AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 22,JUNE 5, 2002
NO. 333-333-88800
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DURA OPERATING CORP.*
(Exact name of registrant as specified in its charter)
DELAWARE 3714 38-2961431
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation Classification Code Number)
or organization)
DURA AUTOMOTIVE SYSTEMS, INC.*
(Exact name of registrant as specified in its charter)
DELAWARE 3714 38-3185711
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation Classification Code Number)
or organization)
4508 IDS CENTER
MINNEAPOLIS, MN 55402
TELEPHONE: (612) 342-2311
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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DAVID R. BOVEE
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER AND ASSISTANT SECRETARY
DURA AUTOMOTIVE SYSTEMS, INC.
2791 RESEARCH DRIVE, ROCHESTER HILLS, MI 48309
TELEPHONE: (248) 299-7500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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Copies to:
DENNIS M. MYERS, ESQ.
KIRKLAND & ELLIS
200 E. RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
TELEPHONE: (312) 861-2000
* The companies listed on the next page are also included in this Form S-4
Registration Statement as additional Registrants.
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: The
exchange will occur as soon as practicable after the effective date of this
Registration Statement.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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(d)
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. [ ]
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED OFFERING PRICE PER UNIT REGISTRATION FEE(1)
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8 5/8% Senior Notes due 2012, Series
B..................................... $350,000,000 100% $32,200(1)
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Guarantees on Senior Notes (2).......... -- -- (3)
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(1) Calculated in accordance with Rule 457 under the Securities Act of 1933, as
amended.
(2) The guarantors are affiliates of Dura Operating Corp. and have guaranteed
the notes being registered.
(3) Pursuant to Rule 457(n), no separate fee is payable with respect to the
guarantees being registered hereby .
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT 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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JURISDICTION OF I.R.S. EMPLOYER
EXACT NAME OF ADDITIONAL REGISTRANTS* FORMATION IDENTIFICATION NO.
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Adwest Electronics, Inc. .................................. Delaware 38-3223055
Atwood Automotive Inc. .................................... Michigan 38-2112709
Atwood Mobile Products, Inc. .............................. Illinois 38-4334203
Dura Automotive Systems Cable Operations, Inc. ............ Delaware 38-3383557
Dura Automotive Systems of Indiana, Inc. .................. Indiana 35-1188181
Dura G.P. ................................................. Delaware 38-3638092
Mark I Molded Plastics of Tennessee, Inc. ................. Tennessee 62-1109669
Universal Tool & Stamping Company Inc. .................... Indiana 35-0797817
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* The address for each of the additional Registrants is c/o Dura Automotive
Systems, Inc., 2791 Research Drive, Rochester Hills, Michigan 48309. The
primary standard industrial classification number for each of the additional
Registrants is 3714.
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the SEC
is effective. The prospectus is not an offer to sell nor is it an offer to buy
these securities in any jurisdiction where the offer and sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 22,JUNE 5, 2002
PROSPECTUS
[DURA LOGO]
DURA OPERATING CORP.
EXCHANGE OFFER FOR
$350,000,000
8 5/8% SENIOR NOTES DUE 2012
UNCONDITIONALLY GUARANTEED BY
DURA AUTOMOTIVE SYSTEMS, INC.
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WE ARE OFFERING TO EXCHANGE UP TO:
$350,000,000 OF OUR NEW 8 5/8% SENIOR NOTES DUE 2012, SERIES B
FOR
A LIKE AMOUNT OF OUR OUTSTANDING 8 5/8% SENIOR NOTES DUE 2012.
MATERIAL TERMS OF EXCHANGE OFFER
- - The terms of the notes to be issued in the exchange offer are substantially
identical to the outstanding notes, except that the transfer restrictions and
registration rights relating to the outstanding notes will not apply to the
exchange notes.
- - We believe that, subject to certain exceptions, the exchange notes may be
offered for resale, resold and otherwise transferred by you without compliance
with the registration and prospectus delivery provisions of the Securities
Act.
- - Expires 5:00 p.m., New York City time, ,July 9, 2002, unless extended.
- - We believe that the exchange of notes will not be a taxable event for U.S.
federal income tax purposes.
- - The exchange offer is subject to customary conditions, including the condition
that the exchange offer will not violate applicable law or any applicable
interpretation of the Staff of the SEC.
- - We will not receive any proceeds from the exchange offer.
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Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. The letter of
transmittal states that by so acknowledging and delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of exchange notes received in exchange for notes where the notes
were acquired by the broker-dealer as a result of market-making activities or
other trading activities. We have agreed that, for a period of 180 days after
the expiration date of the exchange offer (as defined herein), we will make this
prospectus available to any broker-dealer in connection with any such resale.
FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD CONSIDER BEFORE
PARTICIPATING IN THIS EXCHANGE OFFER, SEE "RISK FACTORS" BEGINNING ON PAGE 11 OF
THIS PROSPECTUS.
Neither the SEC nor any state securities commission has approved the notes
to be distributed in the exchange offer, nor have any of these organizations
determined that this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
, 2002
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT
RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL OR
SOLICIT ANY OFFER TO BUY ANY NOTES IN ANY JURISDICTION WHERE THE OFFER OR SALE
IS UNLAWFUL. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF THE DATE IT
BEARS.
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TABLE OF CONTENTS
PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 11
Use of Proceeds............................................. 1920
The Exchange Offer.......................................... 1920
Capitalization.............................................. 2829
Selected Historical Financial Data.......................... 2930
Description of Notes........................................ 3132
Description of Other Financing Arrangements................. 6869
Certain United States Federal Tax Considerations............ 7273
Plan of Distribution........................................ 7677
Legal Matters............................................... 7778
Independent Public Accountants.............................. 7778
In this prospectus, unless the context requires, we refer to Dura Operating
Corp. as the "issuer." Dura is a wholly owned subsidiary to Dura Automotive
Systems, Inc., which we refer to in this prospectus as "Parent." The terms "the
Company," "Dura," "we", "us" and "our" and other similar terms means Parent and
all of its subsidiaries, including the Issuer.
MARKET, RANKING AND OTHER DATA
The data included in or incorporated by reference into this prospectus
regarding markets and ranking, including the size of certain product markets and
our position and the position of our competitors within these markets, are based
on independent industry publications, reports from government agencies or other
published industry sources and our estimates based on our management's knowledge
and experience in the markets in which we operate. Our estimates have been based
on information obtained from our customers, distributors, suppliers, trade and
business organizations and other contacts in the markets in which we operate. We
believe these estimates to be accurate as of the date of this prospectus.
However, this information may prove to be inaccurate because of the method by
which we obtained some of the data for our estimates or because this information
cannot always be verified with complete certainty due to the limits on the
availability and reliability of raw data, the voluntary nature of the data
gathering process and other limitations and uncertainties inherent in a survey
of market size. In addition, consumption patterns and consumer preferences can
and do change. As a result, you should be aware that market, ranking and other
similar data included in or incorporated by reference into this prospectus, and
estimates and beliefs based on such data, may not be reliable.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including information we have incorporated into this
prospectus by reference, contains forward-looking statements that are subject to
risks and uncertainties. You should not place undue reliance on those statements
because they speak only as of the date of this prospectus. Forward-looking
statements include information concerning our possible or assumed future results
of operations. These statements often include words such as "believe," "expect,"
"anticipate," "intend," "plan," "estimate," or similar
i
expressions. These statements are based on assumptions that we have made in
light of our experience in the industry as well as our perceptions of historical
trends, current conditions, expected future developments and other factors we
believe are appropriate in the circumstances. As you read and consider this
prospectus, you should understand that these statements are not guarantees of
performance or results. They involve risks, uncertainties and assumptions.
Although we believe that these forward-looking statements are based on
reasonable assumptions, you should be aware that many factors could affect our
actual financial results or results of operations and could cause actual results
to differ materially from those in the forward-looking statements. These factors
include:
- the loss of any of our significant customers;
- general economic or business conditions affecting the automotive industry
(which is dependent on consumer spending), either nationally or
regionally, being less favorable than expected;
- our failure to obtain business related to new and redesigned models;
- increased competition in the automotive component supply market;
- unforeseen problems associated with international sales, including gains
and losses from foreign currency exchange;
- work stoppages and other labor matters;
- exposure to product liability claims and/or product recall costs;
- implementation of or changes in the laws, regulations or policies
governing the automotive industry that could negatively affect the
automotive components supply industry;
- changes in general economic conditions in the United States and Europe;
and
- various other factors beyond our control.
All future written and oral forward-looking statements made by us or
persons acting on our behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to above. Except for our ongoing
obligations to disclose material information as required by the federal
securities laws, we do not have any obligation or intention to release publicly
any revisions to any forward-looking statements to reflect events or
circumstances in the future or to reflect the occurrence of unanticipated
events. YOU SHOULD ALSO READ CAREFULLY THE FACTORS DESCRIBED IN THE "RISK
FACTORS" SECTION OF THIS PROSPECTUS.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information requirements of the Securities and
Exchange Act of 1934 and file periodic reports and other information with the
SEC. These reports and other information may be inspected and copied at
prescribed rates at the Public Reference Room of the SEC, 450 Fifth Street, NW,
Washington, D.C. 20549. Information on the operation of the Public Reference
Room of the SEC may he obtained by calling the SEC at 1-800-SEC-0330. The SEC
also maintains a Web site that contains reports and other information that we
have filed electronically. The address of the site is http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-4 (Reg. No.
333- )333-88800) with respect to the securities we are offering. This prospectus does
not contain all the information contained in the registration statement,
including its exhibits and schedules. You should refer to the registration
statement, including the exhibits and schedules, for further information about
us and the securities we are offering. Statements we make in this prospectus
about certain contracts or other documents are not necessarily complete. When we
make such statements, we refer you to the copies of the contracts or documents
that are filed as exhibits to the registration statement because those
statements are qualified in all respects by reference to those exhibits. The
registration statement, including exhibits and schedules, is on file at the
offices of the SEC and may be inspected without charge.
ii
We will provide you without charge a copy of the exchange notes, the
indenture governing the exchange notes and the registration rights agreement
relating to the exchange notes. You may request copies of these documents by
contacting us at:
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, MN 55402
Attention: Investor Relations
(612) 342-2311
To ensure timely delivery, please make your request as soon as practicable
and, in any event, no later than five business days prior to the expiration of
the exchange offer.
INCORPORATION BY REFERENCE
This prospectus represents only a summary of the information presented in
this prospectus, and incorporates by reference certain documents we have filed
with the SEC.
The following documents are incorporated by reference into this prospectus:
(1) Annual Report on Form 10-K for the fiscal year ended December 31,
2001. In particular, we refer you to the following sections of the Annual
Report:
- Management's Discussion and Analysis of Results of Operations and
Financial Condition;
- Business; and
- Financial Statements and Supplementary Data.
(2) Amendment No. 1 to Annual Report on Form 10-K/A for the fiscal
year ended December 31, 2001. In particular, we refer you to the following
sections of Amendment No. 1:
- Directors and Executive Officers of the Registrant;
- Executive Compensation;
- Security Ownership of Certain Beneficial Owners and Management; and
- Certain Relationships and Related Party Transactions.
(3) Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2002.
(4) Current Report on Form 8-K, filed with the SEC on January 29,
2002.
(5) Current Report on Form 8-K, filed with the SEC on April 2, 2002.
(6) Current Report on Form 8-K, filed with the SEC on April 5, 2002.
(7) Current Report on Form 8-K, filed with the SEC on May 21, 2002.
(8) All documents filed by Parent with the SEC pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before termination of the offering.
References in this prospectus to this prospectus will be deemed to include
the documents incorporated by reference, which are an integral part of this
prospectus. You should obtain and review carefully copies of the documents
incorporated by reference. Any statement contained in the documents incorporated
by reference will be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in a subsequently dated
document incorporated by reference or in this prospectus modifies or supersedes
the statement. Information that we file later with the SEC will automatically
update the information incorporated by reference and the information in this
prospectus. Any statement so modified or superseded will not be deemed, except
as so modified or superseded, to constitute a part of this prospectus. Any
person obtaining a copy of this prospectus may obtain without charge, upon
written request, a copy of the documents incorporated by reference. See "Where
You Can Find More Information."
iii
PROSPECTUS SUMMARY
This summary contains basic information about the exchange offer. This
summary does not contain all of the information that may be important to you in
deciding whether to participate in the exchange offer. We encourage you to read
the entire prospectus, including the financial data and the information
described under the heading "Risk Factors" and the other documents to which we
have referred you, prior to deciding whether to participate in the exchange
offer.
THE COMPANY
We are the world's largest independent designer and manufacturer of driver
control systems for the global automotive industry. We are also a leading global
supplier of seating control systems, glass systems, engineered assemblies,
structural door modules, exterior trim systems and mobile products. Our products
include:
- Driver Control Systems -- adjustable and traditional pedal systems,
electronic throttle controls, electronic and traditional park brake
systems, cable systems, hybrid electronic and traditional gear shift
systems, steering columns components and assemblies, instrument panel
beams, and integrated driver control modules;
- Seating Control Systems -- 2, 4, 6 and 8-way power and manual seat
adjusters, first, second and third row applications, complete seat
structures, seat recliner assemblies, electronic seating control modules;
- Glass Systems -- RIM and PVC glass encapsulated windows, integrated
liftgate modules, manual and power backlite assemblies, 1, 2 or 3-sided
glass modules, drop-door glass, hidden hardware glass and integrated
greenhouse systems;
- Engineered Assemblies -- spare tire carriers, jacks and tool kit
assemblies, hood and tailgate latch systems and hinge assemblies;
- Structural Door Modules -- aluminum and steel body-in-white door
structures, side impact beams, power and manual window lift systems and
anti-pinch window systems;
- Exterior Trim Systems -- roof trim moldings, side frame trim, A, B &
C-pillar cappings, body color trim and bright trim; and
- Mobile Products -- recreational vehicle appliances (water heaters,
furnaces, stoves and ranges), seat frames and mechanisms, door
assemblies, window systems and other hardware.
We sell our products to every major North American, Japanese and European
automotive original equipment manufacturer, or OEM. We have 73 manufacturing and
product development facilities located in the United States, Brazil, Canada,
Czech Republic, France, Germany, Japan, Mexico, Portugal, Slovakia, Spain and
the United Kingdom. We also have a presence in China and India through
alliances, joint ventures or technical licenses.
Approximately 66% of our 2001 revenues were generated from products
produced by our North American operations, with our major customers being Ford,
GM, DaimlerChrysler and Lear. We manufacture products for many of the most
popular car, light truck and sport utility models sold in North America,
including: Silverado/Sierra GM pickup, Ford Focus, Taurus, Explorer, Ranger and
F-Series pickup, Dodge Ram pickup, Honda Accord and Civic, and Toyota Camry.
Approximately 33% of our 2001 revenues were generated from sales to European
OEMs including Volkswagen, Mercedes, PSA (Peugeot and Citroen), BMW and Renault.
We are generally the sole supplier of the parts we sell to OEMs and will
continue to supply parts for the life of the model, which usually ranges from
three to seven years.
1
The following charts set forth our 2001 revenues by ultimate customer and
by geographic region:
[PIE CHART]
[PIE CHART]
COMPETITIVE STRENGTHS
We believe that we possess a number of competitive strengths, including:
- Well Positioned to Take Advantage of Market Trends: We believe that we
are well positioned to meet the demands of OEMs for fewer, full-service
and globally positioned suppliers. As further described below, we believe
our advanced design capabilities, ability to supply complete systems and
integrated modules, combined with our global production capabilities,
will enable us to take advantage of these market trends.
Advanced Design Capabilities: We seek to maintain a technological
advantage through our investment in product development and advanced
engineering. Our design and engineering staff works in partnership with
OEMs throughout the design, prototype development and manufacturing
implementation of our products. This partnership approach generates
cost-saving ideas that reduce product development cycle time and improve
vehicle quality by assuring better integration of components into the
assembled vehicle. Our computer-aided design systems are compatible with
those of our major customers, enabling us to communicate design
developments with customer engineers throughout the design and
development stage.
Global Presence: We have over 40 manufacturing facilities outside the
United States, including locations in Brazil, Canada, Czech Republic,
France, Japan, Germany, Mexico, Portugal, Slovakia, Spain and the United
Kingdom. In addition, we have formed strategic alliances, which range
from investments in other manufacturers to informal understandings, in
China and India. We have technical design and development capabilities
on-site at 30 locations globally. We have also relocated technical
personnel resources to locations in which OEMs will develop "world
cars." By participating in the design of these vehicles and through
implementation of manufacturing processes near the point of use, we
believe we can continue to expand our international presence.
Complete System and Integrated Module Capabilities: We believe that the
breadth of our product capabilities in the markets in which we compete
is unmatched by any competitor. OEMs increasingly seek suppliers capable
of manufacturing complete systems and modules rather than suppliers who
provide only individual component parts. A system refers to a specific
function within the vehicle, which incorporates components that may be
dispersed throughout the vehicle. Modules, which are different than
systems, are sub-assemblies at a specific location in the vehicle and
may incorporate components from various functional systems. Interior
modules can include the cockpit, seats, doors, door trim, overhead,
electronics and other components. By outsourcing complete
2
systems and modules, OEMs are able to reduce their costs associated with
the design and integration of different components and improve quality
by enabling their suppliers to assemble and test major portions of the
vehicle prior to beginning production. We have capitalized on this trend
by designing our products to function together and by providing systems
that are integrated into the design of the entire vehicle.
- Strong OEM Partnerships: We have formed strong partnerships with our
major OEM customers due to our high level of product quality, customer
service and product design and engineering capabilities. Our application
of innovative operating techniques, combined with investments in
sophisticated capital equipment, has led to a high level of product
quality, industry-low defect rates and the receipt of numerous supplier
awards. Stringent internal controls, including strong inventory and
project management systems, enable us to provide high customer service
levels. OEMs are demanding increasingly more from their suppliers in
regard to just-in-time inventory management, particularly during the
critical launch period of a model. Our strong performance in this regard
has substantially strengthened our relationship with our OEM customers.
- Well Positioned on Popular Product Platforms: We manufacture products for
many of the most popular car, light truck and sport utility vehicle
models, including all of the top ten selling vehicles in North America
for 2001: Silverado/Sierra GM pickup, Ford Focus, Taurus, Explorer,
Ranger and F-Series pickup, the Dodge Ram pickup, the Honda Accord and
Civic, and the Toyota Camry. We also manufacture products for many of the
most popular European passenger cars, including Volkswagen Golf and Polo,
GM-Opel Astra and Corsa, Peugeot 206/207, Renault Clio, Scenic and Megane
and the Ford Focus. We are generally the sole supplier of the parts we
sell to OEMs and will continue to supply parts for the life of the model,
which usually ranges from three to seven years.
- Significant Automotive Experience: Our leadership team, the members of
which have an average of 20 years of experience in the automotive supply
industry, has (i) successfully completed several acquisitions over the
last five years, which have generated significant operational
efficiencies and cost savings; (ii) divested non-core assets and (iii)
strengthened our core businesses during difficult market conditions.
BUSINESS STRATEGY
Our primary business objective is to capitalize on the consolidation,
globalization and system sourcing trends in the automotive supply industry in
order to continue to be the leading provider of the component parts and systems
that we supply to OEMs worldwide. The key elements of our operating and growth
strategies are as follows:
OPERATING STRATEGY
- Continue to Optimize Manufacturing Efficiency and Quality: We
continuously implement strategic initiatives designed to improve product
quality while reducing manufacturing costs through, among other things,
the introduction of cellular manufacturing methods, consolidation of
manufacturing facilities, improvement in inventory management and
reduction of waste. We have continued to upgrade our manufacturing
equipment and processes through selective investment in new equipment,
maintenance of existing equipment and efficient utilization of
manufacturing engineering personnel. In order to maximize return on
invested capital, we increasingly employ flexible manufacturing processes
that allow us to maximize equipment utilization in meeting customer
expectations for product quality and timely delivery. We monitor existing
manufacturing capacity relative to expected capacity, which is determined
primarily by current and expected business backlog. As an example,
beginning in 2000, we began restructuring our operations to reduce excess
manufacturing capacity and improve the efficiency of our operations by,
among other things, discontinuing operations in two North American
facilities, combining the driver control and engineered products
divisions into one control systems division and reducing and
consolidating certain support activities to achieve an appropriate level
of support personnel relative to future business requirements.
3
- Foster a Decentralized, Participatory Culture: Our decentralized approach
to managing our manufacturing facilities encourages decision making and
employee participation in areas such as manufacturing processes and
customer service. This "team" approach fosters a unified culture and
enhances communication of strategic direction and goals, while
facilitating a greater success rate in reaching and exceeding our
objectives. We provide ownership-related incentives to managers and
salaried and hourly employees through grants under our stock option plan
and participation in the employee stock discount purchase plan.
GROWTH STRATEGY
- Focus On Systems: OEMs are increasingly seeking suppliers capable of
providing complete systems rather than suppliers who only provide
separate component parts. A key element of our growth strategy has been
to add to our ability to provide complete systems to our OEM customers.
We are able to provide transmission shifter, brake, window, door and seat
systems on a global basis. While current OEM purchasing strategies do not
allow for single outsourcing of interior mechanical assemblies, we
believe that the trend toward module outsourcing will change this
environment. As a result, the buying power of emerging interior suppliers
will increase rapidly as sourcing responsibility is delegated through
modular outsourcing. This anticipated change in outsourcing strategies
will present us with significant opportunities to provide "one stop
shopping" of complete interior mechanisms.
- Increase Platform and Customer Penetration: A key element of our strategy
is to increase volume by adding new customers and to strengthen our
existing customer relationships by broadening our range of products
through internal development efforts and fill-in acquisitions. We have
relationships with every North American and European OEM. This has helped
us to obtain significant firm orders on a number of new platforms for the
years 2002 through 2004 for incremental new business in North America and
Europe. We believe that our geographic diversity and product depth
strengthen our ability to pursue new vehicle platform contracts in the
future.
- Extend Global Manufacturing Reach: In 2001, over 70% of total worldwide
passenger vehicle production occurred outside North America. Our current
geographic footprint allows us to meet the OEM's increasing preference
for suppliers that possess global capabilities. Approximately 33% of our
2001 revenues were generated from sales to European OEMs. This has
provided us the capability to design, develop and produce components and
systems for the growing market of global platforms or world cars. We have
either been awarded or are currently developing products for several
global platforms such as the next Ford Focus, GM Epsilon and the
Opel/Fiat Gamma. We believe that increased international sales will allow
us to mitigate the effects of cyclical downturns in a given geographic
region and further diversify our OEM customer base.
- Pursue Strategic Acquisitions and Alliances: We compete in seven product
categories worldwide: driver control systems, seating control systems,
engineered assemblies, glass systems, structural door modules, exterior
trim systems and mobile products. We believe that the North American and
European market for our products is approximately $25 to $30 billion in
size and is also highly fragmented, which provides numerous potential
growth opportunities. Our management has substantial experience in
completing and integrating acquisitions within the automobile parts
industry and believes that this experience will help us select and pursue
potential strategic growth opportunities. In the near term, we are
evaluating the disposition of certain non-core assets that we acquired as
part of prior acquisitions.
COMPANY BACKGROUND
Parent is a corporation organized under the laws of Delaware. Our principal
executive offices are located at 4508 IDS Center, Minneapolis, Minnesota 55402,
and our telephone number is (612) 342-2311.
4
RECENT DEVELOPMENTS
DIRECTOR APPOINTMENT. On April 4, 2002, at a meeting of Parent's board of
directors, Mr. Scott D. Rued was appointed to the board to fill an existing
vacancy and, in connection therewith, was elected Chairman of the Board. Mr.
Rued has served as Vice President of Parent since November 1990. Our former
Chairman, Mr. S.A. Johnson, will continue to serve as a member of the board.
AMENDMENT OF SENIOR CREDIT FACILITY. In April 2002, we amended our senior
credit facility to provide for an additional $150.0 million term loan and to
modify certain negative covenants and reset certain financial covenants. We used
approximately $98.1 of such proceeds to repay the balance of the tranche B term
loan and will use the remainder for general corporate purposes. For additional
information regarding the terms of the amendment and the tranche C term loan,
please see "Description of Other Financing Arrangements--Senior Credit
Facility."
SALE OF U.K. STEERING BUSINESS. In April 2002, we completed the sale of our
U.K. steering gear business in a continuation of our strategic plan designed to
focus on core businesses. We sold the steering gear business upon the
determination that the machining operation used by our steering gear business
was non-essential to our capabilities. The sale of this business will result in
a one-time charge to earnings of approximately $22.0 million in the second
quarter of 2002, consisting of asset writedowns and contractual commitments. In
lieu of proceeds, the buyer of this business will assume certain liabilities of
the business.
CHANGE IN CERTIFYING PUBLIC ACCOUNTANTS. On May 21, 2002, Parent's Board of
Directors, upon recommendation of its Audit Committee, appointed Deloitte &
Touche LLP as the Company's independent auditors for 2002 to replace Arthur
Andersen LLP. We have not been able to obtain, after reasonable efforts, the
written consent of Arthur Andersen LLP to its being named in this prospectus as
having certified the consolidated financial statements and schedules of the
Company as of and for the three years ended December 31, 2001, as required by
Section 7 of the Securities Act of 1933. Accordingly, you will not be able to
sue Arthur Andersen LLP pursuant to Section 11(a)(4) of the Securities Act of
1933, and therefore your right to recovery under that section may be limited as
a result of that lack of consent.
5
PURPOSE OF THE EXCHANGE OFFER
On April 18, 2002, we sold, through a private placement exempt from the
registration requirements of the Securities Act of 1933, $350.0 million in
aggregate principal amount of our 8 5/8% Senior Notes due 2012, which we refer
to in this prospectus as the "outstanding notes" or our "outstanding senior
notes." Simultaneously with the private placement of the outstanding notes, we
entered into a registration rights agreement with the initial purchasers of the
outstanding notes. Under the registration rights agreement, we are required to
use our reasonable best efforts to cause a registration statement for
substantially identical notes to become effective on or before October 15, 2002.
We refer to the notes to be registered under this exchange offer registration as
"exchange notes" in this prospectus. The registration rights agreement requires
us to pay liquidated damages to the holders of the outstanding notes from
November 15, 2002 until the exchange offer is consummated. The exchange offer is
intended to satisfy the rights of holders of the outstanding notes under the
registration rights agreement. After the exchange offer, holders of the
outstanding notes will no longer be entitled to any exchange or registration
rights with respect to their outstanding notes.
