary of the Company (or any Person which becomes a
Subsidiary of the Company) or an acquisition of assets, including any
Investment in a Subsidiary of the Company or any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating unit of a
business, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto (including the
Incurrence of any Indebtedness) as if such Investment or acquisition occurred
on the first day of such period and (5) if since the beginning of such period
any Person (that subsequently became a Subsidiary of the Company or was merged
with or into the Company or any Subsidiary of the Company since the beginning
of such period) shall have made any Asset Disposition, Investment or
acquisition of assets that would have required an adjustment pursuant to clause
(3) or (4) above if made by the Company or a Subsidiary of the Company during
such period, Consolidated Cash Flow and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting officer of
the Company. If any Indebtedness bears a floating rate of interest and is
being given pro forma effect, the interest expense on such Indebtedness shall
be calculated as if the rate in effect on the date of determination had been
the applicable rate for the entire period (taking into account any Interest
Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement
has a remaining term in excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Subsidiaries, plus, to the extent not
included in such interest expense, (i) interest expense attributable to capital
leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv)
non-cash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) interest actually paid by the Company or any such Subsidiary
under any Guarantee of Indebtedness or other obligation of any other Person,
(vii) net payments (whether positive or negative) pursuant to Interest Rate
Agreements, and (viii) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust and less (a) to the
extent included in such interest expense, the amortization of capitalized debt
issuance costs and (b) interest income. Notwithstanding the foregoing, the
Consolidated Interest Expense with respect to any Subsidiary of the Company,
that was not a Wholly-Owned Subsidiary, shall be included only to the extent
(and in the same proportion) that the net income of such Subsidiary was
included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income (loss)
of the Company and its consolidated Subsidiaries; provided, however, that there
shall not be included in such Consolidated Net Income: (i) any net income
(loss) of any person acquired by the Company or any of its Subsidiaries in a
pooling of interests transaction for any period prior to the date of such
acquisition, (ii) any net income of any Subsidiary of the Company if such
Subsidiary is subject to restrictions, directly or indirectly, on the payment
of dividends or the making of distributions by such Subsidiary directly or
indirectly, to the Company (other than restrictions in effect on the Issue Date
with respect to a Subsidiary of the Company and other than restrictions that
are created or exist in compliance with the "Limitation on Restrictions on
Distributions from Subsidiaries covenant), (iii) any gain or
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loss realized upon the sale or other disposition of any assets of the Company
or its consolidated Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person, (iv) any extraordinary gain or loss, (v) the
cumulative effect of a change in accounting principles, and (vi) the net income
of any Person, other than a Subsidiary, except to the extent of the lesser of
(A) dividends or distributions paid to the company or any of its Subsidiaries
by such Person and (B) the net income of such Person (but in no event less than
zero), and the net loss of such Person shall be included only to the extent of
the aggregate Investment of the Company or any of its Subsidiaries in such
Person.
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its consolidated Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending prior to the taking of any action for the
purpose of which the determination is being made and for which financial
statements are available (but in no event ending more than 135 days prior to
the taking of such action), as (i) the par or stated value of all outstanding
Capital Stock of the Company plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Continuing Director" means, as of the date of determination, any person
who (i) was a member of the Board of Directors of Holding or the Company on the
date of the Indenture, (ii) was nominated for election or elected to the Board
of Directors of Holding or the Company with the affirmative vote of a majority
of the continuing Directors who were members of such Board of Directors at the
time of such nomination or election, or (iii) is a representative of a
Permitted Holder.
"Credit Agreement" means (i) the Credit Agreement, dated as of March 5,
1996, among Holding, the Company, Chemical Bank, as Administrative Agent,
Bankers Trust Company, as Documentation Agent, and the lenders party thereto
from time to time, as the same may be amended, supplemented or otherwise
modified from time to time and (ii) any renewal, extension, refunding,
restructuring, replacement or refinancing thereof (whether with the original
Administrative Agent and lenders or another administrative agent or agents or
other lenders and whether provided under the original Credit Agreement or any
other credit or other agreement or indenture).
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement as to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness and
(ii) any other Senior Indebtedness which, at the date of determination, has an
aggregate principal amount outstanding of, or under which, at the date of
determination, the holders thereof are committed to lend up to, at least $20
million and is specifically designated by the Company in the instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock of such Person which by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) or upon the happening
of any event (i) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding capital stock which is
convertible or exchangeable solely at the option of the Company or a
Subsidiary) or (iii) is redeemable at the option of the holder thereof, in
whole or in part, in each case on or prior to the Stated Maturity of the Notes,
provided, that only the portion of Capital Stock which so matures or is
mandatorily redeemable, is so convertible or exchangeable or is so redeemable
at the option of the holder thereof prior to such Stated Maturity shall be
deemed to be Disqualified Stock.
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"Equity Offering" means an offering for cash by Holding or the Company
of its common stock, or options, warrants or rights with respect to its common
stock.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect as of the date of the Indenture, including those
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Indenture shall be computed in conformity with GAAP.
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and
any obligation, direct or indirect, contingent or otherwise, of such Person (i)
to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a Subsidiary
Guarantor, whether outstanding on the Issue Date or thereafter issued, the
Guarantee of the Bank Indebtedness by such Subsidiary Guarantor, all other
Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the Company
and all Indebtedness of such Subsidiary Guarantor, including interest and fees
thereon, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that the obligations of such
Subsidiary Guarantor in respect of such Indebtedness are not superior in right
of payment to the obligations of such Subsidiary Guarantor under the Subsidiary
Guarantee; provided, however, that Guarantor Senior Indebtedness shall not
include (1) any obligation of such Subsidiary Guarantor to the Company or any
other Subsidiary of the Company, (2) any liability for Federal, state, local or
other taxes owed or owing by such Subsidiary Guarantor, (3) any accounts
payable or other liability to trade creditors arising in the ordinary course of
business (including Guarantees thereof or instruments evidencing such
liabilities) or (4) any Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor that is expressly subordinate or junior in right of payment
to any other Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor, including any Guarantor Senior Subordinated Indebtedness and
Guarantor Subordinated Obligations of such Subsidiary Guarantor.
"Guarantor Senior Subordinated Indebtedness" means, with respect to a
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and any other Indebtedness of such Subsidiary Guarantor
that specifically provides that such Indebtedness is to rank pari passu in
right of payment with the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee and is not subordinated by its terms in right of payment
to any Indebtedness or other obligation of such Subsidiary Guarantor which is
not Guarantor Senior Indebtedness of such Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a Subsidiary
Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding
on the Issue Date or thereafter Incurred) which is subordinate or junior in
right of payment to the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee pursuant to a written agreement.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be incurred by such
Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations with respect thereto) (other
than obligations with respect to letters of credit securing obligations (other
than obligations described in clauses (i), (ii) and (v)) entered into in the
ordinary course of business of such Person to the extent that such letters of
credit are not drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the third business day following receipt by such
Person of a demand for reimbursement following payment on the letter of
credit), (iv) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services (except trade payables and accrued
expenses incurred in the ordinary course of business), which purchase price is
due more than six months after the date of placing such property in service or
taking delivery and title thereto or the completion of such services, (v) all
Capitalized Lease Obligations and all Attributable Indebtedness of such Person,
(vi) all Indebtedness of other Persons secured by a Lien on any asset of such
Person, whether or not such Indebtedness is assumed by such Person, (vii) all
Indebtedness of other Persons to the extent Guaranteed by such Person and
(viii) to the extent not otherwise included in this definition, obligations
under Currency Agreements and Interest Rate Agreements. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Interest Rate Agreement" means with respect to any Person any interest
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.
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"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Notes are originally issued.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).
"Monitoring and Oversight Agreement" means the Monitoring and Oversight
Agreement among Hicks Muse Partners, the Company and Holding as in
effect on the Issue Date.
"Net Available Cash" from an Asset Disposition means cash payments
received (including any cash payments received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only
as and when received, but excluding any other consideration received in the
form of assumption by the acquiring Person of Indebtedness or other obligations
relating to such properties or assets or received in any other noncash form)
therefrom, in each case net of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all Federal, state,
foreign and local taxes required to be paid or accrued as a liability under
GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any
Indebtedness which is secured by any assets subject to such Asset Disposition,
in accordance with the terms of any Lien upon such assets, or which must by its
terms, or in order to obtain a necessary consent to such Asset Disposition, or
by applicable law, be repaid out of the proceeds from such Asset Disposition,
(iii) all distributions and other payments required to be made to any Person
owning a beneficial interest in assets subject to sale or minority interest
holders in Subsidiaries or joint ventures as a result of such Asset
Disposition, (iv) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities
associated with the assets disposed of in such Asset Disposition and retained
by the Company or any Subsidiary of the Company after such Asset Disposition
and (v) any portion of the purchase price from an Asset Disposition placed in
escrow (whether as a reserve for adjustment of the purchase price, for
satisfaction of indemnities in respect of such Asset Disposition or otherwise
in connection with such Asset Disposition); provided, however, that upon the
termination of such escrow, Net Available Cash shall be increased by any
portion of funds therein released to the Company or any Subsidiary.
"Net Cash Proceeds," with respect to any issuance or sale of Capital
Stock, means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result of such issuance or sale.
"Permitted Indebtedness" means (i) Indebtedness of the Company owing to
and held by any Wholly-Owned Subsidiary or Indebtedness of a Subsidiary owing
to and held by the Company or any Wholly-Owned Subsidiary; provided, however,
that any subsequent issuance or transfer of any Capital Stock or any other
event which results in any such Wholly-Owned Subsidiary ceasing to be a Wholly-
Owned Subsidiary or any subsequent transfer of any such Indebtedness (except to
the Company or a Wholly-Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof; (ii)
Indebtedness represented by (x) the Notes, (y) any Indebtedness (other than the
Indebtedness described in clauses (i), (ii) and (iv) of paragraph (b) of the
covenant described under "Limitation on Indebtedness" and other than
Indebtedness Incurred pursuant to clause (i) above or clauses (iv), (v) or (vi)
below) outstanding on the Issue Date and (z) any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this clause (ii) or
Incurred pursuant to paragraph
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(a) of the covenant described under "Limitation on Indebtedness"; (iii) (A)
Indebtedness of a Subsidiary Incurred and outstanding on the date on which such
Subsidiary was acquired by the Company (other than Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds or credit
support utilized to consummate, the transaction or series of related
transactions pursuant to which such Subsidiary became a Subsidiary or was
otherwise acquired by the Company); provided, however, that at the time such
Subsidiary is acquired by the Company, the Company would have been able to
Incur $1.00 of additional Indebtedness pursuant to paragraph (a) of the
description of "Limitation on Indebtedness" above after giving effect to the
Incurrence of such Indebtedness pursuant to this clause (iii) and (B)
Refinancing Indebtedness Incurred by a Subsidiary in respect of Indebtedness
Incurred by such Subsidiary pursuant to this clause (iii); (iv) Indebtedness
(A) in respect of performance bonds, bankers' acceptances and surety or appeal
bonds provided by the Company or any of its Subsidiaries to their customers in
the ordinary course of their business, (B) in respect of performance bonds or
similar obligations of the Company or any of its Subsidiaries for or in
connection with pledges, deposits or payments made or given in the ordinary
course of business in connection with or to secure statutory, regulatory or
similar obligations, including obligations under health, safety or
environmental obligations, (C) arising from Guarantees to suppliers, lessors,
licensees, contractors, franchisees or customers of obligations (other than
Indebtedness) incurred in the ordinary course of business and (D) under
Currency Agreements and Interest Rate Agreements; provided, however, that in
the case of Currency Agreements and Interest Rate Agreements, such Currency
Agreements and Interest Rate Agreements are entered into for bona fide hedging
purposes of the Company or its Subsidiaries (as determined in good faith by the
Board of Directors or senior management of the Company) and correspond in terms
of notional amount, duration, currencies and interest rates, as applicable, to
Indebtedness of the Company or its Subsidiaries Incurred without violation of
the Indenture or to business transactions of the Company or its Subsidiaries on
customary terms entered into in the ordinary course of business; (v)
Indebtedness arising from agreements providing for indemnification, adjustment
of purchase price or similar obligations, or from Guarantees or letters of
credits, surety bonds or performance bonds securing any obligations of the
Company or any of its Subsidiaries pursuant to such agreements, in each case
incurred in connection with the disposition of any business assets or
Subsidiary of the Company (other than Guarantees of Indebtedness or other
obligations Incurred by any person acquiring all or any portion of such
business assets or Subsidiary of the Company for the purpose of financing such
acquisition) in a principal amount not to exceed the gross proceeds actually
received by the Company or any of its Subsidiaries in connection with such
disposition; provided, however, that the principal amount of any Indebtedness
Incurred pursuant to this clause (v), when taken together with all Indebtedness
Incurred pursuant to this clause (v) and then outstanding, shall not exceed $10
million; and (vi) Indebtedness consisting of (A) Guarantees by the Company or a
Subsidiary of Indebtedness Incurred by a Wholly-Owned Subsidiary without
violation of the Indenture and (B) Guarantees by a Subsidiary of Senior
Indebtedness Incurred by the Company without violation of the Indenture (so
long as such Subsidiary could have Incurred such Indebtedness directly without
violation of the Indenture).
"Permitted Investment" means an Investment by the Company or any of its
Subsidiaries in (i) a Wholly-Owned Subsidiary of the Company; provided,
however, that the primary business of such Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Subsidiary of the Company;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Subsidiaries, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms; (v)
payroll, travel and similar advances to cover matters that are expected at the
time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business; (vi) loans or
advances to employees for purposes of purchasing the Company's common stock in
an aggregate amount outstanding at any one time not to exceed $5 million and
other loans and advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Subsidiary; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any of its Subsidiaries
or in satisfaction of judgments or claims; (viii) a Person engaged in a Related
Business or a loan or advance to the
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Company the proceeds of which are used solely to make an Investment in a Person
engaged in a Related Business or a Guarantee by the Company of Indebtedness of
any Person in which such Investment has been made; provided, however, that no
Permitted Investments may be made pursuant to this clause (viii) to the extent
the amount thereof would, when taken together with all other Permitted
Investments made pursuant to this clause (viii), exceed $20 million in the
aggregate (plus, to the extent not previously reinvested, any return of capital
realized on Permitted Investments made pursuant to this clause (viii), or any
release or other cancellation of any Guarantee constituting such Permitted
Investment); (ix) Persons to the extent such Investment is received by the
Company or any Subsidiary as consideration for asset dispositions effected in
compliance with "Limitations on Sales of Assets and Subsidiary Stock"; (x)
prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of the Company and its
Subsidiaries; and (xi) Investments in connection with pledges, deposits,
payments or performance bonds made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations.
"Person" means any individual, corporation, partnerships joint venture,
association, joint-stock company, trust, unincorporated organizations
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock," as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
A "Public Market" exists at any time with respect to the common stock of
Holding or the Company if (a) the common stock of Holding or the Company, as
applicable, is then registered with the Securities Exchange Commission pursuant
to Section 12(b) or 12(g) of Exchange Act and traded either on a national
securities exchange or in the National Association of Securities Dealers
Automated Quotation System and (b) at least 15% of the total issued and
outstanding common stock of Holding or the Company, as applicable, has been
distributed prior to such time by means of an effective registration statement
under the Securities Act of 1933.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances,
replaces, renews, repays or extends (including pursuant to any defeasance or
discharge mechanism) (collectively "refinances", and "refinanced" shall have a
correlative meaning) any Indebtedness existing on the date of the Indenture or
Incurred in compliance with the Indenture (including Indebtedness of the
Company that refinances Indebtedness of any Subsidiary and Indebtedness of any
Subsidiary that refinances Indebtedness of another Subsidiary) including
Indebtedness that refinances Refinancing Indebtedness; provided, however, that
(i) the Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being refinanced, (ii) the refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced, and (iii) such Refinancing Indebtedness is Incurred in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to (or 101% of, in the case of a
refinancing of the Notes in connection with a Change of Control) or less than
the sum of the aggregate principal amount (or if issued with original issue
discount, the aggregate accreted value) then outstanding of the Indebtedness
being refinanced.
"Related Business" means any business which is the same as or related,
ancillary or complementary to any of the businesses of the Company and its
Subsidiaries on the date of the Indenture, as reasonably determined by the
Company's Board of Directors.
"Representative" means any trustee, agent or representative (if any) of
an issue of Senior Indebtedness.
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<PAGE> 67
"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Subsidiary transfers
such property to a Person and the Company or a Subsidiary leases it from such
Person.
"Secured Indebtedness" means any Indebtedness of the Company secured by
a Lien.
"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness
is to rank pari passu with the Notes in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision.
"Subordinated Obligation" means any Indebtedness of the Company (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the NoteS pursuant to a written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Temporary Cash Investments" means any of the following: (i) any
Investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof, (ii) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250 million (or the foreign
currency equivalent thereof) and whose long-term debt, or whose parent holding
company's long-term debt, is rated "A" (or such similar equivalent rating) or
higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act), (iii) repurchase obligations
with a term of not more than 30 days for underlying securities of the types
described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) Investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America or any foreign country
recognized by the United States of America with a rating at the time as of
which any investment therein is made of "P-1" (or higher) according to Moody's
Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's
Ratings Group, (v) Investments in securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by Standard &
Poor's Ratings Group or "A" by Moody's Investors Service, Inc. and (vi)
Investments in mutual funds whose investment guidelines restrict such funds'
investments to those satisfying the provisions of clauses (i) through (v)
above.
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"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.
"Wholly-Owned Subsidiary" means a Subsidiary of the Company, at least
99% of the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or another Wholly-Owned Subsidiary.
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SELLING SECURITYHOLDERS AND PLAN OF DISTRIBUTION
The following table sets forth the names of the Selling Securityholders,
the principal amount of the securities that each Selling Securityholder may
offer and sell pursuant to this Prospectus, and the securities beneficially
owned by each Selling Securityholder. Because the Selling Securityholders may
sell all or a portion of their securities at any time and from time to time
after the date hereof, no estimate can be made of the amount of securities
offered hereby that each Selling Securityholder may retain upon completion of
the offering to which this Prospectus relates. None of the Selling
Securityholders has had any material relationship with the Company except as
set forth in the notes to the table below and as more fully described elsewhere
in this Prospectus.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF SECURITIES
---------------------------------------------
BENEFICIAL
NAME OF OWNERSHIP OF
BENEFICIAL OWNER NOTES OFFERED NOTES
------------------------------------------------------------ ------------------- ---------------------
<S> <C> <C>
Chase Equity Associates(1) $5,000,000 $ 5,000,000
Hicks, Muse, Tate & Furst Equity Fund II, L.P.(2) 4,925,000 4,925,000
Thomas O. Hicks 37,500 4,975,000(3)(4)
Thomas O. Hicks, Jr. 1984 Trust 3,125 3,125
Mack Hardin Hicks 1984 Trust 3,125 3,125
John Alexander Hicks 1984 Trust 3,125 3,125
Robert Bradley Hicks 1984 Trust 3,125 3,125
John R. Muse(2) 7,000 4,933,250(3)(5)
Charles W. Tate(2)(6) 8,075 4,933,075(3)
Jack D. Furst(2)(6) 6,800 4,931,800(3)
Lawrence D. Stuart, Jr.(2) 1,875 4,926,875(3)
Muse Children's GS Trust 1,250 1,250
</TABLE>
- ------------------
(1) Chase Equity Associates is an affiliate of Chase, which is
Administrative Agent and a lender under the Credit Agreement. See
"Description of Senior Bank Facility."
(2) Hicks Muse Partners, a corporation affiliated with HM Fund II, receives
an annual fee of not less than $500,000 for oversight and monitoring
services to Holding and the Company and is also entitled to receive a
fee equal to 1.5% of the transaction value for each add-on transaction
in which the Company is involved. See "Certain Relationships and
Related Transactions."
(3) Includes Notes owned of record by HM Fund II, of which the sole general
partner is HM2/GP Partners, L.P., a limited partnership of which the
sole general partner is Hicks, Muse GP Partners, L.P., a limited
partnership of which the sole general partner is Hicks, Muse, Tate &
Furst Fund II Incorporated, a corporation affiliated with Hicks, Muse.
Thomas O. Hicks is a controlling stockholder of Hicks, Muse and serves
as Chairman of the Board, President, Chief Executive Officer, Chief
Operating Officer and Secretary of Hicks, Muse. Accordingly, Mr. Hicks
may be deemed to be the beneficial owner of the Notes held by HM Fund
II. John R. Muse, Charles W. Tate, Jack D. Furst, Lawrence D. Stuart,
Michael J. Levitt and Alan B. Menkes are officers, directors and
minority stockholders of Hicks, Muse and as such may also be deemed to
be beneficial owners of the Notes. Each of Messrs. Hicks, Muse, Tate,
Furst, Stuart, Levitt and Menkes disclaims the existence of a group and
disclaims beneficial ownership of the Notes not respectively owned of
record by him.
(4) Includes Notes in the aggregate principal amount of $12,500 owned of
record by Mr. Hicks as the trustee for certain trusts of which his
children are beneficiaries.
(5) Includes Notes in the aggregate principal amount of $1,250 owned of
record by Mr. Muse as the trustee for certain trusts of which his
children are beneficiaries.
(6) Messrs. Tate and Furst each serves as a director of Holding and the
Company.
The Company will not receive any proceeds from the offering to which
this Prospectus relates. The Selling Securityholders may sell the securities
offered hereby through underwriters or dealers, through brokers or other
agents, or directly to one or more purchasers in one or more transactions in
the over-the-counter market, if such a market develops, or in privately
negotiated transactions, or in a combination of such transactions. Such
transactions may be effected by the Selling Securityholders at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices, or at fixed prices, which may be changed. Such
underwriters, dealers, brokers or other agents may receive compensation in the
form of discounts or commissions
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from the Selling Securityholders and may receive commissions from the
purchasers of such securities for whom they act as agent.
Any Selling Securityholder and any dealer, broker or other agent selling
securities offered hereby for the Selling Securityholders or purchasing any
such securities from a Selling Securityholder for purposes of resale may be
deemed to be an underwriter under the Securities Act and any compensation
received by such Selling Securityholder, dealer, broker or other agent may be
deemed underwriting compensation. Neither the Company nor the Selling
Securityholders can presently estimate the amount of such compensation. The
Company knows of no existing arrangements between any Selling Securityholder
and any other Selling Securityholder, dealer, or broker or other agent.
To comply with certain states' securities laws, if applicable, the
securities offered hereby may be sold in such states only through brokers or
dealers. In addition, in certain states the securities may not be sold unless
they have been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
In accordance with the provisions contained in the Preferred Stock and
Warrant Purchase Agreement dated as of March 5, 1996, by and among Holding, the
Company, Chase Equity Associates and HM Fund II ("the Preferred Stock and
Warrant Purchase Agreement") pursuant to which the Registration Statement of
which this Prospectus is a part has been filed, the Company is obligated under
certain circumstances to indemnify the Selling Securityholders who sell
securities pursuant to this Prospectus, their respective officers, directors
and agents, and controlling persons, and each underwriter in an offering or
sale of such securities, against certain liabilities related to such sale or
disposition, including liabilities arising under the Securities Act or to
contribute to payments which such persons or entities may be required to make
in respect thereof. In accordance with the Preferred Stock and Warrant
Purchase Agreement, the Company may, in certain circumstances, also
be entitled to indemnification or contribution by the Selling Securityholders
or underwriters participating in an offering of the securities to which this
Prospectus relates.
Pursuant to the Preferred Stock and Warrant Purchase Agreement,
the Company has agreed to pay, with certain limited exceptions, all the
expenses incurred in connection with the preparation and filing of this
Prospectus and the related Registration Statement, including without
limitation, all registration, filing, securities exchange listing and fees of
any applicable stock exchange, all registration, filing, qualification and
other fees and expenses of complying with securities or blue sky laws, all word
processing duplicating and printing expenses, messenger and delivery expenses,
and the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits or
"cold comfort" letters required by or incident to such performance and
compliance, but excluding underwriting discounts and commissions, the fees and
disbursements of counsel retained by the holders of the Notes being registered
and transfer taxes, if any, in respect of Notes, which shall be borne by the
sellers of the Notes. The Company estimates that the foregoing expenses in
connection with the registration of the securities will be approximately
$143,000.
The Notes are a new issue of securities for which there is no public
market. The Company does not intend to list the Notes on any securities
exchange. Accordingly, no assurance can be given as to (i) the likelihood that
an active market for the Notes will develop, (ii) the liquidity of any such
market, (iii) the ability of holders to sell their Notes or (iv) the prices
that they may obtain for their Notes upon any sale. Future trading prices for
the Notes will depend upon many factors, including, among others, the Company's
operating results, the market for similar securities and fluctuating interest
rates.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States Federal
income tax considerations generally applicable to holders acquiring the Notes,
but does not purport to be a complete analysis of all potential consequences.
The discussion is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, Internal Revenue Service ("IRS") rulings and
judicial decisions now in effect, all of which are subject to change at any
time by legislative, judicial or administrative action. Any such changes may
be applied retroactively in a manner that could adversely affect a holder of
the Notes.
The discussion assumes that the holders of the Notes will hold them as
"capital assets" within the meaning of Section 1221 of the Code. The Company
intends to treat the Notes as indebtedness for federal income tax purposes, and
the balance of the discussion is based on the assumption that such treatment
will be respected. The discussion is not binding on the IRS or the courts.
The Company has not sought and will not seek any rulings from the IRS with
respect to the positions of the Company discussed herein, and there can be no
assurance that the IRS will not take a different position concerning the tax
consequences of the purchase, ownership or disposition of the Notes or that any
such position would not be sustained.
The tax treatment of a holder of the Notes may vary depending on such
holder's particular situation or status. Certain holders (including S
corporations, insurance companies, tax-exempt organizations, financial
institutions, broker-dealers and taxpayers subject to alternative minimum tax)
may be subject to special rules not discussed below. The following discussion
is limited to the United States Federal income tax consequences relevant to a
holder of the Notes that is an individual who is a citizen or resident of the
United States, a corporation or partnership created or organized under the laws
of the United States, or any political subdivision thereof, or an estate or
trust otherwise subject to U.S. Federal income taxation of its worldwide income.
The following discussion does not consider all aspects of United States Federal
income tax that may be relevant to the purchase, ownership and disposition of
the Notes by a holder in light of such holder's personal circumstances. In
addition, the discussion does not consider the effect of any applicable foreign,
state, local or other tax laws or estate or gift tax considerations.
STATED INTEREST ON NOTES
A holder of a Note will be required for federal income tax purposes to
report stated interest on the Note as income in accordance with the holder's
method of accounting for tax purposes.
ISSUE PRICE OF NOTES
The "issue price" of a debt instrument issued in exchange for property
generally should equal its stated principal amount, as long as the debt
instrument provides for "adequate stated interest." In certain "potentially
abusive" situations, such as when a debt instrument provides for "clearly
excessive" interest, the "issue price" of a debt instrument may be determined
by reference to the fair market value of the property acquired in exchange
therefor. Because the Notes provide for "adequate stated interest," the
Company believes that the issue price of the Notes is their stated principal
amount. Accordingly, because interest payments with respect to the Notes
should qualify as "qualified stated interest," the "stated redemption price at
maturity" of the Notes should equal the "issue price" of the Notes, and
therefore the Notes should not have any original issue discount.
AMORTIZABLE BOND PREMIUM ON NOTES
If the holder's basis in the Notes exceeds the amount payable at the
maturity date (or earlier call date, if appropriate), such excess will be
deductible by the holder of the Notes as amortizable bond premium over the term
of the Notes (taking into account earlier call dates, as appropriate), under a
yield-to-maturity formula, if an
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<PAGE> 72
election by the holder under section 171 of the Code is made or is already in
effect. An election under section 171 of the Code is available only if the
Notes are held as capital assets. This election is revocable only with the
consent of the IRS and applies to all obligations owned or acquired by the
holder on or after the first day of the taxable year to which the election
applies. To the extent the excess is deducted as amortizable bond premium, the
holder's adjusted tax basis in the Notes will be reduced. Except any may
otherwise be provided in future Treasury Regulations, the amortizable bond
premium will be treated as an offset to interest income on the Exchange
Debentures rather than as a separate deduction item. Recently proposed
Treasury Regulations, which are not yet effective, would modify the described
rules under section 171 in order to coordinate such rules with the rules
relating to original issue discount.
MARKET DISCOUNT
The market discount rules generally provide that, if a holder of a debt
instrument purchases it at a "market discount" and thereafter realizes gain
upon a disposition or a retirement of the debt instrument, the lesser of such
gain or the portion of the market discount that has accrued on a straight-line
basis (or on a constant interest rate basis, if such alternative rate of
accrual has been elected by the holder under section 1276(b) of the Code) while
the debt instrument was held by such holder will be taxed as ordinary income at
the time of such disposition. "Market discount" with respect to a Note will be
the amount, if any, by which the "stated redemption price at maturity" of the
Note exceeds the holder's basis in the Note immediately after such holder's
acquisition, subject to a de minimis exception.
A holder who acquires a Note at a market discount will also be required
to defer a portion of any interest expense that otherwise may be deductible on
any indebtedness incurred or maintained to purchase or carry such Note until
the holder disposes of the Note in a taxable transaction. Moreover, to the
extent of any accrued market discount on such Notes, any partial principal
payment with respect to the Notes will be includible as ordinary income upon
receipt, as will the Note's fair market value on certain otherwise non-taxable
transfers (such as gifts).
A holder of Notes acquired at a market discount may elect for federal
income tax purposes to include market discount in gross income as the discount
accrues, either on a straight-line basis or on a constant interest rate basis.
This current inclusion election, once made, applies to all market discount
obligations acquired on or after the first day of the first taxable year to
which the election applies, and may not be revoked without the consent of the
IRS. If a holder of Notes makes such an election, the foregoing rules with
respect to the recognition of ordinary income on sales and other disposition of
such debt instruments, and with respect to the deferral of interest deductions
on indebtedness incurred or maintained to purchase or carry such Notes, would
not apply.
REDEMPTION, SALE OR EXCHANGE OF NOTES
Generally, any redemption, sale or exchange of Notes by a holder would
result in taxable gain or loss equal to the difference between the sum of
amount of cash and the fair market value of other property received (except to
the extent that cash received is attributable to accrued interest, which
portion of the consideration would be taxed as ordinary income if such interest
was previously untaxed) and the holder's adjusted tax basis in the Notes.
Subject to the above discussion of market discount, such gain or loss would be
capital gain or loss, long-term if the holder's holding period for the Notes
exceeds one year.
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BACKUP WITHHOLDING
Under the Code, a holder of Notes may be subject, under certain
circumstances, to "backup withholding" at a 31% rate with respect to interest
payments or gross proceeds. This withholding generally applies only if the
holder (i) fails to furnish its social security or other taxpayer
identification number ("TIN") within a reasonable time after the request
therefor, (ii) furnishes an incorrect TIN, (iii) is notified by the Internal
Revenue Service that it has failed to report properly interest or dividends, or
(iv) fails, under certain circumstances, to provide a certified statement,
signed under penalty of perjury, that the TIN provided is its correct number
and that it is not subject to backup withholding. Any amount withheld from a
payment to a holder under the backup withholding rules is allowable as a credit
against such holder's federal income tax liability, provided that the required
information is furnished to the Internal Revenue Service. Corporations and
certain other entities described in the Code and Treasury Regulations are
exempt from such withholding if their exempt status is properly established.
Holders of Notes should consult their tax advisors as to their qualifications
for exemption from withholding and the procedure for obtaining such exemption.
THE FOREGOING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH PURCHASER OF NOTES SHOULD CONSULT WITH ITS OWN TAX ADVISOR AS
TO THE SPECIFIC TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF THE NOTES,
INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN INCOME AND
OTHER TAX LAWS.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby has been
passed upon for the Company by Weil, Gotshal & Manges LLP (a limited liability
partnership including professional corporations), Dallas, Texas. R. Scott
Cohen, who is a partner in Weil, Gotshal & Manges LLP owns 12,000 shares of
Holding Common Stock. Other than the foregoing, no attorney of Weil, Gotshal &
Manges LLP owns any shares of Holding Common Stock or otherwise has a
substantial interest in the Company.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1995, for the year ended December 31, 1996 and the seven months ended
December 31, 1995, have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent certified public accountants, given on the
authority of that firm as experts in accounting and auditing. The combined
financial statements of Dekko as of December 28, 1995 and for each of the years
ended December 28, 1995 and December 29, 1994, have been included herein in
reliance on the report of Coopers & Lybrand L.L.P., independent certified
public accountants, given on the authority of that firm as experts in
accounting and auditing. The consolidated financial statements of Wirekraft
Holdings Corp. for the six months ended May 31, 1995 and for the year ended
November 30, 1994, have been included herein in reliance on the Report of
Coopers & Lybrand L.L.P., independent certified public accountants, given on
the authority of that firm as experts in accounting and auditing. The
consolidated financial statements of Omega for the two months ended May 31,
1995, has been included herein in reliance on the report of Coopers & Lybrand
L.L.P., independent certified public accountants, given on the authority of the
firm as experts in accounting and auditing. The consolidated financial
statements of THL-Omega for the year ended December 31, 1994, have been
included herein in reliance on the report of Price Waterhouse LLP, independent
certified public accountants, given on the authority of that firm as experts
in accounting and auditing. The statement of direct revenues and expenses for
ECM for the period January 1, 1994 through November 30, 1994, have been
included herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent certified public accountants, given an authority of that firm as
experts in accounting and auditing.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
INTERNATIONAL WIRE GROUP, INC.
Report of Coopers & Lybrand L.L.P., Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Balance Sheets as of December 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . F-4
Consolidated Statements of Operations for the year ended December 31, 1996 and seven months
ended December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
Consolidated Statements of Stockholder's Equity for the year ended December 31, 1996 and seven months
ended December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows for the year ended December 31, 1996 and seven months ended
December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-8
Consolidated Balance Sheet as of March 31, 1997 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-21
Consolidated Statements of Operations for the three months ended March 31, 1997 and 1996 (unaudited) . . . . . . . F-22
Consolidated Statements of Stockholder's Equity for the three months ended March 31, 1997 (unaudited) . . . . . . . F-23
Consolidated Statements of Cash Flows for the three months ended March 31, 1997 and 1996 (unaudited) . . . . . . . F-24
Notes to Consolidated Financial Statements (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-25
Pro Forma Combined Statement of Operations for the year ended December 31, 1996 (unaudited) . . . . . . . . . . . . F-31
DEKKO WIRE TECHNOLOGIES
Report of Coopers & Lybrand L.L.P., Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-32
Combined Balance Sheet as of December 28, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-33-34
Combined Statements of Income, for the two years ended
December 28, 1995 and December 29, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-35
Combined Statements of Shareholders' Equity for the two years ended
December 28, 1995 and December 29, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-36
Combined Statements of Cash Flows for the two years ended
December 28, 1995 and December 29, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-37
Notes to Combined Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-38
WIREKRAFT HOLDINGS CORP. (FORMERLY WB HOLDINGS INC.)
Report of Coopers & Lybrand L.L.P., Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-46
Consolidated Statements of Operations for the six months ended May 31, 1995 and the year ended November 30, 1994 . . F-47
Consolidated Statements of Stockholders' Equity for the six months ended May 31, 1995 and the year
ended November 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-48
Consolidated Statements of Cash Flows for the six months ended May 31, 1995 and the year ended
November 30, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-49
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-50
</TABLE>
F-1
<PAGE> 75
<TABLE>
<S> <C> <C>
OMEGA WIRE CORP.
Report of Coopers & Lybrand L.L.P., Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-58
Consolidated Statement of Operations for the two months ended May 31, 1995 . . . . . . . . . . . . . . . . . . . . F-59
Consolidated Statement of Stockholders' Equity for the two months ended May 31, 1995 . . . . . . . . . . . . . . . F-60
Consolidated Statement of Cash Flows for the two months ended May 31, 1995 . . . . . . . . . . . . . . . . . . . . F-61
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-62
THL-OMEGA HOLDING CORPORATION
Report of Coopers & Lybrand L.L.P., Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-67
Consolidated Statement of Operations and Retained Earnings for the three months ended March 31, 1995 . . . . . . . F-68
Consolidated Statement of Cash Flows for the three months ended March 31, 1995 . . . . . . . . . . . . . . . . . . F-69
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-70
Report of Price Waterhouse LLP, Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . .. . . . F-73
Consolidated Statements of Operations and Retained Earnings for the year ended December 31, 1994 . . . . . . . . . F-74
Consolidated Statements of Cash Flows for the year ended December 31, 1994 . . . . . . . . . . . . . . . . . . . . F-75
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-76
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
Report of Coopers & Lybrand L.L.P., Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-80
Statement of Direct Revenues and Expenses for the eleven months ended November 30, 1994 . . . . . . . . . . . . . . F-81
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-82
</TABLE>
F-2
<PAGE> 76
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
International Wire Group, Inc.:
We have audited the accompanying consolidated balance sheets of International
Wire Group, Inc. and subsidiaries as of December 31, 1996 and December 31,
1995, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year ended December 31, 1996 and seven months
ended December 31, 1995. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of International
Wire Group, Inc. and subsidiaries as of December 31, 1996 and December 31,
1995, and the consolidated results of their operations and their cash flows for
the year ended December 31, 1996 and the seven months ended December 31, 1995,
in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
February 28, 1997
F-3
<PAGE> 77
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ASSETS
DECEMBER 31, DECEMBER 31,
1996 1995
-------------- ---------------
<S> <C> <C>
Current assets:
Accounts receivable, less allowance of $1,363, and $860 . . . . . . . $ 71,181 $ 47,180
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,362 57,777
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . 5,060 2,733
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . 4,741 125
---------- ----------
Total current assets . . . . . . . . . . . . . . . . . . . . 141,344 107,815
Property, plant and equipment, net . . . . . . . . . . . . . . . . . 118,551 82,259
Deferred financing costs, net . . . . . . . . . . . . . . . . . . . . 21,222 16,688
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . 244,655 215,400
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,248 5,758
---------- ----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . $531,020 $427,920
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term obligations . . . . . . . . . . . . . $ 20,948 $ 12,662
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . 45,832 37,627
Accrued and other liabilities . . . . . . . . . . . . . . . . . . . . 33,150 20,323
Customers' deposits . . . . . . . . . . . . . . . . . . . . . . . . . 8,033 5,688
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . 4,648 2,516
---------- ----------
Total current liabilities . . . . . . . . . . . . . . . . . . . 112,611 78,816
Long-term obligations, less current maturities . . . . . . . . . . . . 426,719 326,015
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . 14,719 8,194
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . 12,162 4,897
--------- ----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . 566,211 417,922
Stockholders' equity:
Common stock, $.01 par value, 1,000 shares authorized,
issued and outstanding . . . . . . . . . . . . . . . . . . . . -- --
Series A senior cumulative exchangeable redeemable preferred
stock, $.01 par value, $25 liquidation value, 400,000 shares
authorized, issued and outstanding . . . . . . . . . . . . . . 4 --
Contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . 125,340 81,051
Carryover of predecessor basis . . . . . . . . . . . . . . . . . . . (67,762) (67,762)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . (92,773) (3,291)
--------- ----------
Total stockholders' equity . . . . . . . . . . . . . . . . . . (35,191) 9,998
--------- ----------
Total liabilities and stockholders' equity . . . . . . . . . . $531,020 $427,920
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-4
<PAGE> 78
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS ENDED
DECEMBER 31, 1996 DECEMBER 31, 1995
--------------------- ------------------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . $546,981 $245,583
Operating expenses:
Cost of goods sold . . . . . . . . . . . . . . . . 420,823 195,221
Selling, general and administrative . . . . . . . . 43,885 17,129
Depreciation and amortization . . . . . . . . . . . 31,341 11,020
Impairment, unusual and plant closing
charges . . . . . . . . . . . . . . . . . . . 84,250 1,750
Inventory valuation adjustment . . . . . . . . . . 8,500 --
---------- -----------
Operating income (loss) . . . . . . . . . . . . . . . (41,818) 20,463
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . (43,013) (19,931)
Amortization of deferred financing costs . . . . . (3,701) (1,468)
Other, net . . . . . . . . . . . . . . . . . . . . 312 (158)
---------- -----------
Loss before income tax provision . . . . . . . . . . (88,220) (1,094)
Income tax provision . . . . . . . . . . . . . . . . 1,262 2,197
---------- -----------
Net loss . . . . . . . . . . . . . . . . . . . . . . $ (89,482) $ (3,291)
========= ===========
</TABLE>
See accompanying notes to the consolidated financial statements
F-5
<PAGE> 79
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996 AND THE
SEVEN MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
CARRYOVER OF
COMMON PREFERRED CONTRIBUTED PREDECESSOR ACCUMULATED
STOCK STOCK CAPITAL BASIS DEFICIT TOTAL
--------- ---------- ------------- ------------ ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Capital contributed . . . . . . $ -- $ -- $ 81,951 $ -- $ -- $ 81,951
Issuance costs . . . . . . . . -- -- (900) -- -- (900)
Carryover of predecessor basis -- -- -- (67,762) -- (67,762)
Net loss . . . . . . . . . . . -- -- -- -- (3,291) (3,291)
--------- --------- ---------- ---------- --------- ---------
Balance December 31, 1995 . . . -- -- 81,051 (67,762) (3,291) 9,998
Capital contributed . . . . . . -- -- 35,493 -- -- 35,493
Issuance of preferred stock . . -- 4 9,996 -- -- 10,000
Issuance costs . . . . . . . . -- -- (1,200) -- -- (1,200)
Net loss . . . . . . . . . . . -- -- -- -- (89,482) (89,482)
---------- ---------- ----------- ----------- --------- ---------
Balance December 31, 1996 . . . $ -- $ 4 $125,340 $(67,762) $(92,773) $(35,191)
========= ========= ======== ======== ======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-6
<PAGE> 80
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Year Seven Months
Ended Ended
December 31, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . $ (89,482) $ (3,291)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 31,341 11,020
Impairment and unusual charges . . . . . . . . . . . . . . . 78,250 --
Amortization of deferred financing costs . . . . . . . . . . 3,701 1,468
Inventory valuation adjustment . . . . . . . . . . . . . . . 8,500 --
Deferred income taxes . . . . . . . . . . . . . . . . . . . . 3,184 274
Change in assets and liabilities, net of acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . (1,878) 12,094
Inventories . . . . . . . . . . . . . . . . . . . . . . . . (3,645) (9,590)
Prepaid expenses and other . . . . . . . . . . . . . . . . (4,829) (846)
Accounts payable . . . . . . . . . . . . . . . . . . . . . 1,216 1,232
Accrued and other liabilities . . . . . . . . . . . . . . . 2,299 (2,084)
Accrued interest . . . . . . . . . . . . . . . . . . . . . 2,132 2,516
Income taxes payable/refundable . . . . . . . . . . . . . . 1,914 778
Other long-term liabilities . . . . . . . . . . . . . . . . (723) (237)
---------- ----------
Net cash from operating activities . . . . . . . . . . . . . . 31,980 13,334
---------- ----------
Cash flows provided by (used in) investing activities:
Acquisitions, net of cash . . . . . . . . . . . . . . . . . . (160,259) (341,046)
Capital expenditures, net . . . . . . . . . . . . . . . . . . (15,849) (5,751)
---------- ----------
Net cash used in investing activities . . . . . . . . . . . . . (176,108) (346,797)
---------- ----------
Cash flows provided by (used in) financing activities:
Equity proceeds . . . . . . . . . . . . . . . . . . . . . . . 45,039 15,048
Proceeds from issuance of long-term obligations . . . . . . . 128,200 337,500
Repayment of long-term obligations . . . . . . . . . . . . . (21,311) (5,085)
Financing fees and other . . . . . . . . . . . . . . . . . . (7,800) (14,000)
---------- ----------
Net cash from financing activities . . . . . . . . . . . . . . 144,128 333,463
---------- ----------
Net change in cash . . . . . . . . . . . . . . . . . . . . . . -- --
Cash at beginning of the period . . . . . . . . . . . . . . . . -- --
---------- ----------
Cash at end of the period . . . . . . . . . . . . . . . . . . . $ -- $ --
========== ==========
</TABLE>
See accompanying notes to the consolidated financial statements
F-7
<PAGE> 81
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996 AND
SEVEN MONTHS ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
1. THE COMPANY
International Wire Group, Inc. ("Group" or the "Company"), a Delaware
corporation, was formed to participate in the transactions contemplated by the
Wirekraft/Omega Acquisitions (as described below). On June 12, 1995, Wirekraft
Holdings Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire
Holding Company ("Holding"), the sole common stockholder of Group, Wirekraft
Acquisition Company and certain shareholders of Wirekraft and Omega entered
into a series of acquisitions and mergers (the "Acquisitions") pursuant to
which Group acquired all of the common equity securities (and all securities
convertible into such securities) of Wirekraft and all of the common equity
securities of Omega. The Company has designated June 1, 1995, as the effective
date of the Acquisitions for financial reporting purposes. The Company through
its two segments, the Wire segment and the Harness segment, is engaged in the
design, manufacture and marketing of non-insulated and insulated copper wire
and wire harnesses. The Company's products are used by a wide variety of
customers primarily in the appliance, computer and data communications,
automotive and industrial equipment industries.
The total purchase price of the Acquisitions was approximately $420,591,
which included the redemption of certain equity securities, the retirement of
existing indebtedness of Wirekraft and Omega and the payment of related fees
and costs, is summarized as follows:
<TABLE>
<S> <C>
Redemption of common stock, equity rights, warrants and options . . . . . . . . . . . . $104,810
Repayment of existing indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 275,460
Redemption of preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,321
Fees and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000
--------
$420,591
========
</TABLE>
In accordance with EITF 88-16, "Basis in Leveraged Buy Out
Transactions," the Acquisitions have been accounted for at "predecessor basis".
The total acquisition costs have been allocated to the acquired net assets as
follows:
<TABLE>
<S> <C>
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $117,504
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,253
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209,818
Fees and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,749
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,707)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (21,788)
Carryover predecessor basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,762
---------
$420,591
========
</TABLE>
F-8
<PAGE> 82
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Unaudited pro forma data, which present condensed results of operations
for the twelve months ended December 31, 1995 as though the Acquisitions and
related financing had occurred at the beginning of the period, is as follows:
<TABLE>
<S> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . $454,693
Net income . . . . . . . . . . . . . . . . . . . . . $ 3,406
</TABLE>
2. DWT ACQUISITION
On March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a
wholly-owned subsidiary of the Company, acquired the businesses of Hoosier
Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc.,
a group of affiliated companies operating together under the trade name Dekko
Wire Technology Group (the "DWT Acquisition"). The total consideration of
$173,239 paid in connection with the DWT Acquisition including fees, expenses
and certain adjustments consisted of (i) cash and (ii) warrants for the
purchase of 2,000,000 shares of Common Stock, par value $.01 per share, of
Holding. The DWT Acquisition and the related transaction fees and expenses were
funded with (i) $128,200 of senior debt under the Amended Credit Agreement,
(ii) $35,000 from the issuance of 35,000,000 shares of Common Stock, par value
$.01 per share, of Holding, (iii) $39 from the issuance of 3,888,889 shares of
Class A Common Stock, par value $.01 per share, of Holding, and (iv) $10,000
from the issuance of 400,000 shares of Series A Senior Cumulative Exchangeable
Redeemable Preferred Stock, par value $.01 per share, of the Company (sold in
units together with warrants for the purchase of shares of Common Stock, par
value $.01 per share, of Holding).
The DWT Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been allocated to the
consolidated assets and liabilities based upon their estimated respective fair
values. The total acquisition cost is allocated to the acquired net assets as
follows:
<TABLE>
<S> <C>
Current assets . . . . . . . . . . . . . . . . . . . $ 37,669
Property, plant and equipment . . . . . . . . . . . . 36,020
Goodwill . . . . . . . . . . . . . . . . . . . . . . 105,041
Other, non-current . . . . . . . . . . . . . . . . . 3,515
Fees and costs . . . . . . . . . . . . . . . . . . . 7,800
Current liabilities . . . . . . . . . . . . . . . . . (15,306)
Other liabilities . . . . . . . . . . . . . . . . . . (1,500)
--------
$173,239
========
</TABLE>
Unaudited pro forma results of operations of the Company for the years
ended December 31, 1996 and December 31, 1995, are included below. Such pro
forma presentation has been prepared assuming that the DWT Acquisition and
related financing had occurred as of January 1, 1996 and January 1, 1995,
respectively, and that the Acquisitions (as described in Note 1) had occurred
as of January 1, 1995.
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . $574,827 $ 601,709
Net income (loss) . . . . . . . . . . . . . . . . . $(85,394) $ 4,960
</TABLE>
F-9
<PAGE> 83
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Group and
its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
Revenue Recognition
Sales and related cost of goods sold are included in income when goods
are shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is
calculated using the straight-line method. The average estimated lives
utilized in calculating depreciation are as follows: building - 25 to 40 years;
building improvements - 15 years; machinery and equipment - 3 to 11 years; and
furniture and fixtures - 5 years. Leasehold improvements are amortized over
the shorter of the term of the respective lease or the life of the respective
improvement. In fiscal 1996, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of".
SFAS No. 121 requires impairment losses to be recorded on long-lived assets
used in operations when indications of impairment are present and the
undiscounted cash flows estimated to be generated by those assets are less than
the assets' carrying amount.
Intangible Assets
Intangible assets consist principally of goodwill arising from the
excess of cost over the value of net assets acquired which is amortized using
the straight-line method over forty years and a supply agreement (the
"Agreement") which was entered into on December 31, 1995. The Company
estimates its obligation under this Agreement to be approximately $7,609 and
$8,700 at December 31, 1996 and December 31, 1995, respectively. Accordingly
the Company recorded a liability and corresponding intangible asset for $8,700
which will be amortized using the straight-line method over eleven years. In
connection with this Agreement, Holding issued 50,000 shares of preferred stock
having a liquidation value of $5,000, which is amortized as expense and
contributed capital in the Company's financial statements over the period of
the Agreement. Contributed capital recognized by the Company in connection
with this agreement for the year ended December 31, 1996 was $454. In fiscal
1996, the Company completed a review of the carrying value of goodwill, which
resulted in an impairment charge (see Note 10). Accumulated amortization
aggregated $18,182 and $8,783 at December 31, 1996 and December 31, 1995,
respectively.
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses
associated with the debt financing are amortized over the term of the related
debt using the effective interest method and the straight-line method which
F-10
<PAGE> 84
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
approximates the effective interest method. Accumulated amortization
aggregated $5,169 and $1,468 at December 31, 1996 and December 31, 1995,
respectively.
Fair Value of Financial Instruments
The Company's financial instruments, excluding the Senior Notes (as
hereinafter defined) are carried at fair value or amounts that approximate fair
value. The Company has estimated the fair value of the Senior Notes using
current market data. At December 31, 1996, the estimated fair market value of
the Senior Notes was $162,000.
Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Statement of Cash Flows
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest paid for the year ended
December 31, 1996 and seven months ended December 31, 1995 was $40,881 and
$17,415, respectively. Taxes refunded, net of payments for the year ended
December 31, 1996 and taxes paid for the seven months ended December 31, 1995
were $4,073 and $1,145, respectively.
During the year ended December 31, 1996 and seven months ended December
31, 1995, the Company entered into certain non-cash investing and financing
activities. In connection with the Acquisitions, certain shares of Omega and
Wirekraft common stock and Class A common stock were exchanged for shares of
Holding common stock. The total amount of shares exchanged was $66,903. In
fiscal 1996 and 1995, the Company recorded capital lease obligations of $2,348
and $680 respectively, for property, plant and equipment.
Significant Customer
A significant portion of the Company's sales were to a major customer
within the Harness segment. Sales to this customer represented 18% and 19% of
net sales for the year ended December 31, 1996 and the seven months ended
December 31, 1995, respectively.
4. INVENTORIES
The composition of inventories is as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,191 $19,451
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,908 15,916
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,263 22,410
------- -------
Total inventories . . . . . . . . . . . . . . . . . . . . . . . . $60,362 $57,777
======= =======
</TABLE>
F-11
<PAGE> 85
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The current cost of inventories is approximately $57,267 and $56,035 at
December 31, 1996 and December 31, 1995.
In connection with the decline in the average price of copper during
fiscal 1996 the Company recorded an $8,500 pre-tax inventory valuation charge
to reduce the LIFO valuation of copper in inventory.
5. PROPERTY, PLANT AND EQUIPMENT
The composition of property, plant and equipment is as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------------ -----------------
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,797 $ 2,061
Buildings and improvements . . . . . . . . . . . . . . . . . . 31,546 20,848
Machinery and equipment . . . . . . . . . . . . . . . . . . . . 121,013 76,668
--------- --------
155,356 99,577
Less: accumulated depreciation . . . . . . . . . . . . . . . . (36,805) (17,318)
--------- --------
$118,551 $82,259
======== =======
</TABLE>
6. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
In connection with the Acquisitions, the Company incurred aggregate fees
and costs of $14,000. Costs of $13,100 related to the Senior Notes and Credit
Agreement (see Note 7) are included in deferred financing costs and are being
amortized over the terms of the related borrowings. Costs of $900 related to
the issuance of Holding's common stock have been deducted from the proceeds to
reduce the carrying value of the common stock. In connection with the DWT
Acquisition, the Company incurred aggregate fees and costs of $7,800. Costs of
$6,600 related to the Amended Credit Agreement (as hereinafter defined) are
included in deferred financing costs and are being amortized over the terms of
the related borrowings. Costs of $1,200 related to the issuance of Holding's
common stock and the Preferred Stock (as defined in Note 8) have been deducted
from the proceeds to reduce the carrying value of the common and preferred
stock.
In connection with the Acquisitions and the related financing, the
Company entered into a Monitoring and Oversight Agreement ("Agreement") with
Hicks, Muse & Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the Company)
pursuant to which the Company paid Hicks, Muse a cash fee of $3,725 as
compensation for financial advisory services. Pursuant to the Agreement, the
Company paid Hicks, Muse a cash fee of $2,500 as compensation for financial
advisory services received in connection with the DWT Acquisition. The fees
have been allocated based upon the issuance proceeds to the debt and equity
securities issued in connection with the Acquisitions and the DWT Acquisition
as deferred financing costs or as a deduction from the cash proceeds received
from the sale of the common stock of Holding. The Agreement further provides
that the Company shall pay Hicks, Muse an annual fee of $500, for ten years for
monitoring and oversight services adjusted annually at the end of each fiscal
year to an amount equal to .1% of the consolidated net sales of the Company,
but in no event less than $500 annually. The obligation under the Agreement
and the related deferred financing costs have been recorded in the consolidated
balance sheets.
F-12
<PAGE> 86
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. LONG-TERM OBLIGATIONS
The composition of long-term obligations is as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1996
--------------- ---------------
<S> <C> <C>
Credit Agreement:
Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,990 $ 19,000
Term Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271,404 163,813
Senior Subordinated Notes . . . . . . . . . . . . . . . . . . . . . . . 150,000 150,000
Capital lease and other obligations . . . . . . . . . . . . . . . . . . 7,273 5,864
--------- ---------
447,667 338,677
Less, current maturities . . . . . . . . . . . . . . . . . . . . . . . (20,948) (12,662)
---------- ----------
$426,719 $326,015
======== ========
</TABLE>
The schedule of principal payments for long-term obligations at December 31,
1996 is as follows:
<TABLE>
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . $ 20,948
1998 . . . . . . . . . . . . . . . . . . . . . . . . . 23,782
1999 . . . . . . . . . . . . . . . . . . . . . . . . . 29,123
2000 . . . . . . . . . . . . . . . . . . . . . . . . . 58,568
2001 . . . . . . . . . . . . . . . . . . . . . . . . . 41,457
Thereafter . . . . . . . . . . . . . . . . . . . . . . 273,789
-------
Total . . . . . . . . . . . . . . . . . . . . . $447,667
========
</TABLE>
Credit Agreement
In connection with the DWT Acquisition, Group and Holding entered into
an Amended Credit Agreement (the "Amended Credit Agreement") dated as of March
5, 1996 with certain financial institutions. Borrowings under the Amended
Credit Agreement are collateralized by first priority mortgages and liens on
all of the assets of Group. In addition, borrowings under the Amended Credit
Agreement are guaranteed by Holding.
The Amended Credit Agreement consists of an $111,000 term loan (the
"Term A Loan"), an $82,500 term loan (the "Term B Loan"), a $95,000 term loan
(the "Term C Loan", collectively, the "Term Facility") and a $75,000 revolving
credit facility (the "Revolver"). The Revolver provides that up to $10,000 of
such facilities may be used for the issuance of letters of credit. At December
31, 1996, Group had $930 in outstanding letters of credit and $55,966 of unused
borrowing capacity under the Amended Credit Agreement. A commitment fee on the
unused portion of the Revolver of .5% is payable quarterly. The Amended Credit
Agreement contains several financial covenants which, among other things,
require Group to maintain certain financial ratios and restrict Group's ability
to incur indebtedness, make capital expenditures and pay dividends.
Mandatory principal payments of the Term Facility are due in quarterly
installments. The final installment on the Term A Loan is due on September 30,
2000 at which time the Revolver is also due. The final installment on the Term
B Loan is due on September 30, 2002, and the final installment on the Term C
Loan is
F-13
<PAGE> 87
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
due on September 30, 2003. The Amended Credit Agreement requires annual
prepayments of the Term Facility based on "Excess Cash Flow" (as defined in the
Amended Credit Agreement).
Borrowings under the Term A Loan and Revolver bear interest, at the
option of Group, at a rate per annum equal to (a) the Alternate Base Rate (as
defined in the Amended Credit Agreement) plus 1.5% or (b) the Eurodollar Rate
(as defined in the Amended Credit Agreement) plus 2.5%. Borrowings under the
Term B Loan bear interest, at the option of Group, at a rate per annum equal to
(a) the Alternate Base Rate (as defined in the Amended Credit Agreement) plus
2.0% or (b) the Eurodollar Rate (as defined in the Amended Credit Agreement)
plus 3.0%. Borrowings under the Term C Loan bear interest, at the option of
Group, at a rate per annum equal to (a) the Alternate Base Rate (as defined in
the Amended Credit Agreement plus 2.5% or (b) the Eurodollar Rate (as defined
in the Amended Credit Agreement) plus 3.5%. The Alternate Base Rate and
Eurodollar Rate margins are established quarterly based on a formula as defined
in the Amended Credit Agreement. Interest payment dates vary depending on the
interest rate option to which the Term Facility and the Revolver are tied, but
generally interest is payable quarterly. The weighted average interest rate on
outstanding borrowings was 8.75% and 8.59% at December 31, 1996 and December
31, 1995, respectively.
The Company has entered into an interest rate hedging arrangement to
hedge against interest rate fluctuations. This arrangement provides a ceiling
of 7.0% on $55,500 of indebtedness through May 1997 and 8.0% on $63,500 of
indebtedness thereafter, through May 1998.
Senior Subordinated Notes
The Senior Subordinated Notes due 2005 ("the Senior Notes") were issued
under an indenture, dated June 12, 1995 (the "Indenture") in connection with
the Acquisitions. The Senior Notes represent unsecured general obligations of
Group and are subordinated to all Senior Debt (as defined in the Indenture) of
Group. The Senior Notes, which were originally sold pursuant to an exemption
from the registration requirements of the Securities Act of 1933, as amended,
were exchanged for identical notes registered under such Act in November 1995.
The Senior Notes are fully and unconditionally (as well as jointly and
severally) guaranteed on an unsecured, senior subordinated basis by each
subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro
Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico, S.A. de
C.V. (The "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries
and Non-Guarantor Subsidiaries is wholly owned by the Company. Separate
financial statements for the respective Guarantor Subsidiaries are not
contained herein because the aggregate net assets, liabilities, earnings and
equity of the Guarantor Subsidiaries is substantially equivalent to the net
assets, liabilities, earnings and equity of the Company on a consolidated
basis.
The Senior Notes mature on June 1, 2005. Interest on the Senior Notes
is payable semi-annually on each June 1 and December 1. The Senior Notes bear
interest at the rate of 11 3/4% per annum. The Senior Notes may not be
redeemed prior to June 1, 2000, except in the event of a Change of Control (as
defined) or Initial Public Offering (as defined) and at such applicable premium
(as defined). The Senior Notes are redeemable, at the Company's option, at the
redemption prices of 105.875% at June 1, 2000, and at decreasing prices to 100%
at June 1, 2003, and thereafter, with accrued interest. In addition, prior to
June 1, 1998, the Company may redeem, within guidelines specified in the
Indenture, up to $50,000 of the Senior Notes with the proceeds of one or more
Equity Offerings (as defined) by the Company or Holding at a redemption price
of 110%, with accrued interest.
F-14
<PAGE> 88
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Senior Notes restrict, among other things, the incurrence of
additional indebtedness by the Company, the payment of dividends and other
distributions in respect of the Company's capital stock, the payment of
dividends and other distributions by the Company's subsidiaries, the creating
of liens on the properties and the assets of the Company to secure certain
subordinated debt and certain mergers, sales of assets and transactions with
affiliates.
8. PREFERRED STOCK
In connection with the DWT Acquisition, the Company issued 400,000
shares of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock
(the "Preferred Stock"). In accordance with the Certificate of Designation of
the Preferred Stock (the "Certificate of Designation"), cumulative dividends
are payable quarterly at the rate of 14% per annum. Dividend rates could
increase upon the occurrence of any Event of Non-Compliance (as defined in the
Certificate of Designation). At December 31, 1996, dividends in arrears were
$1,200 or $2.99 per share. The Preferred Stock has a liquidation preference of
$25.00 per share and a par value of $.01 per share. The Preferred Stock is
exchangeable, at the option of the Company, for 14.0% Senior Subordinated
Exchange Notes due June 1, 2005 (the "Exchange Notes") (see Note 14). The
Preferred Stock ranks with respect to the payment of dividends and the
distribution of assets upon dissolution, liquidation, or winding up of the
Company, prior to all other capital stock of the Company.
The Company may redeem the Preferred Stock, in whole or in part, at any
time. If such redemption occurs prior to December 31, 1997, the redemption
price shall equal the Makewhole Price (as defined in the Certificate of
Designation). If such redemption occurs on or after December 31, 1997, the
redemption price shall equal the product of the liquidation preference plus all
accrued and unpaid dividends, multiplied by the applicable Redemption
Percentage (as defined in the Certificate of Designation).
9. INCOME TAXES
The Company accounts for income taxes in accordance with the provisions
of SFAS No. 109. The provision (benefit) for income taxes is as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
-------- --------
<S> <C> <C>
Current:
State . . . . . . . . . . . . . . . . $ 935 $1,262
Foreign . . . . . . . . . . . . . . . 264 661
-------- --------
1,199 1,923
Deferred:
Federal . . . . . . . . . . . . . . . (64) (530)
State . . . . . . . . . . . . . . . . 127 804
-------- --------
63 274
-------- --------
Total: . . . . . . . . . . . . $ 1,262 $ 2,197
======= =======
</TABLE>
F-15
<PAGE> 89
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
YEAR ENDED SEVEN MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1996 1995
---- ----
<S> <C> <C>
Reconciliation between the statutory income tax rate and effective tax rate is
summarized below:
U.S. Federal statutory rate . . . . . . $ (30,877) $ (372)
State taxes, net of federal effect . . 690 1,364
Foreign taxes . . . . . . . . . . . . . (430) 789
Nondeductible expenses . . . . . . . . 31,814 397
Other . . . . . . . . . . . . . . . . . 65 19
--------- --------
$ 1,262 $ 2,197
========= ========
</TABLE>
The tax effects of significant temporary differences representing deferred tax
assets and liabilities are as follows:
<TABLE>
<S> <C> <C>
Deferred tax assets:
Accounts receivable reserves . . . . $ 477 $ 298
Accrued liabilities not yet 3,497 2,540
deductible . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . 3,381 --
Net operating loss carry forward . . -- 3,544
Other . . . . . . . . . . . . . . . . 227 87
-------- --------
7,582 6,469
-------- --------
Deferred tax liabilities:
Depreciation and amortization . . . . 14,684 11,809
Inventories . . . . . . . . . . . . . 2,176 2,523
Other . . . . . . . . . . . . . . . . 700 206
-------- --------
17,560 14,538
-------- --------
Net deferred tax liability . . . . . $ 9,978 $ 8,069
======== ========
</TABLE>
10. IMPAIRMENT, UNUSUAL AND PLANT CLOSING CHARGES
Commencing in the first quarter of 1996, the Company began a
comprehensive review of the strategic position of its individual business
units. The original goodwill related to the original Wirekraft acquisition
recognized long-term customer relationships and plant locations that were
strategically sized, located and customer focused. Due to intense competition
in the appliance and automotive markets and the loss of a major appliance
customer in 1995, the Company developed and executed new business strategies,
including the DWT Acquisition, to maintain customer volume levels, meet
competitive pressures and address key changes within the marketplace. As a
result, the Company embarked on a major plant consolidation program including
the utilization of facilities purchased in the DWT Acquisition and
transitioning of business from the Midwest to the Southwest and Mexico. To
this end, six plants were closed in 1995 and another six plants were closed in
1996. In connection with this review and impairment charge, the Company has
provided for anticipated losses related to product liability claims associated
with the period preceding the original acquisition of Wirekraft in 1992. In
December 1996, the Company completed this review, resulting in an impairment
charge of $78,250, principally related to the acquisition of Wirekraft.
F-16
<PAGE> 90
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In determining the goodwill impairment charge, the Company completed
financial projections through the year 2000. These projections reflect the
Company's business strategies and were based on current industry trends,
forecasts and expected developments. A discounted cash flow analysis of the
consolidated entity was used to calculate the fair market value of the Company
and was based upon the Company's acquisition strategy which focuses on the
identification and realization of certain synergies existing between the
acquired businesses. The calculated fair market value was compared to net
tangible assets (net working capital and net property, plant and equipment).
The difference between net tangible assets and the fair market value was
compared to net goodwill to determine the goodwill impairment charge.
The Company recorded a pre-tax charge to operations of $6,000 in 1996
and $1,750 in 1995 to provide for plant closing costs. The plant closing costs
include provisions for shut-down costs from the period of the plant closure to
the date of disposal, commitment costs for leased property and key personnel
and severance related costs. Plant closing costs accrued at December 31, 1996
and December 31, 1995 were $2,462 and $700, respectively. There have been no
adjustments to amounts charged to expense.
11. RETIREMENT BENEFITS AND STOCK OPTION PLANS
The Company sponsors a number of defined contribution retirement plans
which provide retirement benefits for eligible employees. Company contribution
expense related to these retirement plans for the year ended December 31, 1996
and seven months ended December 31, 1995 amounted to approximately $1,208 and
$902, respectively.
Holding's Qualified and Non-qualified Stock Option Plan (the "Option
Plan") provides for the granting of up to 4,795,322 shares of common stock to
officers and key employees of Holding and the Company. Under the plan, options
granted approximate market value of the common stock at the date of grant.
Such options vest ratably over a five year period commencing on the first
anniversary date after the date of grant, and vested options are exercisable at
the discretion of the committee appointed to administer the Option Plan.
Generally, an option may be exercised only if the holder is an officer or
employee of Holding or the Company at the time of exercise. Options granted
under the Option Plan are not transferable, except by will and the laws of
descent and distribution.
Holding and the Company have also granted Performance Options (the
"Performance Options") to certain key executives. The Performance Options are
exercisable only on the occurrence of certain events. The exercise price for
the Performance Options is initially equal to $1.00 per share and, effective
each anniversary of the grant date, the per share exercise price for the
Performance Options is equal to the per share exercise price for the prior year
multiplied by 1.09. The Performance Options terminate on the tenth anniversary
date of the date of grant.
In accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation", the Company applies APB Opinion No. 25, "Accounting for Stock
Issued to Employees," and related Interpretations in accounting for the Option
Plan. Had compensation cost for the Option Plan and the Performance Options
been determined based upon the fair value at the grant date for awards under
these plans consistent with the methodology prescribed under SFAS No. 123, the
effect on the Company's financial statements would have been immaterial.
F-17
<PAGE> 91
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
Weighted
Average
Exercise Price Options Options
Per Share Granted Vested
------------ --------- ---------
<S> <C> <C> <C>
Changes in the status of the Option Plan
are summarized below:
June 1, 1995 . . . . . . . . . . . . . -- -- --
Granted . . . . . . . . . . . . . . $1.00 3,400,000 --
Vested . . . . . . . . . . . . . . . -- -- --
------- --------- -------
December 31, 1995 . . . . . . . . . . . $1.00 3,400,000 --
Granted . . . . . . . . . . . . . . $1.02 1,865,249
Vested . . . . . . . . . . . . . . . $1.00 -- 495,249
Forfeiture . . . . . . . . . . . . . $1.00 (1,250,000) --
----- --------- -------
December 31, 1996 . . . . . . . . . . . $1.01 4,015,249 495,249
===== ========= =======
Changes in the status of the Performance Options are summarized below:
June 1, 1995 . . . . . . . . . . . . . -- -- --
Granted . . . . . . . . . . . . . . $1.00 2,966,178
----- --------- --------
December 31, 1995 . . . . . . . . . . . $1.00 2,966,178 --
Granted . . . . . . . . . . . . . . $1.00 1,236,566 --
----- --------- --------
December 31, 1996 . . . . . . . . . . . $1.06 4,202,744 --
===== ========= ========
</TABLE>
Of the options outstanding under the Option Plan at December 31, 1996,
4,350,000 and 65,249 have exercise prices of $1.00 and $1.625 respectively,
and have weighted average remaining contractual lives of between 9 and 10
years. The weighted average exercise price of options vested at December 31,
1996 is $1.00 per share.
Of the Performance Options outstanding at December 31, 1996, 2,966,178
and 1,235,566 have exercise prices of $1.09 and $1.00 respectively, and have
weighted average remaining contractual lives of between 9 and 10 years.
12. COMMITMENTS AND CONTINGENCIES
The Company leases certain property, transportation vehicles and other
equipment. Total rental expense under operating leases was $2,237 and $1,420
for the year ended December 31, 1996 and seven months ended December 31, 1995.
Future minimum lease payments under capital and operating leases for years
ending are:
F-18
<PAGE> 92
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
Capital Operating
--------- -----------
<S> <C> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,416 $2,706
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,416 2,401
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,416 1,453
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,376 1,128
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . 970 927
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . 3,010 437
----- --------
Total minimum lease payments . . . . . . . . . . . . . . 9,604 $9,052
======
Less amount representing interest . . . . . . . . . . . (2,705)
------
Present value of net minimum lease payments . . . . . . $6,899
======
</TABLE>
The Company is subject to legal proceedings and claims which arise in
the normal course of business. In the opinion of management, the ultimate
liabilities with respect to these actions will not have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.
The Company has agreed in principal to participate in an international
expansion project with one of the Wire segment's largest customers. The
Company estimates its financial commitment for property, plant and equipment to
be approximately $13,000.
13. BUSINESS SEGMENT INFORMATION
Certain information concerning the Company's operating segments for the
year ended December 31, 1996 and the seven months ended December 31, 1995 is
presented below. Total revenue by segment includes both sales to customers and
intersegment sales, which are accounted for at prices charged to customers and
eliminated in consolidation.
<TABLE>
<CAPTION>
Wire Harness Consolidated
---------- ----------- ---------------
<S> <C> <C> <C>
Year Ended December 31, 1996
----------------------------
Total revenue . . . . . . . . . . . . . . . . $ 406,026 $ 161,354
Intersegment sales . . . . . . . . . . . . . 20,399 --
--------- ----------
Sales to customers . . . . . . . . . . . . . $ 385,627 $ 161,354 $ 546,981
Operating loss . . . . . . . . . . . . . . . $ (29,443) $ (12,375) $ (41,818)
Identifiable assets . . . . . . . . . . . . . $ 437,524 $ 93,496 $ 531,020
Depreciation and amortization . . . . . . . . $ 24,880 $ 6,461 $ 31,341
Capital expenditures, net . . . . . . . . . . $ 13,060 $ 2,789 $ 15,849
Seven Months Ended December 31, 1995
------------------------------------
Total revenue . . . . . . . . . . . . . . . . $ 167,082 $ 84,288
Intersegment sales . . . . . . . . . . . . . 5,341 446
--------- ----------
Sales to customers . . . . . . . . . . . . . $ 161,741 $ 83,842 $ 245,583
Operating income . . . . . . . . . . . . . . $ 10,937 $ 9,526 $ 20,463
Identifiable assets . . . . . . . . . . . . . $ 295,671 $ 132,249 $ 427,920
Depreciation and amortization . . . . . . . . $ 7,442 $ 3,578 $ 11,020
Capital expenditures, net . . . . . . . . . . $ 4,991 $ 760 $ 5,751
</TABLE>
F-19
<PAGE> 93
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. SUBSEQUENT EVENTS
On February 4, 1997, the Board of Directors approved the exchange of the
Preferred Stock for Exchange Notes, and voted to pay all dividends in arrears
related to the Preferred Stock.
On February 12, 1997, the Company completed the purchase of the stock
and business activities of Camden Wire Co. for approximately $65,000, including
fees and expenses, subject to certain purchase price adjustments (the "Camden
Acquisition"). The Camden Acquisition and related transaction fees and
expenses were funded with $65,000 of senior debt under the Amended Credit
Agreement pursuant to an amendment dated February 12, 1997 (the "Credit
Agreement").
F-20
<PAGE> 94
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
March 31,
1997
------------
<S> <C>
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,825
Accounts receivable, less allowance of $1,343 . . . . . . . . . . . . . . . . . 106,032
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72,830
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . 9,679
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,741
-----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 197,107
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . 158,719
Deferred financing costs, net . . . . . . . . . . . . . . . . . . . . . . . . . 23,401
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247,980
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,100
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 634,307
===========
LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term obligations . . . . . . . . . . . . . . . . . . $ 21,944
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,155
Accrued and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 56,512
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,649
-----------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . 133,260
Long-term obligations, less current maturities . . . . . . . . . . . . . . . . 510,818
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,532
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 18,856
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 678,466
Stockholder's equity (deficit):
Common stock, $.01 par value, 1,000 shares authorized, issued and outstanding . . . . 0
Contributed capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,080
Carryover of predecessor basis . . . . . . . . . . . . . . . . . . . . . . . . . . . (67,762)
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (90,477)
-----------
Total stockholder's equity (deficit) . . . . . . . . . . . . . . . . . . (44,159)
-----------
Total liabilities and stockholder's equity (deficit) . . . . . . . . . . $ 634,307
===========
</TABLE>
See accompanying notes to the consolidated financial statements
F-21
<PAGE> 95
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
----------------- -----------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 176,153 $ 118,807
Operating expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . . . . 137,913 93,475
Selling, general and administrative . . . . . . . . . . . . 13,308 9,721
Depreciation and amortization . . . . . . . . . . . . . . . 7,511 6,044
Inventory valuation adjustment . . . . . . . . . . . . . . -- 2,000
Expenses related to plant closings . . . . . . . . . . . . 500 4,000
------------- -------------
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . 16,921 3,567
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . (12,011) (9,572)
Amortization of deferred financing costs . . . . . . . . . (995) (723)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . 11 89
------------- -------------
Income (loss) before income tax provision . . . . . . . . . . . . . 3,926 (6,639)
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . 1,630 255
------------- -------------
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,296 $ (6,894)
============= =============
</TABLE>
See accompanying notes to the consolidated financial statements
F-22
<PAGE> 96
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CARRYOVER
OF
COMMON PREFERRED CONSOLIDATED PREDECESSOR ACCUMULATED
STOCK STOCK CAPITAL BASIS DEFICIT TOTAL
------- ---------- ------------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1996 . . . . $ -- $ 4 $ 125,340 $ (67,762) $ (92,773) $ (35,191)
Capital contributed . . . . . . . -- -- 114 -- -- 114
Conversion of Preferred Stock . .