SUMMARY OF THE EXCHANGE OFFER
The Exchange Offer............ We are offering to exchange the exchange notes,
which have been registered under the Securities
Act for your outstanding notes. In order to be
exchanged, an outstanding note must be properly
tendered and accepted. All outstanding notes
that are validly tendered and not validly
withdrawn will be exchanged. We will issue
exchange notes promptly after the expiration of
the exchange offer.
Resales of the Exchange
Notes......................... Based on interpretations by the staff of the
SEC set forth in no-action letters issued to
unrelated parties, we believe that the exchange
notes issued in the exchange offer may be
offered for resale, resold and otherwise
transferred by you without compliance with the
registration and prospectus delivery provisions
of the Securities Act provided that:
- the exchange notes are being acquired in the
ordinary course of your business;
- you are not participating, do not intend to
participate, and have no arrangement or
understanding with any person to participate,
in the distribution of the exchange notes
issued to you in the exchange offer; and
- you are not an affiliate of ours.
If any of these conditions are not satisfied
and you transfer any exchange notes issued to
you in the exchange offer without delivering a
prospectus meeting the requirements of the
Securities Act or without an exemption from
registration of your exchange notes from these
requirements, you may incur liability under the
Securities Act. We will not assume, nor will we
indemnify you against, any such liability.
Each broker-dealer that is issued exchange
notes in the exchange offer for its own account
in exchange for outstanding notes that were
acquired by that broker-dealer as a result of
market-making or other trading activities, must
acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act
in connection with any resale of the exchange
notes. A broker-dealer
6
may use this prospectus for an offer to resell,
resale or other retransfer of the exchange
notes issued to it in the exchange offer.
Record Date................... We mailed this prospectus and the related
exchange offer documents to the registered
holders of outstanding notes on ,June 7, 2002.
Expiration Date............... The exchange offer will expire at 5:00 p.m.,
New York City time, ,July 9, 2002, unless we
decide to extend the expiration date.
Conditions to the Exchange
Offer......................... The exchange offer is subject to customary
conditions, including that the exchange offer
not violate applicable law or any applicable
interpretation of the staff of the SEC. This
exchange offer is not conditioned upon any
minimum principal amount of the outstanding
notes being tendered.
Procedures for Tendering
Outstanding Notes............. If the notes you own are held of record by Cede
& Co., as nominee of the Depositary Trust
Company, or DTC, in book-entry form, you may
tender your outstanding notes in accordance
with the DTC's Automated Tender Offer Program
System, or ATOP. In so doing, you will be
agreeing to be bound by the terms of the letter
of transmittal. ATOP allows you to
electronically transmit your acceptance of the
exchange notes to DTC instead of physically
completing and delivering a letter of
transmittal to the exchange agent. As part of
the book-entry transfer, DTC will facilitate
the exchange of your notes and update your
account to reflect the issuance of the exchange
notes to you.
To tender your notes by a means other than
book-entry transfer, you must complete and
execute an original or a facsimile of the
letter of transmittal, which accompanies this
prospectus, according to the instructions
contained in the letter of transmittal. The
letter of transmittal, together with your
outstanding notes and any other documentation
required by the letter of transmittal, must be
delivered to the exchange agent by mail,
facsimile, overnight carrier or hand delivery.
See "The Exchange Offer -- Procedures for
Tendering Outstanding Notes" for more
information.
Do not send letters of transmittal and
certificates representing outstanding notes to
us. Send these documents only to the exchange
agent. See "The Exchange Offer -- Exchange
Agent" for more information.
Special Procedures for
Beneficial Owners............. If you are the beneficial owner of book-entry
interests and your name does not appear on a
security position listing of DTC as the holder
of the book-entry interests or if you are a
beneficial owner of outstanding notes that are
registered in the name of a broker, dealer,
commercial bank, trust company or other nominee
and you wish to tender the book-entry interest
or outstanding notes in the exchange offer, you
should contact the person in whose name your
book-entry interests or outstanding notes are
registered promptly and instruct that person to
tender on your behalf.
7
Guaranteed Delivery
Procedures.................... If you wish to tender you outstanding notes
and:
- time will not permit your notes or other
required documents to reach the exchange
agent by the expiration date; or
- the procedure for book-entry transfer cannot
be completed on time;
you may tender your notes by completing a
notice of guaranteed delivery and complying
with the guaranteed delivery procedures.
Withdrawal Rights............. You may withdraw the tender of your outstanding
notes at any time prior to 5:00 p.m., New York
City time on ,July 9, 2002.
Federal Income Tax
Considerations................ We believe that the exchange of outstanding
notes will not be a taxable event for United
States federal income tax purposes.
Use of Proceeds............... We will not receive any proceeds from the
issuance of exchange notes pursuant to the
exchange offer. We will pay all of our expenses
incident to the exchange offer.
Exchange Agent................ BNY Midwest Trust Company is serving as the
exchange agent in connection with the exchange
offer.
8
SUMMARY OF TERMS OF THE EXCHANGE NOTES
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes, except that the exchange notes will be registered
under the Securities Act. As a result, the exchange notes will not bear legends
restricting their transfer and will not contain the registration rights and
liquidated damage provisions contained in the outstanding notes. The exchange
notes represent the same debt as the outstanding notes. Both the outstanding
notes and the exchange notes are governed by the same Indenture. We use the term
"notes" in this prospectus to collectively refer to the outstanding notes and
the exchange notes.
Issuer........................ Dura Operating Corp., a Delaware corporation.
Securities.................... $350.0 million in principal amount of Series B
8 5/8% Senior Notes due 2012.
Maturity...................... April 15, 2012.
Issue Price................... 100% plus accrued interest from April 18, 2002.
Interest...................... Annual rate: 8 5/8%.
Payment frequency: every six months on April 15
and October 15.
First payment: October 15, 2002.
Ranking....................... The exchange notes are general unsecured
obligations of the issuer. Accordingly, they
will rank:
- behind all existing and future secured debt
of the issuer to the extent of the value of
the assets securing such debt;
- equally with all existing and future
unsecured debt of the issuer that does not
expressly provide that it is subordinated to
the exchange notes;
- ahead of any of the existing and future debt
of the issuer that expressly provides that it
is subordinated to the exchange notes; and
- structurally behind all of the existing and
future liabilities of the issuer's
subsidiaries that are not guarantors.
As of March 31, 2002, after giving pro forma
effect to the offering of our outstanding
senior notes and the amendment of our senior
credit facility and the application of the net
proceeds therefrom, the exchange notes would
have been effectively subordinated to
approximately $174.6 million of secured
indebtedness of the issuer and approximately
$866.6 million of liabilities of subsidiaries
of the issuer that are not guarantors.
Guarantees.................... The exchange notes will be unconditionally
guaranteed by Parent and by each material
existing and future domestic subsidiary of the
issuer.
Optional Redemption........... On or after April 15, 2007, the issuer may
redeem some or all of the exchange notes at any
time at the redemption prices described in the
section "Description of Notes" under the
heading "Optional Redemption."
9
Prior to April 15, 2005, the issuer may redeem
up to 35% of the exchange notes with the
proceeds of certain public offerings of the
common equity of Parent or the issuer at the
price listed in the section "Description of
Notes" under the heading "Optional Redemption."
Mandatory Offer to
Repurchase.................... If the issuer sells certain assets or if the
issuer or Parent experience specific kinds of
changes in control, the issuer must offer to
repurchase the exchange notes at the prices
listed in the section "Description of Notes."
Basic Covenants of
Indenture..................... The issuer issued the exchange notes under an
indenture with BNY Midwest Trust Company, as
trustee. The Indenture, among other things,
restricts the ability of the issuer and its
restricted subsidiaries to:
- borrow money;
- pay dividends on stock or repurchase stock;
- make investments;
- use assets as security in other transactions;
and
- sell certain assets or merge with or into
other companies.
The covenants are subject to certain
significant exceptions. See "Description of
Notes -- Certain Covenants."
Use of Proceeds............... The issuer used the net proceeds of the
offering to reduce its borrowings outstanding
under its senior credit facility.
YOU SHOULD REFER TO THE SECTION ENTITLED "RISK FACTORS" FOR AN EXPLANATION
OF CERTAIN RISKS OF PARTICIPATING IN THE EXCHANGE OFFER.
10
RISK FACTORS
You should read and consider carefully each of the following factors, as
well as the other information contained in or incorporated by reference into
this prospectus, before making a decision to participate in the exchange offer.
RISKS ASSOCIATED WITH THE EXCHANGE OFFER
BECAUSE THERE IS NO PUBLIC MARKET FOR THE EXCHANGE NOTES, YOU MAY NOT BE ABLE
TO RESELL YOUR EXCHANGE NOTES
The exchange notes will be registered under the Securities Act, but will
constitute a new issue of securities with no established trading market, and
there can be no assurance as to:
- the liquidity of any trading market that may develop;
- the ability of holders to sell their exchange notes; or
- the price at which the holders would be able to sell their exchange
notes.
If a trading market were to develop, the exchange notes might trade at higher or
lower prices than their principal amount or purchase price, depending on many
factors, including prevailing interest rates, the market for similar debentures
and our financial performance.
We understand that the initial purchasers presently intend to make a market
in the notes. However, they are not obligated to do so, and any market-making
activity with respect to the notes may be discontinued at any time without
notice. In addition, any market-making activity will be subject to the limits
imposed by the Securities Act and the Securities Exchange Act of 1934, and may
be limited during the exchange offer or the pendency of an applicable shelf
registration statement. There can be no assurance that an active trading market
will exist for the notes or that any trading market that does develop will be
liquid.
In addition, any outstanding note holder who tenders in the exchange offer
for the purpose of participating in a distribution of the exchange notes may be
deemed to have received restricted securities, and if so, will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. For a description of
these requirements, see "Exchange Offer."
YOUR OUTSTANDING NOTES WILL NOT BE ACCEPTED FOR EXCHANGE IF YOU FAIL TO FOLLOW
THE EXCHANGE OFFER PROCEDURES AND, AS A RESULT, YOUR NOTES WILL CONTINUE TO BE
SUBJECT TO EXISTING TRANSFER RESTRICTIONS AND YOU MAY NOT BE ABLE TO SELL YOUR
OUTSTANDING NOTES
We will not accept your notes for exchange if you do not follow the
exchange offer procedures. We will issue exchange notes as part of this exchange
offer only after a timely receipt of your outstanding notes, a properly
completed and duly executed letter of transmittal and all other required
documents. Therefore, if you want to tender your outstanding notes, please allow
sufficient time to ensure timely delivery. If we do not receive your notes,
letter of transmittal and other required documents by the expiration date of the
exchange offer, we will not accept your notes for exchange. We are under no duty
to give notification of defects or irregularities with respect to the tenders of
outstanding notes for exchange. If there are defects or irregularities with
respect to your tender of notes, we will not accept your notes for exchange.
IF YOU DO NOT EXCHANGE YOUR OUTSTANDING NOTES, YOUR OUTSTANDING NOTES WILL
CONTINUE TO BE SUBJECT TO THE EXISTING TRANSFER RESTRICTIONS AND YOU MAY NOT
BE ABLE TO SELL YOUR OUTSTANDING NOTES
We did not register the outstanding notes, nor do we intend to do so
following the exchange offer. Outstanding notes that are not tendered will
therefore continue to be subject to the existing transfer restrictions and may
be transferred only in limited circumstances under the securities laws. If you
do not exchange your outstanding notes, you will lose your right to have your
outstanding notes registered under the federal securities laws. As a result, if
you hold outstanding notes after the exchange offer, you may not be able to sell
your outstanding notes.
11
WE HAVE NOT OBTAINED ARTHUR ANDERSEN'S CONSENT TO BE NAMED IN THIS PROSPECTUS
AS HAVING CERTIFIED THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AS OF
DECEMBER 31, 2001 AND 2000 AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED
DECEMBER 31, 2001. THIS MAY LIMIT YOUR ABILITY TO ASSERT CLAIMS AGAINST ARTHUR
ANDERSEN
We have not been able to obtain, after reasonable efforts, the written
consent of Arthur Andersen to its being named in this prospectus as having
certified the consolidated financial statements of Dura Automotive Systems Inc.
as of December 31, 2001 and 2000 and for each of the three years in the period
ended December 31, 2001, as required by Section 7 of the Securities Act.
Accordingly, you will not be able to sue Arthur Andersen pursuant to Section
11(a)(4) of the Securities Act and therefore your right of recovery under that
section may be limited as a result of the lack of consent.
RISKS RELATED TO THE EXCHANGE NOTES
WE REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR INDEBTEDNESS, WHICH
COULD MAKE IT DIFFICULT FOR THE ISSUER TO SATISFY ITS OBLIGATIONS WITH RESPECT
TO THE NOTES AND WHICH REDUCES THE CASH AVAILABLE TO FINANCE OUR ORGANIC
GROWTH
We have a significant amount of indebtedness. As of March 31, 2002, after
giving pro forma effect to the offering of our outstanding senior notes and the
amendment of our senior credit facility and the application of the net proceeds
therefrom, we would have had approximately $1,062.7 million of outstanding debt,
$55.3 million of outstanding Trust Preferred Securities and approximately $444.7
million of stockholders' investment. Our ratio of earnings to fixed charges for
the three months ended March 31, 2002, on a pro forma basis, would have been 1.3
to 1.0. In addition, the issuer, Parent and its subsidiaries are able to incur
substantial additional indebtedness in the future. The terms of their indentures
do not fully prohibit them from doing so. Our senior credit facility provides
for revolving credit borrowings of up to $390.0 million, subject to certain
financial covenants.
Our indebtedness could have several important consequences to you,
including but not limited to the following:
- it may be difficult for the issuer to satisfy its obligations with
respect to the notes;
- our ability to obtain additional financing in the future for working
capital, capital expenditures, potential acquisition opportunities,
general corporate purposes or other purposes may be impaired;
- a substantial portion of our cash flow from operations must be dedicated
to the payment of principal and interest on our indebtedness;
- we may be more vulnerable to economic downturns, may be limited in our
ability to withstand competitive pressures and may have reduced
flexibility in responding to changing business, regulatory and economic
conditions; and
- fluctuations in market interest rates will affect the cost of our
borrowings to the extent not covered by interest rate hedge agreements
because a portion of our indebtedness is payable at variable rates.
Our ability to service our indebtedness will depend on our future
performance, which will be affected by prevailing economic conditions and
financial, business, regulatory and other factors. Certain of these factors are
beyond our control. We believe that, based upon current levels of operations, we
will be able to meet our debt service obligations when due. Significant
assumptions underlie this belief including, among other things, that we will
continue to be successful in implementing our business strategy and that there
will be no material adverse developments in our business, liquidity or capital
requirements. If we cannot generate sufficient cash flow from operations to
service our indebtedness and to meet our other obligations and commitments, we
might be required to refinance our debt or to dispose of assets to obtain funds
for such purposes. There is no assurance that refinancings or asset dispositions
could be effected on a timely basis or on satisfactory terms, if at all, or
would be permitted by the terms of the indenture or our senior credit facility.
In the event that we were unable to refinance our senior credit facility or
raise funds through asset
12
sales, sales of equity or otherwise, the issuer's ability to pay principal of,
and interest on, the notes would be impaired.
WE ARE SUBJECT TO SUBSTANTIAL RESTRICTIONS AND COVENANTS UNDER OUR FINANCING
ARRANGEMENTS WHICH LIMIT OUR ABILITY TO PAY DIVIDENDS, INCUR ADDITIONAL DEBT
AND MAKE ACQUISITIONS OR OTHER INVESTMENTS
The indenture relating to the notes, the indentures relating to our senior
subordinated notes and our senior credit facility contain numerous restrictive
covenants, including, but not limited to, covenants that restrict the issuer's
ability to incur indebtedness, pay dividends, create liens, sell assets and
engage in certain mergers and acquisitions. In addition, our senior credit
facility also requires the issuer to maintain certain financial ratios. Our
ability to comply with the covenants and other terms of our senior credit
facility and the indentures and to satisfy our other respective debt obligations
(including, without limitation, borrowings and other obligations under our
senior credit facility) and the issuer's ability to make cash payments with
respect
12
to the notes will depend on our future operating performance. In the
event that we fail to comply with the various covenants contained in our senior
credit facility, the indenture relating to the notes or the indentures relating
to our senior subordinated notes, as applicable, we would be in default
thereunder, and in any such case, the maturity of substantially all of our
long-term indebtedness could be accelerated.
A default under the indenture relating to the notes would also constitute
an event of default under our senior credit facility and the indentures relating
to our senior subordinated notes. In addition, the lenders under our senior
credit facility could elect to declare all amounts borrowed thereunder, together
with accrued interest, to be due and payable. If we were unable to repay such
borrowings, such lenders could proceed against the assets of the issuer, which
secure its borrowings under our senior credit facility. If the indebtedness
under our senior credit facility were to be accelerated, there can be no
assurance that the assets of the issuer would be sufficient to repay such
indebtedness and the notes in full. Our senior credit facility prohibits the
repayment, purchase, redemption, defeasance or other payment of any of the
principal of the notes at any time prior to their stated maturity other than as
described in this prospectus. See "Description of Notes."
THE NOTES AND GUARANTEES ARE GENERAL UNSECURED OBLIGATIONS
The indebtedness evidenced by the notes is an unsecured obligation of the
issuer and the indebtedness evidenced by the parent guaranty and the subsidiary
guarantees are unsecured obligations of Parent and the subsidiary guarantors, as
the case may be. The payment of principal of, premium (if any), and interest on
the notes is effectively subordinated in right of payment to all secured
indebtedness of the issuer, including the payment of our senior credit facility,
and the payment of the parent guaranty and the subsidiary guarantees are
subordinated in right of payment to all secured indebtedness of Parent and the
subsidiary guarantors, as the case may be, including Parent's and the subsidiary
guarantors' respective guarantees of our senior credit facility, in each case to
the extent of the value of the assets securing such indebtedness. In the event
of a bankruptcy or similar proceeding involving us, our assets, which serve as
collateral under our senior credit facility, will be available to satisfy the
obligations under any secured debt before any payments are made on the notes. As
of March 31, 2002, after giving pro forma effect to the offering of our
outstanding senior notes and the amendment of our senior credit facility and the
application of the net proceeds therefrom, secured indebtedness of the issuer
would have been approximately $174.6 million and, as a result of their
respective guarantees of our senior credit facility, secured indebtedness of
Parent and the subsidiary guarantors would have been approximately $150.0
million.
PARENT'S SOLE SOURCE OF OPERATING INCOME IS DERIVED FROM THE ISSUER; YOU
SHOULD NOT RELY ON THE PARENT GUARANTY IN EVALUATING AN INVESTMENT IN THE
NOTES
Parent has unconditionally guaranteed the notes on an unsecured basis.
Parent is a holding company whose sole source of operating income and cash flow
is derived from the issuer and whose only material asset is the issuer's capital
stock. Accordingly, Parent is dependent upon the earnings and cash flow of, and
dividends and distributions from, the issuer to perform on the parent guaranty.
As a result, the parent
13
guaranty provides little, if any, additional credit support for the notes and
investors should not rely on the parent guaranty in evaluating whether to invest
in the notes.
THE ISSUER CONDUCTS CERTAIN OF ITS OPERATIONS THROUGH SUBSIDIARIES AND NOT ALL
OF THE ISSUER'S SUBSIDIARIES ARE SUBSIDIARY GUARANTORS
The issuer conducts some of its domestic and substantially all of its
international operations through subsidiaries. Distributions and intercompany
transfers from the issuer's subsidiaries to the issuer may be restricted by
covenants contained in debt agreements and other agreements to which these
subsidiaries may be subject and may be restricted by other agreements entered
into in the future and by applicable law. There can be no assurance that the
operating results of the issuer's subsidiaries at any given time will be
sufficient to make distributions to the issuer.
13
The subsidiary guarantors will include only the issuer's material domestic
subsidiaries. As a result, the notes will be effectively subordinated to all
existing and future liabilities (including trade payables) of our non-guarantor
subsidiaries. As a result, any right of the issuer to participate in any
distribution of assets of its non-guarantor subsidiaries upon the liquidation,
reorganization or insolvency of any such subsidiary (and the consequential right
of the holders of the notes to participate in the distribution of those assets)
will be subject to the prior claims of such subsidiary's creditors. As of March
31, 2002, after giving pro forma effect to the offering of our outstanding
senior notes and the amendment of our senior credit facility and the application
of the net proceeds therefrom, the notes would have been effectively
subordinated to approximately $866.6 million of liabilities of the issuer's
non-guarantor subsidiaries. For condensed consolidated guarantor and
non-guarantor financial information, see note 15 to our 2001 consolidated
financial statements, incorporated by reference in this prospectus.
THE ISSUER MAY NOT BE ABLE TO PURCHASE THE NOTES UPON A CHANGE OF CONTROL
If either the issuer or Parent undergoes a "change of control" (as defined
in the indenture relating to the notes), we may need to refinance large amounts
of our debt, including the debt under the notes and under the indentures
relating to our senior subordinated notes and our senior credit facility. If a
change of control occurs, we must offer to buy back the notes for a price equal
to 101% of the notes' principal amount, plus any interest which has accrued and
remains unpaid as of the repurchase date. We would fund any repurchase
obligation with our available cash, cash generated from other sources such as
borrowings, sales of equity, or funds provided by a new controlling person.
However, we cannot assure you that there will be sufficient funds available for
any required repurchases of the notes if a change of control occurs. In
addition, our senior credit facility prohibits us from repurchasing the notes
after a change of control until we first repay our debt under our senior credit
facility in full. If we fail to repurchase the notes in that circumstance, we
will go into default under both the notes and our senior credit facility. Any
future debt which we incur may also contain restrictions on repayment which come
into effect upon a change of control. If a change of control occurs, we cannot
assure you that we will have sufficient funds to satisfy all of our debt
obligations. These buyback requirements may also delay or make it harder for
others to obtain control of Parent or the issuer. In addition, certain important
corporate events, such as leveraged recapitalizations, that would increase the
level of our indebtedness, would not constitute a change of control under the
indenture governing the notes. See "Description of Notes -- Repurchase at the
Option of Holders -- Change of Control."
IF A COURT WERE TO FIND THAT THE ISSUANCE OF THE SUBSIDIARY GUARANTEES
CONSTITUTED A FRAUDULENT CONVEYANCE, THAT COURT COULD AVOID THE SUBSIDIARY
GUARANTORS' OBLIGATIONS UNDER THE SUBSIDIARY GUARANTEES
Although standards may vary depending on the applicable law, generally
under federal bankruptcy law and comparable provisions of state fraudulent
transfer laws, if a court were to find that, among other things,
14
at the time any subsidiary guarantor incurred the debt evidenced by the
guarantee of the notes, such subsidiary guarantor:
- intended to hinder, delay or defraud any present or future creditor or
received less than reasonably equivalent value or fair consideration for
the incurrence of such debt; and
- the guarantor:
- was insolvent or rendered insolvent by reason of such incurrence; or
- was engaged in a business or transaction for which its remaining assets
constituted unreasonably small capital; or
- intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature,
then, any payment by a subsidiary guarantor could be voided and required to be
returned to the subsidiary guarantor or to a fund for the benefit of the
creditors of the subsidiary guarantor.
14
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a debtor would be
considered insolvent if:
- the sum of its debts, including allowance for contingent liabilities,
were greater than the fair saleable value of all of its assets; or
- if the present fair saleable value of its assets were less than the
amount that would be required to pay the probable liability on its
existing debts, including allowance for contingent liabilities, as they
become absolute and mature; or
- it could not pay its debts as they became due.
RISKS RELATING TO DURA AND THE AUTOMOTIVE AND RECREATIONAL VEHICLE SUPPLY
INDUSTRIES
WE ARE DEPENDENT ON FORD, GM, LEAR CORPORATION AND DAIMLERCHRYSLER AS OUR
LARGEST CUSTOMERS
Our revenues from Ford, GM, Lear Corporation and DaimlerChrysler
represented approximately 25%, 15%, 12% and 9%, respectively, of our revenues in
2001. The loss of Ford, GM, Lear Corporation, DaimlerChrysler or any other
significant customer could have a material adverse effect on our existing and
future revenues and net income. The contracts we have entered into with many of
our customers provide for supplying the customers' requirements for a particular
model, rather than for manufacturing a specific quantity of products. These
contracts range from one year to the life of the model, usually three to seven
years, and do not require the purchase by the customer of any minimum number of
parts. Therefore, the loss of any one of such customers or a significant
decrease in demand for certain key models or group of related models sold by any
of our major customers could have a material adverse effect on our existing and
future revenues and net income. We are involved in claims relating to our
products with certain of our significant customers. As a result of these claims,
it is possible that our relationship with these customers could be adversely
affected.
CYCLICALITY AND SEASONALITY IN THE AUTOMOTIVE AND RECREATIONAL VEHICLES
MARKETS COULD ADVERSELY AFFECT OUR REVENUES AND NET INCOME
The automotive and recreational vehicle markets are highly cyclical and
both markets are dependent on consumer spending. Economic factors adversely
affecting automotive production and consumer spending could adversely impact us.
The weakness in the North American automotive and recreational vehicle markets
has adversely affected our operating results in 2001. In addition, because we
have fixed production costs, relatively modest declines in our customers'
production levels can have a significant adverse impact on our profitability.
15
Our business is also somewhat seasonal. We typically experience decreased
revenues and operating income during the third calendar quarter of each year due
to the impact of scheduled OEM plant shutdowns in July and August for vacations
and new model changeovers.
WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS THAT
COULD HARM OUR REVENUES AND PROFITABILITY
We have significant operations in Europe, Canada and Latin America. Certain
risks are inherent in international operations, including:
- the difficulty of enforcing agreements and collecting receivables through
certain foreign legal systems;
- foreign customers may have longer payment cycles than customers in the
United States;
- tax rates in certain foreign countries may exceed those in the United
States and foreign earnings may be subject to withholding requirements or
the imposition of tariffs, exchange controls or other restrictions;
15
- general economic and political conditions in countries where we operate
may have an adverse effect on our operations in those countries;
- the difficulties associated with managing a large organization spread
throughout various countries; and
- required compliance with a variety of foreign laws and regulations.
As we continue to expand our business globally, our success will be
dependent, in part, on our ability to anticipate and effectively manage these
and other risks. The occurrence of any of the foregoing risks could have a
significant effect on our international operations and, as a result, our
revenues and profitability. In addition, we generate a significant portion of
our revenues and incur a significant portion of our expenses in currencies other
than U.S. dollars. To the extent that we are unable to match revenues received
in foreign currencies with costs paid in the same currency, exchange rate
fluctuations in any such currency could have an adverse effect on our financial
results. The weakening of the European currencies in relation to the U.S. dollar
had a negative impact on our revenues in 2001.