-- (4) (9,996) -- -- (10,000)
Preferred Stock Dividend . . . . -- -- (1,378) -- -- (1,378)
Net Income . . . . . . . . . . . -- -- -- -- 2,296 2,296
------- ------- --------- --------- --------- ---------
Balance March 31, 1997 . . . . . $ -- $ -- $ 114,080 $ (67,762) $ (90,477) $ (44,159)
======= ======= ========= ========== ========= =========
</TABLE>
See accompanying notes to the consolidated financial statements
F-23
<PAGE> 97
INTERNATIONAL WIRE GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- ---------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . $ 2,296 $ (6,894)
Adjustment to reconcile net loss (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . 7,511 6,044
Amortization of deferred financing costs . . . . . . . . . . . 995 723
Inventory valuation adjustment . . . . . . . . . . . . . . . . -- 2,000
Change in assets and liabilities, net of acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . (19,379) (8,568)
Inventories . . . . . . . . . . . . . . . . . . . . . . 12,958 292
Prepaid expenses and other . . . . . . . . . . . . . . . (1,159) (335)
Accounts payable . . . . . . . . . . . . . . . . . . . . (14,655) (3,150)
Accrued and other liabilities . . . . . . . . . . . . . 1,963 2,743
Accrued interest . . . . . . . . . . . . . . . . . . . . 5,001 6,517
Other long-term liabilities . . . . . . . . . . . . . . (139) (101)
---------- -----------
Net cash used in operating activities . . . . . . . . . . . . . . . . . (4,608) (729)
---------- -----------
Cash flows provided by (used in) investing activities:
Acquisitions, net of cash . . . . . . . . . . . . . . . . . . . (58,996) (160,259)
Capital expenditures . . . . . . . . . . . . . . . . . . . . . (3,038) (2,537)
---------- -----------
Net cash from investing activities . . . . . . . . . . . . . . . . . . (62,034) (162,796)
---------- -----------
Cash flows provided by (used in) financing activities:
Equity proceeds . . . . . . . . . . . . . . . . . . . . . . . . -- 45,039
Proceeds from issuance of long-term obligations . . . . . . . . 65,000 128,200
Borrowing of long-term obligations . . . . . . . . . . . . . . 10,095 3,100
Cash dividends paid on preferred stock . . . . . . . . . . . . (1,378) --
Financing fees and other . . . . . . . . . . . . . . . . . . . (3,250) (7,800)
---------- -----------
Net cash from financing activities . . . . . . . . . . . . . . . . . . 70,467 168,539
---------- -----------
Net change in cash . . . . . . . . . . . . . . . . . . . . . . . . . . 3,825 5,014
Cash at beginning of the period . . . . . . . . . . . . . . . . . . . . -- --
---------- -----------
Cash at end of the period . . . . . . . . . . . . . . . . . . . . . . . $ 3,825 $ 5,014
========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements
F-24
<PAGE> 98
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
1. THE COMPANY
International Wire Group, Inc. ("Group" or the "Company"), a Delaware
corporation, was formed to participate in the transactions contemplated by the
IW Acquisitions (as described below). On June 12, 1995, Wirekraft Holdings
Corp. ("Wirekraft"), Omega Wire Corp. ("Omega"), International Wire Holding
Company ("Holding", the parent company of Group), Group, Wirekraft Acquisition
Company and certain shareholders of Wirekraft and Omega entered into a series
of acquisitions and mergers (the "IW Acquisition") pursuant to which Group
acquired all of the common equity securities (and all securities convertible
into such securities) of Wirekraft and all of the common equity securities of
Omega. On March 5, 1996, Wire Technologies, Inc. ("Wire Technologies"), a
wholly-owned subsidiary of the Company, acquired the businesses of Hoosier
Wire, Inc., Dekko Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc.,
a group of affiliated companies operating together under the trade name Dekko
Wire Technology Group (the "DWT Acquisition"). On February 12, 1997, the
Company acquired all of the issued and outstanding common stock of Camden Wire
Co., Inc. ("Camden") a wholly-owned subsidiary of Oneida LTD. (the "Camden
Acquisition"). See Note 3.
The Company through its two segments, the wire segment and the harness
segment, is engaged in the design, manufacture and marketing of non-insulated
and insulated copper wire and wire harnesses. The Company's products are used
by a wide variety of customers primarily in the automotive, appliance, computer
and data communications and industrial equipment industries.
2. BASIS OF PRESENTATION
Unaudited Interim Consolidated Financial Statements
The unaudited interim consolidated financial statements reflect all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of financial position
and results of operations. The results for the three months ended March 31,
1997 are not necessarily indicative of the results that may be expected for a
full fiscal year.
Statement of Cash Flows
Interest and taxes paid for the three months ended March 31, 1997 were
$7,010 and $166, respectively.
3. CAMDEN ACQUISITION
On February 12, 1997, the Company completed the Camden Acquisition. The
total consideration of $65,000 paid in connection with the Camden Acquisition,
including fees and expenses, consisted of (i) cash and (ii) the assumption of
debt related to Industrial Revenue Bonds. The cash portion of the
consideration paid and the transaction fees and expenses incurred in connection
with the Camden Acquisition were funded with $65,000 of senior debt under the
Amended and Restated Credit Agreement.
F-25
<PAGE> 99
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Camden Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been preliminarily allocated
to the consolidated assets and liabilities based upon their estimated
respective fair values. The purchase price allocations are still in process.
It is not expected that the final allocation of the purchase cost will result
in a materially different allocation than is presented herein. The total
acquisition cost is preliminarily allocated to the acquired net assets as
follows:
<TABLE>
<S> <C>
Current assets . . . . . . . . . . . . . . . . . . . . . . . $ 49,666
Property, plant & equipment . . . . . . . . . . . . . . . . . 42,041
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . 3,572
Other, non-current . . . . . . . . . . . . . . . . . . . . . 1,728
Fees and costs . . . . . . . . . . . . . . . . . . . . . . . 3,250
Current liabilities . . . . . . . . . . . . . . . . . . . . . (27,612)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . (7,645)
---------
$ 65,000
=========
</TABLE>
Unaudited pro forma results of operations of the Company for the three
months ended March 31, 1997 and March 31, 1996, are included below. Such pro
forma presentation has been prepared assuming that the Camden Acquisition and
related financing had occurred as of January 1, 1997 and January 1, 1996,
respectively, and that the DWT Acquisition and related financing had occurred
as of January 1, 1996.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
---------- ----------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . $ 195,144 $ 180,568
Net income (loss) . . . . . . . . . . . . . . . 2,731 (3,939)
</TABLE>
4. INVENTORIES
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out ("LIFO") method.
The composition of inventories at March 31, 1997, is as follows:
<TABLE>
<S> <C>
Raw materials . . . . . . . . . . . . . . . . . . . . . . $ 33,946
Work-in-progress . . . . . . . . . . . . . . . . . . . . . 16,743
Finished goods . . . . . . . . . . . . . . . . . . . . . . 22,141
---------
Total . . . . . . . . . . . . . . . . . . . . . . . $ 72,830
=========
</TABLE>
F-26
<PAGE> 100
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. LONG-TERM OBLIGATIONS
The composition of long-term obligations at March 31, 1997 is as
follows:
<TABLE>
<S> <C>
Credit Agreement:
Revolving credit facility . . . . . . . . . . . . . . . . $ 18,800
Term facility . . . . . . . . . . . . . . . . . . . . . . 331,488
Senior subordinated and exchange notes . . . . . . . . . . 160,000
Industrial revenue bonds . . . . . . . . . . . . . . . . . 15,500
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,974
--------
$532,762
Less current maturities . . . . . . . . . . . . . . . . . . (21,944)
--------
$510,818
========
</TABLE>
The schedule of principal payments for long-term obligations at March
31, 1997 is as follows:
<TABLE>
<S> <C>
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,173
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,153
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,493
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,669
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . 57,508
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . 342,766
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . $532,762
========
</TABLE>
In connection with the Camden Acquisition, Holding and the Company
entered in to an Amended and Restated Credit Agreement dated as of February 12,
1997 with certain financial institutions. The Amended and Restated Credit
Agreement provides senior secured financing of up to $428.5 million, consisting
of an $111.0 million, Term A loan, an $115.0 million Term B loan, an $127.5
million Term C loan (collectively the "Term Facility") and a $75.0 million
revolving loan and letter of credit facility (the "Revolver"). Mandatory
principal payments of the Term Facility are due in quarterly installments. The
final installment on the Term A loan is due September 30, 2000 at which time
the Revolver is also due. The final installments on the Term B Loan and Term C
Loan are due September 30, 2002 and September 30, 2003, respectively.
Borrowings under the Term A Loan and Revolver bear interest, at the
option of Group, at a rate per annum equal to (a) the Alternate Base Rate (as
defined in the Amended and Restated Credit Agreement) plus 1.5% or (b) the
Eurodollar Rate (as defined in the Amended and Restated Credit Agreement) plus
2.5%. Borrowings under the Term B Loan bear interest, at the option of Group,
at a rate per annum equal to (a) the Alternate Base Rate (as defined in the
Amended and Restated Credit Agreement) plus 2.0% or (b) the Eurodollar Rate (as
defined in the Amended and Restated Credit Agreement) plus 3.0%. Borrowings
under the Term C Loan bear interest, at the option of Group, at a rate per
annum equal to (a) the Alternate Base Rate (as defined in the Amended and
Restated Credit Agreement plus 2.5% or (b) the Eurodollar Rate (as defined in
the Amended an Restated Credit Agreement) plus 3.5%. The Alternate Base Rate
and Eurodollar Rate margins are established quarterly based on a formula as
defined in the Amended and Restated Credit Agreement. Interest payment dates
vary depending on the interest rate option to which the Term Facility and
Revolver are tied, but generally interest is payable quarterly. The Amended
and Restated Credit Agreement contains several financial covenants which, among
other
F-27
<PAGE> 101
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
things, require Group to maintain certain financial ratios and restrict Group's
ability to incur indebtedness, make capital expenditures and pay dividends.
Senior Subordinated Notes
The Senior Subordinated Notes due 2005 ("the Senior Notes") were issued
under an indenture, dated June 12, 1995 (the "Indenture") in connection with
the Acquisitions. The Senior Notes represent unsecured general obligations of
Group and are subordinated to all Senior Debt (as defined in the Indenture) of
Group. The Senior Notes, which were originally sold pursuant to an exemption
from the registration of the Securities Act of 1993, as amended, were exchanged
for identical notes registered under such Act in November 1995.
The Senior Notes are fully and unconditionally (as well as jointly and
severally) guaranteed on an unsecured, senior subordinated basis by each
subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro
Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico, S.A. de
C.V. (The "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries
and Non-Guarantor Subsidiaries is wholly owned by the Company. Separate
financial statements for the respective Guarantor Subsidiaries are not
contained herein because the aggregate net assets, liabilities, earnings and
equity of the Guarantor Subsidiaries is substantially equivalent to the net
assets, liabilities, earnings and equity of the Company on a consolidated
basis.
Exchange Notes
In February 1997, the Company exchanged $10,000 of Series A Senior
Cumulative Exchangeable Redeemable Preferred Stock (the "Preferred Stock") for
14.0% Senior Subordinated Notes due June 1, 2005 (the "Exchange Notes") and
paid all dividends in arrears related to the Preferred Stock. The Exchange
Notes were issued under an indenture dated February 12, 1997 (the "Exchange
Indenture"). The Exchange Notes represent unsecured general obligations of
Group, are subordinated to all Senior Indebtedness (as defined in the Exchange
Indenture) of Group and rank on equal terms with the Senior Notes.
The Exchange Notes are fully and unconditionally (as well as jointly and
severally) guaranteed on an unsecured, senior subordinated basis by each
subsidiary of the Company (the "Guarantor Subsidiaries") other than Electro
Componentes de Mexico, S.A. de C.V. and Wirekraft Industries de Mexico, S.A. de
C.V. (The "Non-Guarantor Subsidiaries"). Each of the Guarantor Subsidiaries
and Non-Guarantor Subsidiaries is wholly owned by the Company. Separate
financial statements for the respective Guarantor Subsidiaries are not
contained herein because the aggregate net assets, liabilities, earnings and
equity of the Guarantor Subsidiaries is substantially equivalent to the net
assets, liabilities, earnings and equity of the Company on a consolidated
basis.
The Exchange Notes mature on June 1, 2005. Interest on the Exchange
Notes is payable semi-annually on each June 1 and December 1. The Exchange
Notes bear interest at the rate of 14.0% per annum. The Exchange Notes may not
be redeemed prior to June 1, 2000, except in the event of a Change of Control
(as defined) or Initial Public Offering (as defined) and at such applicable
premium (as defined). The Exchange Notes are redeemable, at the Company's
option, at the redemption prices of 105.875% at June 1, 2000, and at decreasing
prices to 100% at June 1, 2003, and thereafter, with accrued interest. In
addition, prior to June 1, 1998, the Company may redeem within guidelines
specified in the Indenture, up to $3,000 of the Exchange Notes with the
proceeds of one or more Equity Offerings (as defined) by the Company or Holding
at a redemption price of 110%, with accrued interest.
F-28
<PAGE> 102
INTERNATIONAL WIRE GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Industrial Revenue Bonds
In connection with the Camden Acquisition the company assumed debt
related to two Industrial Revenue Bonds (the "IRB's"), totalling $15,500. The
IRB's are due in August 2005 and March 2016 in the amounts of $9,000 and $6,500
respectively. The IRB's bear interest at a rate per annum which is tied to the
Tax Exempt Money Market Index. Rates change weekly and interest is paid
monthly.
6. PLANT CLOSING EXPENSE
In March 1997, the Company recorded a pretax charge to operations of
$500 to provide for plant closing costs. The plant closing costs relate to
consolidating a wire segment facility and include provisions for certain shut-
down and severance related costs.
F-29
<PAGE> 103
INTERNATIONAL WIRE GROUP, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
The following unaudited pro forma combined statement of operations (the
"Pro Forma Statement of Operations") of International Wire Group, Inc. (the
"Company") for the year ended December 31, 1996 has been prepared to give
effect to the DWT Acquisition (as described below) and related financing. On
March 5, 1996, Wire Technologies, Inc., a wholly-owned subsidiary of the
Company, acquired the business activities of Hoosier Wire, Inc., Dekko
Automotive Wire, Inc., Albion Wire, Inc. and Silicones, Inc., a group of
affiliated companies operating together under the trade name Dekko Wire
Technology Group (the "DWT Acquisition"). The DWT Acquisition was financed by
(i) borrowings of $128.2 million under the Amended Credit Agreement (ii) an
equity contribution of $35.0 million from Holding and (iii) the issuance of
400,000 shares of Series A Senior Cumulative Exchangeable Redeemable Preferred
Stock of the Company having a liquidation preference of $10.0 million together
with warrants for the purchase of Holding Common Stock.
The Pro Forma Statement of Operations of the Company has been prepared
to give effect to the DWT Acquisition as though the transaction occurred as of
January 1, 1996. The pro forma adjustments are based upon available
information and certain assumptions that the Company believes are reasonable.
The Pro Forma Statement of Operations does not purport to be indicative
of the results which would have been obtained had such transactions been
completed as of the assumed dates and for the period presented or which may be
obtained in the future.
F-30
<PAGE> 104
INTERNATIONAL WIRE GROUP, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
IWG Combined
Historical Dekko Historical Adjustments Pro Forma
---------- ------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . $546,981 $29,095 $576,076 $(1,249)(1) $574,827
Cost of goods sold . . . . . . . . . . . 420,823 22,938 443,761 (1,249)(1) 442,512
Selling, general and administrative 43,885 1,199 45,084 45,084
expenses . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . 31,341 607 31,948 812 (2) 32,760
Impairment, unusual and plant closing 84,250 84,250 (6,000)(3) 78,250
charges . . . . . . . . . . . . . . . . .
Inventory valuation adjustment . . . . . 8,500 8,500 8,500
-------- ------- -------- ------- --------
Operating income (loss) . . . . . . . . . (41,818) 4,351 (37,467) 5,188 (32,279)
Other income (expense):
Interest expense . . . . . . . . . . . (43,013) (216) (43,229) (1,742)(4) (44,971)
Amortization - deferred fees . . . . . (3,701) (8) (3,709) (231)(5) (3,940)
Other . . . . . . . . . . . . . . . . . 312 (391) (79) (79)
-------- ------- -------- ------- --------
Pre-tax income (loss) . . . . . . . . . . (88,220) 3,736 (84,484) 3,215 (81,269)
Provision for income taxes . . . . . . . 1,262 1,262 2,863 (6) 4,125
-------- ------- -------- ------- --------
Net income (loss) . . . . . . . . . . . . $(89,482) $ 3,736 $(85,746) $ 352 $(85,394)
========= ======= ======== ======= ========
</TABLE>
(1) Reflects the elimination of sales between Dekko and the Company during
January and February of 1996.
(2) Reflects increase in goodwill amortization in the amount of $566 and the
net increase in depreciation expense in the amount of $246 as if the DWT
Acquisition had been consummated at the beginning of the period.
(3) Reflects the elimination of expenses related to plant closing costs,
which relate to shutting down and consolidating certain facilities in
connection with the DWT Acquisition.
(4) Reflects the increased interest expense on the borrowings under the
Senior Bank Facilities as if the DWT Acquisition had been consummated at
the beginning of the period.
<TABLE>
<CAPTION>
Senior Bank Facilities (a) DWT
---
<S> <C>
Term A Loans (b) 398
Term C Loans (b) 1,495
Revolving Facility (b) 65
Elimination of historical interest (216)
------
Net adjustment $1,742
======
</TABLE>
- ----------------------
(a) A one-half of one percent change in interest rates would
impact interest expense for borrowing under the Senior
Bank Facilities in the amount of approximately $1,200.
(b) The reflected interest rate is based upon the average
three-month London Interbank Offered Rate ("LIBOR") for
the first quarter of fiscal 1996, plus the applicable
interest rate margin. Borrowing under the Term A Loans
and the Revolving Facility will require interest payments
at the rate of 1.5% above the base rate or 2.5% above
LIBOR, borrowing under the Term C Loans will require
interest payments at the rate of 2.5% above the base rate
or 3.5% above LIBOR.
(5) Reflects increase in deferred financing fees amortization as if the DWT
Acquisition had been consummated at the beginning of the period.
(6) Reflects the effect of pro forma adjustments described above and the
estimated pro forma tax provision of DWT as a C corporation.
F-31
<PAGE> 105
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of each of the Companies comprising
Dekko Wire Technologies:
We have audited the accompanying combined balance sheet of Dekko Wire
Technologies (the "Company") as of December 28, 1995 and the related combined
statements of income, shareholders' equity and cash flows for each of the years
in the two years ended December 28, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements of the Company referred to above
present fairly, in all material respects, the financial position of Dekko Wire
Technologies as of December 28, 1995 and the results of their operations and
their cash flows for each of the two years in the period ended December 28,
1995.
Coopers & Lybrand L.L.P.
Fort Wayne, Indiana
January 30, 1996, except for
Note 10, as to which the date
is February 6, 1996
F-32
<PAGE> 106
DEKKO WIRE TECHNOLOGIES
COMBINED BALANCE SHEET
AS OF DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1995
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,949
Accounts receivable, trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,295
Inventories:
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,945
Work in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,459
------------
13,564
LIFO reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,292
------------
11,272
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 209
------------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,725
Property, plant and equipment:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,339
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,581
Machinery and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,190
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677
------------
38,787
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,636
------------
30,151
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400
Undisbursed bond funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,108
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
------------
$ 66,689
============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-33
<PAGE> 107
DEKKO WIRE TECHNOLOGIES
COMBINED BALANCE SHEET
AS OF DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1995
-------------
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 160
Long-term debt, current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,545
Accounts payable, trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,695
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,787
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 912
------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,939
Long-term debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . 26,403
------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,342
Redeemable common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
SHAREHOLDERS' EQUITY
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,055
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,263
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,381
------------
28,699
------------
Less treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,641)
------------
26,058
------------
$ 66,689
============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-34
<PAGE> 108
DEKKO WIRE TECHNOLOGIES
COMBINED STATEMENTS OF INCOME
FOR EACH OF THE TWO YEARS IN THE
PERIOD ENDED DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 154,321 $ 131,832
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,898 107,228
------------ ------------
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,423 24,604
Other operating revenues, rentals and
administrative services . . . . . . . . . . . . . . . . . . . . . . 437 458
Selling, general and administrative expenses . . . . . . . . . . . . 6,889 5,506
------------ ------------
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . 19,971 19,556
Other income (expenses):
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . 438 134
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . (1,679) (1,314)
Gain (loss) on sale of property, plant
and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . (14) 51
Other income (expense) . . . . . . . . . . . . . . . . . . . . . . . (200) (114)
------------ ------------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,516 $ 18,313
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-35
<PAGE> 109
DEKKO WIRE TECHNOLOGIES
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
FOR EACH OF THE TWO YEARS ENDED DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Common Paid-in Treasury Subscribed Subscriptions Retained
stock capital stock stock receivable earnings Total
--------- -------- -------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance on December 30, 1993 . . . . 1,410 116 (1,396) 2,411 (2,411) 11,432 11,562
Net income . . . . . . . . . . . . . 18,313 18,313
Distributions to shareholders . . . . (11,987) (11,987)
Common stock issued . . . . . . . . . 229 1,792 390 (2,411) 2,411 2,411
Common stock subscribed . . . . . . . 483 (483) --
Stock redemption . . . . . . . . . . 357 (26) (1,613) 851 (431)
Elimination of El Paso Wire Division
Retained Earnings . . . . . . . . . (3,532) (3,532)
-------- ------- ------- -------- --------- ------- -------
Balance on December 29, 1994 . . . . 1,996 1,882 (2,619) 483 (483) 15,077 16,336
Net income . . . . . . . . . . . . . 18,516 18,516
Distributions to shareholders . . . . (10,409) (10,409)
Common stock issued . . . . . . . . . 3,022 406 55 (483) 483 3,483
Common stock subscribed . . . . . . . 3 (3) --
Stock redemption . . . . . . . . . . 34 (25) (74) (223) (288)
Elimination of Albion Wire Division
Retained Earnings . . . . . . . . . (1,580) (1,580)
-------- ------- ------- -------- --------- ------- -------
Balance on December 28, 1995 . . . . $ 5,055 $ 2,263 $(2,641) $ -- $ -- $21,381 $26,058
======== ======= ======= ======== ========= ======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements
F-36
<PAGE> 110
DEKKO WIRE TECHNOLOGIES
COMBINED STATEMENT OF CASH FLOWS
FOR EACH OF THE TWO YEARS ENDED DECEMBER 28, 1995
(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,516 $ 18,313
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . 2,729 1,189
(Gain) loss on sale of property,
plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 (51)
(Gain) loss on investment in Group
Dekko Services LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . (362) 179
Change in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . 643 (3,994)
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (760) 3,454
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291 19
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . (670) 1,614
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,235 130
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . (91) 180
---------- ---------
Net cash provided by operating activities . . . . . . . . . . . . . . 21,545 21,033
---------- ---------
Cash flows from investing activities:
Property, plant and equipment acquired . . . . . . . . . . . . . . . . . . (4,792) (751)
Proceeds from sale of property,
plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 124
Investment in Group Dekko Services LLC . . . . . . . . . . . . . . . . . . (100)
Distribution from investment in Group
Dekko Services LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . 392
Other assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . (59) (109)
Acquisition of businesses . . . . . . . . . . . . . . . . . . . . . . . . . (6,550) (2,790)
Change in undisbursed bond funds . . . . . . . . . . . . . . . . . . . . . 4,745
---------- ---------
Net cash used in investing activities . . . . . . . . . . . . . . . . (6,128) (3,626)
---------- ---------
Cash flows from financing activities:
Net borrowings (payments) on lines of credit . . . . . . . . . . . . . . . (1,640) (300)
Proceeds from short-term debt . . . . . . . . . . . . . . . . . . . . . . . 2,671
Payments on short-term debt . . . . . . . . . . . . . . . . . . . . . . . . (1,671) (1,500)
Proceeds from long-term debt . . . . . . . . . . . . . . . . . . . . . . . 3,100 6,200
Payments on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . (5,521) (7,176)
Stock redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (431) (5,243)
Proceeds from sale of stock . . . . . . . . . . . . . . . . . . . . . . . . 3,483 2,411
Distribution to shareholders . . . . . . . . . . . . . . . . . . . . . . . (10,409) (11,987)
---------- ---------
Net cash used in financing activities . . . . . . . . . . . . . . . . (13,089) (14,924)
---------- ---------
Acquisition adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,580) (3,532)
---------- ---------
Net change in cash and cash equivalents . . . . . . . . . . . . . . . . . . . 748 (1,049)
Cash and cash equivalents, beginning of year . . . . . . . . . . . . . . . . 2,201 3,250
---------- ---------
Cash and cash equivalents, end of year . . . . . . . . . . . . . . . . . . . $ 2,949 $ 2,201
========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements
F-37
<PAGE> 111
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
1. BASIS OF PRESENTATION
These combined financial statements and the accompanying notes for the
years ended December 28, 1995 ("1995") and December 29, 1994 ("1994"), reflect
the operations of Dekko Wire Technologies ("DWT"). DWT supplies high-quality
insulated wire products and fabricated bare wire products primarily to the
automotive, appliance, marine and electronic industries. DWT is part of a
federation of companies known as "Group Dekko" and is comprised of the
following:
<TABLE>
<CAPTION>
1995 1994
------------------------------------------------------ ---------------------------------------------------
<S> <C> <C> <C>
o Albion Wire, Inc. o Albion Wire, a division of Group Dekko
International, Inc.
o Dekko Automotive Wire, Inc. o Dekko Automotive Wire, Inc.
o Hoosier Wire, Inc. o Hoosier Wire, Inc.
o Silicones, Inc. o Silicones, Inc.
</TABLE>
Albion Wire, a division of Group Dekko International, Inc. (GDI), was
purchased by Albion Wire, Inc. on December 30, 1994, the first day of 1995, by
leveraged buy-out. The product lines of El Paso Wire, a division of GDI, were
purchased by Dekko Automotive Wire, Inc. on December 31, 1993, the first day of
1994. For comparability, the operations of Albion Wire (1994) have been
included in these combined financial statements. As a division of GDI, Albion
Wire shared common management with DWT during 1994. Wire Tech, Inc. was merged
into Hoosier Wire, Inc. on the first day of 1994 and continues to operate as a
division of Hoosier Wire, Inc.
DWT businesses are also known in their industries as "Wire Tech,"
"Masterwire," and "National Reel Services."
2. RELATED PARTY TRANSACTIONS
DWT and the other Group Dekko companies have common executive management
and most have common ownership. DWT owns 26.5% of Group Dekko Services LLC, a
company providing administrative services to its members.
With the exception of Wire Tech, Inc., each of the entitles comprising
DWT was once owned GDI. DWT entitles separated from GDI in several
transactions as follows:
F-38
<PAGE> 112
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
1994 and 1995
o Albion Wire, a division of GDI, was purchased by Albion Wire,
Inc. on the first day of 1995, by leveraged buy-out totaling
$19,663. The purchase of product lines and property, plant and
equipment were financed with the assumption of certain industrial
revenue bonds totaling $9,800 from GDI, capital from
shareholders, and cash flows from operations. The accounts
receivable and inventory associated with the product lines were
acquired at GDI's basis which approximated fair market value.
The property, plant and equipment were acquired at fair market
value.
o The product lines of El Paso Wire, a division of GDI, were
purchased by Dekko Automotive Wire, Inc. on the first day of 1994
for $3,885. The accounts receivable and inventory associated
with these product lines were acquired at GDI's basis which
approximated fair market value. The purchase was financed with a
$2,671 note payable to GDI, cash flows from operations and draws
on the revolving credit agreement. Dekko Automotive Wire, Inc.
continued to lease property, plant and equipment used by the El
Paso Wire Division from GDI under one-year renewable operating
leases.
o The property, plant and equipment leased from GDI by Dekko
Automotive Wire, Inc.'s Alabama Wire Division was purchased by
Dekko Automotive Wire, Inc. on the first day of 1994 for $13,751.
The purchase was financed with the assumption of certain
industrial revenue bonds totaling $11,105 from GDI, cash flows
from operations and draws on the revolving line of credit. The
property, plant and equipment were acquired at fair market value.
o Certain property, plant and equipment leased by Hoosier Wire,
Inc. from GDI was purchased by Hoosier Wire, Inc. on the first
day of 1994 for $4,131. The purchase was financed with the
transfer of an industrial revenue bond in the amount of $3,945
and cash flows from operations. The property, plant and
equipment were acquired at fair market value.
The following table summaries non-cash investing and financing activities
related to the acquisitions described above:
<TABLE>
<CAPTION>
1995 1994
----------------- --------------------
<S> <C> <C> <C> <C>
Fair value of assets acquired $19,663 $21,767
Less: cash paid 9,863 4,046
----------------- --------------------
Liabilities incurred or assumed $ 9,800 $ 17,721
================= ====================
</TABLE>
DWT continues to lease certain equipment and manufacturing facilities from GDI
under one-year renewable operating leases. Rent expense paid to GDI is
included in the table below. Total rent expense charged to operations is
disclosed in Note 8.
DWT has significant transactions with Group Dekko companies described as
follows:
o Group Dekko Services LLC, a company wholly-owned by DWT and the
other Group Dekko companies, provides DWT with certain
administrative services, including: financial, tax, and
accounting; employee benefit administration; legal counsel;
facilities management; marketing and corporate planning; human
F-39
<PAGE> 113
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
resources management; information and communication systems;
environmental and safety; risk management; and corporate records.
o Group Dekko Logistics LLC, owned by Group Dekko Services LLC and
GDI, provides transportation management and trucking services to
DWT.
o Certain DWT companies make payments to GDI on sales agreements
for the purchase of intangible assets such as customer lists,
trade names, patents, etc.
DWT transactions with other Group Dekko companies are summarized as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
INCOME STATEMENT
Trade sales $7,605 $5,256
Rent paid on facilities and equipment 1,203 2,617
Rental income 334 349
Administrative services purchased 1,822 2,403
Interest expense on notes payable 91 339
Materials purchased 4,889 2,582
Labor purchased 269 1,078
Transportation services purchased 506 876
Accrual on intangible assets 59 64
Capital distribution from Group Dekko
Services LLC 392 --
Gain/(loss) on investment in Group Dekko 362 (179)
Services LLC
BALANCE SHEET
Notes payable, balance at year end -- 1,671
Accounts payable, balance at year end 1,088 747
Accounts receivable, balance at year end 637 601
</TABLE>
3. ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION - The combined financial statements include the
accounts of the companies comprising DWT as detailed in Note 1. All
significant intercompany transactions have been eliminated in combination.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents include all cash balances
and highly liquid investments with original maturities of three months or less.
Interest paid during 1995 and 1994 was $1,657 and $1,270, respectively.
INVENTORIES - DWT used the last-in, first-out (LIFO) cost method of valuing its
inventories for approximately 86% and 95% of total inventories at December 28,
1995 and December 29, 1994, respectively. The remainder are stated at cost
using the first-in, first-out (FIFO) method. On the first day of 1994, Dekko
Automotive Wire, Inc., adopted the LIFO method of accounting. The cumulative
effect of this accounting change for years prior to 1994 is not determinable,
nor are the pro forma effects of retroactive application of the LIFO method to
prior years. This change decreased 1994 net income by $1,565.
F-40
<PAGE> 114
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT - Assets are recorded at cost. Upon sale or
retirement of property, plant and equipment, the asset cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is included in income.
Depreciation on assets is calculated by declining balance and straight-line
methods over estimated lives principally as follows: buildings - 15 to 39
years; machinery and equipment - 5 to 7 years.
INTANGIBLE ASSETS - As part of various sales agreements, DWT has purchased
customer lists, trade names, patents, etc., from GDI. Acceleration clauses in
the agreements dictate that unpaid amounts are due immediately upon sale,
liquidation, merger or other triggering event The assets are amortized over 15
years. Unpaid amounts under these agreements approximated $200 as of December
28, 1995.
FINANCIAL INSTRUMENTS - The carrying amounts of financial instruments including
cash equivalents, certificates of deposit, receivables, and accounts payable
approximated fair value as of December 28, 1995, because of the relatively
short maturities of these instruments. The carrying value of long-term debt,
including current maturities, approximated fair value as of December 28, 1995,
based upon terms and conditions currently available to the Company in
comparison to terms and conditions of the long-term debt.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS - The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995
------------
<S> <C>
Unsecured revolving and reducing line of credit
Available $5,500, of which $3,850 was unused at December 28, 1995. Bank advances on
the line of credit carry an interest rate of the bank's Reference Rate. Agreement
was refinanced on April 25, 1995 and the new interest rate is the bank's Reference
Rate minus one percent. At December 28, 1995, the effective rate was 7.5%. $ 1,650
Unsecured revolving and reducing line of credit
Available: $5,000 of which $1,900 was unused at December 28, 1995. Bank advances on
the line of credit carry an interest rate of the bank's Reference Rate minus three-
quarters of a percent. Effective rate at December 28, 1995 was 7.75%. 3,100
Unsecured revolving line of credit
Available for one year: $500 of which $340 was unused at December 28, 1995. Bank
advances on the line of credit are payable on demand and carry an interest rate based
on prime minus one percent. Effective rate at December 28, 1995 was 7.5%. 160
</TABLE>
F-41
<PAGE> 115
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<S> <C>
Harris Bank, El Paso County, Texas, Series 1994 Variable Rate
Demand Industrial Development Revenue Bonds
Interest payable monthly, repriced weekly.
Effective rate: December 28, 1995: 5.4%
Average rate: 1995: 4.15%
Principal due annually through December 1, 2007, in payment ranging from $500 to $800. 8,000
Town of Avilla, Indiana, Series `A' and `B' 1990 Adjustable Rates
Industrial Refunding Revenue Bonds.
Interest payable monthly, repriced weekly.
Effective rate: December 28, 1995: 5.35%
Average rate: 1995: 3.86%
Principal due annually through September 1, 2005, in payments ranging from $260 to $455. 3,478
Indiana Development Finance Authority - Dekalb County
Adjustable Rate Industrial Development Refunding Bonds
Interest payable monthly, repriced weekly
Effective rate: December 28, 1995: 5.2%
Average rate: 1995: 3.50%
Principal due annually through March 1, 2006, in payments ranging from $115 to $210. 1,750
Harris Bank, Town of Elkmont, Alabama, Series 1989
Variable/Fixed Rate Industrial Development Bonds
Interest payable monthly, repriced weekly
Effective rate: December 28, 1995: 5.4%
Average rate: 1995: 4.17%
Principal due annually through September 1, 2004, in payments ranging from $525 to $765. 5,500
Harris Bank, City of Kendallville, Indiana, Series 1987
Variable/Fixed Rate Economic Development Revenue Bonds
Interest payable monthly, repriced weekly.
Effective rate: December 28, 1995: 5.25%
Average rate: 1995: 4.69%
Principal due annually through February 1, 2000 in payments of $300 each. 1,500
Bank One, Town of Ardmore, Alabama, Series 1989
Variable/Fixed Rate Industrial Development Bonds
Interest payable monthly, repriced weekly.
Effective rate: December 28, 1995: 5.35%
Average rate: 1995: 4.34%
Principal due annually through June 1, 2004, in payments ranging from $460 to $660. 3,810
------------
28,948
Less current portion 2,545
------------
$26,403
============
</TABLE>
The industrial revenue bonds are collateralized by land, buildings and
machinery and equipment of the Company totaling $30,132 at December 28,
1995. As additional collateral on all bonds, all rights and interest on
leases entered into with respect to the above land, buildings and
machinery and equipment have been assigned to the holders of the bonds.
F-42
<PAGE> 116
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Certain of the debt agreements contain restrictive covenants which
include, among other things, minimum tangible net worth, maintenance of
minimum working capital and requirements to maintain certain financial
ratios. At certain measurement dates in 1994, DWT was not in compliance
with certain covenants. These events of noncompliance were waived by
the lending institutions.
The aggregate amount of long-term debt maturing in each of the five
years following December 28, 1995, is as follows $2,545, $3,345, $4,310,
$4,050, and $2,610.
5. SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Share
-----
Information: Hoosier Wire, Inc. Silicones, Inc. Dekko Automotive Wire, Inc. Albion Wire, Inc.
----------- -------------------- ------------------- ---------------------------- --------------------
Common Treasury Common Treasury Common Treasury Common Treasury
Stock Stock Stock Stock Stock Stock Stock Stock
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Par value No Par $10 $10 $10
Shares 500,00 60,000 1,000,000 500,000
authorized ===============================================================================================
Shares issued
as of
December 29, 359,059 248,074 45,953 13,834 97,910 -- -- --
1994
Redemption 5,050 2,333 333
Sale (3,266) (1,917) 2,225 (333) 300,000
Shares issued -----------------------------------------------------------------------------------------------
as of
December 28, 359,059 249,858 45,953 14,250 100,135 -- 300,000 -
1995 ===============================================================================================-
</TABLE>
The amounts corresponding to the common stock redemption and sale transactions
in the schedule above are reflected as redeemable common stock and subscribed
stock, respectively, in the balance sheet in the year immediately prior to the
redemption or sale transaction, as these transactions had been approved by the
Board of Directors. Common stock redemptions are reflected in the statement of
shareholders' equity in the year the transaction was approved by the Board of
Directors. Common stock sales are reflected as common stock subscribed in the
statement of shareholders' equity in the year the transaction was approved by
the Board of Directors and as common stock issued in the year the transaction
was executed.
As discussed in Note 1, two divisions of GDI have been included in these
combined financial statements for comparability. The acquisition of these
divisions by DWT requires the elimination of the amounts accumulated by the
division as retained earnings. These eliminations are reflected in the
statement of shareholders' equity during the year the division was acquired by
DWT.
6. INCOME TAXES
The shareholders of each of the respective companies comprising DWT have
elected S Corporation status for federal and state income tax purposes, whereby
profits and losses are passed directly to them for inclusion in their personal
tax returns. Accordingly, no liability or provision for federal or state
income taxes is included in the accompanying financial statements. The pro
forma amounts below reflect the income taxes that would have been reported had
DWT been subject to federal and state income taxes and if the DWT companies had
filed separate
F-43
<PAGE> 117
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
income tax returns during those years. There are no material timing
differences which would give rise to deferred tax assets or liabilities.
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Combined income before income taxes $ 18,516 $ 18,313
Pro forma federal and state income taxes 7,272 7,430
---------- ----------
Pro forma net income $ 11,244 $ 10,883
========== ==========
</TABLE>
Texas franchise taxes included in selling, general and administrative expenses
were $491 and $10 in 1995 and 1994, respectively.
7. PROFIT SHARING RETIREMENT PLAN
DWT participates in a profit sharing retirement plan of GDI which covers
substantially all employees. Under the plan employees may, but are not
required to, make contributions. DWT contributions under the plan are at the
discretion of the Board of Directors and cannot exceed 15% of the annual
compensation of the participating employees.
Total profit sharing plan expense charged to operations in fiscal years 1995
and 1994 amounted to approximately $1,066 and $892, respectively.
8. LEASING TRANSACTIONS
DWT leases certain equipment and manufacturing facilities under renewable
operating leases. Total rent expense charged to operations was $1,712 and
$3,059 in 1995 and 1994, respectively. Rent paid to related parties is
summarized in Note 2. The aggregate amount of minimum operating lease payments
in each of the four years following December 28, 1995, is as follows: $353,
$352, $299, and $114.
9. SIGNIFICANT CUSTOMER
Sales to a single customer approximated 39% and 29% of total 1995 and 1994,
sales, respectively. Accounts receivable from this customer at December 28,
1995 approximated 29% of total trade receivables. Sales to the automotive and
appliance industries were 51% and 47%, of total sales, respectively, in 1995
and 1994.
10. SUBSEQUENT EVENTS
On February 6, 1996, the Boards of Directors of each of the companies
comprising DWT approved, subject to approval by the shareholders of the
respective companies, certain Purchase Agreements whereby International Wire
Group, Inc. (International Wire) would:
- acquire substantially all of the assets and assume certain of the
liabilities of Dekko Automotive Wire, Inc., Albion Wire, Inc.,
and Silicones, Inc.
- acquire all of the issued and outstanding common shares of
Hoosier Wire, Inc.
F-44
<PAGE> 118
DEKKO WIRE TECHNOLOGIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Consideration for the above mentioned acquisition is to be in the form of cash
and warrants to purchase shares in International Wire Holding Company, the
parent of International Wire as follows:
<TABLE>
<CAPTION>
Gross Cash Warrants
-------------- --------------
<S> <C> <C>
Dekko Automotive Wire, Inc. $ 64,665 779,092
Albion Wire, Inc. 47,288 569,732
Silicones, Inc. 7,624 91,850
Hoosier Wire, Inc. 46,423 559,326
------------ ------------
Total $ 166,000 2,000,000
</TABLE>
The consideration described above is subject to certain adjustments prescribed
by the Purchase Agreements and the payment of all outstanding debt and certain
retained liabilities at the date of closing, as well as an aggregate escrow
amount of $10 million. Closing is expected to occur prior to March 31, 1996.
F-45
<PAGE> 119
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Wirekraft Holdings Corp.:
We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Wirekraft Holdings Corp. and
subsidiaries (formerly WB Holdings, Inc.) for the six months ended May 31, 1995
and the year ended November 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of Wirekraft Holdings Corp. and subsidiaries for the six months
ended May 31, 1995 and the year ended November 30, 1994, in conformity with
generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
January 27, 1996
F-46
<PAGE> 120
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30, 1994
---------------- -----------------
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . $ 168,053 $240,972
Operating expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . 138,851 201,602
Selling, general and administrative . . . . . . . . . 13,301 14,319
Depreciation and amortization . . . . . . . . . . . . 6,474 6,435
Compensation expense . . . . . . . . . . . . . . . . 895 --
Expenses related to sale . . . . . . . . . . . . . . 501 --
Expenses related to plant closings . . . . . . . . . . 2,000 --
--------- ----------
Operating income . . . . . . . . . . . . . . . . . . . 6,031 18,616
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . (8,020) (10,565)
Amortization of deferred financing costs . . . . . . (1,657) (1,995)
--------- ----------
Income (loss) before income tax provision
and extraordinary item . . . . . . . . . . . . . . . (3,646) 6,056
Income tax provision (benefit) . . . . . . . . . . . . (2,114) 3,023
--------- ----------
Income (loss) before extraordinary item . . . . . . . . (1,532) 3,033
Extraordinary item - loss due to early
extinguishment of debt, net of
income tax of $4,930 . . . . . . . . . . . . . . . . (7,835) --
--------- ----------
Net income (loss) . . . . . . . . . . . . . . . . . . . $ (9,367) $ 3,033
========= ==========
</TABLE>
See accompanying notes to the consolidated financial statements
F-47
<PAGE> 121
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED MAY 31, 1995 AND
THE YEAR ENDED NOVEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A ADDITIONAL RETAINED
PREFERRED COMMON COMMON PAID-IN EARNINGS
STOCK STOCK STOCK CAPITAL (DEFICIT) TOTAL
---------- ---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance November 30, 1993 . . . . $ -- $200 $ 24 $22,576 $ 2,541 $25,341
Net income . . . . . . . . . . . -- -- -- -- 3,033 3,033
---- ----- ---- --------- -------- --------
Balance November 30, 1994 . . . . -- 200 24 22,576 5,574 28,374
Issuance of preferred stock . . . 10 -- -- 24,990 -- 25,000
Issuance of common stock . . . . -- 3 -- 747 -- 750
Issuance costs . . . . . . . . . -- -- -- (300) -- (300)
Net loss . . . . . . . . . . . . -- -- -- -- (9,367) (9,367)
---- ----- ---- --------- -------- --------
Balance May 31, 1995 . . . . . . $ 10 $203 $ 24 $48,013 $(3,793) $44,457
==== ==== ==== ======= ======= =======
</TABLE>
See accompanying notes to the consolidated financial statements
F-48
<PAGE> 122
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30, 1994
------------------- ------------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . $ (9,367) $ 3,033
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . 12,765 --
Depreciation and amortization . . . . . . . . . . . . . . . . . 6,474 6,435
Amortization of deferred financing costs . . . . . . . . . . . 1,493 1,667
Accretion of debt discount . . . . . . . . . . . . . . . . . . 164 328
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . (4,282) (325)
Change in assets and liabilities, net of acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . (9,863) (7,928)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . (824) (6,622)
Prepaid expenses and other . . . . . . . . . . . . . . . . . (166) (2,951)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . (617) 8,231
Accrued and other liabilities . . . . . . . . . . . . . . . . 2,628 (281)
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 1,276 (1,217)
Income taxes payable/refundable . . . . . . . . . . . . . . . (3,366) 2,443
Other long-term liabilities . . . . . . . . . . . . . . . . . (236) (495)
-------- --------
Net cash from operating activities . . . . . . . . . . . . . . (3,921) 2,318
-------- --------
Cash flows provided by (used in) financing activities:
Acquisitions, net of cash . . . . . . . . . . . . . . . . . . (44,973) (11,754)
Capital expenditures, net . . . . . . . . . . . . . . . . . . (2,914) (6,248)
-------- --------
Net cash from investing activities . . . . . . . . . . . . . . (47,887) (18,002)
Cash flows provided by (used in) financing activities:
Proceeds from issuance of long-term obligations . . . . . . . 24,000 12,674
Equity proceeds . . . . . . . . . . . . . . . . . . . . . . . 25,750 --
Borrowings of long-term obligations . . . . . . . . . . . . . 19,639 22,995
Repayment of long-term obligations . . . . . . . . . . . . . (14,226) (17,481)
Financing fees and other . . . . . . . . . . . . . . . . . . (3,500) (691)
-------- --------
Net cash from financing activities . . . . . . . . . . . . . . 51,663 17,497
-------- --------
Net change in cash and cash equivalents . . . . . . . . . . . . (145) 1,813
Cash and cash equivalents at beginning of the period . . . . . 2,053 240
-------- --------
Cash and cash equivalents at end of the period . . . . . . . . $ 1,908 $ 2,053
======== ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-49
<PAGE> 123
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MAY 31, 1995, AND
THE YEAR ENDED NOVEMBER 30, 1994
(IN THOUSANDS, EXCEPT SHARE DATA)
1. THE COMPANY
WB Holdings Inc. ("Holdings"), a Delaware corporation, was formed to
participate in the December 21, 1992 Acquisition (defined below). Holdings had
no operations prior to December 21, 1992.
On December 2, 1994, Holdings, through a series of mergers, became a
wholly-owned subsidiary of Wirekraft Holdings Corp. ("New Holdings" together
with Holdings, the "Company"). Pursuant to the mergers, the existing
stockholders of Holdings exchanged their Holdings securities for New Holdings
securities that have terms identical to the exchanged Holdings securities. New
Holdings, a Delaware corporation, was formed to participate in the acquisition
of Electro Componentes de Mexico S.A. de C.V. ("ECM") as discussed in Note 2.
New Holdings had no operations prior to December 2, 1994. Holdings and New
Holdings have a fiscal year-end of November 30.
On December 21, 1992, Holdings, through a series of acquisitions and
mergers, acquired all of the issued and outstanding common stock of Bristol
Holding Corporation and Burcliff Holdings Corporation, the parent companies of
the general partners of Kirtland Indiana, Limited Partnership for a total
consideration of $116,997 (the "Acquisition"). Through a related series of
mergers after the Acquisition, Bristol Holding Corporation became the surviving
entity. Bristol Holding Corporation was later renamed Wirekraft Industries,
Inc. ("Wirekraft") (together with Holdings, the "Company"). Wirekraft through
its two segments, the Wire segment and the Harness segment, is engaged in the
manufacture, design and distribution of insulated wire and wire harnesses used
primarily in the appliance and automobile markets. The Company markets and
distributes its products through a combination of internal sales
representatives and independent sales representatives, selling primarily to
original equipment manufacturers.
The total cost of the Acquisition consisted of $57,967 for issued and
outstanding common stock, $42,877 for the retirement of existing indebtedness,
$1,175 for outstanding warrants and $14,978 for fees and expenses. The
Acquisition was accounted for using the purchase method of accounting whereby
the total acquisition cost was allocated to the acquired net assets based on
their respective fair values.
The total acquisition cost was allocated to the acquired net assets as
follows:
<TABLE>
<S> <C>
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,461
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . 19,980
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,319
Fees and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,580
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . 386
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . (16,365)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,364)
--------
$116,997
========
</TABLE>
F-50
<PAGE> 124
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ECM ACQUISITION
On December 2, 1994, through a series of acquisitions and transfers from
New Holdings, Wirekraft acquired the stock of ECM and certain assets from
General Electric Company. The purchase price, including fees and expenses, was
approximately $49,550. The purchase price consisted of $20,000 in cash,
1,000,000 shares of Series A Senior Preferred Stock, par value $.01 per share,
$25 liquidation preference and 275,758 shares of common stock on New Holdings.
The acquisition of ECM was accounted for using the purchase method of
accounting whereby the total acquisition cost was allocated to the acquired net
assets based on their respective fair values. The total acquisition cost was
allocated to the acquired net assets as follows:
<TABLE>
<S> <C>
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,211
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . 8,288
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,958
Fees and costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,500
Current liabilities and other reserves . . . . . . . . . . . . . . . . (8,407)
-------
$49,550
=======
</TABLE>
Unaudited pro forma data, which show condensed results of operations for
the year ended November 30, 1994 as though the acquisition and related
financing of ECM had occurred at the beginning of the period is as follows:
<TABLE>
<S> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 319,486
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,758
</TABLE>
3. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements for the year ended November 30,
1994 include the accounts of Holdings and its wholly-owned subsidiary,
Wirekraft. The consolidated financial statements for the six months ended May
31, 1995 include the accounts of New Holdings and its wholly-owned subsidiary,
Holdings. All material intercompany balances and transactions have been
eliminated in consolidation.
Revenue Recognition
Sales and related costs of goods sold are included in income when goods
are shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out ("LIFO") method.
F-51
<PAGE> 125
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is
calculated using the straight-line method. The average estimated lives
utilized in calculating depreciation are as follows: building and improvements
- - 25 years; machinery and equipment - 7 years; and furniture and fixtures - 5
years. Leasehold improvements are amortized over the shorter of the term of
the respective lease or life of the respective improvement.
Intangible Assets
Intangible assets, which consist principally of goodwill arising from
the excess of cost over the value of net assets acquired, are amortized using
the straight-line method over forty years. Accumulated amortization aggregated
$4,040 at November 30, 1994.
Deferred Financing Costs
Deferred financing costs, which consists of fees and other expenses
associated with the debt financing, are amortized over the term of the related
debt using the effective interest method and the straight-line method which
approximates the effective interest method.
Income Taxes
Deferred income taxes are determined using the liability method.
Statement of Cash Flows
For purposes of the consolidated statements of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest paid for the six months ended
May 31, 1995 and the year ended November 30, 1994 was approximately $6,744 and
$11,803, respectively. Taxes paid for the six months ended May 31, 1995 and
the year ended November 30, 1994 were approximately $604 and $905,
respectively. In connection with the Acquisition, the Company assumed
liabilities aggregating $22,729, which is a non-cash investing activity.
During the six months ended May 31, 1995, the Company entered into a
capital lease obligation of $4,714 for new equipment.
Fair Value of Financial Instruments
The fair market values of the financial instruments included in the
consolidated financial statements approximate the carrying values of the
financial instruments.
Concentration of Credit Risk
Accounts receivable from companies located throughout the United States
in the appliance and automotive industries amounted to approximately $12,397
and $15,684, respectively at November 30, 1994. Sales to the Company's five
largest customers represented 61% of net sales for the six months ended May 31,
1995 and 51% and 56% of net sales in 1994 and 1993, respectively. A
significant portion of the Company's sales are to three
F-52
<PAGE> 126
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
major customers within the Harness Segment. Sales to one of these customers
represented 25% of net sales for the six months ended May 31, 1995. The
Company has entered into a supply contract with this customer expiring in 2002.
Sales to the Company's two other major customers represented 12% and 7% of net
sales for the six months ended May 31, 1995, 17% and 11% of net sales in 1994.
In 1995, a supply contract with one of the above mentioned customers expired.
A supply contract was subsequently renegotiated through December, 1998.
4. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
In connection with the Acquisition and ECM acquisition, the Company
incurred aggregate fees and costs of $11,900. Costs of $11,100 related to the
12% Senior Subordinated Notes due 2003 and Credit Agreement are included in
deferred financing costs and are amortized over the term of the related
borrowings. Costs of $800 related to the issuance of Holding's common stock
have been deducted from the proceeds to reduce the carrying value of the common
stock.
In connection with the Acquisition and the related financing, Holdings
and Wirekraft entered into a Monitoring and Oversight Agreement ("Agreement")
with Hicks, Muse & Co., Incorporated ("Hicks, Muse") (an affiliate of the
Company) pursuant to which the Company paid Hicks, Muse a financial advisory
fee of $1,725. The fees, which also include $200 paid in connection with the
acquisition of Ristance and $750 paid in connection with the acquisition of
ECM, have been allocated to the Company's debt and equity securities as
deferred financing costs or as a deduction from the cash proceeds received from
the sale of stock. The Agreement further provides that the Company shall pay
Hicks, Muse an annual fee of $115 (subject to adjustment), for ten years, for
monitoring and oversight services. Such Agreement was amended and restated in
connection with the acquisition of ECM to increase the annual fee for financial
advisory services to $200 (subject to adjustment). The obligation under the
Agreement, as amended, and the related deferred financing costs have been
recorded in the consolidated balance sheet.
5. STOCKHOLDERS' EQUITY
The authorized capital stock of the Company at May 31, 1995 consists of
50,000,000 shares of common stock, 3,000,000 shares of Class A common stock,
and 10,000,000 shares of preferred stock. In connection with the financing of
the Acquisition, the Company issued 20,000,000 shares of common stock,
2,402,402 shares of Class A common stock and 1,621,622 warrants to purchase
common stock. Each warrant represents the right to purchase one share of the
Company's common stock for $1.00 per warrant. The warrants expire on December
31, 2002. As of May 31, 1995, no warrants had been exercised. On December 2,
1994, in connection with the acquisition of ECM, the Company issued 1,000,000
shares of Series A Senior Preferred Stock and 275,758 shares of common stock.
The Class A common stock may be converted into shares of common stock at
the option of the holder at any time. In addition, shares of the Class A
common stock (i) may be converted into common stock at the option of the
Company effective immediately prior to the occurrence of a Triggering Event (as
defined in the Company's Certificate of Incorporation) or (ii) shall
automatically be converted on December 31, 2002. Such conversions are based on
a formula set forth in the Company's Certificate of Incorporation.
Dividends are payable to holders of the common stock and Class A common
stock in amounts as and when declared by the Company's board of directors,
subject to legally available funds and certain agreements governing the
Company's indebtedness. In the event of any liquidation, dissolution or
winding up of the
F-53
<PAGE> 127
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Company, before any payment or distribution of the assets of the Company shall
be made to the holders of the Class A common stock, each share of common stock
shall be entitled to a liquidation preference based on a formula set forth in
the Company's Certificate of Incorporation. The common stock and the Class A
common stock are entitled to one vote per share on all matters submitted to a
vote of stockholders.
The Company has adopted a qualified and non-qualified incentive stock
option plan (the "Option Plan") for officers and key employees of Holdings. A
total of 1,471,000 shares of the Company's common stock has been reserved for
issuance under the Option Plan. Under the Option Plan, eligible participants
may receive qualified and non-qualified options to purchase shares of the
Company's common stock.
Options are exercisable at such time and on such terms as the committee
appointed to administer the Option Plan (the "Committee") determines. The
exercise price for the options granted under the Option Plan may not be less
than the fair market value of the underlying share, as determined by the
Committee on the date of grant. Generally, an option may be exercised only if
the holder is an officer or employee of the Company at the time of exercise.
Options granted under the Option Plan are not transferable, except by will and
the laws of descent and distribution. During the year ended November 30, 1994,
the Company granted options to purchase 75,000 shares of common stock at $2.74
per share and canceled 235,200 options. No options were exercised during the
year. During the six months ended May 31, 1995, the Company granted options to
purchase 100,000 shares of common stock at $2.74 per share, canceled 188,800
shares and 20,000 options were exercised. At May 31, 1995, there were 764,000
options available for issuance under the Option Plan.
6. INCOME TAXES
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1995 November 30, 1994
--------------------- --------------------
<S> <C> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,022 $ 2,741
State . . . . . . . . . . . . . . . . . . . . . . . . . . . 892 607
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . 254 --
------- -------
2,168 3,348
------- -------
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . (3,159) (124)
State . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,123) (201)
------- -------
(4,282) (325)
------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . $(2,114) $ 3,023
======= =======
</TABLE>
F-54
<PAGE> 128
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Reconciliation between the Federal statutory income tax rate and the effective
tax rate is summarized below:
<TABLE>
<CAPTION>
Six Months Ended Year Ended
May 31, 1995 November 30, 1994
---------------- -----------------
<S> <C> <C>
Federal taxes at statutory rate (34%) . . . . . . . . . . . . $(1,240) $ 2,059
State taxes, net of federal effect . . . . . . . . . . . . . 210 268
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,468) --
Nondeductible assets . . . . . . . . . . . . . . . . . . . . 340 680
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 16
------- -------
Provision (benefit) for income taxes . . . . . . . . . . . . $(2,114) $ 3,023
======= =======
</TABLE>
7. PLANT CLOSING EXPENSE
In May 1995, the Company recorded a pretax charge to operations of
$2,000 to provide for plant closing costs. The Company's decision to shut-down
certain harness segment plants was the result of a customer transitioning
certain wire harness purchases to its own captive operations in Mexico and
other third party suppliers. The plant closing costs include provisions for
shut-down costs from the period of the plant closure to the date of disposal,
commitment costs for leased equipment and severance related costs.
8. RETIREMENT BENEFITS
Employees of Wire division, who are eligible under Section 414(q) of the
Internal Revenue Code, may participate in the profit sharing plan sponsored by
the Company. The plan qualifies under the Internal Revenue Code section
401(k), and the Company may at its discretion make contributions on a matching
or non-matching basis. Employees of the Wire Division with approximately one
year of service may also participate in a money purchase pension plan sponsored
by the Company. The Company is required to make contributions to the money
purchase pension plan equal to 3% of an employee's eligible compensation as
defined in the plan document. Expense under these two plans amounted to
approximately $363 and $451 for the six months ended May 31, 1995 and the year
ended November 30, 1994, respectively.
9. LEASES
The Company leases certain of its manufacturing facilities and equipment
under long-term lease agreements with lease terms expiring through February
2004. Rent expense applicable to the noncancelable operating leases aggregated
$505, $436 and $431 for the six months ended May 31, 1995 and for the year
ended November 30, 1994.
F-55
<PAGE> 129
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The schedule of future minimum lease payments by calendar year under
operating leases at November 30, 1994 is as follows:
<TABLE>
<S> <C>
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,645
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,607
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,567
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,324
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,234
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . 1,723
</TABLE>
10. CONTINGENCIES
The Company is subject to various lawsuits and claims with respect to
such matters as patents, product liabilities, government regulations, and other
actions arising in the normal course of business. In the opinion of
management, the ultimate liabilities resulting from such lawsuits and claims
will not have a material adverse effect on the Company's consolidated financial
conditions and results of operations.
11. OTHER ACQUISITIONS
On December 10, 1993, Wirekraft acquired certain assets and related
liabilities of the wire business of the Ristance division of Echlin Corporation
("Ristance"). The purchase price, including fees and expenses, paid in cash,
was approximately $11,800 which was funded through additional borrowings under
the Credit Agreement. The acquisition of Ristance was accounted for using the
purchase method of accounting and, accordingly, the purchase price was
allocated to assets and liabilities acquired based upon their fair value at the
date of the acquisition.
12. BUSINESS SEGMENT INFORMATION
Certain information concerning the Company's operating segments for the
six months ended May 31, 1995 and the year ended November 30, 1994 is presented
below. Total revenue by segment includes both sales to customers and
intersegment sales, which are accounted for at prices charged to customers and
eliminated in consolidation.
<TABLE>
<CAPTION>
Wire Harness Consolidated
---------- ----------- ---------------
<S> <C> <C> <C>
Six Months Ended May 31, 1995
-----------------------------
Total revenue . . . . . . . . . . . . . . . . $ 88,488 $ 88,620
Intersegment sales . . . . . . . . . . . . . 7,807 1,248
---------- ----------
Sales to customers . . . . . . . . . . . . . $ 80,681 $ 87,372 $ 168,053
========== ===========
Operating income . . . . . . . . . . . . . . 1,320 4,711 6,031
Depreciation and amortization . . . . . . . . 2,534 3,940 6,474
Capital expenditures, net . . . . . . . . . . 1,636 1,278 2,914
</TABLE>
F-56
<PAGE> 130
WIREKRAFT HOLDINGS CORP.
(FORMERLY WB HOLDINGS INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
Wire Harness Consolidated
---------- ----------- ---------------
<S> <C> <C> <C>
Year Ended November 30, 1994
----------------------------
Total revenue . . . . . . . . . . . . . . . . $ 153,014 $ 101,167
Intersegment sales . . . . . . . . . . . . . 13,209 --
---------- ----------
Sales to customers . . . . . . . . . . . . . $ 139,805 $ 101,167 $ 240,972
========== ==========
Operating income . . . . . . . . . . . . . . 9,433 9,183 18,616
Depreciation and amortization . . . . . . . . 4,451 1,984 6,435
Capital expenditures, net . . . . . . . . . . 5,819 429 6,248
</TABLE>
13. SUBSEQUENT EVENT
On June 12, 1995, International Wire Holding Company, through a series
of mergers and acquisitions acquired all of the outstanding common stock of New
Holdings (the "Transaction"). The Company has designated June 1, 1995, as the
effective date of the Transaction for financial reporting purposes. In
connection with the Transaction, the majority of the Company's long-term debt
was repaid, the common stock of New Holdings was redeemed at $51,751, the
Series A Senior Preferred Stock issued as part of the ECM acquisition (see Note
2) was redeemed at a liquidation value of $26,250 plus accrued dividends of $71
and the warrants and equity rights were retired at $10,133. As a result of the
early repayment of certain long-term debt, $7,909 of deferred financing costs
and $2,456 of OID were charged off and included as an extraordinary item in the
accompanying Statements of Operations for the six months ended May 31, 1995.
In addition, the Company paid a prepayment penalty of $2,400 to holders of
subordinated notes. This amount has also been included in the accompanying
statements of operations as an extraordinary item. The stock options granted
pursuant to the Company's stock option plan were canceled for payment to the
option holders who received cash. This amount totaled approximately $895 and
has been included in the Statements of Operations as compensation expense for
the six months ended May 31, 1995. In connection with the sale, the Company
incurred expenses of $501 which has been recorded in the Statements of
Operations as expenses related to sale.
F-57
<PAGE> 131
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Omega Wire Corp.:
We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of Omega Wire Corp. and subsidiaries for
the two months ended May 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of Omega Wire Corp. and subsidiaries for the two months ended May
31, 1995, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
January 27, 1996
F-58
<PAGE> 132
OMEGA WIRE CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 23,295
Operating expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . 17,512
Selling, general and administrative . . . . . . . . . . . . . . . . 1,639
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 1,233
----------
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . 2,911
Other income (expense):
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . (1,797)
Amortization of deferred financing costs . . . . . . . . . . . . . (238)
----------
Income before income tax provision and extraordinary item . . . . . . 876
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . 171
----------
Income before extraordinary item . . . . . . . . . . . . . . . . . . 705
Extraordinary item - loss due to early extinguishment of debt
net of income tax of $2,082 . . . . . . . . . . . . . . . . . . . . (4,044)
----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,339)
==========
</TABLE>
See accompanying notes to the consolidated financial statements
F-59
<PAGE> 133
OMEGA WIRE CORP.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A CARRYOVER OF
COMMON COMMON PAID-IN PREDECESSOR ACCUMULATED
STOCK STOCK CAPITAL BASIS DEFICIT TOTAL
------- ---------- --------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Issuance of common stock . . . .
$420 $ -- $41,580 $ -- $ -- $ 42,000
Issuance of Class A common stock
-- 63 -- -- -- 63
Issuance costs . . . . . . . . .
-- -- (675) -- -- (675)
Carryover of predecessor basis .
-- -- -- (20,000) -- (20,000)
Net loss . . . . . . . . . . . .
-- -- -- -- (3,339) (3,339)
----- ---- --------- ---------- -------- ---------
Balance May 31, 1995 . . . . . . $420 $63 $40,905 $(20,000) $(3,339) $ 18,049
==== === ======= ======== ======= ========
</TABLE>
See accompanying notes to the consolidated financial statements
F-60
<PAGE> 134
OMEGA WIRE CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows provided by (used in) operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,339)
Adjustment to reconcile net loss to net cash provided by
(used in) operating activities:
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . . 6,126
Depreciation and amortization . . . . . . . . . . . . . . . . . . . 1,233
Amortization of deferred financing costs . . . . . . . . . . . . . 238
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . 120
Change in assets and liabilities, net of acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . 1,528
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . (510)
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . (231)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 919
Accrued and other liabilities . . . . . . . . . . . . . . . . . 10
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . 952
Income taxes payable/refundable . . . . . . . . . . . . . . . . (2,033)
Other long-term liabilities . . . . . . . . . . . . . . . . . . (26)
----------
Net cash from operating activities . . . . . . . . . . . . . . . . . 4,987
----------
Cash flows provided by (used in) investing activities:
Acquisition, net of cash . . . . . . . . . . . . . . . . . . . . . (159,080)
Capital expenditures, net . . . . . . . . . . . . . . . . . . . . . (581)
----------
Net cash from investing activities . . . . . . . . . . . . . . . . . (159,661)
----------
Cash flows provided by (used in) financing activities:
Proceeds from issuance of long-term obligations . . . . . . . . . . 135,000
Contributed capital . . . . . . . . . . . . . . . . . . . . . . . . 34,653
Repayment of long-term obligations . . . . . . . . . . . . . . . . (7,979)
Financing fees and other . . . . . . . . . . . . . . . . . . . . . (7,000)
----------
Net cash from financing activities . . . . . . . . . . . . . . . . . 154,674
----------
Net change in cash . . . . . . . . . . . . . . . . . . . . . . . . . --
Cash at beginning of the period . . . . . . . . . . . . . . . . . . . --
----------
Cash at end of the period . . . . . . . . . . . . . . . . . . . . . . $ --
==========
</TABLE>
See accompanying notes to the consolidated financial statements
F-61
<PAGE> 135
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
TWO MONTHS ENDED MAY 31, 1995
(IN THOUSANDS, EXCEPT SHARE DATA)
1. THE COMPANY
Omega Wire Corp. ("Omega" or the "Company"), a Delaware corporation, was
formed to participate in the Acquisition (defined below). Omega had no
operations prior to the Acquisition.
On March 31, 1995, Omega acquired all of the issued and outstanding
common stock of THL-Omega Holding Corporation ("THL-Omega") for a total
consideration $167,300 (the "Acquisition"). Omega, through its subsidiaries,
is engaged in the manufacturing and marketing of non-insulated copper wire and
cable products. The Company's products are used by a wide variety of customers
primarily in the automotive and computer and data communications industries.
Omega has a fiscal year-end of December 31.
The total purchase price of the Acquisition of approximately $174,300,
which included the retirement of existing indebtedness and related fees and
costs, is summarized as follows:
<TABLE>
<S> <C>
Cash paid for all issued and outstanding common stock . . . . $ 102,762
Cash paid to retire existing indebtedness . . . . . . . . . . 55,439
Common stock of Omega issued . . . . . . . . . . . . . . . . 7,410
Fees and costs . . . . . . . . . . . . . . . . . . . . . . . 8,689
----------
$ 174,300
==========
</TABLE>
The Acquisition was accounted for using the purchase method of
accounting whereby the total acquisition cost has been preliminarily allocated
to the consolidated assets and liabilities based on their estimated respective
fair values. In accordance with EITF 88-16, "Basis in Leveraged Buyout
Transactions", a portion of the Acquisition has been accounted for at
"predecessor basis". The application of predecessor basis reduced
stockholders' equity and goodwill by $20,000. The purchase price allocations
are still in process. It is not expected that the final allocation of the
purchase cost will result in a materially different allocation than is
presented herein.
The total acquisition costs have been preliminarily allocated to the
acquired net assets as follows:
<TABLE>
<S> <C>
Current assets . . . . . . . . . . . . . . . . . . . . . . . $ 40,802
Property, plant and equipment . . . . . . . . . . . . . . . . 38,974
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . 96,701
Fees and costs . . . . . . . . . . . . . . . . . . . . . . . 9,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 54
Current liabilities . . . . . . . . . . . . . . . . . . . . . (21,906)
Other liabilities . . . . . . . . . . . . . . . . . . . . . . (9,325)
Carryover of predecessor basis . . . . . . . . . . . . . . . 20,000
----------
$ 174,300
==========
</TABLE>
F-62
<PAGE> 136
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Omega and
its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
Revenue Recognition
Sales and related cost of goods sold are included in income when goods
are shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is
calculated using the straight-line method. The average estimated lives
utilized in calculating depreciation are as follows: buildings - 25 to 40
years; building improvements 15 years; machinery and equipment - 3 to 11 years;
and furniture and fixtures - 5 years. Leasehold improvements are amortized
over the shorter of the term of the respective lease or the life of the
respective improvement.
Intangible Assets
Intangible assets consist principally of goodwill arising from the
excess of cost over the value of net assets acquired, which is being amortized
using the straight-line method over forty years. Amortization of intangible
assets amounted to $384 for the two months ended May 31, 1995.
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses
associated with the debt financing are amortized over the term of the related
debt using the effective interest method and the straight-line method which
approximates the effective interest method.
Statement of Cash Flows
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest and taxes paid for the two
months ended May 31, 1995 were $845 and $2, respectively.
In connection with the Acquisition, certain shares of common stock of
THL-Omega were exchanged for common stock of Omega. The total amount of shares
exchanged were $7,410, which was a non-cash investing and financing activity.
F-63
<PAGE> 137
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. FINANCING COSTS AND RELATED PARTY TRANSACTIONS
In connection with the Acquisition, the Company incurred aggregate fees
and costs of $7,000. Costs of $6,325 related to the debt financing are being
amortized over the terms of the related borrowings. Costs of $675 related to
the issuance of Omega's common stock have been deducted from the proceeds to
reduce the carrying value of the common stock.
In connection with the Acquisition and obtaining the related financing,
Omega entered into a Monitoring and Oversight Agreement ("Agreement") with
Hicks, Muse & Co. Partners, L.P. ("Hicks, Muse") (an affiliate of the Company)
pursuant to which the Company paid Hicks, Muse a cash fee of $2,525 as
compensation for financial advisory services. The fees have been allocated to
the debt and equity securities issued in connection with the Acquisition as
deferred financing costs or as a deduction from the cash proceeds received from
the sale of the common stock of Omega. The agreement further provides that the
Company shall pay Hicks, Muse an annual fee of $200, for ten years for
monitoring and oversight services adjusted annually at the end of each fiscal
year to an amount equal to .1% of the consolidated net sales of the Company,
but in no event less than $200 annually.
4. STOCKHOLDERS' EQUITY
The authorized capital stock of the Company consists of 100,000,000
shares of common stock, 6,333,333 shares of Class A common stock, and
10,000,000 shares of preferred stock. In connection with the financing of the
Acquisition, the Company issued 42,000,000 shares of common stock and 6,333,333
shares of Class A common stock
The Class A common stock may be converted into shares of common stock at
the option of the holder at any time. In addition, shares of the Class A
common stock (i) may be converted into common stock at the option of the
Company effective immediately prior to the occurrence of a Triggering Event (as
defined in the Company's Certificate of Incorporation) or (ii) shall
automatically be converted on March 31, 2005. Such conversions are based on a
formula set forth in the Company's Certificate of Incorporation.
Dividends are payable to holders of the common stock and Class A common
stock in amounts as and when declared by the Company's board of directors,
subject to legally available funds and certain agreements governing the
Company's indebtedness. In the event of any liquidation, dissolution or
winding up of the Company, before any payment or distribution of the assets of
the Company shall be made to the holders of the Class A common stock, each
share of common stock shall be entitled to a liquidation preference based on a
formula set forth in the Company's Certificate of Incorporation. The common
stock and the Class A common stock are entitled to one vote per share on all
matters submitted to a vote of stockholders.
F-64
<PAGE> 138
OMEGA WIRE CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. INCOME TAXES
The Company accounts for income taxes in accordance with provisions of
SFAS No. 109. The provision for income taxes for the two months ended May 31,
1995 is as follows:
<TABLE>
<S> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . $ 51
----
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . . 55
State . . . . . . . . . . . . . . . . . . . . . . . . 65
----
120
----
$171
====
</TABLE>
Reconciliation between the federal statutory income tax rate and the
effective tax rate is summarized below:
<TABLE>
<S> <C>
Federal taxes at statutory rate (34%) . . . . . . . . . . . . $297
State taxes, net of federal effect . . . . . . . . . . . . . 43
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . (169)
----
Provision for income taxes . . . . . . . . . . . . . . . . . $171
====
</TABLE>
6. RETIREMENT PLANS
The Company has a profit sharing plan covering substantially all
employees of Omega Wire Corp. Contributions are made to a trusteed fund to
accumulate as a retirement benefit for employees. The profit sharing expense
amounted to $113 for the two months ended May 31, 1995.
Effective January 1, 1995, the Company implemented a savings plan
permitting substantially all employees to contribute up to 15% of their salary
on a pre-tax basis to any of the six investment options available. There are no
required Company contributions to the plan.
7. COMMITMENTS
The Company leases certain property, transportation vehicles and other
equipment under operating leases. Total lease expense for the two months ended
May 31, 1995 was approximately $290.
Under the terms of the agreements in effect at May 31, 1995, the Company
has future minimum lease commitments as follows:
<TABLE>
<S> <C>
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 979
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,262
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,159
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,108
Later years . . . . . . . . . . . . . . . . . . . . . . . . . 9,198
-------
Total minimum lease commitments . . . . . . . . . . . . . . . $14,908
=======
</TABLE>
F-65
<PAGE> 139
8. CONTINGENCIES
The Company is subject to various lawsuits and claims with respect to
such matters as patents, product liabilities, government regulations, and other
actions arising in the normal course of business. In the opinion of
management, the ultimate liabilities resulting from such lawsuits and claims
will not have a material adverse effect on the Company's consolidated financial
conditions and results of operations.
9. SUBSEQUENT EVENT
On June 12, 1995, International Wire Holding Company ("Holdings"),
through a series of mergers and acquisitions acquired all of the outstanding
common stock of the Company in exchange for certain of its common equity
securities (the "Transaction"). In connection with the Transaction the Company
has been renamed "International Wire Group, Inc." The Company has designated
June 1, 1995, as the effective date of the Transaction for financial reporting
purposes. In connection with the Transaction the Company's long-term debt was
repaid. As a result of the early repayment of long-term debt, approximately
$6,126 of deferred financing costs were charged off and included as an
extraordinary item in the accompanying Statement of Operations.
F-66
<PAGE> 140
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
THL-Omega Holding Corporation:
We have audited the accompanying consolidated statements of operations
and retained earnings and cash flows of THL-Omega Holding Corporation and its
subsidiaries for the three months ended March 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit of these statements in accordance with generally
accepted auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of THL-Omega Holding Corporation and subsidiaries for the three
months ended March 31, 1995, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND, L.L.P.
St. Louis, Missouri
January 27, 1996
F-67
<PAGE> 141
THL-OMEGA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 38,736
Costs and expenses:
Cost of products sold . . . . . . . . . . . . . . . . . . . . . 30,638
Selling expenses . . . . . . . . . . . . . . . . . . . . . . . 1,430
General and administrative expenses . . . . . . . . . . . . . . 1,493
Compensation expense . . . . . . . . . . . . . . . . . . . . . 9,715
Expenses related to sale of Company . . . . . . . . . . . . . . 1,689
----------
Loss from operations . . . . . . . . . . . . . . . . . . . . . . (6,229)
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . (1,478)
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . 32
----------
Loss before income taxes and extraordinary item . . . . . . . . . (7,675)
Provision for income taxes . . . . . . . . . . . . . . . . . . . 484
----------
Loss before extraordinary item . . . . . . . . . . . . . . . . . (8,159)
Extraordinary item - loss due to early extinguishment
of debt net of income tax of $765 . . . . . . . . . . . . . . . (1,148)
----------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . (9,307)
Retained earnings - beginning of the year . . . . . . . . . . . . 13,284
----------
Retained earnings - March 31, 1995 . . . . . . . . . . . . . . . $ 3,977
==========
</TABLE>
See accompanying notes to the consolidated financial statements
F-68
<PAGE> 142
THL-OMEGA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows provided by (used in) operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (9,307)
Adjustment to reconcile net loss to net cash provided by
(used in) operating activities:
Extraordinary item . . . . . . . . . . . . . . . . . . . . . . . 1,913
Compensation expense . . . . . . . . . . . . . . . . . . . . . . 9,715
Depreciation and amortization . . . . . . . . . . . . . . . . . . 1,509
Change in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . 1,222
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . 2,826
Prepaid and other current assets . . . . . . . . . . . . . . . (485)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . (3,714)
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . (90)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . (5)
Deferred compensation . . . . . . . . . . . . . . . . . . . . 20
---------
Net cash from operating activities . . . . . . . . . . . . . . . . 3,604
---------
Cash flows provided by (used) investing activities:
Capital expenditures, net . . . . . . . . . . . . . . . . . . . . (1,597)
---------
Net cash from investing activities . . . . . . . . . . . . . . . . (1,597)
---------
Cash flows provided by (used in) financing activities:
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . (1,500)
Net borrowing (repayment) under revolving credit facility . . . . (656)
Issuance of notes payable, net . . . . . . . . . . . . . . . . . 678
Redemption of common stock . . . . . . . . . . . . . . . . . . . (58)
---------
Net cash from financing activities . . . . . . . . . . . . . . . . (1,536)
---------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . 471
Cash at beginning of period . . . . . . . . . . . . . . . . . . . . 339
---------
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . . $ 810
=========
</TABLE>
See accompanying notes to the consolidated financial statements
F-69
<PAGE> 143
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(IN THOUSANDS)
1. THE COMPANY
THL-Omega Holding Corporation and its subsidiaries ("THL-Omega" or the
"Company") are engaged in the manufacturing and marketing of non-insulated
copper wire and cable products. The Company's products are used by a wide
variety of customers primarily in the automotive and computer and data
communications industries. THL-Omega has a fiscal year-end of December 31.
2. SIGNIFICANT ACCOUNTING POLICIES:
Principles of Consolidation
The consolidated financial statements include the accounts of THL-Omega
and its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
Revenue Recognition
Sales and related cost of goods sold are included in income when goods
are shipped to customers.
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined primarily using the last-in, first-out ("LIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is
calculated using the straight-line method. The average estimated lives
utilized in calculating depreciation are as follows: buildings - 25 to 40
years; building improvements - 15 years; machinery and equipment - 3 to 11
years; and furniture and fixtures - 5 years. Leasehold improvements are
amortized over the shorter of the term of the respective lease or the life of
the respective improvement.
Intangible Assets
Intangible assets consist principally of goodwill arising from the
excess of cost over the value of net assets acquired, which is being amortized
using the straight-line method over forty years.
Deferred Financing Costs
Deferred financing costs, consisting of fees and other expenses
associated with the debt financing are amortized over the term of the related
debt using the effective interest method and the straight-line method which
approximates the effective interest method.
F-70
<PAGE> 144
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Statement of Cash Flows
For purposes of the consolidated statement of cash flows, the Company
considers all highly liquid investments purchased with maturities of three
months or less to be cash equivalents. Interest and taxes paid for the three
months ended March 31, 1995 were $1,548 and $33, respectively.
3. INCOME TAXES
The Company accounts for income taxes in accordance with the provisions
of SFAS No. 109. The provision for income taxes for the three months ended
March 31, 1995 is as follows:
<TABLE>
<S> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . $384
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
----
$484
====
</TABLE>
Reconciliation between the statutory income tax rate and effective tax
rate for the three months ended March 31, 1995 is summarized below:
<TABLE>
<S> <C>
Statutory U.S. federal tax rate . . . . . . . . . . . . . . . . . . . . $(2,610)
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . 66
Amortization on non-deductible goodwill and non-deductible expenses . . 3,028
-------
$ 484
=======
</TABLE>
4. RETIREMENT PLANS
The Company has a profit sharing plan covering substantially all
employees of THL-Omega. Contributions are made to a trusteed fund to
accumulate as a retirement benefit for employees. The profit sharing expense
amounted to $249 for the three months ended March 31, 1995.
5. COMMITMENTS AND CONTINGENCIES
The Company leases certain property, transportation vehicles and other
equipment under operating leases. Rent expense for these operating leases for
the three months ended March 31, 1995 was approximately $433.
Under the terms of the agreements in effect at March 31, 1995, the
Company has future minimum lease commitments as follows:
<TABLE>
<S> <C>
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 979
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,262
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,159
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,108
Later years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,198
-------
Total minimum lease commitments . . . . . . . . . . . . . . . . . $14,908
=======
</TABLE>
F-71
<PAGE> 145
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The Company is subject to legal proceedings and claims which arise in
the normal course of business. In the opinion of management, the ultimate
liabilities with respect to these actions will not have a material adverse
effect on the Company's financial condition or results of operations.
6. ACQUISITION
On March 31, 1995, ownership of the Company transferred pursuant to the
terms of a Stock Purchase Agreement. Substantially all of the Company's long-
term debt has been repaid. As a result of the early repayment of certain long-
term debt, $1,013 of deferred financing costs was charged off and included as
an extraordinary item in the accompanying Statement of Operations and Retained
Earnings for the three months ended March 31, 1995. In addition, the Company
paid a prepayment penalty of $900 to holders of the subordinated notes. This
amount also has been included in the accompanying Statement of Operations and
Retained Earnings as an extraordinary item. Immediately prior to the sale of
the Company, the Company sold common stock and granted stock options to certain
officers and shareholders for consideration less than the fair value of the
common stock. The difference between the fair value and the amount paid by the
officers and shareholders has been included in the Statement of Operations and
Retained Earnings as compensation expense for the three months ended March 31,
1995. In connection with the sale, the Company incurred expenses of $1,689
which has been included in the Statement of Operations and Retained Earnings as
expenses related to the sale of the Company.
F-72
<PAGE> 146
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders of
THL-Omega Holding Corporation:
In our opinion, the accompanying consolidated statements of operations
and retained earnings and of cash flows for the year ended December 31, 1994
present fairly, in all material respects, the results of operations and cash
flows of THL-Omega Holding Corporation and its subsidiaries for the year ended
December 31, 1994, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above. We have not audited the financial statements of THL-
Omega Holding Corporation for any period subsequent to December 31, 1994.
PRICE WATERHOUSE LLP
Syracuse, New York
February 10, 1995
F-73
<PAGE> 147
THL-OMEGA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . $134,457
Costs and expenses:
Cost of products sold . . . . . . . . . . . . . . . . . 103,100
Selling expenses . . . . . . . . . . . . . . . . . . . 5,938
General and administrative expenses . . . . . . . . . . 5,836
--------
Income from operations . . . . . . . . . . . . . . . . . . . . 19,583
Interest expense . . . . . . . . . . . . . . . . . . . . . . . (5,932)
Other income (expense) . . . . . . . . . . . . . . . . . . . . 296
--------
Income before income taxes . . . . . . . . . . . . . . . . . . 13,947
Provision for income taxes . . . . . . . . . . . . . . . . . . (5,787)
--------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 8,160
Retained earnings -- beginning of year . . . . . . . . . . . . 5,124
--------
Retained earnings -- end of year . . . . . . . . . . . . . . . $ 13,284
========
</TABLE>
See accompanying notes to the consolidated financial statements
F-74
<PAGE> 148
THL-OMEGA HOLDING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,160
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . 6,023
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,258
Deferred compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Effect of changes in current assets and liabilities (Note 1) . . . . . . . . . (5,458)
-------
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . 11,064
-------
Cash flows from investing activities:
Additions to property, plant and equipment, net . . . . . . . . . . . . . . . . (8,667)
-------
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . (8,667)
-------
Cash flows from financing activities:
Repayment of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . (6,042)
Net borrowing (repayment) under revolving credit facility . . . . . . . . . . . 206
Issuance of notes payable, net . . . . . . . . . . . . . . . . . . . . . . . . 3,755
-------
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . . . . (2,081)
-------
Net increase in cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316
Cash at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
-------
Cash at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 339
=======
</TABLE>
See accompanying notes to the consolidated financial statements
F-75
<PAGE> 149
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1994
(IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
THL-Omega Holding Corporation and its subsidiaries (the "Company") are
engaged in the manufacturing and marketing on non-insulated copper wire and
cable products.
Consolidation
The consolidated financial statements of THL-Omega Holding Corporation
include the accounts of Omega Wire, Inc. and its wholly-owned subsidiaries,
Auburn Wire Division, Inc., Auburn Wire, Inc., Continental Cordage Corporation
and OWI Corporation. All significant intercompany transactions have been
eliminated.
Inventories
Inventories are carried at the lower of cost or market, cost being
determined using the last-in, first-out method, except for Continental Cordage
Corporation which uses the first-in, first-out method. Continental Cordage
Corporation's cost of products sold represents less than 10% of the Company's
aggregate cost of products sold.
In 1994, OWI Corporation changed its method of accounting for inventory
from the first-in, first-out method of inventory valuation to the last-in,
first-out method of inventory valuation. The Company believes the last-in,
first-out method will produce a better matching of current costs and current
revenues due to the volatility of copper prices. The effect of this change in
1994 was to decrease inventories and to increase cost of products sold by $349.
The retroactive adjustment of prior year statements is insignificant for
restatement.
During 1994, the Company entered into a futures contract providing for
the sale of 10,000 pounds of copper in March 1995 at a fixed price. This future
contract is accounted for as a hedge of the Company's current inventories. At
December 31, 1994, the Company had incurred an approximate $1,052 unrealized
loss on this contract, which served to increase inventory.
Property, Plant and Equipment
Property, plant and equipment are carried at cost, net of accumulated
depreciation. Maintenance and repair costs are charged to expense as incurred.
Depreciation expense is computed using the straight-line method for financial
reporting and accelerated methods for tax purposes. Property, plant and
equipment is depreciated over the following estimated useful lives for
financial reporting purposes.
<TABLE>
<S> <C>
Buildings . . . . . . . . . . . . . . . . . . 25 to 40 years
Building improvements . . . . . . . . . . . . 15 years
Machinery and equipment . . . . . . . . . . . 3 to 11 years
</TABLE>
F-76
<PAGE> 150
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Goodwill and Debt Issue Costs
Goodwill is being amortized on a straight-line basis over 40 years.
Amortization expense was $673 for the year ended December 31, 1994. Cost
related to the issuance of debt amounting to $2,257 at December 31, 1994 has
been deferred and amortized on a straight-line basis over the term of the debt.
Amortization expense was $262 for the year ended December 31, 1994.
Income Tax Accounting
The Company accounts for income taxes in accordance with provision of
Statement of Financial Accounting Standards No. 109 (FAS 109), Accounting for
Income Taxes.
Cash Flow Information
For purposes of reporting cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents. The effect on cash flow of changes in current assets
and liabilities is as follows for the year ended December 31, 1994:
<TABLE>
<CAPTION>
1994
--------
<S> <C>
Accounts receivable . . . . . . . . . . . . . . . . . . $(7,183)
Inventories . . . . . . . . . . . . . . . . . . . . . . (6,450)
Prepaid and other current assets . . . . . . . . . . . 454
Accounts payable . . . . . . . . . . . . . . . . . . . 5,577
Accrued expenses . . . . . . . . . . . . . . . . . . . 1,639
Income taxes payable . . . . . . . . . . . . . . . . . (281)
Customers' deposits on spools and reels . . . . . . . . 786
-------
$(5,458)
=======
</TABLE>
Cash payments for income taxes were $3,808 for the year ended December
31, 1994. Interest paid was $5,873 for the year ended December 31, 1994.
2. INCOME TAXES
The components of the provision for income taxes are as follows for the
year ended December 31, 1994.
<TABLE>
<S> <C>
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . . . $2,979
State . . . . . . . . . . . . . . . . . . . . . . . . . 550
------
3,529
Deferred . . . . . . . . . . . . . . . . . . . . . . . 2,258
------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $5,787
======
</TABLE>
F-77
<PAGE> 151
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The total income tax provision differed from total tax expense as
computed by applying the statutory federal income tax rate to income before
taxes. The reasons were:
<TABLE>
<S> <C>
Statutory U.S. federal tax rate . . . . . . . . . . . . . . . . . 34.0%
State taxes, net of federal benefit . . . . . . . . . . . . . . . 2.7
Amortization of non-deductible goodwill . . . . . . . . . . . . . 1.5
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3
----
41.5%
====
</TABLE>
3. RETIREMENT PLANS
The Company has a profit sharing plan covering substantially all
employees of THL-Omega Holding Corporation. Contributions are made to a
trusteed fund to accumulate as a retirement benefit for employees. The profit
sharing expense amounted to $996 for the year ended December 31, 1994.
Effective January 1, 1995, the Company implemented a savings plan
permitting substantially all employees to contribute up to 15% of their salary
on a pretax basis to any of the six investment options available. There are no
required Company contributions to the plan.
4. STOCKHOLDERS' EQUITY
A leveraged buy out transaction occurred effective January 1, 1989 that
resulted in the application of "predecessor basis" accounting as prescribed by
the Emerging Issues Task Force (EITF) of the Financial Accounting Standards
Board. The application of predecessor basis reduced stockholders' equity and
goodwill by $5,850.
5. COMMITMENTS AND CONTINGENCIES
Operating Lease Agreements
The Company leases certain property, transportation vehicles and other
equipment under operating leases. Total lease expense for the year ended
December 31, 1994 was approximately $1,481.
Under the terms of the agreements in effect at December 31, 1994, the
Company has future minimum lease commitments as follows:
<TABLE>
<S> <C>
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,305
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,262
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,202
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,159
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,108
Later years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,198
-------
Total minimum lease commitments . . . . . . . . . . . . . . . . . . . . $15,234
=======
</TABLE>
F-78
<PAGE> 152
THL-OMEGA HOLDING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Employment Agreements
The Company has consulting and non-competition agreements with two of
its former employees which expire in 1995 and 1997, respectively. Compensation
under the agreements is payable at annual rates of $65 and $95, respectively.
Management Fee
Management fees not exceeding $200 are payable to Thomas H. Lee Company
annually. Payments were $120 for the year ended December 31, 1994.
Joint Venture
During 1992, the Company acquired a 20% interest in Changzhou Omega
Copper Wire Co., Ltd. (the joint venture), a newly-formed joint venture based
in the People's Republic of China, in exchange for certain equipment and
technology. Given the uncertainties surrounding the recoverability of this
investment, the Company's investment in the joint venture was recorded at no
value.
During the initial fifteen-year term of the joint venture, the Company
has the exclusive authority to sell the products manufactured by the joint
venture within its sales territory and has agreed to purchase a specified
quantity of product from the joint venture each year. The Company has the
option of renewing these purchase provisions for an additional fifteen-year
term upon the expiration of the initial term. The Company's purchases from the
joint venture amounted to $3,300 in 1994. There were no such purchases in
1993.
6. SUBSEQUENT EVENT
In March 1995, ownership of the Company transferred pursuant to the
terms of a Stock Purchase Agreement. The majority of the Company's long-term
debt, consisting of the Credit Agreement, Subordinated Notes and Term Loans
have subsequently been repaid.
F-79
<PAGE> 153
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholder of
Electro Componentes de Mexico S.A. de C.V.:
We have audited the accompanying statement of direct revenues and
expenses of Electro Componentes de Mexico S.A. de C.V. (collectively, "ECM")
for the eleven months ended November 30, 1994. This statement is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying financial statement was prepared to present the results
of the direct revenues and expenses of ECM pursuant to the acquisition
agreement described in Note 1, and are not intended to be a complete
presentation of ECM's results of operations or cash flows.
In our opinion, the accompanying financial statements referred to above
present fairly, in all material respects, the statement of direct revenues and
expenses for the eleven months ended November 30, 1994, pursuant to the
acquisition agreement referred to in Note 1, in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
El Paso, Texas
April 24, 1995
F-80
<PAGE> 154
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND
CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
STATEMENT OF DIRECT REVENUES AND EXPENSES
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1994
(IN THOUSANDS)
<TABLE>
<S> <C>
Direct revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $73,549
Direct expenses:
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,981
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . 14,588
-------
Direct revenues in excess of direct expenses . . . . . . . . . . . . . . . . . . 6,980
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 242
-------
Direct revenues in excess of direct expenses before income tax provision . . . . 7,222
Income tax provision at statutory rate . . . . . . . . . . . . . . . . . . . . . 2,787
-------
Net direct revenues in excess of direct expenses . . . . . . . . . . . . . . . . $ 4,435
=======
</TABLE>
See accompanying notes to the consolidated financial statements
F-81
<PAGE> 155
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND
CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS
FOR THE ELEVEN MONTHS ENDED NOVEMBER 30, 1994
(IN THOUSANDS)
1. BACKGROUND AND BASIS OF PRESENTATION
Pursuant to an Acquisition Agreement (the "Agreement") dated December 2,
1994, between General Electric Company ("GE"), Wirekraft Industries, Inc.
("Wirekraft") and certain affiliates of GE and Wirekraft, Wirekraft acquired
the stock of Electro Componentes de Mexico S.A., de C.V. ("Electro Componentes
de Mexico") and certain related assets from GE (collectively, "ECM").
Electro Componentes de Mexico, a "maquiladora," operates under Mexico's
in-bond manufacturing program. ECM manufactures wire harnesses used in the
appliance industry solely for GE.
The accompanying Statement of Direct Revenue and Expenses for the eleven
months ended November 30, 1994, has been derived from the historical books and
records of Electro Componentes de Mexico and GE. This statement has been
prepared to reflect certain historical information relating to the direct
revenues and expenses of ECM for the purpose of meeting certain reporting
requirements of the Securities and Exchange Commission. Separate records of
ECM's assets and liabilities and revenues and expenses have not been maintained
by GE. As such, it is impracticable to prepare full financial statements for
ECM. The accompanying financial statement has been prepared on a basis which
includes certain costs which have been charged or allocated by GE, and excludes
certain other costs which have not been charged or allocated by GE, such as
corporate overhead, employee benefits, interest and financing costs. The
financial statement does not purport to present the results of operations of
ECM as if it had been operated as a separate, unaffiliated entity, rather than
as a wholly-owned subsidiary of GE during the period presented.
2. SIGNIFICANT ACCOUNTING POLICIES
Inventories
Inventories are valued at the lower of cost or market. Cost is
determined using the first-in, first-out ("FIFO") method.
Property, Plant and Equipment
Property, plant and equipment is stated at cost. Depreciation is
calculated using a modified sum of the years digits method. The average
estimated lives utilized in calculating depreciation are as follows: buildings
and improvements -- 25 years; machinery and equipment -- 10 years; and
furniture and fixtures -- 10 years. Leasehold improvements are amortized on
the straight-line method over the shorter of the term of the respective lease
or the life of the respective improvement.
Foreign Currency Translation
The "functional" currency of ECM is U.S. dollars. The historical books
and records of Electro Componentes de Mexico are maintained in Mexican pesos
and have been translated into U.S. dollars in accordance with the Statement of
Financial Accounting Standards No. 52, "Foreign Currency Translation."
F-82
<PAGE> 156
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND
CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Monetary assets and liabilities are converted at the rate of exchange in effect
at the date of acquisition of the asset, and revenue and expense accounts are
converted using a weighted average exchange rate for the period. Translation
gains and losses are included in income currently.
Income Taxes
ECM is not a separate taxable entity for federal, state or local income
tax purposes. Mexican income taxes, amounting to $649, are included in the
provision for income taxes based upon the separate tax return calculation of
Electro Componentes de Mexico for the period presented. ECM's U.S. operations
are included in the consolidated GE tax returns and GE has not historically
allocated U.S. income taxes to ECM. For purposes of the income tax
computation, the provision for income taxes for ECM's U.S. operations,
amounting to $2,138, is based on an assumed combined statutory federal and
state tax rate of 40% for the period presented. Current and deferred portions
of the provision for income taxes have not been determined.
3. TRANSACTIONS WITH AFFILIATES
ECM, through the normal course of business, conducts transactions with
GE and its affiliates. All of ECM's sales and cost of goods sold relate to
sales to GE and its affiliates.
Receipts and disbursements of ECM have been managed by GE through a
centralized treasury system. Accordingly, cash generated by ECM flow directly
to GE and cash requirements are disbursed directly by GE. There is no direct
interest cost allocation to ECM with respect to borrowings, if any, and,
accordingly, the Statement of Direct Revenues and Expenses do not include any
financing costs.
4. RETIREMENT BENEFITS
Seniority premiums to which Mexican employees are entitled upon
retirement after fifteen years or more of service, in accordance with the
Mexican Federal Labor Law, are recognized as cost over the years in which
services are rendered, based on actuarial computations. To this effect,
Electro Componentes de Mexico has established an irrevocable trust fund.
Payments to this fund, charged to operations, were $46 for the eleven months
ended November 30, 1994.
5. LEASES
ECM leases certain of its manufacturing facilities and equipment under
long-term lease agreements with lease terms expiring through 2002. Rent
expense applicable to these noncancelable leases aggregated $657 for the eleven
months ended November 30, 1994.
F-83
<PAGE> 157
ELECTRO COMPONENTES DE MEXICO, S.A. DE C.V. AND
CERTAIN RELATED ASSETS OF GENERAL ELECTRIC COMPANY
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Future minimum lease payments under operating leases for the years ended
November 30 are:
<TABLE>
<S> <C>
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 671
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 536
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 486
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 468
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,279
------
$4,022
======
</TABLE>
Total lease expense under operating leases, including amounts previously
noted as well as month-to-month leases, aggregated $1,276 for the eleven months
ended November 30, 1994.
6. CONTINGENCIES
ECM is subject to various lawsuits and claims with respect to such
matters as patents, product liabilities, government regulations, and other
actions arising in the normal course of business. In the opinion of
management, the ultimate liabilities resulting from such lawsuits and claims
will not have a material adverse effect on ECM's financial condition or results
of operations.
F-84
<PAGE> 158
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
International Wire Group, Inc.:
Our report on the consolidated financial statements of International
Wire Group, Inc. and subsidiaries is included on page S-2 of this Form S-1. In
connection with our audits of such financial statements, we have also audited
the related financial statement schedule listed in the index on page F-1 of this
Form S-1.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
February 28, 1997
S-1
<PAGE> 159
INTERNATIONAL WIRE GROUP, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Allowance for doubtful Collection of
accounts - deducted Balance At Previously Balance At
from receivables in the Beginning Written Off End Of
balance sheet Of Period Provision Writeoffs Accounts Acquisitions Period
- ---------------------------------------- ------------ ----------- ---------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Seven months ended December 31, 1995 . . $845 $ 33 $(53) $35 $ -- $ 860
Year ended December 31, 1996 . . . . . . $860 $337 $(71) $12 $225 $1,363
</TABLE>
S-2
<PAGE> 160
INTERNATIONAL WIRE GROUP, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(IN THOUSANDS)
(Unaudited)
<TABLE>
<CAPTION>
Allowance for doubtful Collection of
accounts - deducted Balance At Previously Balance At
from receivables in the Beginning Written Off End Of
balance sheet Of Period Provision Writeoffs Accounts Acquisitions Period
- ---------------------------------------- ------------ ----------- ---------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Three months ended March 31, 1997. . . . $1,363 $100 $320 $-- $200 $1,343
</TABLE>
S-3
<PAGE> 161
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses payable in connection with
the offering of the securities to be registered and offered hereby. All of
such expenses are estimates, other than the registration fee payable to the
Securities and Exchange Commission. The Company has agreed to pay all expenses
related to the registration of the Notes.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee . . . . $ 3,030.30
Printing and Engraving Expenses . . . . . . . . . . . . . . 15,000.00
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . 75,000.00
Accounting Fees and Expenses . . . . . . . . . . . . . . . 30,000.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 20,000.00
-------------
Total . . . . . . . . . . . . . . . . . . . . . . . . $ 143,030.30
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Delaware law authorizes corporations to limit or to eliminate the
personal liability of directors to corporations and their stockholders for
monetary damages for breach of directors' fiduciary duty of care. The
Certificate of Incorporation of the Company limits the liability of the
Company's directors to the Company or its stockholders to the fullest extent
permitted by the Delaware statute as in effect from time to time.
Specifically, directors of the Company will not be personally liable for
monetary damages for breach of a director's fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to
the Company or its stockholders, (ii) for acts or omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, (iii)
for unlawful payments of dividends or unlawful stock repurchases or redemptions
as provided in Delaware law, or (iv) for any transaction from which the
director derived an improper personal benefit.
The Certificate of Incorporation the Company provides that Company shall
indemnify its officers and directors and former officers and directors to the
fullest extent permitted by the General Corporation Law of the State of
Delaware. Pursuant to the provisions of Section 145 of the General Corporation
Law of the State of Delaware, the Company has the power to indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding (other than an action by or
in the right of the Company) by reason of the fact that he is or was a
director, officer, employee, or agent of the Company, against any and all
expenses, judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with such action, suit, or proceeding. The
power to indemnify applies only if such person acted in good faith and in a
manner he reasonably believed to be in the best interest, or not opposed to the
best interest, of the Company and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
The power to indemnify applies to actions brought by or in the right of
the Company as well, but only to the extent of defense and settlement expenses
and not to any satisfaction of a judgment or settlement of the claim itself,
and with the further limitation that in such actions no indemnification shall
be made in the event of any
II-1
<PAGE> 162
adjudication of negligence or misconduct unless the court, in its discretion,
believes that in light of all the circumstances indemnification should apply.
The statute further specifically provides that the indemnification
authorized thereby shall not be deemed exclusive of any other rights to which
any such officer or direct may be entitled under any bylaws, agreements, vote
of stockholders or disinterested directors, or otherwise.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person thereof in the successful
defense of any action, suit or proceeding) is asserted by a director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On March 31, 1995, the Company (then known as Omega Wire Corp.) issued
and sold 42,000,000 shares of its common stock, 6,333,333 shares of its class A
common stock and $15,000,000 aggregate principal amount of its 13% Junior
Subordinated Notes due 2010 ("Junior Notes") to affiliates of, and persons
associated with, Hicks Muse and Mills & Partners in connection with
the acquisition of THL-Omega Holding Corporation. The consideration for the
issuance of the common stock consisted of $34,590,000 in cash and certain
equity securities of THL-Omega Holding Corporation. The consideration for the
issuance of the class A common stock and the Junior Notes consisted of $63,333
in cash and $15,000,000 in cash, respectively.
Exemption from registration with respect to the above-described sales by
the Company was claimed under Section 4(2) of the Securities Act regarding
transactions by an issuer not involving any public offering.
On June 12, 1995, the Company sold $150,000,000 aggregate principal
amount of 11 3/4% Senior Subordinated Notes due 2005 (the "11 3/4% Notes") in a
private placement in reliance of Section 4(2) under the Securities Act, at a
price equal to 100% of the stated principal amount of such 11 3/4% Notes. The
11 3/4% Notes were immediately resold by the initial purchasers thereof in
reliance on Rule 144A under the Securities Act.
On March 5, 1996, the Company sold 35,000,000 shares of Holding Common
Stock, 3,888,889 shares of Class A Common Stock and 400,000 shares of
Preferred Stock sold in units together with warrants for the purchase of
shares of Common Stock of Holding ("Units") to Chase Equity Associates and to
certain affiliates of, and persons associated with, Hicks, Muse. The
consideration for the issuance of the Holding Common Stock consisted of
$35,000,000 in cash. The consideration for the issuance of the Class A Common
Stock consisted of $38,889 in cash. The consideration for the issuance of the
Units consisted of $10,000,000 in cash. Exemption from registration with
respect to the sales was claimed under Section 4(2) of the Securities Act.
II-2
<PAGE> 163
On February 12, 1997, the Company exchanged the Preferred Stock for the
Notes to be registered and offered hereby. Exemption from registration with
respect to such exchange was claimed under Section 3(a)(9) of the Securities
Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
2.1 -- Agreement and Plan of Merger dated as of June 2, 1995,
among Omega Wire Corp., Wirekraft Holdings Corp.,
International Wire Holding Company, International Wire
Group, Inc. and Wirekraft Acquisition Company. (1)
2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996,
among Hoosier Wire, Inc., International Wire Group, Inc.,
and Wire Technologies, Inc. (2)
2.3 -- Asset Purchase Agreement, dated as of March 5, 1996, among
Dekko Automotive Wire, Inc., International Wire Holding
Company, International Wire Group, Inc., and Wire
Technologies, Inc. (2)
2.4 -- Asset Purchase Agreement, dated as of March 5, 1996, among
Albion Wire, Inc. International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc. (2)
2.5 -- Asset Purchase Agreement, dated as of March 5, 1996, among
Silicones, International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc. (2)
2.6 -- Stock Purchase Agreement dated as of January 2, 1997, among
International Wire Group, Inc., Camden Wire Co., Inc. and
Oneida Ltd.*
3.1 -- Restated Certificate of Incorporation of International
Wire Group, Inc. (4)
3.2 -- By-Laws of International Wire Group, Inc. (1)
3.7 -- Certificate of Incorporation of Camden Wire Co., Inc.*
3.8 -- Bylaws of Camden Wire Co., Inc.*
3.9 -- Certificate of Incorporation of ECM Holding Company.(1)
3.10 -- Bylaws of ECM Holding Company.(1)
3.11 -- Certificate of Incorporation, as amended, of Omega Wire,
Inc. (formerly known as THL-Omega Holding Corporation).(1)
3.12 -- Bylaws, as amended, of Omega Wire, Inc. (formerly known as
THL-Omega Holding Corporation).(1)
3.13 -- Certificate of Incorporation, as amended, of OWI
Corporation.(1)
3.14 -- Bylaws of OWI Corporation.(1)
3.15 -- Certificate of Incorporation of Wirekraft Employment
Company.(1)
3.16 -- Bylaws of Wirekraft Employment Company.(1)
3.17 -- Certificate of Incorporation of Wire Harness Industries,
Inc.*
3.18 -- Bylaws of Wire Harness Industries, Inc.*
3.19 -- Certificate of Incorporation, as amended, of Wirekraft
Industries, Inc.(1)
3.20 -- Bylaws of Wirekraft Industries, Inc.(1)
3.21 -- Articles of Incorporation of Wire Technologies, Inc.*
3.22 -- Bylaws of Wire Technologies, Inc.*
4.1 -- Indenture, dated as of June 12, 1995, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as
therein defined) and IBJ Schroder Bank & Trust Company, as
Trustee.(1)
4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1, Exhibit
B).
4.3 -- Exchange and Registration Rights Agreement, dated as of
June 12, 1995, among International Wire Group, Inc., the
Subsidiary Guarantors (as therein defined), Chemical
Securities Inc. and BT Securities Corporation.(1)
II-3
<PAGE> 164
4.4 -- First Supplemental Indenture, dated as of March 5, 1996,
by and among International Wire Group, Inc., Wire
Technologies, Inc., the subsidiary guarantors party
thereto, and IBJ Schroder Bank & Trust Company, as
Trustee.(2)
4.5 -- Certificate of Designation of Series A Senior Cumulative
Exchangeable Redeemable Preferred Stock of International
Wire Group, Inc.(2)
4.6 -- Second Supplemental Indenture, dated as of December 20,
1996, by International Wire Group, Inc. the subsidiary
guarantors party thereto, and IBJ Schroder Bank and Trust
Company, as Trustee.(5)
4.7 -- Indenture, dated as of February 12, 1997, among
International Wire Group, Inc., as Issuer, the Subsidiary
Guarantors (as therein defined) and IBJ Schroder Bank &
Trust Company, as Trustee.*
4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A).
4.9 -- Preferred Stock and Warrant Purchase Agreement dated as of
March 5, 1996, by and among International Wire Holding
Company, International Wire Group, Inc., Chemical Equity
Associates and Hicks, Muse, Tate & First Equity Fund II,
L.P.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the securities
registered hereby.+
10.1 -- Parts Sourcing Contract, dated as of December 2, 1994,
among Wirekraft Industries, Inc. and General Electric
Company (Confidential treatment has been granted with
respect to certain portions of this exhibit).(1)
10.2 -- Domestic Subsidiaries' Guarantee, dated as of June 12,
1995, made by the subsidiaries of International Wire
Group, Inc. set forth on the signature pages thereof for
the benefit of Chemical Bank, as administrative agent.(1)
10.3 -- Holdings Pledge Agreement, dated as of June 12, 1995, made
by International Wire Holding Company for the benefit of
Chemical Bank, as administrative agent.(1)
10.4 -- Borrower Pledge Agreement, dated as of June 12, 1995, made
by International Wire Group, Inc. for the benefit of
Chemical Bank, as administrative agent.(1)
10.5 -- Domestic Subsidiary Pledge Agreement, dated as of June 12,
1995, made by the domestic subsidiaries listed on the
signature pages thereof for the benefit of Chemical Bank,
as administrative agent; Acknowledgment and Consent made
by the domestic subsidiaries listed on the signature pages
thereof in connection with the Domestic Subsidiary Pledge
Agreement.(1)
10.6 -- Pledge Contract, dated as of June 12, 1995, between ECM
Holding Company and Chemical Bank, as administrative
agent.(1)
10.7 -- Wirekraft Note Pledge Agreement, dated as of June 12,
1995, made by Wirekraft Industries, Inc. for the benefit
of Chemical Bank, as administrative agent.(1)
10.8 -- Borrower Security Agreement, dated as of June 12, 1995,
made by International Wire Group, Inc. for the benefit of
Chemical Bank, as administrative agent. (1)
10.9 -- Domestic Subsidiary Security Agreement, dated as of June
12, 1995, made by International Wire Group, Inc. for the
benefit of Chemical Bank, as administrative agent.(1)
10.10 -- Schedule of Substantially Industrial Domestic Subsidiary
Security Agreements. (1)
10.11 -- Agreement of Sublease, dated as of December 31, 1991,
between Oneida County Industrial Development Agency and
OWI Corporation.(1)
10.12 -- Agreement of Sublease, dated as of December 31, 1991,
between Onondaga County Industrial Development Agency and
OWI Corporation.(1)
10.13 -- Sublease Agreement, dated as of March 31, 1994, between
Productos de Control, S.A. de C.V. and Wirekraft
Industries, Inc.(1)
10.14 -- Lease Contract, dated as of August 1, 1994, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(1)
10.15 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and James N.
Mills. (4)
10.16 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and David M.
Sindelar. (4)
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<PAGE> 165
10.9 -- Employment Agreement, dated as of March 14, 1995, between
Omega Wire, Inc. and Rodney D. Kent. (1)
10.10 -- Employment Agreement, dated as of February 6, 1995,
between Wirekraft Holdings Corp. and William J. Kriss.(1)
10.11 -- Option Agreement, dated as of March 31, 195, between Omega
Wire Corp. and James N. Mills. (1)
10.12 -- Option Agreement, dated as of March 31, 1995, between
Omega Wire Corp. and David M. Sindelar. (1)
10.13 -- Option Agreement dated as of June 12, 1995, between Omega
Wire Corp. and David M. Sindelar. (1)
10.14 -- Option Agreement dated as of June 12, 1995, between
International Wire Group, Inc. and David M. Sindelar.(1)
10.15 -- Option Agreement dated as of August 28, 1995, between
International Wire Group, Inc. and Larry S. Bacon.(3)
10.16 -- Stockholders Agreement dated as of June 12, 1995, among
International Wire Holding Company and the Stockholders
signatories thereto.(1)
10.17 -- Monitoring and Oversight Agreement dated as of June 12,
1995, among International Wire Holding Company,
International Wire Group, Inc. and Hicks, Muse & Co.
Partners, L.P. (1)
10.18 -- Option Agreement dated as of August 28, 1995 between
International Wire Group, Inc. and W. Thomas McGhee.(3)
10.19 -- 1995 Stock Option Plan of International Wire Holding
Company.(4)
10.20 -- Form of Option Agreement of International Wire Holding
Company under 1995 Stock Option Plan. (4)
10.21 -- Agreement dated as of December 29, 1995 among Wirekraft
Industries, Inc. and General Electric Company
(Confidential treatment has been granted with respect to
certain portions of this exhibit). (4)
10.22 -- Amended and Restated Credit Agreement, dated as of
February 12, 1997, among International Wire Group, Inc.,
International Wire Holding Company, the several lenders
from time to time parties thereto, The Chase Manhattan
Bank, as Administrative Agent, and Bankers Trust Company,
as Documentation Agent.(5)
10.23 -- Employment Agreement, dated as of September 25, 1996,
among International Wire Holding Company and International
Wire Group, Inc. and Joseph M. Fiamingo.(5)
10.24 -- Employment Agreement, dated as of March 5, 1996, among
International Wire Holding Company and International Wire
Group, Inc. and Robert C. Kozlowski.(5)
10.25 -- Option Agreement, dated as of November 5, 1995, between
International Wire Holding Company and Joseph M.
Fiamingo.(5)
10.26 -- Option Agreement, dated as of March 5, 1996, between
International Wire Holding Company and Robert C.
Kozlowski.(5)
10.27 -- Option Agreement, dated as of November 6, 1996, between
International Wire Holding Company and Joseph M.
Fiamingo.(5)
12.1 -- Computation of Ratio of Earnings to Fixed Charges of
Wirekraft Holdings Corporation.(1)
12.2 -- Computation of Ratio of Earnings to Fixed Charges of
THL-Omega Holding Corporation.(1)
12.3 -- Computation of Ratio of Earnings to Fixed Charges of
Omega Wire Corporation.(1)
12.4 -- Computation of Deficiency of Earnings to Cover Fixed
Charges of International Wire Group, Inc.(1)
12.5 -- Computation of Ratio of Earnings to Fixed Charges of
International Wire Group, Inc.*
21.1 -- Subsidiaries of International Wire Group, Inc.(5)
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement).
23.2 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.3 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.4 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.5 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.6 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
II-5
<PAGE> 166
23.7 -- Consent of Price Waterhouse LLP, independent certified
public accountants.*
23.8 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
24.1 -- Powers of Attorney (see pages II-8, II-9, II-10, II-11,
II-12 and II-13 of this Registration Statement).
25.1 -- Form T-1 of IBJ Schroder Bank & Trust Company, as Trustee
under the Indenture filed as Exhibit 4.7.*
- -------------------------
(1) Incorporated by reference to the Registration Statement on Form S-1 (33-
93970) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on September 29, 1995.
(2) Incorporated by reference to the Current Report on Form 8-K of
International Wire Group, Inc. as filed with the Securities Exchange
Commission on March 20, 1996.
(3) Incorporated by reference to the Quarterly Report on Form 10-Q of
International Wire Group, Inc. for the fiscal quarter ended September
30, 1995.
(4) Incorporated by reference to the Annual Report on Form 10-K of
International Wire Group, Inc. for the fiscal year ended December 31,
1995.
(5) Incorporated by reference to the Annual Report on Form 10-K of
International Wire Group, Inc. for the fiscal year ended December 31,
1996.
* Filed herewith.
+ To be filed by amendment.
(B) FINANCIAL STATEMENT SCHEDULES
The following Financial Statement Schedules are included in Part
II of this Registration Statement:
INTERNATIONAL WIRE GROUP, INC.
Report of Independent Accountants
Schedule II - Valuation and Qualifying Accounts
ITEM 17. UNDERTAKINGS.
(a) The undersigned Co-Registrants hereby undertake:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)
(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post- effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price
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<PAGE> 167
represent no more than a 20% change in the maximum aggregate offering price
set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at the time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the registration statement when it
becomes effective.
(b) See Item 14.
II-7
<PAGE> 168
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 12th day of May, 1997.
INTERNATIONAL WIRE GROUP, INC.
By: /s/ DAVID M. SINDELAR
---------------------------
David M. Sindelar
Senior Vice President
Each person whose signature to this Registration Statement appears below
hereby appoints James N. Mills and David M. Sindelar, and each individually,
either of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which may make such changes and additions
to this Registration Statement as such agent and attorney-in-fact may deem
necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JAMES N. MILLS Chairman of the Board, May 12, 1997
- --------------------------------- Chief Executive Officer
James N. Mills and Director of the Co-
Registrant listed above
(Principal Executive
Officer)
/s/ DAVID M. SINDELAR Senior Vice President May 12, 1997
- --------------------------------- of each of the Co-
David M. Sindelar Registrants listed above
(Principal Financial and
Accounting Officer)
/s/ JOSEPH M. FIAMINGO President, Chief Operating May 12, 1997
- --------------------------------- Officer and Director of the Co-
Joseph M. Fiamingo Registrant listed above
/s/ RICHARD W. VIESER Director of the Co-Registrant May 12, 1997
- --------------------------------- listed above
Richard W. Vieser
/s/ THOMAS P. DANIS Director of the Co-Registrant May 12, 1997
- --------------------------------- listed above
Thomas P. Danis
/s/ JACK D. FURST Director of the Co-Registrant May 12, 1997
- --------------------------------- listed above
Jack D. Furst
/s/ JOHN A. GAVIN Director of the Co-Registrant May 12, 1997
- --------------------------------- listed above
John A. Gavin
/s/ RODNEY D. KENT Director of the Co-Registrant May 12, 1997
- --------------------------------- listed above
Rodney D. Kent
/s/ CHARLES W. TATE Director of the Co-Registrant May 12, 1997
- --------------------------------- listed above
Charles W. Tate
</TABLE>
II-8
<PAGE> 169
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 12th day of May, 1997.
OMEGA WIRE, INC.
OWI CORPORATION
By: /s/ DAVID M. SINDELAR
---------------------------------
David M. Sindelar
Senior Vice President
Each person whose signature to this Registration Statement appears below
hereby appoints James N. Mills and David M. Sindelar, and each individually,
either of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which may make such changes and additions
to this Registration Statement as such agent and attorney-in-fact may deem
necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ RODNEY D. KENT President, Chief Executive May 12, 1997
- ----------------------------- Officer and Director
Rodney D. Kent of each of the Co-
Registrants listed above
(Principal Executive
Officer)
/s/ DAVID M. SINDELAR Senior Vice President and May 12, 1997
- ----------------------------- Director of each of the Co-
David M. Sindelar Registrants listed above
(Principal Financial and
Accounting Officer)
/s/ JAMES N. MILLS Director of each of the Co- May 12, 1997
- ----------------------------- Registrants listed above
James N. Mills
</TABLE>
II-9
<PAGE> 170
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 12th day of May, 1997.
ECM HOLDING COMPANY WIRE HARNESS
INDUSTRIES, INC. WIREKRAFT
EMPLOYMENT COMPANY WIREKRAFT
INDUSTRIES, INC. WIRE
TECHNOLOGIES, INC.
By: /s/ DAVID M. SINDELAR
--------------------------
David M. Sindelar
Senior Vice President
Each person whose signature to this Registration Statement appears below
hereby appoints James N. Mills and David M. Sindelar, and each individually,
either of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement (and, in addition, any registration statement filed pursuant to Rule
462(b) under the Securities Act of 1933, as amended, for the offering to which
this Registration Statement relates), which may make such changes and additions
to this Registration Statement as such agent and attorney-in-fact may deem
necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ JAMES N. MILLS Chairman of the Board, Chief May 12, 1997
- ---------------------------------- Executive Officer and Director
James N. Mills of each of the Co-Registrants
listed above (Principal
Executive Officer)
/s/ DAVID M. SINDELAR Senior Vice President May 12, 1997
- ---------------------------------- of each of the Co-
David M. Sindelar Registrants listed above
(Principal Financial and
Accounting Officer)
</TABLE>
II-10
<PAGE> 171
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Co-Registrants have duly caused this Registration Statement to be signed on
their behalf by the undersigned, thereunto duly authorized, in the City of St.
Louis, State of Missouri, on the 12th day of May, 1997.
CAMDEN WIRE CO., INC.
By: /s/ DAVID M. SINDELAR
--------------------------
David M. Sindelar
President and Director
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C> <C>
/s/ DAVID M. SINDELAR President and Director May 12, 1997
- -------------------------------- of each of the Co-
David M. Sindelar Registrants listed above
(Principal Executive,
Financial and
Accounting Officer)
</TABLE>
II-11
<PAGE> 172
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<S> <C> <C>
2.1 -- Agreement and Plan of Merger dated as of June 2, 1995,
among Omega Wire Corp., Wirekraft Holdings Corp.,
International Wire Holding Company, International Wire
Group, Inc. and Wirekraft Acquisition Company. (1)
2.2 -- Agreement and Plan of Merger, dated as of March 5, 1996,
among Hoosier Wire, Inc., International Wire Group, Inc.,
and Wire Technologies, Inc. (2)
2.3 -- Asset Purchase Agreement, dated as of March 5, 1996, among
Dekko Automotive Wire, Inc., International Wire Holding
Company, International Wire Group, Inc., and Wire
Technologies, Inc. (2)
2.4 -- Asset Purchase Agreement, dated as of March 5, 1996, among
Albion Wire, Inc. International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc. (2)
2.5 -- Asset Purchase Agreement, dated as of March 5, 1996, among
Silicones, International Wire Holding Company,
International Wire Group, Inc., and Wire Technologies,
Inc. (2)
2.6 -- Stock Purchase Agreement dated as of January 2, 1997, among
International Wire Group, Inc., Camden Wire Co., Inc. and
Oneida Ltd.*
3.1 -- Restated Certificate of Incorporation of International
Wire Group, Inc. (4)
3.2 -- By-Laws of International Wire Group, Inc. (1)
3.7 -- Certificate of Incorporation of Camden Wire Co., Inc.*
3.8 -- Bylaws of Camden Wire Co., Inc.*
3.9 -- Certificate of Incorporation of ECM Holding Company.(1)
3.10 -- Bylaws of ECM Holding Company.(1)
3.11 -- Certificate of Incorporation, as amended, of Omega Wire,
Inc. (formerly known as THL-Omega Holding Corporation).(1)
3.12 -- Bylaws, as amended, of Omega Wire, Inc. (formerly known as
THL-Omega Holding Corporation).(1)
3.13 -- Certificate of Incorporation, as amended, of OWI
Corporation.(1)
3.14 -- Bylaws of OWI Corporation.(1)
3.15 -- Certificate of Incorporation of Wirekraft Employment
Company.(1)
3.16 -- Bylaws of Wirekraft Employment Company.(1)
3.17 -- Certificate of Incorporation of Wire Harness Industries,
Inc.*
3.18 -- Bylaws of Wire Harness Industries, Inc.*
3.19 -- Certificate of Incorporation, as amended, of Wirekraft
Industries, Inc.(1)
3.20 -- Bylaws of Wirekraft Industries, Inc.(1)
3.21 -- Articles of Incorporation of Wire Technologies, Inc.*
3.22 -- Bylaws of Wire Technologies, Inc.*
4.1 -- Indenture, dated as of June 12, 1995, among International
Wire Group, Inc., as Issuer, the Subsidiary Guarantors (as
therein defined) and IBJ Schroder Bank & Trust Company, as
Trustee.(1)
4.2 -- Form of the 11 3/4% Note (included in Exhibit 4.1, Exhibit
B).
4.3 -- Exchange and Registration Rights Agreement, dated as of
June 12, 1995, among International Wire Group, Inc., the
Subsidiary Guarantors (as therein defined), Chemical
Securities Inc. and BT Securities Corporation.(1)
</TABLE>
<PAGE> 173
<TABLE>
<S> <C>
4.4 -- First Supplemental Indenture, dated as of March 5, 1996,
by and among International Wire Group, Inc., Wire
Technologies, Inc., the subsidiary guarantors party
thereto, and IBJ Schroder Bank & Trust Company, as
Trustee.(2)
4.5 -- Certificate of Designation of Series A Senior Cumulative
Exchangeable Redeemable Preferred Stock of International
Wire Group, Inc.(2)
4.6 -- Second Supplemental Indenture, dated as of December 20,
1996, by International Wire Group, Inc. the subsidiary
guarantors party thereto, and IBJ Schroder Bank and Trust
Company, as Trustee.(5)
4.7 -- Indenture, dated as of February 12, 1997, among
International Wire Group, Inc., as Issuer, the Subsidiary
Guarantors (as therein defined) and IBJ Schroder Bank &
Trust Company, as Trustee.*
4.8 -- Form of 14% Note (included in Exhibit 4.7, Exhibit A).
4.9 -- Preferred Stock and Warrant Purchase Agreement dated as of
March 5, 1996, by and among International Wire Holding
Company, International Wire Group, Inc., Chemical Equity
Associates and Hicks, Muse, Tate & First Equity Fund II,
L.P.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the securities
registered hereby.+
10.1 -- Parts Sourcing Contract, dated as of December 2, 1994,
among Wirekraft Industries, Inc. and General Electric
Company (Confidential treatment has been granted with
respect to certain portions of this exhibit).(1)
10.2 -- Domestic Subsidiaries' Guarantee, dated as of June 12,
1995, made by the subsidiaries of International Wire
Group, Inc. set forth on the signature pages thereof for
the benefit of Chemical Bank, as administrative agent.(1)
10.3 -- Holdings Pledge Agreement, dated as of June 12, 1995, made
by International Wire Holding Company for the benefit of
Chemical Bank, as administrative agent.(1)
10.4 -- Borrower Pledge Agreement, dated as of June 12, 1995, made
by International Wire Group, Inc. for the benefit of
Chemical Bank, as administrative agent.(1)
10.5 -- Domestic Subsidiary Pledge Agreement, dated as of June 12,
1995, made by the domestic subsidiaries listed on the
signature pages thereof for the benefit of Chemical Bank,
as administrative agent; Acknowledgment and Consent made
by the domestic subsidiaries listed on the signature pages
thereof in connection with the Domestic Subsidiary Pledge
Agreement.(1)
10.6 -- Pledge Contract, dated as of June 12, 1995, between ECM
Holding Company and Chemical Bank, as administrative
agent.(1)
10.7 -- Wirekraft Note Pledge Agreement, dated as of June 12,
1995, made by Wirekraft Industries, Inc. for the benefit
of Chemical Bank, as administrative agent.(1)
10.8 -- Borrower Security Agreement, dated as of June 12, 1995,
made by International Wire Group, Inc. for the benefit of
Chemical Bank, as administrative agent. (1)
10.9 -- Domestic Subsidiary Security Agreement, dated as of June
12, 1995, made by International Wire Group, Inc. for the
benefit of Chemical Bank, as administrative agent.(1)
10.10 -- Schedule of Substantially Industrial Domestic Subsidiary
Security Agreements. (1)
10.11 -- Agreement of Sublease, dated as of December 31, 1991,
between Oneida County Industrial Development Agency and
OWI Corporation.(1)
10.12 -- Agreement of Sublease, dated as of December 31, 1991,
between Onondaga County Industrial Development Agency and
OWI Corporation.(1)
10.13 -- Sublease Agreement, dated as of March 31, 1994, between
Productos de Control, S.A. de C.V. and Wirekraft
Industries, Inc.(1)
10.14 -- Lease Contract, dated as of August 1, 1994, between
Parques Industriales Mexicanos, S.A. de C.V. and Electro
Componentes de Mexico, S.A. de C.V.(1)
10.15 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and James N.
Mills. (4)
10.16 -- Employment Agreement, dated as of June 12, 1995, among
International Wire Holding Company, International Wire
Group Inc. and certain of its subsidiaries and David M.
Sindelar. (4)
</TABLE>
<PAGE> 174
<TABLE>
<S> <C>
10.9 -- Employment Agreement, dated as of March 14, 1995, between
Omega Wire, Inc. and Rodney D. Kent. (1)
10.10 -- Employment Agreement, dated as of February 6, 1995,
between Wirekraft Holdings Corp. and William J. Kriss.(1)
10.11 -- Option Agreement, dated as of March 31, 195, between Omega
Wire Corp. and James N. Mills. (1)
10.12 -- Option Agreement, dated as of March 31, 1995, between
Omega Wire Corp. and David M. Sindelar. (1)
10.13 -- Option Agreement dated as of June 12, 1995, between Omega
Wire Corp. and David M. Sindelar. (1)
10.14 -- Option Agreement dated as of June 12, 1995, between
International Wire Group, Inc. and David M. Sindelar.(1)
10.15 -- Option Agreement dated as of August 28, 1995, between
International Wire Group, Inc. and Larry S. Bacon.(3)
10.16 -- Stockholders Agreement dated as of June 12, 1995, among
International Wire Holding Company and the Stockholders
signatories thereto.(1)
10.17 -- Monitoring and Oversight Agreement dated as of June 12,
1995, among International Wire Holding Company,
International Wire Group, Inc. and Hicks, Muse & Co.
Partners, L.P. (1)
10.18 -- Option Agreement dated as of August 28, 1995 between
International Wire Group, Inc. and W. Thomas McGhee.(3)
10.19 -- 1995 Stock Option Plan of International Wire Holding
Company.(4)
10.20 -- Form of Option Agreement of International Wire Holding
Company under 1995 Stock Option Plan. (4)
10.21 -- Agreement dated as of December 29, 1995 among Wirekraft
Industries, Inc. and General Electric Company
(Confidential treatment has been granted with respect to
certain portions of this exhibit). (4)
10.22 -- Amended and Restated Credit Agreement, dated as of
February 12, 1997, among International Wire Group, Inc.,
International Wire Holding Company, the several lenders
from time to time parties thereto, The Chase Manhattan
Bank, as Administrative Agent, and Bankers Trust Company,
as Documentation Agent.(5)
10.23 -- Employment Agreement, dated as of September 25, 1996,
among International Wire Holding Company and International
Wire Group, Inc. and Joseph M. Fiamingo.(5)
10.24 -- Employment Agreement, dated as of March 5, 1996, among
International Wire Holding Company and International Wire
Group, Inc. and Robert C. Kozlowski.(5)
10.25 -- Option Agreement, dated as of November 5, 1995, between
International Wire Holding Company and Joseph M.
Fiamingo.(5)
10.26 -- Option Agreement, dated as of March 5, 1996, between
International Wire Holding Company and Robert C.
Kozlowski.(5)
10.27 -- Option Agreement, dated as of November 6, 1996, between
International Wire Holding Company and Joseph M.
Fiamingo.(5)
12.1 -- Computation of Ratio of Earnings to Fixed Charges of
Wirekraft Holdings Corporation.(1)
12.2 -- Computation of Ratio of Earnings to Fixed Charges of
THL-Omega Holding Corporation.(1)
12.3 -- Computation of Ratio of Earnings to Fixed Charges of
Omega Wire Corporation.(1)
12.4 -- Computation of Deficiency of Earnings to Cover Fixed
Charges of International Wire Group, Inc.(1)
12.5 -- Computation of Ratio of Earnings to Fixed Charges of
International Wire Group, Inc.*
21.1 -- Subsidiaries of International Wire Group, Inc.(5)
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement).
23.2 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.3 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.4 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.5 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
23.6 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
</TABLE>
<PAGE> 175
<TABLE>
<S> <C>
23.7 -- Consent of Price Waterhouse LLP, independent certified
public accountants.*
23.8 -- Consent of Coopers & Lybrand L.L.P., independent certified
public accountants.*
24.1 -- Powers of Attorney (see pages II-8, II-9, II-10, II-11,
II-12 and II-13 of this Registration Statement).
25.1 -- Form T-1 of IBJ Schroder Bank & Trust Company, as Trustee
under the Indenture filed as Exhibit 4.7.*
</TABLE>
- -------------------------
(1) Incorporated by reference to the Registration Statement on Form S-1 (33-
93970) of International Wire Group, Inc. as declared effective by the
Securities and Exchange Commission on September 29, 1995.
(2) Incorporated by reference to the Current Report on Form 8-K of
International Wire Group, Inc. as filed with the Securities Exchange
Commission on March 20, 1996.
(3) Incorporated by reference to the Quarterly Report on Form 10-Q of
International Wire Group, Inc. for the fiscal quarter ended September
30, 1995.
(4) Incorporated by reference to the Annual Report on Form 10-K of
International Wire Group, Inc. for the fiscal year ended December 31,
1995.
(5) Incorporated by reference to the Annual Report on Form 10-K of
International Wire Group, Inc. for the fiscal year ended December 31,
1996.
* Filed herewith.
+ To be filed by amendment.
<PAGE> 1
EXHIBIT 2.6
STOCK PURCHASE AGREEMENT
by and among
INTERNATIONAL WIRE GROUP, INC.
CAMDEN WIRE CO., INC.
and
ONEIDA LTD.
January 2, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I
PURCHASE AND SALE OF SHARES; PAYMENT OF COMPANY OBLIGATIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Determination and Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Payment of Inter-Company Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
THE CLOSING
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Deliveries at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Corporate Authority; Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Outstanding Capital Stock; Title to Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.5 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Absence of Material Adverse Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.8 Tangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.9 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.11 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.12 Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.13 Computer Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.14 Material and Affiliated Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.15 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
3.16 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.17 Ability to Conduct the Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.19 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.21 Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.22 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.23 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.24 Minute Books; Stock Record Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3.25 Brokers' or Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.26 Material Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.27 Bank Accounts; Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.28 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.29 Sales Representatives and Other Sales Agents/Sales Offices. . . . . . . . . . . . . . . . . . . 28
3.30 Transaction Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.31 Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.32 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.1 Organization and Corporate Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.2 Corporate Authority; Absence of Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 No Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.4 Securities Act of 1933 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.5 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.6 Brokers' or Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7 Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V
AGREEMENTS OF THE PARTIES RELATED TO TRANSACTIONS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.1 Full Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.2 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.3 Negative Covenants of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.5 Schedules Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.6 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
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<TABLE>
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5.7 Transfer Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.8 Best Efforts and Certain Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.9 Industrial Revenue Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.11 Workers' Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.12 Use of Seller's Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.13 Third-Party Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.14 Ketchum Letter Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
6.1 Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2 Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.3 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.4 Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.5 Lender's Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.6 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.7 Company IRBs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.1 Representations and Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Closing Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.3 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.4 Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.5 Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.6 Directors Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.7 FIRPTA Affidavit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.8 Bank Accounts/Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
7.9 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.10 Selected Material Contracts and Permits, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7.11 Seller Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.1 Survival of Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
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<TABLE>
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8.2 Seller's Agreement to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.3 Buyer's Agreement to Indemnify . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.4 Notification of Claims and Definitive Resolutions . . . . . . . . . . . . . . . . . . . . . . . 41
8.5 Special Indemnification for Tax Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 42
8.6 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.7 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE IX
CERTAIN COVENANTS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.1 Access by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
9.2 Maintenance of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE X
MISCELLANEOUS
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.2 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.5 Entire Agreement and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.6 Section and Other Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.9 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
10.11 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.12 No Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.13 Termination by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
10.14 Termination by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
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SCHEDULES
<TABLE>
<CAPTION>
Schedule Description Ref. Page #
-------- ----------- -----------
<S> <C> <C>
3.1(a) Jurisdictions in which the Company is 6
Qualified to Transact Business as a
Foreign Corporation and is in Good
Standing
3.4 Financial Statements 8
3.5 Undisclosed Liabilities 9
3.6 Material Adverse Changes 9
3.7(a),(b),(d),(f) Real Property 11-12
3.8(a),(b) Tangible Personal Property Subject to Encumbrances 12-13
3.11 Inventory 14
3.14(a),(b),(c) Material and Affiliated Contracts 14-16
3.16 Litigation 16
3.18(b),(c),(e) Labor Matters 18-19
3.19(b),(c),(d),(e) Employee Benefit Plans 20-21
3.20,(g),(k) Environmental Matters 22-23
3.21 Products Liability Claims 24
3.22(b),(d),(f) Tax Matters 25-26
3.23 Insurance 26
3.26(a),(b) Material Customers and Suppliers 27
3.27 Bank Accounts; Powers of Attorney 28, 32
3.28 Books and Records 28
3.29 Sales Representatives 28
</TABLE>
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<PAGE> 7
EXHIBITS
A Opinion of Weil, Gotshal & Manges LLP, Counsel to Buyer
B Opinion of Catherine H. Suttmeier, General Counsel to the Company
and Seller
C FIRPTA Affidavit
D Resolution Memorandum
E Ketchum Letter Agreement
(vi)
<PAGE> 8
LOCATION OF DEFINED TERMS
<TABLE>
<CAPTION>
Defined Term Section Page
<S> <C> <C>
Affiliate 8.5(b) 42
Agreement Preamble 1
Bank Accounts 3.27 28
Benefit Plan 3.19(a) 19
Buyer Preamble 1
Buyer's Accountants 1.2(c) 3
Buyer Indemnity Claim 8.2 40
CAC 1.1 2
CAC Stock Purchase Agreement 1.1 2
Closing 2.1 5
Closing Balance Sheet 1.2(b) 3
Closing Date 2.1 5
Closing Date Payment 1.2(a) 2
Code 3.22(h) 26
Common Control Entity 3.19(d) 20
Company Preamble 1
Company IRBs 5.9 35
Competitive Proposal 5.13 36
Costs 8.5(d) 43
Definitively Resolved 8.4(c) 41
Dispute Notice 1.2(c)(i) 3
Employee 3.18(a) 17
Encumbrance 3.7(b) 11
Environmental Law 3.20(l) 23
ERISA 3.19(a) 19
Final Resolution 8.5(f) 44
Former Employee 3.18(a) 17
Hazardous Substance 3.20(l) 24
HSR Act 3.2(b) 7
INA 3.18(e) 19
Instrument 3.2(b) 7
Latest Balance Sheet 3.4(b) 8
Latest Financial Statements 3.4(b) 8
Leased Real Property 3.7(a) 11
</TABLE>
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<PAGE> 9
<TABLE>
<S> <C> <C>
Material Adverse Effect 3.5 9
Material Contracts 3.14(b) 16
Material Customer 3.26(a) 27
Material Disputed Items 1.2(c)(i) 3
Material Permits 7.10 39
Material Supplier 3.26(b) 27
near relatives 3.27 16
Neutral Accountants 1.2(c)(ii) 4
Other Real Property Interests 3.7(a) 11
Owned Real Property 3.7(a) 11
Parties' Accountants 1.2(c)(ii) 4
PBGC 3.19(d) 20
Permitted Liens 3.6(d) 11
Person 3.1(b) 6
Purchase Price 1.1 1
Purchase Price Cap 1.1 2
Purchase Price Floor 1.1 2
Purchase Price Collar 1.1 2
RCRA 3.20(l) 24
Real Property 3.7(a) 11
Related Party 3.14(b) 16
Resolution Memorandum 8.4(b) 41
Selected Material Contracts 7.10 39
Seller Preamble 1
Seller's Accountants 1.2(b) 3
Seller Indemnity Claim 8.3 40
Shares Preamble 1
Tax 3.22(a) 24
Tax Claim Termination Date 8.1(a) 39
Tax/ERISA Claim 8.1(a) 39
Tax Liability 8.5(c) 43
Tax Recoupment 8.5(i) 45
Third-Party Claim 8.4(d) 42
Total Stockholders' Equity 1.1 2
1996 Balance Sheets 3.4(a) 8
1996 Financial Statements 3.4(a) 8
</TABLE>
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<PAGE> 10
STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of the 2nd day of January,
1997, by and among International Wire Group, Inc., a Delaware corporation
("Buyer"), Camden Wire Co., Inc., a New York corporation (the "Company"), and
Oneida Ltd., a New York corporation ("Seller"), recites as a preamble the
following:
I. Seller owns, beneficially and of record, all of the issued and
outstanding shares (the "Shares") of common stock, no par value, of the
Company.
II. Buyer desires to purchase the Shares from Seller, and Seller
desires to sell the Shares to Buyer, upon the terms and subject to the
conditions of this Agreement.
NOW, THEREFORE, in view of the premises and in consideration of the
agreements and mutual covenants contained in this Agreement, the parties
intending to be legally bound, agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES; PAYMENT OF COMPANY OBLIGATIONS
1.1 Purchase and Sale of the Shares. At the Closing (as hereinafter
defined), Seller shall assign, transfer and deliver to Buyer, and Buyer shall
purchase and accept from Seller, the Shares, for an aggregate purchase price
(the "Purchase Price") equal to the sum of (i) $9,000,000 and (ii) the Total
Stockholders' Equity of the Company on the Closing Date (as hereinafter
defined) as shown on the Closing Balance Sheet (as hereinafter defined);
provided, however, in the event that the sum of (i) the Purchase Price
(including any adjustment thereto pursuant to Section 1.2), (ii) the aggregate
amount of intercompany debt and intercompany payables Buyer is obligated to pay
pursuant to Section 1.3, (iii) all indebtedness for borrowed money of the
Company owing as of the Closing Date, including (A) the Company's liabilities
under the Company IRBs (as hereinafter defined), (B) obligations as lessee
under capitalized leases, (C) all obligations for borrowed money evidenced by
bonds, debentures, notes, letters of credit, or other similar arrangements, (D)
obligations to pay the deferred purchase price of property or services
(excluding trade payables), (E) all debt of others guaranteed by the Company
and (F) all interest, charges, fees, expenses and penalties, including
prepayment penalties on or which become due as a result of mandatory payments
(payments related to the Company IRBs shall not be deemed
<PAGE> 11
mandatory to the extent such payments would have not been mandatory if Buyer
would have caused to be issued one or more letters of credit equal to the
outstanding balance of the Company IRBs) required to be made by the Company on
any indebtedness solely as a result of the consummation of the transaction
contemplated hereby, (iv) all fees and expenses paid or payable by the Company
to Camden Acquisition Company ("CAC") as a result of the termination of that
certain Stock Purchase Agreement (the "CAC Stock Purchase Agreement") dated
November 26, 1996 among CAC, the Company and Seller and (v) the gross amount of
all severance, parachute or similar payments to which any officer, director or
employee is entitled to receive from the Company as a result of the
consummation of the transaction contemplated hereby (without regard to taxes or
other withholdings), (I) exceeds $61 million (the "Purchase Price Cap"), then
the Purchase Price shall be reduced to an amount which when added to items
(ii), (iii), (iv) and (v) above would equal $61 million or (II) is less than
$59 million (the "Purchase Price Floor" and together with the Purchase Price
Cap the "Purchase Price Collar"), then the Purchase Price shall be increased to
an amount which when added to items (ii), (iii), (iv) and (v) above would equal
$59 million. For all purposes of this Agreement the term "Total Stockholders'
Equity," as of any date, shall mean an amount determined in accordance with
generally accepted accounting principles applied on a basis consistent with the
accounting principles and practices applied in the preparation of the 1996
Balance Sheet (as hereinafter defined) (provided, however, that Total
Stockholder Equity on the Closing Date shall be calculated before giving effect
to the repayment of the intercompany debt and intercompany payables pursuant to
Section 1.3, no liabilities or reserves reflected on the Latest Balance Sheet
shall be reduced prior to the Closing except in the ordinary course of business
consistent with past practices and no prepaid asset shall be included on the
Closing Date Balance Sheet unless the Company can utilize the benefit thereof
in the ordinary course of business after the Closing), and is intended to
correspond with the line on the 1996 Balance Sheet designated as Total
Stockholders' Equity.
1.2 Determination and Payment of Purchase Price. The Purchase Price
shall be determined and paid as follows:
(a) On the Closing Date, subject to the Purchase Price Collar,
Buyer shall pay to Seller an amount equal to the sum of (i) $9,000,000 and (ii)
the Total Stockholders' Equity of the Company reflected on the regularly
prepared financial statements of the Company as of the last day of the most
recent fiscal month of the Company, or if financial statements of the Company
are not available on the Closing Date for the most recent fiscal month of the
Company, for the next preceding fiscal month (the "Closing Date Payment").
2
<PAGE> 12
The Purchase Price shall be subject to adjustment after the Closing
Date as follows:
(b) As soon as practicable after the Closing Date, but in any
event not more than ninety (90) days after the Closing Date, Seller shall cause
Coopers & Lybrand, independent public accountants to be retained by the Seller
for this purpose ("Seller's Accountants"), to audit and issue their report on
the balance sheet of the Company as at the Closing Date (the "Closing Balance
Sheet"). The Closing Balance Sheet shall be accompanied by a certificate of the
Seller's Accountants stating the Total Stockholders' Equity of the Company as
of the Closing Date as computed by them and certifying (i) that the Closing
Balance Sheet has been prepared in accordance with generally accepted
accounting principles applied in a manner consistent with the past practices of
the Company, and (ii) the Closing Balance Sheet fairly presents the financial
condition of the Company as of the Closing Date.
(c) Upon receipt of the Closing Balance Sheet and the
certificate of Seller's Accountants described in subsection (b), Buyer shall
have thirty (30) days within which to review the same and register any
objections, provided that Buyer may object to the Closing Balance Sheet only on
the basis that the Closing Balance Sheet (i) was not prepared in accordance
with generally accepted accounting principles applied on a basis consistent
with those principles used in preparing the 1996 Balance Sheet and the
principles set forth in the proviso in the last sentence of Section 1.1., or
(ii) was not based on the application of generally accepted auditing standards.
If Buyer does not object to any portion of the Closing Balance Sheet or such
certificate within 30 days, it shall countersign such certificate and the
Closing Balance Sheet shall be deemed to have been finally determined as the
amount set forth therein. In the event that Buyer or Buyer's accountants
("Buyer's Accountants") shall dispute any item contained in the Closing Balance
Sheet, or whether the computations set forth in the Closing Certificate have
been made in accordance with the requirements of this Section 1.2, the
following procedures will apply:
(i) Within thirty (30) days of receipt of the Closing
Balance Sheet, Buyer shall give written notice (the "Dispute
Notice") to Seller setting forth in reasonable detail the basis for
any such dispute or controversy and, to the extent practicable, the
specific items in dispute and a good faith estimate of the amount
thereof. Buyer shall not be entitled to dispute any single line
item (i.e., all disputes relating to accounts receivable shall be
treated as a single line item) unless such line item involves
$50,000 or more. If the aggregate amount of the items in dispute
(and with respect to line items, each of which involves at least
$50,000) is in excess of
3
<PAGE> 13
$500,000, all such items (the "Material Disputed Items") shall be
resolved in accordance with the remaining paragraphs of this
subsection (c).
(ii) Upon receipt of a Dispute Notice by Seller involving
Material Disputed Items, Buyer's Accountants, on behalf of Buyer,
and the Seller's Accountants, on behalf of the Seller (such
accountants being hereinafter collectively referred to as the
"Parties' Accountants"), shall promptly commence good faith
negotiations with a view to resolving the Material Disputed Items
and, in connection with such negotiations Seller's Accountants
shall provide access to its workpapers to Buyer's Accountants. If
such dispute or controversy shall not have been resolved by mutual
agreement of the parties or the Parties' Accountants within thirty
(30) days after Seller's receipt of the Dispute Notice, Buyer and
Seller shall jointly appoint, within ten (10) days thereafter, the
Rochester, New York office of Peat Marwick or such other firm of
accountants as the parties may agree (the "Neutral Accountants"),
to resolve such Material Disputed Items.
(iii) The Neutral Accountants shall make their
determination as to such Material Disputed Items within thirty (30)
days after their appointment. The Neutral Accountants shall act as
arbitrators, and shall proceed to resolve all Material Disputed
Items in accordance with generally accepted accounting principles
applied on a basis consistent with those used in preparing the 1996
Balance Sheet and the principles set forth in the proviso in the
last sentence in Section 1.1. In resolving such Material Disputed
Items, the Neutral Arbitrators may follow such procedures as the
Neutral Accountants deem appropriate, including requesting written
or oral explanations, submissions or information from the parties.
The determination of the Neutral Accountants shall be a final
determination of the Material Disputed Items, binding and
conclusive as between Buyer and the Seller absent fraud or manifest
error. The respective fees and disbursements of the Parties'
Accountants under this Section 1.2(c) shall be borne by the party
that retained such firm. The fees and disbursements of the Neutral
Accountants shall be apportioned between Buyer and the Seller as
part of the determination of the relevant dispute or controversy,
in such manner as the Neutral Accountants shall deem equitable in
light of the issues raised and the degree to which each party shall
have prevailed on each such issue, it being the parties' intention
that the prevailing party should not bear such costs.
(d) The Closing Balance Sheet shall be deemed finally settled
for purposes of this Section 1.2 upon the earlier of (i) Buyer's failure to
deliver a Dispute Notice within thirty (30) days after receipt of the Closing
Balance Sheet, (ii) resolution of all Material
4
<PAGE> 14
Disputed Items by agreement of the parties or the Parties' Accountants as
provided in Section 1.2(c)(ii) above, or (iii) resolution of all Material
Disputed Items by the Neutral Accountants as provided in Section 1.2(c)(iii)
above. Once the Closing Balance Sheet is deemed finally settled, the Closing
Balance Sheet shall be revised to reflect all Material Disputed Items agreed to
by the parties or resolved by the Neutral Arbitrators. The amount of the
Purchase Price shall be re-calculated based upon the Total Stockholders' Equity
as reflected on the revised Closing Balance Sheet. Subject to the Purchase
Price Collar, if the Closing Date Payment is less than the sum of (i)
$9,000,000 and (ii) the Total Stockholders' Equity as reflected on the revised
Closing Balance Sheet, Buyer shall pay such difference, without interest,
within ten (10) days after settlement of the revised Closing Balance Sheet.
Subject to the Purchase Price Collar, if the Closing Date Payment is greater
than the sum of (i) $9,000,000 and (ii) the Total Stockholders' Equity as
reflected on the revised Closing Balance Sheet, Seller shall refund such
excess, without interest, within ten (10) days after settlement of the revised
Closing Balance Sheet.
1.3 Payment of Inter-Company Debt. At the Closing, Buyer shall take all
action necessary to cause the Company to pay to Seller all inter-company debt
and inter-company payables owed by the Company to Seller as of the Closing
Date, which shall be paid simultaneously with the Purchase Price at the
Closing, subject to adjustments in accordance with the determination of the
Closing Balance Sheet.
ARTICLE II
THE CLOSING
2.1 The Closing. Subject to Articles VI and VII, the consummation of
the transactions contemplated at Article I (the "Closing") shall take place at
the offices of Bond, Schoeneck & King, LLP on January 17, 1997 or on such other
date or at such other place as the Buyer and Seller shall agree to in writing.
The day of closing is referred to herein as the "Closing Date."
2.2 Deliveries at the Closing. (a) At the Closing, Buyer shall pay to
Seller the amounts described in Sections 1.2(a) and 1.3 by wire or electronic
funds transfer in immediately available funds to accounts designated in written
instructions delivered by Seller to Buyer not less than three (3) business days
before the Closing Date.
(b) Simultaneously, Seller shall deliver to Buyer certificates
(i) evidencing the Shares, duly endorsed for transfer or accompanied by duly
executed stock powers assigning
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such Shares in blank, and with signature(s) guaranteed, in proper form for
transfer and with any applicable stock transfer stamps affixed, and (ii)
evidence satisfactory to Buyer that all inter-company debt of the Company to
Seller is discharged in full by the payment required by Section 1.3.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SELLER
The Company and Seller hereby jointly and severally make the
representations and warranties set forth in this Article III, as of the date
hereof and as of the Closing Date:
3.1 Corporate Organization. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York, and has all requisite corporate power and authority to own, lease and
operate the properties and assets it now owns, leases or operates and to carry
on its business as presently conducted or proposed to be conducted pursuant to
existing plans. The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each of the jurisdictions set forth in
Schedule 3.1(a), which are the only jurisdictions where such qualification is
required by reason of the nature or location of the properties and assets
owned, leased or operated by it or the business conducted by it. Prior to the
date hereof, the Company has delivered to Buyer complete and correct copies of
its Certificate of Incorporation, as amended to date (certified by the
competent authority of the state of incorporation of the Company within thirty
(30) days of the date hereof), and its By-Laws, as amended to date (certified
by the Secretary of the Company within thirty (30) days of the date hereof).
Neither the Certificate of Incorporation nor the By-Laws of the Company will
have been amended since the respective dates of certification thereof, nor will
any action have been taken for the purpose of effecting any amendment of such
instruments. The minute books and stock record books of the Company shall be
delivered to Buyer at the Closing.
(b) The Company has no subsidiaries and does not own, of record
or beneficially, directly or indirectly, any equity or other proprietary
interest, or right to acquire any such interest, contingent or otherwise, in
any other corporation, partnership, joint venture, limited liability company,
business enterprise or other entity of any nature whatsoever (a "Person").
3.2 Corporate Authority; Absence of Conflicts. (a) Each of Seller and
the Company has full corporate power and authority to execute, deliver and
perform this Agreement. The
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execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly approved by the Boards of
Directors of Seller and the Company, and no other corporate actions on the part
of Seller or the Company are necessary to authorize and approve the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
each of Seller and the Company and constitutes the valid and binding agreement
of each of Seller and the Company, enforceable against each of them in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization and similar laws of general applicability relating to or
affecting creditors' rights.
(b) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby, nor compliance with
the terms hereof, will (i) conflict with or result in a breach of the
Certificate of Incorporation or By-laws of Seller or the Company, nor (ii)
except as set forth on Schedule 3.14(c) attached hereto, violate, conflict with
or result in a breach of or default (or be any event which with the lapse of
time or the giving of notice or both would constitute an event of default)
under any of the terms, conditions or provisions of any material agreement,
understanding, arrangement, commitment, indenture, contract, lease, sublease,
loan agreement, note, or other document or instrument to which Seller or the
Company is a party or by which they are bound or to which they or their assets
are subject (individually, an "Instrument" and collectively, the
"Instruments"), nor (iii) accelerate or give to others any interests or rights,
including rights of acceleration, termination, modification or cancellation,
under any Instrument or in or with respect to the business or assets of Seller
or the Company, nor (iv) result in the creation of any Encumbrance (as
hereinafter defined) on the assets, capital stock or properties of Seller or
the Company, nor (v) conflict with, violate or result in a breach of or
constitute a default under any law, statute, rule, judgment, order, decree,
injunction, ruling or regulation of any government, governmental agency,
authority or instrumentality, court or arbitration tribunal to which Seller or
the Company or any of their assets or properties are subject, nor (vi) require
Seller or the Company to give notice to, or obtain an authorization, approval,
order, license, franchise, declaration or consent of, or make a filing with,
any third party, including, any foreign, federal, state, county, local or other
governmental or regulatory body, other than such filings as are required under
the Hart-Scott-Rodino Antitrust Improvements Acts of 1976, as amended (the
"HSR Act").
3.3 Outstanding Capital Stock; Title to Shares. (a) The authorized
capital stock of the Company consists of 1,000 shares of common stock, no par
value, of which one (1.0) Share is issued and outstanding, which one (1) Share
is owned, beneficially and of record, by Seller. No other class of capital
stock of the Company is authorized or outstanding. All of the issued and
outstanding Shares are duly authorized and are validly issued, fully paid and
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<PAGE> 17
nonassessable, and none of such Shares have been issued in violation of any
preemptive rights of shareholders. The Shares constitute all of the issued and
outstanding shares of capital stock of the Company.