OUR BUSINESS MAY BE DISRUPTED SIGNIFICANTLY BY WORK STOPPAGES AND OTHER LABOR
MATTERS
As of December 31, 2001, approximately 41% of our employees were unionized.
If we were to encounter strikes, further unionization efforts or other types of
conflicts with labor unions or our employees, it could significantly disrupt our
business. Any of these factors may have an adverse effect on us or may limit our
flexibility in dealing with our workforce.
In addition, many OEMs and their suppliers have unionized work forces. Work
stoppages or slow-downs experienced by OEMs or their suppliers could result in
slow-downs or closures of assembly plants where our products are included in
assembled vehicles. For example, strikes by the United Auto Workers led to the
shut down of most of GM's North American assembly plants in June and July 1998.
We estimate that this work stoppage at GM's facilities had an unfavorable impact
of approximately $16.7 million on our 1998 revenues. We note that GM's master
agreements with the Canadian Auto Workers and the United Auto Workers are
subject to renegotiation in 2002 and 2003, respectively. In the event that one
or more of our customers experiences a material work stoppage, such work
stoppage could have a material adverse effect on our business.
OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY ENVIRONMENTAL AND SAFETY
REGULATIONS TO WHICH WE ARE SUBJECT
We are subject to the requirements of federal, state, local and foreign
environmental and occupational health and safety laws and regulations. We cannot
assure you that we operate at all times in complete compliance with all such
requirements. We could be subject to potentially significant fines and penalties
for any noncompliance that may occur. We have made and will continue to make
capital and other expenditures
16
to comply with environmental requirements. We are also subject to laws requiring
the cleanup of contamination. Some of our operations generate hazardous
substances. If a release of hazardous substances occurs at or from any of our
current or former properties or at a landfill or another location where we have
disposed of wastes, we may be held liable for the contamination, and the amount
of such liability could be material. We are currently addressing environmental
contamination matters at certain facilities, including facilities in Mancelona,
Michigan, Butler, Indiana, and Rotenberg, Einheck and Dusseldorf, Germany, which
could result in material expenditures.
CERTAIN STOCKHOLDERS CURRENTLY CONTROL ALL MATTERS SUBMITTED TO A STOCKHOLDER
VOTE
Onex Corporation, Alkin Co. and certain other stockholders associated with
Dura or Hidden Creek Industries beneficially own all of our outstanding shares
of Class B common stock, representing approximately 61.3% of the combined voting
power of our outstanding common stock as of March 27, 2002. Each share of Class
B common stock has ten votes, as compared to one vote for each share of Class A
common stock. As a result of such stock ownership, these stockholders are able
to control the vote on all matters submitted to a vote of the holders of our
common stock, including the election of directors,
16
amendments to our restated
certificate of incorporation and by-laws and approval of significant corporate
mergers. Such consolidation of voting power could also have the effect of
delaying, deterring or preventing a change in control of Dura that might be
otherwise beneficial to you as a debtholder.
OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY PRODUCT LIABILITY EXPOSURE
CLAIMS
We face an inherent business risk of exposure to product liability claims
in the event that the failure of our products to perform to specifications
results, or is alleged to result, in property damage, bodily injury and/or
death. We cannot assure you that we will not experience any material product
liability losses in the future or that we will not incur significant costs to
defend these claims. In addition, if any Dura-designed products are or are
alleged to be defective, we may be required to participate in a recall involving
those products. Each OEM has its own policy regarding product recalls and other
product liability actions relating to its suppliers. However, as suppliers
become more integrally involved in the vehicle design process and assume more
vehicle assembly functions, OEMs are increasingly looking to their suppliers for
contribution when faced with product recalls, product liability or warranty
claims. We cannot assure you that the future costs associated with providing
product warranties will not be material. A successful product liability claim
brought against us in excess of available insurance coverage or a requirement to
participate in any product recall may have a material adverse effect on our
results of operations or financial condition.
In late 1994, Ford issued a recall of a series of manual transmission Ford
F-Series pickups to repair the self-adjust parking brakes originally
manufactured by the brake and cable business of Alkin Co. The type of alleged
failures that prompted the F-Series recalls have led to a number of claims and
lawsuits filed against Ford, one of which culminated in a July 1998 award of
punitive damages against Ford of more than $151.0 million (which has
subsequently been reduced on appeal to $69.0 million) and Ford is appealing the
decision. We may be subject to claims brought directly against us by injured
occupants of Ford vehicles and to claims for contribution or indemnification
asserted by Ford. The agreement relating to the acquisition of the Brake and
Cable Business provided that we are liable for claims arising out of accidents
that take place on or after August 31, 1994 and that we will be liable for other
claims only to the extent any losses by Alkin relating to such claims are not
paid by Alkin's insurance policies (either because they are not over the
deductible amount, because Alkin's policy limits have been exceeded or because
they are not covered by Alkin's insurance policies for other reasons). We are
not presently aware of any other open self-adjusting parking brake claims
against Ford with respect to which Ford may elect to seek contribution from us.
We have attempted to work with Ford to address the claims arising from the
self-adjusting parking brakes and do not believe that these claims have
adversely affected our business relationship with Ford.
In June 2000, we settled the two product recall matters involving speed
control and secondary hood latches manufactured for Ford through a cost sharing
agreement with Ford. We agreed to pay $40.0 million
17
($20.0 million in July 2000, followed by three equal payments totaling $20.0
million in July 2001, July 2002 and July 2003) to resolve Ford's claims relating
to these recalls.
We maintain insurance against product liability claims, but there can be no
assurance that such coverage will be adequate for liabilities ultimately
incurred or that it will continue to be available on terms acceptable to us. In
November 1996, one of our insurance carriers brought a declaratory judgment that
the umbrella and excess liability policies that it had issued to Onex did not
provide coverage for an allegedly defective parking brake manufactured prior to
August 31, 1994. We and Onex dispute the allegations of the insurance carrier
and have filed a counterclaim for breach of contract.
OUR INABILITY TO COMPETE EFFECTIVELY IN THE HIGHLY COMPETITIVE AUTOMOTIVE
SUPPLY INDUSTRY COULD RESULT IN THE LOSS OF CUSTOMERS, WHICH COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR REVENUES AND OPERATING RESULTS
The automotive component supply industry is highly competitive. Some of our
competitors are companies, or divisions or subsidiaries of companies, that are
larger and have greater financial and other resources than we do. In addition,
with respect to certain of our products, some of our competitors are
17
divisions
of our OEM customers. There can be no assurance that our products will be able
to compete successfully with the products of these other companies.
We principally compete for new business both at the beginning of the
development of new models and upon the redesign of existing models by our major
customers. New model development generally begins two to five years prior to the
marketing of such models to the public. The failure to obtain new business on
new models or to retain or increase business on redesigned existing models could
adversely affect our business.
In addition, there is substantial and continuing pressure from the major
OEMs to reduce costs, including the cost of products purchased from outside
suppliers such as Dura. If we are unable to generate sufficient production cost
savings in the future to offset price reductions, our gross margin could be
adversely affected.
IF WE DO NOT ANTICIPATE AND DEVELOP NEW PRODUCTS IN RESPONSE TO TECHNOLOGICAL
AND REGULATORY CHANGES, SUCH CHANGES COULD ADVERSELY AFFECT OUR REVENUES AND
PROFITABILITY
Changes in legislative, regulatory or industry requirements or competitive
technologies may render certain of our products obsolete. Our ability to
anticipate changes in technology and regulatory standards and to develop and
introduce new and enhanced products successfully on a timely basis will be a
significant factor in our ability to grow and to remain competitive. We cannot
assure you that we will be able to achieve the technological advances that may
be necessary for us to remain competitive or that certain of our products will
not become obsolete. We are also subject to the risks generally associated with
new product introductions and applications, including lack of market acceptance,
delays in product development and failure of products to operate properly.
OUR FIRST QUARTER 2002 EARNINGS RESULTS COULD DECLINE IF WE WRITE-OFF GOODWILL
On January 1, 2002, we adopted SFAS No. 142, "Goodwill and Other Intangible
Asset," which provides that goodwill and other intangible assets with indefinite
lives not be amortized but rather tested for impairment annually using market
values, or more frequently if impairment indicators arise. As a result, we are
currently in the process of performing our initial goodwill impairment review
under these new accounting standards. We expect to complete the first stage of
this review during the second quarter of 2002. If upon completion of our
goodwill assessment we determine there is an impairment, we will be required to
restate our first quarter 2002 financial results. This impairment would be
reflected as a change in accounting principle as of January 1, 2002. In
assessing the recoverability of goodwill and other intangibles, we must make
assumptions regarding estimated future cash flows and other factors to determine
the fair value of the respective assets. If these estimates or their related
assumptions change in the future, we may be required to
18
record additional impairment charges for these assets not previously recorded.
If required, these additional charges would be included in operating income. If
we determine that significant impairment has occurred, we would be required to
write-off the impaired portion of goodwill as previously mentioned, which could
have a material adverse effect on our operating results in the period in which
the write-off occurs. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- New Accounting Pronouncements"
incorporated by reference in this prospectus.
18THE U.S. GOVERNMENT HAS INDICTED THE COMPANY'S FORMER INDEPENDENT AUDITORS,
ARTHUR ANDERSEN LLP, IN CONNECTION WITH ITS INVESTIGATION OF ENRON
CORPORATION. IT IS POSSIBLE THAT EVENTS ARISING OUT OF THE INDICTMENT MAY
ADVERSELY AFFECT THE ABILITY OF ARTHUR ANDERSEN TO SATISFY ANY CLAIMS AGAINST
IT
The Company's former independent auditors, Arthur Andersen LLP, have
informed us that on March 14, 2002, an indictment was unsealed charging Arthur
Andersen with federal obstruction of justice arising from the government's
investigation of Enron Corporation. It is possible that events arising out of
the indictment may adversely affect the ability of Arthur Andersen to satisfy
any claims arising from its provision of auditing services to the Company,
including claims that may arise out of Arthur Andersen's audit of the
consolidated financial statements of the Company as of December 31, 2001 and
2000 and for each of the three years in the period ended December 31, 2001,
which are incorporated by reference in this prospectus.
19
USE OF PROCEEDS
This exchange offer is intended to satisfy certain of our obligations under
the registration rights agreement. We will not receive any cash proceeds from
the issuance of the exchange notes. In consideration for issuing the exchange
notes contemplated in this prospectus, we will receive outstanding notes in like
principal amount, the form and terms of which are the same as the form and terms
of the exchange notes, except as otherwise described in this prospectus.
The net proceeds from the issuance of the outstanding notes was
approximately $341.0 million, after deducting discounts commissions and
estimated offering expenses. We used the net proceeds of the offering to repay
the tranche A term loan under our senior credit facility and to repay
appropriately $171.4 million the tranche B term loan under our senior credit
facility.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
Simultaneously with the sale of the outstanding notes, we entered into a
registration rights agreement with the initial purchasers of the outstanding
notes. The registration rights agreement provides that we will take the
following actions at our expense, for the benefit of the holders of the notes:
- within 90 days after the date on which the outstanding notes were issued,
we will use our reasonable best efforts to file the exchange offer
registration statement, of which this prospectus is a part, relating to
the exchange offer. The exchange notes will have terms substantially
identical in all material respects to the outstanding notes except that
the exchange notes will not contain transfer restrictions;
- we will use our reasonable best efforts to cause the exchange offer
registration statement to be declared effective under the Securities Act
within 180 days after the date on which the outstanding notes were
issued;
- we will use our reasonable best efforts to complete the exchange offer
within 30 days, or such longer period as may be required by law, after
the registration statement is declared effective, offer the exchange
notes in exchange for surrender of the outstanding notes; and
- we will keep the exchange offer open for at least 20 business days, or
longer if required by applicable law, after the date on which notice of
the exchange offer is mailed to the holders.
A copy of the registration rights agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part.
We are conducting the exchange offer to satisfy our contractual obligations
under the registration rights agreement. The form and terms of the exchange
notes are the same as the form and terms of the outstanding notes, except that
the registered securities will be registered under the Securities Act, and
holders of the exchange notes will not be entitled to the payment of any
additional amounts pursuant to the terms of the registration rights agreement,
as described below.
For each of the outstanding notes surrendered in the exchange offer, we
will offer the holder who surrendered the note will receive an exchange note
having a principal amount, interest rate, maturity date and other terms
substantially identical to the principal amount, interest rate, maturity date
and other terms equal to those of the surrendered note. The exchange notes will
be accepted for clearance through the Depositary Trust Company, which we refer
to as the "DTC," Clearstream and Euroclear System with new CUSIP and ISIN
numbers.
Based on existing interpretations of the Securities Act by the staff of the
SEC, we believe that the holders of the exchange notes (other than holders who
are broker-dealers) may freely offer, sell and transfer the exchange notes.
However, holders of outstanding notes who are affiliates of Dura, who intend to
participate in the exchange offer for the purpose of distributing the exchange
notes, or who are broker-dealers who purchased the notes from us for resale, may
not freely offer, sell or transfer the exchange notes, may not
1920
participate in the exchange offer and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
offer, sale or transfer of the exchange notes.
Each holder of outstanding notes who is eligible to and wishes to
participate in the exchange offer will be required to represent that it is not
an affiliate of Dura, that it is not a broker-dealer tendering outstanding notes
directly acquired from us for its own account and that it acquired the
outstanding notes and will acquire the exchange notes in the ordinary course of
its business and that it has no arrangement with any person to participate in
the distribution of the exchange notes. In addition, any broker-dealer who
acquired the outstanding notes for its own account as a result of market-making
or other trading activities must deliver a prospectus (which may be the
prospectus contained in the registration statement if the broker-dealer is not
reselling an unsold allotment of outstanding notes) meeting the requirements of
the Securities Act in connection with any resales of the exchange notes. We will
agree to allow such broker-dealers and the initial purchasers, if subject to
similar prospectus delivery requirements, to use the prospectus contained in the
registration statement or a similar prospectus in connection with the resale of
exchange notes for a period of 180 days from the issuance of the exchange notes.
If:
- because of any change in law or in applicable interpretations of the law
by the staff of the SEC, we are not permitted to effect an exchange
offer;
- the exchange offer is not consummated within 210 days of the date on
which the outstanding notes were issued;
- any initial purchaser so requests with respect to outstanding notes held
by the initial purchaser that are not eligible to be exchanged for
exchange notes in the exchange offer; or
- in the case of any holder that participates in and meets all of the
requirements of the exchange offer, the holder does not receive freely
transferable exchange notes in exchange for tendered notes (other than
because the holder is an affiliate of Dura or is a person that must
deliver a prospectus in connection with the resale),
then we will promptly notify the holders of outstanding notes and, subject to
certain exceptions, we will file a shelf registration statement to cover resales
of transfer restricted securities by those holders who satisfy various
conditions relating to the provision of information in connection with the shelf
registration statement on or prior to the later of the 90th day after the
issuance of the outstanding notes or the 30th day after such filing obligation
arises. In addition, we will use our reasonable best efforts to cause the shelf
registration statement to be declared effective on or prior to the 90th day
after such filing obligation arises and use our reasonable best efforts to keep
effective the shelf registration statement until the earlier to occur of two
years from the issuance of the outstanding notes or the time when all
outstanding notes have been sold thereunder. Holders of exchange notes will not
be entitled to sell such securities pursuant to a shelf registration statement.
In the event that a shelf registration statement is filed, we will provide
to each affected holder copies of the prospectus that is a part of the shelf
registration statement, notify each affected holder when the shelf registration
has become effective and take certain other actions as are required to permit
unrestricted resales of the affected securities. A holder that sells notes
pursuant to the shelf registration statement will be required to be named as a
selling security holder in the prospectus and to deliver a prospectus to
purchasers. A selling holder will also be subject to certain of the civil
liability provisions under the Securities Act in connection with sales and will
be bound by the provisions of the registration rights agreement that are
applicable to it, including certain indemnification rights and obligations.
If:
(1) we fail to file any of the registration statements required by the
registration rights agreement on or before the date specified for such
filing; or
2021
(2) we are permitted under SEC rules to conduct the exchange offer and
the exchange offer registration statement is not declared effective on or
prior to the 180th day following our issuance of the outstanding notes; or
(3) the exchange offer is not consummated on or prior to the 210th day
following our issuance of the outstanding notes; or
(4) the shelf registration statement or the exchange offer
registration statement is declared effective but thereafter ceases to be
effective or useable in connection with resales during the period specified
in the registration agreement;
(any of such dates in clauses (1) through (4) being referred to a "registration
default"), additional amounts will accrue on the affected outstanding notes (or
the affected exchange notes issued in exchange for outstanding notes) from and
including the day immediately following the date of such registration default
until it is cured, in each case at a rate equal to 0.50% per year over the
stated rate for the outstanding notes; provided that if Securities Act Rule 437a
or a substantially similar rule is not available, and, despite all reasonable
efforts on the part of the issuer and the guarantors, (A) the issuer and the
guarantors' failure to file any such registration statements on or before the
90th day following our issuance of the outstanding notes has resulted solely
from, or (B) any such registration statement has not been declared effective
prior to the 180th day following the issuance of our outstanding notes solely
because of, in each case, the inability or refusal of their auditor to issue a
consent to the use of its audit report relating to the consolidated financial
statements required in connection with any such registration statements, then
the occurrence of a registration default shall be determined as set forth in the
next paragraph, but shall only be determined with respect to either clause (A)
or clause (B) but not both.
For purposes of determining the occurrence of a registration default under
the proviso in the immediately preceding paragraph: (1) with respect to clause
(A) immediately above, if, prior to the earlier of the filing of any such
registration statements and the 90th day following the issuance of the
outstanding notes, the issuer receives notice or has reasonable grounds to
conclude and in good faith concludes that its auditor is unable or unwilling to
issue such consent, then the new date upon which such amounts begin to accrue
shall be 90 days in the case of the filing of such registration statement and
180 days in the case of effectiveness of such registration statement from the
date on which the issuer first receives such notice or reaches such conclusion;
and (2) with respect to clause (B) immediately above, if, subsequent to the
filing of any registration statements but prior to the applicable date of
effectiveness of such registration statements, the issuer first receives notice
or has reasonable grounds to conclude and in good faith concludes that its
auditor is unable or unwilling to issue such consent, then the new date upon
which amounts begin to accrue shall be 90 days from the date on which the issuer
first receives such notice or reaches such conclusion, unless the otherwise
applicable date on which amounts begin to accrue would be more than 90 days from
the date therefrom. Promptly upon receipt of such notice or reaching such
conclusion, the issuer shall deliver an officers' certificate to the trustee
certifying as to the date of the receipt of such notice or the date of the
reaching of such conclusion, and setting forth the new date on or prior to which
the registration statement must be filed and the new date on or prior to which a
registration statement may become effective, as the case may be, and the trustee
shall notify the holders of such resultant date or dates.
The amounts payable will increase by an additional 0.50% over the stated
rate for the outstanding notes per annum at the beginning of each subsequent
90-day period until all registration defaults have been cured. However, the
additional amounts payable will in no event be more than 1.0% per year. All
accrued amounts payable will be paid by the issuer and the Guarantors on each
payment date to the global note holder by wire transfer of immediately available
funds or by federal funds check and to holders of certificated notes by wire
transfer to the accounts specified by them or by mailing checks to their
registered addresses if no such accounts have been specified.
Upon the filing of the registration statement, the effectiveness of the
exchange offer registration statement, the consummation of the exchange offer or
the effectiveness of the shelf registration statement, as the case may be, the
additional amounts will cease to accrue from the date of filing, effectiveness
or consummation, as the case may be.
2122
Following the consummation of the exchange offer, holders of outstanding
notes who were eligible to participate in the exchange offer, but who did not
tender their outstanding notes, will not have any further registration rights
and the outstanding notes will continue to be subject to restrictions on
transfer. Accordingly, the liquidity of the market for the outstanding notes
could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept any and all outstanding notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the expiration date of the exchange offer. We will issue $1,000 principal amount
of exchange notes in exchange for each $1,000 principal amount of outstanding
notes accepted in the exchange offer. Any holder may tender some or all of its
outstanding notes pursuant to the exchange offer. However, outstanding notes may
be tendered only in integral multiples of $1,000.
The form and terms of the exchange notes are the same as the form and terms
of the outstanding notes except that:
(1) the exchange notes bear a series B designation and a different
CUSIP number from the outstanding notes;
(2) the exchange notes have been registered under the Securities Act
and hence will not bear legends restricting their transfer; and
(3) the holders of the exchange notes will be deemed to have agreed to
be bound by the provisions of the registration rights agreement and each
exchange note will bear a legend to that effect.
The exchange notes will evidence the same debt as the outstanding notes and will
be entitled to the benefits of the indenture.
As of the date of this prospectus, $350.0 million in aggregate principal
amount of the outstanding notes were outstanding. We have fixed the close of
business on ,June 6, 2002 as the record date for the exchange offer for purposes
of determining the persons to whom this prospectus and the letter of transmittal
will be mailed initially.
Holders of outstanding notes do not have any appraisal or dissenters'
rights under the General Corporation Law of Delaware, or the indenture relating
to the notes in connection with the exchange offer. We intend to conduct the
exchange offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the SEC.
We will be deemed to have accepted validly tendered outstanding notes when,
as and if we have given oral or written notice of our acceptance to the exchange
agent. The exchange agent will act as agent for the tendering holders for the
purpose of receiving the exchange notes from us.
If any tendered outstanding notes are not accepted for exchange because of
an invalid tender, the occurrence of specified other events set forth in this
prospectus or otherwise, the certificates for any unaccepted outstanding notes
will be returned, without expense, to the tendering holder as promptly as
practicable after the expiration date of the exchange offer.
Holders who tender outstanding notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
outstanding notes pursuant to the exchange offer. We will pay all charges and
expenses, other than transfer taxes in certain circumstances, in connection with
the exchange offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "expiration date" will mean 5:00 p.m., New York City time, on ,July
9, 2002, unless we, in our sole discretion, extend the exchange offer, in which
case the term "expiration date" will mean the latest date and time to which the
exchange offer is extended.
2223
In order to extend the exchange offer, we will notify the exchange agent of
any extension by oral or written notice and will mail to the registered holders
an announcement thereof, each prior to 9:00 a.m., New York City time, on the
next business day after the previously scheduled expiration date.
We reserve the right, in our sole discretion, (1) to delay accepting any
outstanding notes, to extend the exchange offer or to terminate the exchange
offer if any of the conditions set forth below under "-- Conditions" have not
been satisfied, by giving oral or written notice of any delay, extension or
termination to the exchange agent or (2) to amend the terms of the exchange
offer in any manner. Any delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The exchange notes will bear interest from their date of issuance. Holders
of outstanding notes that are accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the date of issuance of the
exchange notes. Such interest will be paid with the first interest payment on
the exchange notes on October 15, 2002. Interest on the outstanding notes
accepted for exchange will cease to accrue upon issuance of the exchange notes.
Interest on the exchange notes is payable semi-annually on each April 15
and October 15, commencing on October 15, 2002. For more information regarding
the terms of the exchange notes, see "Description of Notes."
PROCEDURES FOR TENDERING
Only a holder of outstanding notes may tender outstanding notes in the
exchange offer. To tender in the exchange offer, a holder must complete, sign
and date the letter of transmittal, or a facsimile thereof, have the signatures
thereon guaranteed if required by the letter of transmittal or transmit an
agent's message in connection with a book-entry transfer, and mail or otherwise
deliver the letter of transmittal or the facsimile, together with the
outstanding notes and any other required documents, to the exchange agent prior
to 5:00 p.m., New York City time, on the expiration date. To be tendered
effectively, the outstanding notes, letter of transmittal or an agent's message
and other required documents must be completed and received by the exchange
agent at the address set forth below under "Exchange Agent" prior to 5:00 p.m.,
New York City time, on the expiration date. Delivery of the outstanding notes
may be made by book-entry transfer in accordance with the procedures described
below. Confirmation of the book-entry transfer must be received by the exchange
agent prior to the expiration date.
The term "agent's message" means a message, transmitted by a book-entry
transfer facility to, and received by, the exchange agent forming a part of a
confirmation of a book-entry, which states that the book-entry transfer facility
has received an express acknowledgment from the participant in the book-entry
transfer facility tendering the outstanding notes that the participant has
received and agrees: (1) to participate in ATOP; (2) to be bound by the terms of
the letter of transmittal; and (3) that we may enforce the agreement against the
participant.
By executing the letter of transmittal, each holder will make to us the
representations set forth above in the third paragraph under the heading
"-- Resale of the Exchange Notes."
The tender by a holder and our acceptance thereof will constitute agreement
between the holder and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of transmittal or
agent's message.
THE METHOD OF DELIVERY OF OUTSTANDING NOTES AND THE LETTER OF TRANSMITTAL
OR AGENT'S MESSAGE AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT
THE ELECTION AND SOLE RISK OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL,
HOLDERS MAY WISH TO CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT
BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OUTSTANDING NOTES SHOULD
BE SENT TO US. HOLDERS MAY REQUEST THEIR
2324
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR NOMINEES TO
EFFECT THE ABOVE TRANSACTIONS FOR THEM.
Any beneficial owner whose outstanding notes are registered in the name of
a broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the letter of transmittal.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by a member of the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program, which we refer to as the "Medallion
System", unless the outstanding notes tendered pursuant to the letter of
transmittal are tendered (1) by a registered holder who has not completed the
box entitled "Special Registration Instructions" or "Special Delivery
Instructions" on the letter of transmittal or (2) for the account of a member
firm of the Medallion System. In the event that signatures on a letter of
transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, the guarantee must be by a member firm of the Medallion System.
If the letter of transmittal is signed by a person other than the
registered holder of any outstanding notes listed in this prospectus, the
outstanding notes must be endorsed or accompanied by a properly completed bond
power, signed by the registered holder as the registered holder's name appears
on the outstanding notes with the signature thereon guaranteed by a member firm
of the Medallion System.
If the letter of transmittal or any outstanding notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
offices of corporations or others acting in a fiduciary or representative
capacity, the person signing should so indicate when signing, and evidence
satisfactory to us of its authority to so act must be submitted with the letter
of transmittal.