(b) Seller is, and immediately following the Closing Buyer will
be, the beneficial and record owner of all of the Shares, free and clear of any
Encumbrances. There are no agreements, arrangements or understandings
(including, without limitation, options or rights of first refusal) to which
Seller is a party relating to the purchase, sale or other disposition of the
Shares or any interest therein.
(c) There is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement of any kind to purchase
or otherwise to receive from the Company or Seller any shares of the capital
stock or any other security of the Company, and there is no outstanding
security of any kind convertible into such capital stock.
3.4 Financial Statements. Attached hereto as Schedule 3.4 are the
following financial statements:
(a) The balance sheet of the Company as of January 27, 1996
(the "1996 Balance Sheet"), and the related statements of income, retained
earnings and cash flows for the year then ended (the "1996 Financial
Statements");
(b) The balance sheet of the Company as of November 23, 1996
(the "Latest Balance Sheet") and the related statements of income, retained
earnings and cash flows for the ten-month period then ended (the "Latest
Financial Statements");
(c) The statements of income, retained earnings and cash flows
for the quarterly periods ended October 26, 1996, July 27, 1996 and April 27,
1996; and
(d) The balance sheets of the Company as of January 28, 1995
and January 29, 1994, and the related statements of income, retained earnings
and cash flows for the years then ended.
Each of the said financial statements (i) fairly presents the financial
position, results of operations and cash flows of the Company for the
respective periods stated therein, (ii) has been prepared from and is
consistent with the books and records of the Company, (iii) is complete and
correct in all material respects, and (iv) has been prepared in accordance with
generally accepted accounting principles, consistently applied (in each case,
as part of a
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consolidated group) subject, in the case of the Latest Financial Statements and
the quarterly financial statements described in subsection (c), to normal year
end adjustments consistent with prior periods. No notes are included in the
financial statements.
3.5 Absence of Undisclosed Liabilities. Except as set forth in Schedule
3.5, the Company does not have any liabilities or obligations of any nature,
whether accrued, absolute, contingent, unliquidated or otherwise, whether due
or to become due and whether arising out of transactions entered into or any
condition or state of facts existing on or prior to the date hereof, which
would in accordance with generally accepted accounting principles be reflected
on, or disclosed in the notes to, a balance sheet, other than (a) liabilities
and obligations set forth on the Latest Balance Sheet, and (b) liabilities and
obligations which have arisen after the date of the Latest Balance Sheet in the
ordinary course of business, all of which are properly reflected in the books
and records of the Company and which will not, individually or in the
aggregate, have a material adverse effect on the business, assets, liabilities,
financial condition, results of operations or operations of the Company (a
"Material Adverse Effect").
3.6 Absence of Material Adverse Changes. Except as set forth in
Schedule 3.6 hereto, since the date of the Latest Balance Sheet, the Company
has carried on its business in the ordinary course and consistent with past
practice. Except as set forth in Schedule 3.6 hereto, since the date of the
Latest Balance Sheet (except as set forth in subsection (l) of this Section
3.6) the Company has not:
(a) incurred any obligation or liability (whether absolute,
accrued, contingent or otherwise), except in the ordinary course of business
and consistent with past practice;
(b) discharged or satisfied any Encumbrance, or paid any
obligation or liability, absolute, accrued, contingent, or otherwise, whether
due or to become due, other than obligations or liabilities incurred in the
ordinary course of the Company's business;
(c) suffered any damage, destruction or loss of physical
property or goods resulting in costs or expenses to the Company in excess of
$100,000, whether or not covered by insurance;
(d) mortgaged, pledged or subjected to any lien, charge or
other Encumbrance any of its assets, tangible or intangible, except for
"Permitted Liens" as that term is hereinafter defined or as set forth in one of
the Schedules hereto;
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(e) sold or transferred any of its assets or canceled or
compromised any of its debts, except, in each such case, in the ordinary course
of business and consistent with past practice, or waived any claims or rights
of a material nature;
(f) leased, licensed or granted to any person or entity any
rights in any of its assets or properties except in the ordinary course of
business;
(g) experienced any material adverse change in its financial
condition, results of operations, cash flows, assets, liabilities, businesses,
prospects, or operations;
(h) experienced any material adverse change in its relationship
with any of its employees, salesmen, distributors, or independent contractors;
(i) made any capital expenditures or capital additions or
betterments in excess of an aggregate of Five Hundred Thousand Dollars
($500,000);
(j) revalued any of its assets;
(k) entered into any material transaction, contract or
commitment of a kind required to be disclosed on one of the Schedules, except
as disclosed on one of the Schedules hereto;
(l) since the date of the 1996 Balance Sheet, made any change
in any accounting principle or practice or in its method of applying any such
principle or practice;
(m) made any distributions (however characterized and whether
payable in cash or additional shares of stock) in respect of any shares of its
capital stock or declared or paid any dividends in a manner inconsistent with
the Company's customary practices with respect to dividends;
(n) repurchased or redeemed any shares of its capital stock;
(o) entered into any agreement to do any of the foregoing; or
(p) issued any additional shares of its capital stock or
granted any options, warrants or other rights to purchase, or any securities
convertible into or exchangeable for, shares of its capital stock.
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3.7 Real Property. (a) Schedule 3.7(a) sets forth a complete list and
summary description of (i) all real property owned by the Company (the "Owned
Real Property"), (ii) all real property leased or subleased by the Company (the
"Leased Real Property"), and (iii) all other rights or interests of the Company
in real property (the "Other Real Property Interests") (the Owned Real
Property, the Leased Real Property and the Other Real Property Interests are
collectively referred to herein as the "Real Property"). Prior to the date
hereof, Seller has delivered to Buyer true and correct copies of all leases,
subleases, abstracts of title, surveys, title opinions and title insurance
policies in Seller's or the Company's possession relating to all of the Real
Property. None of the Real Property reflected in the 1996 Balance Sheet or the
Latest Balance Sheet has been disposed of, and no real property has been
acquired by the Company since the date of the Latest Balance Sheet.
(b) Except for (i) liens disclosed in Schedule 3.7(b), (ii)
liens for current taxes not yet delinquent, (iii) covenants, conditions and
restrictions of record, all of which are reflected in the title documents, and
none of which materially impair the use of such property in the manner
currently used or impair the ability of the Company to deliver good and
marketable title to such Real Property, and (iv) any mechanic's, workmen's,
repairmen's, materialmen's, contractor's, warehousemen's, carrier's, supplier's
or vendor's lien, if payment is not yet due (the "Permitted Liens"), the
Company has good and marketable title in fee simple to all Owned Real Property,
and a valid leasehold interest in all Leased Real Property, free and clear of
any mortgage, pledge, security interest, lien, claim, charge, conditional sales
contract, restriction, reservation, option, right of first refusal, or other
encumbrance of any nature whatsoever (collectively, "Encumbrances"). Except as
set forth on Schedule 3.7(b), the Company has good and marketable title to all
structures, plants, leasehold improvements, systems, fixtures and other
property located on or about any of the Leased Real Property which are owned by
the Company, as reflected in the Latest Balance Sheet, free of any
Encumbrances, except for Permitted Liens and none of such assets is subject to
any agreement, arrangement or understanding for their use by any person other
than the Company.
(c) Each of the leases and subleases relating to the Leased
Real Property is in full force and effect, there is no default by the Company
(or to the best knowledge of the Company or Seller, by the lessor) under any
such lease or sublease, and each such lease and sublease will remain in full
force and effect following the Closing without any modification in the rights
or obligations of the parties under any such lease or sublease.
(d) Except as set forth in Schedule 3.7(d), no work has been
performed on or with respect to or in connection with any of the Real Property
that would cause such Real
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Property to become subject to any mechanic's, materialmen's, workmen's,
repairmen's, carrier's or similar liens aggregating in excess of $100,000.
(e) To the best of Seller's and the Company's knowledge, the
structures, plants, improvements, systems and fixtures (including, without
limitation, storage tanks or other impoundment vessels, whether above or below
ground) located on each such parcel of Real Property comply in all material
respects with all Federal, state and local laws, ordinances, rules, regulations
and similar governmental and regulatory requirements, and are in good operating
condition and repair, ordinary wear and tear excepted. To the best of Seller's
and the Company's knowledge, each such parcel of Real property (in view of the
purposes for which it is currently used) conforms in all material respects with
all covenants or restrictions of record and conforms with all applicable
building codes and zoning requirements and, to the best knowledge of Seller and
the Company, there is no proposed change in any such governmental or regulatory
requirements or in any such zoning requirements. All existing electrical,
plumbing, fire sprinkler, lighting, air conditioning, heating, ventilation,
elevator and other mechanical systems located in or about the Real Property are
in good operating condition and repair ordinary wear and tear excepted), except
for defects or deficiencies which would not have a Material Adverse Effect.
(f) The Other Real property Interests include all easements,
rights-of-way and similar rights necessary to conduct the Company's business as
presently conducted and to use all of its Real Property as currently used,
including, without limitation, easements and licenses for pipelines, power
lines, water lines, roadways and other access. Schedule 3.7(f) correctly lists
and describes all such easements and rights and all agreements and other
instruments (including any amendments) relating thereto which are not recorded.
All material easements and rights are valid, binding in favor of the Company
and in full force and effect; any amounts due and payable thereon to date have
been paid or have been fully accrued for in the Latest Balance Sheet or in the
books and records of the Company for periods after the date of the Latest
Balance Sheet, as applicable; neither the Company nor (to the best knowledge of
the Company and the Seller) any other party thereto is in default thereunder;
and there exists no event or condition affecting the Company or (to the best
knowledge of the Company and Seller) any other party thereto, which, with the
passage of time or notice or both, would constitute a default thereunder. No
material easement or right will be breached by, nor will any party thereto be
given a right of termination as a result of, the transactions contemplated by
this Agreement.
3.8 Tangible Personal Property. (a) The Company has good and marketable
title to all of the equipment, machinery, motor vehicles, inventories,
supplies, furniture and fixtures and other tangible personal property owned by
the Company, free and clear of any Encumbrance
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of any kind or nature whatsoever except as set forth in Schedule 3.8(a) and
except for Permitted Liens. All items of equipment, machinery, vehicles,
furniture, fixtures and other tangible personal property currently owned or
used by the Company as of the date hereof are in good operating condition and
repair, ordinary wear and tear excepted (except for defects or deficiencies
which would not have a Material Adverse Effect), are physically located at or
about the Company's place of business and are owned outright by the Company or
validly leased under leases set forth in Schedule 3.8(b). None of such personal
property is subject to any agreement, arrangement or understanding for its use
by any person other than the Company. The maintenance and operation of such
personal property complies with all applicable laws, regulations, ordinances,
contractual commitments and obligations, except for such noncompliance as would
not have a Material Adverse Effect. Except as set forth in Schedule 3.8(a), no
item of tangible personal property owned or used by the Company as of the date
hereof is subject to any conditional sale agreement, installment sale agreement
or title retention or security agreement or arrangement of any kind. As to each
item of personal property subject to any such agreement or arrangement,
Schedule 3.8(a) sets forth a brief description of the property in question and
the amount and repayment terms of the underlying obligation. Schedule 3.8(a)
sets forth a complete and correct fixed asset list of the Company dated
December 10, 1996.
(b) Schedule 3.8(b) sets forth a complete and correct list and
summary description of all material tangible personal property leases to which
the Company is a party, together with a brief description of the property
leased. Prior to the date hereof, the Company has made available to Buyer
complete and correct copies of each lease (and any amendments thereto) listed
in Schedule 3.8(b). Except as set forth in Schedule 3.8(b): (i) each such lease
is in full force and effect; (ii) all lease payments due to date on any such
lease have been paid, and neither the Company nor (to the best knowledge of the
Company and Seller) any other party is in default under any such lease, and no
event has occurred which constitutes, or with the lapse of time or the giving
of notice or both would constitute, a default by the Company or (to the best
knowledge of the Company and Seller) any other party under such lease; and
(iii) there are no disputes or disagreements between the Company and any other
party with respect to any such lease.
3.9 Accounts Receivable. The accounts receivable reflected on the
Latest Balance Sheet are, and the accounts and notes receivable of the Company
created from and after the date of the Latest Balance Sheet to the Closing Date
will be, free and clear of any Encumbrance. All accounts receivable of the
Company (i) arose from bona fide sales of goods or services in the ordinary
course of business and consistent with past practice, (ii) are accurately and
fairly reflected on the Latest Balance Sheet or, with respect to accounts
receivable of the Company created after the date thereof and through the date
of this
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Agreement are accurately and fairly reflected in the books and records of the
Company, and (iii) are fully collectible, without offset or counterclaim, net
of reserves, within ninety (90) days.
3.10 Accounts Payable. All accounts payable to the Company (i) arose
from bona fide purchases in the ordinary course of business and consistent with
past practice, and (ii) are accurately and fairly reflected on the Latest
Balance Sheet or, with respect to accounts payable of the Company created after
the date thereof and through the date hereof, are accurately and fairly
reflected in the books and records of the Company.
3.11 Inventory. The inventory of the Company consists only of items of a
quality and quantity useful or saleable in the ordinary course of business of
the Company. The inventories as reflected on the 1996 Balance Sheet and the
Latest Balance Sheet are valued at the lower of cost (determined by the LIFO
method of accounting) or market value, subject, in the case of the inventories
reflected in the Latest Balance Sheet, to the computation of LIFO reserves at
year end. The inventory on hand on the date of this Agreement (and on the
Closing Date) was (or will be) purchased at prices and in quantities consistent
with the Company's custom in the ordinary course of business. Schedule 3.11
sets forth a list of each location of inventory of the Company, and a list and
summary description of any agreements, including processing agreements and
consignment agreements, applicable to such inventory.
3.12 Backlog. All outstanding customer purchase orders for products of
the Company have been entered at prices and upon terms and conditions
consistent with the normal practices of the Company, and, to the best knowledge
of Seller and the Company, the completion of such orders will not have a
Material Adverse Effect. The Company and Seller have not been informed by any
customer that any material order included in its backlog is likely to be
canceled or terminated prior to its completion.
3.13 Computer Software. All computer software programs (excluding
noncustomized computer software available to the Company on an over-the-counter
basis through normal commercial channels) used by the Company in the conduct of
its business are owned or licensed by the Company free and clear of
Encumbrances, except for Permitted Liens, and to the best of Seller's and the
Company's knowledge do not infringe any copyright, trade secret, or trademark
of any other person.
3.14 Material and Affiliated Contracts. (a) Except as set forth in
Schedule 3.14(a), the Company is not a party to, or subject to:
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<PAGE> 24
(i) any contract, arrangement or understanding, or
series of related contracts, arrangements or understandings, which
involves annual expenditures or receipts by the Company of more
than $100,000 or which provides for performance, regardless of
amounts, over a period in excess of six months after the date of
such contract, arrangement or commitment;
(ii) any license agreement, whether as licensor or
licensee:
(iii) any agreement with suppliers or customers for
discounts or allowances:
(iv) any note, bond, indenture, credit facility,
mortgage, security agreement or other instrument or document
relating to or evidencing indebtedness for money borrowed or a
security interest in or mortgage on the assets of the Company;
(v) any warranty, indemnity or guaranty issued by the
Company (other than customary product warranties provided by the
Company in the ordinary course of business, which will be provided
to Buyer pursuant to Section 3.21);
(vi) any contract, arrangement or understanding granting
to any person the right to use any property or property right of
the Company, including any lease;
(vii) any contract, arrangement or understanding
restricting the right of the Company to engage in any business
activity or to compete with any business;
(viii) any joint venture contracts;
(ix) any agreement granting to others the right to
manufacture or distribute products of the Company;
(x) any other material contract, arrangement or
understanding not made in the ordinary course of business and
consistent with past practice; or
(xi) any outstanding offer or commitment to enter into
any contract or arrangement of the nature described in subsections
(i) through (x) of this Section 3.14(a).
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(b) Schedule 3.14(b) contains an accurate and complete list and
description of all agreements, arrangements and understandings (including
outstanding indebtedness) which are currently in effect between the Company or
the Seller and any of the following (each, a "Related Party") and which involve
a value of $10,000 or more: (i) each director and officer of the Company; (ii)
the spouses, children, grandchildren, siblings, parents, grandparents, uncles,
aunts, nieces, nephews or first cousins of any director or officer of the
Company or their spouses (collectively, "near relatives"); (iii) any trust for
the benefit of any director or officer of the Company or any of their
respective near relatives; and (iv) any corporation, partnership, joint venture
or other entity owned or controlled by any director or officer of the company
or any of their respective near relatives.
(The contracts, arrangements and understanding described in Schedule 3.14(a)
and Schedule 3.14(b) are collectively referred to herein as "Material
Contracts").
(c) Prior to the date hereof, Seller has delivered to Buyer
complete and correct copies of each written Material Contract (and any
amendments thereto), and Schedule 3.14(a) and Schedule 3.14(b) contain accurate
summary descriptions of all oral Material Contracts. Except as set forth in
Schedule 3.14(c): (i) each contract to which the Company is a party or by which
it is bound is in full force and effect; (ii) neither the Company nor, to the
best of Seller's and the Company's knowledge, any other party is in default
under any such contract, and no event has occurred which constitutes, or which
with the lapse of time or the giving of notice or both would constitute, a
default by the Company or, to the best of Seller's and the Company's knowledge,
by any other party under such contract; and (iii) there are no disputes or
disagreements between the Company and any other party with respect to any such
contract.
3.15 Compliance with Laws. To the best of Seller's and the Company's
knowledge, the Company is complying and has complied in all material respects
with all laws, statutes, rules, regulations, codes and, ordinances, and has
secured all necessary permits and authorizations and licenses issued by,
federal, state, local and foreign agencies and authorities, applicable to its
business, properties and operations, or to which the Company may be subject or
which are applicable to the operations, business or assets of the Company
except for such permits and authorizations, the absence of which would not have
a Material Adverse Effect. Neither the Company nor Seller has received any
notice alleging any such violation nor, to the best of Seller's and the
Company's knowledge is there any inquiry, investigation or proceedings relating
thereto.
3.16 Legal Proceedings. Except as set forth in Schedule 3.16 hereto,
there are no suits, actions, proceedings (including, without limitation,
arbitral and administrative proceedings),
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<PAGE> 26
claims or governmental investigations or audits pending or, to the best of
Seller's and the Company's knowledge, threatened against the Company or its
properties, assets or business, or pending or, to the best of Seller's and the
Company's knowledge, threatened against, relating to or involving any of the
officers, directors, Employees or agents of the Company in connection with the
business of the Company. There are no such suits, actions, proceedings, claims,
or investigations pending or, to the best of Seller's and the Company's
knowledge, threatened, challenging the validity or propriety of, or otherwise
relating to or involving, this Agreement or the transactions contemplated
hereby. Except as set forth in Schedule 3.16, there is no judgment, order,
writ, injunction, decree or award (whether issued by a court, an arbitrator, a
governmental body or agency thereof or otherwise) to which the Company is a
party, or involving the property, assets or business of the Company, which is
unsatisfied or which requires continuing compliance therewith by the company.
3.17 Ability to Conduct the Business. There is no agreement, arrangement
or understanding to which the Company is a party, nor any judgment, order,
writ, injunction or decree of any court or any governmental body or agency
thereof directed at the Company or in which the Company is named nor, to the
best knowledge of the Company and Seller, any other judgment, order, writ,
injunction or decree, that could in any such case) prevent the use by the
Company of its properties and assets or the conduct by the Company of its
business as of the date hereof. To the best of Seller's and the Company's
knowledge, the Company has in force, and has complied in all material respects
with all of the conditions and requirements imposed by, all permits, licenses,
exemptions, consents, authorizations and approvals used in or required for the
conduct of its business as presently conducted. Neither the Company nor Seller
has received any notice of, and neither the Company nor Seller has any
knowledge of, any intention on the part of any appropriate authority to cancel,
revoke or modify, or any inquiries, proceedings or investigations the purpose
or possible outcome of which is the cancellation, revocation or modification of
any such permit, license, exemption, consent, authorization or approval.
3.18 Labor Matters. (a) No union is certified as collective bargaining
agent to represent any Employee of the Company, and Seller and the Company have
no knowledge of any representation campaign which is currently under way. The
Company is not (a) a party to, involved in or threatened by any labor dispute,
unfair labor practice charge, labor arbitration proceeding or grievance
proceeding, (b) currently negotiating any collective bargaining agreement or
(c) aware of any threatened strike or filing with the National Labor Relations
Board by any employee or employee group seeking recognition as a collective
bargaining representative or unit, work stoppage or slowdown, picketing or
controversy involving employees or former employees of the Company (hereafter
referred to as "Employees" and "Former Employees", respectively).
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(b) Schedule 3.18(b) also sets forth the names of all directors
and officers of the Company (whether or not such persons are Employees or
Former Employees), together with the respective term of office and titles for
each such person and all remuneration payable to any such officers and
directors who are not Employees. The Company has delivered to Buyer, prior to
the date hereof, a statement, certified by an appropriate officer of the
Company, setting forth: (i) with respect to each officer or director of the
Company, such person's date of birth, date of employment, the current salary
and commission terms of such person, the date and amount of such person's most
recent salary increase, the amount of any bonuses or other cash compensation
(other than regular salary or commissions) paid since February 1, 1993 to such
person and a description of all compensation arrangements currently applicable
to such person, and (ii) with respect to all other Employees, their date of
birth, date of employment, and compensation for fiscal years 1996 and 1995.
(c) Except as set forth on Schedule 3.18(c), subject to normal
year-end adjustments the Company has accrued or reflected on the Latest Balance
Sheet, and will accrue or reflect on its books and records, all obligations for
salaries, vacations, medical, severance and other benefits and other
compensation of any kind with respect to its Employees and any of its Former
Employees, to the extent required by generally accepted accounting principles,
including, but not limited to, vacation pay, sick pay, medical, death, and
disability benefits, severance, bonuses, incentive, and pension, retirement,
profit sharing or other types of deferred compensation, and all commissions and
other fees payable to salespeople, sales representatives and other agents.
Except as set forth in Schedule 3.18(c) there are no outstanding loans from the
Company to any Employee except normal Employee advances in the ordinary course
of business. Complete and correct copies of all written agreements with or
concerning Employees and all employment policies, and all amendments and
supplements thereto, will be delivered to Buyer, and a list of all such
agreements and policies, whether written or oral is set forth on Schedule
3.18(c).
(d) Since January 27, 1996, the Company has not (i) except in
the ordinary course of business and consistent with past practice, increased
the salary or other compensation payable or to become, payable to or for the
benefit of any of the Employees or Former Employees, (ii) provided any of the
Employees with any increased security or tenure of employment, (iii) increased
the amounts payable to any of the Employees upon the termination of any such
person's employment or (iv) adopted, amended, or revised the terms of any
Benefit Plan (as hereinafter defined) with respect to the benefits granted to
or for the benefit of any of the Employees or Former Employees thereunder.
(e) To the best of Seller's and the Company's knowledge, the
Company has complied in all material respects with all laws, statutes, rules,
and regulations applicable with
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respect to Employees in each of the jurisdictions in which it operates and/or
does business. In particular, to the best of Seller's and the Company's
knowledge, the Company has complied with all Federal and state laws, statutes,
rules and regulations applicable to discriminatory employment practices
(including, without limitation, discrimination based on race, age, handicap,
sex or sexual preference or sexual harassment, in particular with respect to
employment, equal pay and/or discharge), workplace safety, (including rules and
regulations of the Occupational Safety and Health Administration), workers'
compensation, payment of minimum wages and overtime rates, immigration, or
otherwise relating to the conduct of employers with respect to employees or
prospective employees, except where the failure to so comply will not have a
Material Adverse Effect. There have been no claims made or threatened
thereunder against the Company arising out of, relating to or alleging any
violation of any of the foregoing, except for claims which are no longer
pending or which are set forth on Schedule 3.18(e). The Company has complied in
all material respects with the employment eligibility verification form
requirements under the Immigration and Naturalization Act, as amended ("INA"),
in recruiting, hiring, reviewing and documenting prospective employees for
employment eligibility verification purposes and the Company has complied in
all material respects with the paperwork provisions and anti-discrimination
provisions of the INA. The Company has obtained and maintained the employee
records and I-9 forms in proper order as required by law. To the best of
Seller's and the Company's knowledge, the Company is not currently employing
any workers unauthorized to work in the United States.
3.19 Employee Benefit Plans. (a) For purposes of this Agreement,
"Benefit Plan" means and includes (i) any "employee benefit plan", within the
meaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), without regard to any exemption or exclusion therefrom
under Department of Labor regulations, and (ii) any deferred compensation
agreement, defined benefit and defined contribution plan, stock ownership plan,
consulting or employment agreement, executive compensation plan, bonus plan,
incentive compensation plan or arrangement, supplemental retirement plan or
arrangement, agreement with respect to temporary employees, vacation pay,
sickness, disability or death benefit plan (whether provided through insurance,
on a funded or unfunded basis or otherwise), retiree medical or life insurance
plan, employee stock option or stock purchase plan, severance pay, termination
or salary continuation plan, arrangement or practice, and (iii) each other
employee benefit plan, program or arrangement, which at any time has been
maintained or contributed to by the Company for the benefit of or relating to
any of the Employees or Former Employees and which is or remains legally
binding on the Company or in respect of which the Company has any liability or
obligation, whether imposed by a government program or run by any Governmental
administration or agency, or whether written or oral.
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<PAGE> 29
(b) Schedule 3.19(b) sets forth a complete and correct list of
each Benefit Plan.
(c) The Company will not incur any liability under any
severance agreement, deferred compensation agreement, employment agreement or
similar agreement solely as a result of the consummation of the transactions
contemplated by this Agreement (including liability occurring as a result of
the passage of time or events outside the control of the Company). Except as
set forth in Schedule 3.19(c), the Company is not sponsoring or contributing
to, and since January 1, 1991 has not sponsored or contributed to, any Benefit
Plan which is an "employee pension benefit plan," as defined in section 3(2) of
ERISA, or which is subject to Title IV of ERISA or to section 412 of the Code.
No Benefit Plan is a "voluntary employees beneficiary association" (within the
meaning of section 501(c)(9) of the Code) and there are no other "welfare
benefit funds" relating to Employees or Former Employees within the meaning of
section 419 of the Code. No event or condition exists with respect to any
Benefit Plan that could subject the Company to any tax under section 4980B of
the Code or, for plan years beginning before January 1, 1989, section 162(k) of
the Code. With respect to each Benefit Plan, prior to the date hereof, Seller
has delivered to Buyer complete and correct copies of the following documents,
where applicable: (i) the annual reports (Form 5500 series), together with
schedules, as required, filed with the IRS, and any financial statements and
opinions required by section 103(a)(3) of ERISA for the three (3) most recent
plan years, (ii) the most recent determination letter issued by the IRS, (iii)
the most recent summary plan description and all modifications, as well as all
other descriptions distributed to Employees or set forth in any manuals or
other documents, (iv) the text of the Benefit Plan and of any trust, insurance
or annuity contracts maintained in connection therewith, (v) the actuarial
reports, if any, relating to any Benefit Plan for the three (3) most recent
plan years, (vi) the most recent actuarial valuation, study or estimate of any
retiree medical plan or supplemental retirement benefit plan; and (vii) the
most recent statement of plan assets for each Benefit Plan that is intended to
meet the requirements of section 401(a) of the Code.
(d) Since January 1, 1990 neither the Company nor any
corporation or other trade or business under common control with the Company
(as determined pursuant to section 414(b), (c), (m) or (o) of the Code) (a
"Common Control Entity") has maintained or contributed to or in any way
directly or indirectly has any liability whether contingent or otherwise) with
respect to any "multi-employer plan", within the meaning of section 3(37) or
4001(a)(3) of ERISA, or, except as set forth in Schedule 3.19(d), any other
plan which is subject to Title IV of ERISA. No proceedings by the Pension
Benefit Guaranty Corporation (the "PBGC") to terminate any Benefit Plan have
been instituted or threatened; no event has occurred or condition exists which
constitutes grounds for the PBGC to so terminate any Benefit Plan; neither the
Company nor any Common Control Entity is a party to or has any
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liability under any agreement imposing secondary liability on it as a seller of
the assets of a business in accordance with section 4204 of ERISA or under any
other provision of Title IV of ERISA; no contingent or other liability with
respect to which the Company has, had or could have any liability under section
4063 or 4069 or other provision of Title IV of ERISA to the PBGC or to any
Benefit Plan; and no assets of the Company are subject to a lien under sections
4064 or 4068 of ERISA. All contributions required to be made to or with respect
to each Benefit Plan with respect to the service of Employees, Former Employees
or other individuals with the Company prior to the date hereof have been made
or have been accrued for in the Latest Balance Sheet or in the books and
records of the Company for periods after the date of the Latest Balance Sheet,
as applicable.
(e) Except as set forth on Schedule 3.19(e), none of the
Benefit Plans has been subject to a "reportable event," within the meaning of
section 4043 of ERISA (whether or not waived); to the best of Seller's and the
Company's knowledge, there have been no "prohibited transactions", within the
meaning of section 406 of ERISA or section 4975 of the Code; to the best of
Seller's and the Company's knowledge, each Benefit Plan has, in all material
respects been administered to date in accordance with the applicable provisions
of ERISA, the Code and applicable law and with the terms and provisions of all
documents, contracts or agreements pursuant to which such Benefit Plan is
maintained; all reports and information required to be filed with the
Department of Labor, the IRS, the PBGC or plan participants or beneficiaries
with respect to any Benefit Plan have been timely filed; there is no dispute,
arbitration, claim, suit, or grievance, pending or, to the best knowledge of
the Company and the Seller, threatened, involving a Benefit Plan (other than
routine claims for benefits), and, to the best knowledge of the Company and the
Seller, there is no basis for such a claim; none of the Benefit Plans nor, to
the best of Seller's and the Company's knowledge, any fiduciary thereof (in
such person's capacity as such) has been the direct or indirect subject of an
order or, to the knowledge of the Company and the Seller, an investigation by a
governmental or quasi-governmental agency, there are no matters pending as to
which the Company has received notice before the IRS, the Department of Labor,
the PBGC or any other domestic or foreign governmental agency with respect to a
Benefit Plan; there have been no claims, or notice of claims, filed under any
fiduciary liability insurance policy covering any Benefit Plan, and there has
not been and there will not be any "excess parachute payment" (as that term is
defined in section 280G of the Code) to any of the Employees prior to the
Closing or as the result of the transactions contemplated by this Agreement. To
the best of Seller's and the Company's knowledge, no event or set of conditions
exists which would subject the Company to any Tax under sections 4972, 4974-76,
4979, 4980, 4980B, 4999 or 5000 of the Code.
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3.20 Environmental Matters. (a) There are no actions, investigations,
inquiries (written or oral) or other proceedings, rulings, orders or citations
pending, or to the best knowledge of Seller and the Company, threatened by
government officials with respect to the Company as the result of any actual or
alleged failure of the Company to comply with any requirement of any
Environmental Laws (as that term is defined in subsection (l) below). Schedule
3.20 contains a complete list of all solid waste dumps and hazardous waste
disposal, treatment and storage facilities which are presently or formerly were
used by the Company for disposal of hazardous waste as that term is used in the
RCRA (as hereinafter defined) during the past seven years. Prior to the date
hereof, the Company has delivered to Buyer true and correct copies of all
hazardous waste manifests issued by it at any time since January 1, 1994.
Except as disclosed on Schedule 3.20:
(b) To the best of Seller's and the Company's knowledge, the
Company has received all permits and approvals, has kept all records, and has
made all filings required by applicable Federal, state, or local laws with
respect to emissions of Hazardous Substances into the environment (including
solids, liquids, and gases) at the Real Property and the proper disposal of
such materials (including solid waste materials).
(c) To the best of Seller's and the Company's knowledge, the
Company and all operations thereof are currently in compliance in all material
respects with all applicable Environmental Laws.
(d) To the best of Seller's and the Company's knowledge,
neither the Company nor its operations nor its property is the subject of any
Federal, state, or local investigation or inquiry evaluating whether any
remedial action is needed to respond to a release of any Hazardous Substances
into the environment, and there is no basis for any such investigation or
inquiry.
(e) Since January 1, 1994, the Company has not filed, nor has
it been required to file, any notice under Federal, state or local laws
indicating past or present treatment, storage, or disposal of hazardous waste
as defined under 40 C.F.R Parts 260-270 or any state equivalent or reporting a
spill or release of a contaminant at, on or under or about the Real Property.
(f) Prior to the date hereof, Seller has furnished Buyer with a
summary description of the Company's activities with respect to the generation,
transportation, treatment, storage or disposal of Hazardous Substances, as
defined in subsection 3.20(l), and
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Seller and the Company have made available to Buyer all reports, inventories
and plans in the possession of Seller or the Company relating to same.
(g) To the best of Seller's and the Company's knowledge, since
the effective date of any Environmental Law (if applicable), the Company has
not disposed of or released any Hazardous substance in or on the ground or into
the groundwaters of its Real Property, except the disposal of or release of
Hazardous Substances which (i) are permitted by law, (ii) have been remediated
in accordance with applicable law (provided that any remediation effected
pursuant to any judicial or administrative order or consent decree or as a
result of any governmental investigation, inquiry request, order or decree
since January 1, 1980 is summarily described in Schedule 3.20(g), hereto), or
(iii) would not have a Material Adverse Effect.
(h) No underground storage tanks or surface impoundments used
for the storage of Hazardous Substances are located at, on, or under the Real
Property.
(i) No lien in favor of any governmental authority for (i) any
liability under any Environmental Laws or (ii) damages arising from or costs
incurred by such governmental authority in response to a release of a
contaminant into the environment has been filed or attached to the real
property of the Company.
(j) Since January 1, 1994, the Company and its Real Properties
have been found to be in substantial compliance with applicable Environmental
Laws following all inspections conducted by applicable regulatory bodies in
connection with the matters described in this Section.
(k) To the best of Seller's and the Company's knowledge, except
as disclosed in Schedule 3.20(k), none of the Real Property is located in an
area identified by an agency or department of Federal, state or local
governments, or identified by the Company or the Seller, as having special
flood or mudslide hazards or wetlands.
(l) For purposes of this Agreement, the term "Environmental
Laws" shall mean all applicable Federal, state and local laws, regulations or
ordinances relative to air quality, water quality, solid waste management,
hazardous or toxic substances or the protection of health, safety or the
environment, including, but not limited to, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. 9601
et seq.), the Hazardous Material Transportation Act (49 U.S.C. 1801 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), the Resource
Conservation and Recovery Act of 1976, as amended (42 U.S.C. 6901 et seq.)
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("RCRA"), the Clean Air Act, as amended (42 U.S.C. 2601 et seq.), the Toxic
Substances Control Act, as amended (15 U.S.C. 2601 et seq.), the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. 136 et seq.),
and the Clean Water Act of 1977, as amended (33 U.S.C. 1251 et seq.), as these
laws may have been amended or supplemented through the Closing Date, and any
analogous state or local statutes and the regulations promulgated pursuant
thereto. For purposes of this Agreement, the term "Hazardous Substance" shall
mean any product, substance, chemical, contaminant, pollutant, effluent, waste
or other material whose presence, nature, quantity and/or concentration, use,
manufacture, disposal, transportation, emission, discharge, spill, release or
effect, either by itself or in combination with other material located on any
of the Real Properties, is either (i) regulated or monitored by any
governmental authority, or (ii) defined or listed in, or otherwise classified
pursuant to, any statute, law, ordinance, rule or regulation (or any proposed
statute, law, ordinance, rule or regulation) as "hazardous substances,"
"hazardous materials," "hazardous wastes," "infectious wastes" or "toxic
substances". Hazardous Substances shall include, but not be limited to: (i)(A)
any "hazardous substance" as defined in the "Comprehensive Environmental
Response, Compensation and Liability Act, (B) any "regulated substance" as
defined in the Solid Waste Disposal Act or (C) any substance subject to
regulation pursuant to the Toxic Substances Control Act, as such laws are now
in effect or may be amended through the Closing Date and any rule, regulation
or administrative or judicial policy statement, guideline, order or decision
under such laws, (ii) petroleum and refined petroleum products, (iii) asbestos
and asbestos-containing products, (iv) flammable explosives, (v) radioactive
materials, (vi) radon and (vii) any other substance that is regulated or
classified as hazardous or toxic under any Federal, state or local law,
statute, ordinance, rule or regulation.
3.21 Products. Prior to the date hereof, the Company has delivered to
Buyer copies of all standard and other warranties which are currently extended
or which have previously been extended by the Company with respect to products
sold by the Company and for which the Company may have continuing liability or
obligations as of the date hereof. Except as disclosed on Schedule 3.21, there
are no pending claims, and Seller and the Company know of no basis for any
claims, based on defective products, violation of product warranties, violation
of product packaging or labeling requirements or similar claims with respect to
any products manufactured or sold by the Company or delivered to customers on
or prior to the date hereof, nor have the Company or Seller received any
notices from any person threatening any such claim, except for product returns
in the ordinary course of business which in the aggregate do not have a
Material Adverse Effect. All product warranties extended by the Company are in
compliance with applicable law.
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3.22 Tax Matters. (a) For purposes of this Agreement the terms "Tax" and
"Taxes" shall mean and include any and all Federal, state, local, foreign or
other taxes, assessments, Social Security obligations, deficiencies, fees,
export or import duties, or other governmental charges, including, without
limitation, income, gross receipts, ad valorem, value added, excise, real or
personal property, sales, use, license, and franchise taxes and any installment
payment for taxes and contributions or other amounts determined to be payable
in the nature of a Tax with respect to compensation paid to directors,
officers, employees or independent contractors, from time to time imposed by or
required to be paid by the Company to any governmental authority including
penalties and additions to tax thereon, penalties for failure to file a return
or report, and interest on any of the foregoing) and any amount payable by the
Company pursuant to any tax-sharing agreement or similar agreement with respect
to any of the foregoing.
(b) All returns and reports relating to Taxes or otherwise
required under applicable tax laws which were required to be filed by or with
respect to the Company on or before the date hereof (after giving effect to
applicable extensions) have been duly and timely filed and all such returns and
reports are complete and correct in all material respects. All Taxes imposed on
or with respect to the Company which have become due and payable on or before
the date hereof (including, but not limited to, estimated payments of Federal
income taxes) have been paid in a timely manner by the Company and there is no
liability (and no basis for any liability) for Taxes with respect to the
Company which has not (been in the case of Taxes which have become due and
payable) paid or (in the case of Taxes which are not yet due and payable)
accrued on the books of the Company. Except as set forth on Schedule 3.22(b)
hereto, there are no actions or proceedings which are currently pending or, to
the best of Seller's and the Company's knowledge, threatened against the
Company by any governmental authority for the assessment or collection of
Taxes; no claim for the assessment or collection of Taxes has been asserted or,
to the best of Seller's and the Company's knowledge, threatened against the
Company; and there are no matters under discussion by the Company or Seller
with any governmental authority regarding claims for the assessment or
collection of Taxes against the Company. There are no agreements, waivers or
applications by the Company for an extension of time for the assessment or
payment of any Taxes. There are no Tax liens on any of the assets of the
Company (other than any lien for current Taxes not yet due and payable). True
and complete copies of all Tax returns, reports and other Tax filings of the
Company which have been filed for any periods since January 31, 1989 will be
provided to Buyer upon request.
(c) All Federal, state and local income tax returns of the
Company with respect to the taxable period through the year ended January, 1987
have been examined and closed.
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(d) Except as set forth in Schedule 3.22(d), within the past
ten years, the Company has not been a member of any affiliated group of
corporations (as defined in section 1504(a) of the Code) which has filed
consolidated Tax returns. For purposes of this Section 3.22(d), the term
"Company" shall be deemed to include the Company, any subsidiaries of the
Company or any predecessors of the Company or any of its subsidiaries.
(e) The Company has not made, is not obligated to make, and is
not a party to any agreement that under any circumstances could obligate it to
make payments the deductibility of which would be prohibited under section 280G
of the Code.
(f) Except as set forth in Schedule 3.22(f), the Company has
not taken any action which would have the effect of deferring its tax liability
from any taxable period ending on or before the Closing Date to any taxable
period ending after the Closing Date, except for ordinary tax planning of the
Company consistent with its historical practices in the ordinary course of
business.
(g) The Company has at no time during the five (5) years
preceding the date of this Agreement been a "United States real property
holding corporation," within the meaning of section 897(c)(2) of the Code, and
the Shares do not constitute "United States real property interests," within
the meaning of section 897(c)(1) of the Code.
(h) The Company has not, with regard to any assets or property
held, acquired or to be acquired by the Company, filed a consent to the
application of section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code").
(i) The Company is not a party to any Tax sharing, Tax
allocation, Tax indemnity or other similar agreement.
3.23 Insurance. Schedule 3.23 hereto sets forth a complete and correct
list and brief summary description of all insurance policies carried by, or
covering, the Company with respect to its business. Complete and correct copies
of each such policy will be made available to Buyer upon request. All such
policies are in full force and effect, and no notice of cancellation has been
given with respect to any such policy. All premiums due thereon have been paid
in a timely manner. Except as set forth on Schedule 3.23, there are no pending
claims or to the best knowledge of Seller and the Company, threatened claims,
under any of the Company's insurance policies.
3.24 Minute Books; Stock Record Books. True and correct copies of the
Company's minute books and stock record book have been provided to Buyer prior
to the date hereof.
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The minute books of the Company contain true and complete originals or copies
of all minutes of meetings of and actions by the stockholders, Board of
Directors and all committees of the Board of Directors of the Company, and
accurately reflect in all material respects all corporate actions of the
Company which are required by law to be passed upon by the Board of Directors
or shareholders of the Company. The stock record book accurately reflects all
transactions in shares of the Company's stock.
3.25 Brokers' or Finders' Fees. No agent, broker, investment banker, or
other person or firm acting on behalf of Seller is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties in connection with any of the transactions
contemplated by this agreement.
3.26 Material Customers and Suppliers. (a) Schedule 3.26(a) sets forth a
complete and correct list of the ten (10) largest customers of the Company in
terms of amounts invoiced to such customers during the fiscal year of the
company ended January 27, 1996), and a similar list for the nine month period
ending October 26, 1996 (each, a "Material Customer") showing the total amount
invoiced to each such customer for the period in question. Except as set forth
and described in Schedule 3.26(a), no Material Customer has given the Company
any notice terminating, suspending or reducing in any material respect, or
specifying an intention to terminate, suspend or reduce in any respect in the
future, or otherwise reflecting an adverse change in, the business relationship
between such customer and the Company; and there has not been any adverse
change in the business relationship of the Company with any such customer since
the date of the 1996 Financial Statements. No customer other than a Material
Customer accounted for more than five percent (5%) of the Company's gross sales
during the past three fiscal years.
(b) Schedule 3.26(b) sets forth a complete and correct list of
the ten largest suppliers of the Company in terms of amounts purchased from
such suppliers during the fiscal year of the Company ended January 27, 1996),
and a similar list for the nine month period ending October 26, 1996 (each, a
"Material Supplier") showing the total amount purchased from each such Material
Supplier for the period in question. Schedule 3.26(b) also correctly identifies
all current outstanding purchase orders of the Company for goods or services
with an aggregate value of $100,000 or more. Except as set forth in Schedule
3.26(b), no supplier identified in Schedule 3.26(b) has given the Company any
notice terminating, suspending or reducing in any respect, or specifying an
intention to terminate, suspend or reduce in any respect in the future, or
otherwise reflecting an adverse change in, the business relationship between
such supplier and the Company and there has not been any adverse change in the
business relationship of the Company with any such supplier since the date of
the 1996 Financial Statements.
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3.27 Bank Accounts; Powers of Attorney. Schedule 3.27 sets forth a
complete and correct list showing: (i) all banks in which the Company maintains
a bank account or safe deposit box (collectively, "Bank Accounts"), together
with, as to each such Bank account, the account number, the names of all
signatories thereof and the authorized powers of each such signatory and, with
respect to each such safe deposit box, the number thereof and the names of all
persons having access thereto; and (ii) the names of all persons holding powers
of attorney from the Company. True and correct copies thereof have been
delivered to Buyer prior to the date hereof.
3.28 Books and Records. Except as set forth on Schedule 3.28, all of the
records, data, information, databases, systems and controls maintained,
operated or used by the Company or in connection with the conduct or
administration of its business (including all means of access thereto and
therefrom) are located on the premises of the Company and are under the
exclusive ownership or direct control of the Company.
3.29 Sales Representatives and Other Sales Agents/Sales Offices.
Schedule 3.29 hereto sets forth a complete and correct list of the names and
addresses of each sales representative or other sales agent currently engaged
by the Company who is not an Employee, and a summary description of the
territory assigned to each such person (noting whether such territory is
exclusive or non-exclusive). Schedule 3.29 also sets forth a list of all
agreements between the Company and any such person, complete and correct copies
of which agreements will be delivered to Buyer.
3.30 Transaction Expenses. The Company has not incurred or paid, and
will not prior to the Closing Date incur or pay, expenses relating to or
arising out of the sale of the Shares or the transactions contemplated by this
Agreement, including, without limitation, fees and expenses of counsel,
accountants, and investment bankers.
3.31 Schedules. Disclosures made in any Schedule apply to all of the
representations and warranties made in this Article III and shall not be
limited to any particular paragraphs in relation to which they may appear. No
schedule, certificate or certified information delivered or to be delivered by
the Company or Seller pursuant to this Agreement, or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact or omits or will omit to state any material fact necessary
to make the statements contained therein not misleading.
3.32 Reliance. The representations and warranties of the Company and the
Seller made in Article III of this Agreement are made by the Company and the
Seller with the knowledge and expectation that Buyer is relying thereon in
entering into, and performing its respective
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obligations under, this Agreement, and the same shall not be affected in any
respect whatsoever by any investigation heretofore or hereafter conducted by or
on behalf of Buyer, whether in contemplation of this Agreement or otherwise.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Corporate Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to do business as a foreign corporation and is
in good standing in all jurisdictions where the failure so to qualify would
have a material adverse effect on Buyer. Buyer has full corporate power and
authority to own, lease and operate the properties and assets which it
currently owns, leases or operates and to carry on its business as presently
conducted or proposed to be conducted pursuant to existing plans. Buyer has
full corporate power and authority to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
4.2 Corporate Authority; Absence of Conflicts. (a) The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby have been duly approved by the Board of Directors of Buyer,
and no other corporate actions on the part of Buyer are necessary to approve
and authorize the execution and delivery of this Agreement, or the consummation
of the transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by Buyer and constitutes a valid and legally
binding agreement of Buyer, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(b) The execution and delivery of this Agreement by Buyer,
consummation of the transactions herein contemplated and compliance with the
terms of this Agreement will not conflict with or violate any provision of the
Certificate of Incorporation or any By-Law of Buyer; nor do such actions
constitute a default of or require the consent or approval under any agreement
or instrument to which Buyer is a party or by which Buyer's assets are bound,
or require Buyer to obtain the approval or consent of any foreign, Federal,
state, county, local or other governmental or regulatory body, other than such
filings as are required under the HSR Act and except for the consent of Buyer's
lender(s), nor will such actions violate any applicable law, rule, regulation,
judgment, order or decree of any
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government, governmental instrumentality or court, domestic or foreign,
presently applicable to Buyer.
4.3 No Investigation. There exists no legal proceeding or investigation
by any governmental or regulatory authority, or any request for information or
action by any third party, known to Buyer which could result in the institution
of legal proceedings to prohibit or restrain the consummation or performance of
this Agreement or the transactions contemplated hereby.
4.4 Securities Act of 1933. Buyer is acquiring the Shares solely for
its own account and for the purpose of investment only and not with a view to
any distribution thereof. Buyer acknowledges that the Shares are not registered
under the Securities Act of 1933, as amended, and that such Shares may not be
transferred or sold except pursuant to the registration provisions of such Act
or pursuant to an applicable exemption therefrom and pursuant to applicable
state securities laws and regulations.
4.5 Reliance. The representations and warranties of Buyer made in this
Article IV are made by Buyer with the knowledge and expectation that the
Company and Seller are relying thereon in entering into, and performing their
obligations under, this Agreement, and the same shall not be affected in any
respect whatsoever by any investigation heretofore or hereafter conducted by or
on behalf of the Company or Seller, whether in contemplation of this Agreement
or otherwise.
4.6 Brokers' or Finders' Fees. No agent, broker, investment banker, or
other person or firm acting on behalf of Buyer is or will be entitled to any
broker's or finder's fee or any other commission or similar fee directly or
indirectly from any of the parties in connection with any of the transactions
contemplated by this Agreement.
4.7 Financing. Buyer has delivered to Seller prior to the date hereof
written commitment letters in respect of financing sufficient to pay at Closing
the amounts required to be paid under Sections 1.2 and 1.3 hereof and to cause
the issuance of one or more letters of credit equal to the outstanding balance
of the Company IRBs.
ARTICLE V
AGREEMENTS OF THE PARTIES RELATED TO TRANSACTIONS
5.1 Full Access. The Company shall afford to Buyer, its counsel,
accountants and other representatives reasonable access, during normal business
hours to, and the Company shall disclose and make reasonably available to them
(with the right to make copies), all of
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the books and records of the Company relating to the ownership of the
properties, operations, financial condition, assets, obligations and
liabilities of the Company, and the Company shall afford Buyer, its counsel,
accountants and other representatives with reasonable access to the facilities
and properties of the Company and to the officers and directors of the Company.
5.2 Preservation of Business. From the date hereof through the Closing
Date, the Company shall and the Seller shall cause the Company to conduct its
business consistent with past business practices, and use their best efforts to
preserve the Company's business organizations intact, keep available the
services of its present relationships with key employees, consultants and
agents, maintain its present material suppliers, customers, and others having
material business relationships with it and preserve their goodwill.
5.3 Negative Covenants of Seller. The Company and Seller covenant and
agree that from and after the date hereof through the Closing Date, the Company
shall not, except with the prior written consent of Buyer, or except as
directly related to the completion of the transactions contemplated by this
Agreement:
(a) Issue or sell any of its shares of capital stock or other
securities, or propose or effect a split or reclassification of its outstanding
capital stock or a recapitalization;
(b) Mortgage, pledge or otherwise encumber any properties or
assets, or dispose of, or make any agreement with respect to the mortgage,
pledge, sale, transfer or disposition of, any properties or assets except in
the ordinary course of business consistent with past practice;
(c) Make any capital commitment or expenditure of more than
$250,000, in the aggregate, or incur or become liable for any other obligation
or liability except obligations or liabilities in the ordinary course of
business consistent with past practice;
(d) Declare or pay any dividends, whether in cash, securities
or other property or distribute any assets to Seller or purchase, redeem or
acquire any shares of capital stock;
(e) Adjust in any way, either directly or indirectly, the
compensation or benefits paid or payable to (i) any officer, director, or
executive, or (ii) any other Employee of the Company if outside the ordinary
course of business consistent with past practice;
(f) Borrow or agree to borrow any funds or incur, or assume or
become subject to, whether directly or by way of guarantee or otherwise, any
obligation or liability
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(absolute or contingent) except (i) borrowings from Seller for working capital
purposes in the ordinary course of business consistent with past practices and
(ii) liabilities or obligations incurred in the ordinary course of business
consistent with past practices;
(g) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities or obligations reflected or
reserved against in the Latest Balance Sheet or incurred in the ordinary course
of business and consistent with past practice since the date of the Latest
Balance sheet;
(h) Prepay any obligation having a fixed maturity of more than
90 days from the date such obligation was issued or incurred except in the
ordinary course of business;
(i) Pay, loan or advance any amount to, or sell transfer or
lease any properties or assets to, or enter into any agreement or arrangement
with, any of its officers or directors or any affiliate, associate or near
relative of any of its officers or directors;
(j) Except in the ordinary course of business consistent with
past practice, write down (or write up) the value of any inventory or write off
as uncollectible any notes or accounts receivable;
(k) Cancel any debts or waive any claims or rights of
substantial value, other than in the ordinary course of business consistent
with past practice or cancel or terminate any Material Contract or other
material agreement;
(l) Dispose of or permit to lapse any rights to the use of any
patent, trademark, trade name, copyright or other intangible asset, or dispose
of or disclose to any person any trade secret, formula, process or know-how not
theretofore a matter of public knowledge;
(m) Change any of the banking or safe deposit arrangements
described in Schedule 3.27 hereto, except in the ordinary course of business;
(n) Grant or extend any power of attorney or act, as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise, in respect of
the obligation of any person, corporation, partnership, joint venture,
association, organization or other entity;
(o) make any change in financial or tax accounting methods,
principles or practices or make or cause to be made any change in any elections
on Tax returns of the Company, unless required by generally accepted accounting
principles or applicable law;
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(p) extend credit in the sale of products, collection of
receivables or otherwise, other than in the ordinary course of business
consistent with past practices (provided that refraining from pursuing
collection of delinquent accounts shall not be deemed to be extending credit);
(q) fail to maintain its books, accounts and records in the
usual, regular and ordinary manner on a basis consistent with prior years;
(r) adopt or amend in any material respect any collective
bargaining agreement or Employee Benefit Plan other than as required by law;
(s) grant to any executive officer any increase in compensation
or in severance or termination pay, grant any severance or termination pay, or
enter into to any employment agreement with any executive officer, except as
may be required under employment or termination agreements in effect on the
date of this Agreement; or
(t) agree, whether in writing or otherwise, to do any of the
foregoing.
5.4 Third Party Consents. Seller and the Company shall use their best
efforts to obtain at the earliest practicable date all consents of third
parties necessary to the consummation of the transactions contemplated hereby,
the absence of which would have a Material Adverse Effect, and will provide to
Buyer copies of each such consent promptly after it is obtained.
5.5 Schedules Update. From time to time after the date hereof, but in
any event not later than the Closing Date, the Company will promptly supplement
or amend the Schedules hereto with respect to any matter which, if it existed
or occurred on or prior to the date hereof, would have been required to be set
forth or described in any such Schedule or which is necessary to correct any
information set forth in any such Schedule which has been rendered inaccurate
thereby; provided, however, that no supplement or amendment to any such
Schedule shall have any effect for the purpose of determining whether any
breach of this Agreement existed prior to such supplement or amendment or
whether the condition set forth in Section 7.1 of this Agreement has been
satisfied.
5.6 Tax Matters. (a) Seller shall prepare and file or cause to be
prepared and filed on or before the relevant due dates therefor (after giving
effect to all applicable extensions) all Federal, state, local and foreign Tax
returns and reports of the Company attributable to any taxable period ending on
or prior to the Closing Date, accompanied by the full and complete payment of
all Taxes due with respect to such periods. Any Tax refunds received by the
Company attributable to periods prior to the Closing shall belong to Seller and
shall be
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promptly remitted to Seller upon receipt, reduced by any increase in Taxes in a
period ending after the Closing Date which is directly attributable to Seller's
claim for a refund.
(b) Buyer shall prepare and file or cause to be prepared and
filed on or before the relevant due dates therefor (after giving effect to all
applicable extensions) all Federal, state, local and foreign Tax returns and
reports of the Company attributable to any taxable periods ending after the
Closing Date, accompanied by the full and complete payment of all Taxes due
with respect to such periods.
(c) During the period between the Closing Date and the Tax
Claim Termination Date (as hereinafter defined), Seller shall provide
reasonable access during normal business hours to the books and records of
Seller, including work papers, to the extent such access is reasonably
requested in writing in advance by the Buyer for purposes of responding to any
inquiry, audit or proceeding involving the Tax Returns of the Company for the
periods ending prior to the Closing Date. After the Closing, Seller shall make
available to Buyer all work papers, records of estimated tax payments and Tax
Returns as have been used or filed for the fiscal year of the Company
commencing prior to the Closing.
(d) Buyer shall not, and after the Closing shall not permit the
Company to, amend any Tax return, report or filing with respect to Tax periods
prior to the Closing without Seller's prior written consent or as required by
applicable law. To the extent permitted by applicable law, at Seller's request
and expense, Buyer shall, and shall cause the Company to (or in the case of
Seller's consolidated Tax Return, Seller shall), file an amendment to a Tax
Return, report or filing made with respect to Tax periods prior to the Closing,
provided that Seller shall pay any additional Taxes resulting from such amended
filing, and provided further that Seller shall be entitled to receive any
refund resulting from such amended filing, reduced by any increase in Taxes
paid by the Company which is directly attributable to Seller's claim for a
refund. Following the Closing, Buyer shall not, and shall not permit the
Company to, make any elections or changes in accounting methods if such
elections or changes will materially adversely affect the Tax liabilities of
the Company or the Seller for a Tax period ending on or prior to the Closing
Date, except as required by law after written notice to Seller.
(e) The parties agree not to make any election or deemed
election under Section 338(g) or 338(h)(10) of the Code or any similar
provision under state law with respect to the transactions contemplated by this
Agreement.
5.7 Transfer Taxes. Buyer shall be responsible for, and shall pay or
reimburse promptly when and if due, all applicable sales, transfer, excise,
use, documentary stamps or
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any other similar Taxes which may be imposed on or made payable in any
jurisdiction, or by any authority, in connection with or arising from the
consummation of the transactions contemplated by this Agreement. Buyer shall
prepare and file all appropriate sales, transfer, excise, use, documentary
stamps and other tax returns and other documents due in connection with the
transactions contemplated hereunder. For purposes of paying any New York real
property transfer tax resulting from the transactions contemplated hereby, the
parties agree that the amount of the Purchase Price allocable to the Company's
Real Property shall be the book value thereof at the Closing Date.
5.8 Best Efforts and Certain Filings. Subject to the terms and
conditions of this Agreement, Buyer and Seller will use their best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable to consummate the transactions contemplated by
this Agreement and to maintain the accuracy of their representations and
warranties hereunder. Each of Seller and the Company will not take, agree to
take or knowingly permit to be taken any action to do or knowingly permit to be
done anything in the conduct of the business of the Company, or otherwise,
which would be contrary to or in breach of any of the terms or provisions of
this Agreement. Buyer and Seller agree to make their respective filings under
the HSR Act on or prior to January 9, 1997.
5.9 Industrial Revenue Bonds. Seller agrees to cooperate with Buyer in
Buyer's efforts to ensure that the 1985 City of Pine Bluff Industrial Revenue
Bonds and the 1996 City of El Paso Industrial Revenue Bonds issued on behalf of
the Company (collectively, the "Company IRBs") will remain in force and effect
following the Closing, upon the terms and conditions as presently are in effect
but without any liability of Seller subsequent to the Closing. The parties
shall use their best efforts to secure Seller's release from any liability
under the Company IRBs after the Closing.
5.10 Insurance. All insurance (other than group health and workers'
compensation programs) covering the property, and employees of the Company is
provided through Seller, and the Company is charged by Seller for its insurance
cost. All such insurance coverage provided through policies maintained by
Seller shall terminate at the Closing, and any return premiums received upon
termination shall be retained by or paid over to Seller upon receipt. Buyer
shall be responsible, at the cost of Buyer or the Company, for procuring
replacement insurance coverage following the Closing.
5.11 Workers' Compensation. Workers' compensation and disability
benefits for Employees of the Company are provided through a self-insured plan
sponsored by the Seller and administered by a third-party administrator.
Coverage for workers' compensation
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benefits for Employees of the Company under Seller's self-insured plan shall be
terminated as of the Closing. On or prior to the Closing, Buyer shall make all
necessary arrangements (including, but without limitation, posting one or more
surety bonds and/or letters of credit in amounts required by applicable
regulations) to implement its own self-insured workers' compensation program
for Employees of the Company or to procure an insurance policy providing
workers' compensation benefits for Employees of the Company. From and after the
Closing, neither Seller nor Seller's self-insured workers' compensation program
shall have any further obligations with respect to workers' compensation or
disability benefits or claims by Employees or Former Employees of the Company,
including, without limitation, claims or benefits arising out of injuries or
occurrences prior to or after the Closing.
5.12 Use of Seller's Name. Within 30 days after the Closing, Buyer shall
cause the Company to discontinue use of and destroy any signs, letterhead,
promotional materials, business forms and other documents bearing the name or
logo of Seller or which in any way indicate a continuing affiliation between
the Company and Seller.
5.13 Third-Party Offers. Seller and the Company shall not, nor shall
Seller or the Company authorize or permit any subsidiary or any of its or a
subsidiary's respective officers, directors, employees, investment bankers,
attorneys or other advisors or representatives to, (i) solicit or initiate any
Competitive Proposal (as defined below) or (ii) participate in any discussions
or negotiations regarding, or furnish to any person any information with
respect to, a Competitive Proposal. For purposes of this Agreement,
"Competitive Proposal" means a proposal from any person to acquire all or a
substantial part of the assets of the Company or more than 50% of the equity
securities of the Company or any merger, consolidation or business combination
involving the Company, other than the transactions contemplated by this
Agreement.
5.14 Ketchum Letter Agreement. At the Closing, the parties shall execute
and deliver the Letter Agreement attached hereto as Exhibit E.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
The obligations of Seller hereunder are subject to the fulfillment
of the following conditions, any one of which may be waived in writing by
Seller:
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6.1 Representations and Covenants. All representations and warranties
of Buyer contained herein shall be true and correct in all material respects on
and as of the Closing Date with the same force and effect as though made on and
as of the Closing Date. Buyer shall have performed and complied with all
covenants and agreements contained herein and required to be performed or
complied in all material respects with by it on or prior to the Closing Date.
6.2 Closing Certificate. Buyer shall have delivered to Seller a
certificate signed by its President or a Vice President, dated as of the
Closing Date, to the effect set forth in Section 6.1.
6.3 Legal Opinion. Seller shall have received the opinion of Weil,
Gotshal & Manges LLP, counsel for Buyer, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit A.
6.4 Injunction. No order or decree prohibiting or restraining the
consummation of this Agreement shall have been issued by any court or
governmental or regulatory body.
6.5 Lender's Consent. Seller shall have received the consent of its
senior lenders to the consummation of the transactions contemplated hereby.
6.6 HSR Act. The waiting period under the HSR Act shall have expired or
been earlier terminated without objection of the U.S. Department of Justice.
6.7 Company IRBs. If the parties shall have been unable to secure
Seller's release from liability pursuant to Section 5.9, Buyer shall (or shall
have caused the Company to) have furnished one or more letters of credit or
otherwise have provided indemnification reasonably satisfactory to Seller to
protect Seller against any liability after the Closing Date in connection with
the Company IRBs.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to enter into and complete the Closing is
subject to the fulfillment on or before the Closing Date of each of the
following conditions, any one of which may be waived in writing by Buyer:
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7.1 Representations and Covenants. All representations and warranties
of Seller contained herein shall be true and correct in all material respects
on and as of the Closing Date with the same force and effect as though made on
and as of the Closing Date. Seller shall have performed and complied in all
material respects with all covenants and agreements contained herein and
required to be performed or complied with by it on or prior to the Closing
Date.
7.2 Closing Certificate. Seller shall have delivered to Buyer a
certificate signed by it or on its behalf dated as of the Closing Date, to the
effect set forth in Section 7.1.
7.3 Legal Opinion. Buyer shall have received the favorable opinion of
Catherine H. Suttmeier, General Counsel for the Company and Seller dated as of
the Closing Date, in substantially the form attached hereto as Exhibit B.
7.4 Injunction. No order, decree, statute, rule or regulation
prohibiting or restraining the consummation of this Agreement shall have been
issued by any court or governmental or regulatory body.
7.5 Material Adverse Change. The Company shall not have suffered any
material adverse change in its business or financial condition since November
23, 1996, including, without limitation (i) any loss or notice of loss of any
Material Customer (other than to Buyer or one of its affiliates) or Material
Supplier as those terms are herein defined, or (ii) any loss on account of
fire, flood, accident, strike or other calamity which has or reasonably may
have a Material Adverse Effect.
7.6 Directors Resignations. Buyer shall have received the written
resignation of each of the directors of the Company effective as of the Closing
Date.
7.7 FIRPTA Affidavit. Buyer shall have received an affidavit from the
Seller in the form of Exhibit C attached hereto that the Company is not, and
has not been at any time during the five (5) year period preceding the date of
this Agreement been, a United States real property holding corporation under
the Foreign Investment in Real Property Tax Act of 1980.
7.8 Bank Accounts/Powers of Attorney. Any changes of signatories to
Company bank accounts or cancellation of powers of attorney requested by Buyer
shall have been made effective as of the Closing.
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7.9 HSR Act. The waiting period under the HSR Act shall have expired or
been earlier terminated without objection of the U.S. Department of Justice.
7.10 Selected Material Contracts and Permits, Etc. The completion of the
transactions contemplated at Article I of this Agreement shall not impair the
ability of the Company to enforce or continue to receive the benefits provided
to it under (i) any contract, agreement or arrangement described at paragraph
(i), (ii), (iv) or (viii) of subsection 3.14(a) ("Selected Material
Contracts"), or (ii) any material permits, licenses, exemptions, consents,
authorizations and approvals ("Material Permits"), upon the consummation of the
transactions contemplated by this Agreement, and all consents necessary to
preserve the Company's continuing ability to enforce or receive the benefits
pursuant to each Selected Material Contract and Material Permit shall have been
obtained by the Company or Seller.
7.11 Seller Indebtedness. Seller shall have caused the Company to be
released from any liability (as a guarantor, co-maker or otherwise) with
respect to the indebtedness of Seller.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival of Representations and Warranties. All representations,
warranties, obligations, covenants and agreements of the parties contained
herein, or in any Schedule or Exhibit hereto, and the rights of the parties to
seek indemnification with respect thereto, shall survive the Closing and,
except in respect of any claims for indemnification as to which notice shall
have been duly given prior to the relevant expiration date set forth below (or
in the case of the representations set forth in Section 3.3, or claims for
indemnification arising therefrom, which shall have an indefinite duration),
shall expire on the following dates:
(a) in the case of Buyer Indemnity Claims as defined in Section
8.2 below based in whole or in part on a breach of the representations and
warranties set forth in Section 3.19 or 3.22 ("Tax/ERISA Claims"), the day (the
"Tax Claim Termination Date") which is the forty-fifth (45th) day following the
third (3rd) anniversary of the earliest date on which all of the Company's Tax
returns for its fiscal year ending on the Closing Date have been duly filed;
provided, however, that if any governmental entity shall commence an audit of
the Company on or before the Tax Claim Termination Date with respect to any
taxable periods of the Company ending on or before the Closing Date, Buyer
shall have the right to assert a Buyer Indemnity Claim hereunder at any time on
or before the Tax Claim Termination Date for the estimated amount of all Tax
Liabilities and Costs (as those terms are hereinafter defined) which could
potentially be assessed or otherwise be asserted by such
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governmental entity in connection with such audit and, provided further, that
in the case of Tax Liabilities described in Section 8.5(c)(ii), the Tax Claim
Expiration Date shall be the forty-fifth day following the expiration of the
applicable statute of limitations (including extensions) for the assessment of
Taxes for the respective consolidated, combined, affiliated Tax Returns;
(b) in the case of all other Buyer Indemnity Claims, the later
of May 31, 1998 or the end of the sixteenth calendar month after the Closing
Date; and
(c) in the case of any Seller Indemnity Claim, the later of May
31, 1998 or the end of the sixteenth calendar month after the Closing Date.
8.2 Seller's Agreement to Indemnify. Seller shall defend, indemnify and
hold harmless Buyer and the Company from and against any Buyer Indemnity Claims
arising under this Agreement. For purposes of this Agreement, the term "Buyer
Indemnity Claim" shall mean (i) any Tax Liability or Cost (as defined in
Section 8.5), or (ii) any loss, damage, deficiency, claim, liability,
obligation, suit, action, proceeding, demand, assessment, judgment, fee, cost
or expense of any nature whatsoever (including, without limitation, all
interest and penalties in connection with the foregoing and all out-of-pocket
costs and expenses incident to the investigation, settlement or disposal of any
of the foregoing, including, without limitation, reasonable fees and
disbursements of accountants and counsel) arising out of, based upon or
resulting from (A) any breach of any representation and warranty of the Company
or Seller which is contained in this Agreement or the certificate delivered
under Section 7.2 of this Agreement, (B) any breach or nonfulfillment of, or
any failure to perform, any of the covenants, agreements or undertakings of the
Company or the Seller which are contained in or made pursuant to this
Agreement, and (C) the termination of the CAC Stock Purchase Agreement;
provided, however, that Buyer shall be entitled to indemnification for Buyer
Indemnity Claims under subsection (ii)(A) (other than under Sections 3.3., 3.25
and 3.30) of this Section 8.2 only to the extent that the aggregate amount of
all Buyer Indemnity Claims which have been Definitively Resolved (as that term
is hereinafter defined) in favor of Buyer under the terms of this Agreement
shall exceed $1,000,000 and only to the extent of such excess. Any payments
made by Seller hereunder with respect to a Buyer Indemnity Claim shall be
deemed to be a reduction of the Purchase Price.
8.3 Buyer's Agreement to Indemnify. Buyer hereby agrees to indemnify
and hold the Seller harmless from, and to reimburse the Seller for any Seller
Indemnity Claims (as that term is hereinafter defined) arising under the terms
and conditions of this Agreement. For purposes of this Agreement, the term
"Seller Indemnity Claim" shall mean any loss, damage, deficiency, claim,
liability, obligation, suit, action, proceeding, demand, assessment,
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judgment, fee, cost or expense of any nature whatsoever (including, without
limitation, all interest and penalties in connection with the foregoing and all
out-of-pocket costs and expenses incident to the investigation, settlement or
other disposal of any of the foregoing, including, without limitation,
reasonable fees and disbursements of accountants and counsel) arising out of,
based upon or resulting from (i) any breach of any representation and warranty
of Buyer which is contained in this Agreement or any certificate or other
instrument or document delivered pursuant hereto, or (ii) any breach or
nonfulfillment of, or failure to perform, any of the covenants, agreements or
undertakings of Buyer contained in or made pursuant to the terms and conditions
of this Agreement.
8.4 Notification of Claims and Definitive Resolutions. (a) Subject to
the provisions of Section 8.5 below, upon the occurrence of an event which
constitutes or is claimed to constitute a Buyer Indemnity Claim or a Seller
Indemnity Claim, as applicable, such party shall provide the indemnifying party
or parties with prompt written notice of such event and shall otherwise make
available to the indemnifying party all relevant information which is material
to the claim and which is in the possession of the indemnified party but in no
event later than the time period set forth in Section 8.1. (For all purposes of
this Section 8.4, in the case of Seller "indemnified party" or "indemnifying
party" refers to Seller and not the Company.) Following receipt of a notice of
any such indemnity claim asserted under this Section 8.4(a), the indemnifying
party shall have sixty (60) days (or such longer period as may be agreed in
writing by the indemnified party) to make such initial investigation of the
claim as the indemnifying party deems necessary or desirable. For the purpose
of such investigation, the indemnified party shall make available to the
indemnifying party any books and records relied upon by it to substantiate the
claim. At or prior to the expiration of such sixty-day period (or any extension
thereof which shall have been agreed to by the indemnified party in writing),
the indemnifying party shall notify the indemnified party as to whether or not
it disputes the indemnified party's claim in whole or in part.
(b) If the indemnifying party does not dispute the indemnified
party's claim, the two shall execute a memorandum (hereinafter referred to as a
"Resolution Memorandum"), in the form of Exhibit D hereto, which shall recite
the amount of the Buyer Indemnity Claim or Seller Indemnity Claim. If the
indemnifying party notifies the indemnified party within 60 days that it
disputes such claim, then, for a period not to exceed 30 days following receipt
of such notice from the indemnifying party, the parties shall confer with one
another and endeavor in good faith to resolve any dispute regarding the claim.
If the parties reach an agreement regarding the existence and amount of the
Buyer Indemnity Claim or Seller Indemnity Claim, the parties shall execute a
Resolution Memorandum as aforesaid.
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(c) For purposes of this Agreement, a Buyer Indemnity Claim or
Seller Indemnity Claim shall be deemed to have been "Definitively Resolved"
when (i) a Resolution Memorandum has been signed by Buyer and Seller; or (ii)
there is a decision, judgment, decree or other order by any court of competent
jurisdiction, which disposes of all or part of a Buyer Indemnity Claim or
Seller Indemnity Claim, which decision, judgment, decree or other order is not
appealable or with respect to which the time for appeal has expired, or (iii) a
period of sixty (60) days has expired since notice of a Buyer Indemnity Claim
or Seller Indemnity Claim has been delivered to the indemnifying party and the
indemnifying party has not notified the indemnified party that it disputes such
claim. Upon the Definitive Resolution of a Buyer Indemnity Claim in favor of
Buyer, the amount of such claim shall be paid by Seller to Buyer within thirty
(30) days, subject to the provisions of Section 8.2(ii) hereinabove.
(d) If any indemnity claim asserted under Section 8.4(a)
involves the claim of any third party (a "Third-Party Claim"), the indemnifying
party shall have the right to elect to join in the defense, settlement,
adjustment or compromise of any such Third-Party Claim, and to employ counsel
to assist such indemnifying party in connection with the handling of such
claim, at the sole expense of the indemnifying party, and no such claim shall
be settled, adjusted or compromised, or the defense thereof terminated, without
the prior consent of the indemnifying party unless and until the indemnifying
party shall have failed, after the lapse of a reasonable period of time, but in
no event more than thirty (30) days after written notice to it of the
Third-Party Claim, to join in the defense, settlement, adjustment or compromise
of the same. An indemnified party's failure to give timely notice or to furnish
the indemnifying party with any relevant data and documents in connection with
any Third-Party Claim shall not constitute a defense in part or in whole) to
any claim for indemnification by such party, except and only to the extent that
such failure shall result in any material prejudice to the indemnifying party.
If so desired by any indemnifying party, such party may elect, at such party's
sole expense, to assume control of the defense, settlement, adjustment or
compromise of any Third-Party Claim, insofar as such claim relates to the
liability of the indemnifying party, provided that such indemnifying party
shall obtain the consent of all indemnified parties before entering into any
settlement, adjustment or compromise of such claim, or ceasing to defend
against such claim, if as a result thereof, or pursuant thereto, there would be
imposed on an indemnified party any liability or obligation not covered by the
indemnity obligations of the indemnifying parties under this Agreement
(including, without limitation, any injunctive relief or other remedy).
8.5 Special Indemnification for Tax Liabilities. (a) Seller shall
indemnify and hold harmless Buyer, the Company and each Affiliate (as that term
is hereinafter defined) of Buyer, from and against the payment of any and all
Tax Liabilities (as that term is
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hereinafter defined). Except as may otherwise be expressly provided for in this
Agreement, the term "Buyer Indemnity Claims" shall be deemed to include all
claims for Tax Liabilities.
(b) For purposes of this Section 8.5, the term "Affiliate"
shall mean any corporation or other entity which is, directly or indirectly,
controlled by Buyer, or any successor in interest to, or transferee of, Buyer,
as the case may be, as determined from time to time, including, without
limitation, the Company and any successor in interest to, the Company.
(c) For purposes of this Agreement, the term "Tax Liabilities"
shall mean and include (i) any and all liabilities for Taxes which are or shall
be incurred by the Company (or by Buyer with respect to the Company) with
respect to any taxable year or any other period prior to the Closing, other
than Taxes for which provision was made on the Closing Balance Sheet, and (ii)
any and all Taxes of any member of an affiliated, consolidated, combined or
unitary group (other than Taxes allocable to the Company) of which the Company
is or was a member on or prior to the Closing Date by reason of the liability
of the Company pursuant to Treas. Reg. Section 1.1502-6(a) or any similar
state, local or foreign law.
(d) In the event the indemnitee receives notice of a claim made
by any Federal, state, local, foreign or other governmental authority which, if
successful, would result in an obligation to indemnify pursuant to this Section
8.5 (hereinafter, referred to as a "claim"), the indemnitee shall give prompt
notice to Seller of the same in writing but in no event later than the time
period specified in Section 8.1(a)), specifying in reasonable detail the basis
of such claim, and the facts pertaining thereto, and shall not make payment of
the Taxes claimed for at least 30 days after the giving of such notice. Seller
shall have the right to control the defense of any such claim, subject in all
cases to its obligation to indemnify Buyer and the Company with respect to Tax
Liabilities. If Seller wishes the indemnitee to contest such claim, Seller
shall, within 30 days after notice by the indemnitee to Seller of such claim,
or, if earlier, the period required by law, request that such claim be
contested. If the indemnitee agrees to do so, it shall contest the claim;
provided, if the indemnitee so requests, Seller shall first furnish an opinion
of independent tax counsel selected by Seller and reasonably satisfactory to
the indemnitee, that there is a reasonable defense to the claim, and Seller
shall agree to pay the indemnitee from time to time on demand, an amount which
shall be equal to all costs and expenses which the indemnitee may incur in
connection with contesting such claim, including, without limitation, fees and
disbursements of attorneys, accountants and other experts (hereinafter referred
to as the "Costs"). If indemnitee chooses not to contest the claim, Seller
shall have the right to do so; provided, that Buyer shall (and shall cause the
Company to) cooperate with and assist Seller, at Seller's expense, in
contesting such claim. If any such claim shall be made by the IRS or other
governmental
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authority and Seller shall have requested the indemnitee to contest such claim,
as above provided, and shall have duly complied with all of the terms of this
Section 8.5, the indemnitee hereby agrees to consult with Seller in good faith
with respect to the actions to be taken by the indemnitee in connection with
contesting any such claim; provided, however, that in determining the actions
to be taken by the indemnitee, the overall tax and other interests of the
indemnitee and its Affiliates shall be taken into account; and provided further
that; (i) the indemnitee may either pay the Taxes claimed and sue for a refund
in the appropriate court of proper jurisdiction, as the Seller shall elect, or
contest such claim without first paying the Taxes claimed, and (ii) if the
Seller requests the indemnitee to pay the taxes claimed and then seek a refund,
the indemnitee will be provided with sufficient funds by Seller, on an
interest-free basis, to pay the full amount of such Taxes. The indemnitee
agrees to notify Seller in a timely manner in writing of any action taken or
proposed to be taken from time to time by the governmental authority with
respect to such claim, and to make available to Seller any relevant information
relating to such claim which may be particularly within the knowledge of Buyer
or any Affiliate and to otherwise cooperate with Seller in good faith in order
to contest effectively any such claim. For the purpose of all dealings with
Buyer or other indemnitee hereunder, Seller shall act exclusively through one
designated counsel, and the indemnitee is hereby authorized by the Seller to
deal with such designated counsel.
(e) Any liability of the Seller under this Section 8.5 shall
become fixed upon a Final Resolution of the liability of the indemnitee and any
amounts due to Buyer or other indemnitee under this Section 8.5 shall be paid
within 30 days after such Final Resolution subject to the limitations in
Section 8.2. An indemnitee's failure to give timely notice or to provide copies
of documents or to furnish relevant data in connection with any such claim
shall not constitute a defense (in whole or in part) to such claim for
indemnification for such indemnitee, except to the extent such failure or delay
results in prejudice to Seller.
(f) For purposes of this Section 8.5, a "Final Resolution"
shall be deemed to occur with respect to a proposed or other adjustment when
(i) there is a decision, judgment, decree or other order by any court of
competent jurisdiction, which decision, judgment, decree or other order has
become final with respect to the indemnitee (i.e., all allowable appeals taken
pursuant to this Section 8.5 have been exhausted by either party to the
action), (ii) there is a closing agreement made under section 7121 of the Code
binding in respect of the indemnitee or other administrative settlement with
the IRS or other government authority, (iii) the time for instituting a claim
for refund in respect of the indemnitee has expired, or, if a claim was filed,
the time for instituting suit with respect thereto has expired or (iv) the
Taxes which are the subject of a proposed or other adjustment are paid, and,
pursuant to
44
<PAGE> 54
written agreement between Seller and Buyer or other indemnitee, no claim for
refund is filed, and no other contest of such proposed or other adjustment is
made.
(g) Upon a Final Resolution, the Seller shall become obligated
for any payment, as provided above (less any amounts already advanced to the
indemnitee as provided above), and the indemnitee shall become obligated to pay
to Seller any refund (including interest thereon, to the extent actually paid
by the relevant governmental authority) received or credited with respect to
such claim (plus any amounts advanced to the indemnitee, as provided above, not
depleted in satisfaction of the obligations of the Seller to the indemnitee).
The obligations of the indemnitee and the Seller shall first be set off against
each other and any difference owing by either party shall be paid within 30
days after such final determination.
(h) If any such claim referred to in subsection 8.5(d) hereof
shall be made by any Federal, state, local, foreign or other governmental
authority and Seller, after having received notice thereof, shall have failed
(i) to request the indemnitee to contest or not to contest such claim, as above
provided, or (ii) to comply with any of the other material terms of this
Section 8.3, Seller shall become obligated to pay the indemnitee upon a Final
Resolution, an amount which shall be equal to the Taxes which ultimately are
paid as a result of contesting such claim and, from time to time upon demand,
the costs which the indemnitee may incur in connection with contesting such
claim.
(i) In the event that Seller pays a Tax Liability pursuant to
this Section 8.5 which arises from the disallowance in one fiscal year of a
deduction or tax credit, which payment results in a reduction of the Federal or
state income tax liability of the Company (or the consolidated group of which
the Company is a member) for one of the first four (4) tax periods beginning
after the Closing Date ("a "Tax Recoupment"), Buyer or the Company shall pay to
the Seller an amount equal to the Tax Recoupment, within 30 days after Final
Resolution of all Buyer Indemnity Claims with respect to Tax Liabilities or,
with respect to Tax Recoupments arising during the fourth tax period beginning
after the Closing. within 30 days after the filing of the federal and state
income tax returns for such period.
8.6 Limitations on Indemnification. Notwithstanding anything in this
Agreement to the contrary, Seller shall have no obligation to indemnify the
Buyer or the Company for a Buyer Indemnity Claim to the extent the matter
giving rise to such claim (a) relates to any matter which is provided for,
reserved or otherwise taken into account in the Closing Balance Sheet, (b)
relates to any loss to the extent Buyer or the Company is covered by insurance,
(c) arises or is increased as a result of any change in the basis or method of
application or calculation of, or an increase in rates of, taxation after the
Closing Date or the passing of any legislation
45
<PAGE> 55
or any change in generally accepted accounting principles after the Closing
Date, or (d) arises or is increased as a result of a change in Environmental
Law after the Closing Date. The amount of any indemnification required to be
paid by Seller under this Article VIII shall be reduced by the amount by which
the Federal or state income tax of the Company (or the consolidated group of
which the Company is a member) is actually reduced due to a reduction of its
net income for the tax period in which the liability or obligation giving rise
to the indemnification is satisfied by the Company. In no event shall the
liability of Seller under this Article VIII exceed the Purchase Price (except
in the case of Tax Liabilities described in Section 8.5(c)(ii)).
8.7 Exclusive Remedy. After the Closing, the indemnification provisions
of this Agreement shall constitute the sole and exclusive remedy of Buyer for
any breach by Seller or Company of any representation or warranty or covenant
contained in this Agreement. Buyer shall not be entitled to assert against
Seller any claim for damages, indemnification or otherwise relating to the
transactions under this Agreement except pursuant and subject to the provisions
of this Article VIII or to the extent such claim is based on fraud. Without
limiting the generality of the foregoing, Buyer agrees that the rights accorded
to it by Section 8.2 are the sole and exclusive remedy against Seller with
respect to all liabilities under any Environmental Laws. Buyer (on its own
behalf and on behalf of the Company after the Closing) and its successors and
assigns hereby waive any right to seek contribution or other recovery from
Seller or any of its affiliates under any Environmental Law, and Buyer
unconditionally releases Seller from any and all claims, demands and causes of
actions that it may now have or in the future have against Seller for recovery
under any Environmental Law except pursuant to Section 8.2 hereof. After the
Closing, Seller and its successors and assigns hereby waive any right to seek
contribution or other recovery from the Company in connection with any
representation made jointly and severally hereunder by the Company and Seller
or any covenant made by the Company if Buyer is entitled to indemnification
under this Article for a breach or violation of any such representation or
covenant.
ARTICLE IX
CERTAIN COVENANTS
9.1 Access by Seller. The Company shall, from and after the Closing
Date, provide reasonable access to Seller (and to the Seller's Accountants for
purposes of preparation and audit of the Closing Balance Sheet and the
preparation or audit of the Tax returns of the Company for the period ending on
or prior to the Closing Date) during normal business hours, to the books and
records and personnel of the Company, to the extent that such access is
reasonably requested in writing in advance by Seller.
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<PAGE> 56
9.2 Maintenance of Records. Buyer shall cause the Company to maintain
all books and records of the Company existing as of the Closing Date for a
period of ten years after the Closing and shall not destroy such books and
records during such period without giving Seller sixty (60) days prior written
notice.
ARTICLE X
MISCELLANEOUS
10.1 Expenses. Seller shall be responsible for the expenses which Seller
and the Company incur in connection with the transactions provided for herein
or contemplated hereby including, without limitation, the fees and expenses of
counsel, accountants and investment bankers, and Seller shall not cause or
permit the Company to pay or be liable for such costs. Buyer shall bear the
expenses which it incurs in connection with the transactions provided for
herein or contemplated hereby, including the fees and expenses of its counsel
and accountants. The fees for filing of pre-merger notification reports under
the HSR Act shall be paid by Buyer.
10.2 Brokers. Neither Buyer nor Seller nor the Company has employed a
finder or broker or other person entitled to a commission or fee in respect of
this Agreement and the transactions contemplated hereby.
10.3 Notices. Any notice, request, demand or other communication given
by any party under this Agreement (each a "notice") shall be in writing, may be
given by a party or its legal counsel, and shall be deemed to be duly given (i)
when personally delivered, or (ii) upon delivery by United States Express Mail
or similar overnight courier service which provides evidence of delivery, or
(iii) when five days have elapsed after its transmittal by registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party to whom directed at that party's address as it appears below or another
address of which that party has given written notice to the other parties
hereto, or (iv) when transmitted by telex (or equivalent service), the sender
having received the answer back of the addressee, or (v) when delivered by
facsimile transmission if a copy thereof is also delivered in person or by
overnight courier. Notices of address change shall be effective only upon
receipt notwithstanding the provisions of the foregoing sentence.
(a) Notice to Buyer shall be sufficient if given to:
International Wire Group, Inc.
101 South Hanley Road, Suite 400
St. Louis, Missouri 63105
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<PAGE> 57
Facsimile No.: (314) 746-2251
Attention: David M. Sindelar
with copies to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Facsimile No.: (214) 740-7313
Attention: Lawrence D. Stuart, Jr.
Mills & Partners, Inc.
101 South Hanley Road
St. Louis, Missouri 63105
Facsimile No.: (314) 746-2299
Attention: David M. Sindelar
Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Facsimile No.: (214) 746-7777
Attention: David J. Webster
(b) Notice to Seller or the Company (prior to Closing) shall be
sufficient if given to:
Oneida, Ltd.
Kenwood Avenue
Oneida, New York 13421
Attn: Catherine H. Suttmeier, General Counsel
Facsimile: (315) 361-3700
10.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
assigns. This Agreement or any part thereof may not be assigned without the
prior written consent of the other party, which consent may be withheld in the
sole discretion of the other party; provided, however, this Agreement may be
assigned to any affiliate of Buyer but such assignment shall not relieve Buyer
of any of its obligations hereunder.
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10.5 Entire Agreement and Modification. This Agreement, the Schedules to
be provided hereunder, Exhibits hereto and agreements executed concurrently
herewith (all of which are incorporated by reference into and considered part
of this Agreement) supersede all prior agreements and understandings between
the parties or any of their respective affiliates (written or oral) relating to
the subject matter of this Agreement and are intended to be the entire and
complete statement of the terms of the agreement between the parties, and may
be amended or modified only by a written instrument executed by the parties.
The waiver by one party of any breach of this Agreement by any other party
shall not be considered to be a waiver of any succeeding breach (whether of a
similar or a dissimilar nature) of any such provision or other provision or a
waiver of any such provision itself. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto.
10.6 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.
10.7 Governing Law. This Agreement and the respective rights, duties and
obligations of the parties hereunder, shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to the
conflicts of laws provisions thereof.
10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and such
counterparts shall together constitute one and the same instrument.
10.9 Further Assurances. Each of the parties shall, at any time and from
time-to-time after the Closing Date and at the expense of the other parties but
without further consideration, execute and deliver such further instruments,
assignments or documents and other papers and take such further actions as may
be reasonably required to carry out the provisions hereof and the transactions
contemplated hereby. Each party shall use its reasonable efforts to fulfill or
obtain the fulfillment of the conditions to the Closing.
10.10 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition and
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
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<PAGE> 59
10.11 Confidentiality. Seller and Buyer agree to keep the terns of this
Agreement and any amendments to it or transactions arising from it confidential
except as required by applicable securities laws or to discharge the obligation
of each of the parties to file submissions and data with respect to the
proposed transaction pursuant to the HSR Act or as otherwise agreed by the
parties.
10.12 No Third Party Beneficiaries. Neither this Agreement nor any
provision hereof is intended to confer upon any person (other than the parties
hereto) any rights or remedies hereunder.
10.13 Termination by Buyer. If Seller fails to comply with Section 2.2(b)
or if any of the conditions to Closing specified in Article VII are not
satisfied in all material respects, at or prior to January 25, 1997 (unless
Seller is diligently undertaking to comply with Section 2.2(b) or to satisfy
the conditions to Closing specified in Article VII in which case such date will
be extended for 15 days), and such failure is not waived in writing by Buyer,
then Buyer may, without liability of Buyer to any party, terminate this
Agreement, provided Buyer has satisfied (or stood ready to satisfy) all of
Seller's conditions to Closing specified in Article VI, or such conditions have
otherwise been satisfied or waived, by written notice to Buyer.
10.14 Termination by Seller. If Buyer fails to comply with Section 2.2(a)
or if any of the conditions to Closing specified in Article VI are not
satisfied in all material respects at or prior to January 25, 1997(unless Buyer
is diligently undertaking to comply with Section 2.2(a) or to satisfy the
conditions to Closing specified in Article VI, in which case such date shall be
extended for 15 days), and such failure is not waived in writing by Seller,
then Seller may, without liability of Seller to any party, terminate this
Agreement, provided Seller has satisfied (or stood ready to satisfy) all of
Buyer's conditions to Closing specified in Article VII, or such conditions have
otherwise been satisfied or waived, by written notice to Seller.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
ONEIDA LTD.
By: /s/ WILLIAM D. MATTHEWS
----------------------------
William D. Matthews
Chairman
CAMDEN WIRE CO., INC.
By: /s/ WILLIAM D. MATTHEWS
----------------------------
William D. Matthews
Chairman
INTERNATIONAL WIRE GROUP, INC.
By: /s/ ELLEN LIPSITZ
----------------------------
Ellen Lipsitz
Vice President
51
<PAGE> 1
EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
OF
ONEIDA WIRE CO., INC.
UNDER SECTION 402 OF THE BUSINESS CORPORATION LAW
THE UNDERSIGNED natural person, being of the age of twenty-one
years or over, acting as incorporator of a corporation (the "Corporation")
under the provisions of the New York Business Corporation Law (this law as
amended from time to time is referred to herein as the "B.C.L."), does hereby
set forth:
1. Name. The name of the Corporation shall be Oneida Wire Co.,
Inc.
2. Duration. The period of duration of the Corporation is
perpetual.
3. Purposes and Powers.
A. The purposes for which the Corporation is formed are
as follows:
(1) To manufacture, fabricate, plate, buy, sell,
import, export, trade and deal in wire, and wire and
cable products of all kinds and types.
(2) To make all contracts and do all things
proper, incidental, and conductive to the complete
attainment of such purposes.
B. The Corporation, subject to any specific written
limitations or restrictions imposed by the B.C.L. or by this
Certificate of Incorporation, and solely in furtherance of but
not in addition to the purposes set forth above, shall have
and exercise the following powers:
(1) To have and exercise all the powers specified
in the B.C.L.
(2) To acquire (by purchase, exchange, lease,
hire or otherwise), hold, own, use, assign, lease,
sell, convey or mortgage, either alone or in
conjunction with others, the rights, property, and
business of any
<PAGE> 2
domestic or foreign corporations, associations,
partnerships, individuals, or other entities.
(3) To have and exercise all powers necessary or
convenient to effect any or all of the purposes for
which the Corporation is organized.
C. The powers enumerated above shall be construed as
purposes as well as powers and the enumeration of specific
purposes or powers above shall not be construed as limiting or
restricting in any manner either the meaning of general terms
used or the scope of the general powers and purposes of the
Corporation created by them; nor shall the expression of one
thing in any of the above clauses be deemed to exclude another
not expressed although it be of like nature.
D. The Corporation may carry out its purposes and
exercise its powers in any state, territory, district or
possession of the United States, or in any foreign country, to
the extent that these purposes and powers are not forbidden by
the law of the state, territory, district or possession of the
United States, or by the foreign country; and it may limit the
purposes or purposes that it proposes to carry out or the
powers it proposes to exercise in any application to do
business in any state, territory, district or possession of
the United States, or foreign country.
4. Board of Directors.
The Board of Directors shall have the power to adopt, amend or
repeal the bylaws of the Corporation by a vote of a majority
of the directors present at the time of the vote. A majority
of the number of directors fixed by the bylaws shall
constitute a quorum for such action.
5. Office. The office of the Corporation is to be located in the
Village of Camden, Oneida County, New York.
6. Authorized Shares. The aggregate number of shares which the
Corporation shall have the authority to issue shall be 1,000
shares. Such shares are to consist of one class only without
par value.
7. Agent. The Secretary of State of the State of New York is
hereby designated as the agent of the Corporation upon whom
process against it may be served. The post office address to
which the Secretary of State shall mail a copy of any process
against it served upon it:
2
<PAGE> 3
12 Masonic Avenue
Camden, New York 13316
8. THE TAX YEAR FOR THE CORPORATION SHALL END ON DECEMBER 31.
Incorporator: /s/ M. Jack Rudnick
-------------------------------
M. Jack Rudnick
Kenwood Station
Oneida, New York 13421
STATE OF NEW YORK )
COUNTY OF MADISON ) ss.:
CITY OF ONEIDA )
On this 23rd day of August, 1976, before me, the subscriber,
personally appeared M. Jack Rudnick, to me known and known to me to be the
person described in and who executed the foregoing Certificate of
Incorporation, and he duly acknowledged to me that he executed the same.
-----------------------------------
Notary Public in and for the
State of New York
My commission expires:
------------
3
<PAGE> 1
EXHIBIT 3.8
AMENDED AND RESTATED
BY-LAWS
OF
CAMDEN WIRE CO., INC.
A NEW YORK CORPORATION
PREAMBLE
These By-laws have been amended and restated as of February 12,
1997. These By-laws are subject to, and governed by, the New York Business
Corporation Law (the "Business Corporation Law") and the Certificate of
Incorporation of Camden Wire Co., Inc., a New York corporation (the
"Corporation"). In the event of a direct conflict between the provisions of
these By-laws and the mandatory provisions of the Business Corporation Law or
the provisions of the Certificate of Incorporation of the Corporation, such
provisions of the Business Corporation Law or the Certificate of Incorporation
of the Corporation, as the case may be, will be controlling.
ARTICLE I
Shareholders
SECTION 1. Annual Meeting. The annual meeting of shareholders
for the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held at the office of the
Corporation in the State of New York or at such other place within or without
the State of New York as may be determined by the Board of Directors and as
shall be designated in the notice of said meeting, on such date and at such
time as may be determined by the Board of Directors.
SECTION 2. Special Meetings. Special meetings of the
shareholders for the transaction of such business as may properly come before
the meeting shall be held at the office of the Corporation in the State of New
York, or at such
<PAGE> 2
other place within or without the State of New York as may be designated from
time to time by the Board of Directors. Whenever the Board of Directors shall
fail to fix such place, or whenever shareholders entitled to call a special
meeting shall call the same, the meeting shall be held at the office of the
Corporation in the State of New York. Special meetings of the shareholders
shall be held upon call of the Board of Directors or of the President or any
Vice-President or the Secretary or any director, at such time as may be fixed
by the Board of Directors or the President or such Vice-President or the
Secretary or such director, as the case may be, and as shall be stated in the
notice of said meeting, except when the Business Corporation Law confers upon
the shareholders the right to demand the call of such meeting and fix the date
thereof.
SECTION 3. Notice of Meetings. The notice of all meetings shall
be in writing, shall state the place, date and hour of the meeting and, unless
it is the annual meeting, shall indicate that it is being issued by or at the
direction of the person or persons calling the meeting. The notice of an
annual meeting shall state that the meeting is called for the election of
directors and for the transaction of such other business as may properly come
before the meeting and shall state the purpose or purposes of the meeting if
any other action is to be taken at such annual meeting which could be taken at
a special meeting. The notice of a special meeting shall, in all instances,
state the purpose or purposes for which the meeting is called. If the Board of
Directors shall adopt, amend or repeal a By-law regulating an impending
election of directors, the notice of the next meeting for the election of
directors shall contain the By-law so adopted, amended or repealed, together
with a concise statement of the changes made. If any action is proposed to be
taken which would, if taken, entitle shareholders to receive payment for their
shares, the notice shall include a statement of that purpose and to that effect
and shall be accompanied by a copy of Section 623 of the Business Corporation
Law or an outline of its material terms. A copy of the notice of any meeting
shall be served either personally or by first class mail, not less than 10 nor
more than 50 days before the date of the meeting, to each shareholder at such
shareholder's record address or at such other address as such shareholder may
have furnished by request in writing to the Secretary of the Corporation. If a
meeting is adjourned to another time or place and if any announcement of the
adjourned time or place is made at the meeting, it shall not be necessary to
give notice of the
2
<PAGE> 3
adjourned meeting unless the Board of Directors, after adjournment, fixes a new
record date for the adjourned meeting. Notice of a meeting need not be given
to any shareholder who submits a signed waiver of notice before or after the
meeting. The attendance of a shareholder at a meeting without protesting prior
to the conclusion of the meeting the lack of notice of such meeting shall
constitute a waiver of notice by such shareholder.
SECTION 4. Shareholder Lists. A list of shareholders as of the
record date, certified by the corporate officer responsible for its
preparation, or by the transfer agent, if any, shall be produced at any meeting
of shareholders upon the request thereat or prior thereto of any shareholder.
If the right to vote at any meeting is challenged, the inspectors of election,
if any, or the person presiding thereat, shall require such list of
shareholders to be produced as evidence of the right of the persons challenged
to vote at such meeting, and all persons who appear from such list to be
shareholders entitled to vote thereat may vote at such meeting.
SECTION 5. Quorum. Except as otherwise provided by law or the
Corporation's Certificate of Incorporation, a quorum for the transaction of
business at any meeting of shareholders shall consist of the holders of record
of a majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote at the meeting, present in person or by proxy. At
all meetings of the shareholders at which a quorum is present, all matters,
except as otherwise provided by law or in the Certificate of Incorporation,
shall be decided by the vote of the holders of a majority of the shares
entitled to vote thereat, present in person or by proxy. If there be no such
quorum, the holders of a majority of such shares so present or represented may
adjourn the meeting from time to time, without further notice, until a quorum
shall have been obtained. When a quorum is once present to organize a meeting,
it is not broken by the subsequent withdrawal of any shareholder.
SECTION 6. Organization. Meetings of shareholders shall be
presided over by the Chairman, if any, or if none or in the Chairman's absence
the President, or if none or in the President's absence a Vice-President, or,
if none of the foregoing is present, by a chairman to be chosen by the
shareholders entitled to vote who are present in person or by proxy at the
meeting. The Secretary of the
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Corporation, or in the Secretary's absence an Assistant Secretary, shall act as
secretary of every meeting, but if neither the Secretary nor an Assistant
Secretary is present, the presiding officer of the meeting shall choose any
person present to act as secretary of the meeting.
SECTION 7. Voting; Proxies; Required Vote; Ballots. At each
meeting of shareholders, every shareholder shall be entitled to vote in person
or by proxy appointed by instrument in writing, subscribed by such shareholder
or by such shareholder's duly authorized attorney-in-fact, and shall have one
vote for each share entitled to vote and registered in such shareholder's name
on the books of the Corporation on the applicable record date fixed pursuant to
these By-laws. No proxy shall be valid after the expiration of 11 months from
the date thereof unless otherwise provided in the proxy. Every proxy shall be
revocable at the pleasure of the shareholder executing it, except as otherwise
provided by the Business Corporation Law. At all elections of directors the
voting may but need not be by ballot and a plurality of the votes cast thereat
shall elect. Except as otherwise required by law or the Certificate of
Incorporation, any other action shall be authorized by a majority of the votes
cast.
SECTION 8. Inspectors. The Board of Directors, in advance of
any meeting, may appoint one or more inspectors to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not so appointed, the
person presiding at the meeting may, and on the request of any shareholder
shall, appoint one or more inspectors. In case any person appointed fails to
appear or act, the vacancy may be filled by appointment made by the Board of
Directors in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, if any, before entering upon the discharge of such
inspector's duties, shall take and sign an oath to execute faithfully the
duties of inspector at such meeting with strict impartiality and according to
the best of such inspector's ability. The inspectors, if any, shall determine
the number of shares outstanding and the voting power of each, the shares
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all shareholders. On
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request of the person presiding at the meeting or any shareholder, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate as to any fact found by them.
SECTION 9. Actions Without Meetings. Whenever shareholders are
required or permitted to take any action by vote, such action may be taken
without a meeting on written consent, setting forth the action so taken, signed
by the holders of all outstanding shares entitled to vote thereon. This
section shall not be construed to alter or modify any provision of law or of
the Certificate of Incorporation under which the written consent of the holders
of less than all outstanding shares is sufficient for corporate action.
SECTION 10. Meaning of Certain Terms. As used herein in respect
of the right to notice of a meeting of shareholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the terms "share" and "shareholder" or
"shareholders" refer to an outstanding share or shares and to a holder or
holders of record of outstanding shares, respectively, when the Corporation is
authorized to issue only one class of shares, and said references are also
intended to include any outstanding share or shares and any holder or holders
of record of outstanding shares of any class upon which or upon whom the
Certificate of Incorporation confers such rights, where there are two or more
classes or series of shares, or upon which or upon whom the Business
Corporation Law confers such rights, notwithstanding that the Certificate of
Incorporation may provide for more than one class or series of shares, one or
more of which are limited in or denied such rights thereunder.
ARTICLE II
Board of Directors
SECTION 1. General Powers. The business, property and affairs
of the Corporation shall be managed by or under the direction of its Board of
Directors.
SECTION 2. Qualification; Number; Term. (a) Each director
shall be at least 18 years of age. A director need not be a shareholder, a
citizen of the United States, or a resident of the State of New York. The
number of directors constituting the entire Board of Directors shall
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be at least three, except that where all the shares are owned beneficially and
of record by fewer than three shareholders, the number of directors may be less
than three but not less than the number of shareholders. Subject to the
foregoing limitation and except for the first Board of Directors, such number
may be fixed from time to time by action of the Board of Directors or of the
shareholders, or, if the number of directors is not so fixed, the number shall
be three. The number of directors may be increased or decreased by action of
the Board of Directors or shareholders, provided that any action of the Board
of Directors to effect such increase or decrease shall require the vote of a
majority of the entire Board of Directors. The use of the phrase "entire Board
of Directors" herein refers to the total number of directors which the
Corporation would have if there were no vacancies.
(b) The first Board of Directors shall be elected by the
incorporator or incorporators of the Corporation and shall hold office until
the first annual meeting of shareholders or until their respective successors
have been elected and qualified. Thereafter, directors who are elected at an
annual meeting of shareholders, and directors who are elected in the interim to
fill vacancies and newly created directorships, shall hold office until the
next annual meeting of shareholders or until their respective successors have
been elected and qualified. In the interim between annual meetings of
shareholders or special meetings of shareholders called for the election of
directors, newly created directorships and any vacancies in the Board of
Directors, including vacancies resulting from the removal of directors for
cause or without cause, may be filled by the vote of a majority of the
directors then in office, although less than a quorum exists.
SECTION 3. Quorum and Manner of Voting. A majority of the
entire Board of Directors shall constitute a quorum for the transaction of
business. A majority of the directors present, whether or not a quorum is
present, may adjourn a meeting to another time and place without notice.
Except as herein otherwise provided, the vote of a majority of the directors
present at the time of the vote, at a meeting duly assembled, a quorum being
present at such time, shall be the act of the Board of Directors.
SECTION 4. Places of Meetings. Meetings of the Board of
Directors shall be held at such place within or without the State of New York
as may from time to time be
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fixed by resolution of the Board of Directors, or as may be specified in the
notice of the meeting. Regular meetings of the Board of Directors shall be
held at such times and places as may from time to time be fixed by resolution
of the Board of Directors, and special meetings may be held at any time and
place upon the call of the Chairman of the Board, if any, or of the President
or any Vice-President or the Secretary or any director by oral, telegraphic or
notice duly served as set forth in these By-laws.
SECTION 5. Annual Meeting. Following the annual meeting of
shareholders, the newly elected Board of Directors shall meet for the purpose
of the election of officers and the transaction of such other business as may
properly come before the meeting. Such meeting may be held without notice
immediately after the annual meeting of shareholders at the same place at which
such shareholders' meeting is held.
SECTION 6. Notice of Meetings. A notice of the place, date,
time and purpose or purposes of each meeting of the Board of Directors shall be
given to each director by mailing the same at least two days before the
meeting, or by telegraphing or telephoning the same or by delivering the same
personally not later than the day before the day of the meeting. Notice need
not be given of regular meetings of the Board of Directors held at times and
places fixed by resolution of the Board of Directors. Any requirements of
furnishing a notice shall be waived by any director who signs a waiver of
notice before or after the meeting, or who attends the meeting without
protesting, prior thereto or at its commencement, the lack of notice to such
director. The notice of any meeting need not specify the purpose of the
meeting, and any and all business may be transacted at such meeting.
SECTION 7. Organization. At all meetings of the Board of
Directors, the Chairman, if any, or if none or in the Chairman's absence or
inability to act the President, or in the President's absence or inability to
act any Vice-President who is a member of the Board of Directors, or in such
Vice-President's absence or inability to act a chairman chosen by the
directors, shall preside. The Secretary of the Corporation shall act as
secretary at all meetings of the Board of Directors when present, and in the
Secretary's absence, the presiding officer may appoint any person to act as
secretary.
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SECTION 8. Resignation. Any director may resign at any time
upon written notice to the Corporation and such resignation shall take effect
upon receipt thereof by the President or Secretary, unless otherwise specified
in the resignation. Except as otherwise provided by law or by the Certificate
of Incorporation, any or all of the directors may be removed, with or without
cause, by the holders of a majority of the shares of stock outstanding and
entitled to vote for the election of directors.
SECTION 9. Vacancies. Unless otherwise provided in these
By-laws, vacancies among the directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number of directors or
otherwise, may be filled by the affirmative vote of a majority of the remaining
directors, although less than a quorum, or by a sole remaining director, or, at
a special meeting of the shareholders, by the holders of shares entitled to
vote for the election of directors.
SECTION 10. Actions by Written Consent. Any action required or
permitted to be taken by the Board of Directors or by any committee thereof may
be taken without a meeting if all members of the Board of Directors or of any
such committee consent in writing to the adoption of a resolution authorizing
the action and the writing or writings are filed with the minutes of the
proceedings of the Board of Directors or of any such committee.
SECTION 11. Electronic Communication. Any one or more members
of the Board of Directors or any committee thereof may participate in a meeting
of the Board of Directors or any such committee by means of a conference
telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other at the same time.
Participation by such means shall constitute presence in person at a meeting.
ARTICLE III
Committees
SECTION 1. Appointment. From time to time the Board of
Directors by a resolution adopted by a majority of the whole Board may appoint
any committee or committees for any purpose or purposes, to the extent lawful,
which shall have powers as shall be determined and specified by the
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Board of Directors in the resolution of appointment. The Board of Directors
shall have full power, at any time, to fill vacancies in, to change membership
of, to designate alternate members of, or to discharge any such committee.
SECTION 2. Procedures, Quorum and Manner of Acting. Each
committee shall fix its own rules of procedure, and shall meet where and as
provided by such rules or by resolution of the Board of Directors. Except as
otherwise provided by law, the presence of a majority of the then appointed
members of a committee shall constitute a quorum for the transaction of
business by that committee, and in every case where a quorum is present the
affirmative vote of a majority of the members of the committee present shall be
the act of the committee. Each committee shall keep minutes of its
proceedings, and actions taken by a committee shall be reported to the Board of
Directors.
SECTION 3. Action by Written Consent. Any action required or
permitted to be taken at any meeting of any committee of the Board may be taken
without a meeting if all the members of the committee consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the committee.
SECTION 4. Term; Termination. In the event any person shall
cease to be a director of the Corporation, such person shall simultaneously
therewith cease to be a member of any committee appointed by the Board of
Directors.
ARTICLE IV
Officers
SECTION 1. Election and Qualifications. The Board of Directors
shall elect the officers of the Corporation, which shall include a President
and a Secretary, and may include, by election or appointment, one or more Vice-
Presidents (any one or more of whom may be given an additional designation of
rank or function), a Treasurer and such other officers as the Board may from
time to time deem proper. Each officer shall have such powers and duties as
may be prescribed by these By-laws and as may be assigned by the Board of
Directors or the President. Any two or more offices may be held by the same
person except the offices of President and Secretary. When all of the issued
and
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outstanding stock of the Corporation is owned by one person, such person may
hold all or any combination of offices.
SECTION 2. Term of Office and Remuneration. The term of office
of all officers shall be one year and until their respective successors have
been elected and qualified, but any officer may be removed from office, either
with or without cause, at any time by the Board of Directors. Any vacancy in
any office arising from any cause may be filled for the unexpired portion of
the term by the Board of Directors.
SECTION 3. Resignation; Removal. Any officer may resign at any
time upon written notice to the Corporation and such resignation shall take
effect upon receipt thereof by the President or Secretary, unless otherwise
specified in the resignation. Any officer shall be subject to removal, with or
without cause, at any time by vote of a majority of the whole Board.
SECTION 4. Chairman of the Board. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the Board of
Directors and shall have such other powers and duties as may from time to time
be assigned by the Board of Directors.
SECTION 5. President and Chief Executive Officer. The President
shall be the chief executive officer of the Corporation and shall have general
management and supervision of the property, business and affairs of the
Corporation and over its other officers. The President shall preside at all
meetings of the shareholders and, in the absence or disability of the Chairman
of the Board of Directors, or if there be no Chairman, shall preside at all
meetings of the Board of Directors. The President may execute and deliver in
the name of the Corporation powers of attorney, contracts, bonds and other
obligations and instruments.
SECTION 6. Vice-President. A Vice-President may execute and
deliver in the name of the Corporation contracts and other obligations and
instruments pertaining to the regular course of such Vice-President's duties,
and shall have such other authority as from time to time may be assigned by the
Board of Directors or the President.
SECTION 7. Treasurer. The Treasurer shall in general have all
duties incident to the position of
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Treasurer and such other duties as may be assigned by the Board of Directors or
the President.
SECTION 8. Secretary. The Secretary shall in general have all
the duties incident to the office of Secretary and such other duties as may be
assigned by the Board of Directors or the President.
SECTION 9. Assistant Officers. Any assistant officer shall have
such powers and duties of the officer such assistant officer assists as such
officer or the Board of Directors shall from time to time prescribe.
ARTICLE V
Books and Records
SECTION 1. Location. The Corporation shall keep correct and
complete books and records of account and shall keep minutes of the proceedings
of the shareholders, of the Board of Directors, and/or of any committee which
the Board of Directors may appoint, and shall keep at the office of the
Corporation in the State of New York or at the office of the transfer agent or
registrar, if any, in said state a record containing the names and addresses of
all shareholders, the number and class of shares held by each, and the dates
when such shareholders respectively became the owners of record thereof. Any
of the foregoing books, minutes or records may be in written form or in any
other form capable of being converted into written form within a reasonable
time.
SECTION 2. Addresses of Shareholders. Notices of meetings and
all other corporate notices may be delivered personally or mailed to each
shareholder at said shareholder's address as it appears on the records of the
Corporation.
SECTION 3. Fixing Date for Determination of Shareholders of
Record. For the purpose of determining the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment thereof, or to
express to consent to or dissent from any proposal without a meeting, or for
the purpose of determining shareholders entitled to receive payment of any
dividend or the allotment of any rights, or for the purpose of any other
action, the Board of Directors may fix, in advance, a record date, which shall
be
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not more than 50 nor less than 10 days before the date of such meeting, nor
more than 50 days prior to any other action. If no record date is fixed, the
record date for determining shareholders entitled to notice of or to vote at a
meeting of shareholders shall be at the close of business on the day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the day on which the meeting is held. The record date
for determining shareholders for any purpose other than that specified in the
preceding sentence shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
shareholders of record entitled to notice of or to vote at a meeting of
shareholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
ARTICLE VI
Certificates Representing Shares
SECTION 1. Certificates; Signatures. (a) The shares of the
Corporation shall be represented by certificates representing shares, in such
form not inconsistent with the Certificate of Incorporation as the Board of
Directors may from time to time prescribe, or shall be uncertificated shares.
Certificates representing shares shall have set forth thereon the statements
prescribed by law and shall be signed by the Chairman of the Board or the
President or a Vice-President and by the Secretary or an Assistant Secretary or
a Treasurer or an Assistant Treasurer and may be sealed with the corporate seal
or a facsimile thereof. Any and all signatures on any such certificate may be
facsimiles if the certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation itself or its employee, or
the shares are listed on a registered national securities exchange. In case
any officer who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer before such certificate is
issued, it may be issued by the Corporation with the same effect as if such
officer were an officer at the date of its issue.
(b) Each certificate representing shares issued by the
Corporation, if the Corporation is authorized to issue shares of more than one
class, shall set forth upon the face or back of the certificate, or shall state
that the
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Corporation will furnish to any shareholder upon request and without charge, a
full statement of the designation, relative rights, preferences and limitations
of the shares of each class authorized to be issued and, if the Corporation is
authorized to issue any class of preferred shares in series, the designation,
relative rights, preferences and limitations of each such series so far as the
same have been fixed and the authority of the Board of Directors to designate
and fix the relative rights, preferences and limitations of other series.
(c) Each certificate representing shares shall state upon the
face thereof:
(1) That the Corporation is formed under the laws of the State
of New York;
(2) The name of the person or persons to whom issued; and
(3) The number and class of shares, and the designation of the
series, if any, which such certificate represents.
(d) The name of the holder of record of the shares represented
thereby, with the number of shares and the date of issue, shall be entered on
the books of the Corporation.
SECTION 2. Transfer of Shares. Upon compliance with provisions
restricting the transferability of shares, if any, transfers of shares of the
Corporation shall be made only on the share record of the Corporation by the
registered holder thereof, or by such holder's attorney-in-fact thereunto
authorized by power of attorney duly executed and filed with the Secretary of
the Corporation or with a transfer agent or a registrar, if any, and upon the
surrender of the certificate or certificates for such shares properly endorsed
and the payment of all taxes due thereon. A certificate representing shares
shall not be issued until the full amount of consideration therefor has been
paid, except as the Business Corporation Law may otherwise permit.
SECTION 3. Fractional Shares. The Corporation may, but shall
not be required to, issue certificates for fractions of a share where necessary
to effect transactions authorized by the Business Corporation Law, which shall
entitle the holder, in proportion to such holder's frac-
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tional holdings, to exercise voting rights, receive dividends and participate
in liquidating distributions; or the Corporation may pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
fractions are determined; or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a shareholder except as therein
provided. The Board of Directors shall have power and authority to make all
such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation.
SECTION 4. Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new certificate of stock in place of any certificate,
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Board of Directors may require the owner of any lost, stolen or destroyed
certificate, or his legal representative, to give the Corporation a bond
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate.
ARTICLE VII
Dividends
Subject always to the provisions of law and the Certificate of
Incorporation, the Board of Directors shall have full power to determine
whether any, and, if any, what part of any, funds legally available for the
payment of dividends shall be declared as dividends and paid to shareholders;
the division of the whole or any part of such funds of the Corporation shall
rest wholly within the lawful discretion of the Board of Directors, and it
shall not be required at any time, against such discretion, to divide or pay
any part of such funds among or to the shareholders as dividends or otherwise;
and before payment of any dividend, there may be set aside out of any funds of
the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, thinks proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or
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maintaining any property of the Corporation, or for such other purpose as the
Board of Directors shall think conducive to the interest of the Corporation,
and the Board of Directors may modify or abolish any such reserve in the manner
in which it was created.
ARTICLE VIII
Ratification
Any transaction, questioned in any law suit on the ground of lack
of authority, defective or irregular execution, adverse interest of director,
officer or shareholder, non-disclosure, miscomputation, or the application of
improper principles or practices of accounting, may be ratified, before or
after judgment, by the Board of Directors or by the shareholders and if so
ratified shall have the same force and effect as if the questioned transaction
had been originally duly authorized. Such ratification shall be binding upon
the Corporation and its shareholders and shall constitute a bar to any claim or
execution of any judgment in respect of such questioned transaction.
ARTICLE IX
Corporate Seal
The corporate seal shall have inscribed thereon the name of the
Corporation and the year of its incorporation, and shall be in such form and
contain such other words and/or figures as the Board of Directors shall
determine. The corporate seal may be used by printing, engraving,
lithographing, stamping or otherwise making, placing or affixing, or causing to
be printed, engraved, lithographed, stamped or otherwise made, placed or
affixed, upon any paper or document, by any process whatsoever, an impression,
facsimile or other reproduction of said corporate seal.
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ARTICLE X
Fiscal Year
The fiscal year of the Corporation shall be fixed, and shall be
subject to change, by the Board of Directors. Unless otherwise fixed by the
Board of Directors, the fiscal year of the Corporation shall be the calendar
year.
ARTICLE XI
Waiver of Notice
Whenever notice is required to be given by these By-laws or by
the Certificate of Incorporation or by law, a written waiver thereof, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE XII
Indemnification
The Corporation, to the full extent permitted and in the manner
required by the laws of the State of New York as in effect at the time of the
adoption of this Article XII or as the law may be amended from time to time,
shall (i) indemnify any person (and the heirs and legal representatives of such
person) made, or threatened to be made, a party in an action or proceeding
(including, without limitation, one by or in the right of the Corporation to
procure a judgment in its favor), whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind,
domestic or foreign, or any partnership, joint venture, trust, employee benefit
plan or other enterprise, which any director or officer of the Corporation
served in any capacity at the request of the Corporation, by reason of the fact
that such director or officer, or such director's or officer's testator or
intestate, was a director or officer of the Corporation or served such other
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise in any capacity, and (ii) provide to any such person (and the heirs
and legal representatives of such person) advances for expenses incurred in
pursuing such action or proceeding, upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount
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as, and to the extent, required by Section 725(a) of the Business Corporation
Law.
ARTICLE XIII
Bank Accounts, Drafts, Contracts, Etc.
SECTION 1. Bank Accounts and Drafts. In addition to such bank
accounts as may be authorized by the Board of Directors, the Treasurer or any
person designated by the Treasurer, whether or not an employee of the
Corporation, may authorize such bank accounts to be opened or maintained in the
name and on behalf of the Corporation as such person may deem necessary or
appropriate, and may authorize payments from such bank accounts to be made upon
and according to the check of the Corporation in accordance with the written
instructions of the Treasurer, or other person so designated by the Treasurer.
SECTION 2. Contracts. The Board of Directors may authorize any
person or persons, in the name and on behalf of the Corporation, to enter into
or execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
SECTION 3. Proxies; Powers of Attorney; Other Instruments. The
Chairman, the President or any other person designated by either of them shall
have the power and authority to execute and deliver proxies, powers of attorney
and other instruments on behalf of the Corporation in connection with the
rights and powers incident to the ownership of stock by the Corporation. The
Chairman, the President or any other person authorized by proxy or power of
attorney executed and delivered by either of them on behalf of the Corporation
may attend and vote at any meeting of shareholders of any company in which the
Corporation may hold stock, and may exercise on behalf of the Corporation any
and all of the rights and powers incident to the ownership of such stock at any
such meeting, or otherwise as specified in the proxy or power of attorney so
authorizing any such person. The Board of Directors, from time to time, may
confer like powers upon any other person.
SECTION 4. Financial Reports. The directors may appoint the
Treasurer or other fiscal officer and/or the Secretary or any other officer to
cause to be prepared and
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furnished to shareholders entitled thereto any special financial notice and/or
financial statement, as the case may be, which may be required by any provision
of law.
ARTICLE XIV
Amendments
The shareholders entitled to vote in the election of directors
may amend or repeal the By-laws and may adopt new By-laws. Except as otherwise
required by law or by the provisions of these By-laws, the Board of Directors
may also amend or repeal the By-laws and adopt new By-laws, but By-laws adopted
by the Board of Directors may be amended or repealed by the said shareholders.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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The undersigned, the Secretary of the Corporation, hereby
certifies that the foregoing By-laws were amended and restated by written
consent by the sole stockholder of the Corporation as of February 12, 1997.
/s/ ELLEN L. LIPSITZ
-------------------------------------
Ellen L. Lipsitz, Secretary
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EXHIBIT 3.17
CERTIFICATE OF INCORPORATION
OF
WIRE HARNESS INDUSTRIES, INC.
- --------------------------------------------------------------------------------
I, the undersigned natural person acting as an incorporator of a
corporation (hereinafter called the "Corporation") under the General
Corporation Law of the State of Delaware, do hereby adopt the following
Certificate of Incorporation for the Corporation:
FIRST: The name of the Corporation is Wire Harness Industries, Inc.
SECOND: The registered office of the Corporation in the State of
Delaware is located at Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of the registered agent of
the Corporation at such address is The Corporation Trust Company.
THIRD: The purpose for which the Corporation is organized is to
engage in any and all lawful acts and activity for which corporations may be
organized under the General Corporation Law of the State of Delaware. The
Corporation will have perpetual existence.
FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 1,000 shares, par value $.01 per share,
designated Common Stock.
FIFTH: The name of the incorporator of the Corporation is Harlin R.
Dean, Jr. and the mailing address of such incorporator is 100 Crescent Court,
Suite 1300, Dallas, Texas 75201-6950.
SIXTH: The number of directors constituting the initial board of
directors is one, and the name and mailing address of the person who is to
serve as director until the first annual meeting of stockholders or until his
successor is elected and qualified is as follows:
James N. Mills 101 South Hanley Road, Suite 400
St. Louis, Missouri 63105
<PAGE> 2
SEVENTH: Directors of the Corporation need not be elected by written
ballot unless the by-laws of the Corporation otherwise provide.
EIGHTH: The directors of the Corporation shall have the power to
adopt, amend, and repeal the by-laws of the Corporation.
NINTH: No contract or transaction between the Corporation and one or
more of its directors, officers, or stockholders or between the Corporation and
any person (as used herein "person" means other corporation, partnership,
association, firm, trust, joint venture, political subdivision, or
instrumentality) or other organization in which one or more of its directors,
officers, or stockholders are directors, officers, or stockholders, or have a
financial interest, shall be void or voidable solely for this reason, or solely
because the director or officer is present at or participates in the meeting of
the board or committee which authorizes the contract or transaction, or solely
because his, her, or their votes are counted for such purpose, if: (i) the
material facts as to his or her relationship or interest and as to the contract
or transaction are disclosed or are known to the board of directors or the
committee, and the board of directors or committee in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; or (ii) the material facts as to his or her relationship or interest
and as to the contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or transaction is
specifically approved in good faith by vote of the stockholders; or (iii) the
contract or transaction is fair as to the Corporation as of the time it is
authorized, approved, or ratified by the board of directors, a committee
thereof, or the stockholders. Common or interested directors may be counted in
determining the presence of a quorum at a meeting of the board of directors or
of a committee which authorizes the contract or transaction.
TENTH: The Corporation shall indemnify any person who was, is, or is
threatened to be made a party to a proceeding (as hereinafter defined) by
reason of the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or was
serving at the request of the Corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit plan, or other enterprise, to the
fullest extent permitted under the General Corporation Law of the State of
Delaware, as the same exists or may hereafter be amended. Such right shall be
a contract right and as such shall run to the benefit of any director or
officer who is
2
<PAGE> 3
elected and accepts the position of director or officer of the Corporation or
elects to continue to serve as a director or officer of the Corporation while
this Article Tenth is in effect. Any repeal or amendment of this Article Tenth
shall be prospective only and shall not limit the rights of any such director
or officer or the obligations of the Corporation with respect to any claim
arising from or related to the services of such director or officer in any of
the foregoing capacities prior to any such repeal or amendment to this Article
Tenth. Such right shall include the right to be paid by the Corporation
expenses incurred in investigating or defending any such proceeding in advance
of its final disposition to the maximum extent permitted under the General
Corporation Law of the State of Delaware, as the same exists or may hereafter
be amended. If a claim for indemnification or advancement of expenses
hereunder is not paid in full by the Corporation within sixty (60) days after a
written claim has been received by the Corporation, the claimant may at any
time thereafter bring suit against the Corporation to recover the unpaid amount
of the claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of costs of
defense are not permitted under the General Corporation Law of the State of
Delaware, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its board of directors or any
committee thereof, independent legal counsel, or stockholders) to have made its
determination prior to the commencement of such action that indemnification of,
or advancement of costs of defense to, the claimant is permissible in the
circumstances nor an actual determination by the Corporation (including its
board of directors or any committee thereof, independent legal counsel, or
stockholders) that such indemnification or advancement is not permissible shall
be a defense to the action or create a presumption that such indemnification or
advancement is not permissible. In the event of the death of any person having
a right of indemnification under the foregoing provisions, such right shall
inure to the benefit of his or her heirs, executors, administrators, and
personal representatives. The rights conferred above shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, by-law, resolution of stockholders or directors, agreement, or
otherwise.
The Corporation may additionally indemnify any employee or agent of
the Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative, any appeal in such an action,
suit, or proceeding, and any inquiry or investigation that could lead to such
an action, suit, or proceeding.
3
<PAGE> 4
ELEVENTH: A director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which the
director derived an improper personal benefit. Any repeal or amendment of this
Article Eleventh by the stockholders of the Corporation shall be prospective
only, and shall not adversely affect any limitation on the personal liability
of a director of the Corporation arising from an act or omission occurring
prior to the time of such repeal or amendment. In addition to the
circumstances in which a director of the Corporation is not personally liable
as set forth in the foregoing provisions of this Article Eleventh, a director
shall not be liable to the Corporation or its stockholders to such further
extent as permitted by any law hereafter enacted, including without limitation
any subsequent amendment to the General Corporation Law of the State of
Delaware.
TWELFTH: The Corporation expressly elects not to be governed by
Section 203 of the General Corporation Law of the State of Delaware.
I, the undersigned, for the purpose of forming the Corporation under
the laws of the State of Delaware, do make, file, and record this Certificate
of Incorporation and do certify that this is my act and deed and that the facts
stated herein are true and, accordingly, I do hereunto set my hand on this 20th
day of December, 1996.
/s/ HARLIN R. DEAN, JR.
------------------------------------------
Harlin R. Dean, Jr.
4
<PAGE> 1
EXHIBIT 3.18
BYLAWS
OF
WIRE HARNESS INDUSTRIES, INC.
A Delaware Corporation
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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ARTICLE ONE: OFFICES
1.1 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Required Vote; Withdrawal of Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.9 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE THREE: DIRECTORS
3.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.2 Number; Qualification; Election; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Change in Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.6 Meetings of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.8 Election of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.9 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.10 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.11 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
</TABLE>
i
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<TABLE>
<S> <C> <C>
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.14 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.15 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Number; Qualification; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.4 Committee Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.5 Alternate Members of Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.6 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.7 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.8 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.11 Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE FIVE: NOTICE
5.1 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.7 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.8 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.9 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.11 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.12 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
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<TABLE>
<S> <C> <C>
ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7.2 Replacement of Lost or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.3 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.4 Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.5 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.6 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.5 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.6 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.7 Securities of Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.8 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
8.9 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.11 Mortgages, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.13 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
8.14 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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<PAGE> 5
BYLAWS
OF
WIRE HARNESS INDUSTRIES, INC.
A Delaware Corporation
PREAMBLE
These bylaws are subject to, and governed by, the General Corporation
Law of the State of Delaware (the "Delaware General Corporation Law") and the
certificate of incorporation of Wire Harness Industries, Inc., a Delaware
corporation (the "Corporation"). In the event of a direct conflict between the
provisions of these bylaws and the mandatory provisions of the Delaware General
Corporation Law or the provisions of the certificate of incorporation of the
Corporation, such provisions of the Delaware General Corporation Law or the
certificate of incorporation of the Corporation, as the case may be, will be
controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and
registered agent of the Corporation shall be as designated from time to time by
the appropriate filing by the Corporation in the office of the Secretary of
State of the State of Delaware.
1.2 Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
1
<PAGE> 6
2.2 Special Meeting. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the request
in writing of the stockholders of record of not less than ten percent of all
shares entitled to vote at such meeting or as otherwise provided by the
certificate of incorporation of the Corporation. A special meeting shall be
held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice of
such meeting or in a duly executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be
held at any place within or without the State of Delaware designated by the
board of directors. A special meeting of stockholders may be held at any place
within or without the State of Delaware designated in the notice of the meeting
or a duly executed waiver of notice of such meeting. Meetings of stockholders
shall be held at the principal office of the Corporation unless another place
is designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and
time of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or person(s) calling the meeting, to each stockholder of record
entitled to vote at such meeting. If such notice is to be sent by mail, it
shall be directed to such stockholder at his address as it appears on the
records of the Corporation, unless he shall have filed with the Secretary of
the Corporation a written request that notices to him be mailed to some other
address, in which case it shall be directed to him at such other address.
Notice of any meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy and shall not,
at the beginning of such meeting, object to the transaction of any business
because the meeting is not lawfully called or convened, or who shall, either
before or after the meeting, submit a signed waiver of notice, in person or by
proxy.
2.5 Voting List. At least ten days before each meeting of
stockholders, the Secretary or other officer of the Corporation who has charge
of the Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten days prior to such meeting, such list shall be kept on file
at a place within the city where the meeting is to
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<PAGE> 7
be held, which place shall be specified in the notice of meeting or a duly
executed waiver of notice of such meeting or, if not so specified, at the place
where the meeting is to be held and shall be open to examination by any
stockholder during ordinary business hours. Such list shall be produced at
such meeting and kept at the meeting at all times during such meeting and may
be inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these by-laws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders,
the stockholders entitled to vote thereat who are present, in person or by
proxy, or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other
than announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present
at any meeting, the vote of the holders of at least a majority of the
outstanding shares entitled to vote who are present, in person or by proxy,
shall decide any question brought before such meeting, unless the question is
one on which, by express provision of statute, the certificate of incorporation
of the Corporation, or these bylaws, a different vote is required, in which
case such express provision shall govern and control the decision of such
question. The stockholders present at a duly constituted meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in
the certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each
such proxy shall be filed with the Secretary of the Corporation before or at
the time of the meeting. No proxy shall be valid after three years from the
date of its execution, unless otherwise provided in the
3
<PAGE> 8
proxy. If no date is stated in a proxy, such proxy shall be presumed to have
been executed on the date of the meeting at which it is to be voted. Each
proxy shall be revocable unless expressly provided therein to be irrevocable
and coupled with an interest sufficient in law to support an irrevocable power
or unless otherwise made irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination
of stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law or these bylaws, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation by delivery to its registered office in the
State of Delaware, its
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principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office in the State of
Delaware, principal place of business, or such officer or agent shall be by
hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the board of directors and prior action by the
board of directors is required by law or these bylaws, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office
has been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non- acting officer under these bylaws or by some person
appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail
to appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies and shall receive votes, ballots, or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots, or consents, determine the
results, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting, the
inspectors shall make a report in writing of any challenge, request, or matter
determined by them and shall execute a certificate of any fact found by them.
No director or candidate for the office of director shall act as an inspector
of an election of directors. Inspectors need not be stockholders.
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ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation
shall be managed by the board of directors. Subject to the restrictions
imposed by law, the certificate of incorporation of the Corporation, or these
bylaws, the board of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of
directors which shall constitute the entire board of directors shall be not
less than one. The first board of directors shall consist of the number of
directors named in the certificate of incorporation of the Corporation or, if
no directors are so named, shall consist of the number of directors elected by
the incorporator(s) at an organizational meeting or by unanimous written
consent in lieu thereof. Thereafter, within the limits above specified, the
number of directors which shall constitute the entire board of directors shall
be determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the certificate
of incorporation of the Corporation, or these bylaws, the directors shall be
elected at an annual meeting of stockholders at which a quorum is present.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors. Each director so chosen shall hold office until the first annual
meeting of stockholders held after his election and until his successor is
elected and qualified or, if earlier, until his death, resignation, or removal
from office. None of the directors need be a stockholder of the Corporation or
a resident of the State of Delaware. Each director must have attained the age
of majority.
3.3 Change in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
incorporation of the Corporation or these by-laws, at any meeting of
stockholders called expressly for that purpose, any director or the entire
board of directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares then entitled to vote on the election of
directors; provided, however, that so long as stockholders have the right to
cumulate votes in the election of directors pursuant to the certificate of
incorporation of the Corporation, if less than the entire board of directors is
to be removed, no one of the directors may be removed if the votes cast against
his removal would be sufficient to elect him if then cumulatively voted at an
election of the entire board of directors.
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3.5 Vacancies. Vacancies and newly-created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
the sole remaining director, and each director so chosen shall hold office
until the first annual meeting of stockholders held after his election and
until his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. If there are no directors in office, an
election of directors may be held in the manner provided by statute. If, at
the time of filling any vacancy or any newly-created directorship, the
directors then in office shall constitute less than a majority of the whole
board of directors (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least 10% of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly-created directorships or to replace
the directors chosen by the directors then in office. Except as otherwise
provided in these bylaws, when one or more directors shall resign from the
board of directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have the power to
fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in these bylaws with respect to the filling of
other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings
and may have an office and keep the books of the Corporation, except as
otherwise provided by statute, in such place or places within or without the
State of Delaware as the board of directors may from time to time determine or
as shall be specified in the notice of such meeting or duly executed waiver of
notice of such meeting.
3.7 First Meeting. Each newly elected board of directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of stockholders, and no notice of such meeting shall be
necessary.
3.8 Election of Officers. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall be
present, the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors
shall be held at such times and places as shall be designated from time to time
by resolution of the board of directors. Notice of such regular meetings shall
not be required.
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3.10 Special Meetings. Special meetings of the board of directors
shall be held whenever called by the Chairman of the Board, the President, or
any director.
3.11 Notice. The Secretary shall give notice of each special
meeting to each director at least 24 hours before the meeting. Notice of any
such meeting need not be given to any director who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of notice
to him. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board of
directors, a majority of the directors fixed in the manner provided in these
bylaws shall constitute a quorum for the transaction of business. If at any
meeting of the board of directors there be less than a quorum present, a
majority of those present or any director solely present may adjourn the
meeting from time to time without further notice. Unless the act of a greater
number is required by law, the certificate of incorporation of the Corporation,
or these bylaws, the act of a majority of the directors present at a meeting at
which a quorum is in attendance shall be the act of the board of directors. At
any time that the certificate of incorporation of the Corporation provides that
directors elected by the holders of a class or series of stock shall have more
or less than one vote per director on any matter, every reference in these
bylaws to a majority or other proportion of directors shall refer to a majority
or other proportion of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business
shall be transacted in such order as from time to time the board of directors
may determine. The Chairman of the Board, if such office has been filled, and,
if not or if the Chairman of the Board is absent or otherwise unable to act,
the President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of
the Corporation shall act as the secretary of each meeting of the board of
directors unless the board of directors appoints another person to act as
secretary of the meeting. The board of directors shall keep regular minutes of
its proceedings which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is
present at the meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by
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certified or registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
3.15 Compensation. The board of directors shall have the authority
to fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution
adopted by a majority of the entire board of directors, designate one or more
committees.
4.2 Number; Qualification; Term. Each committee shall consist of
one or more directors appointed by resolution adopted by a majority of the
entire board of directors. The number of committee members may be increased or
decreased from time to time by resolution adopted by a majority of the entire
board of directors. Each committee member shall serve as such until the
earliest of (i) the expiration of his term as director, (ii) his resignation as
a committee member or as a director, or (iii) his removal as a committee member
or as a director.
4.3 Authority. Each committee, to the extent expressly provided
in the resolution establishing such committee, shall have and may exercise all
of the authority of the board of directors in the management of the business
and property of the Corporation except to the extent expressly restricted by
law, the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee.
4.5 Alternate Members of Committees. The board of directors may
designate one or more directors as alternate members of any committee. Any
such alternate member may replace any absent or disqualified member at any
meeting of the committee. If no alternate committee members have been so
appointed to a committee or each such alternate committee member is absent or
disqualified, the member or members of such committee present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may
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unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be
held without notice at such time and place as may be designated from time to
time by the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be
held whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee
member at least two days before such special meeting. Neither the business to
be transacted at, nor the purpose of, any special meeting of any committee need
be specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a
majority of the number of members designated by the board of directors shall
constitute a quorum for the transaction of business. If a quorum is not
present at a meeting of any committee, a majority of the members present may
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present. The act of a majority
of the members present at any meeting at which a quorum is in attendance shall
be the act of a committee, unless the act of a greater number is required by
law, the certificate of incorporation of the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its
proceedings to be prepared and shall report the same to the board of directors
upon the request of the board of directors. The minutes of the proceedings of
each committee shall be delivered to the Secretary of the Corporation for
placement in the minute books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the
board of directors, be allowed a fixed sum and expenses of attendance, if any,
for attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such
director by law.
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ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation
of the Corporation, or these bylaws, notice is required to be given to any
committee member, director, or stockholder and no provision is made as to how
such notice shall be given, personal notice shall not be required and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director, or stockholder at his address as it appears on the
books or (in the case of a stockholder) the stock transfer records of the
Corporation, or (b) by any other method permitted by law (including but not
limited to overnight courier service, telegram, telex, or telefax). Any notice
required or permitted to be given by mail shall be deemed to be delivered and
given at the time when the same is deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice
required or permitted to be given by telegram, telex, or telefax shall be
deemed to be delivered and given at the time transmitted with all charges
prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the
Corporation shall be a President, a Secretary, and such other officers as the
board of directors may from time to time elect or appoint, including a Chairman
of the Board, one or more Vice Presidents (with each Vice President to have
such descriptive title, if any, as the board of directors shall determine), and
a Treasurer. Each officer shall hold office until his successor shall have
been duly elected and shall have qualified, until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided. Any two
or more offices may be held by the same person. None of the officers need be a
stockholder or a director of the Corporation or a resident of the State of
Delaware.
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6.2 Removal. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors whenever in its
judgment the best interest of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the
Corporation (by death, resignation, removal, or otherwise) may be filled by the
board of directors.
6.4 Authority. Officers shall have such authority and perform
such duties in the management of the Corporation as are provided in these
bylaws or as may be determined by resolution of the board of directors not
inconsistent with these bylaws.
6.5 Compensation. The compensation, if any, of officers and
agents shall be fixed from time to time by the board of directors; provided,
however, that the board of directors may delegate the power to determine the
compensation of any officer and agent (other than the officer to whom such
power is delegated) to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected
by the board of directors, shall have such powers and duties as may be
prescribed by the board of directors. Such officer shall preside at all
meetings of the stockholders and of the board of directors. Such officer may
sign all certificates for shares of stock of the Corporation.
6.7 President. The President shall be the chief executive officer
of the Corporation and, subject to the board of directors, he shall have
general executive charge, management, and control of the properties and
operations of the Corporation in the ordinary course of its business, with all
such powers with respect to such properties and operations as may be reasonably
incident to such responsibilities. If the board of directors has not elected a
Chairman of the Board or in the absence or inability to act of the Chairman of
the Board, the President shall exercise all of the powers and discharge all of
the duties of the Chairman of the Board. As between the Corporation and third
parties, any action taken by the President in the performance of the duties of
the Chairman of the Board shall be conclusive evidence that there is no
Chairman of the Board or that the Chairman of the Board is absent or unable to
act.
6.8 Vice Presidents. Each Vice President shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President, and (in order of their seniority as determined by
the board of directors or, in the absence of such determination, as determined
by the length of time they have held the office of Vice President) shall
exercise the powers of the President during that officer's absence or inability
to act. As
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between the Corporation and third parties, any action taken by a Vice President
in the performance of the duties of the President shall be conclusive evidence
of the absence or inability to act of the President at the time such action was
taken.
6.9 Treasurer. The Treasurer shall have custody of the
Corporation's funds and securities, shall keep full and accurate account of
receipts and disbursements, shall deposit all monies and valuable effects in
the name and to the credit of the Corporation in such depository or
depositories as may be designated by the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the Chairman
of the Board, or the President.
6.10 Assistant Treasurers. Each Assistant Treasurer shall have
such powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Treasurers (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Treasurer) shall exercise the powers of the
Treasurer during that officer's absence or inability to act.
6.11 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board or the President, in the name of the Corporation, all contracts of the
Corporation and affix the seal of the Corporation thereto. He may sign with
the Chairman of the Board or the President all certificates for shares of stock
of the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which
shall at all reasonable times be open to inspection by any director upon
application at the office of the Corporation during business hours. He shall
in general perform all duties incident to the office of the Secretary, subject
to the control of the board of directors, the Chairman of the Board, and the
President.
6.12 Assistant Secretaries. Each Assistant Secretary shall have
such powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
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ARTICLE SEVEN: CERTIFICATES AND SHAREHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of
the Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or
the President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all
signatures on the certificate may be a facsimile and may be sealed with the
seal of the Corporation or a facsimile thereof. If any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been
placed upon, a certificate has ceased to be such officer, transfer agent, or
registrar before such certificate is issued, such certificate may be issued by
the Corporation with the same effect as if he were such officer, transfer
agent, or registrar at the date of issue. The certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued and shall exhibit the holder's name and the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
a certificate or certificates theretofore issued by the Corporation and alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates representing shares to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond with a
surety or sureties satisfactory to the Corporation in such sum as it may direct
as indemnity against any claim, or expense resulting from a claim, that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall
be transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the
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part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and
authority to provide that certificates representing shares of stock bear such
legends as the board of directors deems appropriate to assure that the
Corporation does not become liable for violations of federal or state
securities laws or other applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate
of incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out
of funds of the Corporation legally available therefor such reserve or reserves
as the directors from time to time, in their discretion, consider proper to
provide for contingencies, to equalize dividends, or to repair or maintain any
property of the Corporation, or for such other purpose as the board of
directors shall consider beneficial to the Corporation, and the board of
directors may modify or abolish any such reserve in the manner in which it was
created.
8.3 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings of
its stockholders and board of directors and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be
fixed by the board of directors; provided, that if such fiscal year is not
fixed by the board of directors and the selection of the fiscal year is not
expressly deferred by the board of directors, the fiscal year shall be the
calendar year.
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8.5 Seal. The seal of the Corporation shall be such as from time
to time may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the Chairman of the Board, the
President, or the Secretary. Such resignation shall take effect at the time
specified therein or, if no time is specified therein, immediately upon its
receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board,
the President, or any Vice President of the Corporation shall have the power
and authority to transfer, endorse for transfer, vote, consent, or take any
other action with respect to any securities of another issuer which may be held
or owned by the Corporation and to make, execute, and deliver any waiver,
proxy, or consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or
through a proxy), members of the board of directors, and members of a committee
of the board of directors may participate in and hold a meeting of such
stockholders, board of directors, or committee by means of a conference
telephone or similar communications equipment by means of which persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in
the certificate of incorporation of the Corporation, any action required by the
Delaware General Corporation Law to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which the holders of all shares entitled to vote thereon were present and
voted and shall be delivered to the Corporation by delivery to its registered
office in the State of Delaware, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated
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consent delivered in the manner required by this Section 8.9(a) to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office, principal place of business, or such officer or agent shall be by hand
or by certified or registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of
incorporation of the Corporation or by these bylaws, any action required or
permitted to be taken at a meeting of the board of directors, or of any
committee of the board of directors, may be taken without a meeting if a
consent or consents in writing, setting forth the action so taken, shall be
signed by all the directors or all the committee members, as the case may be,
entitled to vote with respect to the subject matter thereof, and such consent
shall have the same force and effect as a vote of such directors or committee
members, as the case may be, and may be stated as such in any certificate or
document filed with the Secretary of State of the State of Delaware or in any
certificate delivered to any person. Such consent or consents shall be filed
with the minutes of proceedings of the board or committee, as the case may be.
8.10 Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust,
mortgage, or other instrument executed by the Corporation through its duly
authorized officer or officers, the attestation to such execution by the
Secretary of the Corporation shall not be necessary to constitute such deed,
deed of trust, mortgage, or other instrument a valid and binding obligation
against the Corporation unless the resolutions, if any, of the board of
directors authorizing such execution expressly state that such attestation is
necessary.
17
<PAGE> 22
8.12 Headings. The headings used in these bylaws have been
inserted for administrative convenience only and do not constitute matter to be
construed in interpretation.
8.13 References. Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. These bylaws may be altered, amended, or repealed
or new bylaws may be adopted by the stockholders or by the board of directors
at any regular meeting of the stockholders or the board of directors or at any
special meeting of the stockholders or the board of directors if notice of such
alteration, amendment, repeal, or adoption of new bylaws be contained in the
notice of such special meeting.
The undersigned, the Secretary of the Corporation, hereby certifies
that the foregoing bylaws were adopted by written consent of the sole director
of the Corporation as of December 20, 1996.
/s/ W. THOMAS MCGHEE
-----------------------------
W. Thomas McGhee, Secretary
18
<PAGE> 1
EXHIBIT 3.21
ARTICLES OF INCORPORATION Provided by: EVAN BAYH
State Form 4159 (R6/3-88)
Secretary of State
Room 155, State House
Indianapolis, Indiana 46204
(317) 232-6576
INSTRUCTIONS: Use 8 1/2 x 11 inch white Indiana Code 23-1-21-2
paper for inserts. Filing
requirements - Present FILING FEE $90.00
original and one copy to
the address in the upper
right corner of this form.
ARTICLE OF INCORPORATION OF
(Indicate the appropriate act)
The undersigned desiring to form a corporation (herein after referred to as
"Corporation") pursuant to the provisions of:
[X] Indiana Business [ ] Indiana Professional
Corporation Law Corporation Act 1983
As amended, executes the following Articles of Incorporation:
ARTICLE I NAME
Name of Corporation
Hoosier Wire, Inc.
(The name must contain the word "Corporation," "Incorporated," "Limited,"
"Company" or an abbreviation of one of those words.)
ARTICLE II REGISTERED OFFICE AND AGENT
(The street address of the corporation's initial registered office in Indiana
and the name of its initial registered agent at that office is:)
Name of Agent
Judy C. Young
Street Address of Registered Office Zip Code
U.S. 6 West & CR 400 East, Kendallville, IN 46755
ARTICLE III AUTHORIZED SHARES
Five hundred thousands shares (500,000)
Number of shares: -----------------------------------------
If there is more than one class of shares,
shares with rights and preferences, list
such information on "Exhibit A."
ARTICLE IV INCORPORATORS
(The name(s) and address(es) of the incorporator(s) of the corporation:)
<TABLE>
<CAPTION>
NUMBER and STREET
NAME OR BUILDING CITY STATE ZIP CODE
---- ----------------- ---- ----- --------
<S> <C> <C> <C> <C>
Judy C. Young U.S. 6 West & Kendallville IN 46755
CR 400 East
</TABLE>
In Witness Whereof, the undersigned being all the incorporators of said
corporation execute these Articles of Incorporation and verify, subject to
penalties of perjury, that the statements contained herein are true,
this 23rd day of November 1988.
---- --------
Signature Printed Name
/s/ JUDY C. YOUNG Judy C. Young
Signature Printed Name
-- --
Signature Printed Name
-- --
This instrument was prepared by (Name)
Judy C. Young
Address (Street, Number, City and State) Zip Code
U.S. 6 West & CR 400 East, P.O. Box 2000, Kendallville, IN 46755
<PAGE> 1
EXHIBIT 3.22
BYLAWS
OF
WIRE TECHNOLOGIES, INC.
An Indiana Corporation
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Special Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3 Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Voting List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.7 Required Vote; Withdrawal of Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.8 Method of Voting; Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 Conduct of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.11 Inspectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE THREE: DIRECTORS
3.1 Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Number; Qualification; Election; Term . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.3 Change in Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.5 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.6 Meetings of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.7 First Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Election of Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.9 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.10 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.11 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.12 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.13 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.14 Presumption of Assent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
3.15 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE FOUR: COMMITTEES
4.1 Designation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Number; Qualification; Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.3 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.4 Committee Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.5 Alternate Members of Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.6 Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.7 Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.8 Quorum; Majority Vote . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9 Minutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.11 Responsibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE FIVE: NOTICE
5.1 Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6.2 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.6 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.7 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.8 Vice Presidents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.9 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.10 Assistant Treasurers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.11 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.12 Assistant Secretaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
7.2 Replacement of Lost or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . 14
7.3 Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.4 Registered Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.5 Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
7.6 Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.2 Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.5 Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.6 Resignations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.7 Securities of Other Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.8 Telephone Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.9 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.10 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.11 Mortgages, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.13 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8.14 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
(iii)
<PAGE> 5
BYLAWS
OF
WIRE TECHNOLOGIES, INC.
An Indiana Corporation
PREAMBLE
These bylaws are subject to, and governed by, the Indiana Business
Corporation Law (the "Indiana Business Corporation Law") and the certificate of
incorporation of Wire Technologies, Inc., an Indiana corporation (the
"Corporation"). In the event of a direct conflict between the provisions of
these bylaws and the mandatory provisions of the Indiana Business Corporation
Law or the provisions of the certificate of incorporation of the Corporation,
such provisions of the Indiana Business Corporation Law or the certificate of
incorporation of the Corporation, as the case may be, will be controlling.
ARTICLE ONE: OFFICES
1.1 Registered Office and Agent. The registered office and
registered agent of the Corporation shall be as designated from time to time by
the appropriate filing by the Corporation in the office of the Secretary of
State of the State of Indiana.
1.2 Other Offices. The Corporation may also have offices at such
other places, both within and without the State of Indiana, as the board of
directors may from time to time determine or as the business of the Corporation
may require.
ARTICLE TWO: MEETINGS OF STOCKHOLDERS
2.1 Annual Meeting. An annual meeting of stockholders of the
Corporation shall be held each calendar year on such date and at such time as
shall be designated from time to time by the board of directors and stated in
the notice of the meeting or in a duly executed waiver of notice of such
meeting. At such meeting, the stockholders shall elect directors and transact
such other business as may properly be brought before the meeting.
<PAGE> 6
2.2 Special Meeting. A special meeting of the stockholders may be
called at any time by the Chairman of the Board, the President, the board of
directors, and shall be called by the President or the Secretary at the request
in writing of the stockholders of record of not less than ten percent of all
shares entitled to vote at such meeting or as otherwise provided by the
certificate of incorporation of the Corporation. A special meeting shall be
held on such date and at such time as shall be designated by the person(s)
calling the meeting and stated in the notice of the meeting or in a duly
executed waiver of notice of such meeting. Only such business shall be
transacted at a special meeting as may be stated or indicated in the notice of
such meeting or in a duly executed waiver of notice of such meeting.
2.3 Place of Meetings. An annual meeting of stockholders may be
held at any place within or without the State of Indiana designated by the
board of directors. A special meeting of stockholders may be held at any place
within or without the State of Indiana designated in the notice of the meeting
or a duly executed waiver of notice of such meeting. Meetings of stockholders
shall be held at the principal office of the Corporation unless another place
is designated for meetings in the manner provided herein.
2.4 Notice. Written or printed notice stating the place, day, and
time of each meeting of the stockholders and, in case of a special meeting, the
purpose or purposes for which the meeting is called shall be delivered not less
than ten nor more than 60 days before the date of the meeting, either
personally or by mail, by or at the direction of the President, the Secretary,
or the officer or person(s) calling the meeting, to each stockholder of record
entitled to vote at such meeting. If such notice is to be sent by mail, it
shall be directed to such stockholder at his address as it appears on the
records of the Corporation, unless he shall have filed with the Secretary of
the Corporation a written request that notices to him be mailed to some other
address, in which case it shall be directed to him at such other address.
Notice of any meeting of stockholders shall not be required to be given to any
stockholder who shall attend such meeting in person or by proxy and shall not,
at the beginning of such meeting, object to the transaction of any business
because the meeting is not lawfully called or convened, or who shall, either
before or after the meeting, submit a signed waiver of notice, in person or by
proxy.
2.5 Voting List. At least ten days before each meeting of
stockholders, the Secretary or other officer of the Corporation who has charge
of the Corporation's stock ledger, either directly or through another officer
appointed by him or through a transfer agent appointed by the board of
directors, shall prepare a complete list of stockholders entitled to vote
thereat, arranged in alphabetical order and showing the address of each
stockholder and number of shares registered in the name of each stockholder.
For a period of ten days prior to such meeting, such list shall be kept on file
at a place within the city where the meeting is to
2
<PAGE> 7
be held, which place shall be specified in the notice of meeting or a duly
executed waiver of notice of such meeting or, if not so specified, at the place
where the meeting is to be held and shall be open to examination by any
stockholder during ordinary business hours. Such list shall be produced at
such meeting and kept at the meeting at all times during such meeting and may
be inspected by any stockholder who is present.
2.6 Quorum. The holders of a majority of the outstanding shares
entitled to vote on a matter, present in person or by proxy, shall constitute a
quorum at any meeting of stockholders, except as otherwise provided by law, the
certificate of incorporation of the Corporation, or these bylaws. If a quorum
shall not be present, in person or by proxy, at any meeting of stockholders,
the stockholders entitled to vote thereat who are present, in person or by
proxy, or, if no stockholder entitled to vote is present, any officer of the
Corporation may adjourn the meeting from time to time, without notice other
than announcement at the meeting (unless the board of directors, after such
adjournment, fixes a new record date for the adjourned meeting), until a quorum
shall be present, in person or by proxy. At any adjourned meeting at which a
quorum shall be present, in person or by proxy, any business may be transacted
which may have been transacted at the original meeting had a quorum been
present; provided that, if the adjournment is for more than 30 days or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the adjourned meeting.