We understand that the exchange agent will make a request promptly after
the date of this prospectus to establish accounts with respect to the
outstanding notes at DTC for the purpose of facilitating the exchange offer, and
subject to the establishment thereof, any financial institution that is a
participant in DTC's system may make book-entry delivery of outstanding notes by
causing DTC to transfer the outstanding notes into the exchange agent's account
with respect to the outstanding notes in accordance with DTC's procedures for
the transfer. Although delivery of the outstanding notes may be effected through
book-entry transfer into the exchange agent's account at DTC, unless an agent's
message is received by the exchange agent in compliance with ATOP, an
appropriate letter of transmittal properly completed and duly executed with any
required signature guarantee and all other required documents must in each case
be transmitted to and received or confirmed by the exchange agent at its address
set forth below on or prior to the expiration date, or, if the guaranteed
delivery procedures described below are complied with, within the time period
provided under the procedures. Delivery of documents to DTC does not constitute
delivery to the exchange agent.
All questions as to the validity, form, eligibility, including time of
receipt, acceptance of tendered outstanding notes and withdrawal of tendered
outstanding notes will be determined by us in our sole discretion, which
determination will be final and binding. We reserve the absolute right to reject
any and all outstanding notes not properly tendered or any outstanding notes our
acceptance of which would, in the opinion of our counsel, be unlawful. We also
reserve the right in our sole discretion to waive any defects, irregularities or
conditions of tender as to particular outstanding notes. Our interpretation of
the terms and conditions of the exchange offer, including the instructions in
the letter of transmittal, will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of outstanding
notes must be cured within the time we determine. Although we intend to notify
holders of defects or irregularities with respect to tenders of outstanding
notes, neither we, the exchange agent nor any other person will incur any
liability for failure to give the notification. Tenders of outstanding notes
will not be deemed to have been made until the defects or irregularities have
been cured or waived. Any outstanding notes received by the exchange agent that
are not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by the exchange agent to the tendering
holders, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
2425
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their outstanding notes and (1) whose
outstanding notes are not immediately available, (2) who cannot deliver their
outstanding notes, the letter of transmittal or any other required documents to
the exchange agent or (3) who cannot complete the procedures for book-entry
transfer, prior to the expiration date, may effect a tender if:
(A) the tender is made through a member firm of the Medallion System;
(B) prior to the expiration date, the exchange agent receives from a
member firm of the Medallion System a properly completed and duly executed
notice of guaranteed delivery by facsimile transmission, mail or hand
delivery setting forth the name and address of the holder, the certificate
number(s) of the outstanding notes and the principal amount of outstanding
notes tendered, stating that the tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after
the expiration date, the letter of transmittal or facsimile thereof
together with the certificate(s) representing the outstanding notes or a
confirmation of book-entry transfer of the outstanding notes into the
exchange agent's account at DTC, and any other documents required by the
letter of transmittal will be deposited by the member firm of the Medallion
System with the exchange agent; and
(C) the properly completed and executed letter of transmittal of
facsimile thereof, as well as the certificate(s) representing all tendered
outstanding notes in proper form for transfer or a confirmation of
book-entry transfer of the outstanding notes into the exchange agent's
account at DTC, and all other documents required by the letter of
transmittal are received by the exchange agent within five New York Stock
Exchange trading days after the expiration date.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their outstanding notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, tenders of outstanding
notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the expiration date.
To withdraw a tender of outstanding notes in the exchange offer, a
telegram, telex, letter or facsimile transmission notice of withdrawal must be
received by the exchange agent at its address set forth in this prospectus prior
to 5:00 p.m., New York City time, on the expiration date of the exchange offer.
Any notice of withdrawal must:
(1) specify the name of the person having deposited the outstanding
notes to be withdrawn;
(2) identify the outstanding notes to be withdrawn, including the
certificate number(s) and principal amount of the outstanding notes, or, in
the case of outstanding notes transferred by book-entry transfer, the name
and number of the account at DTC to be credited;
(3) be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the outstanding notes were
tendered, including any required signature guarantees, or be accompanied by
documents of transfer sufficient to have the trustee with respect to the
outstanding notes register the transfer of the outstanding notes into the
name of the person withdrawing the tender; and
(4) specify the name in which any outstanding notes are to be
registered, if different from that of the person depositing the outstanding
notes to be withdrawn.
All questions as to the validity, form and eligibility, including time of
receipt, of the notices will be determined by us, whose determination will be
final and binding on all parties. Any outstanding notes so withdrawn will be
deemed not to have been validly tendered for purposes of the exchange offer and
no exchange notes will be issued with respect thereto unless the outstanding
notes so withdrawn are validly retendered. Any outstanding notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to the holder as soon as practicable after withdrawal,
rejection of tender or termination of the exchange offer. Properly withdrawn
outstanding notes may be retendered by
2526
following one of the procedures described above under "-- Procedures for
Tendering" at any time prior to the expiration date.
CONDITIONS
Notwithstanding any other term of the exchange offer, we will not be
required to accept for exchange, or exchange notes for, any outstanding notes,
and may terminate or amend the exchange offer as provided in this prospectus
before the acceptance of the outstanding notes, if:
(1) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the exchange offer
which, in our sole judgment, might materially impair our ability to proceed
with the exchange offer or any material adverse development has occurred in
any existing action or proceeding with respect to us or any of our
subsidiaries; or
(2) any law, statute, rule, regulation or interpretation by the Staff
of the SEC is proposed, adopted or enacted, which, in our sole judgment,
might materially impair our ability to proceed with the exchange offer or
materially impair the contemplated benefits of the exchange offer to us; or
(3) any governmental approval has not been obtained, which approval we
will, in our sole discretion, deem necessary for the consummation of the
exchange offer as contemplated by this prospectus.
If we determine in our sole discretion that any of the conditions are not
satisfied, we may (1) refuse to accept any outstanding notes and return all
tendered outstanding notes to the tendering holders, (2) extend the exchange
offer and retain all outstanding notes tendered prior to the expiration of the
exchange offer, subject, however, to the rights of holders to withdraw the
outstanding notes (see "--Withdrawal of Tenders") or (3) waive the unsatisfied
conditions with respect to the exchange offer and accept all properly tendered
outstanding notes which have not been withdrawn.
EXCHANGE AGENT
BNY Midwest Trust Company has been appointed as exchange agent for the
exchange offer. Questions and requests for assistance, requests for additional
copies of this prospectus or of the letter of transmittal and requests for
Notice of Guaranteed Delivery should be directed to the exchange agent addressed
as follows:
By Overnight Courier or Registered/Certified By Hand:
Mail: Bank of New York
Bank of New York Corporate Trust Operations
Corporate Trust Operations Reorganization Unit
Reorganization Unit 156 Broad Street, 16th Floor
156 Broad Street, 16th Floor New York, NY 10007
New York, NY 10007 Attn: Mr. William Buckley
Attn: Mr. William Buckley
For Information Telephone: Facsimile Transmission:
(212) 235-2352 Bank of New York
(212) 235-2261
Confirmation of Receipt:
(212) 235-2352
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal solicitation
is being made by mail; however, additional solicitation may be made by
telegraph, telecopy, telephone or in person by our and our affiliates' officers
and regular employees.
26
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the
27
exchange agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses incurred in connection with these
services.
We will pay the cash expenses to be incurred in connection with the
exchange offer. Such expenses include fees and expenses of the exchange agent
and trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The exchange notes will be recorded at the same carrying value as the
outstanding notes, which is face value, as reflected in our accounting records
on the date of exchange. Accordingly, we will not recognize any gain or loss for
accounting purposes as a result of the exchange offer. The expenses of the
exchange offer will be deferred and charged to expense over the term of the
exchange notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The outstanding notes that are not exchanged for exchange notes pursuant to
the exchange offer will remain restricted securities. Accordingly, the
outstanding notes may be resold only:
(1) to us upon redemption thereof or otherwise;
(2) so long as the outstanding notes are eligible for resale pursuant
to Rule 144A, to a person inside the United States whom the seller
reasonably believes is a qualified institutional buyer within the meaning
of Rule 144A under the Securities Act in a transaction meeting the
requirements of Rule 144A, in accordance with Rule 144 under the Securities
Act, or pursuant to another exemption from the registration requirements of
the Securities Act, which other exemption is based upon an opinion of
counsel reasonably acceptable to us;
(3) outside the United States to a foreign person in a transaction
meeting the requirements of Rule 904 under the Securities Act; or
(4) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of exchange notes, based on interpretations by the
Staff of the SEC set forth in no-action letters issued to third parties, we
believe that a holder or other person who receives exchange notes, whether or
not such person is the holder (other than a person that is our affiliate within
the meaning of Rule 405 of the Securities Act) in exchange for outstanding notes
in the ordinary course of business and who is not participating, does not intend
to participate and has no arrangement or understanding with any person to
participate in the distribution of the exchange notes will be allowed to resell
the exchange notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the exchange notes a
prospectus that satisfies the requirements of Section 10 of the Securities Act.
However, if any holder acquires exchange notes in the exchange offer for the
purpose of distributing or participating in a distribution of the exchange
notes, the holder cannot rely on the position of the Staff or the SEC expressed
in the no-action letters or any similar interpretive letters, and must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale transaction, unless an exemption from registration
is otherwise available. Further, each broker-dealer that receives exchange notes
for its own account in exchange for outstanding notes, where the outstanding
notes were acquired by the broker-dealer as a result of market-making activities
or other trading activities, must acknowledge that it will deliver a prospectus
in connection with any resale of the exchange notes. See "Plan of Distribution."
2728
CAPITALIZATION
The following table sets forth as of March 31, 2002: (1) our actual
consolidated capitalization and (2) our as adjusted capitalization giving effect
to the offering of our outstanding senior notes and the amendment of our senior
credit facility and the application of the net proceeds therefrom as set forth
under "Use of Proceeds." This table should be read in conjunction with the
audited and unaudited consolidated financial statements and related notes
incorporated by reference in this prospectus. See "Incorporation by Reference."
AS OF MARCH 31, 2002
---------------------------
ACTUAL AS ADJUSTED(1)
---------- --------------
(DOLLARS IN THOUSANDS)
Cash and cash equivalents................................ $ 40,988 $ 92,934
========== ==========
Long-term debt, including current maturities:
Senior credit facility:
Revolving credit facility........................... $ -- $ --
Tranche A and Tranche B term loans.................. 439,054 --
Tranche C term loan................................. -- 150,000
Other senior indebtedness.............................. 24,641 24,641
8 5/8% Senior Notes due 2012........................... -- 350,000
---------- ----------
Total senior debt................................... 463,695 524,641
9% senior subordinated notes due 2009(2)............... 538,104 538,104
---------- ----------
Total debt........................................ $1,001,799 $1,062,745
---------- ----------
Trust Preferred Securities(3)............................ 55,250 55,250
Stockholders' investment:
Preferred Stock, $1.00 par value per share; 5,000,000
shares authorized none issued or outstanding........ -- --
Class A Common Stock, $0.01 par value per share:
30,000,000 shares authorized; 15,552,142 shares
issued and outstanding on an actual basis........... 155 155
Class B Common Stock, $0.01 par value per share;
10,000,000 shares authorized; 2,451,540 shares
issued and outstanding on an actual basis........... 25 25
Additional paid-in capital............................. 343,627 343,627
Treasury stock......................................... (1,652) (1,652)
Retained earnings...................................... 172,492 169,070
Accumulated other comprehensive income (loss).......... (66,480) (66,480)
---------- ----------
Total stockholders' investment...................... 448,167 444,745
---------- ----------
Total capitalization.............................. $1,505,216 $1,562,740
========== ==========
- ------------
(1) As adjusted to give effect to (i) the offering of our outstanding senior
notes and the amendment of our senior credit facility and the application of
the net proceeds therefrom as set forth under "Use of Proceeds," and (ii)
the write-off of $3.4 million, net of tax, of deferred financing fees
associated with the repayment of borrowings outstanding under our senior
credit facility in connection with the offering. Proceeds of the offering of
our outstanding senior notes are net of discounts and commissions and the
estimated expenses of the offering.
(2) In April 1999, the Issuer sold $300.0 million in aggregate principal amount
of 9% senior subordinated notes due 2009 and E100.0 million in aggregate
principal amount of 9% senior subordinated notes due 2009. In June 2001, the
Issuer sold additional 9% senior subordinated notes due 2009 with a
principal amount at maturity of $158.5 million. The Euro-denominated notes
were translated into U.S. dollars as of December 31, 2001 using a rate of
$0.8915 = E1.00. On May 20, 2002, the exchange rate was $0.9208 = E1.00.
(3) Represents the Trust Preferred Securities issued by the Dura Trust in March
1998. The sole assets of the Dura Trust are approximately $57.0 million
principal amount of Parent's 7 1/2% Convertible Subordinated Debentures due
March 31, 2028, such amount being the sum of the stated liquidation
preference of the Trust Preferred Securities and the capital contributed by
Parent in exchange for the common securities of the Dura Trust. Parent has
guaranteed, on a subordinated basis, certain obligations of the Dura Trust
under the Trust Preferred Securities.
2829
SELECTED HISTORICAL FINANCIAL DATA
The selected historical financial data forth below as of December 31, 1997,
1998, 1999, 2000 and 2001 and for each of the years in the five-year period then
ended have been derived from our audited consolidated financial statements. The
summary historical financial data as of March 31, 2001 and 2002, and for each of
the three-month periods then ended are unaudited. In the opinion of management,
the unaudited historical financial data below were prepared on the same basis as
the audited historical financial data and include all adjustments, consisting
only of normal, recurring adjustments, necessary for the fair statement of this
information. We have incorporated our consolidated financial statements as of
December 31, 2000 and 2001 and for the years ended December 31, 1999, 2000 and
2001 by reference to our Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 and our consolidated financial statements as of March 31, 2002
and for the three-month period ended March 31, 2002, by reference to our
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2002. You
should read the following summary together with the "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the audited
consolidated financial statements and the related notes incorporated by
reference into this prospectus. See "Incorporation By Reference."
DURA AUTOMOTIVE SYSTEMS, INC.(1)
THREE MONTH
PERIOD ENDED
YEAR ENDED DECEMBER 31, MARCH 31, MARCH 31,
---------------------------------------------------------- -----------------------
1997 1998 1999 2000 2001 2001 2002
-------- -------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Revenues..................... $449,111 $739,467 $2,200,385 $2,633,084 $2,477,373 $ 661,853 $ 616,181
Gross profit................. 74,025 130,949 345,680 396,540 314,049 91,907 76,348
Operating income............. 37,610 71,256 175,809 188,140 123,055 44,646 41,685
Net income................... 16,642 26,024 41,220 41,777 11,219 9,218 11,224
OTHER FINANCIAL DATA:
Depreciation and
amortization............... $ 12,303 $ 27,571 $ 76,654 $ 85,503 $ 94,579 $ 23,695 $ 18,440
Capital expenditures, net.... 16,242 31,822 80,469 110,132 71,779 15,176 14,036
EBITDA(2).................... 49,913 98,827 252,463 273,643 217,634 68,341 60,125
Adjusted EBITDA(3)........... 49,913 98,827 268,709 289,004 242,020 70,970 60,125
Adjusted EBITDA margin....... 11.1% 13.4% 12.2% 11.0% 9.8% 8.2% 6.8%
Ratio of net debt to Adjusted
EBITDA(4).................. -- -- -- -- 4.3x -- --
Ratio of Adjusted EBITDA to
cash interest expense...... -- -- -- -- 2.6x 2.6x 2.9x
Ratio of earnings to fixed
charges(5)................. 3.7x 2.8x 1.9x 1.6x 1.2x 1.5x 1.3x
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital.............. $ 50,304 $ 63,766 $ 162,949 $ 169,005 $ 80,642 $ 149,635 $ 45,384
Total assets................. 419,264 929,383 2,444,867 2,357,047 2,121,604 2,304,614 2,102,115
Total debt................... 180,322 331,906 1,231,022 1,225,214 1,076,426 1,163,136 1,001,799
Stockholders' investment..... 101,708 238,037 430,996 453,394 442,397 442,076 448,167
- ------------
(1) The financial information presented is the financial information of Parent.
No separate financial information for the issuer has been provided in this
prospectus because Parent's financial information is materially the same as
the issuer's financial information as a result of the fact that (i) Parent
does not itself conduct any operations but rather all of our operations are
conducted by the issuer and its direct and indirect subsidiaries; (ii)
Parent has no material assets other than the capital stock of the issuer;
(iii) all of the assets
2930
and liabilities shown in the consolidated financial statements for Parent
are located at the issuer and its direct and indirect subsidiaries, and (iv)
Parent has unconditionally guaranteed the exchange notes.
(2) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and our calculation thereof may not be comparable to that
reported by other companies. We believe that it is widely accepted that
EBITDA provides useful information regarding a company's ability to service
and/or incur indebtedness. This belief is based, in part, on our
negotiations with our lenders who have required that the interest payable
under our senior credit facility be based, in part, on our ratio of
consolidated senior funded indebtedness to EBITDA. EBITDA does not take into
account our working capital requirements, debt service requirements and
other commitments and, accordingly, is not necessarily indicative of amounts
that may be available for discretionary use.
(3) "Adjusted EBITDA" equals EBITDA plus facility consolidation, product recall
and other charges of $16,246 in 1999, $15,361 in 2000 and $24,386 in 2001,
including $2,269 in the first quarter 2001.
(4) Net debt represents total debt minus cash and cash equivalents.
(5) In calculating the ratio of earnings to fixed charges, earnings consist of
income before income taxes plus fixed charges. Fixed charges consist of
interest expense (which includes amortization of deferred financing costs
and debt issuance costs) and one-third of rental expense, deemed
representative of that portion of rental expense estimated to be
attributable to interest.
3031
DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description
under the subheading "Certain Definitions." In this description, the word
"issuer" refers only to Dura Operating Corp. and not to any of its subsidiaries.
The issuer issued the outstanding senior notes and will issue the exchange
notes under an indenture (the "Indenture") to be among itself, the Guarantors
and BNY Midwest Trust Company, as trustee (the "Trustee"). The terms of the
exchange notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended, the
"Trust Indenture Act."
The following description is a summary of the material provisions of the
Indenture. It does not restate that agreement in its entirety. We urge you to
read the Indenture because it, and not this description, defines your rights as
holders of the exchange notes. A copy of the Indenture is available as set forth
above under "Where You Can Find More Information." Certain defined terms used in
this description but not defined below under "-- Certain Definitions" have the
meanings assigned to them in the Indenture.
As of the date of the Indenture, all of the issuer's material domestic
subsidiaries will be "Restricted Subsidiaries." However, under the circumstances
described below under the subheading "-- Certain Covenants -- Designation of
Restricted and Unrestricted Subsidiaries," the issuer is permitted to designate
certain of its subsidiaries as "Unrestricted Subsidiaries." The Unrestricted
Subsidiaries will not be subject to many of the restrictive covenants in the
Indenture. The Unrestricted Subsidiaries will not guarantee the exchange notes.
BRIEF DESCRIPTION OF THE NOTES AND THE GUARANTEES
The Notes
- are general unsecured, senior obligations of the issuer;
- are being issued in the aggregate principal amount of $350.0 million;
- are pari passu in right of payment with all existing and any future
unsecured, senior Indebtedness of the issuer and senior in right of
payment to all existing and future subordinated Indebtedness of the
issuer; and
- are unconditionally guaranteed on a senior unsecured basis by the
Guarantors.
The Guarantees
The Notes are guaranteed by Parent and all of the material Domestic
Restricted Subsidiaries of the issuer.
Each Guaranty of the notes:
- is a general unsecured, senior obligation of the Guarantor;
- is senior in right of payment to all existing and future subordinated
Indebtedness of the Guarantor; and
- is pari passu in right of payment with all existing and any future senior
unsecured Indebtedness of the Guarantor.
Not all of our Subsidiaries guaranteed the exchange notes. In the event of
a bankruptcy, liquidation or reorganization of any of these non-guarantor
Subsidiaries, these non-guarantor Subsidiaries will pay the holders of their
debts and their trade creditors before they will be able to distribute any of
their assets to us. See "Risk Factors -- The Issuer Conducts Certain of its
Operations Through Subsidiaries and Not All of the Issuer's Subsidiaries Are
Subsidiary Guarantors."
3132
PRINCIPAL, MATURITY AND INTEREST
The issuer will issue in the exchange offering exchange notes in an
aggregate principal amount of $350.0 million. The issuer may issue additional
notes from time to time. Any offering of additional notes is subject to the
covenant described below under the caption "-- Certain Covenants -- Incurrence
of Indebtedness and Issuance of Preferred Stock." The notes and any additional
notes subsequently issued under the Indenture would be treated as a single class
for all purposes under the Indenture, including, without limitation, waivers,
amendments, redemptions and offers to purchase. The notes will be issued in
fully registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The notes will mature on April 15, 2012.
Interest on the notes accrues at the rate of 8 5/8% per annum and will be
payable semi-annually in arrears on April 15 and October 15, commencing on
October 15, 2002. The issuer will make each interest payment to the holders of
record on the immediately preceding April 1 and October 1.
Interest on the notes will accrue from April 18, 2002. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
Payments of principal, premium and Liquidated Damages, if any, and interest
will be made at the corporate trust office of the Paying Agent in New York City
by United States dollar check drawn on, or, if a holder has given wire
instructions to the issuer, by wire transfer to a United States dollar account
maintained by the holder with a bank located in New York City. If a payment date
is not a Business Day (as defined in the Indenture) at a place of payment,
payment may be made at that place on the next succeeding Business Day and no
interest shall accrue for the intervening period.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The Trustee will initially act as principal Paying Agent and Registrar at
its corporate trust offices in the City of New York, State of New York. The
issuer may change the Paying Agent or Registrar without prior notice to the
Holders, and the issuer or any of its Subsidiaries may act as Paying Agent or
Registrar.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the Indenture.
The Registrar and the Trustee may require a holder, among other things, to
furnish appropriate endorsements and transfer documents and the issuer may
require a holder to pay any taxes and fees required by law or permitted by the
Indenture. The issuer is not required to transfer or exchange any note selected
for redemption. Also, the issuer is not required to transfer or exchange any
note for a period of 15 days before a selection of notes to be redeemed.
The registered holder of a note will be treated as the owner of it for all
purposes.
SUBSIDIARY GUARANTEES
The Guarantors will jointly and severally guarantee, on a senior unsecured
basis, the issuer's obligations under the notes. Each Subsidiary Guaranty will
be pari passu in right of payment to all other senior, unsecured Indebtedness of
that Guarantor and senior to all subordinated Indebtedness of that Guarantor.
The obligations of each Guarantor under its Subsidiary Guaranty are limited as
necessary to prevent that Subsidiary Guaranty from constituting a fraudulent
conveyance under applicable law. See "Risk Factors -- If a Court Were to Find
That the Issuance of the Subsidiary Guarantees Constituted a Fraudulent
Conveyance, That Court Could Avoid the Subsidiary Guarantors' Obligations under
the Subsidiary Guarantees."
3233
A Guarantor may not sell or otherwise dispose of all or substantially all
of its assets to, or consolidate with or merge with or into (whether or not such
Guarantor is the surviving Person), another Person, other than the issuer or
another Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or
Event of Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or
disposition or the Person formed by or surviving any such consolidation
or merger assumes all the obligations of that Guarantor under the
Indenture, its Subsidiary Guaranty and the registration rights
agreements pursuant to supplemental indenture and appropriate collateral
documents satisfactory to the Trustee; or
(b) the Net Proceeds of such sale or other disposition are applied
in accordance with the "Asset Sale" provisions of the Indenture.
The Subsidiary Guaranty of a Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Guarantor (including by way of
merger or consolidation) to a Person that is not (either before or after
giving effect to such transaction) a Restricted Subsidiary of the issuer,
if the Guarantor applies the Net Proceeds of that sale or other disposition
in accordance with the "Asset Sale" provisions of the Indenture;
(2) in connection with any sale of all of the Capital Stock of a
Guarantor to a Person that is not (either before or after giving effect to
such transaction) a Restricted Subsidiary of the issuer, if the issuer
applies the Net Proceeds of that sale in accordance with the "Asset Sale"
provisions of the Indenture;
(3) if the issuer properly designates any Restricted Subsidiary that
is a Guarantor as an Unrestricted Subsidiary;
(4) if that Guarantor ceases to guarantee, pledge any of its assets or
otherwise provide direct or indirect credit support for any Indebtedness or
other obligations of the Parent, the issuer or any Restricted Subsidiary;
or
(5) in connection with the sale, disposition or transfer of all of the
assets of a Guarantor to another Guarantor or the issuer.
See "-- Repurchase at the Option of Holders -- Asset Sales."
PARENT GUARANTY
The notes will be unconditionally guaranteed, on a senior unsecured basis,
by Parent (the "Parent Guaranty"). The Parent Guaranty is pari passu in right of
payment to all other senior unsecured Indebtedness of Parent and senior to all
subordinated Indebtedness of Parent. Parent may not sell or otherwise dispose of
all or substantially all of its assets to, or consolidate or merge with or into
(whether or not Parent is the Surviving Person) another Person unless
immediately after giving effect to that transaction, no Default or Event of
Default exists and the Person acquiring the property in any such sale or
disposition or the Person formed by or surviving any such consolidation or
merger assumes all obligations of Parent under the Indenture and the
registration rights agreement pursuant to supplemental indenture and appropriate
collateral documents satisfactory to the Trustee. The Parent Guaranty shall be
released if the Parent has no outstanding Indebtedness and does not guarantee,
pledge any of its assets to secure or otherwise provide any direct or indirect
credit support for any Indebtedness or other obligations of the issuer or any
Restricted Subsidiary.
RANKING
The payment of principal, interest and premium and Liquidated Damages, if
any, on the notes will be unsecured senior obligations of the issuer, Parent and
the Guarantors, respectively, ranking senior in right of payment to all existing
and future subordinated Indebtedness, including the Existing Notes and the
related
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Guarantees, and ranking pari passu, with the issuer's, Parent's and each
Guarantor's existing and future unsecured and unsubordinated senior
Indebtedness.
As of March 31, 2002, after giving pro forma effect to the offering of our
outstanding senior notes and the amendment of our senior credit facility and the
application of the net proceeds therefrom, the aggregate amount of outstanding
Indebtedness of the issuer, its Subsidiaries and Parent would have been
approximately $1,062.7 million, of which $538.1 million would have been
subordinated in right of payment to the notes and the related Subsidiary
Guarantees and Parent Guaranty, and approximately $174.6 million would have been
secured Indebtedness of the issuer, its Subsidiaries and Parent effectively
ranking senior to the notes and the related Guarantees to the extent of the
assets securing such Indebtedness.
The notes and the related Guarantees will be structurally subordinate to
the liabilities, including trade payables, of the issuer's Subsidiaries that are
not Guarantors.
OPTIONAL REDEMPTION
At any time prior to April 15, 2005, the issuer may redeem up to 35% of the
aggregate principal amount of the notes (calculated after giving effect to any
issuance of additional notes under the Indenture) at a redemption price of
108.625% of the principal amount thereof, plus accrued and unpaid interest and
Liquidated Damages, if any, to the redemption date, with the net cash proceeds
of one or more Equity Offerings; provided that:
(1) at least 65% of the aggregate principal amount of the notes remain
outstanding immediately after the occurrence of each such redemption
(excluding notes held by Parent, the issuer and their respective
Subsidiaries); and
(2) the redemption must occur within 90 days of the date of the
closing of any such Equity Offering.
Except pursuant to the preceding paragraph, the notes will not be
redeemable at the issuer's option prior to April 15, 2007. The issuer is not
prohibited, however, from acquiring the notes by means other than a redemption,
whether pursuant to an issuer tender or otherwise, assuming such acquisition
does not otherwise violate the terms of the Indenture.
After April 15, 2007, the issuer may redeem all or a part of the notes upon
not less than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus accrued and
unpaid interest and Liquidated Damages, if any, thereon, to the applicable
redemption date, if redeemed during the twelve-month period beginning on April
15 of the years indicated below:
YEAR PERCENTAGE
- ---- ----------
2007........................................................ 104.313%
2008........................................................ 102.875%
2009........................................................ 101.438%
2010 and thereafter......................................... 100.000%
MANDATORY REDEMPTION
The issuer is not required to make mandatory redemption or sinking fund
payments with respect to the notes.
REPURCHASE AT THE OPTION OF HOLDERS
Change of Control
If a Change of Control occurs, each holder of notes will have the right to
require the Issuer to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of that holder's notes pursuant to a Change of Control Offer
on the terms set forth in the Indenture. In the Change of Control Offer, the
issuer will offer a Change of Control Payment in cash equal to 101% of the
aggregate principal amount of notes
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repurchased plus accrued and unpaid interest and Liquidated Damages, if any,
thereon, to the date of purchase. Within 30 days following any Change of
Control, unless the issuer has exercised its right to redeem the notes as
described under "-- Optional Redemption," the issuer will mail a notice to each
holder describing the transaction or transactions that constitute the Change of
Control and offering to repurchase notes on the Change of Control Payment Date
specified in such notice, which date shall be no earlier than 30 days and no
later than 60 days from the date such notice is mailed, pursuant to the
procedures required by the Indenture and described in such notice. The issuer
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the notes as a
result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with the Change of Control provisions of
the Indenture, the issuer will comply with the applicable securities laws and
regulations and will not be deemed to have breached its obligations under the
Change of Control provisions of the Indenture by virtue of such conflict.
On the Change of Control Payment Date, the issuer will, to the extent
lawful:
(1) accept for payment all notes or portions thereof properly tendered
pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all notes or portions thereof so tendered;
and
(3) deliver or cause to be delivered to the Trustee the notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of notes or portions thereof being purchased by the
issuer.
The Paying Agent will promptly mail to each holder of notes so tendered the
Change of Control Payment for such notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new note equal in principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new note will be in a principal
amount of $1,000 or an integral multiple thereof.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
issuer will either repay all secured Indebtedness outstanding under the Credit
Agreement or obtain the requisite consents, if any, under the Credit Agreement
to permit the repurchase of notes required by this covenant. If the issuer does
not obtain such consents or repay such borrowings, the issuer will be prohibited
from purchasing the notes. The issuer will publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The provisions described above that require the issuer to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the holders of the notes to require that the
issuer repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction.
The issuer will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indenture applicable to a Change of Control Offer made by the issuer and
purchases all notes validly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of the issuer and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all," there is no precise established
definition of the phrase under applicable law. Accordingly, the ability of a
holder of notes to require the Issuer to repurchase such notes as a result of a
sale, lease,
3536
transfer, conveyance or other disposition of less than all of the assets of the
issuer and its Subsidiaries taken as a whole to another Person or group may be
uncertain.
Asset Sales
The issuer will not, and will not permit any of its Restricted Subsidiaries
to, consummate an Asset Sale unless:
(1) the issuer (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of (as determined in good faith by the issuer);
(2) such fair market value is determined by the issuer's Board of
Directors and evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the Trustee; and
(3) at least 75% of the consideration therefor received by the issuer
or such Restricted Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed to be
cash:
(a) any liabilities (as shown on the issuer's or such Restricted
Subsidiary's most recent balance sheet) of the issuer or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are
by their terms subordinated to the notes or any related Subsidiary
Guaranty) that are expressly assumed by the transferee of any such
assets;
(b) any securities, notes or other obligations received by the
issuer or any such Restricted Subsidiary from such transferee that are
converted by the issuer or such Restricted Subsidiary into cash within
180 days after the consummation of such Asset Sale (to the extent of the
cash received in that conversion); and
(c) any Designated Noncash Consideration received by the issuer or
any of its Restricted Subsidiaries in such Asset Sale; provided that the
aggregate fair market value (as determined above) of such Designated
Noncash Consideration, taken together with the fair market value at the
time of receipt of all other Designated Noncash Consideration received
pursuant to this clause (c) less the amount of Net Proceeds previously
realized in cash from prior Designated Noncash Consideration is less
than 5.0% of Total Assets at the time of the receipt of such Designated
Noncash Consideration (with the fair market value of each item of
Designated Noncash Consideration being measured at the time received and
without giving effect to subsequent changes in value).
Within 365 days after the receipt of any Net Proceeds from an Asset Sale,
the issuer may apply such Net Proceeds at its option:
(1) to repay the issuer's secured Indebtedness (other than
subordinated Indebtedness) under the Credit Agreement and, if such
Indebtedness repaid is revolving credit Indebtedness, to correspondingly
reduce commitments with respect thereto;
(2) to acquire all or substantially all of the assets of, or a
majority of the Voting Stock of, another Permitted Business;
(3) to make a capital expenditure;
(4) to acquire other long-term assets that are used or useful in a
Permitted Business;
(5) any combination of the foregoing; and/or
(6) to redeem the notes with the Net Proceeds of such Asset Sale
pursuant to any of the provisions described above under the caption
"Optional Redemption."
Pending the final application of any such Net Proceeds, the issuer may
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by the Indenture.
3637
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $20.0 million, the issuer will make
an Asset Sale Offer to all holders of notes and all holders of other
Indebtedness that is pari passu with the notes containing provisions similar to
those set forth in the Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100%
of the principal amount plus accrued and unpaid interest and Liquidated Damages,
if any, to the date of purchase, and will be payable in cash. If any Excess
Proceeds remain after consummation of an Asset Sale Offer, the issuer may use
such Excess Proceeds for any purpose not otherwise prohibited by the Indenture.
If the aggregate principal amount of notes and such other pari passu
Indebtedness tendered into such Asset Sale Offer exceeds the amount of Excess
Proceeds, the Trustee shall select the notes and such other pari passu
Indebtedness to be purchased on a pro rata basis based on the principal amount
of notes and such other pari passu Indebtedness tendered. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
The issuer will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of the Indenture, the issuer will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the Indenture by virtue of such
conflict.
The Credit Agreement currently prohibits the issuer from purchasing any
notes, and also provides that certain change of control or asset sale events
with respect to the issuer would constitute a default under the Credit
Agreement. Any future credit agreements may contain similar restrictions and
provisions. In the event a Change of Control or Asset Sale occurs at a time when
the issuer is prohibited from purchasing notes, the issuer could seek the
consent of its Credit Facility lender to the purchase of notes or could attempt
to refinance the Credit Facility to eliminate such prohibition. If the issuer
does not obtain such a consent or repay such borrowings, the issuer will remain
prohibited from purchasing notes. In such case, the issuer's failure to purchase
tendered notes would constitute an Event of Default under the Indenture which
would, in turn, constitute a default under the Credit Agreement. In such
circumstances, the subordination provisions in the Indenture would likely
restrict payments to the holders of notes.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the Trustee
will select notes for redemption as follows:
(1) if the notes are listed, in compliance with the requirements of
the principal national securities exchange on which the notes are listed;
or
(2) if the notes are not so listed, on a pro rata basis, by lot or by
such method as the Trustee shall deem fair and appropriate.
No notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each holder of notes to be redeemed at its registered
address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note shall state the portion of the principal amount thereof to
be redeemed. A new note in principal amount equal to the unredeemed portion of
the original note will be issued in the name of the holder thereof upon
cancellation of the original note. Notes called for redemption become due on the
date fixed for redemption. On and after the redemption date, interest ceases to
accrue on notes or portions of them called for redemption.
3738
CERTAIN COVENANTS
Restricted Payments
The issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly:
(1) declare or pay any dividend or make any other payment or
distribution on account of the issuer's or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment
in connection with any merger or consolidation involving the issuer or any
of its Restricted Subsidiaries) or to the direct or indirect holders of the
issuer's or any of its Restricted Subsidiaries' Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the issuer or to the issuer or
a Restricted Subsidiary of the issuer);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving the issuer) any Equity Interests of the issuer or
any direct or indirect parent of the issuer;
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated to the notes or the related Subsidiary Guarantees, except a
payment of interest or principal at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other
actions set forth in clauses (1) through (4) above being collectively
referred to as "Restricted Payments"), unless, at the time of and after
giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(2) the issuer would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have
been permitted to incur at least $1.00 of additional Indebtedness
pursuant to the Fixed Charge Coverage Ratio test set forth in the first
paragraph of the covenant described below under the caption
"-- Incurrence of Indebtedness and Issuance of Preferred Stock;" and
(3) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the issuer and its Restricted
Subsidiaries after the 9% Notes' Original Issue Date (excluding
Restricted Payments permitted by clauses (2), (3) and (4) of the next
succeeding paragraph), is less than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of the issuer for the
period (taken as one accounting period) from the 9% Notes' Original
Issue Date to the end of the issuer's most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment (or, if such Consolidated Net Income
for such period is a deficit, less 100% of such deficit), plus
(b) 100% of the aggregate net cash proceeds or fair market value
of Productive Assets received by the issuer since the 9% Notes'
Original Issue Date as a contribution to its common equity capital or
from the issue or sale of Equity Interests of the issuer (other than
Disqualified Stock) or from the issue or sale of convertible or
exchangeable Disqualified Stock or convertible or exchangeable debt
securities of the issuer that have been converted into or exchanged
for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Subsidiary of the
issuer), plus
(c) to the extent that any Restricted Investment that was made
after the date of the Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (i) the cash return of
capital with respect to such Restricted Investment (less the cost of
disposition, if any) and (ii) the initial amount of such Restricted
Investment; plus
3839
(d) without duplication of any amounts included in clause (b)
above, 100% of the aggregate Net Cash Proceeds or the fair market
value of Productive Assets received by the issuer as common equity
contributions by a holder of the Equity Interests of the issuer
(excluding any net cash proceeds from an equity contribution which
has been financed, directly or indirectly using funds (1) borrowed
from the issuer or any of its Subsidiaries, unless and until and to
the extent such borrowing is repaid or (2) contributed, extended,
guaranteed or advanced by the issuer or by any of its Subsidiaries);
plus
(e) any dividends paid in cash or Productive Assets received by
the issuer or a Restricted Subsidiary of the Issuer after the 9%
Notes' Original Issue Date from any Unrestricted Subsidiary to the
extent that such dividends were not otherwise included in
Consolidated Net Income; plus
(f) to the extent that any Unrestricted Subsidiary is
redesignated as a Restricted Subsidiary after the date of the
Indenture, the fair market value of the issuer's Investment in such
Subsidiary (which consists of cash or Productive Assets) as of the
date of such redesignation.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration, such payment would
have complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of Parent, the issuer or any
Guarantor or of any Equity Interests of Parent, the issuer or any
Restricted Subsidiary in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the
issuer) of, Equity Interests of the issuer (other than Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement, defeasance or other
acquisition shall be excluded from clause (3) (b) of the preceding
paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the issuer or any Guarantor with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the
issuer to the holders of its Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for
value of any Equity Interests of Parent, the issuer or any Restricted
Subsidiary of the issuer held by any employee, officer or director (in each
case either current or former) of the issuer (or any of its Restricted
Subsidiaries) pursuant to any management equity subscription agreement or
stock plan; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $5.0 million in any twelve-month period;
(6) cash dividends or loans from the issuer to Parent for the purpose
of permitting Parent to pay its ordinary operating expenses (including,
without limitation, directors' fees, indemnification obligations,
professional fees and expenses, etc.) in an aggregate amount not to exceed
$5.0 million in any twelve-month period;
(7) payments to Parent not to exceed $100,000 in any fiscal year,
solely to enable Parent to make payments to holders of its Capital Stock in
lieu of issuance of fractional shares of its Capital Stock;
(8) repurchases of Capital Stock deemed to occur upon the exercise of
stock options if such Capital Stock represents a portion of the exercise
price thereof;
(9) the declaration and payment of dividends to holders of any class
or series of Designated Preferred Stock (other than Disqualified Capital
Stock) issued after the 9% Notes' Original Issue Date;
3940
provided that, at the time of such issuance, the issuer, after giving
effect to such issuance on a pro forma basis, would have had a Fixed Charge
Coverage Ratio of at least 2.0 to 1.0;
(10) other Restricted Payments in an aggregate amount not to exceed
$10.0 million since the 9% Notes' Original Issue Date;
(11) the distribution, as a dividend or otherwise, of shares of
Capital Stock of any Unrestricted Subsidiary of the issuer;
(12) cash dividends or loans from the issuer to Parent in amounts
equal to amounts required for Parent to pay franchise taxes and Federal,
state and local taxes to the extent such income taxes are attributable to
the income of the issuer and its Restricted Subsidiaries;
(13) dividends from the issuer to Parent in an amount sufficient to
pay dividends on Parent's 7 1/2% Convertible Trust Preferred Securities due
2028, that are outstanding on the issue date of the notes;
(14) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness from Net Proceeds to the extent not prohibited
under "-- Asset Sale"; and
(15) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the issuer following a Change of Control after
the issuer shall have complied with the provisions under "-- Change of
Control," including payment of the applicable Change of Control Payment.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by the issuer or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee. The Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $10.0 million. Not later than the date of making any
Restricted Payment, the issuer shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this "Restricted Payments"
covenant were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur") any Indebtedness (including Acquired Debt), and the
issuer will not issue any Disqualified Stock and will not permit any of its
Restricted Subsidiaries to issue any shares of preferred stock; provided,
however, that the issuer may incur Indebtedness (including Acquired Debt) or
issue Disqualified Stock, and the Guarantors may incur Indebtedness (including
Acquired Debt) or issue preferred stock, if, in each case, the Fixed Charge
Coverage Ratio for the issuer's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock or preferred stock is issued would have been at least 2.0 to 1.0,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred or the
preferred stock or Disqualified Stock had been issued, as the case may be, at
the beginning of such four-quarter period.
The first paragraph of this covenant will not prohibit the incurrence of
any of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by the issuer and any Restricted Subsidiary of
Indebtedness and letters of credit under Credit Facilities in an aggregate
principal amount at any one time outstanding under this clause (1) (with
letters of credit being deemed to have a principal amount equal to the
maximum potential liability of the issuer and its Restricted Subsidiaries
thereunder) not to exceed $550.0 million less the aggregate amount of all
Net Proceeds of Asset Sales applied by the issuer or any of its Restricted
4041
Subsidiaries to repay any Indebtedness under the Credit Facilities and to
effect a corresponding commitment reduction thereunder pursuant to the
covenant described above under the caption "-- Repurchase at the Option of
Holders -- Asset Sales;"
(2) the incurrence by the issuer and its Restricted Subsidiaries of
the Existing Indebtedness;
(3) the incurrence by the issuer and the Guarantors of Indebtedness
represented by the notes and the related Guarantees to be issued on the
date of the Indenture and the exchange notes and the related Guarantees to
be issued pursuant to the registration rights agreement;
(4) the incurrence by the issuer or any of its Restricted Subsidiaries
of Indebtedness represented by Capital 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, plant or equipment used in the
business of the issuer or such Restricted Subsidiary, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any Indebtedness incurred pursuant to this
clause (4), not to exceed 5% of Total Assets at any time outstanding;
(5) the incurrence by the issuer or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other than
intercompany Indebtedness) that was permitted by the Indenture to be
incurred under the first paragraph of this covenant or clauses (2), (3),
(4), (5), or (10) of this paragraph;
(6) the incurrence by the issuer or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the issuer and any of its
Restricted Subsidiaries; provided, however, that:
(a) if the issuer or any Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to the
prior payment in full in cash of all Obligations with respect to the
notes, in the case of the issuer, or the Guaranty of such Guarantor, in
the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other than
the issuer or a Restricted Subsidiary thereof and (ii) any sale or other
transfer of any such Indebtedness to a Person that is not either the
issuer or a Restricted Subsidiary thereof; shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the issuer or
such Subsidiary, as the case may be, that was not permitted by this
clause (6);
(7) the incurrence by the issuer or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of the Indenture to be outstanding or to
hedge exposure to foreign currency fluctuations or commodity price risk
with respect to any commodity purchases;
(8) (a) the guarantee by the issuer or any of the Guarantors of
Indebtedness of the issuer or a Guarantor that was permitted to be incurred
by another provision of this covenant; and
(b) the guarantee by any Restricted Subsidiary of the issuer that is
not a Guarantor of Indebtedness of another Restricted Subsidiary of the
issuer that is not a Guarantor that was permitted to be incurred by
another provision of this covenant;
(9) the accrual of interest, the accretion or amortization of original
issue discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of dividends
on Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock; provided, in each such case, that the amount thereof is
included in Fixed Charges of the Issuer as accrued;
(10) the incurrence by the issuer or any of the Restricted
Subsidiaries of additional Indebtedness or Disqualified Stock in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this
clause (10), not to exceed $50.0 million;
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(11) the incurrence by the issuer's Unrestricted Subsidiaries of
Non-Recourse Debt; provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the issuer that was not permitted by this clause (11);
(12) the incurrence of Indebtedness (including letters of credit) in
respect of workers' compensation claims, self-insurance obligations,
performance, surety, bid or similar bonds and completion guarantees
provided by the issuer or one of its Restricted Subsidiaries in the
ordinary course of business and consistent with past practices;
(13) Indebtedness arising from agreements of the issuer or a
Restricted Subsidiary providing for indemnification, adjustment of purchase
price, earn out or other similar obligations, in each case, incurred or
assumed in connection with the disposition of any business, assets or a
Restricted Subsidiary, other than guarantees of Indebtedness incurred by
any Person acquiring all or any portion of such business, assets or
Restricted Subsidiary for the purpose of financing such acquisition;
provided that the maximum assumable liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually received
by the issuer and its Restricted Subsidiaries in connection with such
disposition;
(14) the incurrence by a Securitization Entity of Indebtedness in a
Qualified Securitization Transaction that is Non-Recourse Debt (except for
Standard Securitization Undertakings) with respect to the issuer and its
other Restricted Subsidiaries;
(15) Indebtedness of the issuer evidenced by promissory notes
subordinated to the notes issued to employees of the issuer and its
Subsidiaries in lieu of cash payment for at any time Equity Interest of
Parent being repurchased from such employees; provided that the aggregate
amount of such Indebtedness does not exceed $5.0 million at any one time
outstanding;
(16) guarantees of Indebtedness of any other person incurred by the
issuer or a Restricted Subsidiary in the ordinary course of business in an
aggregate principal amount not to exceed $5.0 million at any one time
outstanding;
(17) Indebtedness consisting of take-or-pay obligations contained in
supply agreements entered into by the issuer or its Subsidiaries in the
ordinary course; and
(18) Any Indebtedness of a Restricted Subsidiary of the issuer that is
not a Guarantor that is not prohibited by the covenant described below
under the caption "-- Limitation on Foreign Indebtedness."
The issuer will not incur any Indebtedness (including Permitted Debt) that
is contractually subordinated in right of payment to any other Indebtedness of
the issuer unless such Indebtedness is also contractually subordinated in right
of payment to the notes on substantially identical terms; provided, however,
that no Indebtedness of the issuer will be deemed to be contractually
subordinated in right of payment to any other Indebtedness of the issuer solely
by virtue of being unsecured.
Limitation on Foreign Indebtedness
The issuer will not permit any Restricted Subsidiary of the issuer that is
not a Guarantor to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness) unless:
(1) after giving effect to the incurrence of such Indebtedness and the
receipt of the application of the proceeds thereof;
(a) if, as a result of the incurrence of such Indebtedness such
Restricted Subsidiary will become subject to any restriction or
limitation on the payment of dividends or the making of other
distributions,
(i) the Fixed Charge Coverage Ratio of Restricted Subsidiaries
that are not Guarantors (determined on a pro forma basis for the last
four fiscal quarters for which financial statements are available at
the date of determination) is greater than 2.5 to 1.0; and
4243
(ii) the issuer's Fixed Charge Coverage Ratio (determined on a
pro forma basis for the last four fiscal quarters of the issuer for
which financial statements are available at the date of
determination) is greater than 2.0 to 1.0; and
(b) in any other case, the issuer's Fixed Charge Coverage Ratio
(determined on a pro forma basis for the last four fiscal quarters of
the issuer for which financial statements are available at the date of
determination) is greater than 2.0 to 1.0; and
(2) no Default or Event of Default shall have occurred and be
continuing at the time or as a consequence of the incurrence of such
Indebtedness.
In the event that any Indebtedness incurred pursuant to clause (1)(b) of
the foregoing paragraph is proposed to be amended, modified or otherwise
supplemented such that the payment of dividends or the making of other
distributions becomes subject in any manner to any restriction or limitation,
the issuer will not permit the Restricted Subsidiary to so amend, modify or
supplement such Indebtedness unless such Indebtedness could be incurred pursuant
to the terms of clause (1)(a) of the foregoing paragraph.
All calculations required under the prior two paragraphs hereof shall be
made in a manner consistent with the calculations required under the covenant
described under "Incurrence of Indebtedness and Issuance of Preferred Stock."
Liens
The issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien of
any kind on any asset now owned or hereafter acquired, except Permitted Liens
without making, or causing such Subsidiary to make, effective provision for
securing the notes or, in respect of Liens on any Guarantor's property or
assets, any Guarantee of such Guarantor, (x) equally and ratably with such
Indebtedness as to such property or assets for so long as such Indebtedness will
be so secured or (y) in the event such Indebtedness is subordinated
Indebtedness, prior to such Indebtedness as to such property or assets for so
long as such Indebtedness will be so secured.
Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries
The issuer will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(1) pay dividends or make any other distributions on its Capital Stock
to the issuer or any of its Restricted Subsidiaries, or with respect to any
other interest or participation in, or measured by, its profits, or pay any
indebtedness owed to the issuer or any of its Restricted Subsidiaries;
(2) make loans or advances to the issuer or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to the issuer or any of
its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the Indenture;
(2) the Indenture, the notes and the Guarantees;
(3) Indebtedness incurred by a Restricted Subsidiary that is not a
Guarantor in compliance with the provisions set forth under the caption
"-- Limitation on Foreign Indebtedness."
(4) applicable law, regulation or order;
(5) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the issuer or any of its Restricted Subsidiaries as in effect
at the time of such acquisition (except to the extent such Indebtedness was
incurred in connection with or in contemplation of such acquisition), which
4344
encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person, or the property
or assets of the Person, so acquired; provided that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of the Indenture
to be incurred;
(6) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(7) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of
the nature described in clause (3) of the preceding paragraph;
(8) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(9) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien;
(10) provisions with respect to the disposition or distribution of
assets or property in joint venture agreements, assets sale agreements,
stock sale agreements and other similar agreements entered into in the
ordinary course of business;
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business;
(12) customary provisions in agreements with respect to Permitted
Joint Ventures;
(13) Indebtedness incurred after the date of the Indenture in
accordance with the terms of the Indenture; provided; that the restrictions
contained in the agreements governing such new Indebtedness are, in the
good faith judgment of the Board of Directors of the issuer, not materially
less favorable, taken as a whole, to the holders of the notes than those
contained in the agreements governing Indebtedness outstanding on the date
of the Indenture;
(14) any encumbrance or restriction of a Securitization Entity
effected in connection with a Qualified Securitization Transaction; and
(15) any encumbrances or restrictions imposed by any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings of the contracts, instruments or obligations
referred to in clauses (1) through (14) above; provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings are, in the good faith judgment of
the Board of Directors, no more restrictive with respect to such dividend
and other payment restrictions prior to such amendment, modification,
restatement, renewal, increase, supplement, refunding, replacement or
refinancing.
Merger, Consolidation or Sale of Assets
The issuer may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not the issuer is the surviving corporation);
or (2) sell, assign, transfer, convey or otherwise dispose of all or
substantially all of the properties or assets of the issuer and its Restricted
Subsidiaries taken as a whole, in one or more related transactions, to another
Person; unless:
(1) either: (a) the issuer is the surviving corporation; or (b) the
Person formed by or surviving any such consolidation or merger (if other
than the issuer) or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made is a corporation, partnership,
limited liability company or trust organized or existing under the laws of
the United States, any state thereof or the District of Columbia;
(2) the Person formed by or surviving any such consolidation or merger
(if other than the issuer) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all
the obligations of the issuer under the notes and the Indenture pursuant to
agreements reasonably satisfactory to the Trustee;
4445
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) the issuer or the Person formed by or surviving any such
consolidation or merger (if other than the issuer), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made
will, on the date of such transaction after giving pro forma effect thereto
and any related financing transactions as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in the first paragraph of the covenant
described above under the caption "-- Incurrence of Indebtedness and
Issuance of Preferred Stock."
In addition, the issuer may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person. This "Merger, Consolidation or Sale of
Assets" covenant will not apply to a sale, assignment, transfer, conveyance or
other disposition of assets between or among the issuer and any of the
Guarantors.