2.7 Required Vote; Withdrawal of Quorum. When a quorum is present
at any meeting, the vote of the holders of at least a majority of the
outstanding shares entitled to vote who are present, in person or by proxy,
shall decide any question brought before such meeting, unless the question is
one on which, by express provision of statute, the certificate of incorporation
of the Corporation, or these bylaws, a different vote is required, in which
case such express provision shall govern and control the decision of such
question. The stockholders present at a duly constituted meeting may continue
to transact business until adjournment, notwithstanding the withdrawal of
enough stockholders to leave less than a quorum.
2.8 Method of Voting; Proxies. Except as otherwise provided in
the certificate of incorporation of the Corporation or by law, each outstanding
share, regardless of class, shall be entitled to one vote on each matter
submitted to a vote at a meeting of stockholders. Elections of directors need
not be by written ballot. At any meeting of stockholders, every stockholder
having the right to vote may vote either in person or by a proxy executed in
writing by the stockholder or by his duly authorized attorney-in-fact. Each
such proxy shall be filed with the Secretary of the Corporation before or at
the time of the meeting. No proxy shall be valid after three years from the
date of its execution, unless otherwise provided in the
3
<PAGE> 8
proxy. If no date is stated in a proxy, such proxy shall be presumed to have
been executed on the date of the meeting at which it is to be voted. Each
proxy shall be revocable unless expressly provided therein to be irrevocable
and coupled with an interest sufficient in law to support an irrevocable power
or unless otherwise made irrevocable by law.
2.9 Record Date. (a) For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion, or exchange of stock or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, for any such determination
of stockholders, such date in any case to be not more than 60 days and not less
than ten days prior to such meeting nor more than 60 days prior to any other
action. If no record date is fixed:
(i) The record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be
at the close of business on the day next preceding the day on which
notice is given or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held.
(ii) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which
the board of directors adopts the resolution relating thereto.
(iii) A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the board
of directors may fix a record date, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the board
of directors, and which date shall not be more than ten days after the date
upon which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate
action in writing without a meeting, when no prior action by the board of
directors is required by law or these bylaws, shall be the first date on which
a signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation by delivery to its registered office in the
State of Indiana, its
4
<PAGE> 9
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corporation's registered office in the State of
Indiana, principal place of business, or such officer or agent shall be by hand
or by certified or registered mail, return receipt requested. If no record
date has been fixed by the board of directors and prior action by the board of
directors is required by law or these bylaws, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the board of
directors adopts the resolution taking such prior action.
2.10 Conduct of Meeting. The Chairman of the Board, if such office
has been filled, and, if not or if the Chairman of the Board is absent or
otherwise unable to act, the President shall preside at all meetings of
stockholders. The Secretary shall keep the records of each meeting of
stockholders. In the absence or inability to act of any such officer, such
officer's duties shall be performed by the officer given the authority to act
for such absent or non- acting officer under these bylaws or by some person
appointed by the meeting.
2.11 Inspectors. The board of directors may, in advance of any
meeting of stockholders, appoint one or more inspectors to act at such meeting
or any adjournment thereof. If any of the inspectors so appointed shall fail
to appear or act, the chairman of the meeting shall, or if inspectors shall not
have been appointed, the chairman of the meeting may, appoint one or more
inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares of capital stock of the
Corporation outstanding and the voting power of each, the number of shares
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies and shall receive votes, ballots, or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots, or consents, determine the
results, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting, the
inspectors shall make a report in writing of any challenge, request, or matter
determined by them and shall execute a certificate of any fact found by them.
No director or candidate for the office of director shall act as an inspector
of an election of directors. Inspectors need not be stockholders.
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ARTICLE THREE: DIRECTORS
3.1 Management. The business and property of the Corporation
shall be managed by the board of directors. Subject to the restrictions
imposed by law, the certificate of incorporation of the Corporation, or these
bylaws, the board of directors may exercise all the powers of the Corporation.
3.2 Number; Qualification; Election; Term. The number of
directors which shall constitute the entire board of directors shall be not
less than one. The first board of directors shall consist of the number of
directors named in the certificate of incorporation of the Corporation or, if
no directors are so named, shall consist of the number of directors elected by
the incorporator(s) at an organizational meeting or by unanimous written
consent in lieu thereof. Thereafter, within the limits above specified, the
number of directors which shall constitute the entire board of directors shall
be determined by resolution of the board of directors or by resolution of the
stockholders at the annual meeting thereof or at a special meeting thereof
called for that purpose. Except as otherwise required by law, the certificate
of incorporation of the Corporation, or these bylaws, the directors shall be
elected at an annual meeting of stockholders at which a quorum is present.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy and entitled to vote on the election of
directors. Each director so chosen shall hold office until the first annual
meeting of stockholders held after his election and until his successor is
elected and qualified or, if earlier, until his death, resignation, or removal
from office. None of the directors need be a stockholder of the Corporation or
a resident of the State of Indiana. Each director must have attained the age
of majority.
3.3 Change in Number. No decrease in the number of directors
constituting the entire board of directors shall have the effect of shortening
the term of any incumbent director.
3.4 Removal. Except as otherwise provided in the certificate of
incorporation of the Corporation or these bylaws, at any meeting of
stockholders called expressly for that purpose, any director or the entire
board of directors may be removed, with or without cause, by a vote of the
holders of a majority of the shares then entitled to vote on the election of
directors; provided, however, that so long as stockholders have the right to
cumulate votes in the election of directors pursuant to the certificate of
incorporation of the Corporation, if less than the entire board of directors is
to be removed, no one of the directors may be removed if the votes cast against
his removal would be sufficient to elect him if then cumulatively voted at an
election of the entire board of directors.
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3.5 Vacancies. Vacancies and newly-created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
the sole remaining director, and each director so chosen shall hold office
until the first annual meeting of stockholders held after his election and
until his successor is elected and qualified or, if earlier, until his death,
resignation, or removal from office. If there are no directors in office, an
election of directors may be held in the manner provided by statute. If, at
the time of filling any vacancy or any newly-created directorship, the
directors then in office shall constitute less than a majority of the whole
board of directors (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least 10% of the total number of the shares at the time outstanding
having the right to vote for such directors, summarily order an election to be
held to fill any such vacancies or newly-created directorships or to replace
the directors chosen by the directors then in office. Except as otherwise
provided in these bylaws, when one or more directors shall resign from the
board of directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have the power to
fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office as provided in these bylaws with respect to the filling of
other vacancies.
3.6 Meetings of Directors. The directors may hold their meetings
and may have an office and keep the books of the Corporation, except as
otherwise provided by statute, in such place or places within or without the
State of Indiana, as the board of directors may from time to time determine or
as shall be specified in the notice of such meeting or duly executed waiver of
notice of such meeting.
3.7 First Meeting. Each newly elected board of directors may hold
its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of stockholders, and no notice of such meeting shall be
necessary.
3.8 Election of Officers. At the first meeting of the board of
directors after each annual meeting of stockholders at which a quorum shall be
present, the board of directors shall elect the officers of the Corporation.
3.9 Regular Meetings. Regular meetings of the board of directors
shall be held at such times and places as shall be designated from time to time
by resolution of the board of directors. Notice of such regular meetings shall
not be required.
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3.10 Special Meetings. Special meetings of the board of directors
shall be held whenever called by the Chairman of the Board, the President, or
any director.
3.11 Notice. The Secretary shall give notice of each special
meeting to each director at least 24 hours before the meeting. Notice of any
such meeting need not be given to any director who shall, either before or
after the meeting, submit a signed waiver of notice or who shall attend such
meeting without protesting, prior to or at its commencement, the lack of notice
to him. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the board of directors need be specified in the
notice or waiver of notice of such meeting.
3.12 Quorum; Majority Vote. At all meetings of the board of
directors, a majority of the directors fixed in the manner provided in these
bylaws shall constitute a quorum for the transaction of business. If at any
meeting of the board of directors there be less than a quorum present, a
majority of those present or any director solely present may adjourn the
meeting from time to time without further notice. Unless the act of a greater
number is required by law, the certificate of incorporation of the Corporation,
or these bylaws, the act of a majority of the directors present at a meeting at
which a quorum is in attendance shall be the act of the board of directors. At
any time that the certificate of incorporation of the Corporation provides that
directors elected by the holders of a class or series of stock shall have more
or less than one vote per director on any matter, every reference in these
bylaws to a majority or other proportion of directors shall refer to a majority
or other proportion of the votes of such directors.
3.13 Procedure. At meetings of the board of directors, business
shall be transacted in such order as from time to time the board of directors
may determine. The Chairman of the Board, if such office has been filled, and,
if not or if the Chairman of the Board is absent or otherwise unable to act,
the President shall preside at all meetings of the board of directors. In the
absence or inability to act of either such officer, a chairman shall be chosen
by the board of directors from among the directors present. The Secretary of
the Corporation shall act as the secretary of each meeting of the board of
directors unless the board of directors appoints another person to act as
secretary of the meeting. The board of directors shall keep regular minutes of
its proceedings which shall be placed in the minute book of the Corporation.
3.14 Presumption of Assent. A director of the Corporation who is
present at the meeting of the board of directors at which action on any
corporate matter is taken shall be presumed to have assented to the action
unless his dissent shall be entered in the minutes of the meeting or unless he
shall file his written dissent to such action with the person acting as
secretary of the meeting before the adjournment thereof or shall forward any
dissent by
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certified or registered mail to the Secretary of the Corporation immediately
after the adjournment of the meeting. Such right to dissent shall not apply to
a director who voted in favor of such action.
3.15 Compensation. The board of directors shall have the authority
to fix the compensation, including fees and reimbursement of expenses, paid to
directors for attendance at regular or special meetings of the board of
directors or any committee thereof; provided, that nothing contained herein
shall be construed to preclude any director from serving the Corporation in any
other capacity or receiving compensation therefor.
ARTICLE FOUR: COMMITTEES
4.1 Designation. The board of directors may, by resolution
adopted by a majority of the entire board of directors, designate one or more
committees.
4.2 Number; Qualification; Term. Each committee shall consist of
one or more directors appointed by resolution adopted by a majority of the
entire board of directors. The number of committee members may be increased or
decreased from time to time by resolution adopted by a majority of the entire
board of directors. Each committee member shall serve as such until the
earliest of (i) the expiration of his term as director, (ii) his resignation as
a committee member or as a director, or (iii) his removal as a committee member
or as a director.
4.3 Authority. Each committee, to the extent expressly provided
in the resolution establishing such committee, shall have and may exercise all
of the authority of the board of directors in the management of the business
and property of the Corporation except to the extent expressly restricted by
law, the certificate of incorporation of the Corporation, or these bylaws.
4.4 Committee Changes. The board of directors shall have the
power at any time to fill vacancies in, to change the membership of, and to
discharge any committee.
4.5 Alternate Members of Committees. The board of directors may
designate one or more directors as alternate members of any committee. Any
such alternate member may replace any absent or disqualified member at any
meeting of the committee. If no alternate committee members have been so
appointed to a committee or each such alternate committee member is absent or
disqualified, the member or members of such committee present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may
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unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member.
4.6 Regular Meetings. Regular meetings of any committee may be
held without notice at such time and place as may be designated from time to
time by the committee and communicated to all members thereof.
4.7 Special Meetings. Special meetings of any committee may be
held whenever called by any committee member. The committee member calling any
special meeting shall cause notice of such special meeting, including therein
the time and place of such special meeting, to be given to each committee
member at least two days before such special meeting. Neither the business to
be transacted at, nor the purpose of, any special meeting of any committee need
be specified in the notice or waiver of notice of any special meeting.
4.8 Quorum; Majority Vote. At meetings of any committee, a
majority of the number of members designated by the board of directors shall
constitute a quorum for the transaction of business. If a quorum is not
present at a meeting of any committee, a majority of the members present may
adjourn the meeting from time to time, without notice other than an
announcement at the meeting, until a quorum is present. The act of a majority
of the members present at any meeting at which a quorum is in attendance shall
be the act of a committee, unless the act of a greater number is required by
law, the certificate of incorporation of the Corporation, or these bylaws.
4.9 Minutes. Each committee shall cause minutes of its
proceedings to be prepared and shall report the same to the board of directors
upon the request of the board of directors. The minutes of the proceedings of
each committee shall be delivered to the Secretary of the Corporation for
placement in the minute books of the Corporation.
4.10 Compensation. Committee members may, by resolution of the
board of directors, be allowed a fixed sum and expenses of attendance, if any,
for attending any committee meetings or a stated salary.
4.11 Responsibility. The designation of any committee and the
delegation of authority to it shall not operate to relieve the board of
directors or any director of any responsibility imposed upon it or such
director by law.
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ARTICLE FIVE: NOTICE
5.1 Method. Whenever by statute, the certificate of incorporation
of the Corporation, or these bylaws, notice is required to be given to any
committee member, director, or stockholder and no provision is made as to how
such notice shall be given, personal notice shall not be required and any such
notice may be given (a) in writing, by mail, postage prepaid, addressed to such
committee member, director, or stockholder at his address as it appears on the
books or (in the case of a stockholder) the stock transfer records of the
Corporation, or (b) by any other method permitted by law (including but not
limited to overnight courier service, telegram, telex, or telefax). Any notice
required or permitted to be given by mail shall be deemed to be delivered and
given at the time when the same is deposited in the United States mail as
aforesaid. Any notice required or permitted to be given by overnight courier
service shall be deemed to be delivered and given at the time delivered to such
service with all charges prepaid and addressed as aforesaid. Any notice
required or permitted to be given by telegram, telex, or telefax shall be
deemed to be delivered and given at the time transmitted with all charges
prepaid and addressed as aforesaid.
5.2 Waiver. Whenever any notice is required to be given to any
stockholder, director, or committee member of the Corporation by statute, the
certificate of incorporation of the Corporation, or these bylaws, a waiver
thereof in writing signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be equivalent to the
giving of such notice. Attendance of a stockholder, director, or committee
member at a meeting shall constitute a waiver of notice of such meeting, except
where such person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE SIX: OFFICERS
6.1 Number; Titles; Term of Office. The officers of the
Corporation shall be a President, a Secretary, and such other officers as the
board of directors may from time to time elect or appoint, including a Chairman
of the Board, one or more Vice Presidents (with each Vice President to have
such descriptive title, if any, as the board of directors shall determine), and
a Treasurer. Each officer shall hold office until his successor shall have
been duly elected and shall have qualified, until his death, or until he shall
resign or shall have been removed in the manner hereinafter provided. Any two
or more offices may be held by the same person. None of the officers need be a
stockholder or a director of the Corporation or a resident of the State of
Indiana.
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6.2 Removal. Any officer or agent elected or appointed by the
board of directors may be removed by the board of directors whenever in its
judgment the best interest of the Corporation will be served thereby, but such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
6.3 Vacancies. Any vacancy occurring in any office of the
Corporation (by death, resignation, removal, or otherwise) may be filled by the
board of directors.
6.4 Authority. Officers shall have such authority and perform
such duties in the management of the Corporation as are provided in these
bylaws or as may be determined by resolution of the board of directors not
inconsistent with these bylaws.
6.5 Compensation. The compensation, if any, of officers and
agents shall be fixed from time to time by the board of directors; provided,
however, that the board of directors may delegate the power to determine the
compensation of any officer and agent (other than the officer to whom such
power is delegated) to the Chairman of the Board or the President.
6.6 Chairman of the Board. The Chairman of the Board, if elected
by the board of directors, shall have such powers and duties as may be
prescribed by the board of directors. Such officer shall preside at all
meetings of the stockholders and of the board of directors. Such officer may
sign all certificates for shares of stock of the Corporation.
6.7 President. The President shall be the chief executive officer
of the Corporation and, subject to the board of directors, he shall have
general executive charge, management, and control of the properties and
operations of the Corporation in the ordinary course of its business, with all
such powers with respect to such properties and operations as may be reasonably
incident to such responsibilities. If the board of directors has not elected a
Chairman of the Board or in the absence or inability to act of the Chairman of
the Board, the President shall exercise all of the powers and discharge all of
the duties of the Chairman of the Board. As between the Corporation and third
parties, any action taken by the President in the performance of the duties of
the Chairman of the Board shall be conclusive evidence that there is no
Chairman of the Board or that the Chairman of the Board is absent or unable to
act.
6.8 Vice Presidents. Each Vice President shall have such powers
and duties as may be assigned to him by the board of directors, the Chairman of
the Board, or the President, and (in order of their seniority as determined by
the board of directors or, in the absence of such determination, as determined
by the length of time they have held the office of Vice President) shall
exercise the powers of the President during that officer's absence or inability
to act. As
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between the Corporation and third parties, any action taken by a Vice President
in the performance of the duties of the President shall be conclusive evidence
of the absence or inability to act of the President at the time such action was
taken.
6.9 Treasurer. The Treasurer shall have custody of the
Corporation's funds and securities, shall keep full and accurate account of
receipts and disbursements, shall deposit all monies and valuable effects in
the name and to the credit of the Corporation in such depository or
depositories as may be designated by the board of directors, and shall perform
such other duties as may be prescribed by the board of directors, the Chairman
of the Board, or the President.
6.10 Assistant Treasurers. Each Assistant Treasurer shall have
such powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Treasurers (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Treasurer) shall exercise the powers of the
Treasurer during that officer's absence or inability to act.
6.11 Secretary. Except as otherwise provided in these bylaws, the
Secretary shall keep the minutes of all meetings of the board of directors and
of the stockholders in books provided for that purpose, and he shall attend to
the giving and service of all notices. He may sign with the Chairman of the
Board or the President, in the name of the Corporation, all contracts of the
Corporation and affix the seal of the Corporation thereto. He may sign with
the Chairman of the Board or the President all certificates for shares of stock
of the Corporation, and he shall have charge of the certificate books, transfer
books, and stock papers as the board of directors may direct, all of which
shall at all reasonable times be open to inspection by any director upon
application at the office of the Corporation during business hours. He shall
in general perform all duties incident to the office of the Secretary, subject
to the control of the board of directors, the Chairman of the Board, and the
President.
6.12 Assistant Secretaries. Each Assistant Secretary shall have
such powers and duties as may be assigned to him by the board of directors, the
Chairman of the Board, or the President. The Assistant Secretaries (in the
order of their seniority as determined by the board of directors or, in the
absence of such a determination, as determined by the length of time they have
held the office of Assistant Secretary) shall exercise the powers of the
Secretary during that officer's absence or inability to act.
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ARTICLE SEVEN: CERTIFICATES AND STOCKHOLDERS
7.1 Certificates for Shares. Certificates for shares of stock of
the Corporation shall be in such form as shall be approved by the board of
directors. The certificates shall be signed by the Chairman of the Board or
the President or a Vice President and also by the Secretary or an Assistant
Secretary or by the Treasurer or an Assistant Treasurer. Any and all
signatures on the certificate may be a facsimile and may be sealed with the
seal of the Corporation or a facsimile thereof. If any officer, transfer
agent, or registrar who has signed, or whose facsimile signature has been
placed upon, a certificate has ceased to be such officer, transfer agent, or
registrar before such certificate is issued, such certificate may be issued by
the Corporation with the same effect as if he were such officer, transfer
agent, or registrar at the date of issue. The certificates shall be
consecutively numbered and shall be entered in the books of the Corporation as
they are issued and shall exhibit the holder's name and the number of shares.
7.2 Replacement of Lost or Destroyed Certificates. The board of
directors may direct a new certificate or certificates to be issued in place of
a certificate or certificates theretofore issued by the Corporation and alleged
to have been lost or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate or certificates representing shares to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to advertise the same
in such manner as it shall require and/or to give the Corporation a bond with a
surety or sureties satisfactory to the Corporation in such sum as it may direct
as indemnity against any claim, or expense resulting from a claim, that may be
made against the Corporation with respect to the certificate or certificates
alleged to have been lost or destroyed.
7.3 Transfer of Shares. Shares of stock of the Corporation shall
be transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives. Upon
surrender to the Corporation or the transfer agent of the Corporation of a
certificate representing shares duly endorsed or accompanied by proper evidence
of succession, assignment, or authority to transfer, the Corporation or its
transfer agent shall issue a new certificate to the person entitled thereto,
cancel the old certificate, and record the transaction upon its books.
7.4 Registered Stockholders. The Corporation shall be entitled to
treat the holder of record of any share or shares of stock as the holder in
fact thereof and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the
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part of any other person, whether or not it shall have express or other notice
thereof, except as otherwise provided by law.
7.5 Regulations. The board of directors shall have the power and
authority to make all such rules and regulations as they may deem expedient
concerning the issue, transfer, and registration or the replacement of
certificates for shares of stock of the Corporation.
7.6 Legends. The board of directors shall have the power and
authority to provide that certificates representing shares of stock bear such
legends as the board of directors deems appropriate to assure that the
Corporation does not become liable for violations of federal or state
securities laws or other applicable law.
ARTICLE EIGHT: MISCELLANEOUS PROVISIONS
8.1 Dividends. Subject to provisions of law and the certificate
of incorporation of the Corporation, dividends may be declared by the board of
directors at any regular or special meeting and may be paid in cash, in
property, or in shares of stock of the Corporation. Such declaration and
payment shall be at the discretion of the board of directors.
8.2 Reserves. There may be created by the board of directors out
of funds of the Corporation legally available therefor such reserve or reserves
as the directors from time to time, in their discretion, consider proper to
provide for contingencies, to equalize dividends, or to repair or maintain any
property of the Corporation, or for such other purpose as the board of
directors shall consider beneficial to the Corporation, and the board of
directors may modify or abolish any such reserve in the manner in which it was
created.
8.3 Books and Records. The Corporation shall keep correct and
complete books and records of account, shall keep minutes of the proceedings of
its stockholders and board of directors and shall keep at its registered office
or principal place of business, or at the office of its transfer agent or
registrar, a record of its stockholders, giving the names and addresses of all
stockholders and the number and class of the shares held by each.
8.4 Fiscal Year. The fiscal year of the Corporation shall be
fixed by the board of directors; provided, that if such fiscal year is not
fixed by the board of directors and the selection of the fiscal year is not
expressly deferred by the board of directors, the fiscal year shall be the
calendar year.
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8.5 Seal. The seal of the Corporation shall be such as from time
to time may be approved by the board of directors.
8.6 Resignations. Any director, committee member, or officer may
resign by so stating at any meeting of the board of directors or by giving
written notice to the board of directors, the Chairman of the Board, the
President, or the Secretary. Such resignation shall take effect at the time
specified therein or, if no time is specified therein, immediately upon its
receipt. Unless otherwise specified therein, the acceptance of such
resignation shall not be necessary to make it effective.
8.7 Securities of Other Corporations. The Chairman of the Board,
the President, or any Vice President of the Corporation shall have the power
and authority to transfer, endorse for transfer, vote, consent, or take any
other action with respect to any securities of another issuer which may be held
or owned by the Corporation and to make, execute, and deliver any waiver,
proxy, or consent with respect to any such securities.
8.8 Telephone Meetings. Stockholders (acting for themselves or
through a proxy), members of the board of directors, and members of a committee
of the board of directors may participate in and hold a meeting of such
stockholders, board of directors, or committee by means of a conference
telephone or similar communications equipment by means of which persons
participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting, except where a person participates in the meeting for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
8.9 Action Without a Meeting. (a) Unless otherwise provided in
the certificate of incorporation of the Corporation, any action required by the
Indiana Business Corporation Law to be taken at any annual or special meeting
of the stockholders, or any action which may be taken at any annual or special
meeting of the stockholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders (acting for themselves or
through a proxy) of outstanding stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a meeting
at which the holders of all shares entitled to vote thereon were present and
voted and shall be delivered to the Corporation by delivery to its registered
office in the State of Indiana, its principal place of business, or an officer
or agent of the Corporation having custody of the book in which proceedings of
meetings of stockholders are recorded. Every written consent of stockholders
shall bear the date of signature of each stockholder who signs the consent and
no written consent shall be effective to take the corporate action referred to
therein unless, within sixty days of the earliest dated
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consent delivered in the manner required by this Section 8.9(a) to the
Corporation, written consents signed by a sufficient number of holders to take
action are delivered to the Corporation by delivery to its registered office in
the State of Indiana, its principal place of business, or an officer or agent
of the Corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the Corporation's registered
office, principal place of business, or such officer or agent shall be by hand
or by certified or registered mail, return receipt requested.
(b) Unless otherwise restricted by the certificate of
incorporation of the Corporation or by these bylaws, any action required or
permitted to be taken at a meeting of the board of directors, or of any
committee of the board of directors, may be taken without a meeting if a
consent or consents in writing, setting forth the action so taken, shall be
signed by all the directors or all the committee members, as the case may be,
entitled to vote with respect to the subject matter thereof, and such consent
shall have the same force and effect as a vote of such directors or committee
members, as the case may be, and may be stated as such in any certificate or
document filed with the Secretary of State of the State of Indiana or in any
certificate delivered to any person. Such consent or consents shall be filed
with the minutes of proceedings of the board or committee, as the case may be.
8.10 Invalid Provisions. If any part of these bylaws shall be held
invalid or inoperative for any reason, the remaining parts, so far as it is
possible and reasonable, shall remain valid and operative.
8.11 Mortgages, etc. With respect to any deed, deed of trust,
mortgage, or other instrument executed by the Corporation through its duly
authorized officer or officers, the attestation to such execution by the
Secretary of the Corporation shall not be necessary to constitute such deed,
deed of trust, mortgage, or other instrument a valid and binding obligation
against the Corporation unless the resolutions, if any, of the board of
directors authorizing such execution expressly state that such attestation is
necessary.
8.12 Headings. The headings used in these bylaws have been
inserted for administrative convenience only and do not constitute matter to be
construed in interpretation.
8.13 References. Whenever herein the singular number is used, the
same shall include the plural where appropriate, and words of any gender should
include each other gender where appropriate.
8.14 Amendments. These bylaws may be altered, amended, or repealed
or new bylaws may be adopted by the stockholders or by the board of directors
at any regular meeting
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of the stockholders or the board of directors or at any special meeting of the
stockholders or the board of directors if notice of such alteration, amendment,
repeal, or adoption of new bylaws be contained in the notice of such special
meeting.
The undersigned, being the Secretary of the Corporation, hereby
certifies that the foregoing bylaws were adopted by the consent of the sole
director of the Corporation as of February 21, 1996.
/s/ ELLEN L. LIPSITZ
----------------------------------------
Ellen L. Lipsitz, Secretary
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EXHIBIT 4.7
================================================================================
INTERNATIONAL WIRE GROUP, INC.
14.00% Senior Subordinated Notes due 2005
=====================
INDENTURE
Dated as of February 12, 1997
====================
IBJ Schroder Bank & Trust Company,
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA Indenture
Section Section
- ------- ---------
<S> <C>
310(a)(1) .............................. 7.10
(a)(2) .............................. 7.10
(a)(3) .............................. N.A.
(a)(4) .............................. N.A.
(b) .............................. 7.8; 7.10
(c) .............................. N.A.
311(a) .............................. 7.11
(b) .............................. 7.11
(c) .............................. N.A.
312(a) .............................. 2.5
(b) .............................. 11.3
(c) .............................. 11.3
313(a) .............................. 7.6
(b)(1) .............................. N.A.
(b)(2) .............................. 7.6
(c) .............................. 7.6
(d) .............................. 7.6
314(a) .............................. 4.2
4.11; 12.2
(b) .............................. N.A.
(c)(1) .............................. 12.4
(c)(2) .............................. 12.4
(c)(3) .............................. N.A.
(d) .............................. N.A.
(e) .............................. 12.5
(f) .............................. 4.10
315(a) .............................. 7.1
(b) .............................. 7.5; 12.2
(c) .............................. 7.1
(d) .............................. 7.1
(e) .............................. 6.11
316(a)(last sentence)...................... 12.6
(a)(1)(A)............................... 6.5
(a)(1)(B)............................... 6.4
(a)(2) .............................. N.A.
(b) .............................. 6.7
317(a)(1) .............................. 6.8
(a)(2) .............................. 6.9
(b) .............................. 2.4
318(a) .............................. 12.1
</TABLE>
N.A. means Not Applicable.
- --------------------
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
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ARTICLE I
Definitions and Incorporation by Reference . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Other Definitions . . . . . . . . . . . . . . . . 24
SECTION 1.3. Incorporation by Reference of Trust Indenture Act . 25
SECTION 1.4. Rules of Construction . . . . . . . . . . . . . . 26
ARTICLE II
The Securities . . . . . . . . . . . . . 26
SECTION 2.1. Form and Dating . . . . . . . . . . . . . . . . . 26
SECTION 2.2. Execution and Authentication . . . . . . . . . . . 28
SECTION 2.3. Registrar and Paying Agent . . . . . . . . . . . . 29
SECTION 2.4. Paying Agent To Hold Money in Trust . . . . . . . 30
SECTION 2.5. Securityholder Lists . . . . . . . . . . . . . . . 30
SECTION 2.6. Transfer and Exchange . . . . . . . . . . . . . . 30
SECTION 2.7. Replacement Securities . . . . . . . . . . . . . . 40
SECTION 2.8. Outstanding Securities . . . . . . . . . . . . . . 41
SECTION 2.9. Temporary Securities . . . . . . . . . . . . . . . 41
SECTION 2.10. Cancellation . . . . . . . . . . . . . . . . . . . 42
SECTION 2.11. Defaulted Interest . . . . . . . . . . . . . . . . 42
SECTION 2.12. CUSIP Numbers . . . . . . . . . . . . . . . . . . 43
ARTICLE III
Redemption . . . . . . . . . . . . . . 43
SECTION 3.1. Notices to Trustee . . . . . . . . . . . . . . . . 43
SECTION 3.2. Selection of Securities To Be Redeemed . . . . . . 43
SECTION 3.3. Notice of Redemption . . . . . . . . . . . . . . . 44
SECTION 3.4. Effect of Notice of Redemption . . . . . . . . . . 45
SECTION 3.5. Deposit of Redemption Price . . . . . . . . . . . 45
SECTION 3.6. Securities Redeemed in Part . . . . . . . . . . . 45
ARTICLE IV
Covenants . . . . . . . . . . . . . . . 46
SECTION 4.1. Payment of Securities . . . . . . . . . . . . . . 46
SECTION 4.2. SEC Reports . . . . . . . . . . . . . . . . . . . 46
SECTION 4.3. Limitation on Indebtedness . . . . . . . . . . . . 47
SECTION 4.4. Limitation on Restricted Payments . . . . . . . . 48
SECTION 4.5. Limitation on Restrictions on Distributions from
Subsidiaries . . . . . . . . . . . . . . . . . . . 52
SECTION 4.6. Limitation on Sales of Assets and Subsidiary
Stock . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 4.7. Limitation on Affiliate Transactions . . . . . . . 57
SECTION 4.8. Change of Control . . . . . . . . . . . . . . . . 58
</TABLE>
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SECTION 4.9. Limitation on Preferred Stock of Subsidiaries . . 59
SECTION 4.10. Limitation on Capital Stock of Subsidiaries . . . 60
SECTION 4.11. Compliance Certificate . . . . . . . . . . . . . . 60
SECTION 4.12. Further Instruments and Acts . . . . . . . . . . . 60
ARTICLE V
Successor Company . . . . . . . . . . . . . 60
SECTION 5.1. When Company May Merge or Transfer Assets . . . . 60
ARTICLE VI
Defaults and Remedies . . . . . . . . . . . . 62
SECTION 6.1. Events of Default . . . . . . . . . . . . . . . . 62
SECTION 6.2. Acceleration . . . . . . . . . . . . . . . . . . . 64
SECTION 6.3. Other Remedies . . . . . . . . . . . . . . . . . . 65
SECTION 6.4. Waiver of Past Defaults . . . . . . . . . . . . . 65
SECTION 6.5. Control by Majority . . . . . . . . . . . . . . . 65
SECTION 6.6. Limitation on Suits . . . . . . . . . . . . . . . 66
SECTION 6.7. Rights of Holders to Receive Payment . . . . . . . 66
SECTION 6.8. Collection Suit by Trustee . . . . . . . . . . . . 67
SECTION 6.9. Trustee May File Proofs of Claim . . . . . . . . . 67
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . 68
ARTICLE VII
Trustee . . . . . . . . . . . . . . . 68
SECTION 7.1. Duties of Trustee . . . . . . . . . . . . . . . . 68
SECTION 7.2. Rights of Trustee . . . . . . . . . . . . . . . . 70
SECTION 7.3. Individual Rights of Trustee . . . . . . . . . . . 70
SECTION 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . 71
SECTION 7.5. Notice of Defaults . . . . . . . . . . . . . . . . 71
SECTION 7.6. Reports by Trustee to Holders . . . . . . . . . . 71
SECTION 7.7. Compensation and Indemnity . . . . . . . . . . . . 72
SECTION 7.8. Replacement of Trustee . . . . . . . . . . . . . . 73
SECTION 7.9. Successor Trustee by Merger . . . . . . . . . . . 74
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . 74
SECTION 7.11. Preferential Collection of Claims Against Company . 75
ARTICLE VIII
Discharge of Indenture; Defeasance . . . . . . . . . . . 75
SECTION 8.1. Discharge of Liability on Securities; Defeasance . 75
SECTION 8.2. Conditions to Defeasance . . . . . . . . . . . . . 76
SECTION 8.3. Application of Trust Money . . . . . . . . . . . . 78
SECTION 8.4. Repayment to Company . . . . . . . . . . . . . . . 78
</TABLE>
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SECTION 8.5. Indemnity for U.S. Government Obligations . . . . 78
SECTION 8.6. Reinstatement . . . . . . . . . . . . . . . . . . 78
ARTICLE IX
Amendments . . . . . . . . . . . . . . 79
SECTION 9.1. Without Consent of Holders . . . . . . . . . . . . 79
SECTION 9.2. With Consent of Holders . . . . . . . . . . . . . 80
SECTION 9.3. Compliance with Trust Indenture Act . . . . . . . 81
SECTION 9.4. Revocation and Effect of Consents and Waivers . . 81
SECTION 9.5. Notation on or Exchange of Securities . . . . . . 82
SECTION 9.6. Trustee To Sign Amendments . . . . . . . . . . . . 82
ARTICLE X
Subordination . . . . . . . . . . . . . . 83
SECTION 10.1. Agreement To Subordinate . . . . . . . . . . . . . 83
SECTION 10.2. Liquidation, Dissolution, Bankruptcy . . . . . . . 83
SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior
Indebtedness . . . . . . . . . . . . . . . . . . . 84
SECTION 10.4. Acceleration of Payment of Securities . . . . . . 85
SECTION 10.5. When Distribution Must Be Paid Over . . . . . . . 86
SECTION 10.6. Subrogation . . . . . . . . . . . . . . . . . . . 86
SECTION 10.7. Relative Rights . . . . . . . . . . . . . . . . . 86
SECTION 10.8. Subordination May Not Be Impaired by Company or the
Subsidiary Guarantors . . . . . . . . . . . . . . 87
SECTION 10.9. Rights of Trustee and Paying Agent . . . . . . . . 87
SECTION 10.10. Distribution or Notice to Representative . . . . . 88
SECTION 10.11. Article X Not To Prevent Events of Default
or Limit Right To Accelerate . . . . . . . . . . 88
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . 88
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . 88
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . 89
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness and Guarantor
Senior Indebtedness . . . . . . . . . .. . . . . . 89
SECTION 10.16. Reliance by Holders of Senior Indebtedness
and Guarantor Senior Indebtedness on
Subordination Provisions . . . . . . . . . . . . . 89
ARTICLE XI
Subsidiary Guarantee . . . . . . . . . . . . 90
SECTION 11.1. Subsidiary Guarantee . . . . . . . . . . . . . . . 90
SECTION 11.2. Limitation on Liability . . . . . . . . . . . . . 93
SECTION 11.3. Successors and Assigns . . . . . . . . . . . . . . 93
SECTION 11.4. No Waiver . . . . . . . . . . . . . . . . . . . . 93
</TABLE>
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SECTION 11.5. Right of Contribution . . . . . . . . . . . . . . 94
SECTION 11.6. No Subrogation . . . . . . . . . . . . . . . . . . 94
SECTION 11.7. Additional Subsidiary Guarantors . . . . . . . . . 94
SECTION 11.8. Modification . . . . . . . . . . . . . . . . . . . 95
ARTICLE XII
Miscellaneous . . . . . . . . . . . . . . 95
SECTION 12.1. Trust Indenture Act Controls . . . . . . . . . . . 95
SECTION 12.2. Notices . . . . . . . . . . . . . . . . . . . . . 95
SECTION 12.3. Communication by Holders with other Holders . . . 96
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent . . . . . . . . . . . . . . . . . . . . . 96
SECTION 12.5. Statements Required in Certificate or Opinion . . 97
SECTION 12.6. When Securities Disregarded . . . . . . . . . . . 97
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar . . . 98
SECTION 12.8. Legal Holidays . . . . . . . . . . . . . . . . . . 98
SECTION 12.9. Governing Law . . . . . . . . . . . . . . . . . . 98
SECTION 12.10. No Recourse Against Others . . . . . . . . . . . . 98
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . 98
SECTION 12.12. Multiple Originals . . . . . . . . . . . . . . . . 99
SECTION 12.13. Variable Provisions . . . . . . . . . . . . . . . 99
SECTION 12.14. Qualification of Indenture . . . . . . . . . . . . 99
SECTION 12.15. Table of Contents; Headings . . . . . . . . . . . 99
</TABLE>
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<PAGE> 7
INDENTURE dated as of February 12, among INTERNATIONAL WIRE
GROUP, INC., a Delaware corporation (the "Company"), the Subsidiary Guarantors
(as defined herein), and IBJ Schroder Bank & Trust Company (the "Trustee").
Each party agrees as follows for the benefit of the other parties
and for the equal and ratable benefit of the Holders of the Company's 14.00%
Senior Subordinated Notes due 2005 (the "Initial Exchange Notes") and, if and
when issued in exchange for Initial Exchange Notes as provided in the Purchase
Agreement (as hereinafter defined), the Company's 14.00% Senior Subordinated
Notes due 2005 (the "Registered Exchange Notes" and, together with the Initial
Exchange Notes, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1. Definitions.
"Acquired Preferred Stock" means Preferred Stock of any Person
which was issued and outstanding at the time such Person becomes a Subsidiary
of the Company or at the time it merges or consolidates with the Company or any
of its Subsidiaries and not issued by such Person in connection with, or in
anticipation or contemplation of, such acquisition, merger or consolidation.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in a Related Business; (ii) the Capital Stock
of a Person that becomes a Subsidiary as a result of the acquisition of such
Capital Stock by the Company or a Subsidiary of the Company; (iii) Capital
Stock constituting a minority interest in any Person that at such time is a
Subsidiary of the Company; or (iv) Permitted Investments of the type and in the
amounts described in clause (viii) of the definition thereof; provided,
however, that, in the case of clauses (ii) and (iii) of this definition, such
Subsidiary is primarily engaged in a Related Business.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the
<PAGE> 8
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Premium" means, with respect to a Security at any
Redemption Date, the greater of (i) 1.0% of the principal amount of such
Security and (ii) the excess of (A) the present value at such time of (1)
105.875% of the principal amount of such Security plus (2) all required
interest payments due on such Security through June 1, 2000, computed using a
discount rate equal to the Treasury Rate plus 100 basis points, over (B) the
principal amount of such Security.
"Asset Disposition" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions that are part of a common plan) of shares of Capital Stock of a
Subsidiary (other than directors' qualifying shares), property or other assets
(each referred to for the purposes of this definition as a "disposition") by
the Company or any of its Subsidiaries (including any disposition by means of a
merger, consolidation or similar transaction) other than (i) a disposition by a
Subsidiary to the Company or by the Company or a Subsidiary to a Wholly Owned
Subsidiary, (ii) a disposition of inventory in the ordinary course of business,
(iii) a disposition of obsolete or worn out equipment that is no longer useful
in the conduct of the business of the Company and its Subsidiaries and that is
disposed of in each case in the ordinary course of business, (iv) dispositions
of property for net proceeds less than $2.5 million in aggregate in any
calendar year and (v) transactions permitted under Section 5.1.
"Attributable Indebtedness" in respect of a Sale/Leaseback
Transaction means, as at the time of determination, the present value
(discounted at the interest rate borne by the Securities, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
2
<PAGE> 9
"Average Life" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness or
redemption multiplied by the amount of such payment by (ii) the sum of all such
payments.
"Bank Indebtedness" means any and all amounts, whether
outstanding on the Issue Date or thereafter incurred, payable by the Company
under or in respect of the Credit Agreement and any related notes, collateral
documents, letters of credit and guarantees, including principal, premium (if
any), interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not a claim for post filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board of
Directors.
"Business Day" means each day which is not a Legal Holiday.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP, and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date such lease may be terminated without
penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
3
<PAGE> 10
"Certificate of Designation" means the Certificate of Designation
of Series A Senior Cumulative Exchangeable Redeemable Preferred Stock of the
Company.
"Change of Control" means the occurrence of any of the following
events:
(i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially
all of the assets of the Company and its Subsidiaries to any Person or
group of related Persons for purposes of Section 13(d) of the Exchange
Act (a "Group") (whether or not otherwise in compliance with the
provisions of this Indenture), other than to Permitted Holders; or
(ii) a majority of the Board of Directors of Holding or
the Company shall consist of Persons who are not Continuing Directors;
or
(iii) the acquisition by any Person or Group (other than
the Permitted Holders) of the power, directly or indirectly, to vote or
direct the voting of securities having more than 50% of the ordinary
voting power for the election of directors of Holding or the Company.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means International Wire Group, Inc., a Delaware
corporation, until a successor replaces it and, thereafter, means the successor
and, for purposes of any provision contained herein and required by the TIA,
each other obligor on the indenture securities.
"Consolidated Cash Flow" for any period means the Consolidated
Net Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) income tax expense, (ii)
Consolidated Interest Expense, (iii) depreciation expense, (iv) amortization
expense, (v) exchange or translation losses on foreign currencies, and (vi) all
other non-cash items reducing Consolidated Net Income (excluding any non-cash
item to the extent it represents an accrual of or reserve
4
<PAGE> 11
for cash disbursements for any subsequent period prior to the Stated Maturity
of the Securities) and less, to the extent added in calculating Consolidated
Net Income, (x) exchange or translation gains on foreign currencies, and (y)
non-cash items (excluding such non-cash items to the extent they represent an
accrual for cash receipts reasonably expected to be received prior to the
Stated Maturity of the Securities), in each case for such period.
Notwithstanding the foregoing, the income tax expense, depreciation expense and
amortization expense of a Subsidiary of the Company shall be included in
Consolidated Cash Flow only to the extent (and in the same proportion) that the
net income of such Subsidiary was included in calculating Consolidated Net
Income.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of Consolidated Cash Flow for the
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination and as to which financial statements are available
to (ii) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that (1) if the Company or any of its Subsidiaries has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, or both, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to (A) such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period (provided that if such
Indebtedness is Incurred under a revolving credit facility (or similar
arrangement or under any predecessor revolving credit or similar arrangement)
only that portion of such Indebtedness that constitutes the one year projected
minimum balance of such Indebtedness (as determined in good faith by senior
management of the Company and assuming a constant level of sales) shall be
deemed outstanding for purposes of this calculation) and (B) the discharge of
any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if since the beginning of such period any
Indebtedness of the Company or any of its Subsidiaries has been repaid,
repurchased, defeased or otherwise discharged (other than Indebtedness under a
revolving credit or similar arrangement
5
<PAGE> 12
unless such revolving credit Indebtedness has been permanently repaid and has
not been replaced), Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Indebtedness had
been repaid, repurchased, defeased or otherwise discharged on the first day of
such period, (3) if since the beginning of such period the Company or any of
its Subsidiaries shall have made any Asset Disposition or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is an
Asset Disposition, Consolidated Cash Flow for such period shall be reduced by
an amount equal to the Consolidated Cash Flow (if positive) attributable to the
assets which are the subject of such Asset Disposition for such period or
increased by an amount equal to the Consolidated Cash Flow (if negative)
attributable thereto for such period, and Consolidated Interest Expense for
such period shall be (i) reduced by an amount equal to the Consolidated
Interest Expense attributable to any Indebtedness of the Company or any of its
Subsidiaries repaid, repurchased, defeased or otherwise discharged with respect
to the Company and its continuing Subsidiaries in connection with such Asset
Disposition for such period (or, if the Capital Stock of any Subsidiary of the
Company is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Subsidiary to the extent the Company
and its continuing Subsidiaries are no longer liable for such Indebtedness
after such sale) and (ii) increased by interest income attributable to the
assets which are the subject of such Asset Disposition for such period, (4) if
since the beginning of such period the Company or any of its Subsidiaries (by
merger or otherwise) shall have made an Investment in any Subsidiary of the
Company (or any Person which becomes a Subsidiary of the Company) or an
acquisition of assets, including any Investment in a Subsidiary of the Company
or any acquisition of assets occurring in connection with a transaction causing
a calculation to be made hereunder, which constitutes all or substantially all
of an operating unit of a business, Consolidated Cash Flow and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period and (5) if
since the beginning of such period any Person (that subsequently became a
Subsidiary of the Company or was merged with or into the Company or any
Subsidiary of the Company since the beginning of such period) shall have made
any Asset
6
<PAGE> 13
Disposition, Investment or acquisition of assets that would have required an
adjustment pursuant to clause (3) or (4) above if made by the Company or a
Subsidiary of the Company during such period, Consolidated Cash Flow and
Consolidated Interest Expense for such period shall be calculated after giving
pro forma effect thereto as if such Asset Disposition, Investment or
acquisition occurred on the first day of such period. For purposes of this
definition, whenever pro forma effect is to be given to an acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in good
faith by a responsible financial or accounting Officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for
the entire period (taking into account any Interest Rate Agreement applicable
to such Indebtedness if such Interest Rate Agreement has a remaining term in
excess of 12 months).
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Subsidiaries, plus, to the extent not
included in such interest expense, (i) interest expense attributable to capital
leases, (ii) amortization of debt discount, (iii) capitalized interest, (iv)
non-cash interest expense, (v) commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing, (vi) interest actually paid by the Company or any such Subsidiary
under any Guarantee of Indebtedness or other obligation of any other Person,
(vii) net payments (whether positive or negative) pursuant to Interest Rate
Agreements, and (viii) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than the Company) in
connection with Indebtedness Incurred by such plan or trust and less, (a) to
the extent included in such interest expense, the amortization of capitalized
debt issuance costs and (b) interest income. Notwithstanding the foregoing,
the Consolidated Interest Expense with respect to any Subsidiary of the Company
that was not a Wholly Owned Subsidiary, shall be included only to the extent
7
<PAGE> 14
(and in the same proportion) that the net income of such Subsidiary was
included in calculating Consolidated Net Income.
"Consolidated Net Income" means, for any period, the net income
(loss) of the Company and its consolidated Subsidiaries; provided, however,
that there shall not be included in such Consolidated Net Income: (i) any net
income (loss) of any Person acquired by the Company or any of its Subsidiaries
in a pooling of interests transaction for any period prior to the date of such
acquisition; (ii) any net income of any Subsidiary of the Company if such
Subsidiary is subject to restrictions, directly or indirectly, on the payment
of dividends or the making of distributions by such Subsidiary, directly or
indirectly, to the Company (other than restrictions in effect on the Issue Date
with respect to a Subsidiary of the Company and other than restrictions that
are created or exist in compliance with Section 4.5); (iii) any gain or loss
realized upon the sale or other disposition of any assets of the Company or its
consolidated Subsidiaries (including pursuant to any Sale/Leaseback
Transaction) which are not sold or otherwise disposed of in the ordinary course
of business and any gain or loss realized upon the sale or other disposition of
any Capital Stock of any Person; (iv) any extraordinary gain or loss; (v) the
cumulative effect of a change in accounting principles; and (vi) the net income
of any Person, other than a Subsidiary, except to the extent of the lesser of
(A) dividends or distributions paid to the Company or any of its Subsidiaries
by such Person and (B) the net income of such Person (but in no event less than
zero), and the net loss of such Person shall be included only to the extent of
the aggregate Investment of the Company or any of its Subsidiaries in such
Person.
"Consolidated Net Worth" means the total of the amounts shown on
the balance sheet of the Company and its consolidated Subsidiaries, determined
on a consolidated basis in accordance with GAAP, as of the end of the most
recent fiscal quarter of the Company ending prior to the taking of any action
for the purpose of which the determination is being made and for which
financial statements are available (but in no event ending more than 135 days
prior to the taking of such action), as (i) the par or stated value of all
outstanding Capital Stock of the Company plus (ii) paid-in capital or capital
surplus relating to such Capital Stock plus (iii) any retained earnings or
earned surplus less (A)
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<PAGE> 15
any accumulated deficit and (B) any amounts attributable to Disqualified Stock.
"Continuing Director" means, as of the date of determination, any
Person who (i) was a member of the Board of Directors of Holding or the Company
on the Issue Date, (ii) was nominated for election or elected to the Board of
Directors of Holding or the Company with the affirmative vote of a majority of
the Continuing Directors who were members of such Board of Directors at the
time of such nomination or election, or (iii) is a representative of a
Permitted Holder.
"Credit Agreement" means (i) the Amended Credit Agreement, dated
as of March 5, 1996, among Holding, the Company, Chemical Bank, as
Administrative Agent, Bankers Trust Company, as Documentation Agent, and the
lenders parties thereto from time to time, as the same may be amended,
supplemented or otherwise modified from time to time and (ii) any renewal,
extension, refunding, restructuring, replacement or refinancing thereof
(whether with the original Administrative Agent and lenders or another
administrative agent or agents or other lenders and whether provided under the
original Credit Agreement or any other credit or other agreement or indenture).
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement as to
which such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Depositary" means The Depository Trust Company, its nominees and
their respective successors.
"Designated Senior Indebtedness" means (i) the Bank Indebtedness
in the case of the Company, (ii) any Guarantee by a Subsidiary Guarantor of the
Bank Indebtedness in the case of such Subsidiary Guarantor and (iii) any other
Senior Indebtedness in the case of the Company or Guarantor Senior Indebtedness
of a Subsidiary Guarantor in the case of such Subsidiary Guarantor which, at
the date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of
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<PAGE> 16
determination, the holders thereof are committed to lend up to, at least $20
million and is specifically designated by the Company or such Subsidiary
Guarantor in the instrument evidencing or governing such Senior Indebtedness or
Guarantor Senior Indebtedness as "Designated Senior Indebtedness" for purposes
of this Indenture.
"Disqualified Stock" means, with respect to any Person, any
Capital Stock of such Person which by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable) or upon
the happening of any event (i) matures or is mandatorily redeemable pursuant to
a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for
Indebtedness or Disqualified Stock (excluding capital stock which is
convertible or exchangeable solely at the option of the Company or a
Subsidiary) or (iii) is redeemable at the option of the holder thereof, in
whole or in part, in each case on or prior to the Stated Maturity of the
Securities, provided, that only the portion of Capital Stock which so matures
or is mandatorily redeemable, is so convertible or exchangeable or is so
redeemable at the option of the holder thereof prior to such Stated Maturity
shall be deemed to be Disqualified Stock.
"ECM" means Electro Componentes de Mexico, S.A. de C.V., a
Mexican corporation and a Wholly-Owned Subsidiary.
"Equity Offering" means an offering for cash by Holding or the
Company of its common stock, or options, warrants or rights with respect to its
common stock.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted principles in the United States
of America as in effect as of the date of this Indenture, including those set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such entity as are approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP.
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<PAGE> 17
"Guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness of any other Person
and any obligation, direct or indirect, contingent or otherwise, of such Person
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness of such other Person (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantor Senior Indebtedness" means, with respect to a
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
issued, the Guarantee of the Bank Indebtedness by such Subsidiary Guarantor,
all other Guarantees by such Subsidiary Guarantor of Senior Indebtedness of the
Company and all Indebtedness of such Subsidiary Guarantor, including interest
and fees thereon, unless, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that the obligations
of such Subsidiary Guarantor in respect of such Indebtedness are not superior
in right of payment to the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee; provided, however, that Guarantor Senior Indebtedness
shall not include (1) any obligation of such Subsidiary Guarantor to the
Company or any other Subsidiary of the Company, (2) any liability for Federal,
state, local or other taxes owed or owing by such Subsidiary Guarantor, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including Guarantees thereof or instruments evidencing such
liabilities) or (4) any Indebtedness, Guarantee or obligation of such
Subsidiary Guarantor that is expressly subordinate or junior in right of
payment to any other Indebtedness, Guarantee or obligation of such Subsidiary
Guarantor, including any Guarantor Senior Subordinated Indebtedness and
Guarantor Subordinated Obligations of such Subsidiary Guarantor.
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<PAGE> 18
"Guarantor Senior Subordinated Indebtedness" means, with respect
to a Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under
the Subsidiary Guarantee and any other Indebtedness of such Subsidiary
Guarantor that specifically provides that such Indebtedness is to rank pari
passu in right of payment with the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee and is not subordinated by its terms in right of
payment to any Indebtedness or other obligation of such Subsidiary Guarantor
which is not Guarantor Senior Indebtedness of such Subsidiary Guarantor.
"Guarantor Subordinated Obligation" means, with respect to a
Subsidiary Guarantor, any Indebtedness of such Subsidiary Guarantor (whether
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee pursuant to a written agreement.
"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Holding" means International Wire Holding Company, a Delaware
corporation and the owner of all the outstanding Capital Stock of the Company
on the Issue Date.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Subsidiary at the time it becomes a Subsidiary.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of indebtedness of such Person for borrowed money, (ii) the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person in respect of letters of credit or other similar
instruments (including reimbursement obligations
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<PAGE> 19
with respect thereto) (other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (i), (ii) and
(v)) entered into in the ordinary course of business of such Person to the
extent that such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third business day
following receipt by such Person of a demand for reimbursement following
payment on the letter of credit), (iv) all obligations of such Person to pay
the deferred and unpaid purchase price of property or services (except trade
payables and accrued expenses incurred in the ordinary course of business),
which purchase price is due more than six months after the date of placing such
property in service or taking delivery and title thereto or the completion of
such services, (v) all Capitalized Lease Obligations and all Attributable
Indebtedness of such Person, (vi) all Indebtedness of other Persons secured by
a Lien on any asset of such Person, whether or not such Indebtedness is assumed
by such Person, (vii) all Indebtedness of other Persons to the extent
Guaranteed by such Person and (viii) to the extent not otherwise included in
this definition, obligations under Currency Agreements and Interest Rate
Agreements. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented from
time to time.
"Interest Rate Agreement" means with respect to any Person any
interest rate protection agreement, interest rate future agreement, interest
rate option agreement, interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate hedge agreement or
other similar agreement or arrangement as to which such Person is party or a
beneficiary.
"Investment" in any Person means any direct or indirect advance,
loan (other than advances to customers in the ordinary course of business that
are recorded as accounts payable on the balance sheet of such Person) or other
extension of credit (including by way of Guarantee or similar arrangement, but
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<PAGE> 20
excluding any debt or extension of credit represented by a bank deposit other
than a time deposit) or capital contribution to (by means of any transfer of
cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person.
"Issue Date" means the date on which the Initial Exchange Notes
are originally issued.
"Legal Holiday" has the meaning ascribed in Section 12.8.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof).
"Mills & Partners" means Mills & Partners, Inc.
"Monitoring and Oversight Agreement" means the Monitoring and
Oversight Agreement, dated as of June 12, 1995 among the Company, Holding and
Hicks Muse & Co. Partners, L.P., as in effect on the Issue Date.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other non-
cash form) therefrom, in each case net of (i) all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all
Federal, state, foreign and local taxes required to be paid or accrued as a
liability under GAAP, as a consequence of such Asset Disposition, (ii) all
payments made on any Indebtedness which is secured by any assets subject to
such Asset Disposition, in accordance with the terms of any Lien upon such
assets, or which must by its terms, or in order to obtain a necessary consent
to such Asset Disposition, or by applicable law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other
14
<PAGE> 21
payments required to be made to any Person owning a beneficial interest in
assets subject to sale or minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition, (iv) the deduction of
appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Disposition and retained by the Company or any Subsidiary of the
Company after such Asset Disposition and (v) any portion of the purchase price
from an Asset Disposition placed in escrow (whether as a reserve for adjustment
of the purchase price, for satisfaction of indemnities in respect of such Asset
Disposition or otherwise in connection with such Asset Disposition); provided,
however, that upon the termination of such escrow, Net Available Cash shall be
increased by any portion of funds therein released to the Company or any
Subsidiary.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result of such issuance or sale.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company, as applicable.
"Officers' Certificate" means a certificate signed by two
Officers.
"Opinion of Counsel" means a written opinion from legal counsel
who is acceptable to the Trustee. The counsel may be an employee of or counsel
to the Company or the Trustee.
"Permitted Holders" means Hicks Muse, Mills & Partners or any of
their Affiliates, officers or directors.
"Permitted Indebtedness" means (i) Indebtedness of the Company
owing to and held by any Wholly Owned Subsidiary or Indebtedness of a
Subsidiary owing to and held by the Company or any Wholly Owned Subsidiary;
provided, however, that any subsequent issuance or transfer of any Capital
Stock or any other
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<PAGE> 22
event which results in any such Wholly Owned Subsidiary ceasing to be a Wholly
Owned Subsidiary or any subsequent transfer of any such Indebtedness (except to
the Company or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Incurrence of such Indebtedness by the issuer thereof; (ii)
Indebtedness represented by (x) the Securities, (y) any Indebtedness (other
than the Indebtedness described in clauses (i), (ii) and (iv) of Section 4.3(b)
and other than Indebtedness incurred pursuant to clause (i) above or clauses
(iv), (v) or (vi) below) outstanding on the Issue Date and (z) any Refinancing
Indebtedness Incurred in respect of any Indebtedness described in this clause
(ii) or Incurred pursuant to Section 4.3(a); (iii) (A) Indebtedness of a
Subsidiary Incurred and outstanding on the date on which such Subsidiary was
acquired by the Company (other than Indebtedness incurred as consideration in,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary or was otherwise acquired by the Company);
provided, however, that at the time such Subsidiary is acquired by the Company,
the Company would have been able to Incur $1.00 of additional Indebtedness
pursuant to Section 4.3(a) after giving effect to the Incurrence of such
Indebtedness pursuant to this clause (iii) and (B) Refinancing Indebtedness
Incurred by a Subsidiary in respect of Indebtedness Incurred by such Subsidiary
pursuant to this clause (iii); (iv) Indebtedness (A) in respect of performance
bonds, bankers' acceptances and surety or appeal bonds provided by the Company
or any of its Subsidiaries to their customers in the ordinary course of their
business, (B) in respect of performance bonds or similar obligations of the
Company or any of its Subsidiaries for or in connection with pledges, deposits
or payments made or given in the ordinary course of business in connection with
or to secure statutory, regulatory or similar obligations, including
obligations under health, safety or environmental obligations, (C) arising from
Guarantees to suppliers, lessors, licensees, contractors, franchisees or
customers of obligations (other than Indebtedness) Incurred in the ordinary
course of business and (D) under Currency Agreements and Interest Rate
Agreements; provided, however, that in the case of Currency Agreements and
Interest Rate Agreements, such Currency Agreements and Interest Rate Agreements
are entered into for bona fide hedging purposes of the Company or its
Subsidiaries (as determined in good faith by the Board of Directors or senior
16
<PAGE> 23
management of the Company) and correspond in terms of notional amount,
duration, currencies and interest rates, as applicable, to Indebtedness of the
Company or its Subsidiaries Incurred without violation of the Indenture or to
business transactions of the Company or its Subsidiaries on customary terms
entered into in the ordinary course of business; (v) Indebtedness arising from
agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from Guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in any case incurred in connection
with the disposition of any business assets or Subsidiary of the Company (other
than Guarantees of Indebtedness or other obligations Incurred by any Person
acquiring all or any portion of such business assets or Subsidiary of the
Company for the purpose of financing such acquisition) in a principal amount
not to exceed the gross proceeds actually received by the Company or any of its
Subsidiaries in connection with such disposition; provided, however, that the
principal amount of any Indebtedness Incurred pursuant to this clause (v), when
taken together with all Indebtedness Incurred pursuant to this clause (v) and
then outstanding, shall not exceed $10.0 million; and (vi) Indebtedness
consisting of (A) Guarantees by the Company or a Subsidiary of Indebtedness
Incurred by a Wholly Owned Subsidiary without violation of this Indenture, (B)
Guarantees by a Subsidiary of Senior Indebtedness Incurred by the Company
without violation of this Indenture (so long as such Subsidiary could have
Incurred such Indebtedness directly without violation of this Indenture) and
(C) Guarantees by the Company or a Subsidiary of Guarantor Senior Indebtedness
of a Subsidiary Guarantor (so long as the Company or such Subsidiary could have
Incurred such Indebtedness directly without violation of this Indenture).
"Permitted Investment" means an Investment by the Company or any
of its Subsidiaries in (i) a Wholly Owned Subsidiary of the Company; provided,
however, that the primary business of such Subsidiary is a Related Business;
(ii) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Subsidiary of the Company;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
of its Subsidiaries,
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<PAGE> 24
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; (v) payroll, travel and
similar advances to cover matters that are expected at the time of such
advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business; (vi) loans or advances to
employees for purposes of purchasing the common stock of the Company in an
aggregate amount outstanding at any one time not to exceed $5.0 million and
other loans and advances to employees made in the ordinary course of business
consistent with past practices of the Company or such Subsidiary; (vii) stock,
obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any of its Subsidiaries
or in satisfaction of judgments or claims; (viii) a Person engaged in a Related
Business or a loan or advance to the Company the proceeds of which are used
solely to make an Investment in a Person engaged in a Related Business or a
Guarantee by the Company of Indebtedness of any Person in which such Investment
has been made; provided, however, that no Permitted Investments may be made
pursuant to this clause (viii) to the extent the amount thereof would, when
taken together with all other Permitted Investments made pursuant to this
clause (viii), exceed $20.0 million in the aggregate (plus, to the extent not
previously reinvested, any return of capital realized on Permitted Investments
made pursuant to this clause (viii), or any release or other cancellation of
any Guarantee constituting such Permitted Investment); (ix) Persons to the
extent such Investment is received by the Company or any Subsidiary as
consideration for asset dispositions effected in compliance with Section 4.6;
(x) prepayments and other credits to suppliers made in the ordinary course of
business consistent with the past practices of the Company and its
Subsidiaries; and (xi) Investments in connection with pledges, deposits,
payments or performance bonds made or given in the ordinary course of business
in connection with or to secure statutory, regulatory or similar obligations,
including obligations under health, safety or environmental obligations.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
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<PAGE> 25
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
A "Public Market" exists at any time with respect to the common
stock of Holding or the Company if (a) the common stock of Holding or the
Company, as applicable, is then registered with the SEC pursuant to Section
12(b) or 12(g) of the Exchange Act and traded either on a national securities
exchange or in the National Association of Securities Dealers Automated
Quotation System and (b) at least 15% of the total issued and outstanding
common stock of the Company or Holding, as applicable, has been distributed
prior to such time by means of an effective registration statement under the
Securities Act of 1933.
"Purchase Agreement" means the Preferred Stock and Warrant
Purchase Agreement dated as of March 5, 1996, among the Company, Holding,
Chemical Equity Associates and Hicks, Muse, Tate & Furst Equity Fund II, L.P.,
as amended, supplemented and otherwise in effect from time to time.
"QIB" means any "qualified institutional buyer" (as defined under
the Securities Act).
"Redemption Date" means the date specified by the Company in a
notice delivered pursuant to Section 3.3 as the date on which the Company has
elected to redeem all of the Securities pursuant to paragraph 5 of the
Securities after the occurrence of a Change of Control.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of the Indenture or Incurred in compliance with the Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Subsidiary and
Indebtedness of any Subsidiary that refinances
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<PAGE> 26
Indebtedness of another Subsidiary) including Indebtedness that refinances
Refinancing Indebtedness; provided, however, that (i) the Refinancing
Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the
Indebtedness being refinanced, (ii) the Refinancing Indebtedness has an Average
Life at the time such Refinancing Indebtedness is Incurred that is equal to or
greater than the Average Life of the Indebtedness being refinanced and (iii)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or
if issued with original issue discount, an aggregate issue price) that is equal
to (or 101% of, in the case of a refinancing of the Securities in connection
with a Change of Control) or less than the sum of the aggregate principal
amount (or if issued with original issue discount, the aggregate accreted
value) then outstanding of the Indebtedness being refinanced.
"Related Business" means any business which is the same as or
related, ancillary or complementary to any of the businesses of the Company and
its Subsidiaries on the Issue Date, as reasonably determined by the Board of
Directors.
"Representative" means any trustee, agent or representative (if
any) of an issue of Senior Indebtedness or Guarantor Senior Indebtedness;
provided that, with respect to any Guarantor Senior Indebtedness consisting of
a Guarantee of Senior Indebtedness, the Representative of such Guarantor Senior
Indebtedness shall be deemed to be the Representative of such Senior
Indebtedness.
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Subsidiary
transfers such property to a Person and the Company or a Subsidiary leases it
from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company or
any Subsidiary secured by a Lien.
"Securities" means the Securities issued under this Indenture.
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<PAGE> 27
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Custodian" means the custodian with respect to the
Global Security (as appointed by the Depositary), or any successor Person
thereto and shall initially be the Trustee.
"Senior Indebtedness" means, whether outstanding on the Issue
Date or thereafter issued, the Bank Indebtedness and all Indebtedness of the
Company, including interest and fees thereon, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that the obligations in respect of such Indebtedness are not
superior in right of payment to the Securities; provided, however, that Senior
Indebtedness shall not include (1) any obligation of the Company to any
Subsidiary, (2) any liability for Federal, state, local or other taxes owed or
owing by the Company, (3) any accounts payable or other liability to trade
creditors arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities) or (4) any Indebtedness,
Guarantee or obligation of the Company that is expressly subordinate or junior
in right of payment to any other Indebtedness, Guarantee or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Obligations.
"Senior Subordinated Indebtedness" means the Securities and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness.
"Shelf Registration" has the meaning ascribed thereto in the
Purchase Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which
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the payment of principal of such security is due and payable, including
pursuant to any mandatory redemption provision.
"Subordinated Obligation" means any Indebtedness of the Company
(whether outstanding on the Issue Date or thereafter Incurred) which is
subordinate or junior in right of payment to the Securities pursuant to a
written agreement.
"Subsidiary" of any Person means any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or more
Subsidiaries of such Person. Unless otherwise specified herein, each reference
to a Subsidiary shall refer to a Subsidiary of the Company.
"Subsidiary Guarantee" means the Guarantee of the Securities by
the Subsidiary Guarantors set forth in Article XI.
"Subsidiary Guarantors" means each Subsidiary of the Company in
existence on the Issue Date (other than ECM and Wirekraft Industries de Mexico,
S.A. de C.V.) and each Subsidiary (other than foreign subsidiaries) created or
acquired by the Company after the Issue Date and which becomes a party hereto
pursuant to Section 11.7.
"Temporary Cash Investments" means any of the following: (i) any
Investment in direct obligations of the United States of America or any agency
thereof or obligations Guaranteed by the United States of America or any agency
thereof, (ii) Investments in time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of acquisition
thereof issued by a bank or trust company which is organized under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America having capital, surplus and
undivided profits aggregating in excess of $250.0 million (or the foreign
currency equivalent thereof) and whose long-term debt, or whose parent holding
company's long-term debt, is rated "A" (or such similar
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<PAGE> 29
equivalent rating) or higher by at least one nationally recognized statistical
rating organization (as defined in Rule 436 under the Securities Act), (iii)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above, (iv) Investments in
commercial paper, maturing not more than 180 days after the date of
acquisition, issued by a corporation (other than an Affiliate of the Company)
organized and in existence under the laws of the United States of America or
any foreign country recognized by the United States of America with a rating at
the time as of which any investment therein is made of "P-1" (or higher)
according to Moody's Investors Services, Inc. or "A-1" (or higher) according to
Standard and Poor's Ratings Group, (v) Investments in securities with
maturities of six months or less from the date of acquisition issued or fully
guaranteed by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof, and rated
at least "A" by Standard & Poor's Ratings Group or "A" by Moody's Investors
Service, Inc., and (vi) Investments in mutual funds whose investment guidelines
restrict such funds' investments to those satisfying the provisions of clauses
(i) through (v) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.6(g) hereof.
"Treasury Rate" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two business days prior
to the Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Redemption Date to June 1, 2000; provided, however, that if the
period from the Redemption Date to June 1, 2000 is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by
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<PAGE> 30
linear interpolation (calculated to the nearest one-twelfth of a year) from the
weekly average yields of United States Treasury securities for which such
yields are given, except that if the period from the Redemption Date to June 1,
2000 is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
"Trustee" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or
any other officer or assistant officer of the Trustee assigned by the Trustee
to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform Commercial
Code as in effect from time to time.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Subsidiary of the Company, at
least 99% of the Capital Stock of which (other than directors qualifying
shares) is owned by the Company or another Wholly Owned Subsidiary.
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<PAGE> 31
SECTION 1.2. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- ----------
<S> <C>
"Affiliate Transaction" . . . . . . . . . . . . . . . . . . . . . . 4.7
"Agent Member" . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
"covenant defeasance option" . . . . . . . . . . . . . . . . . . . 8.1(b)
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Definitive Securities" . . . . . . . . . . . . . . . . . . . . . . 2.1
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . 6.1
"Global Security" . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"legal defeasance option" . . . . . . . . . . . . . . . . . . . . . 8.1(b)
"Non-Global Purchaser" . . . . . . . . . . . . . . . . . . . . . . 2.1
"Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6
"pay the Securities" . . . . . . . . . . . . . . . . . . . . . . . 10.3
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . . 10.3
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
"Restricted Payment" . . . . . . . . . . . . . . . . . . . . . . . 4.4
"Rule 144A" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
"Successor Company" . . . . . . . . . . . . . . . . . . . . . . . . 5.1
</TABLE>
SECTION 1.3. Incorporation by Reference of Trust Indenture Act.
This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by the TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
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SECTION 1.4. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof that
would be shown on a balance sheet of the issuer dated such date prepared
in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater.
ARTICLE II
The Securities
SECTION 2.1. Form and Dating. (a) The Initial Exchange Notes
and the Trustee's certificate of authentication shall be substantially in the
form of Exhibit A, which is hereby incorporated in and expressly made a part of
this Indenture. The Registered Exchange Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit B, which is hereby
incorporated by reference and expressly made a part of this Indenture. The
Securities may have notations,
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<PAGE> 33
legends or endorsements required by law, stock exchange rule or usage, in
addition to those set forth on Exhibits A and B. The Company and the Trustee
shall approve the forms of the Securities and any notation, endorsement or
legend on them. Each Security shall be dated the date of its authentication.
The terms of the Securities set forth in Exhibits A and B are part of the terms
of this Indenture and, to the extent applicable, the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to be bound by such terms.
(b) Global Securities. The Initial Exchange Notes are being
issued by the Company in exchange for Preferred Stock of the Company pursuant
to the terms and conditions of the Certificate of Designation and the Purchase
Agreement.
Initial Exchange Notes issued to a QIB in reliance on Rule 144A
under the Securities Act ("Rule 144A") shall be issued initially in the form of
one or more permanent global Securities in definitive, fully registered form
without interest coupons with the Global Securities Legend and Restricted
Securities Legend set forth in Exhibit A hereto (each, a "Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Exchange
Notes represented thereby with the Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and authenticated by
the Trustee as hereinafter provided. The aggregate principal amount of the
Global Securities may from time to time be increased or decreased by
endorsements made on such Global Securities by the Trustee and the Depositary
or its nominee as hereinafter provided.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply
only to Global Securities deposited with the Trustee, as custodian for the
Depositary.
Members of, or participants in, the Depositary ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the Depositary or by the Trustee as the custodian of
the Depositary or under such Global Security, and the Depositary may be treated
by the Company, the Trustee and any agent of the Company or the Trustee
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<PAGE> 34
as the absolute owner of such Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Agent Members, the operation of
customary practices of the Depositary governing the exercise of the rights of a
holder of a beneficial interest in any Global Security.
(d) Certificated Securities. Except as provided in Section
2.6, owners of beneficial interests in Global Securities will not be entitled
to receive Definitive Securities (as defined in Section 2.6). Initial Exchange
Notes issued to Persons who are not QIBs (referred to herein as the "Non-Global
Purchasers") shall be issued initially to such Person in the form of
certificated Initial Exchange Notes bearing the Restricted Securities Legend
set forth in Exhibit A hereto; provided, however, that upon transfer of such
Definitive Securities to a QIB, such Definitive Securities will, unless the
Global Security has previously been exchanged, be exchanged for an interest in
a Global Security pursuant to the provisions of Section 2.6 hereof. Definitive
Securities will bear the Restricted Securities Legend set forth on Exhibit A
unless removed in accordance with Section 2.6(g) hereof.
SECTION 2.2. Execution and Authentication. Two Officers shall
sign the Securities for the Company by manual or facsimile signature. The
Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually authenticates the Security. The signature of the Trustee
on a Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture.
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<PAGE> 35
The Trustee shall authenticate and deliver: (1) Initial Exchange
Notes for original issue in an aggregate principal amount of $10,000,000 and
(2) Registered Exchange Notes for issue only on any date on which, pursuant to
the Purchase Agreement, the Shelf Registration is effective, in exchange for
Initial Exchange Notes of an equal principal amount, in each case upon a
written order of the Company signed by two Officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of the Company. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and whether the
Securities are to be Initial Exchange Notes or Registered Exchange Notes. The
aggregate principal amount of Securities outstanding at any time may not exceed
$10,000,000 except as provided in Section 2.7.
The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent.
SECTION 2.3. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional
paying agents. The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with
any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of each such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.7. The Company or
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<PAGE> 36
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar, co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent for the Securities.
SECTION 2.4. Paying Agent To Hold Money in Trust. By at least
12:00 noon (New York City time) on the date on which any principal of or
interest on any Security is due and payable, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal or interest when due. The
Company shall require each Paying Agent (other than the Trustee) to agree in
writing that such Paying Agent shall hold in trust for the benefit of
Securityholders or the Trustee all money held by such Paying Agent for the
payment of principal of or interest on the Securities and shall notify the
Trustee of any default by the Company in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate the money held
by it as Paying Agent and hold it as a separate trust fund. The Company at any
time may require a Paying Agent (other than the Trustee) to pay all money held
by it to the Trustee and to account for any funds disbursed by such Paying
Agent. Upon complying with this Section, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money
delivered to the Trustee. Upon any bankruptcy, reorganization or similar
proceeding with respect to the Company, the Trustee shall serve as Paying Agent
for the Securities.
SECTION 2.5. Securityholder Lists. The Trustee shall preserve
in as current a form as is reasonably practicable the most recent list
available to it of the names and addresses of Securityholders. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee, in writing at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of
Securityholders.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
certificated Securities ("Definitive Securities") are
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<PAGE> 37
presented by a Holder to the Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that:
(i) such Definitive Securities shall be duly endorsed
or accompanied by a written instrument of transfer in form reasonably
satisfactory to the Company and the Registrar or co-registrar, duly
executed by such Holder or his attorney duly authorized in writing; and
(ii) if such Definitive Securities are Transfer
Restricted Securities, such Definitive Securities shall also be
accompanied by the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from such
Holder to that effect (in the form set forth on the reverse of
the Security); or
(B) if such Transfer Restricted Securities are being
transferred (x) to the Company or to a QIB in accordance with
Rule 144A under the Securities Act or (y) pursuant to an
effective registration statement under the Securities Act, a
certification from such Holder to that effect (in the form set
forth on the reverse of the Security); or
(C) if such Transfer Restricted Securities are being
transferred (w) pursuant to an exemption from registration in
accordance with Rule 144 or Regulation
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<PAGE> 38
S under the Securities Act; or (x) to an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act that is acquiring the
security for its own account, or for the account of such an
institutional accredited investor, in each case in a minimum
principal amount of the Securities of $250,000 for investment
purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities
Act; or (y) in reliance on another exemption from the
registration requirements of the Securities Act: (i) a
certification to that effect from such Holder (in the form set
forth on the reverse of the Security), (ii) if the Company or the
Trustee so requests, an Opinion of Counsel reasonably acceptable
to the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act and (iii) in
the case of clause (x), a signed letter from the transferee
substantially in the form of Exhibit C hereto.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee
of a Definitive Security, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse
of the Security, to the effect that such Definitive Security is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act; and
(ii) written instructions from the Holder thereof
directing the Trustee to make, or to direct the Securities Custodian to
make, an endorsement on the Global Security to reflect an increase in
the aggregate principal amount of the Securities represented by the
Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depositary and the Securities Custodian, the
aggregate principal
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<PAGE> 39
amount of Securities represented by the Global Security to be increased
accordingly. If no Global Securities are then outstanding, the Company shall
issue and the Trustee shall authenticate, upon written order of the Company in
the form of an Officers' Certificate, a new Global Security in the appropriate
principal amount. The Trustee shall deliver copies of each certification and
instruction received by it pursuant to clauses (i) and (ii) above to the
Depositary and, upon receipt thereof, the Depositary shall make appropriate
adjustments to its books and records to reflect exchange of such Definitive
Security for an interest in the Global Security in accordance with Section
2.6(c).