Transactions with Affiliates
The issuer will not, and will not permit any of its Restricted Subsidiaries
to, make any payment to, or sell, lease, transfer or otherwise dispose of any of
its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan,
advance or guarantee with, or for the benefit of, any Affiliate (each, an
"Affiliate Transaction"), unless:
(1) such Affiliate Transaction is on terms that are no less favorable
to the issuer or the relevant Restricted Subsidiary than those that would
have been obtained in a comparable transaction by the issuer or such
Restricted Subsidiary with an unrelated Person; and
(2) the issuer delivers to the Trustee:
(a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$5.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant and that such Affiliate Transaction has been
approved by a majority of the disinterested members of the Board of
Directors; and
(b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of
$15.0 million, an opinion as to the fairness to the issuer or the
relevant Restricted Subsidiary of such Affiliate Transaction from a
financial point of view issued by an accounting, appraisal or investment
banking firm of national standing.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by the issuer or any of its
Restricted Subsidiaries in the ordinary course of business and consistent
with the past practice of the issuer or such Restricted Subsidiary;
(2) transactions between or among the issuer and/or its Restricted
Subsidiaries;
(3) payment of reasonable directors fees to Persons who are not
otherwise Affiliates of the issuer;
(4) sales of Equity Interests (other than Disqualified Stock) to
Affiliates of the issuer; and
(5) Restricted Payments that are permitted by the provisions of the
Indenture described above under the caption "-- Restricted Payments;"
(6) providing indemnity to officers, directors, or employees of the
issuer or any of its Subsidiaries as determined in good faith by the Board
of Directors of the issuer;
(7) the payment of customary management, consulting and advisory fees
and related expenses to Hidden Creek Industries or its affiliates
consistent with past practices, including, without limitation, 45in
46
in
connection with acquisitions, divestitures or financings by Parent, the
issuer or any of the issuer's Restricted Subsidiaries;
(8) the existence of, or the performance by the issuer or any of its
Restricted Subsidiaries of its obligations under the terms of, any
agreement to which it is a party as of the date of the Indenture, and any
similar agreements which it may enter into thereafter; provided, however,
that the existence of, or the performance by the issuer or any of its
Restricted Subsidiaries of obligations under, any future amendment to any
such existing agreement or under any similar agreement entered into after
the date of the Indenture shall only be permitted by this clause to the
extent that the terms of any such amendment or similar agreement are not
disadvantageous to the holders in any material respect;
(9) transactions effected as part of a Qualified Securitization
Transaction;
(10) transactions with customers, joint venture partners, clients and
suppliers, in each case in the ordinary course of business and otherwise in
compliance with the terms of the Indenture which are fair to the issuer or
its Restricted Subsidiaries, in the reasonable determination of the Board
of Directors of the issuer;
(11) the grant of stock options, restricted stock or similar rights to
the issuer's employees, directors and consultants pursuant to plans
approved by the Board of Directors of the issuer; and
(12) loans or advances to employees or consultants in the ordinary
course of business and consistent with past practices, which are approved
by a majority of the Board of Directors of the issuer in good faith.
Additional Subsidiary Guarantees
If the issuer or any of its Restricted Subsidiaries acquires or creates
another material Domestic Restricted Subsidiary after the dates of the Indenture
and the newly acquired or created material Domestic Restricted Subsidiary
guarantees any obligations under any Credit Facility, then that newly acquired
or created Domestic Restricted Subsidiary must become a Guarantor and execute a
supplemental indenture and deliver an Opinion of Counsel to the Trustee within
10 Business Days of the date on which it guaranteed any obligation under any of
the Credit Facilities. If any Subsidiary that is not a Guarantor at any time
guarantees Indebtedness of the issuer or a Guarantor, the issuer will cause such
Subsidiary to simultaneously execute and deliver a supplemental indenture
providing for the guaranty of the payment of the notes by such Subsidiary.
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors of the issuer may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if that designation would not cause
a Default. If a Restricted Subsidiary is designated as an Unrestricted
Subsidiary, the aggregate fair market value of all outstanding Investments owned
by the issuer and its Restricted Subsidiaries in the Subsidiary so designated
will be deemed to be an Investment made as of the time of such designation and
will either reduce the amount available for Restricted Payments under the first
paragraph of the covenant described above under the caption "-- Restricted
Payments" or reduce the amount available for future Investments under one or
more clauses of the definition of Permitted Investments, as the issuer shall
determine. That designation will only be permitted if such Investment would be
permitted at that time and if such Restricted Subsidiary otherwise meets the
definition of an Unrestricted Subsidiary. The Board of Directors may redesignate
any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Default.
Payments for Consent
The issuer and Parent will not, and will not permit any of their
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any holder of notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or the notes issued thereunder unless such consideration is
offered to be paid and is paid to all holders of such notes that
4647
consent, waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.
Reports
Whether or not required by the SEC, so long as any notes are outstanding,
the issuer will furnish to the holders of notes, within five days of filing such
reports with the SEC:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if
the issuer were required to file such Forms, including a "Management's
Discussion and Analysis of Results of Operations and Financial Condition"
and, with respect to the annual information only, a report on the annual
financial statements by the issuer's certified independent accountants; and
(2) all current reports that would be required to be filed with the
SEC on Form 8-K if the issuer were required to file such reports.
In addition, following the consummation of the exchange offer contemplated
by the registration rights agreement, whether or not required by the SEC, the
issuer will file a copy of all of the information and reports referred to in
clauses (1) and (2) above with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the issuer and the
Guarantors have agreed that, for so long as any notes remain outstanding, they
will furnish to the holders and to securities analysts and prospective
investors, upon their request, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act. Reports and other filings made by
Parent that include all of the information referred to in clauses (1) and (2)
above with respect to Parent and its consolidated subsidiaries shall be deemed
to satisfy the obligations of the issuer and/or the Guarantors set forth above
as long as such reports and filings include the information required by Rule
3-10 of Regulation S-X; provided that Parent does not have any business
operations other than those conducted through the issuer.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, any notes;
(2) default in payment when due of the principal of, or premium, if
any, on the notes;
(3) failure by the issuer or any of its Restricted Subsidiaries to
comply with the provisions described under the caption "-- Certain
Covenants -- Merger, Consolidation or Sale of Assets;"
(4) failure by the issuer or any of its Restricted Subsidiaries for 60
days after notice to comply with any of the other agreements in the
Indenture;
(5) default under any mortgage, indenture or instrument under which
there is issued and outstanding any Indebtedness for money borrowed by the
issuer or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by the issuer or any of its Restricted Subsidiaries) whether
such Indebtedness or guarantee now exists, or is created after the dates of
the Indenture, if that default:
(a) is caused by a failure to pay principal of, or interest or
premium, if any, on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such default
(a "Payment Default"); or
(b) results in the acceleration of such Indebtedness prior to its
express maturity, and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness the maturity of which has been so accelerated, aggregates
$20.0 million or more;
4748
(6) failure by the issuer or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $20.0 million, which judgments are
not paid, vacated, discharged, stayed or non-appealable for a period of 60
days, and in the event such judgment is covered by insurance, an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree which is not promptly stayed;
(7) except as permitted by the Indenture, any Guaranty shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect or any Guarantor, or any
Person acting on behalf of any Guarantor, shall deny or disaffirm its
obligations under its Subsidiary Guaranty or Parent, or any Person acting
on behalf of Parent, shall deny or disaffirm its obligations under the
Parent Guaranty; and
(8) certain events of bankruptcy or insolvency with respect to Parent,
the issuer or any of its Significant Subsidiaries.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to the issuer, any Subsidiary that is a
Significant Subsidiary or any group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, all outstanding notes will become due and
payable immediately without further action or notice. If any other Event of
Default occurs and is continuing, the Trustee or the holders of at least 25% in
principal amount of the then outstanding notes may declare all the notes to be
due and payable immediately.
Holders of the notes may not enforce the Indenture or the notes except as
provided in the Indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest or Liquidated
Damages) if it determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the Trustee may on behalf of the holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest or Liquidated Damages on, or the principal of, the notes.
The issuer is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the issuer is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of Parent, the
issuer or any Guarantor, as such, shall have any liability for any obligations
of the Issuer or the Guarantors under the notes, the Indenture, the Subsidiary
Guarantees, the Parent Guaranty or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each holder of notes by accepting
a note waives and releases all such liability. The waiver and release are part
of the consideration for issuance of the notes. The waiver may not be effective
to waive liabilities under the federal securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Under the Indenture, the issuer may, at its option and at any time, elect
to have all of its obligations discharged with respect to any outstanding notes
under such Indenture and all obligations of the Guarantors discharged with
respect to their Guarantees ("Legal Defeasance") except for:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, or interest or premium and Liquidated Damages,
if any, on such notes when such payments are due from the trust referred to
below;
4849
(2) the issuer's obligations with respect to the notes concerning
issuing temporary notes, registration of notes, mutilated, destroyed, lost
or stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the Trustee,
and the issuer's and the Guarantor's obligations in connection therewith;
and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the issuer may, at its option and at any time, elect to have
the obligations of the issuer and the Guarantors released with respect to
certain covenants that are described in the Indenture ("Covenant Defeasance")
and thereafter any omission to comply with those covenants shall not constitute
a Default or Event of Default with respect to the notes. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the issuer must irrevocably deposit with the Trustee, in trust,
for the benefit of the holders of the notes, cash in U.S. Dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, or
interest and premium and Liquidated Damages, if any, on such outstanding
notes on the stated maturity or on the applicable redemption date, as the
case may be, and the issuer must specify whether the notes are being
defeased to maturity or to a particular redemption date;
(2) in the case of Legal Defeasance, the issuer shall have delivered
to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee
confirming that (a) the issuer has received from, or there has been
published by, the Internal Revenue Service a ruling or (b) since the date
of the Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the holders of the outstanding notes will
not recognize income, gain or loss for federal income tax purposes as a
result of such Legal Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the issuer shall have
delivered to the Trustee an Opinion of Counsel reasonably acceptable to the
Trustee confirming that the holders of such outstanding notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing either: (a) on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied to
such deposit); or (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on the
91st day after the date of deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the Indenture) to which the issuer or
any of its Subsidiaries is a party or by which the issuer or any of its
Subsidiaries is bound;
(6) the issuer must have delivered to the Trustee an Opinion of
Counsel to the effect that, assuming no intervening bankruptcy of the
issuer or any Guarantor between the date of deposit and the 91st day
following the deposit and assuming that no holder is an "insider" of the
issuer under applicable bankruptcy law, after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; and
4950
(7) the issuer must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the issuer with the intent of
preferring the holders of such notes over the other creditors of the issuer
with the intent of defeating, hindering, delaying or defrauding creditors
of the issuer or others.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next three succeeding paragraphs, neither the
Indenture nor the notes issued thereunder may be amended or supplemented without
the consent of the holders of at least a majority in principal amount of the
notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes),
and any existing default or compliance with any provision of the Indenture or
the notes may be waived with the consent of the holders of a majority in
principal amount of the then outstanding notes (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, notes).
Without the consent of each applicable holder affected, an amendment or
waiver may not (with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent to
an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note
or alter the provisions with respect to the redemption of the notes (other
than provisions relating to the covenants described above under the caption
"-- Repurchase at the Option of Holders");
(3) reduce the rate of or change the time for payment of interest on
any note;
(4) waive a Default or Event of Default in the payment of principal
of, or interest or premium, or Liquidated Damages, if any, on the notes
(except a rescission of acceleration of the notes by the holders of at
least a majority in aggregate principal amount of the notes and a waiver of
the payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the
notes;
(6) make any change in the provisions of the Indenture relating to
waivers of past Defaults or the rights of holders of notes to receive
payments of principal of, or interest or premium or Liquidated Damages, if
any, on the notes;
(7) waive a redemption payment with respect to any note (other than a
payment required by one of the covenants described above under the caption
"-- Repurchase at the Option of Holders");
(8) release any Guarantor from any of its obligations under its
Guaranty or the Indenture, except in accordance with the terms of such
Indenture;
(9) make any change in the preceding amendment and waiver provisions;
or
(10) contractually subordinate any note or any Guarantee to any other
Indebtedness or other obligations of the issuer or any Guarantor.
Notwithstanding the preceding, without the consent of any holder of notes,
the issuer, the Guarantors and the Trustee may amend or supplement either
Indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of the issuer's obligations to
holders of notes in the case of a merger or consolidation or sale of all or
substantially all of the issuer's assets;
(4) to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely affect the
legal rights under the Indenture of any such holder; or
5051
(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder, when:
(1) either:
(a) all notes that have been authenticated (except lost, stolen or
destroyed notes that have been replaced or paid and notes for whose
payment money has theretofore been deposited in trust and thereafter
repaid to the issuer) have been delivered to the Trustee for
cancellation; or
(b) all notes that have not been delivered to the Trustee for
cancellation have become due and payable by reason of the making of a
notice of redemption or otherwise or will become due and payable within
one year and the issuer or any Guarantor has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in trust solely
for the benefit of such holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will
be sufficient without consideration of any reinvestment of interest, to
pay and discharge the entire indebtedness on such notes not delivered to
the Trustee for cancellation for principal, premium and Liquidated
Damages, if any, and accrued interest to the date of maturity or
redemption;
(2) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or shall occur as a result of such
deposit and such deposit will not result in a breach or violation of, or
constitute a default under, any other instrument to which the issuer or any
Guarantor is a party or by which the issuer or any Guarantor is bound;
(3) the issuer or any Guarantor has paid or caused to be paid all sums
payable by it under the Indenture; and
(4) the issuer has delivered irrevocable instructions to the Trustee
under the Indenture to apply the deposited money toward the payment of the
notes at maturity or the redemption date, as the case may be.
In addition, the issuer must deliver an Officers' Certificate and an
Opinion of Counsel to the Trustee stating that all applicable conditions
precedent to satisfaction and discharge have been satisfied.
CONCERNING THE TRUSTEE
If the Trustee becomes a creditor of the issuer or any Guarantor, the
Indenture limits its right to obtain payment of claims in certain cases, or to
realize on certain property received in respect of any such claim as security or
otherwise. The Trustee will be permitted to engage in other transactions;
however, if it acquires any conflicting interest it must eliminate such conflict
within 90 days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of notes, unless such holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
5152
BOOK-ENTRY; DELIVERY AND FORM
The Global Notes
The exchange notes will be issued in the form of one or more global notes
in bearer form. The global notes will be deposited on the issue date with the
DTC and registered in the name of Cede & Co., as nominee of DTC, or will remain
in the custody of the trustee pursuant to the FAST Balance Certificate Agreement
between DTC and the Trustee. Except as set forth below, the global notes may be
transferred in whole, and not in part, solely to another nominee of DTC or a
successor to DTC or its nominee. Ownership of beneficial interests in the global
notes will be limited to persons that have account with DTC or persons that may
hold interests through such participants. All interests in the global notes may
be subject to the procedures and requirements of DTC and its direct and indirect
participants, including Euroclear Bank S.A./ N.V., as operator of the Euroclear
System, which we refer to as "Euroclear," and Clearstream Banking, societe
anonyme, which we refer to as "Clearstream."
Certain Book-Entry Procedures for the Global Notes
The descriptions of the operations and procedures of DTC, Euroclear and
Clearstream set forth below are provided solely as a matter of convenience.
These operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Neither
we nor the Initial Purchasers take any responsibility for these operations or
procedures, and investors are urged to contact the relevant system or its
participants directly to discuss these matters.
DTC has advised us that it is (1) a limited purpose trust company organized
under the laws of the State of New York, (2) a "banking organization" within the
meaning of the New York Banking Law, (3) a member of the Federal Reserve System,
(4) a "clearing corporation" within the meaning of the Uniform Commercial Code,
as amended and (5) a "clearing agency" registered pursuant to Section 17A of the
Securities Exchange Act of 1934. DTC was created to hold securities for its
participants and facilitates the clearance and settlement of securities
transactions between participants through electronic book-entry changes to the
accounts of its participants, thereby eliminating the need for physical transfer
and delivery of certificates. DTC's participants include securities brokers and
dealers, including the Initial Purchasers, banks and trust companies, clearing
corporations and certain other organizations. Indirect access to DTC's system is
also available to other entities such as banks, brokers, dealers and trust
companies, referred to as "indirect participants," that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly. Investors who are not participants may beneficially own securities
held by or on behalf of DTC only through participants or indirect participants.
Pursuant to procedures established by DTC, upon deposit of each of the
global notes, DTC will credit the accounts of participants designated by the
Initial Purchasers with an interest in the global notes. Ownership of the notes
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by DTC, with respect to the interests of
participants, and the records of participants and the indirect participants,
with respect to the interests of persons other than participants.
The laws of some jurisdictions may require that some types purchasers of
notes take physical delivery of the notes in definitive form. Accordingly, the
ability to transfer interests in the notes represented by a global note to these
persons may be limited. In addition, because DTC can act only on behalf of its
participants, who in turn act on behalf of persons who hold interests through
participants, the ability of a person having an interest in notes represented by
a global note to pledge or transfer the interest to persons or entities that do
not participate in DTC's system, or to otherwise take actions in respect of the
interest, may be affected by the lack of a physical definitive note in respect
of the interest.
So long as DTC or its nominee is the registered owner of a global note, DTC
or such nominee, as the case may be, will be considered the sole owner or holder
of the notes represented by the global note for all purposes under the
Indenture. Except as provided below, owners of beneficial interests in a global
note will not be entitled to have notes represented by the global note
registered in their names, will not receive or be entitled to receive physical
delivery of certificated notes, and will not be considered the owners or holders
5253
thereof under the Indenture for any purpose, including with respect to the
giving of any direction, instruction or approval to the trustee under the
Indenture. Accordingly, each holder owning a beneficial interest in a global
note must rely on the procedures of DTC and, if the holder is not a participant
or an indirect participant, on the procedures of the participant through which
the holder owns its interest, to exercise any rights of a holder of notes under
the Indenture or the global note.
We understand that under existing industry practice, in the event that we
request any action of holders of notes, or a holder that is an owner of a
beneficial interest in a global note desires to take any action that DTC, as the
holder of such global note, is entitled to take, DTC would authorize the
participants to take the action and the participants would authorize holders
owning through the participants to take the action or would otherwise act upon
the instruction of the holders. Neither we nor the trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of notes by DTC, or for maintaining, supervising or
reviewing any records of DTC relating to the notes.
Payments with respect to the principal of, and premium, if any, liquidated
damages, if any, and interest on, any notes represented by a global note
registered in the name of DTC or its nominee on the applicable record date will
be payable by the trustee to or at the direction of DTC or its nominee in its
capacity as the registered holder of the global note representing the notes
under the Indenture. Under the terms of the Indenture, we may treat, and the
trustee may treat, the persons in whose names the notes, including the global
notes, are registered as the owners of the notes for the purpose of receiving
payment on the notes and for any and all other purposes whatsoever. Accordingly,
neither we nor the Trustee has or will have any responsibility or liability for
the payment of these amounts to owners of beneficial interests in the global
note, including principal, premium, if any, liquidated damages, if any, and
interest. Payments by the participants and the indirect participants to the
owners of beneficial interests in the global notes will be governed by standing
instructions and customary industry practice and will be the responsibility of
the participants or the indirect participants and DTC.
Transfers between participants in DTC will be effected in accordance with
DTC's procedures, and will be settled in same-day funds. Transfers between
participants in Euroclear or Clearstream will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
Subject to compliance with the transfer restrictions applicable to the
notes, cross-market transfers between the participants in DTC, on the one hand,
and Euroclear or Clearstream participants, on the other hand, will be effected
through DTC in accordance with DTC's rules on behalf of Euroclear or
Clearstream, as the case may be, by its respective depositary; however, such
cross-market transactions will require delivery of instructions to Euroclear or
Clearstream, as the case may be, by the counterparty in the system in accordance
with the rules and procedures and within the established deadlines (Brussels
time) of the system. Euroclear or Clearstream, as the case may be, will, if the
transaction meets its settlement requirements, deliver instructions to its
respective depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant global notes in DTC, and
making or receiving payment in accordance with normal procedures for same-day
funds settlement applicable to DTC. Euroclear participants and Clearstream
participants may not deliver instructions directly to the depositaries for
Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a global note from a
participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Clearstream participant, during the securities
settlement processing day, which must be a business day for Euroclear and
Clearstream, immediately following the settlement date of DTC. Cash received in
Euroclear or Clearstream as a result of the sale of an interest in a global note
by or through a Euroclear or Clearstream participant to a participant in DTC
will be received with value on the settlement date of DTC but will be available
in the relevant Euroclear or Clearstream cash account only as of the business
day for Euroclear or Clearstream following DTC's settlement date.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the global notes among
participants in DTC, Euroclear and Clearstream, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at
5354
any time. Neither we nor the trustee will have any responsibility for the
performance by DTC, Euroclear or Clearstream or their respective participants or
indirect participants of their respective obligations under the rules and
procedures governing their operations.
Certificated Notes
If (1) we notify the trustee in writing that DTC, Euroclear or Clearstream
is no longer willing or able to act as a depositary or clearing system for the
notes or DTC ceases to be registered as a clearing agency under the Exchange
Act, and a successor depositary or clearing system is not appointed within 90
days of this notice or cessation, (2) we, at our option, notify the Trustee in
writing that we elect to cause the issuance of notes in definitive form under
the Indenture or (3) upon the occurrence and continuation of an Event of Default
under the Indenture, then, upon surrender by DTC of the global notes,
certificated notes will be issued to each person that DTC identifies as the
beneficial owner of the notes represented by the global notes. Upon any such
issuance, the Trustee is required to register the certificated notes in the name
of the person or persons or the nominee of any of these persons and cause the
same to be delivered to these persons.
Neither we nor the Trustee shall be liable for any delay by DTC or any
participant or indirect participant in identifying the beneficial owners of the
related notes and each such person may conclusively rely on, and shall be
protected in relying on, instructions from DTC for all purposes, including with
respect to the registration and delivery, and the respective principal amounts,
of the notes to be issued.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, whether or not such Indebtedness is incurred in connection with, or
in contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales or leases in the ordinary course of business
consistent with past practices; provided that the sale, conveyance or other
disposition of all or substantially all of the assets of the issuer and its
Subsidiaries taken as a whole will be governed by the provisions of the
Indenture described above under the caption "-- Repurchase at the Option of
Holders -- Change of Control" and/or the provisions described above under
the caption "-- Certain Covenants -- Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests by any of the issuer's Restricted
Subsidiaries or the sale of Equity Interests in any of its Subsidiaries.
5455
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $5.0 million;
(2) a transfer of assets between or among the issuer and its
Restricted Subsidiaries;
(3) an issuance of Equity Interests by a Restricted Subsidiary to the
issuer or to another Restricted Subsidiary;
(4) the sale, lease or license of property, plant, equipment,
inventory, accounts receivable or other assets in the ordinary course of
business;
(5) the sale or other disposition of cash or Cash Equivalents;
(6) a Restricted Payment or Permitted Investment that is permitted by
the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments;"
(7) the licensing of intellectual property; and
(8) sales of receivables and related assets (including contract
rights) of the type specified in the definition of "Qualified
Securitization Transaction" to a Securitization Entity for the fair market
value thereof, including consideration in the amount specified in the
proviso to the definition of Qualified Securitization Transaction.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the Board of Directors of the
corporation;
(2) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
(3) with respect to any other Person, the board or committee of such
Person serving a similar function.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means:
(1) in the case of a corporation, corporate stock;
(2) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock;
(3) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and
(4) any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
5556
"Cash Equivalents" means:
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than twelve months from the
date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of twelve months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case, with any lender party to the Credit Agreement or
with any domestic commercial bank having capital and surplus in excess of
$500.0 million and a Thompson Bank Watch Rating of "B" or better;
(4) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (2) and (3) above
entered into with any financial institution meeting the qualifications
specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Service and in each
case maturing within twelve months after the date of acquisition;
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition; and
(7) Indebtedness with a rating of "A" or higher from Standard & Poor's
Rating Service or "A-2" or higher from Moody's Investors Service, Inc.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of the issuer and its Restricted Subsidiaries taken as
a whole to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act) other than a Principal or a Related Party of a Principal;
(2) the adoption of a plan relating to the liquidation or dissolution
of the issuer;
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principals and their Related
Parties, becomes the Beneficial Owner, directly or indirectly, of more than
50% of the Voting Stock of the issuer, measured by voting power rather than
number of shares;
(4) the first day on which a majority of the members of the Board of
Directors of the issuer are not Continuing Directors;
(5) the first day on which Parent ceases to own 100% of the
outstanding Equity Interests of the issuer; or
(6) the issuer consolidates with, or merges with or into, any Person,
or any Person consolidates with, or merges with or into, the issuer, in any
such event pursuant to a transaction in which any of the outstanding Voting
Stock of the issuer or such other Person is converted into or exchanged for
cash, securities or other property, other than any such transaction where
the Voting Stock of the issuer outstanding immediately prior to such
transaction is converted into or exchanged for Voting Stock (other than
Disqualified Stock) of the surviving or transferee Person constituting a
majority of the outstanding shares of such Voting Stock of such surviving
or transferee Person (immediately after giving effect to such issuance).
5657
"Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:
(1) an amount equal to any extraordinary loss plus any net loss
realized by such Person or any of its Subsidiaries in connection with an
Asset Sale, to the extent such losses were deducted in computing such
Consolidated Net Income; plus
(2) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, to the extent that such provision for
taxes was deducted in computing such Consolidated Net Income; plus
(3) consolidated interest expense of such Person and its Subsidiaries
for such period, whether paid or accrued and whether or not capitalized
(including, without limitation, amortization of debt issuance costs and
original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers'
acceptance financings, and net of the effect of all payments made or
received pursuant to Hedging Obligations), to the extent that any such
expense was deducted in computing such Consolidated Net Income; plus
(4) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) and other non-cash items (excluding any such
non-cash items to the extent that it represents an accrual of or reserve
for cash expenses in any future period or amortization of a prepaid cash
expense that was paid in a prior period) of such Person and its
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash items were deducted in computing such
Consolidated Net Income; minus
(5) non-cash items increasing such Consolidated Net Income for such
period, other than the accrual of revenue in the ordinary course of
business, in each case, on a consolidated basis and determined in
accordance with GAAP.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash items
of, a Subsidiary of the issuer shall be added to Consolidated Net Income to
compute Consolidated Cash Flow of the issuer only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to the issuer by such Subsidiary without prior governmental approval
(that has not been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the Net Income of any Person that is not a Restricted Subsidiary
or that is accounted for by the equity method of accounting shall be
included only to the extent of the amount of dividends or distributions
paid in cash to the specified Person or a Wholly Owned Restricted
Subsidiary thereof;
(2) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders;
(3) the Net Income or loss of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded; and
5758
(4) the cumulative effect of a change in accounting principles shall
be excluded.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the issuer who:
(1) was a member of such Board of Directors on the date of the
Indenture; or
(2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Credit Agreement" means that certain Amended and Restated Credit
Agreement, dated as of March 19, 1999, by and among the issuer, Parent and
various direct and indirect wholly owned Subsidiaries of Parent and Bank of
America National Trust and Savings Association as a lender and as agent, and
certain other lenders, providing for up to $1,150 million of aggregate
borrowings, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced from time to time.
"Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables), letters of credit or other long-term indebtedness, in
each case, as amended, restated, modified, renewed, refunded, replaced or
refinanced in whole or in part from time to time.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Designated Noncash Consideration" means any non-cash consideration (other
than non-cash consideration that would constitute a Restricted Investment)
received by the issuer or one of its Restricted Subsidiaries in connection with
an Asset Disposition that is so designated as Designated Noncash Consideration
pursuant to an Officers' Certificate executed by the principal executive officer
and the principal financial officer of the issuer or such Restricted Subsidiary.
Such Officers' Certificate shall state the basis of such valuation, which shall
be a report of a nationally recognized investment banking firm with respect to
the receipt in one or a series of related transactions of Designated Noncash
Consideration with a fair market value in excess of $5.0 million.
"Designated Preferred Stock" means preferred stock that is so designated as
Designated Preferred Stock, pursuant to an Officers' Certificate executed by the
principal executive officer and the principal financial officer of the issuer,
on the issuance date thereof, the cash proceeds of which are excluded from the
calculation set forth in clause 3(b) of the first paragraph of the covenant
described under the caption "-- Restricted Payments."
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date that is 91 days after the
date on which the notes mature. Notwithstanding the preceding sentence, any
Capital Stock that would constitute Disqualified Stock solely because the
holders thereof have the right to require the issuer to repurchase such Capital
Stock upon the occurrence of a Change of Control or an asset sale shall not
constitute Disqualified Stock if the terms of such Capital Stock provide that
the issuer may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with the covenant
described above under the caption "-- Certain Covenants -- Restricted Payments."
"Domestic Restricted Subsidiary" means any Restricted Subsidiary that was
formed under the laws of the United States or any state thereof or the District
of Columbia.
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"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity Offering" means an offering by Parent or the issuer of shares of
its Common Stock (however designated and whether voting or non-voting) and any
and all rights, warrants or options to acquire such Common Stock; provided that,
in the event of any Equity Offering by Parent, Parent contributes to the common
equity capital of the issuer (other than as Disqualified Stock) the net cash
proceeds of such Equity Offering.
"Existing Indebtedness" means the aggregate principal amount of
Indebtedness of the issuer and its Subsidiaries (other than Indebtedness under
the Credit Agreement) in existence on the date of the Indenture, until such
amounts are repaid.
"Existing Notes" means the issuer's Series A 9% Senior Subordinated Notes
due 2009, Series B 9% Senior Subordinated Notes due 2009, Series C 9% Senior
Subordinated Notes due 2009 and Series D 9% Senior Subordinated Notes due 2009.
"Fixed Charges" means, with respect to any specified Person for any period,
the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, original issue discount, non-cash interest
payments, the interest component of any deferred payment obligations, the
interest component of all payments associated with Capital Lease
Obligations, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of
the effect of all payments made or received pursuant to Hedging
Obligations; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period; plus
(3) any interest expense on Indebtedness of another Person that is
guaranteed by such Person or any one of its Restricted Subsidiaries or
secured by a Lien on assets of such Person or any one of its Restricted
Subsidiaries, whether or not such guaranty or Lien is called upon; plus
(4) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person or
any of its Restricted Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of the issuer (other than
Disqualified Stock) or to the issuer or a Restricted Subsidiary of the
issuer, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local effective tax rate of such Person, expressed as a decimal, in
each case, on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified Person
and its Restricted Subsidiaries for any period, the ratio of the Consolidated
Cash Flow of such Person for such period to the Fixed Charges of such Person for
such period. In the event that the specified Person or any of its Restricted
Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems any
Indebtedness (other than ordinary working capital borrowings) or issues,
repurchases or redeems preferred stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated and on or
prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the "Calculation Date"), then the Fixed Charge
Coverage Ratio shall be calculated giving pro forma effect to such incurrence,
assumption, guarantee, repayment, repurchase or redemption of Indebtedness, or
such issuance, repurchase or redemption of preferred stock, and the use of the
proceeds therefrom as if the same had occurred at the beginning of the
applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any of
its Restricted Subsidiaries, including through mergers or consolidations
and including any related financing transactions, during the
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four-quarter reference period or subsequent to such reference period and on
or prior to the Calculation Date shall be given pro forma effect as if they
had occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a
pro forma basis in accordance with Regulation S-X under the Securities Act
(giving effect to any Pro Forma Cost Savings), but without giving effect to
clause (3) of the proviso set forth in the definition of Consolidated Net
Income;
(2) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of prior to the Calculation Date, shall be excluded;
and
(3) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of prior to the Calculation Date, shall be excluded, but only to the extent
that the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted Subsidiaries
following the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which were in effect as of the 9% Notes' Original Issue Date.
"Guaranty" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Guarantors" means each of:
(1) Parent; Universal Tool & Stamping Company Inc.; Dura Automotive
Systems Cable Operations, Inc.; Adwest Electronics, Inc.; Dura Automotive
Systems of Indiana, Inc.; Atwood Automotive Inc.; Mark I Molded Plastics of
Tennessee, Inc.; Atwood Mobile Products, Inc.; and Dura G.P.
(2) any other subsidiary that executes a Guaranty in accordance with
the provisions of the Indenture; and their respective successors and
assigns.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates, currency values or commodity
prices.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of:
(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any
property, except any such balance that constitutes an accrued expense or
trade payable; or
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(6) representing any Hedging Obligations, if and to the extent any of
the preceding items (other than letters of credit and Hedging Obligations)
would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP.
In addition, the term "Indebtedness" includes all Indebtedness of others secured
by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included,
the guarantee by the specified Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness issued
with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness.
"Initial Purchasers" means Banc of America Securities, LLC, J.P. Morgan
Securities Inc., Salomon Smith Barney Inc., Comerica Securities Inc. and Scotia
Capital (USA) Inc.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including guarantees or other obligations), advances or capital
contributions (excluding commissions, travel and similar advances to officers
and employees made in the ordinary course of business), purchases or other
acquisitions for consideration of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the issuer
or any Restricted Subsidiary of the issuer sells or otherwise disposes of any
Equity Interests of any direct or indirect Restricted Subsidiary of the issuer
such that, after giving effect to any such sale or disposition, such Person is
no longer a Restricted Subsidiary of the issuer, the issuer shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "-- Certain Covenants -- Restricted
Payments." The acquisition by the issuer or any Restricted Subsidiary of the
issuer of a Person that holds an Investment in a third Person shall be deemed to
be an Investment by the issuer or such Restricted Subsidiary in such third
Person in an amount equal to the fair market value of the Investment held by the
acquired Person in such third Person in an amount determined as provided in the
final paragraph of the covenant described above under the caption "-- Certain
Covenants -- Restricted Payments."
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages owing pursuant to the
registration rights agreement entered into on April 18, 2002 between the issuer,
the Guarantors and the Initial Purchasers.
"Net Income" means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however:
(1) any gain or loss, together with any related provision for taxes on
such gain or loss, realized in connection with: (a) any Asset Sale; or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or
any of its Restricted Subsidiaries; and
(2) any extraordinary gain or loss, together with any related
provision for taxes on such extraordinary gain or loss.
"Net Proceeds" means the aggregate cash proceeds received by the issuer or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or
6162
other disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, and amounts required to
be applied to the repayment of Indebtedness, other than under the Credit
Agreement, secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"9% Notes' Original Issue Date" means April 22, 1999, the date of issuance
of the issuer's outstanding Series A 9% Senior Subordinated Notes due 2009.
"Non-recourse Debt" means Indebtedness:
(1) as to which neither the issuer nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness),
(b) is directly or indirectly liable as a guarantor or otherwise, or (c)
constitutes the lender;
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness of the issuer or any of its Restricted Subsidiaries
to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and
(3) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the issuer or any of
its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Permitted Business" means the business conducted by the issuer and its
Restricted Subsidiaries on the date hereof and businesses reasonably related
thereto.
"Permitted Investments" means:
(1) any Investment in the issuer or in a Restricted Subsidiary;
(2) any Investment in Cash Equivalents;
(3) any Investment by the issuer or any Restricted Subsidiary of the
issuer in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the issuer; or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated onto, the issuer or a Restricted Subsidiary of the issuer;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
"-- Repurchase at the Option of Holders -- Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of
Equity Interests (other than Disqualified Stock) of the issuer or Parent;
(6) Hedging Obligations;
(7) other Investments in any Person having an aggregate fair market
value (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (7) that are at the time
outstanding not to exceed the greater of (x) $50.0 million and (y) 5.0% of
Total Assets;
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(8) Investments existing on the date of the Indenture and any
amendment, modification, restatement, supplement, extension, renewal,
refunding, replacement, refinancing, in whole or in part, thereof;
(9) any Investment by the issuer or a Subsidiary of the issuer in a
Securitization Entity or any Investment by a Securitization Entity in any
other Person in connection with a Qualified Securitization Transaction;
provided that any Investment in a Securitization Entity is in the form of a
Purchase Money Note or any equity interest;
(10) Investments in Permitted Joint Ventures of up to $25.0 million
outstanding at any one time;
(11) Investments in Unrestricted Subsidiaries an amount at any one
time outstanding not to exceed $10.0 million; and
(12) Investments in securities of trade creditors or customers
received pursuant to a plan of reorganization or similar arrangement upon
the bankruptcy or insolvency of such trade creditors or customers.
"Permitted Joint Venture" means an entity characterized as a joint venture
(however structured) engaged in a Permitted Business and in which the issuer or
a Restricted Subsidiary (a) owns at least 20% of the ownership interest or (b)
has the right to receive at least 20% of the profits or distributions; provided
that such joint venture is not a Subsidiary.
"Permitted Liens" means:
(1) Liens of the issuer and any Guarantor securing Indebtedness and
other Obligations under Credit Facilities that were permitted by the terms
of the Indenture to be incurred;
(2) Liens in favor of the issuer or the Guarantors;
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the issuer or any Subsidiary of
the issuer; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with the
issuer or the Subsidiary;
(4) Liens on property existing at the time of acquisition thereof by
the issuer or any Subsidiary of the issuer; provided that such Liens were
in existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (4) of the second paragraph of the covenant entitled
"-- Certain Covenants -- Incurrence of Indebtedness and Issuance of
Preferred Stock" covering only the assets acquired with such Indebtedness;
(7) Liens existing on the date of the Indenture;
(8) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded;
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) Liens incurred in the ordinary course of business of the issuer or
any Subsidiary of the issuer with respect to obligations that do not exceed
$5.0 million at any one time outstanding;
(10) Liens on assets of Unrestricted Subsidiaries that secure
Non-Recourse Debt of Unrestricted Subsidiaries;
(11) Liens on assets of a Restricted Subsidiary that is not a
Guarantor that secures Indebtedness (including Acquired Indebtedness)
incurred in compliance with the covenant described under "-- Limitation on
Foreign Indebtedness."
(12) judgment Liens not giving rise to an Event of Default;
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(13) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
issuer or any of its Restricted Subsidiaries, including rights of offset
and set-off;
(14) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customer duties in connection with the
importation of goods;
(15) Liens on assets transferred to a Securitization Entity or on
assets of a Securitization Entity, in either case incurred in connection
with a Qualified Securitization Transaction;
(16) leases or subleases granted to others that do not materially
interfere with the ordinary course of business of the issuer and its
Restricted Subsidiaries;
(17) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters of
credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, performance and return-of-money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money).
(18) Liens imposed by law, such as carriers', warehouseman's and
mechanics' Liens in each case for sums not yet due or being contested in
good faith;
(19) Liens securing indebtedness or other obligations of a Restricted
Subsidiary owing to the issuer or any Guarantor to the extent such
Indebtedness is permitted to be incurred in accordance with the covenant
described under "-- Incurrence of Indebtedness and Issuance of Preferred
Stock";
(20) Liens securing Hedging Obligations as long as the related
Indebtedness is, and is permitted to be, under the Indenture to be secured
by a Lien on the same property securing the Hedging Obligations;
(21) Liens on specific items of inventory or other goods and proceeds
of any Person securing such Person's obligations with respect to bankers'
acceptances issued or created for the account of such Person to facilitate
the purchase, shipment or storage of such inventory or other goods; and
(22) Liens arising from Uniform Commercial Code financing statement
filings regarding operating leases entered into by the issuer and its
Restricted Subsidiaries in the ordinary course of business.
"Permitted Refinancing Indebtedness" means any Indebtedness of the issuer
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the issuer or any of its Restricted Subsidiaries
(other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, defeased or refunded (plus all accrued interest thereon
and the amount of all expenses and premiums incurred in connection
therewith);
(2) such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and has a Weighted Average Life to
Maturity equal to or greater than the Weighted Average Life to Maturity of,
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded;
(3) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the
notes on terms at least as favorable to the holders of notes as those
contained in the documentation governing the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; and
(4) such Indebtedness is incurred either by the Issuer or by the
Restricted Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
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"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Principals" means Onex DHC LLC, Alkin Co. and J2R Corporation.
"Pro Forma Cost Savings" means, with respect to any period, the reduction
in costs that occurred during the four-quarter period or after the end of the
four-quarter period and on or prior to the Transaction Date that were directly
attributable to an asset acquisition and calculated on a basis that is
consistent with Article 11 of Regulation S-X under the Securities Act as in
effect as of the 9% Notes' Original Issue Date.
"Productive Assets" means assets that are used or useful in, or Capital
Stock of any person engaged in, a Permitted Business.
"Qualified Securitization Transaction" means any transaction or series of
transactions pursuant to which the issuer or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (a) a Securitization Entity (in the
case of a transfer by the Issuer or any of its Restricted Subsidiaries) and (b)
any other Person (in case of a transfer by a Securitization Entity), or may
grant a security interest in, any accounts receivable or equipment (whether now
existing or arising or acquired in the future) of the issuer or any of its
Restricted Subsidiaries, and any assets related thereto including, without
limitation, all collateral securing such accounts receivable and equipment and
other assets (including contract rights and all guarantees or other obligations
in respect to such accounts receivable and equipment, proceeds of such accounts
receivable and equipment and other assets (including contract rights) which are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving accounts receivable and equipment, all of the foregoing for the
purpose of providing working capital financing on terms that are more favorable
to the issuer and its Restricted Subsidiaries than would otherwise be available
at that time.
"Related Party" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of any Principal; or
(2) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially
holding an 80% or more controlling interest of which consist of any one or
more Principals and/or such other Persons referred to in the immediately
preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"Securitization Entity" means a Wholly Owned Subsidiary of the issuer (or
another Person in which the issuer or any Subsidiary of the issuer makes an
Investment and to which the issuer or any Subsidiary of the issuer transfers
accounts receivable or equipment and related assets) that engages in no
activities other than in connection with the financing of accounts receivable or
equipment and that is designated by the Board of Directors of the issuer (as
provided below) as a Securitization Entity (a) no portion of the Indebtedness or
any other obligations (contingent or otherwise) of which (i) is guaranteed by
the issuer or any other Restricted Subsidiary (excluding guarantees of
Obligations (other than the principal of, and interest on, Indebtedness))
pursuant to Standard Securitization Undertakings, (ii) is recourse to or
obligates the issuer or any Restricted Subsidiary in any way other than pursuant
to Standard Securitization Undertakings, (b) with which neither the issuer nor
any Restricted Subsidiary has any material contract, agreement, arrangement or
understanding other than on terms no less favorable to the issuer or such
Restricted Subsidiary than those that might be obtained at the time from Persons
that are not Affiliates of the issuer, other than fees payable in the ordinary
course of business in connection with servicing receivables of such entity, and
(c) to which neither the issuer nor any Restricted Subsidiary has any obligation
to maintain or preserve such entity's financial condition or cause such entity
to achieve certain levels of operating results. Any such designation by the
Board of Directors shall be evidenced to each of the Trustees by filing with the
Trustees a certified copy of the resolution of the
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Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Standard Securitization Undertakings" means representations, warranties,
covenants and indemnities entered into by the issuer or any Subsidiary of the
issuer that are reasonably customary in an accounts receivable or equipment
transactions.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Total Assets" means the total assets of the issuer and its Restricted
Subsidiaries on a consolidated basis determined in accordance with GAAP, as
shown on the most recently available consolidated balance sheet of the issuer
and its Restricted Subsidiaries.
"Treasury Rate" means, as of any Redemption Date, the yield to maturity as
of such Redemption Date of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) that 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 of similar market data)) most
nearly equal to the period from the Redemption Date to May 1, 2004; provided,
however, that if the period from the Redemption Date to May 1, 2004 is less than
one year, the weekly average yield on actually traded United States Treasury
securities adjusted to a constant maturity of one year shall be used.
"Unrestricted Subsidiary" means any Subsidiary of the issuer (other than
Dura UK Limited or any successor thereto) that is designated by the Board of
Directors as an Unrestricted Subsidiary pursuant to a Board Resolution, but only
to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt:
(2) is not party to any agreement, contract, arrangement or
understanding with the issuer or any Restricted Subsidiary of the issuer
unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the issuer or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of the issuer;
(3) is a Person with respect to which neither the issuer nor any of
its Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of the issuer or any of its Restricted
Subsidiaries.
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Any designation of a Subsidiary of the issuer as an Unrestricted Subsidiary
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the preceding
conditions and was permitted by the covenant described above under the caption
"-- Certain Covenants -- Restricted Payments." If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the issuer as of such date
and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the caption "-- Certain Covenants -- Incurrence of
Indebtedness and Issuance of Preferred Stock," the issuer shall be in default of
such covenant. The Board of Directors of the issuer may at any time designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the issuer of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (1) such Indebtedness
is permitted under the covenant described under the caption "-- Certain
Covenants -- Incurrence of Indebtedness and Issuance of Preferred Stock,"
calculated on a pro forma basis as if such designation had occurred at the
beginning of the four-quarter reference period; and (2) no Default or Event of
Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a) the amount of
each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any specified Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person.
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DESCRIPTION OF OTHER FINANCING ARRANGEMENTS
SENIOR CREDIT FACILITY
General. The issuer, Parent and various direct and indirect wholly owned
subsidiaries of Parent (the "Borrowers"), entered into our amended and restated
senior credit facility with Bank of America National Trust and Savings
Association ("Bank of America") and certain other lenders on March 19, 1999.
Prior to its amendment in April 2002, the senior credit facility provided for
aggregate borrowings by the Borrowers of approximately $950.0 million, including
(a) a $275.0 million tranche A term loan, (b) a $275.0 million tranche B term
loan and (c) a $400.0 million revolving credit facility. We used the proceeds of
the offering of the outstanding senior notes to repay the tranche A term loan
and to repay approximately $171.4 million of the tranche B term loan. In April
2002, we amended our senior credit facility to provide for an additional $150.0
million tranche C term loan and to reduce the total commitment under the
revolving credit facility from $400.0 million to $390.0 million. We used the
proceeds of the tranche C term loan to repay the balance of the tranche B term
loan and will use the remainder for general corporate purposes. As of March 31,
2002, after giving pro forma effect to the offering of the outstanding senior
notes and to the amendment the senior credit facility, and application of the
proceeds therefrom there would have been approximately $150.0 million of
outstanding indebtedness under our senior credit facility and $390.0 million of
unused borrowing capacity under our senior credit facility for working capital
and other corporate purposes, of which $91.4 million was available under the
most restrictive covenants of our senior credit facility.
Interest. Amounts outstanding under our senior credit facility bear
interest, at our option, at a rate per annum equal to either: (1) the
Eurocurrency interbank offered rate (the "Eurocurrency Rate") or (2) the
alternate base rate, in each case, plus an applicable margin. The "U.S. base
rate" is defined as the higher of (x) Bank of America's reference rate, and (y)
0.50% per annum over the federal funds rate. The applicable margin for the
revolving credit facility adjusts according to a performance pricing grid based
on our ratio of senior indebtedness to EBITDA, ranging from (1) for Eurocurrency
loans, 2.75% to 2.00% and (2) for U.S. base rate loans, 1.25% to 0.50%. The
applicable margin for the tranche C term loan is fixed at 2.50% for Eurocurrency
loans and 1.00% for U.S. base rate loans. As of March 31, 2002, our borrowings
under our senior credit facility bore interest at rates ranging from 4.1% to
6.3%.
Maturity. Borrowings under the tranche C term loan are due and payable in
quarterly installments beginning on September 30, 2002. An amount equal to 0.25%
of the original principal amount of the tranche C term loan is due and payable
each quarter through December 31, 2007, with such installment payments
increasing to 23.625% of the original principal amount of the tranche C term
loan on each of March 31, June 30, September 30 and December 31, 2008. The
revolving credit facility is available until March 2005.
Security and Guarantees. The senior credit facility is secured by a first
priority security interest in all existing and after-acquired tangible and
intangible assets of the Borrowers and their material subsidiaries, including,
without limitation, intellectual property, real property, all of the capital
stock owned by the Borrowers and each of their material subsidiaries and any
inter-company debt obligations (with exceptions for certain foreign
subsidiaries). All of the Borrowers' obligations under our senior credit
facility are fully and unconditionally guaranteed by Parent and all of the
issuer's material subsidiaries (with exceptions for certain foreign
subsidiaries).
Covenants. Our senior credit facility requires us to meet certain financial
tests, including, without limitation, maximum levels of senior debt as a ratio
to EBITDA, minimum interest coverage, total debt as a ratio to EBITDA and net
worth. Our senior credit facility contains certain covenants which, among other
things, limit the incurrence of additional indebtedness, investments, dividends,
transactions with affiliates, asset sales, acquisitions, mergers and
consolidations, payments of certain other indebtedness, liens and encumbrances.
The April 2002 amendment to our senior credit facility modified certain negative
covenants and reset certain financial covenants. Specifically, the negative
covenants were modified to allow the issuer to issue the notes and to apply the
net proceeds as contemplated under "Use of Proceeds." Additionally, the negative
covenants were modified to allow for an increase in permitted: (i) asset
dispositions; (ii) subsidiary
6869
indebtedness; (iii) investments in joint ventures; (iv) guaranty obligations of
permitted joint ventures; and (v) asset securitizations.
The financial covenants under the senior credit facility were amended to
provide the Borrowers with more flexibility under the total debt to EBITDA ratio
and the minimum fixed charge coverage ratio, while tightening the senior
leverage ratio. The minimum net worth test were redefined to limit the impact of
currency translation adjustments and certain FAS rulings. Additionally, the
impact of any swap contracts relating to the notes were excluded from the
definition of indebtedness, as well as other sections impacted by such swap
contracts.
Events of Default. Our senior credit facility contains customary events of
default, including, without limitation, payment defaults, breaches of
representations and warranties, covenant defaults, cross-defaults to certain
other indebtedness (including the notes), certain events of bankruptcy and
insolvency, judgment defaults, failure of any guaranty or security document
supporting our senior credit facility to be in full force and effect and a
change of control of Parent.
SENIOR SUBORDINATED NOTES
General. The issuer's 9% senior subordinated notes were issued (1) in an
aggregate principal amount equal to $300 million and E100 million under an
indenture dated as of April 22, 1999, among the issuer, the Guarantors and
United States Trust National Association, as trustee, and (2) in a principal
amount at maturity of $158.5 million under an indenture dated as of June 11,
2001 among the issuer, the Guarantors and United States Trust National
Association, as trustee.
Maturity. The senior subordinated notes mature on May 1, 2009 and bear
interest at the rate equal to 9% per annum. Interest is computed on the basis of
a 360 day year comprised of twelve thirty day months.
Subordination and Guarantees. The senior subordinated notes are general
unsecured obligations of the issuer and are subordinated in right of payment to
all existing and future senior indebtedness of the issuer and the Guarantors,
including the senior credit facility and the notes. The senior subordinated
notes are effectively subordinated to all existing and future liabilities
(including liabilities owed to trade creditors) of the non-Guarantor
subsidiaries of Parent to the extent of the assets of each non-Guarantor
subsidiary. Any right of the issuer or any of the Guarantors to participate in
any distribution of assets of any non-Guarantor subsidiary upon the liquidation,
reorganization, or insolvency thereof (and the consequent right of the holder to
benefit from those assets) will be subject to the claims of creditors (including
trade creditors) of such subsidiary, except to the extent that claims of the
issuer or such Guarantor itself as a creditor of such subsidiary may be
recognized, in which case the claims of the issuer would still be subordinate to
any security interest in the assets of such subsidiary and any indebtedness of
such subsidiary senior to that held by the issuer or such guarantor.
Redemption. The senior subordinated notes may be redeemed at the option of
the issuer after May 1, 2004, upon not less than 30 nor more than 60 days'
notice, in whole or in part, at the redemption prices (expressed as percentages
of principal amount) set forth below plus accrued and unpaid interest and
liquidated damages, if any, thereon, to the applicable redemption date, if
redeemed during the twelve-month period beginning on May 1 of the years
indicated below:
REDEMPTION
YEAR PRICE
- ---- ----------
2004........................................................ 104.50%
2005........................................................ 103.00%
2006........................................................ 101.50%
2007 and thereafter......................................... 100.00%
The issuer is not required to make mandatory redemption or sinking fund
payments with respect to the senior subordinated notes.
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Change of Control. The indentures relating to the senior subordinated notes
provide that, if a change of control occurs, as defined in such indentures, each
holder of the senior subordinated notes will have the right to require the
issuer to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of that holder's senior subordinated notes, at a purchase price equal
to 101% of the principal amount thereof, plus accrued and unpaid interest and
liquidated damages, if any, thereon. The term "change of control" is defined in
the indentures relating to the senior subordinated notes to include one or more
of the following events:
(i) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of the issuer and its Restricted Subsidiaries taken as
a whole to any "person" other than a Onex DHC LLC, Alkin Co. or J2R
Corporation (the "Principals") or any person related thereto (the "Related
Parties");
(ii) the adoption of a plan relating to the liquidation or dissolution
of the issuer;
(iii) the consummation of any transaction (including, without
limitation, a merger or consolidation) the result of which is that any
"person" other than the Principals and their Related Parties becomes the
beneficial owner, directly or indirectly, of more than 50% of the voting
stock of the issuer (measured by voting power rather than number of
shares);
(iv) the first day on which a majority of the members of the board of
directors of the issuer are not Continuing Directors, as defined;
(v) the first day on which Parent ceases to own 100% of the
outstanding Equity Interests, as defined, of the issuer; or
(vi) the issuer consolidates with, or merges with or into, any person,
or any person consolidates with, or merges with or into, the issuer, in any
such event pursuant to a transaction in which any of the outstanding voting
stock of the issuer or such other person is converted into or exchanged for
cash, securities or other property, other than any such transaction where
the voting stock of the issuer outstanding immediately prior to such
transaction is converted into or exchanged for voting stock (other than
Disqualified Voting Stock, as defined) of the surviving or transferee
person constituting a majority of the outstanding shares of such voting
stock of such surviving or transferee person (immediately after giving
effect to such issuance).