(c) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein
shall be effected through the Depositary, in accordance with this Indenture
(including applicable restrictions on transfer set forth herein, if any) and
the procedures of the Depositary therefor.
(ii) A Global Security deposited with the Depositary or
with the Trustee as custodian for the Depositary pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof only if such transfer complies
with this Section 2.6 and (i) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security or if at
any time such Depositary ceases to be a "clearing agency" registered under the
Exchange Act and a successor depositary is not appointed by the Company within
90 days of such notice, or (ii) an Event of Default has occurred and is
continuing.
(iii) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section shall be surrendered by the
Depositary to the Trustee to be so transferred, in whole or from time to time
in part, without charge, and the Company shall sign and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Each Definitive Security delivered in exchange for
any portion of a Global Security transferred pursuant to this Section shall be
executed, authenticated and delivered only in denominations of
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<PAGE> 40
$1,000 and any integral multiple thereof and shall be registered in such names
as the Depositary shall direct. Any Definitive Security delivered in exchange
for an interest in the Global Security shall, except as otherwise provided in
Section 2.6(g), bear the Restricted Securities Legend set forth in Exhibit A
hereto.
(iv) The registered Holder of a Global Security may
grant proxies and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take any action which
a Holder is entitled to take under this Indenture or the Securities.
(v) In the event of the occurrence of either of the
events specified in Section 2.6(c)(ii), the Company will promptly make
available to the Trustee a reasonable supply of certificated Securities in
definitive, fully registered form without interest coupons.
(d) Restriction on Transfer of a Beneficial Interest in a
Global Security for a Definitive Security.
(i) Any person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Definitive Security of the same aggregate principal amount; provided
that such request is accompanied by the information specified below.
Upon receipt by the Trustee of written instructions (or such other form
of instructions as is customary for the Depositary) from the Depositary
or its nominee on behalf of any Person having a beneficial interest in a
Global Security and, in the case of a Transfer Restricted Security, the
following additional information and documents (all of which may be
submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the owner of a
beneficial interest in a Global Security, a certification from
such Person to that effect (in the form set forth on the reverse
of the Security); or
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<PAGE> 41
(B) if such beneficial interest is being transferred
(x) to a QIB in accordance with Rule 144A under the Securities
Act or (y) pursuant to an effective registration statement under
the Securities Act, a certification from such person to that
effect (in the form set forth on the reverse of the Security); or
(C) if such beneficial interest is being transferred
(w) pursuant to an exemption from registration in accordance with
Rule 144 or Regulation S under the Securities Act; or (x) to an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act that is
acquiring the security for its own account, or for the account of
such an institutional accredited investor, in each case in a
minimum principal amount of the Securities of $250,000 for
investment purposes and not with a view to, or for offer or sale
in connection with, any distribution in violation of the
Securities Act; or (y) in reliance on another exemption from the
registration requirements of the Securities Act: (i) a
certification to that effect from the transferee (in the form set
forth on the reverse of the Security), (ii) if the Company or the
Trustee so requests, an Opinion of Counsel reasonably acceptable
to the Company and to the Trustee to the effect that such
transfer is in compliance with the Securities Act, and (iii) in
the case of clause (x), a signed letter from the transferee in
the form of Exhibit C hereto;
then the Securities Custodian, at the direction of the Trustee, will
cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Securities Custodian, the
aggregate principal amount of the Global Security to be reduced
accordingly and, following such reduction, the Company will execute and
the Trustee will authenticate and deliver to the transferee one or more
Definitive Securities in accordance with clause (ii) below.
(ii) Definitive Securities issued in exchange for a
beneficial interest in a Global Security pursuant to
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<PAGE> 42
this Section 2.6(d) shall be registered in such names and in such
authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct
the Trustee in writing. The Trustee shall deliver such Definitive
Securities to the Persons in whose names such Securities are so
registered in accordance with the instructions of the Depositary.
(e) Restrictions on Transfer and Exchange of Global
Securities. Notwithstanding any other provisions of this Indenture (other than
the provisions set forth in subsection (f) of this Section 2.6), a Global
Security may not be transferred as a whole except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary
or another nominee of the Depositary or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary.
(f) [Intentionally Omitted];
(g) Legend.
(i) Except as permitted by the following paragraph (ii)
each Security certificate evidencing Global Securities and Definitive
Securities (and all Securities issued in exchange therefor or
substitution thereof) shall bear a legend in substantially the following
form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE
YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE
LAST DATE ON
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<PAGE> 43
WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF
THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO
THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG
AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND
SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH CASE, ONLY
IF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER
SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE
TRANSFEROR TO THE ISSUER AND THE TRUSTEE. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
RESTRICTION TERMINATION DATE."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the Securities
Act:
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(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security for
a Definitive Security that does not bear the legend set forth in
paragraph (i) above and rescind any restriction on the transfer
of such Security; and
(B) in the case of any such Transfer Restricted
Security represented by a Global Security, such Transfer
Restricted Security shall not be required to bear the legend set
forth in paragraph (i) above, although it shall continue to be
subject to the provisions of Section 2.6(c) hereof; provided,
however, that with respect to any request for an exchange of a
Transfer Restricted Security that is represented by a Global
Security for a Definitive Security that does not bear the legend
set forth in paragraph (i) above, which request is made in
reliance upon Rule 144, the Holder thereof shall certify in
writing to the Trustee that such request is being made pursuant
to Rule 144 (such certification to be in the form set forth on
the reverse of the Security).
(h) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been
exchanged for Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned to the Depositary for cancellation or
retained and canceled by the Trustee. At any time prior to such cancellation,
if any beneficial interest in a Global Security is exchanged for Definitive
Securities, redeemed, repurchased or canceled, the principal amount of
Securities represented by such Global Security shall be reduced and an
endorsement shall be made on such Global Security by the Securities Custodian
to reflect such reduction.
(i) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall
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authenticate Definitive Securities and Global Securities at the
Registrar's or co-registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any transfer tax, assessments, or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charges payable upon
exchange or transfer pursuant to Sections 4.6, 4.8 or 9.5 or pursuant to
paragraph 5 of the Securities).
(iii) The Registrar or co-registrar shall not be required
to register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article III,
except the unredeemed portion of any Definitive Security being redeemed
in part, or (b) any Security for a period beginning (1) 15 Business Days
before the mailing of a notice of an offer to repurchase or redeem
Securities and ending at the close of business on the day of such
mailing or (2) 15 Business Days before an interest payment date and
ending on such interest payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in whose
name a Security is registered as the absolute owner of such Security for
the purpose of receiving payment of principal of and interest on such
Security and for all other purposes whatsoever, whether or not such
Security is overdue, and none of the Company, the Trustee, the Paying
Agent, the Registrar or any co-registrar shall be affected by notice to
the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt and
shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(j) No Obligation of the Trustee. (i) The Trustee shall have
no responsibility or obligation to any beneficial
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owner of a Global Security, a member of, or a participant in the Depositary or
other Person with respect to the accuracy of the records of the Depositary or
its nominee or of any participant or member thereof, with respect to any
ownership interest in the Securities or with respect to the delivery to any
participant, member, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the payment
of any amount or delivery of any Securities (or other security or property)
under or with respect to such Securities. All notices and communications to be
given to the Holders and all payments to be made to Holders in respect of the
Securities shall be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case of a Global
Security). The rights of beneficial owners in any Global Security shall be
exercised only through the Depositary subject to the applicable rules and
procedures of the Depositary. The Trustee may rely and shall be fully
protected in relying upon information furnished by the Depositary with respect
to its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers between
or among Depositary participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by, the terms of this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 2.7. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
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which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.8. Outstanding Securities. Securities outstanding at
any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.7, it ceases to
be outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient to
pay all principal and interest payable on that date with respect to the
Securities (or portions thereof) to be redeemed or maturing, as the case may
be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9. Temporary Securities. Until definitive Securities
are ready for delivery, the Company may prepare and the Trustee shall
authenticate temporary Securities. Temporary Securities shall be substantially
in the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay,
the Company shall prepare and the Trustee shall authenticate definitive
Securities. After the preparation of definitive Securities, the temporary
Securities shall be exchangeable for definitive Securities upon surrender of
the temporary Securities at any office or agency maintained by the Company for
that purpose and such exchange shall be without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Securities, the Company
shall execute, and the Trustee shall authenticate and deliver in exchange
therefor, one
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or more definitive Securities representing an equal principal amount of
Securities. Until so exchanged, the Holder of temporary Securities shall in
all respects be entitled to the same benefits under this Indenture as a holder
of a definitive Securities.
SECTION 2.10. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee to deliver canceled
Securities to the Company. The Company may not issue new Securities to replace
Securities it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who are
Securityholders on a subsequent special record date. The Company shall fix or
cause to be fixed (or upon the Company's failure to do so the Trustee shall
fix) any such special record date and payment date to the reasonable
satisfaction of the Trustee which specified record date shall not be less than
10 days prior to the payment date for such defaulted interest and shall
promptly mail or cause to be mailed to each Securityholder a notice that states
the special record date, the payment date and the amount of defaulted interest
to be paid. The Company shall notify the Trustee in writing of the amount of
defaulted interest proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid in
respect of such defaulted interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the proposed payment, such
money when so deposited to be held in trust for the benefit of the Person
entitled to such defaulted interest as provided in this Section.
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SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders, provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE III
Redemption
SECTION 3.1. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify
the Trustee in writing of the redemption date and the principal amount of
Securities to be redeemed.
The Company shall give each notice to the Trustee provided for in
this Section at least 60 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate from the Company to the effect that such redemption will comply
with the conditions herein. If fewer than all the Securities are to be
redeemed, the record date relating to such redemption shall be selected by the
Company and set forth in the related notice given to the Trustee, which record
date shall be not less than 15 days after the date of such notice.
SECTION 3.2. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of
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Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or a whole multiple
of $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption. The
Trustee shall notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portion thereof) called for redemption ceases to accrue on and after
the redemption date;
(7) the CUSIP number, if any, printed on the Securities being
redeemed; and
(8) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
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At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
SECTION 3.4. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date;
provided that if the redemption date is after a regular record date and on or
prior to the interest payment date, the accrued interest shall be payable to
the Securityholder of the redeemed Securities registered on the relevant record
date. Failure to give notice or any defect in the notice to any Holder shall
not affect the validity of the notice to any other Holder.
SECTION 3.5. Deposit of Redemption Price. By at least 12:00
noon (New York City time) on the date on which any principal of or intent on
any Security is due and payable, the Company shall deposit with the Paying
Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate
and hold in trust) money sufficient to pay the redemption price of and accrued
interest on all Securities to be redeemed on that date other than Securities or
portions of Securities called for redemption which are owned by the Company or
a Subsidiary and have been delivered by the Company or such Subsidiary to the
Trustee for cancellation.
If the Company complies with the preceding paragraph, then,
unless the Company defaults in the payment of such redemption price, interest
on the Securities to be redeemed will cease to accrue on and after the
applicable redemption date, whether or not such Securities are presented for
payment.
SECTION 3.6. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in a principal amount to the unredeemed portion of the Security
surrendered.
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ARTICLE IV
Covenants
SECTION 4.1. Payment of Securities. The Company shall promptly
pay the principal of and interest on the Securities on the dates and in the
manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee
or the Paying Agent holds in accordance with this Indenture money sufficient to
pay all principal and interest then due and the Trustee or the Paying Agent, as
the case may be, is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Notwithstanding anything to the contrary contained in this
Indenture, the Company may, to the extent it is required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States
of America from principal or interest payments hereunder.
SECTION 4.2. SEC Reports. Notwithstanding that the Company may
not be required to be subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, the Company shall file with the SEC and within 15
days after such reports are filed, provide the Trustee and the Holders (at
their addresses as set forth in the register of Securities) with the annual and
quarterly reports and the information, documents and other reports which are
otherwise required pursuant to Section 13 of the Exchange Act. In addition,
following the registration of the common stock of the Company pursuant to
Section 12(b) or 12(g) of the Exchange Act, the Company shall furnish to the
Trustee and the Holders, promptly upon their becoming available, copies of the
Company's annual report to shareholders and any other information provided by
the Company to its public shareholders generally. The Company shall also
comply with the other provisions of TIA Section 314(a).
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SECTION 4.3. Limitation on Indebtedness. (a) The Company shall
not, and shall not permit any of its Subsidiaries to, Incur any Indebtedness;
provided, however, that the Company and any of its Subsidiaries may Incur
Indebtedness if on the date thereof the Consolidated Coverage Ratio would be
greater than 2.00:1.00, if such Indebtedness is Incurred on or prior to the
second anniversary of the Issue Date, and 2.25:1:00, if such Indebtedness is
Incurred thereafter.
(b) Notwithstanding Section 4.3(a), the Company and its
Subsidiaries may Incur the following Indebtedness: (i) Indebtedness Incurred
pursuant to (A) the Credit Agreement (including any renewal, extension,
refunding, restructuring, replacement or refinancing thereof referred to in
clause (ii) of the definition thereof) or (B) any other agreements or
indentures governing Senior Indebtedness or Guarantor Senior Indebtedness;
provided that the aggregate principal amount of all Indebtedness Incurred
pursuant to this clause (i) does not exceed $240.0 million at any time
outstanding, less the aggregate principal amount thereof repaid with the net
proceeds of Asset Dispositions (to the extent, in the case of a repayment of
revolving credit Indebtedness, the commitment to advance the loans repaid has
been terminated); (ii) Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations, in each case
Incurred for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property used in a Related Business or
Incurred to Refinance any such purchase price or cost of construction or
improvement, in each case Incurred no later than 365 days after the date of
such acquisition or the date of completion of such construction or improvement;
provided, however, that the principal amount of any Indebtedness Incurred
pursuant to this Section 4.3(b)(ii) shall not exceed $10.0 million at any time
outstanding; (iii) Permitted Indebtedness; and (iv) Indebtedness (other than
Indebtedness described in clauses (i)-(iii)) in a principal amount which, when
taken together with the principal amount of all other Indebtedness Incurred
pursuant to this Section 4.3(b)(iv) and then outstanding, will not exceed $25.0
million.
(c) The Company shall not Incur any Indebtedness under Section
4.3(b) if the proceeds thereof are used, directly or indirectly, to Refinance
any Subordinated Obligations unless such
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Indebtedness shall be subordinated to the Securities to at least the same
extent as such Subordinated Obligations. No Subsidiary Guarantor shall Incur
any Indebtedness under Section 4.3(b) if the proceeds thereof are used,
directly or indirectly, to Refinance any Guarantor Subordinated Indebtedness of
such Subsidiary Guarantor unless such Indebtedness shall be subordinated to the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee to at
least the same extent as such Guarantor Subordinated Indebtedness.
(d) The Company shall not Incur any Secured Indebtedness which
is not Senior Indebtedness unless contemporaneously therewith effective
provision is made to secure the Securities equally and ratably with such
Secured Indebtedness for so long as such Secured Indebtedness is secured by a
Lien. No Subsidiary Guarantor shall Incur any Secured Indebtedness which is
not Guarantor Senior Indebtedness of such Subsidiary Guarantor unless
contemporaneously therewith effective provision is made to secure the
obligations of such Subsidiary Guarantor under the Subsidiary Guarantee equally
and ratably with such Secured Indebtedness for so long as such Secured
Indebtedness is secured by a Lien.
(e) The Company shall not Incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
expressly subordinated in right of payment to Senior Subordinated Indebtedness.
No Subsidiary Guarantor shall Incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Guarantor Senior
Indebtedness of such Subsidiary Guarantor unless such Indebtedness is Guarantor
Senior Subordinated Indebtedness of such Subsidiary Guarantor or is expressly
subordinated in right of payment to Guarantor Senior Subordinated Indebtedness
of such Subsidiary Guarantor.
SECTION 4.4. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any of its Subsidiaries, directly or
indirectly, to (i) declare or pay any dividend or make any distribution on or
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving the Company or any of its Subsidiaries)
except (A) dividends or distributions payable in its Capital
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Stock (other than Disqualified Stock) or in options, warrants or other rights
to purchase such Capital Stock and (B) dividends or distributions payable to
the Company or a Subsidiary of the Company (and, if such Subsidiary is not a
Wholly Owned Subsidiary, to its other stockholders on a pro rata basis or on a
basis no more favorable to such other stockholders), (ii) purchase, redeem,
retire or otherwise acquire for value any Capital Stock of the Company held by
Persons other than a Subsidiary of the Company or any Capital Stock of a
Subsidiary of the Company held by any Affiliate of the Company, other than
another Subsidiary (in either case, other than in exchange for its Capital
Stock (other than Disqualified Stock)), (iii) purchase, repurchase, redeem,
defease or otherwise acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any Subordinated
Obligations (other than the purchase, repurchase or other acquisition of
Subordinated Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within
one year of the date of acquisition) or (iv) make any Investment (other than a
Permitted Investment) in any Person (any such dividend, distribution, purchase,
redemption, repurchase, defeasance, other acquisition, retirement or Investment
being herein referred to as a "Restricted Payment"), if at the time the Company
or such Subsidiary makes such Restricted Payment: (1) a Default or Event of
Default shall have occurred and be continuing (or would result therefrom); or
(2) the Company is not able to incur an additional $1.00 of Indebtedness
pursuant to Section 4.3(a); or (3) the aggregate amount of such Restricted
Payment and all other Restricted Payments declared or made subsequent to the
Issue Date would exceed the sum of: (A) 50% of the Consolidated Net Income
accrued during the period (treated as one accounting period) from the Issue
Date to the end of the most recent fiscal quarter ending prior to the date of
such Restricted Payment as to which financial results are available (but in no
event ending more than 135 days prior to the date of such Restricted Payment)
(or, in case such Consolidated Net Income shall be a deficit, minus 100% of
such deficit); (B) the aggregate Net Cash Proceeds received by the Company from
the issue or sale of its Capital Stock (other than Disqualified Stock) or other
cash contributions to its capital subsequent to the Issue Date (other than an
issuance or sale to a Subsidiary of the Company or an employee stock ownership
plan or similar trust); (C) the aggregate Net Cash
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Proceeds received by the Company from the issue or sale of its Capital Stock
(other than Disqualified Stock) to an employee stock ownership plan or similar
trust subsequent to the Issue Date; provided, however, that if such plan or
trust Incurs any Indebtedness to or Guaranteed by the Company or any of its
Subsidiaries to finance the acquisition of such Capital Stock, such aggregate
amount shall be limited to such Net Cash Proceeds less such Indebtedness
Incurred or Guaranteed by the Company or any of its Subsidiaries and any
increase in the Consolidated Net Worth of the Company resulting from principal
repayments made by such plan or trust with respect to Indebtedness Incurred by
it to finance the purchase of such Capital Stock; (D) the amount by which
Indebtedness of the Company is reduced on the Company's balance sheet upon the
conversion or exchange (other than by a Subsidiary of the Company) subsequent
to the Issue Date of any Indebtedness of the Company convertible or
exchangeable for Capital Stock of the Company (less the amount of any cash, or
other property, distributed by the Company upon such conversion or exchange);
and (E) the amount equal to the net reduction in Investments (other than
Permitted Investments) made by the Company or any of its Subsidiaries in any
Person resulting from repurchases or redemptions of such Investments by such
Person, proceeds realized upon the sale of such Investment to an unaffiliated
purchaser, repayments of loans or advances or other transfers of assets by such
Person to the Company or any Subsidiary of the Company; provided, however, that
no amount shall be included under this clause (E) of this Section 4.4(a) to the
extent it is already included in Consolidated Net Income.
(b) The provisions of Section 4.4(a) shall not prohibit: (i)
any purchase or redemption of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary or an employee
stock ownership plan or similar trust); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale shall be
excluded from clause (3)(B) of Section 4.4(a); (ii) any purchase or redemption
of Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of
the Company; provided, however, that
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such purchase or redemption shall be excluded in the calculation of the amount
of Restricted Payments; (iii) any purchase or redemption of Subordinated
Obligations from Net Available Cash to the extent permitted under Section 4.6;
provided, however, that such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments; (iv) dividends paid within 60
days after the date of declaration if at such date of declaration such dividend
would have complied with this provision; provided, however, that such dividend
shall be included in the calculation of the amount of Restricted Payments; (v)
[Intentionally Omitted]; (vi) payments by the Company to fund (A) out of pocket
expenses of Holding for administrative, legal and accounting services provided
by third parties, or to pay franchise fees and similar costs; provided,
however, any such administrative expenses shall not exceed an aggregate amount
of $1.0 million per annum, and (B) taxes of Holding; (vii) payments by the
Company to Holding pursuant to the Monitoring and Oversight Agreement; (viii)
payments of dividends on the Company's common stock after an initial public
offering of common stock of the Company or of Holding in an annual amount not
to exceed 6% of the gross proceeds (before deducting underwriting discounts and
commissions and other fees and expenses of the offering) received by the
Company (directly or as a common equity contribution from Holding) from such
initial public offering; (ix) payments by the Company to repurchase, or to
enable Holding to repurchase, Capital Stock or other securities of Holding from
members of management of Holding or the Company in an aggregate amount not to
exceed $7,500,000; (x) payments to enable Holding to redeem or repurchase stock
purchase or similar rights granted by Holding with respect to its Capital Stock
in an aggregate amount not to exceed $500,000; (xi) payments, not to exceed
$100,000 in the aggregate, to enable Holding to make cash payments to holders
of its Capital Stock in lieu of the issuance of fractional shares of its
Capital Stock; and (xii) payments made pursuant to any merger, consolidation or
sale of assets effected in accordance with Section 5.1; provided, however, that
no such payment may be made pursuant to this clause (xii) unless, after giving
effect to such transaction, the Consolidated Coverage Ratio of the Company
would be greater than 3.5:1.0; provided, further, that in the case of clauses
(vii), (viii), (ix), (x), (xi) and (xii) no Default or Event of Default (in the
case of clause (vii) such Default or Event of Default shall be limited to items
(1) and (2) under Section 6.1) shall have
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occurred or be continuing at the time of such payment or as a result thereof.
SECTION 4.5. Limitation on Restrictions on Distributions from
Subsidiaries. The Company shall not, and shall not permit any of its
Subsidiaries to, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on its Capital Stock or pay any
Indebtedness or other obligation owed to the Company, (ii) make any loans or
advances to the Company or (iii) transfer any of its property or assets to the
Company; except: (a) any encumbrance or restriction pursuant to an agreement in
effect at or entered into on the Issue Date, including the Credit Agreement;
(b) any encumbrance or restriction with respect to such a Subsidiary pursuant
to an agreement relating to any Indebtedness issued by such Subsidiary on or
prior to the date on which such Subsidiary was acquired by the Company and
outstanding on such date (other than Indebtedness issued as consideration in,
or to provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to which
such Subsidiary became a Subsidiary of the Company or was acquired by the
Company); (c) any encumbrance or restriction with respect to such a Subsidiary
pursuant to an agreement evidencing Indebtedness Incurred without violation of
this Indenture or effecting a refinancing of Indebtedness issued pursuant to an
agreement referred to in clauses (a) or (b) or this clause (c) or contained in
any amendment to an agreement referred to in clauses (a) or (b) or this clause
(c); provided, however, that the encumbrances and restrictions with respect to
such Subsidiary contained in any of such agreement, refinancing agreement or
amendment, taken as a whole, are no less favorable to the Holders in any
material respect, as determined in good faith by the senior management of the
Company or the Board of Directors, than encumbrances and restrictions with
respect to such Subsidiary contained in agreements in effect at, or entered
into on, the Issue Date; (d) in the case of clause (iii) of this Section 4.5,
any encumbrance or restriction (A) that restricts in a customary manner the
subletting, assignment or transfer of any property or asset that is a lease,
license, conveyance or contract or similar property or asset, (B) by virtue of
any transfer of, agreement to transfer, option or right with respect to, or
Lien on, any
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property or assets of the Company or any Subsidiary not otherwise prohibited by
this Indenture, (C) that is included in a licensing agreement to the extent
such restrictions limit the transfer of the property subject to such licensing
agreement or (D) arising or agreed to in the ordinary course of business and
that does not, individually or in the aggregate, detract from the value of
property or assets of the Company or any of its Subsidiaries in any manner
material to the Company or any such Subsidiary; (e) in the case of clause (iii)
of this Section 4.5, restrictions contained in security agreements, mortgages
or similar documents securing Indebtedness of a Subsidiary to the extent such
restrictions restrict the transfer of the property subject to such security
agreements; (f) any restriction with respect to such a Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition and (g) encumbrances or restrictions
arising or existing by reason of applicable law.
SECTION 4.6. Limitation on Sales of Assets and Subsidiary Stock.
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
make any Asset Disposition unless (i) the Company or such Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value, as determined in good faith by the Company's senior management or
the Board of Directors (including as to the value of all non-cash
consideration), of the shares and assets subject to such Asset Disposition;
(ii) at least 75% of the consideration thereof received by the Company or such
Subsidiary is in the form of cash or cash equivalents; and (iii) an amount
equal to 100% of the Net Available Cash from such Asset Disposition is applied
by the Company (or such Subsidiary, as the case may be) (A) first, to the
extent the Company or any Subsidiary elects (or is required by the terms of any
Senior Indebtedness or Guarantor Senior Indebtedness), to prepay, repay or
purchase (x) Senior Indebtedness or Guarantor Senior Indebtedness or (y)
Indebtedness of a Wholly Owned Subsidiary (in each case other than Indebtedness
owed to the Company) within 180 days from the later of the date of such Asset
Disposition or the receipt of such Net Available Cash; (B) second, within one
year from the receipt of such Net Available Cash, to the extent of the balance
of such Net Available Cash after application in accordance with clause (A), at
the Company's election either (x) to the investment in or
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acquisition of Additional Assets or (y) to prepay, repay or purchase (1) Senior
Indebtedness or Guarantor Senior Indebtedness or (2) Indebtedness of a Wholly
Owned Subsidiary (in each case other than Indebtedness owed to the Company);
(C) third, within 45 days after the later of the application of Net Available
Cash in accordance with clauses (A) and (B) and the date that is one year from
the receipt of such Net Available Cash, to the extent of the balance of such
Net Available Cash after application and in accordance with clauses (A) and
(B), to make an offer to purchase 11 3/4% Senior Subordinated Notes at par plus
accrued and unpaid interest, if any, thereon in accordance with the provisions
of the 11 3/4% Senior Subordinated Indenture; (D) fourth, within 45 days of the
later of the Application of Net Available Cash in accordance with clauses (A),
(B) and (C) and the date that is one year from the receipt of such Net
Available Cash, to the extent if the balance of such Net Available Cash after
application and in accordance with clause (A), (B) and (C), to make an offer to
purchase Securities at par plus accrued and unpaid interest, if any, thereon;
and (E) fifth, to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A), (B), (C) and (D), to (w) the
investment in or acquisition of Additional Assets; (x) the making of Temporary
Cash Investments, (y) the prepayment, repayment or purchase of Indebtedness of
the Company or Indebtedness of any Subsidiary (other than Indebtedness owed to
the Company) or (z) any other purpose otherwise permitted under this Indenture,
in each case within the later of 45 days after the application of Net Available
Cash in accordance with clauses (A), (B), (C) and (D) and the date that is one
year from the receipt of such Net Available Cash; provided, however, that, in
connection with any prepayment, repayment or purchase of Indebtedness pursuant
to clauses (A), (B), (C), (D) or (E) above, the Company or such Subsidiary
shall retire such Indebtedness and shall cause the related loan commitment (if
any) to be permanently reduced in an amount equal to the principal amount so
prepaid, repaid or purchased. Notwithstanding the foregoing provisions, the
Company and its Subsidiaries shall not be required to apply any Net Available
Cash in accordance herewith except to the extent that the aggregate Net
Available Cash from all Asset Dispositions which are not applied in accordance
with this covenant at any time exceed $10.0 million. The Company shall not be
required to make an offer for Securities pursuant to this covenant if the Net
Available Cash available therefor (after application of the
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proceeds as provided in clauses (A), (B) and (C)) is less than $10.0 million
for any particular Asset Disposition (which lesser amounts shall be carried
forward for purposes of determining whether an offer is required with respect
to the Net Available Cash from any subsequent Asset Disposition).
For the purposes of this covenant, the following will be deemed
to be cash: (x) the assumption by the transferee of Senior Indebtedness of the
Company or Indebtedness of any Subsidiary of the Company and the release of the
Company or such Subsidiary from all liability on such Senior Indebtedness or
Indebtedness in connection with such Asset Disposition (in which case the
Company shall, without further action, be deemed to have applied cash to repay
such assumed Indebtedness in accordance with clause (A) of the preceding
paragraph) and (y) securities received by the Company or any Subsidiary from
the transferee that are promptly converted by the Company or such Subsidiary
into cash.
(b) In the event of an Asset Disposition that requires the
purchase of Securities pursuant to Section 4.6(a)(iii)(D), the Company will be
required to purchase Securities tendered pursuant to an offer by the Company
for the Securities (the "Offer") at a purchase price of 100% of their principal
amount plus accrued and unpaid interest, if any, to the purchase date in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 4.6(c). If the aggregate purchase price
of the Securities tendered pursuant to the Offer is less than the Net Available
Cash allotted to the purchase of the Securities, the Company will apply the
remaining Net Available Cash in accordance with Section 4.6(a)(iii)(E).
(c) (1) Promptly, and in any event within 10 days after the
Company is required to make an Offer, the Company shall deliver to the Trustee
and send, by first-class mail to each Holder, a written notice stating that the
Holder may elect to have his Securities purchased by the Company either in
whole or in part (subject to prorating as hereinafter described in the event
the Offer is oversubscribed) in integral multiples of $1,000 of principal
amount, at the applicable purchase price. The notice shall specify a purchase
date not less than 30 days nor more than 60 days after the date of such notice
(the "Purchase Date").
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(2) Not later than the date upon which such written notice of an
Offer is delivered to the Trustee and the Holders, the Company shall deliver to
the Trustee an Officers' Certificate setting forth (i) the amount of the Offer
(the "Offer Amount"), (ii) the allocation of the Net Available Cash from the
Asset Dispositions as a result of which such Offer is being made and (iii) the
compliance of such allocation with the provisions of Section 4.6(a). Upon the
expiration of the period (the "Offer Period") for which the Offer remains open,
the Company shall deliver to the Trustee for cancellation the Securities or
portions thereof which have been properly tendered to and are to be accepted by
the Company. The Trustee shall, on the Purchase Date, mail or deliver payment
to each tendering Holder in the amount of the purchase price of the Securities
tendered by such Holder to the extent such funds are available to the Trustee.
(3) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice prior to the expiration of
the Offer Period. Each Holder will be entitled to withdraw its election if the
Trustee or the Company receives, not later than one Business Day prior to the
expiration of the Offer Period, a telegram, telex, facsimile transmission or
letter from such Holder setting forth the name of such Holder, the principal
amount of the Security or Securities which were delivered for purchase by such
Holder and a statement that such Holder is withdrawing his election to have
such Security or Securities purchased. If at the expiration of the Offer
Period the aggregate principal amount of Securities surrendered by Holders
exceeds the Offer Amount, the Company shall select the Securities to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Securities in denominations of $1,000,
or integral multiples thereof, shall be purchased). Holders whose Securities
are purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered.
(d) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.6. To the extent that the provisions of any securities laws or
regulations
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conflict with provisions of this Section 4.6, the Company will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Indenture by virtue thereof.
SECTION 4.7. Limitation on Affiliate Transactions. (a) The
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, enter into or conduct any transaction (including the purchase,
sale, lease or exchange of any property or the rendering of any service) with
any Affiliate of the Company other than a Wholly Owned Subsidiary (an
"Affiliate Transaction") unless: (i) the terms of such Affiliate Transaction
are no less favorable to the Company or such Subsidiary, as the case may be,
than those that could be obtained at the time of such transaction in arm's-
length dealings with a Person who is not such an Affiliate; (ii) in the event
such Affiliate Transaction involves an aggregate amount in excess of $2.5
million, the terms of such transaction have been approved by a majority of the
members of the Board of Directors and by a majority of the disinterested
members of such Board of Directors, if any (and such majority or majorities, as
the case may be, determine(s) that such Affiliate Transaction satisfies the
criteria in clause (i) above); and (iii) in the event such Affiliate
Transaction involves an aggregate amount in excess of $10.0 million, the
Company has received a written opinion from an independent investment banking
firm of nationally recognized standing that such Affiliate Transaction is fair
to the Company or such Subsidiary, as the case may be, from a financial point
of view.
(b) The provisions of Section 4.7(a) shall not prohibit (i)
any Restricted Payment permitted to be made pursuant to Section 4.4, (ii) any
issuance of securities, or other payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by the Board of Directors, (iii)
loans or advances to employees in the ordinary course of business of the
Company or any of its Subsidiaries, (iv) any transaction between Wholly Owned
Subsidiaries, (v) the payment of fees and indemnities to directors, officers
and employees of the Company and its Subsidiaries in the ordinary course of
business, (vi) transactions pursuant to agreements as in existence on the Issue
Date, (vii) any employment agreements
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entered into by the Company or any of its Subsidiaries in the ordinary course
of business, (viii) the issuance of Capital Stock of the Company (other than
Disqualified Stock) and (ix) any obligation of the Company pursuant to the
Monitoring and Oversight Agreement.
SECTION 4.8. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
repurchase all or any part of such Holder's Securities at a purchase price in
cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest on the relevant interest
payment date), such repurchase to be made in accordance with Section 4.8(b).
(b) Within 30 days following any Change of Control, unless the
Company has mailed a redemption notice with respect to all the outstanding
Securities in connection with such Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder
has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant interest payment date);
(2) the repurchase date (which shall be no earlier than 30 days
nor later than 60 days from the date such notice is mailed); and
(3) the procedures determined by the Company, consistent with
this Section, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Each Holder will be entitled to withdraw its
election if the
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Company receives, not later than one Business Day prior to the purchase date, a
telegram, telex, facsimile transmission or letter from such Holder setting
forth the name of such Holder, the principal amount of the Security or
Securities which were delivered for purchase by such Holder and a statement
that such Holder is withdrawing his election to have such Security or
Securities purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancellation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
this Section 4.8. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.8, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Indenture by virtue thereof.
SECTION 4.9. Limitation on Preferred Stock of Subsidiaries. The
Company will not permit any of its Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly Owned Subsidiary of the Company) or
permit any Person (other than the Company or a Wholly Owned Subsidiary of the
Company) to own any such Preferred Stock (other than Acquired Preferred Stock);
provided that at the time the issuer of such Acquired Preferred Stock becomes a
Subsidiary of the Company or merges with the Company or any of its
Subsidiaries, and after giving effect to such transaction, the Company shall be
able to incur an additional $1.00 of Indebtedness pursuant to Section 4.3(a)
(treating the amount of all obligations of such Subsidiary with respect to the
redemption, repayment or other repurchase of such Acquired Preferred Stock (but
excluding any accrued dividends thereon) as Indebtedness solely for purpose of
such calculation, but only to the extent that such obligations arise on or
prior to the first anniversary of the Stated Maturity of the Securities).
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SECTION 4.10. Limitation on Capital Stock of Subsidiaries. The
Company will not permit any of its Subsidiaries to issue any Capital Stock
(other than Preferred Stock) to any Person (other than to the Company or a
Wholly Owned Subsidiary) or permit any Person (other than the Company or a
Wholly-Owned Subsidiary) to own any Capital Stock (other than Preferred Stock)
of a Subsidiary of the Company, if in either case as a result thereof such
Subsidiary would no longer be a Subsidiary of the Company; provided, however,
that this Section 4.10 shall not prohibit the Company or any of its
Subsidiaries from selling, leasing or otherwise disposing of all of the Capital
Stock of any Subsidiary.
SECTION 4.11. Compliance Certificate. The Company shall deliver
to the Trustee within 120 days after the end of each fiscal year of the Company
an Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Company they would normally have
knowledge of any Default or Event of Default and whether or not the signers
know of any Default or Event of Default that occurred during such period. If
they do, the certificate shall describe the Default or Event of Default, its
status and what action the Company is taking or proposes to take with respect
thereto. The Company also shall comply with TIA Section 314(a)(4).
SECTION 4.12. Further Instruments and Acts. Upon request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.1. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer
or lease all or substantially all its assets to, any Person, unless:
(i) the resulting, surviving or transferee Person (the
"Successor Company") shall be a corporation organized
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and existing under the laws of the United States of America, any State
thereof or the District of Columbia and the Successor Company (if not
the Company) shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to
the Trustee, all the obligations of the Company under the Securities and
this Indenture;
(ii) immediately after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the
Successor Company or any Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or such Subsidiary at the
time of such transaction), no Default or Event of Default shall have
occurred and be continuing;
(iii) immediately after giving effect to such
transaction, the Successor Company would be able to incur an additional
$1.00 of Indebtedness pursuant to Section 4.3(a); and
(iv) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer or lease and such supplemental indenture
(if any) comply with this Indenture.
The Successor Company shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture,
but the predecessor, the Company, in the case of a lease of all or
substantially all its assets shall not be released from the obligation to pay
the principal of and interest on the Securities.
Notwithstanding clauses (ii) and (iii) of the first sentence of
this Section 5.1: (1) any Subsidiary of the Company may consolidate with,
merge into or transfer all or part of its properties and assets to the Company,
and (2) the Company may merge with an Affiliate incorporated solely for the
purpose of reincorporating the Company in another jurisdiction to realize tax
or other benefits.
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ARTICLE VI
Defaults and Remedies
SECTION 6.1. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article X, and such default continues for
a period of 30 days;
(2) the Company defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity,
upon optional redemption, upon required repurchase, upon declaration or
otherwise, whether or not such payment shall be prohibited by Article X;
(3) the Company fails to comply with Section 5.1;
(4) the Company fails to comply with Section 4.2, 4.3, 4.4, 4.5,
4.6, 4.7, 4.8, 4.9 or 4.10 (in each case other than a failure to
repurchase Securities when required pursuant to Section 4.6 or 4.8 which
failure shall constitute an Event of Default under Section 6.1(2)) and
such failure continues for 30 days after the notice specified below;
(5) the Company or any Subsidiary Guarantor fails to comply with
any of its agreements in the Securities or this Indenture (other than
those referred to in (1), (2), (3) or (4) above) and such failure
continues for 60 days after the notice specified below;
(6) Indebtedness of the Company or any Subsidiary is not paid
within any applicable grace period after final maturity or is
accelerated by the holders thereof because of a default and the total
amount of such unpaid or accelerated Indebtedness exceeds $10.0 million
or its foreign currency equivalent at the time and such default shall
not have been cured or such acceleration rescinded within a 10 day
period;
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(7) the Company or a Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against
it in an involuntary case;
(C) consents to the appointment of a Custodian of it or
for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the Company
or any Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order,
decree or relief remains unstayed and in effect for 60 days; or
(9) any judgment or decree for the payment of money in excess of
$10.0 million or its foreign currency equivalent at the time (to the
extent not covered by insurance) is entered against the Company or any
Significant Subsidiary and such judgment or decree remains undischarged
or unstayed for a period of 60 days after such judgment becomes final
and non-appealable.
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The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code, or
any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
Notwithstanding the foregoing, a Default under clause (4) or (5)
of this Section 6.1 will not constitute an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the outstanding
Securities notify the Company of the Default and the Company does not cure such
Default within the time specified in said clause (4) or (5) after receipt of
such notice. Such notice must specify the Default, demand that it be remedied
and state that such notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Event of Default under clauses (4), (5), (6) or (9) of this Section 6.1.
SECTION 6.2. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by notice to the Company, or the
Holders of at least 25% in outstanding principal amount of the Securities by
notice to the Company and the Trustee, may declare the principal of and accrued
and unpaid interest on all the Securities to be due and payable. Upon such a
declaration, such principal and interest shall be due and payable immediately.
If an Event of Default specified in Section 6.1(7) or (8) with respect to the
Company occurs, the principal of and accrued and unpaid interest on all the
Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Securityholders.
The Holders of a majority in principal amount of the Securities by notice to
the Trustee may
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rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree and if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of acceleration. No such rescission shall affect any
subsequent Default or Event of Default or impair any right consequent thereto.
SECTION 6.3. Other Remedies. If an Event of Default occurs and
is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are
cumulative.
SECTION 6.4. Waiver of Past Defaults. The Holders of a majority
in principal amount of the Securities by notice to the Trustee may waive an
existing Default or Event of Default and its consequences except (i) a Default
or Event of Default in the payment of the principal of or interest on a
Security or (ii) a Default or Event of Default in respect of a provision that
under Section 9.2 cannot be amended without the consent of each Securityholder
affected. When a Default or Event of Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or Event of
Default or impair any consequent right.
SECTION 6.5. Control by Majority. The Holders of a majority in
principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.1, that the Trustee determines is unduly prejudicial
to the rights of other Securityholders or would
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involve the Trustee in personal liability; provided, however, that the Trustee
may take any other action deemed proper by the Trustee that is not inconsistent
with such direction. Prior to taking any action hereunder, the Trustee shall
be entitled to indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
SECTION 6.6. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating that
an Event of Default is continuing;
(2) the Holders of at least 25% in outstanding principal amount
of the Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of security or indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
SECTION 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder, on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
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SECTION 6.8. Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in Section
7.7.
SECTION 6.9. Trustee May File Proofs of Claim. The Trustee may
file such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company, its Subsidiaries
or their respective creditors or properties and, unless prohibited by law or
applicable regulations, may vote on behalf of the Holders in any election of a
trustee in bankruptcy or other Person performing similar functions, and any
Custodian in any such judicial proceeding is hereby authorized by each Holder
to make payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and its counsel, and any
other amounts due the Trustee under Section 7.7.
SECTION 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.7;
SECOND: to holders of Senior Indebtedness and Guarantor Senior
Indebtedness to the extent required by Article X;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
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FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.7 or a suit
by Holders of more than 10% in outstanding principal amount of the Securities.
ARTICLE VII
Trustee
SECTION 7.1. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
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(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(1) this paragraph does not limit the effect of paragraph (b) of
this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.5.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of
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such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 7.2. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall
not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
SECTION 7.3. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-
registrar
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or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.4. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.5. Notice of Defaults. If a Default or Event of
Default occurs and is continuing and if a Trust Officer has actual knowledge
thereof, the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 90 days after it occurs. Except in the case of a
Default or Event of Default in payment of principal of or interest on any
Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as its board of directors, the Executive Committee of its
board of directors or a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.
SECTION 7.6. Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15 following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA Section 313(a). The Trustee also shall comply with TIA
Section 313(b). The Trustee shall also transmit by mail all reports required
by TIA Section 313(c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
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SECTION 7.7. Compensation and Indemnity. The Company shall pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable out-of-pocket expenses incurred or made by it,
including costs of collection, costs of preparing and reviewing reports,
certificates and other documents, costs of preparation and mailing of notices
to Securityholders and reasonable costs of counsel retained by the Trustee in
connection with the delivery of an Opinion of Counsel or otherwise, in addition
to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Company shall
indemnify the Trustee against any and all loss, liability or expense (including
reasonable attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
Section 7.7) and of defending itself against any claims (whether asserted by
any Securityholder, the Company or otherwise). The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or indebtedness of the Company.
The Company's payment obligations pursuant to this Section shall
survive the discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default
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specified in Section 6.1(7) or (8) with respect to the Company, the expenses
are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee. The Trustee may resign at
any time by so notifying the Company. The Holders of a majority in principal
amount of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, subject to the
lien provided for in Section 7.7.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee or the Holders
of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and in all such cases such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee
shall have a combined capital and surplus of at least $100 million as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or
indentures under which other securities or certificates of interest or
participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.
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SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.1. Discharge of Liability on Securities; Defeasance.
(a) When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.7) for cancellation or
(ii) all outstanding Securities have become due and payable, whether at
maturity or as a result of the mailing of a notice of redemption pursuant to
Article III hereof and the Company irrevocably deposits with the Trustee funds
sufficient to pay at maturity or upon redemption all outstanding Securities
(other than Securities replaced pursuant to Section 2.7), including interest
thereon to maturity or such redemption date, and if in either case the Company
pays all other sums payable hereunder by the Company, then this Indenture
shall, subject to Section 8.1(c), cease to be of further effect. The Trustee
shall acknowledge satisfaction and discharge of this Indenture on demand of the
Company (accompanied by an Officers' Certificate and an Opinion of Counsel
stating that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with) and at
the cost and expense of the Company.
(b) Subject to Sections 8.1(c) and 8.2, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture and all obligations of the Subsidiary Guarantors under the Subsidiary
Guarantee and this Indenture ("legal defeasance option") or (ii) its
obligations under Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8, 4.9, 4.10, 4.11,
5.1(iii) and 5.1(iv) and the operation of Sections 6.1(4), 6.1(5), 6.1(6),
6.1(7) (but only with respect to a Significant Subsidiary), 6.1(8) (but only
with respect to a Significant Subsidiary) and 6.1(9) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
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If the Company exercises its legal defeasance option, payment of
the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Sections 6.1(4),
6.1(5), 6.1(6), 6.1(7) (but only with respect to a Significant Subsidiary),
6.1(8) (but only with respect to a Significant Subsidiary) and 6.1(9) or
because of the failure of the Company to comply with Section 5.1(iii) and
Section 5.1(iv).
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding the provisions of Sections 8.1(a) and (b),
the Company's obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 7.7, 7.8, 8.4,
8.5 and 8.6 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.7, 8.4 and 8.5 shall
survive.
SECTION 8.2. Conditions to Defeasance. The Company may exercise
its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of and
interest on the Securities to maturity or redemption, as the case may
be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and
in such amounts as will be sufficient to pay principal and interest when
due on all the Securities to maturity or redemption, as the case may be;
(3) the Company shall have delivered to the Trustee an Opinion
of Counsel, subject to certain customary qualifications, to the effect
that (i) the funds so
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deposited will not be subject to any rights of any other holders of
Indebtedness of the Company, and (ii) the funds so deposited will not be
subject to avoidance under applicable Bankruptcy Law;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article X;
(5) the Company delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under the
Investment Company Act of 1940;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of such
defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the
case if such legal defeasance had not occurred;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders will not recognize income, gain or loss for
Federal income tax purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
covenant defeasance had not occurred; and
(8) the Company delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to
the defeasance and discharge of the Securities and this Indenture as
contemplated by this Article VIII have been complied with.
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Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article III.
SECTION 8.3. Application of Trust Money. The Trustee shall hold
in trust money or U.S. Government Obligations deposited with it pursuant to
this Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article X.
SECTION 8.4. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
Subject to any applicable abandoned property law, the Trustee and
the Paying Agent shall pay to the Company upon request any money held by them
for the payment of principal of or interest on the Securities that remains
unclaimed for two years, and, thereafter, Securityholders entitled to the money
must look to the Company for payment as general creditors.
SECTION 8.5. Indemnity for U.S. Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.6. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with
this Article VIII by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Company and the
Subsidiary Guarantors under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article VIII
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article VIII;
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provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the money or U.S. Government Obligations held by
the Trustee or Paying Agent.
ARTICLE IX
Amendments
SECTION 9.1. Without Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to or consent
of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article V;
(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article X that would limit or
terminate the benefits available to any holder of Senior Indebtedness or
Guarantor Senior Indebtedness (or Representatives therefor) under
Article X;
(5) to add guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon the
Company;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA;
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(8) to make any change that does not adversely affect the rights
of any Securityholder; or
(9) to provide for the issuance of the Registered Exchange
Notes, which will have terms substantially identical in all material
respects to the Initial Exchange Notes (except that the transfer
restrictions contained in the Initial Exchange Notes will be modified or
eliminated, as appropriate), and which will be treated, together with
any outstanding Initial Exchange Notes, as a single issue of securities.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.2. With Consent of Holders. The Company and the
Trustee may amend this Indenture or the Securities without notice to any
Securityholder but with the written consent of the Holders of at least a
majority in principal amount of the Securities. However, without the consent
of each Securityholder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon the redemption or repurchase
of any Security or change the time at which any
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Security may or shall be redeemed or repurchased in accordance with this
Indenture;
(5) make any Security payable in money other than that stated in
the Security;
(6) modify or affect in any manner adverse to the Holders the
terms and conditions of the obligation of the Company for the due and
punctual payment of the principal of or interest on Securities; or
(7) make any change in Section 6.4 or 6.7 or the second sentence
of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article X of any holder of Senior
Indebtedness or Guarantor Senior Indebtedness then outstanding unless the
holders of such Senior Indebtedness or Guarantor Senior Indebtedness (or any
group or representative thereof authorized to give a consent) consent to such
change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any
defect therein, shall not impair or affect the validity of an amendment under
this Section.
SECTION 9.3. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.4. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as
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to such Holder's Security or portion of the Security if the Trustee receives
the notice of revocation before the date the amendment or waiver becomes
effective. After an amendment or waiver becomes effective, it shall bind every
Securityholder.
The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not such
Persons continue to be Holders after such record date. No such consent shall
become valid or effective more than 120 days after such record date.
SECTION 9.5. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
SECTION 9.6. Trustee To Sign Amendments. The Trustee shall sign
any amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment
the Trustee shall be entitled to receive indemnity reasonably satisfactory to
it and to receive, and (subject to Section 7.1) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.
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ARTICLE X
Subordination
SECTION 10.1. Agreement To Subordinate. The Company and each
Subsidiary Guarantor agree, and each Securityholder by accepting a Security and
the related Subsidiary Guarantee agrees, that the Indebtedness evidenced by the
Securities and the related Subsidiary Guarantee is subordinated in right of
payment, to the extent and in the manner provided in this Article X, to the
prior payment of (i) all Senior Indebtedness in the case of the Securities and
(ii) all Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case
of its obligations under the Subsidiary Guarantee and that the subordination is
for the benefit of and enforceable by the holders of Senior Indebtedness and
such Guarantor Senior Indebtedness. The Securities shall in all respects rank
pari passu with all other Senior Subordinated Indebtedness of the Company, the
related Subsidiary Guarantee of each Subsidiary Guarantor shall in all respects
rank pari passu with all Guarantor Senior Subordinated Indebtedness of such
Subsidiary Guarantor and only Indebtedness of the Company which is Senior
Indebtedness will rank senior to the Securities and only Indebtedness of such
Subsidiary Guarantor which is Guarantor Senior Indebtedness of such Subsidiary
Guarantor shall rank senior to the obligations of such Subsidiary Guarantor
under the Subsidiary Guarantee in accordance with the provisions set forth
herein. All provisions of this Article X shall be subject to Section 10.12.
SECTION 10.2. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company or any Subsidiary
Guarantor to creditors upon a total or partial liquidation or a total or
partial dissolution of the Company or such Subsidiary Guarantor or in a
bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or such Subsidiary Guarantor or their respective
properties:
(1) holders of Senior Indebtedness in the case of the Company or
holders of Guarantor Senior Indebtedness of such Subsidiary Guarantor in
the case of such Subsidiary Guarantor shall be entitled to receive
payment in full of all Senior Indebtedness in the case of the Company or
all
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such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor before Securityholders shall be entitled to receive any
payment of principal of or interest on or other amounts with respect to
the Securities from the Company or such Subsidiary Guarantor, whether
directly by the Company or pursuant to the Subsidiary Guarantee; and
(2) until the Senior Indebtedness in the case of the Company or
such Guarantor Senior Indebtedness in the case of such Subsidiary
Guarantor is paid in full, any payment or distribution to which
Securityholders would be entitled but for this Article X shall be made
to holders of Senior Indebtedness in the case of payments or
distributions made by the Company or the holders of such Guarantor
Senior Indebtedness in the case of payments or distributions made by
such Subsidiary Guarantor, in each case as their respective interests
may appear.
SECTION 10.3. Default on Senior Indebtedness or Guarantor Senior
Indebtedness. Neither the Company nor any Subsidiary Guarantor may pay the
principal of, premium (if any) or interest on or other amounts with respect to
the Securities or make any deposit pursuant to Section 8.1 or repurchase,
redeem or otherwise retire any Securities, whether directly by the Company or
by such Subsidiary Guarantor under the Subsidiary Guarantee (collectively, "pay
the Securities") if (i) any Senior Indebtedness in the case of the Company or
any Guarantor Senior Indebtedness of such Subsidiary Guarantor in the case of
such Subsidiary Guarantor is not paid when due or (ii) any other default on
Senior Indebtedness in the case of the Company or such Guarantor Senior
Indebtedness in the case of such Subsidiary Guarantee occurs and the maturity
of such Senior Indebtedness in the case of the Company or such Guarantor Senior
Indebtedness in the case of such Subsidiary Guarantor is accelerated in
accordance with its terms unless, in either case, (x) the default has been
cured or waived and any such acceleration has been rescinded or (y) such Senior
Indebtedness in the case of the Company or such Guarantor Senior Indebtedness
in the case of such Subsidiary Guarantor has been paid in full; provided,
however, that the Company or such Subsidiary Guarantor may pay the Securities,
whether directly or pursuant to the Subsidiary Guarantee, without regard to the
foregoing if the Company or such Subsidiary Guarantor and the Trustee receive
written notice
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approving such payment from the Representative of the Senior Indebtedness in
the case of the Company or such Guarantor Senior Indebtedness in the case of
such Subsidiary Guarantor with respect to which either of the events set forth
in clause (i) or (ii) of the immediately preceding sentence has occurred or is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, neither the Company (in the case of Designated Senior Indebtedness of
the Company) nor any Subsidiary Guarantor (in the case of Designated Senior
Indebtedness of such Subsidiary Guarantor) may pay the Securities, either
directly or pursuant to the Subsidiary Guarantee, for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to
the Company or such Subsidiary Guarantor) of written notice (a "Blockage
Notice") of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company or such Subsidiary Guarantor from the Person or Persons who gave such
Blockage Notice, (ii) by repayment in full of such Designated Senior
Indebtedness or (iii) because the default giving rise to such Blockage Notice
is no longer continuing). Notwithstanding the provisions of the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness
or the Representative of such holders shall have accelerated the maturity of
such Designated Senior Indebtedness, the Company or such Subsidiary Guarantor
may resume payments on the Securities, either directly or pursuant to the
Subsidiary Guarantee, after such Payment Blockage Period. Not more than one
Blockage Notice may be given in any consecutive 360-day period, irrespective of
the number of defaults with respect to Designated Senior Indebtedness during
such period.
SECTION 10.4. Acceleration of Payment of Securities. If payment
of the Securities is accelerated because of an Event of Default, the Company,
the Subsidiary Guarantors or the Trustee shall promptly notify the holders of
the Designated Senior Indebtedness (or their Representatives) of the
acceleration. If
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any Designated Senior Indebtedness is outstanding, neither the Company (in the
case of any Designated Senior Indebtedness of the Company) nor any Subsidiary
Guarantor (in the case of any Designated Senior Indebtedness of such Subsidiary
Guarantor) may pay the Securities, either directly or pursuant to the
Subsidiary Guarantee, until five Business days after the Representative of such
Designated Senior Indebtedness receives notice of such acceleration and,
thereafter, may pay the Securities, either directly or pursuant to the
Subsidiary Guarantee, only if this Article 10 otherwise permits payments at
that time.
SECTION 10.5. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article X should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness and Guarantor Senior
Indebtedness and promptly pay it over to them as their respective interests may
appear.
SECTION 10.6. Subrogation. After all Senior Indebtedness and
Guarantor Senior Indebtedness is paid in full and until the Securities are paid
in full, Securityholders shall be subrogated to the rights of holders of Senior
Indebtedness and Guarantor Senior Indebtedness to receive distributions
applicable to Senior Indebtedness and Guarantor Senior Indebtedness. A
distribution made under this Article X to holders of Senior Indebtedness or
Guarantor Senior Indebtedness which otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a payment
by the Company of Senior Indebtedness or, as between a Subsidiary Guarantor and
Securityholders, a payment by such Subsidiary Guarantor of Guarantor Senior
Indebtedness.
SECTION 10.7. Relative Rights. This Article X defines the
relative rights of Securityholders and holders of Senior Indebtedness and
Guarantor Senior Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company or the Subsidiary Guarantors,
as the case may be, and Securityholders, the obligation of the Company
or the Subsidiary Guarantors, as the case may be, which is absolute and
unconditional, to pay
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principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default or Event of Default, subject to
the rights of holders of Senior Indebtedness and Guarantor Senior
Indebtedness to receive distributions otherwise payable to
Securityholders.
SECTION 10.8. Subordination May Not Be Impaired by Company or
the Subsidiary Guarantors. No right of any holder of Senior Indebtedness or
Guarantor Senior Indebtedness to enforce the subordination of the Indebtedness
evidenced by the Securities or the related Subsidiary Guarantee shall be
impaired by any act or failure to act by the Company or any Subsidiary
Guarantor or by the failure of any of them to comply with this Indenture.
SECTION 10.9. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.3, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article X. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness or Guarantor
Senior Indebtedness may give the notice; provided, however, that, if an issue
of Senior Indebtedness or Guarantor Senior Indebtedness has a Representative,
only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness or Guarantor Senior Indebtedness with the same rights it
would have if it were not Trustee. The Registrar and co-registrar and the
Paying Agent may do the same with like rights. The Trustee shall be entitled
to all the rights set forth in this Article X with respect to any Senior
Indebtedness or Guarantor Senior Indebtedness which may at any time be held by
it, to the same extent as any other holder of Senior Indebtedness or Guarantor
Senior Indebtedness; and nothing in Article VII shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article X shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.7.
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SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness or Guarantor Senior Indebtedness, the distribution may be made and
the notice given to their Representative (if any).
SECTION 10.11. Article X Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment in respect of the
Securities, whether directly or pursuant to the Subsidiary Guarantee, by reason
of any provision in this Article X shall not be construed as preventing the
occurrence of a Default or Event of Default. Nothing in this Article X shall
have any effect on the right of the Securityholders or the Trustee to
accelerate the maturity of the Securities or to make a claim for payment under
the Subsidiary Guarantee.
SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article VIII by the Trustee
for the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness or Guarantor
Senior Indebtedness or subject to the restrictions set forth in this Article X,
and none of the Securityholders shall be obligated to pay over any such amount
to the Company, any Subsidiary Guarantor, any holder of Senior Indebtedness of
the Company, any holder of Guarantor Senior Indebtedness or any other creditor
of the Company or any Subsidiary Guarantor.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article X, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.2
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness or Guarantor Senior Indebtedness for the purpose of ascertaining
the Persons entitled to participate in such payment or distribution, the
holders of Senior Indebtedness, Guarantor Senior Indebtedness
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and other Indebtedness of the Company or the Subsidiary Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X. In the event that
the Trustee determines, in good faith, that evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness or Guarantor
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article X, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
or Guarantor Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article X, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.1 and 7.2 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article X.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Securityholders and the
holders of Senior Indebtedness and Guarantor Senior Indebtedness as provided in
this Article X and appoints the Trustee as attorney-in-fact for any and all
such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness and Guarantor Senior Indebtedness. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness or
Guarantor Senior Indebtedness and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Securityholders or the Company, the
Subsidiary Guarantors or any other Person, money or assets to which any holders
of Senior Indebtedness or Guarantor Senior Indebtedness shall be entitled by
virtue of this Article X or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness and
Guarantor Senior Indebtedness on Subordination Provisions. Each Securityholder
by accepting a Security
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acknowledges and agrees that the foregoing subordination provisions are, and
are intended to be, an inducement and a consideration to each holder of any
Senior Indebtedness or Guarantor Senior Indebtedness, whether such Senior
Indebtedness or Guarantor Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness or Guarantor Senior Indebtedness and
such holder of Senior Indebtedness or Guarantor Senior Indebtedness shall be
deemed conclusively to have relied on such subordination provisions in
acquiring and continuing to hold, or in continuing to hold, such Senior
Indebtedness or Guarantor Senior Indebtedness.
ARTICLE XI
Subsidiary Guarantee
SECTION 11.1. Subsidiary Guarantee. Subject to the
subordination provisions contained in Article X, the Subsidiary Guarantors
hereby, jointly and severally, unconditionally and irrevocably, Guarantee to
each Holder and to the Trustee and its successors and assigns (a) the full and
punctual payment of principal of and interest on the Securities when due,
whether at maturity, by acceleration, by redemption or otherwise, and all other
monetary obligations of the Company under this Indenture (including obligations
to the Trustee) and the Securities and (b) the full and punctual performance
within applicable grace periods of all other obligations of the Company under
this Indenture and the Securities (all the foregoing being hereinafter
collectively called the "Obligations"). The Subsidiary Guarantors further
agree that the Obligations may be extended or renewed, in whole or in part,
without notice or further assent from the Subsidiary Guarantors, and that the
Subsidiary Guarantors will remain bound under this Article XI notwithstanding
any extension or renewal of any Obligation.
The Subsidiary Guarantors waive presentation to, demand of,
payment from and protest to the Company of any of the Obligations and also
waive notice of protest for nonpayment. The Subsidiary Guarantors waive notice
of any default under the Securities or the Obligations. The obligations of the
Subsidiary Guarantors hereunder shall not be affected by (a) the failure of
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any Holder or the Trustee to assert any claim or demand or to enforce any right
or remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any Obligation; (c) any rescission, waiver, amendment, modification or
supplement of any of the terms or provisions of this Indenture (other than this
Article XI), the Securities or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or any of them;
(e) the failure of any Holder or Trustee to exercise any right or remedy
against any other guarantor of the Obligations; or (f) any change in the
ownership of the Company.
The Subsidiary Guarantors further agree that their Guarantees
herein constitute a guarantee of payment, performance and compliance when due
(and not a guarantee of collection) and waive any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Obligations.
The Guarantee of each Subsidiary Guarantor is, to the extent and
in the manner set forth in Article X, subordinated and subject in right of
payment to the prior payment in full of the principal of and premium, if any,
and interest on all Guarantor Senior Indebtedness of such Subsidiary Guarantor
and this Guarantee is made subject to such provisions of this Indenture.
The obligations of the Subsidiary Guarantors hereunder shall not
be subject to any reduction, limitation, impairment or termination for any
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense, setoff, counterclaim,
recoupment or termination whatsoever or by reason of the invalidity, illegality
or unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of the Subsidiary Guarantors
herein shall not be discharged or impaired or otherwise affected by the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Obligations, or by any other
act or thing or omission or delay to do any other act or thing which may or
might in any manner or to any extent
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vary the risk of the Subsidiary Guarantors or would otherwise operate as a
discharge of the Subsidiary Guarantors as a matter of law or equity.
The Subsidiary Guarantors further agree that their Guarantees
herein shall continue to be effective or be reinstated, as the case may be, if
at any time payment, or any part thereof, of any Obligation is rescinded or
must otherwise be restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against the
Subsidiary Guarantors by virtue hereof, upon the failure of the Company to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, by redemption or otherwise, or to perform or comply with any
other Obligation, the Subsidiary Guarantors hereby promise to and will, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be paid,
in cash, to the Holders or the Trustee an amount equal to the sum of (i) the
unpaid principal amount of such Obligations, (ii) accrued and unpaid interest
on such Obligations (but only to the extent not prohibited by law) and (iii)
all other monetary Obligations of the Company to the Holders and the Trustee.
The Subsidiary Guarantors agree that, as between the Subsidiary
Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated
as provided in Article VI for the purposes of the Guarantee herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Article VI, such Obligations (whether or not due and payable) shall forthwith
become due and payable by the Subsidiary Guarantors for the purposes of this
Section.
The Subsidiary Guarantors also agree to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
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SECTION 11.2. Limitation on Liability. Any term or provision of
this Indenture to the contrary notwithstanding, the maximum, aggregate
liability of each Subsidiary Guarantor hereunder shall not exceed the maximum
amount that can be guaranteed by such Subsidiary Guarantor under applicable
federal and state laws relating to insolvency of debtors.
SECTION 11.3. Successors and Assigns. This Article XI shall be
binding upon the Subsidiary Guarantors and their successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
(b) Notwithstanding the foregoing, all obligations of a
Subsidiary Guarantor under this Article XI shall be automatically and
unconditionally released and discharged upon any sale, exchange or transfer to
any Person which is not a Subsidiary of the Company, of all or substantially
all of the assets of such Subsidiary Guarantor or all of the Capital Stock of
such Subsidiary Guarantor owned by the Company or any Subsidiary; provided that
(i) such sale, exchange or transfer is not prohibited by this Indenture and
(ii) all obligations of such Subsidiary Guarantor in respect of the Bank
Indebtedness and under all of its Guarantees of, and in respect of all liens on
its assets securing, Indebtedness of the Company are also released and
discharged upon such sale, exchange or transfer.
SECTION 11.4. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article XI shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of
any right, power or privilege. The rights, remedies and benefits of the
Trustee and the Holders herein expressly specified are cumulative and not
exclusive of any other rights, remedies or benefits which either may have under
this Article XI at law, in equity, by statute or otherwise.
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SECTION 11.5. Right of Contribution. Each Subsidiary Guarantor
hereby agrees that to the extent that a Subsidiary Guarantor shall have paid
more than its proportionate share of any payment made hereunder, such
Subsidiary Guarantor shall be entitled to seek and receive contribution from
and against any other Subsidiary Guarantor hereunder who has not paid its
proportionate share of such payment. Each Subsidiary Guarantor's right of
contribution shall be subject to the terms and conditions of Section 11.6. The
provisions of this Section shall in no respect limit the obligations and
liabilities of any Subsidiary Guarantor to the Trustee and the Securityholders
and each Subsidiary Guarantor shall remain liable to the Trustee and the
Securityholders for the full amount guaranteed by such Subsidiary Guarantor
hereunder.
SECTION 11.6. No Subrogation. Notwithstanding any payment or
payments made by any of the Subsidiary Guarantors hereunder, no Subsidiary
Guarantor shall be entitled to be subrogated to any of the rights of the
Trustee or any Securityholder against the Company or any other Subsidiary
Guarantor or any collateral security or guarantee or right of offset held by
the Trustee or any Securityholder for the payment of the Obligations, nor shall
any Subsidiary Guarantor seek or be entitled to seek any contribution or
reimbursement from the Company or any other Subsidiary Guarantor in respect of
payments made by such Subsidiary Guarantor hereunder, until all amounts owing
to the Trustee and the Securityholders by the Company on account of the
Obligations are paid in full. If any amount shall be paid to any Subsidiary
Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Subsidiary Guarantor in trust for the Trustee and the Securityholders,
segregated from other funds of such Subsidiary Guarantor, and shall, forthwith
upon receipt by such Subsidiary Guarantor, be turned over to the Trustee in the
exact form received by such Subsidiary Guarantor (duly indorsed by such
Subsidiary Guarantor to the Trustee, if required), to be applied against the
Obligations.
SECTION 11.7. Additional Subsidiary Guarantors. Concurrently
with the creation or acquisition by the Company of any Subsidiary (other than a
foreign subsidiary), the Company, such Subsidiary and the Trustee shall execute
and deliver a
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supplement to this Indenture providing that such Subsidiary will be a
Subsidiary Guarantor hereunder. Each such supplement shall be in a form
reasonably satisfactory to the Trustee.
SECTION 11.8. Modification. No modification, amendment or
waiver of any provision of this Article XI, nor the consent to any departure by
the Subsidiary Guarantors therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on the Subsidiary Guarantors in any
case shall entitle the Subsidiary Guarantors to any other or further notice or
demand in the same, similar or other circumstances.
ARTICLE XII
Miscellaneous
SECTION 12.1. Trust Indenture Act Controls. If any provision of
this Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control.
SECTION 12.2. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company:
International Wire Group, Inc.
101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention of David M. Sindelar
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if to the Subsidiary Guarantors:
International Wire Group, Inc.
c/o 101 South Hanley Road
Suite 400
St. Louis, Missouri 63105
Attention of David M. Sindelar
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention of Corporate Trust and
Agency Administration
The Company, any of the Subsidiary Guarantors, or the Trustee by
notice to the other may designate additional or different addresses for
subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be
mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or
any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 12.3. Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 12.4. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the
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Trustee to take or refrain from taking any action under this Indenture, the
Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
SECTION 12.6. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
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deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at
the time shall be considered in any such determination.
SECTION 12.7. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.
SECTION 12.8. Legal Holidays. A "Legal Holiday" is a Saturday,
a Sunday or a day on which banking institutions are not required to be open in
the State of New York. If a payment date is a Legal Holiday, payment shall be
made on the next succeeding day that is not a Legal Holiday, and no interest
shall accrue for the intervening period. If a regular record date is a Legal
Holiday, the record date shall not be affected.
SECTION 12.9. Governing Law. This Indenture and the Securities
shall be governed by, and construed in accordance with, the laws of the State
of New York but without giving effect to applicable principles of conflicts of
law to the extent that the application of the laws of another jurisdiction
would be required thereby.
SECTION 12.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or
for any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
SECTION 12.11. Successors. All agreements of the Company and
the Subsidiary Guarantors in this Indenture and the Securities shall bind their
respective successors. All agreements of the Trustee in this Indenture shall
bind its successors.
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SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
SECTION 12.13. Variable Provisions. The Company initially
appoints the Trustee as Paying Agent and Registrar and custodian with respect
to any Global Securities.
SECTION 12.14. Qualification of Indenture. The Company shall
qualify this Indenture under the TIA in accordance with the terms and
conditions of the Purchase Agreement and shall pay all reasonable costs and
expenses (including attorneys' fees for the Company, the Trustee and the
Holders) incurred in connection therewith, including, but not limited to, costs
and expenses of qualification of the Indenture and the Securities and printing
this Indenture and the Securities. The Trustee shall be entitled to receive
from the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 12.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
99
<PAGE> 106
IN WITNESS WHEREOF, the parties have caused this Indenture to be
duly executed as of the date first written above.
INTERNATIONAL WIRE GROUP, INC.
By:
-------------------------------
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY
By:
-------------------------------
Name:
Title:
OMEGA WIRE, INC.
By:
-------------------------------
Name:
Title:
OWI CORPORATION
By:
-------------------------------
Name:
Title:
WIREKRAFT INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
100
<PAGE> 107
WIRE TECHNOLOGIES, INC.
By:
-------------------------------
Name:
Title:
WIRE HARNESS INDUSTRIES, INC.
By:
-------------------------------
Name:
Title:
ECM HOLDING COMPANY
By:
-------------------------------
Name:
Title:
WIREKRAFT EMPLOYMENT COMPANY
By:
-------------------------------
Name:
Title:
101
<PAGE> 108
EXHIBIT A
[FORM OF FACE OF INITIAL EXCHANGE NOTE]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED
OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR
ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO
1
<PAGE> 109
LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO
A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E)
TO AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) AND (F) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH CASE, ONLY IF A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE ISSUER AND
THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.
2
<PAGE> 110
No. [___] Principal Amount $[______________]
CUSIP NO. [___________]
14.00% Senior Subordinated Note due 2005
International Wire Group, Inc., a Delaware corporation promises
to pay to [___________], or registered assigns, the principal sum of
[__________________] Dollars on June 1, 2005.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other
side of this Security.
Dated: [____________] INTERNATIONAL WIRE GROUP, INC.
by
-----------------------------------
Senior Vice President
-----------------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
[NAME OF TRUSTEE]
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
--------------------------
Authorized Signatory
1
<PAGE> 111
[FORM OF REVERSE SIDE OF INITIAL EXCHANGE NOTE]
14.00% Senior Subordinated Note due 2005
1. Interest
International Wire Group, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company") promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and December
1 of each year. Interest on the Securities will accrue from the most recent
date to which interest has been paid on the Securities or, if no interest has
been paid, from [_____].(1) The Company shall pay interest on overdue
principal or premium, if any, at the rate borne by the Securities to the extent
lawful. Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on which
any principal of or interest on any Security is due and payable, the Company
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal, premium, if any, and/or interest. The Company will pay
interest (except defaulted interest) to the Persons who are registered Holders
of Securities at the close of business on the May 15 or November 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest
by check payable in such money. It may mail an interest check to a Holder's
registered address.
- --------------------
(1) Insert the Issue Date.
1
<PAGE> 112
3. Paying Agent and Registrar
Initially, [ ](2) ("Trustee"), will act as Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice to any Securityholder. The Company or
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of
[____________](3) (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named therein (the "Subsidiary Guarantors") and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $[____](4) aggregate principal amount
(subject to Section 2.7 of the Indenture). This Security is one of the Initial
Exchange Notes referred to in the Indenture. The Securities include the
Initial Exchange Notes and any Registered Exchange Notes issued in exchange for
the Initial Exchange Notes pursuant to the Indenture and the Purchase
Agreement. The Initial Exchange Notes and the Registered Exchange Notes are
treated as a single class of
- --------------------
(2) Insert the name of the Trustee
(3) Insert date of the Indenture
(4) Insert aggregate principal amount of Initial Exchange Notes on Issue Date.
2
<PAGE> 113
securities under the Indenture. The Indenture imposes certain limitations on
the Incurrence of Indebtedness by the Company and its Subsidiaries, the payment
of dividends and other distributions on the Capital Stock of the Company and
its Subsidiaries, the purchase or redemption of Capital Stock of the Company
and Capital Stock of such Subsidiaries, certain purchases or redemptions of
Subordinated Obligations, the sale or transfer of assets and Capital Stock of
Subsidiaries, the issuance or sale of Capital Stock of Subsidiaries, the
business activities and investments of the Company and its Subsidiaries and
transactions with Affiliates. In addition, the Indenture limits the ability of
the Company and its Subsidiaries to restrict distributions and dividends from
Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and the Indenture, the Subsidiary Guarantors
have unconditionally guaranteed such obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. Optional Redemption
[Except as set forth in this paragraph 5, the Securities will not
be redeemable at the option of the Company prior to June 1, 2000. On and after
such date, the](5) [The] Securities will be redeemable, at the Company's option,
in whole or in part, upon not less than 30 nor more than 60 days' prior notice
mailed by first class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
- --------------------
(5) Delete bracketed text if Issue Date occurs after June 1, 2000.
3
<PAGE> 114
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 . . . . . . . . . . 105.875%
2001 . . . . . . . . . . 103.917%
2002 . . . . . . . . . . 101.958%
2003 and thereafter . . . 100.000%(6)
</TABLE>
[Notwithstanding the foregoing, at any time or from time to time
prior to June 1, 1998, the Company may redeem in the aggregate up to
$[__________] principal amount of the Securities with the proceeds of one or
more Equity Offerings by the Company or Holding (to the extent, in the case of
Holding, the net cash proceeds thereof are contributed to the equity capital of
the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 110% plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to such redemption, at least $[__________] principal
amount of the Securities remain outstanding.](7)
[At any time on or prior to June 1, 2000, the Securities may also
be redeemed in whole, but not in part, at the option of the Company upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice (but in no event more than 90 days after the occurrence of such
Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of, and accrued but unpaid interest to, the date
of redemption (subject to the right
- --------------------
(6) Delete any period occurring in its entirety prior to the Issue Date.
(7) Delete bracketed text if Issue Date occurs after June 1, 2000.
4
<PAGE> 115
of holders of record on the relevant record date to receive interest due on the
relevant interest payment date).](8)
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right to cause the Company to repurchase all or any part of the Securities of
such Holder at a repurchase price equal to 101% of the principal amount thereof
plus accrued interest to the date of repurchase as provided in, and subject to
the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give
- --------------------
(8) Delete bracketed text if Issue Date occurs after June 1, 2000.
5
<PAGE> 116
them effect and appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) for a period beginning 15 days before a selection of Securities
to be redeemed and ending on the date of such selection or (ii) any Securities
for a period beginning 15 days before an interest payment date and ending on
such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the
6
<PAGE> 117
Company deposits with the Trustee money or U.S. Government Obligations for the
payment of principal and interest on the Securities to redemption or maturity,
as the case may be.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company, or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act, or to make any change that does not adversely affect the rights of any
Securityholder, or to provide for the issuance of Registered Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5 of the Securities, upon required repurchase, upon declaration or otherwise;
(iii) failure by the Company to comply with other agreements in the Indenture
or the Securities, in certain cases subject to notice and lapse of time; (iv)
certain accelerations (including failure to pay within any grace period after
final maturity) of other indebtedness of the Company or its Subsidiaries if the
amount accelerated (or so unpaid) exceeds $10.0 million and such acceleration
or failure to pay is not
7
<PAGE> 118
rescinded or cured within a 10 day period; (v) certain events of bankruptcy or
insolvency with respect to the Company or any Significant Subsidiary; and (vi)
certain final, non-appealable judgments or decrees for the payment of money in
excess of $10.0 million. If an Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities
may declare all the Securities to be due and payable immediately. Certain
events of bankruptcy or insolvency are Events of Default which will result in
the Securities being due and payable immediately upon the occurrence of such
Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives
8
<PAGE> 119
and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on its behalf) manually signs
the certificate of authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in accordance
with, the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws
of another jurisdiction would be required thereby.
9
<PAGE> 120
The Company will furnish to any Securityholder upon written
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger type.
Requests may be made to: International Wire Group, Inc., 101 South
Hanley Road, Suite 400, St. Louis, Missouri 63105
Attention of General Counsel
10
<PAGE> 121
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security
on the books of the Company. The agent may substitute another to act
for him.
- --------------------------------------------------------------------------------
Date: Your Signature:
---------------------- ------------------------------------
Signature Guarantee:
-----------------------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is three years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any Affiliate of the
Company, the undersigned confirms that such Securities are being:
CHECK ONE BOX BELOW:
1[ ] acquired for the undersigned's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or
Section 2.6(d)(i)(A) of the Indenture); or
2[ ] transferred to the Company; or
3[ ] transferred pursuant to and in compliance with Rule 144A
under the Securities Act of 1933; or
4[ ] transferred pursuant to an effective registration
statement under the Securities Act; or
1
<PAGE> 122
5[ ] transferred pursuant to and in compliance with Regulation
S under the Securities Act of 1933; or
6[ ] transferred to an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933), that has furnished to the Trustee
a signed letter containing certain representations and
agreements (the form of which letter appears as Exhibit C
to the Indenture); or
7[ ] transferred pursuant to another available exemption from
the registration requirements of the Securities Act of
1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Company may require, prior to registering
any such transfer of the Securities, in their sole discretion, such legal
opinions, certifications and other information as the Trustee or the Company
may reasonably request to confirm that such transfer is being made pursuant to
an exemption from, or in a transaction not subject to, the registration
requirements of the Securities Act of 1933, such as the exemption provided by
Rule 144 under such Act.
----------------------------------------
Signature
Signature Guarantee:
- --------------------------- ----------------------------------------
Signature
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
2
<PAGE> 123
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have
been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized officer of
Date of Principal Amount of Principal Amount of following such Trustee or Securities
Exchange this Global Security this Global Security decrease or increase Custodian
<S> <C> <C> <C> <C>
</TABLE>
3
<PAGE> 124
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased
by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000): $
Date: Your Signature
------------ ------------------------------------------
(Sign exactly as your name appears on the
other side of the Security)
Signature Guarantee:
----------------------------------------------------
(Signature must be guaranteed)
4
<PAGE> 125
EXHIBIT B
[FORM OF FACE OF REGISTERED EXCHANGE NOTE]
No. [_____] Principal Amount $[____________]
CUSIP NO. ___________
14.00% Senior Subordinated Notes due 2005
International Wire Group, Inc., a Delaware corporation, promises
to pay to [______________], or registered assigns, the principal sum of
[_______________] Dollars on June 1, 2005.
Interest Payment Dates: June 1 and December 1.
Record Dates: May 15 and November 15.
Additional provisions of this Security are set forth on the other
side of this Security.
Date: INTERNATIONAL WIRE GROUP, INC.
by
------------------------------
Senior Vice President
by
------------------------------
Assistant Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
[NAME OF TRUSTEE]
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------------
Authorized Signatory
5
<PAGE> 126
[FORM OF REVERSE SIDE OF REGISTERED EXCHANGE NOTE]
14.00% Senior Subordinated Note due 2005
1. Interest
International Wire Group, Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company") promises to pay interest on the
principal amount of this Security at the rate per annum shown above.
The Company will pay interest semiannually on June 1 and December
1 of each year. Interest on the Securities will accrue from the most recent
date to which interest has been paid on the Securities or, if no interest has
been paid, from [_____](9). The Company shall pay interest on overdue
principal or premium, if any, at the rate borne by the Securities to the extent
lawful. Interest will be computed on the basis of a 360-day year of twelve 30-
day months.
2. Method of Payment
By at least 12:00 noon (New York City time) on the date on which
any principal of or interest on any Security is due and payable, the Company
shall irrevocably deposit with the Trustee or the Paying Agent money sufficient
to pay such principal, premium, if any, and/or interest. The Company will pay
interest (except defaulted interest) to the Persons who are registered Holders
of the Securities at the close of business on the May 15 or November 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. However, the Company may pay principal and interest
by check payable in such money. It may mail an interest check to a Holder's
registered address.
- --------------------
(9) Insert the Issue Date.
1
<PAGE> 127
3. Paying Agent and Registrar
Initially, [ ](10) ("Trustee"), will act as Paying
Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice to any Securityholder. The Company or
any of its domestically incorporated Wholly Owned Subsidiaries may act as
Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of
[__________](11) (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Company, the
Subsidiary Guarantors named therein (the "Subsidiary Guarantors") and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Sections 77aaa-7bbbb) as in effect on the date of the
Indenture (the "Act"). Capitalized terms used herein and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture
and the Act for a statement of those terms.
The Securities are general unsecured senior subordinated
obligations of the Company limited to $[_________](12) aggregate principal
amount (subject to Section 2.7 of the Indenture). This Security is one of the
Registered Exchange Notes referred to in the Indenture. The Securities include
the Initial Exchange Notes and any Registered Exchange Notes issued in exchange
for the Initial Exchange Notes pursuant to the Indenture and the Purchase
Agreement. The Initial Exchange Notes and the Registered Exchange Notes are
treated as a
- --------------------
(10) Insert the name of the Trustee.
(11) Insert date of the Indenture.
(12) Insert aggregate principal amount of Initial Exchange Notes on Issue Date.
2
<PAGE> 128
single class of securities under the Indenture. The Indenture imposes certain
limitations on the Incurrence of Indebtedness by the Company and its
Subsidiaries, the payment of dividends and other distributions on the Capital
Stock of the Company and certain of its Subsidiaries, the purchase or
redemption of Capital Stock of the Company and Capital Stock of such
Subsidiaries, certain purchases or redemptions of Subordinated Obligations, the
sale or transfer of assets and Capital Stock of Subsidiaries, the issuance or
sale of Capital Stock of Subsidiaries, the business activities and investments
of the Company and its Subsidiaries and transactions with Affiliates. In
addition, the Indenture limits the ability of the Company and its Subsidiaries
to restrict distributions and dividends from Subsidiaries.
To guarantee the due and punctual payment of the principal and
interest, if any, on the Securities and all other amounts payable by the
Company under the Indenture and the Securities when and as the same shall be
due and payable, whether at maturity, by acceleration or otherwise, according
to the terms of the Securities and such Indenture, the Subsidiary Guarantors
have unconditionally guaranteed the Obligations on a senior subordinated basis
pursuant to the terms of the Indenture.
5. Optional Redemption
[Except as set forth in this paragraph 5, the Securities will not
be redeemable at the option of the Company prior to June 1, 2005. On and after
such date, the](13) [the] Securities will be redeemable, at the Company's
option, in whole or in part, upon not less than 30 nor more than 60 days' prior
notice mailed by first-class mail to each Holder's registered address, at the
following redemption prices (expressed as percentages of principal amount) plus
accrued and unpaid interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date):
- --------------------
(13) Delete bracketed text if the Issue Date occurs after June 1, 2000.
3
<PAGE> 129
If redeemed during the 12-month period commencing on June 1 of
the years set forth below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2000 . . . . . . . . . . . 105.875%
2001 . . . . . . . . . . . 103.917%
2002 . . . . . . . . . . . 101.958%
2003 and thereafter . . . 100.000%(14)
</TABLE>
[Notwithstanding the foregoing, at any time or from time to time
prior to June 1, 1998, the Company may redeem in the aggregate up to
[__________] million principal amount of the Securities with the proceeds of
one or more Equity Offerings by the Company or Holding (to the extent, in the
case of Holding, the net cash proceeds thereof are contributed to the equity
capital of the Company) so long as there is a Public Market at the time of such
redemption, at a redemption price (expressed as a percentage of principal
amount) of 110% plus accrued and unpaid interest to the redemption date
(subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date); provided, however,
that after giving effect to such redemption, at least $[__________] million
principal amount of Securities remain outstanding.](15)
[At any time on or prior to June 1, 2000, the Securities may also
be redeemed in whole, but not in part, at the option of the Company upon the
occurrence of a Change of Control, upon not less than 30 nor more than 60 days'
prior notice (but in no event more than 90 days after the occurrence of such
Change of Control) mailed by first-class mail to each Holder's registered
address, at a redemption price equal to 100% of the principal amount thereof
plus the Applicable Premium as of and accrued but unpaid interest to, the date
of redemption (subject to the right
- --------------------
(14) Delete any period occurring in its entirety prior to the Issue Date.
(15) Delete bracketed text if the Issue Date occurs after June 1, 2000.
4
<PAGE> 130
of holders of record on the relevant record date to receive interest due on the
relevant interest payment date).](16)
6. Notice of Redemption
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of Securities to be
redeemed at his registered address. Securities in denominations of principal
amount larger than $1,000 may be redeemed in part but only in whole multiples
of $1,000. If money sufficient to pay the redemption price of and accrued and
unpaid interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions thereof) called
for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the
right to cause the Company to repurchase all or any part of the Securities of
such Holder at a repurchase price equal to 101% of the principal amount thereof
plus accrued interest to the date of repurchase as provided in, and subject to
the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture. To the extent provided in the Indenture, Senior
Indebtedness must be paid before the Securities may be paid. The Company
agrees, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorizes the Trustee
to give them effect and appoints the Trustee as attorney-in-fact for such
purpose.
- --------------------
(16) Delete bracketed text if the Issue Date occurs after June 1, 2000.
5
<PAGE> 131
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of principal amount of $1,000 and whole multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the
transfer of or exchange (i) any Securities selected for redemption (except, in
the case of a Security to be redeemed in part, the portion of the Security not
to be redeemed) or for a period beginning 15 days before a selection of
Securities to be redeemed and ending on the date of selection or (ii) any
Securities for a period beginning 15 days before an interest payment date and
ending on such interest payment date.
10. Persons Deemed Owners
The registered holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Defeasance
Subject to certain conditions set forth in the Indenture, the
Company at any time may terminate some or all of its obligations under the
Securities and the Indenture if the Company deposits with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
6
<PAGE> 132
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the outstanding
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount of the outstanding Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Securityholder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company or
Communications or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Registered Exchange Notes.
14. Defaults and Remedies
Under the Indenture, Events or Default include (i) default for 30
days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon required repurchase, upon
required repurchase, upon redemption pursuant to paragraph 5 of the Securities,
upon required repurchase, upon declaration or otherwise; (iii) failure by the
Company to comply with other agreements in the Indenture or the Securities, in
certain cases subject to notice and lapse of time; (iv) certain accelerations
(including failure to pay within any grace period after final maturity) of
other Indebtedness of the Company or its Subsidiaries if the amount accelerated
(or so unpaid) exceeds $10.0 million and such acceleration or failure to pay is
not rescinded or cured within a 10 day period; (v) certain events of bankruptcy
or insolvency with respect to the Company or any Significant Subsidiary; and
(vi) certain final, non-appealable judgments or decrees for the payment of
money in excess of $10.0 million. If an Event of Default occurs and is
continuing, the Trustee or Holders of at
7
<PAGE> 133
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default.
Securityholders may not enforce the Indenture or the Securities
except as provided in the Indenture. The Trustee may refuse to enforce the
Indenture or the Securities unless it receives reasonable indemnity or
security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default or Event of Default (except a Default or Event of Default in payment of
principal or interest) if it determines that withholding notice is in their
interest.
15. Trustee Dealings with the Company
Subject to certain limitations set forth in the Indenture, the
Trustee under the Indenture, in its individual or any other capacity, may
become the owner or pledgee of Securities and may otherwise deal with and
collect obligations owed to it by the Company or its affiliates and may
otherwise deal with the Company or its affiliates with the same rights it would
have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or any Subsidiary Guarantor shall not have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities or
the Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
waives and releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory of
the Trustee (or an authenticating agent acting on
8
<PAGE> 134
its behalf) manually signs the certificate of authentication on the other side
of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entirety), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to
Minors Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Securityholders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
20. Governing Law
This Security shall be governed by, and construed in accordance
with, the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the laws
of another jurisdiction would be required thereby.
The Company will furnish to any Securityholder upon
request and without charge to the Securityholder a copy of the
Indenture which has in it the text of this Security in larger
type. Requests may be made to: International Wire Group, Inc.,
101 South Hanley Road, Suite 400, St. Louis, Missouri 63105
Attention of General Counsel
9
<PAGE> 135
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: Your Signature
---------------- ---------------------------------
Signature Guarantee:
--------------------------------------------------
(Signature must be guaranteed)
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
1
<PAGE> 136
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.6 or 4.8 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security purchased
by the Company pursuant to Section 4.6 or 4.8 of the Indenture, state the
amount in principal amount (must be integral multiple of $1,000): $
Date:
---------------
Your Signature:
---------------------------------
(Sign exactly as your name appears on the other
side of the Security)
Signature
Guarantee:
-----------------------------------------------
(Signature must be guaranteed)
1
<PAGE> 137
EXHIBIT C
Transferee Letter of Representation
International Wire Group, Inc.
c/o [Trustee]
Attention:
Dear Sirs:
This certificate is delivered to request a transfer of $
principal amount of the 14.00% Senior Subordinated Notes due 2005 (the "Notes")
of International Wire Group, Inc. (the "Company").
Upon transfer, the Notes would be registered in the name of the
new beneficial owner as follows:
Name:
-----------------------------------
Address:
--------------------------------
Taxpayer ID Number:
---------------------
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933 (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor," at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risk of our investment in the Notes and
invest in or purchase securities similar to the Notes in the normal course of
our business. We and any accounts for which we are acting are each able to
bear the economic risk of our or its investment.
1
<PAGE> 138
2. We understand that the Notes have not been registered
under the Securities Act and, unless so registered, may not be sold except as
permitted in the following sentence. We agree on our own behalf and on behalf
of any investor account for which we are purchasing Notes to offer, sell or
otherwise transfer such Notes prior to the date which is three years after the
later of the date of original issue and the last date on which the Company or
any affiliate of the Company was the owner of such Notes (or any predecessor
thereto) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective
under the Securities Act, (c) in a transaction complying with the requirements
of Rule 144A under the Securities Act, to a person we reasonably believe is a
qualified institutional buyer under Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) pursuant to offers and
sales that occur outside the United States within the meaning of Regulation S
under the Securities Act, (e) to an institutional "accredited investor" within
the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is
purchasing for its own account or for the account of such an institutional
"accredited investor", in each case in a minimum principal amount of Notes of
$250,000 or (f) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject in each of the foregoing cases to
any requirement of law that the disposition of our property or the property of
such investor account or accounts be at all times within our or their control
and in compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale Restriction
Termination Date. If any resale or other transfer of the Notes is proposed to
be made pursuant to clause (e) above prior to the Resale Restriction
Termination Date, the transferor shall deliver a letter from the transferee
substantially in the form of this letter to the Company and the Trustee, which
shall provide, among other things, that the transferee is an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Termination Date of
the Notes
2
<PAGE> 139
pursuant to clauses (d), (e) or (f) above to require the delivery of an opinion
of counsel, certifications and/or other information satisfactory to the Company
and the Trustee.
TRANSFEREE:
---------------------
BY
------------------------------
3
<PAGE> 1
EXHIBIT 4.9
================================================================================
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
by and among
INTERNATIONAL WIRE HOLDING COMPANY,
INTERNATIONAL WIRE GROUP, INC.,
CHEMICAL EQUITY ASSOCIATES
and
HICKS, MUSE, TATE & FURST EQUITY FUND II, L.P.
dated as of March 5, 1996
================================================================================
<PAGE> 2
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.
<TABLE>
<CAPTION>
Page
No.
----
<S> <C> <C>
ARTICLE I
AUTHORIZATION;
PURCHASE AND SALE; CLOSING
1.01 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.02 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.03 Investors' Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.04 Issuers' Closing Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.05 Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.06 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE ISSUERS
2.01 Corporate Existence; Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.02 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . 5
2.03 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.04 Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.05 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.06 No Event of Non-Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.07 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.08 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.09 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10 Delivery of Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.11 Representations and warranties Contained in Other Agreements . . . . . . . . . . . . . . . . . . . . 8
2.12 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.13 Disqualified Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.14 Offering of Purchased Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.15 Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
3.01 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.02 Corporate Power; Authorization; Enforceable Obligations . . . . . . . . . . . . . . . . . . . . . . 9
3.03 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.04 Purchase of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.05 Resale of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Page
No.
----
<S> <C> <C>
ARTICLE IV
AFFIRMATIVE COVENANTS
4.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.03 Inspection of Property; Books and Records; Discussions . . . . . . . . . . . . . . . . . . . . . . . 12
4.04 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.05 Reservation and Authorization of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.06 Board observers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V
REGISTRATION RIGHTS IN RESPECT OF EXCHANGE NOTES
5.01 Shelf Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.02 Registration Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.03 Holdback Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.04 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI
GENERAL PROVISIONS
6.01 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.02 Survival of Representations, Warranties, Covenants and Agreements . . . . . . . . . . . . . . . . . 26
6.03 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.04 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.05 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.06 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.07 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.08 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.09 No Assignment; Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.10 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.11 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
SCHEDULES AND EXHIBITS
SCHEDULE I Investor Information
SCHEDULE II Capitalization of Holding and the Company
EXHIBIT A Form of Warrant
EXHIBIT B Certificate of Designation
-ii-
<PAGE> 4
EXHIBIT C-1 Certificate of Incorporation of the Company
EXHIBIT C-2 Certificate of Incorporation of Holding
EXHIBIT D Form of Exchange Indenture
-iii-
<PAGE> 5
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
Preferred Stock and Warrant Purchase Agreement (this "Agreement") made
and entered into this 5th day of March, 1996, by and among International Wire
Holding Company, a corporation organized and existing under the laws of the
State of Delaware ("Holding"), International Wire Group, Inc., a corporation
organized and existing under the laws of the State of Delaware (the "Company"
and, together with Holding, the "Issuers"), Chemical Equity Associates ("CEA")
and Hicks, Muse, Tate & Furst Equity Fund II, L.P. ("HMTF") and, together with
CEA, the "Investors"). Certain capitalized terms used in this Agreement are
defined in Section 7.01 and in the Certificate of Designation attached hereto
as Exhibit B.
RECITALS
WHEREAS, the Company proposes to acquire all of the capital stock of
Hoosier Wire, Inc., and the Company, through a wholly-owned subsidiary,
proposes to acquire all of the assets of Dekko Automotive Wire, Inc.,
Silicones, Inc. and Albion Wire, Inc., and, in order to provide a portion of
the financing for the consummation of such acquisitions, the Company and
Holding propose to enter into the transactions contemplated by this Agreement;
WHEREAS, the Investors desire to purchase an aggregate of (i) 400,000
shares of the Company's Series A Senior Cumulative Exchangeable Redeemable
Preferred Stock, par value $0.01 per share (the "Series A Preferred Stock"),
and (ii) warrants of Holding in the form attached hereto as Exhibit A entitling
the holder or holders thereof to purchase, on certain terms and conditions, an
aggregate of 7,126,316 shares of Holding's Common Stock at a purchase price of
$0.01 per share, subject to adjustment as provided therein (the "Warrants" and,
together with the Series A Preferred Stock, the "Purchased Securities"), all on
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, the Series A Preferred Stock shall, on the terms and subject
to the conditions set forth in this Agreement and in the Certificate of
Designation, be exchangeable (in whole but not in part) by the Company for the
Exchange Notes to be issued pursuant to the Exchange Indenture; and
WHEREAS, the Company and Holding desire to issue and sell the
Purchased Securities to the Investors, on the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
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ARTICLE I
AUTHORIZATION;
PURCHASE AND SALE; CLOSING
1.01 Purchase and Sale; Purchase Price. On the basis of the
representations, warranties, covenants and agreements contained in this
Agreement, (i) the Company agrees to sell to the Investors, and the Investors
severally agree to purchase from the Company, an aggregate of 400,000 shares of
the Company's Series A Preferred Stock and (ii) Holding agrees to sell to the
Investors, and the Investors severally agree to purchase from Holding, Warrants
to purchase an aggregate of 7,126,316 shares of Holding's Common Stock (subject
to adjustment). Shares of the Series A Preferred Stock and the Warrants shall
be issued and sold to the Investors in units (the "Units"), each Unit
consisting of 1,000 shares of Series A Preferred Stock and Warrants to purchase
17,815.79 shares of Holding's Common Stock. The purchase price for each Unit
shall be $250,000, for an aggregate purchase price of $10,000,000 (the
"Purchase Price"), payable in immediately available funds at the Closing in the
manner provided in Section 1.02. Each Investor will purchase the number of
Units set forth opposite the name of such Investor on Schedule I hereto.
1.02 Closing. The closing of the purchase and sale of the Units
under this Agreement (the "Closing") will take place at the offices of Simpson
Thatcher & Bartlett, 425 Lexington Avenue, New York, New York, or at such other
place as the Issuers and the Investors mutually agree, at 10:00 A.M., local
time, on March 5, 1996, or on such later Business Day on or prior to March 31,
1996 as the Issuers and the Investors mutually agree (the "Closing Date"). At
the Closing, each Investor will deliver to the Company the portion of the
Purchase Price set forth opposite such Investor's name on Schedule I hereto by
wire or interbank transfer in immediately available funds to an account
designated in writing by the Company, against delivery (i) by the Company to
such Investor of one or more (as designated by such Investor) duly executed
stock certificates evidencing the aggregate number of shares of Series A
Preferred Stock to be purchased by such Investor (as set forth on Schedule I
hereto) and (ii) by Holding to such Investor of duly executed warrant
certificates, in at least such numbers as may be required to reflect the
various exercise dates and conditions thereof specified in Section 5.01 and in
such additional numbers as may be requested by such Investor, evidencing
Warrants to purchase the aggregate number of shares of Common Stock set forth
opposite such Investors name on Schedule I hereto, each such certificate to be
dated the Closing Date and registered in the name of the Investor purchasing
the Purchased Securities evidenced thereby.
1.03 Investors' Closing Conditions. The obligations of each
Investor to purchase and pay for the Units at the Closing
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is subject to the satisfaction (as of the Closing) of the following conditions:
(a) Representations True; No Event of Non-Compliance. All
representations and warranties of the Issuers made in Article II or
otherwise under or pursuant to this Agreement shall (except as
affected by the transactions contemplated hereby) be true and correct
as though made on the Closing Date; and no Event of Non-Compliance
shall have occurred and be continuing.
(b) Consummation of Related Transactions.
(i) The Other Agreements shall have been duly
executed and delivered by the parties thereto and shall be in
full force and effect, and no material term or condition
thereof shall have been amended, modified, supplemented or
waived without the prior written consent of such Investor. The
Company shall have delivered to such Investor true and correct
copies of each of the Other Agreements as in effect on the
Closing Date (certified by the Company to be such).
(ii) Such Investor shall have received (x) a true
and complete copy of each certificate, opinion, agreement or
other writing delivered to any party to the Other Agreements
(including any solvency letters or analyses) and (y) the
opinions of counsel required to be delivered pursuant to the
Other Agreements, addressed to the Investors (or accompanied
by an appropriate reliance letter addressed to the Investors).
(iii) Concurrently with or prior to the Investors'
purchase of the Units, the transactions contemplated by the
Other Agreements shall have been consummated.
(c) Compliance Certificate. Each Issuer shall have
delivered to such Investor a certificate of a Responsible Officer of
such Issuer, dated the Closing Date, certifying to the effect set
forth in Sections 1.03(a) and (b)(iii).
(d) Instruments and Proceedings to be Satisfactory. All
corporate and other proceedings taken or to be taken in connection
with the transactions contemplated by this Agreement and all documents
incident thereto shall be satisfactory in form and substance to such
Investor and CEA's special counsel, and such Investor and CEA's
special counsel shall have received all such counterpart originals or
certified or other copies of such documents as they may reasonably
request.
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(e) Certificate of Designation. The Issuer shall have
adopted the Certificate of Designation and filed the Certificate of
Designation with the Secretary of State of the State of Delaware in
accordance with the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
(f) Opinion of the Issuers' Counsel. Such Investor shall
have received from Weil, Gotshal & Manges, counsel for the Issuers, an
opinion, in connection with the transactions contemplated by this
Agreement, dated the Closing Date, in form satisfactory to such
Investor and CEA's special counsel, and as to such matters as such
Investor may reasonably request.
(g) Legality of Investment. There shall not be in effect
any Requirement of Law restraining, enjoining or otherwise prohibiting
or making illegal to consummation of the transactions contemplated by
this Agreement.
(h) Other Investor. The other Investor shall purchase and
pay for the Units to be purchased by such Investor hereunder.
(i) Administrative Fee. The Company shall have paid to
each of the Investors on the Closing Date an administrative fee of
$75,000, such fee to be paid in immediately available funds to an
account designated by each Investor.
1.04 Issuers' Closing Conditions. The obligations of each Issuer to
sell the Purchased Securities to be sold by such Issuer at the Closing is
subject to the satisfaction (as of the Closing) of the following conditions:
(a) Consummation of Other Transactions. Concurrently with
or prior to the Investors' purchase of the Units, the transactions
contemplated by the Other Agreements shall have been consummated.
(b) Legality of Investment. There shall not be in effect
any Requirement of Law restraining, enjoining or otherwise prohibiting
or making illegal to consummation of the transactions contemplated by
this Agreement.
1.05 Restrictive Legend. In addition to any legend required by the
DGCL, each certificate evidencing the Series A Preferred Stock and the warrants
issued at the Closing will bear, and each certificate representing a Restricted
Security will bear, a legend in the following terms:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933,
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AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND ACCORDINGLY, SUCH
SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS
OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE
EXEMPTIONS THEREFROM."
The holder of certificates representing Restricted Securities bearing the
above-referenced legend shall be entitled to receive certificates not bearing
such legend in connection with a sale pursuant to a registration statement that
has been declared effective by the SEC under the Securities Act or, in
connection with a sale exempt from the registration requirements of the
Securities Act and applicable state securities laws or otherwise, upon
furnishing the applicable Issuer with a reasonably satisfactory opinion of
counsel to the effect that such legend may be removed under the Securities Act
and applicable state securities laws.
1.06 Further Assurances. Following the Closing, each party hereto
will execute such further documents and instruments and take such further
actions as may reasonably be requested by one or more of the others to
consummate the purchase of the Units and to effect the other purposes of this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE ISSUERS
To induce the Investors to enter into this Agreement and to purchase
the Units, the Issuers hereby represent and warrant to each Investor that:
2.01 Corporate Existence; Compliance with Law. Holding and each of
its Subsidiaries (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has the corporate
power and authority, and the legal right, to own and operate its property, to
lease the property it operates as lessee and to conduct the business in which
it is currently engaged, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to so qualify could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect and
(d) is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Affect.
2.02 Corporate Power; Authorization; Enforceable Obligations. Each
Issuer has the corporate power and authority, and the legal right, to make,
deliver and perform each Investment
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Document to which it is a party and the Loan Documents and Acquisition
Documents to which it is a party and has taken all necessary corporate action
to authorize the execution, delivery and performance of each Investment
Document to which it is a party and the Loan Documents and Acquisition
Documents to which it is a party. No material consent or authorization of,
filing with, notice to or other act by or in respect of, any Governmental
Authority or any other Person is required in connection with the execution,
delivery, performance, validity or enforceability of the Investment Documents,
the Loan Documents or the Acquisition Documents to which either Issuer is a
party, except for (a) those set forth on Schedule 5.4 to the Senior Credit
Agreement, each of which has been made or taken and is in full force and effect
and (b) the filing of the Certificate of Designation as specified in Section
1.03(e) (which filing will have been made on or prior to the Closing Date).
This Agreement, each Warrant, the Certificate of Designation and each of the
Loan Documents and the Acquisition Documents has been duly executed and
delivered on behalf of the Issuer party thereto. This Agreement, each Warrant,
the Certificate of Designation and each of the Loan Documents and each of the
Acquisition Documents constitutes a legal, valid and binding obligation of the
Issuer party thereto enforceable against such Issuer in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors', rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
2.03 Capitalization. (a) on the date hereof, the total number of
shares of capital stock which the Company has authority to issue is 2,000,000
shares, consisting of (i) 1,000,000 shares of preferred stock, par value $.01
per share, of which 400,000 shares have been designated Series A Preferred
Stock, par value $0.01 per share; and (ii) 1,000,000 shares of common stock,
par value $.01 per share, of which 1,000 have been issued and are outstanding.
Part A of Schedule II hereto correctly sets forth the Company's capital stock
and equity securities owned of record and the names of the owners of record on
the date hereof. Upon the Closing, the Company shall not have outstanding any
subscriptions, options, warrants, rights (including "phantom" stock rights),
preemptive rights or other contracts, commitments, understandings or
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
the Company or any of its Subsidiaries to issue or sell any shares of capital
stock of the Company or to grant, extend or enter into any Option with respect
thereto.
(b) on the date hereof, the total number of shares of capital
stock which Holding has authority to issue is 205,000,000 shares, consisting of
(i) 10,000,000 shares of preferred stock, par value $.01 per share; (ii)
175,000,000 shares of common
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stock, par value $.01 per share (the "Common Stock"); and (iii) 20,000,000
shares of class A common stock, par value $.01 per share (the "Class A Common
Stock"). Part B of Schedule II hereto correctly sets forth Holding's capital
stock and equity securities owned of record and the names of the owners of
record securities date hereof. Upon the issuance of the Warrants pursuant to
this agreement, Holding shall not have outstanding any options obligating
Holding or any of its Subsidiaries to issue or sell any shares of capital stock
of Holding or to grant, extend or enter into any option with respect thereto,
other than the Warrants to be issued pursuant to this Agreement, the Warrants
to purchase 2,000,000 shares of Common Stock to be issued pursuant to the
Acquisition Agreements, the Class A Common Stock, options to purchase up to
3,400,000 shares of Common Stock issued to management of the Company and
4,187,629 options to purchase Common Stock to be issued to Mills & Partners,
Inc. or its employees upon Hicks, Muse, Tate & Furst Equity Fund, L.P.
achieving a 35% internal rate of return on its invested capital.
2.04 Securities. (a) Upon consummation of the Closing, all shares
of Series A Preferred Stock to be issued and sold pursuant to this Agreement
will have been duly and validly issued and will be fully paid and nonassessable
and free and clear of any lien, charge or other encumbrance or claim, and the
issuance thereof will not be subject to any preemptive or similar rights.
(b) Upon consummation of the Closing, 7,126,316 shares of Common
Stock issuable upon the exercise of the Warrants will have been duly authorized
and reserved for issuance upon exercise of the Warrants and, when issued upon
such exercise and payment of the exercise price thereof in accordance with the
terms of the Warrants, will have been duly and validly issued and will be fully
paid and nonassessable and free and clear of any lien, charge or other
encumbrance or claim, and the issuance of such (Common Stock will not be
subject to any preemptive or similar rights.
(c) The Exchange Notes, when issued in accordance with this
Agreement and the Certificate of Designation, will be legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms except as such enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors', rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
2.05 No Legal Bar. The execution, delivery and performance of the
Investment Documents, the Loan Documents and the Acquisition Documents, and the
use of the proceeds from the Purchase of the Units hereunder, will not violate
any Requirement of Law or Contractual Obligation of either Issuer or of any of
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their Subsidiaries which could reasonably be expected to have a Material
Adverse Effect.
2.06 No Event of Non-Compliance. Neither of the Issuers nor any of
their respective Subsidiaries is in default under or with respect to any of its
Contractual Obligations in any respect which could reasonably be expected to
have a Material Adverse Effect. No Event of Non-Compliance has occurred and is
continuing.
2.07 Federal Regulations. No part of the proceeds of the purchase
of the Units hereunder will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation U of the Board of Governors of the Federal Reserve System as now and
from time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of such Board of Governors.
2.08 Use of Proceeds. The proceeds of the purchase of the Units
hereunder shall be used to finance a portion of the Acquisition and the
transaction costs associated therewith.
2.09 Financial Statements. Each Investor has received a complete
copy of each financial statement specified in Section 5.1 of the Senior Credit
Agreement.
2.10 Delivery of Other Agreements. Each Investor has received a
complete copy of each of the Acquisition Documents and each of the Loan
Documents (including all exhibits, schedules and disclosure letters referred to
therein or delivered pursuant thereto, if any) and all amendments thereto,
waivers relating thereto and other side letters or agreements affecting the
terms thereof.
2.11 Representations and Warranties Contained in Other Agreements.
Each of the Acquisition Documents and each of the Loan Documents has been duly
executed and delivered by the Issuers and, to the best knowledge of the
Issuers, all other parties thereto and is in full force and effect. As of the
date hereof, the representations and warranties of Holding and the Company and,
to the best knowledge of the Company, each of other parties thereto,
respectively, in the Loan Documents and in the Acquisition Documents are true
and correct in all material respects.
2.12 Disclosure. No information, financial statement, report,
certificate or other document prepared or furnished by or on behalf of either
Issuer to any Investor in connection with this Agreement, any other Investment
Document, any of the Loan Documents or any of the Acquisition Documents (but
excluding all projections and pro forma financial statements which shall have
been prepared in good faith and based upon reasonable assumptions) contains any
untrue statement of a material fact or
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omits to state any material fact necessary to make the statements herein or
therein not misleading. As of the Closing Date, there is no fact known to
either Issuer (other than general economic conditions, which conditions are
commonly known and affect businesses generally) which has, or which could
reasonably be expected to have, in the reasonable judgment of such Issuer, a
Material Adverse Effect.
2.13 Disqualified Equity. The Series A Preferred Stock does not
constitute "Disqualified Equity" for purposes of the Senior Subordinated Notes.
2.14 Offering of Purchased Securities. Neither the Issuers,
directly or indirectly, nor any agent on their behalf has Offered the Purchased
Securities or any similar securities or has solicited an offer to acquire the
Purchased Securities or any similar securities from any Person so as to require
registration of the issuance and sale of the Purchased Securities sold to the
Investors under the circumstances contemplated by this Agreement under the
provisions of Section 5 of the Securities Act. Assuming the representations and
warranties of the Investors in Article III are true and correct, the sale of
the Purchased Securities under this Agreement is exempt from the registration
and prospectus delivery requirements of the Securities Act. No form of general
solicitation or general advertising was used by the issuers or their
representatives in connection with the offer or sale of the Purchased
Securities.
2.15 Charter Documents. Annexed hereto as Exhibits C-1 and C-2,
respectively, are true and complete copies of the certificates of incorporation
and By-laws of the Company and Holding as amended and in effect on the date
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each of the Investors severally, but not jointly, hereby represents
and warrants to the Issuers as follows:
3.01 Organization. Such Investor is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization.
3.02 Corporate Power; Authorization; Enforceable Obligations. Such
Investor has the corporate power and authority, and the legal right, to make,
deliver and perform this Agreement and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly executed and delivered on behalf of such Investor, and
constitutes a legal, valid and binding obligation of such Investor enforceable
against such
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Investor in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors, rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
3.03 No Legal Bar. The execution, delivery and performance of the
this Agreement will not violate any Requirement of Law or Contractual
Obligation of such Investor.
3.04 Purchase of Securities. Such Investor is an "accredited
investor" within the meaning of Rule 501 under the Securities Act and is
purchasing the Purchased Securities for its own account and not with a view to
the distribution thereof, provided that the disposition of such Investor's
property shall at all times be within its control.
3.05 Resale of Securities. Such Investor understands that the
Purchased Securities have not been registered under the Securities Act and may
be resold only if registered pursuant to the provisions of the Securities Act
or if an exemption from registration is available and that, except as expressly
provided in this Agreement, the Warrants or the Certificate of Designation,
neither Issuer is required to register the Purchased Securities.
ARTICLE IV
AFFIRMATIVE COVENANTS
Each Issuer agrees that, for so long as the Purchased Securities
issued by such Issuer are outstanding, for the benefit of the Investors and any
other Applicable Securityholder, such Issuer shall, and shall cause its
Subsidiaries to:
4.01 Financial Statements. Furnish to each Applicable
Securityholder:
(a) as soon as available, but in any event within 110
days after the end of each fiscal year of such Issuer, a copy of the
consolidated balance sheet of such Issuer and its consolidated
Subsidiaries as at the end of such year and the consolidated
statements of income and retained earnings and consolidated statement
of cash flows for such year, setting forth in each case in comparative
form the figures for the previous year except in the case of the
financial statements for the year ending December 31, 1995, reported
on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by independent
certified public accountants of nationally recognized standing;
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(b) as soon as available, but in any event not later than
45 days after the end of each of the first three quarterly periods of
each fiscal year of such Issuer, the unaudited consolidating and
consolidated balance sheet of such Issuer and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidating and consolidated statements of income and retained
earnings and consolidated statement of cash flows of such Issuer and
its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, setting forth in each
case in comparative form (i) the figures for the previous year
commencing with the quarter ending September 30, 1996 and (ii) in the
case of the Company, commencing with the quarter ending September 30,
1995, the figures set forth in the relevant budgets required to be
delivered in accordance with Section 4.02(b), certified by a
Responsible Officer as being fairly stated in all material respects
when considered in relation to the consolidated financial statements
of such Issuer and its consolidated Subsidiaries (subject to normal
year-end audit adjustments); and
(c) in the case of the Company, as soon as available, but
in any event not later than 45 days after the end of each month (other
than a month the last day of which coincides with the last day of any
fiscal quarter) of each fiscal year of the Company, the consolidated
balance sheet of the Company and its consolidated Subsidiaries as at
the end of such month and the related unaudited consolidated
statements of income and retained earnings and consolidated statement
of cash flows of the Company and its consolidated Subsidiaries for
such month and the portion of the fiscal year through the end of such
month, setting forth in each case in comparative form (i) the figures
for the previous year commencing with the 1996 fiscal year and (ii)
commencing with the month ending July 31, 1995, the figures set forth
in the relevant budgets required to be delivered in accordance with
Section 4.02(b);
all such financial statements shall fairly present in all.material respects the
consolidated financial position or the consolidating financial position, as the
case may be, of the applicable Issuer and its Subsidiaries as of such date and
shall be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).
4.02 Certificates; Other Information. Furnish to each Applicable
Securityholder:
(a) concurrently with the delivery of the financial
statements referred to in Sections 4.01(a) and (b), a
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certificate of a Responsible Officer of such Issuer (i) stating that,
to the best of such Responsible Officer's knowledge, such Issuer
during such period has observed or performed all of its covenants and
other agreements, and satisfied every condition, contained in this
Agreement and in the other Investment Documents to which it is a party
to be observed, performed or satisfied by it, in all material
respects, and that such Officer has obtained no knowledge of any Event
of Non-Compliance except as specified in such certificate and (ii)
stating that all such financial statements fairly present in all
material respects (subject, in the case of interim statements, to
normal year-end audit adjustments) the consolidated financial position
or the consolidating financial position, as the case may be, of the
applicable Issuer and its Subsidiaries as of such date and have been
prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein (except as
disclosed therein);
(b) in the case of the Company, as soon as available but
not later than 45 days subsequent to the end of each fiscal year of
the Company (or, in the case of the 1996 fiscal year, as soon as
available but in no event later than 90 days from the Closing Date), a
copy of the projections by the Company of the operating budget and
cash flow budget of the Company and its Subsidiaries for the
succeeding fiscal year (showing the operating budget and cash flow
budget for each month within such fiscal year), such projections to be
accompanied by a certificate of a Responsible Officer of the Company
to the effect that such projections have been prepared in good faith
and based upon reasonable assumptions;
(c) within five days after the same are filed, copies of
all financial statements and reports which such Issuer or any of its
Subsidiaries may make to, or file with, the SEC or any successor or
analogous Governmental Authority; and
(d) promptly, such additional financial and other
information as any Applicable Securityholder may from time to time
reasonably request.
4.03 Inspection of Property; Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Applicable Securityholder to visit and inspect any of
its properties and examine and make abstracts from any of its books and records
upon reasonable advance notice at any reasonable time on any Business Day and
as often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of such Issuer and
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its Subsidiaries with officers and employees of such Issuer and its
Subsidiaries and with its independent certified public accountants; provided
that such Applicable Securityholder shall notify such Issuer prior to any
contact with such accountants and give such Issuer the opportunity to
participate in such discussions.
4.04 Notices. Promptly give to each Applicable securityholder:
(a) notice of the occurrence of any Event of
NonCompliance; and
(b) copies of any notices provided by either Issuer to
the Lenders under the Senior Credit Agreement.
Each notice pursuant to this subsection shall be accompanied by a statement of
a Responsible Officer of the applicable Issuer setting forth details of the
occurrence referred to therein and stating what action Holdings or the Company
proposes to take with respect thereto.
4.05 Reservation and Authorization of Common Stock. (a) Holding
shall at all times reserve and keep available for issue upon the exercise or
conversion of Warrants such number of its authorized but unissued shares of
Common Stock as will be sufficient to permit the exercise in full of all
outstanding Warrants.
(b) Before taking any action which would result in an adjustment
in the number of shares of Common Stock comprising a stock unit (as defined in
the Warrants) or which would cause an adjustment reducing the Current Warrant
Price (as defined in the Warrants) per share of Common Stock below the then par
value, if any, of the shares of Common Stock issuable upon exercise of the
Warrants, Holding shall take any corporate action which is necessary in order
that Holding may validly and legally issue fully paid and nonassessable shares
of Common Stock free and clear of any liens upon the exercise of all the
Warrants immediately after the taking of such action.
(c) Before taking any action which would result in an adjustment
in the number of shares of Common Stock comprising a Stock Unit or in the
Current Warrant Price per share of Common Stock, the Issuer shall obtain all
such authorizations or exemptions thereof, or consents thereto, as may be
necessary from any public regulatory body or bodies having jurisdiction
thereof.
(d) Holding will list on each national securities exchange on
which any Common Stock may at any time be listed, subject to official notice of
issuance upon exercise of the Warrants, and will maintain such listing of, all
shares of Common
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Stock from time to time issuable upon the exercise of the Warrants.
4.06 Board Observers. For so long as CEA holds any shares of Series
A Preferred Stock, the Company shall afford CEA the opportunity to have one (1)
representative (an "Observer") attend (at CEA's sole cost and expense) as an
observer at (but not participate in or vote at) each meeting of the Board of
Directors. In addition, upon the occurrence of an Event of NonCompliance, CEA
shall be afforded the opportunity to appoint a second Observer to attend, at
its sole cost and expense (but not participate in or vote at) each meeting of
the Board of Directors. The Company shall give each Observer notice of all such
meetings at the same time and in the same manner as notice is given to members
of the Board of Directors. Each Observer shall be entitled to receive all
written materials and other information given to the directors of the Company
in connection with such meetings at the same time and in the same manner and
form such materials and information are given to the directors, and copies of
all minutes and all resolutions adopted by the Board of Directors (whether at
meetings, by written consent or otherwise) promptly after such adoption and (if
applicable) approval thereof (it being understood that such copies shall be
certified by the Secretary or Assistant Secretary of the Company).
ARTICLE V
REGISTRATION RIGHTS IN RESPECT OF EXCHANGE NOTES
5.01 Shelf Registration.
(a) Effective Registration. The Company shall, not later than
ninety (90) days following the Exchange Date, prepare and file with the SEC a
"shelf" registration statement with respect to the Registrable Securities on
any appropriate form pursuant to Rule 415 under the Securities Act and/or any
similar rule that may be adopted by the SEC (a "Shelf Registration"), and shall
use its best efforts to have such Shelf Registration declared effective within
one hundred eighty (180) days following the Exchange Date; provided, that the
Company shall not be required to effect a Shelf Registration of the Registrable
Securities if the Registrable Securities have been called for redemption
pursuant to the Indenture under which such Registrable Securities are issued.
The Company agrees to use its best efforts to keep such Shelf Registration
continuously effective for a period of three (3) years following the date on
which the Shelf Registration is declared effective or, if earlier, until all
Registrable Securities included therein have been sold or are no longer
outstanding. As used herein, "Registrable Securities" means the Exchange Notes,
provided that as to any particular Exchange Note, once issued such securities
shall cease to be
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Registrable Securities, and shall no longer be deemed outstanding for purposes
of the first sentence of this Section 5.01(a), when (i) a registration statement
with respect to the sale of such securities shall have become effective under
the Securities Act such securities shall have been disposed of in accordance
with such registration statement, (ii) they shall have been distributed to the
public pursuant to Rule 144 or have become eligible for sale pursuant to
paragraph (k) of Rule 144 or (iii) they shall have ceased to be outstanding.
(b) Supplements and Amendments. The Company shall supplement and
amend the Shelf Registration if (i) required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, (ii) otherwise required by the SEC, (iii) requested by the
holders of, or any underwriter for, a majority of the Registrable Securities to
which such Shelf Registration relates or (iv) requested to do so by any holder
to the extent necessary to list such holder as a "Selling Securityholder" in
such registration statement, and the Company agrees to furnish to the holders
of the Registrable Securities copies of any such supplement or amendment prior
to its being used and/or filed with the SEC.
(c) Registration Expenses. The Company will pay all expenses
incident to the Company's performance of or compliance with its obligations
under this Article V to effect the registration of Registrable Securities,
including, without limitation, all registration, filing, securities exchange
listing and fees of any applicable stock exchange, all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, and the fees and disbursements of counsel for the Company
and of its independent public accountants, including the expenses of any
special audits or "cold comfort" letters required by or incident to such
performance and compliance, but excluding underwriting discounts and
commissions, the fees and disbursements of counsel retained by the holders of
the Registrable Securities being registered and transfer taxes, if any, in
respect of Registrable Securities, which shall be borne by the sellers of the
Registrable Securities and which each such holder agrees, by acquisition of
such Registrable Securities, to bear.
(d) Selection of Underwriters and Counsel. The holders of a
majority of the principal amount of Registrable Securities to be sold in an
underwritten Public Offering (as defined below) shall have the right to select
the Managing Underwriter (as defined below); provided, however, that such
Managing Underwriter and its counsel must be reasonably satisfactory to the
Company. As used herein, "Managing underwriter" means, with respect to any
underwritten public
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offering of Exchange Notes (a "Public Offering"), the underwriter or
underwriters managing such Public Offering.
5.02 Registration Procedures. In connection with the Shelf
Registration, the Company shall use its best efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the intended methods of distribution thereof, and pursuant thereto the
Company shall, as expeditiously as possible:
(a) furnish to the holders of Registrable Securities listed in the
Shelf Registration as Selling Security holders (the "Selling Securityholders")
copies of reasonably complete drafts of all such documents proposed to be filed
(including exhibits) with the SEC and consider in good faith comments with
respect to any such drafts made by the Selling Securityholders or their legal
counsel, and, without limiting the foregoing, each Selling Securityholder shall
have the opportunity to object to any information pertaining solely to such
Selling Securityholder that is contained therein and the Company will make the
corrections reasonably requested by such Selling Securityholder with respect to
such information prior to filing any such registration statement or amendment
(including, without limitation, the deletion of such Selling Securityholder as
a "Selling Securityholder" in such registration statement, without prejudice to
such Selling Securityholder's right to become a "Selling Securityholder" again
pursuant to Section 5.01(b));
(b) promptly notify each Selling Securityholder and the Managing
Underwriter, if any:
(i) when the Shelf Registration or any prospectus used in
connection therewith, or any amendment or supplement thereto, has been
filed and, with respect to such Shelf Registration or any
post-effective amendment thereto, when the same has become effective;
(ii) of any written comments from the SEC with respect to
any filing and of any written request by the SEC for amendments or
supplements to such registration statement or prospectus;
(iii) of the notification to the Company by the SEC of its
initiation of any proceeding with respect to the issuance by the SEC
of, or of the issuance by the SEC of, any stop order suspending the
effectiveness of such registration statement; and
(iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of any Registrable
Securities for sale under the applicable securities or blue sky laws
of any jurisdiction;
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(c) furnish to each Selling Securityholder such number of
conformed copies of such registration statement and of each amendment and
supplement thereto (in each case including all exhibits and documents
incorporated by reference), such number of copies of the prospectus contained
in such registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 promulgated
under the Securities Act relating to such Investor's Registrable Securities,
any other Registrable Securities and such other documents, as such Investor may
reasonably request to facilitate the disposition of its Registrable Securities;
(d) use its best efforts to register or qualify all Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as each holder thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and take any other action which may be reasonably necessary or
advisable to enable such holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such holder, except that
the Company shall not for any such purpose be required (i) to qualify generally
to do business as a foreign corporation in any Jurisdiction wherein it would
not but for the requirements of this Section 5.02(d) be obligated to be so
qualified, (ii) to subject itself to taxation in any such jurisdiction solely
by reason of such registration or qualification or (iii) to consent to general
service of process in any jurisdiction;
(e) in connection with any underwritten Public Offering, furnish
to each Selling Securityholder a signed counterpart, addressed to such holder
(and the underwriters, if any), of
(i) an opinion of counsel for the Company, dated the date
of any closing under the underwriting agreement, and
(ii) a "comfort" letter, dated the date of any closing
under the relevant underwriting agreement, signed by the independent
public accountants who have certified the Company's financial
statements included in such registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case
of the accountants' letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to the underwriters in
underwritten Public Offerings of securities;
(f) notify each Selling Securityholder, at any time when a
prospectus relating thereto is required to be delivered
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under the Securities Act, of the happening of any event as a result of which
any prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and at the request of any such holder promptly prepare and furnish to such
holder a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(g) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make available to its securityholders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve (12) months, but not more than eighteen (18) months, beginning
with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder (or
any successor provision); and
(h) use its best efforts to cause all Registrable Securities to be
listed, upon official notice of issuance, on any securities exchange on which
any of the securities of the same class as the Registrable Securities are then
listed.
The Company may require each holder of Registrable Securities to, and
each such holder, as a condition to including Registrable Securities in such
registration, shall, furnish the Company with such information and affidavits
regarding such holder and the distribution of such securities as the Company
may from time to time reasonably request in writing in connection with such
registration.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5.02(f), such holder
will forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 5.02(f) and, if so directed by the Company,
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of any prospectus
relating to such Registrable Securities at the time of receipt of such notice.
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5.03 Holdback Agreements.
(a) By the Holders of Registrable Securities. If and to the extent
requested by the Managing Underwriter in connection with an underwritten Public
Offering of Registrable Securities, each holder of Registrable Securities, by
acquisition of such Registrable Securities, agrees, to the extent permitted by
Law, not to effect any public sale or distribution (including a sale under Rule
144) of such securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven (7) days prior to and the
ninety (90) days after the closing of such underwritten Public Offering (or for
such shorter period of time as is sufficient and appropriate, in the opinion of
the Managing Underwriter, in order to complete the sale and distribution of the
securities included in such underwritten public offering), except as part of
such underwritten Public Offering, whether or not such holder participates in
such underwritten Public Offering.
(b) By the Company. If and to the extent requested by the Managing
Underwriter in connection with an underwritten Public Offering of Registrable
Securities, the Company agrees not to effect any public sale or distribution of
any securities similar to those being registered hereunder, or any securities
convertible into or exchangeable or exercisable for such securities, during the
seven (7) days prior to and the ninety (90) days after the closing of such
underwritten Public Offering (or for such shorter period of time as is
sufficient and appropriate, in the opinion of the Managing Underwriter, in
order to complete the sale and distribution of the securities included in such
underwritten Public Offering), except pursuant to registrations on Form S-4 or
Form S-8 promulgated by the SEC (or any successor or similar forms thereto).
5.04 Indemnification.
(a) Indemnification by the Company. The Company shall, to the full
extent permitted by applicable law, indemnify and hold harmless each seller of
Registrable Securities in connection with the Shelf Registration, its general
or limited partners, directors, officers, employees, agents and each other
Person, if any, who controls any such seller within the meaning of the
Securities Act, against any Losses, to which such seller or any such other
Person may become subject under the Securities Act or otherwise, insofar as
such Losses (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case
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of a prospectus, in the light of the circumstances under which they were made)
not misleading, and the Company will reimburse such seller and each such other
Person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such Loss (or action or
proceeding in respect thereof); provided that the Company shall not be liable
in any such case to the extent that any such Loss (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such seller specifically for use in the
preparation thereof; provided further, however that with respect to any untrue
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, the indemnity agreement contained in this paragraph
shall not apply to the extent that any such Loss results from the fact that a
current copy of the prospectus was not sent or given to the person asserting
any such Loss at or prior to the written confirmation of the sale of the
securities concerned to such person if the Company had prior thereto given such
seller the notice referred to in Section 5.02(f) hereof and provided to such
seller a supplemented or amended prospectus as contemplated by Section 5.02(f),
and such current copy of the prospectus would have cured the defect giving rise
to such Loss. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such seller or any such other
Person, and shall survive the transfer of such securities by such seller. The
Company shall also indemnify each other Person who participates (including as
an underwriter) in the offering or sale of Registrable Securities, their
partners, officers, directors, employees, agents and each other Person, if any,
who controls any such participating Person within the meaning of the Securities
Act to the same extent as provided above with respect to sellers of Registrable
Securities.
(b) Indemnification by the Sellers. Each holder of Registrable
Securities which are included in the Shelf Registration, as a condition to
including Registrable Securities in such registration statement, shall, to the
full extent permitted by Law, indemnify and hold harmless the Company, its
directors, officers, employees, agents and each other Person, if any, who
controls the Company within the meaning of the Securities Act, against any
Losses to which the Company or any such other Person may become subject under
the Securities Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or
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supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of a prospectus, in the light of the circumstances under
which they were made) not misleading, if such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company by such seller
specifically for use in the preparation thereof; provided, however, that the
obligation to provide indemnification pursuant to this Section 5.04(b) shall be
several, and not joint and several, among such sellers on the basis of the
number of Registrable Securities included by each in such registration
statement and the aggregate amount which may be recovered from any holder of
Registrable Securities pursuant to the indemnification provided for in this
Section 5.04(b) in connection with any sale of Registrable Securities shall be
limited to the total proceeds received by such holder from the sale of such
Registrable Securities. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company or any such
other Person and shall survive the transfer of such securities by such seller.
Such holders shall also indemnify each other Person who participates (including
as an underwriter) in the offering or sale of Registrable Securities, their
partners, officers, directors, employees, agents and each other Person, if any,
who controls any such participating Person within the meaning of the Securities
Act to the same extent as provided above with respect to the Company.
(c) Notices of Claims, etc. Promptly after receipt by a party
entitled to indemnity under this Section 5.04 of notice of the commencement of
any action or proceeding involving a claim referred to in Section 5.04(a) or
(b), such indemnified party will, if a claim in respect thereof is to be made
against a person obligated to provide indemnity under this Section 5.04
pursuant to such provisions, give written notice to the latter in the manner
provided in Section 6.04 and such Proceeding shall be subject to the other
provisions contained in Section 6.08(c) as if such Section were applicable to
such Proceeding.
(d) Contribution. If the indemnification provided for in any
paragraph of this Section 5.04 is unenforceable although available to an
indemnified party in respect of any Losses referred to therein or is
insufficient to hold an indemnified party harmless for any Losses in respect of
which the provisions of Section 5.04(a) and/or (b) would otherwise apply by
their terms, then the indemnifying party shall contribute to the aggregate
amount paid or payable by the indemnified party as a result of such Losses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and the indemnified party on the other hand
in connection with statements or omissions which resulted in such Losses, as
well as any other relevant equitable considerations. The
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relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the indemnifying party or the indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid by an Indemnified Party as a
result of the Losses referred to above shall be deemed to include any legal and
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any Loss which is the subject of this paragraph.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.04(d) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
(e) Other Indemnification. Indemnification similar to that
specified in this Section 5.04 (with appropriate modifications) shall be given
by the Company and each seller of Registrable Securities with respect to any
required registration or other qualification of securities under any Federal or
state law or regulation of any Governmental or Regulatory Authority other than
the Securities Act. The provisions of this Section 5.04 shall be in addition to
any other rights to which any indemnified party hereunder may otherwise have.
ARTICLE VI
GENERAL PROVISIONS
6.01 Certain Definitions. Except as otherwise specified or as the
context may otherwise require, the following terms shall have the respective
meanings set forth below whenever used in this Agreement:
"Acquisition Documents" has the meaning specified the Senior Credit
Agreement.
"Applicable Securityholder" means, with respect to either Issuer, a
Securityholder holding any Purchased Securities issued by such Issuer.
"Certificate of Designation" means the certificate designation in
respect of the Series A Preferred Stock, in substantially the form attached
hereto as Exhibit B.
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"Closing" has the meaning specified in Section 1.02.
"Closing Date" has the meaning specified in Section 1.02.
"Common Stock" has the meaning specified in Section 2.03(b).
"Company" means International Wire Group, Inc., a corporation
organized and existing under the laws of the State of Delaware.
"Contractual Obligation" means, as to any Person, any provision of
any security issued by such Person or any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Documents" has the meaning specified in Section 6.08(a).
"Exchange Indenture" means an indenture between the Company and a
trustee satisfactory to the Company and the holders of a majority of the
outstanding shares of Series A Preferred Stock, in substantially the form of
Exhibit E.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Holding" means International Wire Holding Company, a corporation
organized and existing under the laws of the State of Delaware.
"Indemnified Person" has the meaning specified in Section 6.08(a).
"Investment Documents" means this Agreement, the Certificate of
Designation, the Series A Preferred Stock and the Warrants.
"Investors" has the meaning specified in the recitals of this
Agreement.
"Issuers" means the Company and Holding.
"Loan Documents" has the meaning specified in the Senior Credit
Agreement.
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"Losses" means all losses, claims, damages, liabilities, costs
(including any costs of investigation and reasonable attorneys' fees) and
expenses.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property, condition (financial or otherwise) or prospects
of Holding, the Company and their Subsidiaries, taken as a whole, or, prior to
the consummation of the Acquisition, the Dekko Business taken as a whole, (b)
the ability of Holding, the Company and each of their Subsidiaries, taken as a
whole, to perform their respective obligations under this Agreement or any of
the other Investment Documents, the Loan Documents or the Acquisition Documents
or (c) the validity or enforceability of this Agreement or any of the other
Investment Documents, the Loan Documents or the Acquisition Documents or the
rights or remedies of the Securityholders hereunder or thereunder.
"Materials of Environmental Concern" means any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including, without limitation, friable
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Managing Underwriter" has the meaning specified in Section 5.01(d).
"Options" has the meaning specified in Section 2.03(a).
"Other Agreements" means each Loan Document and each Acquisition
Document.
"Proceeding" has the meaning specified in Section 6.08(c).
"Public Offering" has the meaning specified in Section 5.01(d).
"Purchase Price" has the meaning specified in Section 1.01.
"Purchased Securities" has the meaning specified in recitals of this
Agreement.
"Registrable Securities" has the meaning specified in Section 5.01(a).
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or
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other Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its property is
subject.
"Responsible Officer" means, as to any Person, the chief executive
officer, the president, the chief financial or any vice president of such
Person.
"Restricted Securities" means (i) the Series A Preferred Stock, (ii)
the Exchange Notes, (iii) the Warrants, (iv) the Warrant Stock and (iv) any
securities issued with respect to the securities specified in the foregoing
clauses (i), (ii), (iii) or (iv) by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. Any security referred to in the preceding sentence
shall cease to be a Restricted Security when it has (a) been disposed of
pursuant to an effective registration statement under the Securities Act, (b)
become eligible for sale pursuant to paragraph (k) of Rule 144 or (c) otherwise
been transferred and new certificates therefor not bearing the legend set forth
in Section 1.05 have been delivered by the applicable Issuer.
"Rule 144" means Rule 144 promulgated by the SEC under the Securities
Act or any successor or similar provision thereto adopted by the SEC.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Securityholder" means any Person who acquires Series A Preferred
Stock, Warrants or Warrant Stock pursuant to the provisions of this Agreement,
including any transferees of Series A Preferred Stock, Warrants or Warrant
Stock (and including, without limitation, the Investors).
"Senior Credit Agreement" means the Amended Credit Agreement dated as
of March 5, 1996, among the Company, Holding, Chemical Bank, as Administrative
Agent, Bankers Trust Company, as Documentation Agent and the other parties
specified therein, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"Senior Subordinated Notes" means the $150,000,000 aggregate principal
amount of 11-3/4% Senior Subordinated Notes due 2005 of the Company, as the
same may be amended, supplemented or otherwise modified and in effect from time
to time.
"Series A Preferred Stock" has the meaning specified in the recitals of
this Agreement.
"Shelf Registration" has the meaning specified in Section 6.01(a).
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"Units" has the meaning specified in Section 1.01.
"Warrants" has the meaning specified in the recitals of this
Agreement.
"Warrant Stock" means all shares of Common Stock issued or issuable
from time to time upon exercise of the Warrants.
6.02 Survival of Representations, Warranties, Covenants and
Agreements. The representations, warranties, covenants and agreements contained
in this Agreement or any other instrument delivered pursuant to this Agreement
shall survive the purchase of the Units hereunder.
6.03 Amendment and Waiver. This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by law or otherwise afforded, will be cumulative
and not alternative.
6.04 Notices. All notices and other communications provided for
herein shall be given or made by telex, telecopy, telegraph, cable or in
writing and telexed, telecopied, telegraphed, cabled, mailed or delivered to:
(i) the intended recipient at the "Address for Notices"
specified below its name on the signature pages hereof, or
(ii) if to any other person who is then the registered
holder of any Purchased Securities or shares of Warrant Stock, to the
address of such holder as it appears in the stock or warrant ledger of
the Company or Holdings, as the case may be.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telex, telecopy, telegraph or cable or personally delivered or, in the case of
a mailed notice, upon receipt, in each case given or addressed as aforesaid.
6.05 Entire Agreement. This Agreement and the Investment Documents
supersede all prior discussions and agreements among the parties hereto with
respect to the subject matter hereof and thereof and contain the sole and
entire
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agreement among the parties hereto with respect to the subject matter hereof
and thereof.
6.06 Specific Performance. Damages in the event of breach of this
Agreement by either Issuer or either Investor would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each Issuer and each
Investor, in addition to and without limiting any other remedy or right it may
have, have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof, and each Issuer and each Investor hereby waives
any and all defenses it may have on the ground of lack of jurisdiction or
competence of the court to grant such an injunction or other equitable relief.
The existence of this right will not preclude the Issuers or the Investors from
pursuing any other rights and remedies at law or in equity which the Issuers or
the Investors may have.
6.07 Expenses. The Issuers jointly and severally agree to pay or
reimburse the Investors and each other Securityholder for all reasonable
out-of-pocket costs and expenses of the Investors and the Securityholders
(including the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy,
special New York counsel to CEA), in connection with (i) the negotiation,
preparation, execution and delivery of this Agreement, the Certificate of
Designation and the Warrants and the issuance of the Series A Preferred Stock
and the warrants hereunder, (ii) the issuance of the Exchange Notes, and (iii)
any amendment, modification or waiver of (or consents in respect of) any of the
terms of this Agreement, the Certificate of Designation, the Series A Preferred
Stock or the Warrants.
6.08 Indemnification. (a) The Issuers jointly and severally
covenant and agree to indemnify the Investors and the Investors' officers,
directors, employees, agents and each person, if any, who controls each of them
(each, an "Indemnified Person"), against, and hold each Indemnified Person
harmless from, all Losses incurred by any Indemnified Person pursuant to any
investigation or proceeding by any third party against either Issuer or one or
more of the Indemnified Persons, arising out of or in connection with any of
this Agreement, the Series A Preferred Shares, the Warrants, the Exchange Notes
and any document relating thereto or any other document or instrument executed
herewith or pursuant hereto or thereto (collectively, the "Documents"), whether
or not the transactions contemplated by this Agreement are consummated, which
investigation or proceeding requires the participation of, or is commenced or
filed against, one or more of the Indemnified Persons because of this Agreement
Or any other Documents and the transactions contemplated hereby or thereby
(including any proceeding requiring the participation Of, or commenced or filed
against, an Indemnified Person), other than any Losses resulting from (i) any
action on the part of the
-27-
<PAGE> 32
Indemnified Person which is finally determined in such proceeding to be the
result of such Indemnified Person's bad faith, negligence or wilful misconduct
or material breach of the terms of this Agreement or (ii) the failure of any
Indemnified Person to pay any Taxes which either Issuer is not required to pay
hereunder. The Issuers jointly and severally agree to reimburse the Indemnified
Person promptly for all such Losses as they are incurred by the Indemnified
Person; provided that the Issuers may require such Indemnified Person to, and
in such case the Indemnified Person shall, reimburse all such fees and expenses
to the extent it is finally judicially determined that such Indemnified Person
is not entitled to indemnification hereunder. The obligations of the Issuers
under this Section 6.08 shall survive the Closing and the payment or prepayment
of the Series A Preferred Shares, the Warrants or the Exchange Notes, upon
redemption, exchange, exercise or otherwise, any transfer, conversion or
exchange of the Series A Preferred Stock, the Warrants or the Exchange Notes
pursuant to their terms by the Indemnified Person and the termination of this
Agreement and any other Documents.
(b) If the indemnification provided for in Section 6.08(a) is
unenforceable although available to the Indemnified Person in respect of any
Losses referred to therein (for any reason other than by reason of the
exceptions set forth in the provisions of Section 6.08(a)) or is insufficient
to hold such Indemnified Person harmless for any Losses in respect of which the
provisions of Section 6.08(a) would otherwise apply by their terms, then the
Issuers, in lieu of indemnifying such person, shall contribute to the aggregate
amount paid or payable by such person as a result of such Losses in such
proportion as is appropriate to reflect the relative fault of the Issuers on
the one hand and the Indemnified Person on the other hand in connection with
the actions which resulted in such Losses as well as any other relevant
equitable considerations. The amount paid or payable by an Indemnified Person
as a result of the Losses referred to above shall be deemed to include, subject
to the limitations set forth in Section 6.08(a), any legal or other fees or
expenses reasonably incurred by such person in connection with investigating or
defending any Loss which is the subject of this paragraph.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6.08(b) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
-28-
<PAGE> 33
(c) Promptly after receipt by an Indemnified Person of notice of
the commencement of any action or proceeding or any governmental investigation
or inquiry (a "Proceeding"), such Indemnified Person will, if a claim in
respect thereof is to be made against either Issuer hereunder, notify in
writing the Issuers of the commencement thereof; but the omission so to notify
the Issuers will not relieve the Issuers from any liability which the Issuers
may have to any Indemnified Person except to the extent that either Issuer is
materially prejudiced thereby. The Issuers shall have the right, exercisable by
giving written notice to an Indemnified Person promptly after the receipt of
written notice from such Indemnified Person of such proceeding, to assume, at
their expense, the defense of any such Proceeding with counsel reasonably
satisfactory to such Indemnified Person; Provided, however, that an Indemnified
Person shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Person unless (1) the
Issuers agree to pay such fees and expenses, (2) the Issuers fail to assume
promptly the defense of such Proceeding or fail to employ counsel reasonably
satisfactory to such Indemnified Person or (3) if the Indemnified Person shall
have been advised by counsel, in its reasonable judgment, that there is
reasonably likely to be a conflict between the positions of the Issuers and
such Indemnified Person in conducting the defense of such Proceeding which
makes it improper, under generally acceptable standards of professional
conduct, for the same counsel to represent both the Issuers and such
Indemnified Person; provided that the Issuers shall not, in connection with any
one such Proceeding or separate but substantially similar or related
Proceedings, be liable for the fees and expenses of more than one separate firm
of attorneys for all such Indemnified Persons. The Issuers will not be subject
to any liability for any settlement made without their consent (which will not
be unreasonably withheld); Provided that, if such Proceeding is settled with
their written consent or if there shall be a final judgment for the claimant or
plaintiff in such Proceeding, the Issuers shall indemnify and hold harmless the
Indemnified Person from and against any Losses by reason of such settlement or
judgment for which such Indemnified Person would be entitled to indemnification
hereunder. The Issuers shall not, without the consent of an Indemnified Person,
consent to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Person of a release, in form and substance
satisfactory to such Indemnified Person, from all liability in respect of such
Proceeding for which such Indemnified Person would be entitled to
indemnification hereunder.
(d) The obligations of each Issuer under this Section 6.08 shall
be in addition to any liability which such Issuer may otherwise have.
-29-
<PAGE> 34
6.09 No Assignment; Binding Effect. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of each Issuer (in the case of any assignment
by either Investor) or each Investor (in the case of any assignment by either
Issuer) and any attempt to do so will be void. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns
(including, but not limited to, transferees of Purchased Securities).
6.10 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
6.11 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
6.12 Confidentiality. Each Investor agrees to keep information
obtained by it pursuant hereto identified as confidential in writing at the time
of delivery confidential in accordance with such Investor's customary practices
and agrees that it will only use such information in connection with the
transactions contemplated by this Agreement and not disclose any of such
information other than (a) to such Investor's employees, representatives,
directors, attorneys, auditors, agents or affiliates who are advised of the
confidential nature of such information, (b) to the extent such information
presently is or hereafter becomes available to such Investor on a
nonconfidential basis from any source or such information that is in the public
domain at the time of disclosure, (c) to the extent disclosure is required by
law (including applicable securities laws), regulation, subpoena or judicial
order or process (provided that notice of such requirement or order shall be
promptly furnished to the Issuers unless such notice is legally prohibited),
(d) to transferees or prospective transferees who agree to be bound by the
provisions of this subsection 6.12, (e) to the extent required in connection
with any litigation between any Issuer and any Investor with respect to this
Agreement and the other Investment Documents or (f) with the Issuer's prior
written consent.
6.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New
-30-
<PAGE> 35
York applicable to a contract executed and performed in such State, without
giving effect to the conflicts of laws principles thereof, except for matters
relating to the internal corporate affairs of either Issuer, which shall be
governed by and construed in accordance with the DGCL.
6.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
-31-
<PAGE> 36
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officer of each party hereto as of the date first above
written.
INTERNATIONAL WIRE HOLDING COMPANY
By: /s/ ELLEN L. LIPSITZ
----------------------------------
Name: Ellen L. Lipsitz
Title: Vice President
Address for Notices:
INTERNATIONAL WIRE GROUP, INC.
By: /s/ ELLEN L. LIPSITZ
----------------------------------
Name: Ellen L. Lipsitz
Title: Vice President
Address for Notices:
CHEMICAL EQUITY ASSOCIATES
By: /s/ JOHN M.B. O'CONNER
----------------------------------
Name: John M.B. O'Conner
Title: Managing Director
Address for Notices:
-32-
<PAGE> 37
HICKS, MUSE, TATE & FURST EQUITY
FUND II, L.P.
By: HM2/GP Partners, L.P., a
General Partner
By: Hicks Muse GP Partners, L.P., its
General Partner
By: Hicks Muse Fund II Incorporated, its
General Partner
By: /s/ ALAN B. MARLEN
------------------------------------
Name: Alan B. Marlen
Title: Vice President
Address for Notices:
-33-
<PAGE> 1
EXHIBIT 12.5
INTERNATIONAL WIRE GROUP, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(IN THOUSANDS EXCEPT RATIO AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31
------------- ----------------------
1996 1997 1996
---- ---- ----
<S> <C> <C> <C>
Earnings:
Income (loss) before income tax
provision .................... $ (88,220) $ 3,926 $ (6,639)
Fixed charges .................. 47,460 13,193 10,475
--------- -------- --------
Earnings ....................... $ (40,760) $ 17,119 $ (3,836)
========= ======== ========
Fixed charges:
Interest expense ............... $ 43,013 $ 12,011 $ 9,572
Amortization of deferred
financing fees ............... 3,701 995 723
Rent expense ................... 746 187 180
--------- -------- --------
Fixed charges .................. $ 47,460 $ 13,193 $ 10,475
========= ======== ========
Ratio of earnings to fixed
charges ........................ -- 1.3x --
Deficiency of earnings available
to cover fixed charges ......... $ (88,220) -- $ (6,639)
</TABLE>
<PAGE> 1
EXHIBIT 23.2
[COOPERS & LYBRAND LETTERHEAD]
To the Board of Directors of
International Wire Group, Inc.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated February 28, 1997 on our audits of the consolidated financial
statements and financial statement schedules of International Wire Group, Inc.
We also consent to the reference to our Firm as experts under the caption
"Experts."
/s/ COOPERS & LYBRAND L.L.P
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
May 12, 1997
<PAGE> 1
EXHIBIT 23.3
To the Board of Directors of
each of the companies comprising
Dekko Wire Technologies:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 30, 1996, except for Note 10, as to which the date is
February 6, 1996, on our audits of the consolidated financial statements of
Dekko Wire Technologies as of December 28, 1995, and the related combined
statements of income, shareholders' equity and cash flows for each of the years
in the two years ended December 28, 1995. We also consent to the reference to
our Firm as experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
May 12, 1997
<PAGE> 1
EXHIBIT 23.4
To the Board of Directors of
Wirekraft Holdings Corp.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 27, 1996 on our audits of the consolidated statements of
operations, stockholders' equity and cash flows of Wirekraft Holdings Corp. and
Subsidiaries (formerly WB Holdings, Inc.) for the six months ended May 31, 1995
and the year ended November 30, 1994. We also consent to the reference to our
Firm as experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
May 12, 1997
<PAGE> 1
EXHIBIT 23.5
To the Board of Directors of
Omega Wire Corp.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 27, 1996 on our audits of the consolidated statements of
operations, stockholders' equity and cash flows of Omega Wire Corp. for the two
months ended May 31, 1995. We also consent to the reference to our Firm as
experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
May 12, 1997
<PAGE> 1
EXHIBIT 23.6
To the Stockholders of
Electro Componentes de Mexico S.A. de C.V.:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated April 24, 1995 on our audit of the statement of direct revenues
and expenses of Electro Componentes de Mexico S.A. de C.V. for the eleven
months ended November 30, 1994. We also consent to the reference to our Firm
under the caption "Experts."
COOPERS & LYBRAND L.L.P.
El Paso, Texas
May 12, 1997
<PAGE> 1
EXHIBIT 23.7
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form S-1 of our report dated February 10, 1995
relating to the financial statements of THL-Omega Holding Corporation, which
appears in such Prospectus. We also consent to the reference to us under the
heading Experts in such Prospectus.
PRICE WATERHOUSE LLP
Syracuse, New York
May 12, 1997
<PAGE> 1
EXHIBIT 23.8
To the Shareholders of
THL-Omega Holding Corporation:
We consent to the inclusion in this Registration Statement on Form S-1 of our
report dated January 27, 1996 on our audit of the financial statements of
operations and retained earnings and cash flows of THL-Omega Holding
Corporation for the three months ended March 31, 1995. We also consent to the
reference of our Firm as experts under the caption "Experts."
COOPERS & LYBRAND L.L.P.
St. Louis, Missouri
May 12, 1997
<PAGE> 1
EXHIBIT 25.1
------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
-------------
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
JAMES P. FREEMAN
IBJ SCHRODER BANK & TRUST COMPANY
One State Street
New York, New York 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
INTERNATIONAL WIRE GROUP, INC.
(Exact names of obligor as specified in its charter)
Delaware 43-1705942
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
101 South Hanley Road, Suite 400
St. Louis, Missouri 10019
(Address of principal executive offices) (Zip code)
14% Senior Subordinated Notes due 2005
---------------
(Title of indenture securities)
<PAGE> 2
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
New York State Banking Department, Two Rector Street,
New York, New York
Federal Deposit Insurance Corporation, Washington,
D.C.
Federal Reserve Bank of New York Second District, 33
Liberty Street, New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
The obligor is not an affiliate of the trustee.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to
the securities under this indenture. Explain the nature of
any such default.
None
2
<PAGE> 3
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the obligors are
outstanding, or is trustee for more than one outstanding
series of securities under the indenture, state whether there
has been a default under any such indenture or series,
identify the indenture or series affected, and explain the
nature of any such default.
None
Item 16. List of exhibits.
List below all exhibits filed as part of this statement of
eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as
amended to date. (See Exhibit 1A to Form T-1, Securities and
Exchange Commission File No. 22-18460).
*2. A copy of the Certificate of Authority of the trustee to
Commence Business (included in Exhibit 1 above).
*3. A copy of the Authorization of the trustee to exercise
corporate trust powers, as amended to date (See Exhibit 4 to
Form T-1, Securities and Exchange Commission File No.
22-19146).
*4. A copy of the existing By-Laws of the trustee, as amended to
date (See Exhibit 4 to Form T-1, Securities and Exchange
Commission File No. 22-19146).
5. Not Applicable
6. The consent of United States institutional trustee required by
Section 321(b) of the Act.
7. A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the
Securities and Exchange Commission, to which there have been no
amendments or changes.
3
<PAGE> 4
NOTE
In answering any item in this Statement of Eligibility which relates to matters
peculiarly within the knowledge of the obligor and its directors or officers,
the trustee has relied upon information furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the trustee of
all facts on which to base responsive answers to Item 2, the answer to said
Item is based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an amendment
to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items 1, 2 and
16 of this form since to the best knowledge of the trustee as indicated in Item
13, the obligor is not in default under any indenture under which the applicant
is trustee.
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Schroder Bank & Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility & qualification to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of New York, and State
of New York, on the 8th day of May, 1997.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/James P. Freeman
-----------------------------------------
James P. Freeman
Assistant Vice President
<PAGE> 6
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the issuance by International Wire
Group, Inc. of its 14% Senior Subordinated Notes due 2005, we hereby consent
that reports of examinations by Federal, State, Territorial, or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/James P. Freeman
----------------------------------
James P. Freeman
Assistant Vice President
Dated: May 8, 1997