Events of Default. The indentures relating to the senior subordinated notes
contain customary events of default, including, without limitation, payment
defaults, covenant defaults, certain cross-defaults to mortgages, indentures or
other instruments, certain events of bankruptcy and insolvency, judgment
defaults, and failure of any guaranty or security document supporting the senior
subordinated notes to be in full force and effect.
Covenants. The indentures relating to the senior subordinated notes contain
covenants for the benefit of the holders of the senior subordinated notes that,
among other things, limit the ability of the issuer and any of its restricted
subsidiaries to:
- pay dividends or other restricted payments (or allow its restricted
subsidiaries to pay dividends or other restricted payments);
- incur indebtedness or issue preferred stock;
- incur foreign indebtedness;
- incur liens;
- merge, consolidate or sell its assets;
- enter into transactions with affiliates;
- incur additional senior subordinated debt; or
- impose restrictions on the ability of a restricted subsidiary to pay
dividends or make payments to the Issuer and its restricted subsidiaries.
7071
These limitations are, however, subject to a number of important
qualifications and exceptions.
The foregoing summary of the material provisions of the indentures relating
to the senior subordinated notes is qualified in its entirety by reference to
all of the provisions of these indentures, which have been filed with the SEC.
See "Where You Can Find More Information."
TRUST PREFERRED SECURITIES
General. On March 20, 1998, the Dura Trust (the "Trust"), a statutory
business trust created at the direction of Parent, completed the offering of
$55.3 million of its 7 1/2% Trust Preferred Securities resulting in net proceeds
of approximately $52.6 million. Parent owns all of the outstanding common
securities issued by the Trust. The sole assets of the Trust are the 7 1/2%
Convertible Subordinated Debentures due March 31, 2028 issued by Parent in an
aggregate principal amount of $57.0 million.
Redemption. The Trust Preferred Securities are redeemable, in whole or in
part, on or after March 31, 2001, and all Trust Preferred Securities must be
redeemed on or after March 31, 2028. The Trust Preferred Securities are subject
to redemption at the following percentages of the liquidation amount thereof
plus accrued and unpaid distributions, if any, to the date fixed for redemption
if redeemed during the twelve-month period commencing on March 31, in each of
the years indicated:
REDEMPTION
YEAR PRICE
- ---- ----------
2001........................................................ 105.250%
2002........................................................ 104.500
2003........................................................ 103.750
2004........................................................ 103.000
2005........................................................ 102.250
2006........................................................ 101.150
2007........................................................ 100.750
2008 and thereafter......................................... 100.000
Conversion. The Trust Preferred Securities are convertible, at the option
of the holder, into Class A common stock of Parent at a rate of 0.5831 shares of
Class A common stock for each Trust Preferred Security, which is equivalent to a
conversion price of $42.875 per share. The net proceeds of the offering of the
Trust Preferred Securities were used to repay outstanding indebtedness. Parent
has guaranteed, on a subordinated basis, certain obligations of the Trust under
the Trust Preferred Securities.
7172
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following discussion summarizes the material U.S. federal income tax
aspects of the acquisition, ownership and disposition of the exchange notes.
This discussion is a summary for general information purposes and does not
consider all aspects of U.S. federal income taxation that may be relevant to the
purchase, ownership and disposition of the exchange notes by a prospective
investor in light of such investor's personal circumstances. This discussion
also does not address the U.S. federal income tax consequences of ownership of
exchange notes not held as capital assets within the meaning of Section 1221 of
the U.S. Internal Revenue Code of 1986, as amended (the "Code"), or the U.S.
federal income tax consequences to investors subject to special treatment under
the U.S. federal income tax laws, such as dealers in securities or foreign
currency, tax-exempt entities, financial institutions, insurance companies,
persons that hold the exchange notes as part of a "straddle," a "hedge" or a
"conversion transaction," persons that have a "functional currency" other than
the U.S. dollar, except as specifically described under "Non-U.S. Holders," and
investors in pass-through entities. In addition, this discussion does not
describe any tax consequences arising under U.S. federal gift and estate taxes
or out of the tax laws of any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing Treasury regulations
thereunder, and current administrative rulings and court decisions. All of the
foregoing is subject to change, possibly on a retroactive basis, and any such
change could affect the continuing validity of this discussion.
This discussion deals only with beneficial owners who acquired the exchange
notes in connection with the offering of the outstanding notes at original
issue. It does not address some issues that are relevant to subsequent
purchasers of the outstanding notes or exchange notes including, but not limited
to, the treatment of market discount for federal income tax purposes.
HOLDERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
APPLICATION OF FEDERAL INCOME TAX LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL
OR FOREIGN TAXING JURISDICTION, TO THEIR PARTICULAR SITUATIONS.
U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a note that is:
- a citizen or resident (as defined in Section 770l(b)(1) of the Code) of
the United States;
- a corporation or partnership organized under the laws of the United
States or any political subdivision thereof or therein;
- an estate, the income of which is subject to U.S. federal income tax
regardless of the source; or
- a trust with respect to which a court within the United States is able to
exercise primary supervision over its administration and one or more
United States persons have the authority to control all of its
substantial decisions or if the trust was in existence on August 20, 1996
and has properly elected to continue to be treated as a U.S. person, or a
"U.S. Holder."
Certain U.S. federal income tax consequences relevant to a holder other
than a U.S. Holder are discussed separately below.
Interest Income
The Notes are not being issued with original issue discount. Accordingly,
payments of interest on a Note generally will be taxable to a U.S. Holder as
ordinary interest income at the time such payments are accrued or are received
(in accordance with the holder's regular method of tax accounting).
Because we are obligated to pay an additional amount to the holders of the
Notes under certain circumstances described under "Description of
Notes -- Registration Rights; Liquidated Damages," the Notes may be subject to
special rules under Treasury Regulations that are applicable to debt instruments
that
7273
provide for one or more contingent payments. Under the Treasury Regulations,
however, the special rules applicable to contingent payment debt instruments
will not apply if, as of the issue date, the contingency is either "remote" or
"incidental." We intend to take the position that, solely for these purposes,
the payment of the additional amount is a remote or incidental contingency. Our
determination that such payments are a remote or incidental contingency for
these purposes is binding on a holder, unless such holder discloses in the
proper manner to the Internal Revenue Service (the "IRS") that it is taking a
different position. Prospective investors should consult their tax advisors as
to the tax considerations relating to the payment of the additional amount, in
particular in connection with the Treasury Regulations relating to contingent
payment interests.
Sale, Exchange or Redemption of Notes.
A holder will generally recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or other
disposition of the exchange note (other than amounts attributable to accrued
interest not already taken into income, which will be taxed as ordinary income)
and the holder's adjusted tax basis in the exchange note. A holder's adjusted
tax basis in the note generally will be the initial purchase price paid
therefor. Gain recognized on the sale of an exchange note will be long-term
capital gain provided the holder's holding period for the exchange note exceeds
one year. In the case of a holder other than a corporation, the current maximum
marginal United States federal income tax rate applicable to long term capital
gain recognized on the sale of a note is 20%.
If the selling price is less than the holder's adjusted tax basis, the
holder will recognize a capital loss. Subject to certain limited exceptions,
capital losses cannot be applied to offset ordinary income for United States
federal income tax purposes.
The Exchange Offer
Neither the exchange of the outstanding notes for exchange notes pursuant
to the exchange offer nor the filing of any registration statement with respect
to the resale of the notes should constitute a significant modification of the
terms of the outstanding notes, and, accordingly, such exchange and filing
should not constitute exchanges for federal income tax purposes. Therefore, a
holder will not recognize gain or loss upon receipt of an exchange note in the
registered exchange offer; a holder's holding period for any exchange note will
include the holding period of the outstanding note surrendered and such holders
adjusted basis in such exchange note will be the same as such holder's basis in
the outstanding note surrendered. In addition, each holder of exchange notes
would continue to be required to include interest on the exchange notes in its
gross income in accordance with its method of accounting for federal income tax
purposes.
Backup Withholding and Information Reporting
Under the Code, a U.S. Holder of a note may be subject, under certain
circumstances, to information reporting and/or backup withholding at a 30% rate
with respect to cash payments in respect of interest on, or the gross proceeds
from disposition of, a note. This withholding applies only if a U.S. Holder:
- fails to furnish its social security or other taxpayer identification
number ("TIN") within a reasonable time after a request therefor;
- furnishes an incorrect TIN;
- fails to report interest or dividends properly; or
- 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 U.S. Holder under the backup
withholding rules is allowable as a credit, and may entitle such holder to a
refund, against such holder's U.S. federal income tax liability, provided that
the required information is furnished to the IRS. Certain persons are exempt
from backup withholding, including corporations and financial institutions.
Holders of notes should consult their tax
7374
advisors as to their qualification for exemption from withholding and the
procedure for obtaining such exemption.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of an outstanding note or an exchange note,
each referred to in this discussion as a "note," that is not a U.S. Holder (a
"Non-U.S. Holder").
This discussion does not address all aspects of U.S. federal income
taxation that may be relevant to the purchase, ownership or disposition of the
notes by any particular Non-U.S. Holder in light of such holder's personal
circumstances, including holding the notes through a partnership. For example,
persons who are partners in foreign partnerships or beneficiaries of foreign
trusts or estates and who are subject to U.S. federal income tax because of
their own status, such as U.S. residence or foreign persons engaged in a trade
or business in the United States, may be subject to U.S. federal income tax even
though the entity is not subject to income tax on disposition of its note.
For purposes of the following discussion, interest and gain on the sale,
exchange or other disposition of the note will be considered "U.S. trade or
business income" if such income or gain is effectively connected with the
conduct of a U.S. trade or business, or in the case of an applicable income tax
treaty between the United States and the country of which the holder is a
qualified resident, attributable to a U.S. permanent establishment (or to a
fixed base) in the United States.
Stated Interest
Generally, any interest paid to a Non-U.S. Holder of a note that is not
U.S. trade or business income will not be subject to U.S. federal income tax if
the interest qualifies as "portfolio interest." Interest on the notes will
qualify as portfolio interest if:
- the Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of our voting stock, and is not a
"controlled foreign corporation" with respect to which the issuer is a
"related person" within the meaning of Section 864(d)(4) of the Code; and
- the beneficial owner, under penalties of perjury, certifies that the
beneficial owner is not a U.S. person and such certificate provides the
beneficial owner's name and address.
The gross amount of payments to a Non-U.S. Holder of interest that do not
qualify for the portfolio interest exception and that are not U.S. trade or
business income will be subject to U.S. withholding tax at the rate of 30%,
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed at regular U.S. federal income tax rates
rather than the 30% gross rate. To claim the benefit of a tax treaty or to claim
exemption from withholding because the income is U.S. trade or business income,
the Non-U.S. Holder must provide a properly executed Form W-8BEN or W-8ECI, or
such successor forms as the IRS designates, as applicable, prior to payment of
interest. These forms must be periodically updated. A Non-U.S. Holder who is
claiming the benefits of a tax treaty may be required to obtain a U.S. TIN and
to provide certain documentary evidence issued by foreign governmental
authorities to prove residence in the foreign country.
Sale, Exchange or Redemption of the Notes
Subject to the discussion concerning backup withholding, any gain realized
by a Non-U.S. Holder on the sale, exchange or redemption of a note generally
will not be subject to U.S. federal income tax unless such gain is U.S. trade or
business income, or, subject to certain exceptions, the Non-U.S. Holder is an
individual who holds the note as a capital asset and is present in the United
States for 183 days or more in the taxable year of the disposition.
7475
Information Reporting and Backup Withholding
The issuer must report annually to the IRS and to each Non-U.S. Holder any
interest that is subject to U.S. withholding tax or that is exempt from
withholding pursuant to a tax treaty or the portfolio interest exception (as
described above in "Stated Interest"). Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement to
the tax authorities of the country in which the Non-U.S. Holder resides.
Backup withholding and information reporting will not apply to payments of
principal on the notes by the issuer to a Non-U.S. holder, if the holder
certifies as to its non-U.S. status under penalties of perjury or otherwise
establishes an exemption, provided that neither the issuer nor its paying agent
has actual knowledge that the holder is a U.S. Holder or that the conditions of
any other exemption are not, in fact, satisfied.
United States backup withholding tax will not apply to payments on the
notes to a non-U.S. Holder if the certification described above in "Stated
Interest" is duly provided by such holder, provided that the payor does not have
actual knowledge that the holder is a United States person. Information
reporting may still apply with respect to payments of interest. Information
reporting and backup withholding tax will not apply to payments of the proceeds
of the sale of notes to a non-U.S. Holder effected by a broker, provided that
either a sale occurs through a foreign office of a foreign broker that has no
connection with the United States, as described in applicable regulations, or
such broker has in its records certain documentary evidence allowed by Treasury
regulations that the beneficial owner is a non-U.S. Holder, certain other
conditions are met and the broker does not have actual knowledge that the holder
is a U.S. Holder.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
7576
PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a participating broker-dealer in connection with resales of exchange notes
received in exchange for outstanding notes where such outstanding notes were
acquired as a result of market-making activities or other trading activities. We
have agreed that for a period of 180 days after the expiration date, we will
make this prospectus, as amended or supplemented, available to any participating
broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sales of the exchange notes by
participating broker-dealers. Exchange notes received by participating
broker-dealers for their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the exchange notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such participating broker-dealer and/or the purchasers of any such
exchange notes. Any participating broker-dealer that resells the exchange notes
that were received by it for its own account pursuant to the exchange offer and
any broker or dealer that participates in a distribution of such exchange notes
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any profit on any such resale of exchange notes and any commissions or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a prospectus, a
participating broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any participating broker-dealer that requests such documents in
the letter of transmittal. We have agreed to pay all expenses incident to the
exchange offer (including the expenses of one counsel for the holders of the
notes) other than commissions or concessions or any brokers or dealers and will
indemnify the holders of the notes (including any broker-dealers) against
certain liabilities, including liabilities under the Securities Act.
Prior to the exchange offer, there has not been any public market for the
outstanding notes. The outstanding notes have not been registered under the
Securities Act and will be subject to restrictions on transferability to the
extent that they are not exchanged for exchange notes by holders who are
entitled to participate in this exchange offer. The holders of outstanding
notes, other than any holder that is our affiliate within the meaning of Rule
405 under the Securities Act, who are not eligible to participate in the
exchange offer are entitled to certain registration rights, and we are required
to file a shelf registration statement with respect to the outstanding notes.
The exchange notes will constitute a new issue of securities with no
established trading market. We do not intend to list the exchange notes on any
national securities exchange or to seek the admission thereof to trading in the
National Association of Securities Dealers Automated Quotation System. In
addition, such market-making activity will be subject to the limits imposed by
the Securities Act and the Exchange Act and may be limited during the exchange
offer and the pendency of the shelf registration statements. Accordingly, no
assurance can be given that an active public or other market will develop for
the exchange notes or as to the liquidity of the trading market for the exchange
notes. If a trading market does not develop or is not maintained, holders of the
exchange notes may experience difficulty in reselling the exchange notes or may
be unable to sell them at all. If a market for the exchange notes develops, any
such market may be discontinued at any time.
7677
LEGAL MATTERS
The validity of the exchange notes and the guarantees offered hereby and
certain other legal matters will be passed upon on behalf of the issuer and the
subsidiary guarantors by Kirkland & Ellis (a partnership that includes
professional corporations), Chicago, Illinois.
INDEPENDENT PUBLIC ACCOUNTANTS
The consolidated financial statements and schedules of Dura Automotive
Systems, Inc. as of December 31, 2001 and 2000 and for each of the three years
in the period ended December 31, 2001 incorporated by reference in this
registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
incorporated by reference in reliance upon the authority of said firm as experts
in auditing and accounting in giving said reports.
77We have not been able to obtain, after reasonable efforts, the written
consent of Arthur Andersen LLP to its being named in this prospectus as having
certified the consolidated financial statements of the Company as of December
31, 2001 and 2000 and for each of the three years in the period ended December
31, 2001, as required by Section 7 of the Securities Act. Accordingly, you will
not be able to sue Arthur Andersen pursuant to Section 11(a)(4) of the
Securities Act and therefore your right of recovery under that section may be
limited as a result of the lack of consent.
78
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[DURA LOGO]
DURA OPERATING CORP.
EXCHANGE OFFER FOR
$350,000,000
8 5/8% SENIOR NOTES DUE 2012
UNCONDITIONALLY GUARANTEED BY
DURA AUTOMOTIVE SYSTEMS, INC.
-------------------------------
PROSPECTUS
, 2002
-------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Dura Automotive Systems, Inc.; Dura Operating Corp.; Adwest Electronics,
Inc.; and Dura Automotive Cable Operations, Inc. Dura Automotive Systems, Inc.
is incorporated under the laws of the State of Delaware. Section 145 of the
General Corporation Law of the State of Delaware ("Section 145") provides that a
Delaware corporation may indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer, director, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation by reason of the fact that such person was a director,
officer, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise. The indemnity may include expenses (including
attorney's fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interests except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
Article Eleven of the Restated Certificate of Incorporation of Parent
provides that no director of the corporation shall be liable to the corporation
or its stockholders for monetary damages arising from a breach of fiduciary duty
owed to the corporation or its stockholders to the fullest extent permitted by
the Delaware General Corporation Law.
Article V of Parent's Amended and Restated By-Laws (the "Dura By-laws")
provides that each person who was or is made a party or is threatened to be made
a party to or is otherwise involved (including involvement as a witness) in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative by reason of the fact that he or she is or was a director or
officer of the corporation, is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan, whether the basis of such proceeding is
alleged action in an official capacity as a director or officer or in any other
capacity while serving as a director or officer, against all expense, liability
and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid in settlement) reasonably incurred or suffered by
such indemnitee in connection therewith and such indemnification shall continue
as to an indemnitee who has ceased to be a director, officer, employee or agent
and shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided below with respect
to proceedings to enforce rights to indemnification, the corporation shall
indemnify any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the Board of Directors. The right to indemnification is a contract
right and includes the right to be paid by the corporation the expenses incurred
in defending any such proceeding in advance of its final disposition
(advancement of expenses); provided, however, that, if and to the extent that
the Delaware General Corporation Law requires, an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer (and
not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit plan)
II-1
shall be made only upon delivery to the corporation of an undertaking by or on
behalf of such indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is no
further right to appeal than such indemnitee is not entitled to be indemnified
for such expenses.
Article V of the Dura By-laws further provides that any person serving as a
director, officer, employee or agent of a subsidiary of Dura shall be
conclusively presumed to be serving in such capacity at the request of Dura and,
hence subject to indemnification by Dura.
Article V of the Dura By-laws further provides that persons who after the
date of the adoption of Article V become or remain directors or officers of the
corporation or who, while a director or officer of the corporation, become or
remain a director, officer, employee or agent of a subsidiary, shall be
conclusively presumed to have relied on the rights to indemnify, advancement of
expenses and other rights contained in Article V in entering into or continuing
such service. The rights to indemnification and to the advancement of expenses
conferred in Article V shall apply to claims made against a indemnitee arising
out of acts or omissions which occurred or occur both prior and subsequent to
the adoption hereof. The rights to indemnification and to the advancement of
expenses conferred in Article V shall not be exclusive of any other right which
any person may have or hereafter acquire under the Amended and Restated
Certificate of Incorporation or under any statute, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
All of the directors and officers of Parent are covered by insurance
policies maintained and held in effect by such corporation against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933.
Dura Operating Corp., Adwest Electronics, Inc. and Dura Automotive Systems
Cable Operations, Inc. are also incorporated under the General Corporation Law
of the State of Delaware. Under their respective charter documents, each
corporation has agreed to indemnify their officers and directors to the fullest
extent authorized by the Delaware General Corporation Law.
In addition, the bylaws of Adwest Electronics, Inc. provide that 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 a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived any improper personal benefit.
Dura G.P. Dura G.P. is a general partnership formed under the laws of
Delaware. Section 15-110 of the Delaware Revised Uniform Partnership Act
provides that subject to the standards and restrictions set forth in a
partnership agreement, a partnership shall have the power to indemnify its
partners against any and all claims and demands whatsoever. The partnership's
partnership agreement provides that the partnership shall defend, indemnify and
hold the partners (including Dura Operating Corp., the "Managing General
Partner") harmless from and against any loss, expense, damage or injury suffered
or sustained by reason of any acts, omissions or alleged acts or omissions
arising out of its or their activities on or believed by such partner to be on
behalf of the partnership or in or believed by such partner to be in furtherance
of the interest of the partnership including but not limited to any judgment,
award, settlement, reasonable attorney's fees and other costs or expenses
incurred in connection with the defense of any actual or threatened action,
proceeding or claim if the acts, omissions or alleged acts or omissions upon
which such actual or threatened actions, proceedings or claims are based were
not performed or omitted fraudulently or in bad faith by the partner. Any such
indemnification shall only be from the assets of the partnership and may include
advances if approved by the Managing General Partner (even if it itself makes
the claim proposed to be indemnified).
II-2
Atwood Automotive, Inc. Each director and officer of the corporation shall
be indemnified by the corporation against all expenses in connection with any
claim (civil, criminal or otherwise, including appeals) in which he or she may
become involved due to his or her position with the corporation. Where such
cases proceed to final adjudication, indemnification shall not be allowed for
such directors found liable for negligence or misconduct in performance of
duties to the corporation. Neither a judgment of conviction or the entry of any
plea in a criminal case shall of itself be deemed an adjudication that such
individual was liable of negligence or misconduct if the individual acted in
good faith, for a purpose believed to be in the best interest of the corporation
and had no reasonable cause to believe the conduct was unlawful. The rights
contained in the bylaws of Atwood Automotive, Inc. shall not be deemed exclusive
of other rights to which the individual is entitled.
Atwood Mobile Products, Inc. The corporation shall 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, whether civil, criminal,
administrative, or investigative, by reason of the fact that such person is or
was a director or officer of the corporation, or is or was serving another
organization or entity (whether for profit or not) at the corporation's request.
Such indemnification shall be to the fullest extent, and shall be determined in
such manner, as now or hereafter permitted by law. The indemnification shall
continue as to an indemnitee who has ceased to be a director or officer and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators. No director of the corporation shall be personally liable to the
corporation or its shareholders for monetary damages for breach of fiduciary
duty as a director, except for liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its shareholders, (ii) for acts
or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (iii) under Section 8.65 of the Illinois Business
Corporation Act, or (iv) for any transaction from which the director derived an
improper personal benefit. The corporation may, by action of its board of
directors, indemnify its employees and agents to the same extent as the
indemnification of its directors and officers. Notwithstanding the foregoing,
the indemnification and advancement of expenses provided by or granted under the
Illinois Business Corporation Act shall not be considered exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled to under the articles of incorporation, by-laws, insurance, or a
contractual agreement.
Dura Automotive Systems of Indiana, Inc. and Universal Tool & Stamping
Company, Inc. A corporation may indemnify an individual who was or is a director
made party to a proceeding if the individual's conduct was in good faith and the
individual reasonably believed that the individual's conduct was in the
corporation's best interest or not opposed to its best interest. For
indemnification in a criminal proceeding, the individual must either: had
reasonable cause to believe the conduct was lawful or no reasonable cause to
believe it was unlawful. In respect to an employee benefit plan, a director's
conduct believed to be in the best interest of the participants and
beneficiaries of the plan is enough to exercise the indemnification protection.
The corporation shall indemnify a director who was wholly successful in the
defense of a proceeding to which the director was party because of his position
as director. A director may apply for indemnification from the court. The court
must determine if: (1) if the director is entitled to mandatory indemnification
as noted above or (2) the director is fairly and reasonably entitled to
indemnification in view of all relevant circumstances. The corporation shall
have the power to purchase and maintain insurance for above said person for
liability from actions regardless of the corporation's power to indemnify said
person under this provision. This provision shall not be deemed exclusive and
those seeking indemnification may be entitled to indemnification under any
articles of incorporation, by-laws, resolution by board of directors or
shareholders, or any other authorization by a majority vote of the voting
shares.
Mark I Molded Plastics of Tennessee, Inc. Subject to certain exceptions
described below, a corporation may indemnify an individual made a party to a
proceeding because the individual is or was a director against liability
incurred in the proceeding if: (i) the individual's conduct was in good faith,
and (ii) the individual reasonably believed: (a) In the case of conduct in the
individual's official capacity with the corporation, that the individual's
conduct was in its best interest; and (b) in all other cases, that the
individual's conduct was at least not opposed to its best interests; and (iii)
in the case of any criminal proceeding, the individual had no reasonable cause
to believe the individual's conduct was unlawful. A corporation may not
indemnify a
II-3
director under: (i) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
(ii) in connection with any other proceeding charging improper personal benefit
to the director, whether or not involving action in the director's official
capacity, in which the director was adjudged liable on the basis that personal
benefit was improperly received by the director. Unless limited by its charter,
a corporation shall indemnify a director who was wholly successful, on the
merits or otherwise, in the defense of any proceeding to which the director was
a party because the director is or was a director of the corporation against
reasonable expenses incurred by the director in connection with the proceeding.
A corporation may not indemnify a director unless authorized in the specific
case after a determination has been made that indemnification of the director is
permissible in the circumstances because the director has met the relevant
standard of conduct. The determination shall be made: (1) by the board of
directors by majority vote of a quorum consisting of directors not at the time
parties to the proceeding; (ii) if a quorum cannot be obtained under subdivision
(b)(i), by majority vote of a committee duly designated by the board of
directors (in which designation directors who are parties may participate),
consisting solely of two (2) or more directors not at the time parties to the
proceeding; (iii) by independent special legal counsel; or by the shareholders,
but shares owned by or voted under the control of directors who are at the time
parties to the proceeding may not be voted on the determination.
ITEM 21. EXHIBITS.
(a) The following exhibits are filed as part of the Registration Statement
or incorporated by reference herein:
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1 Purchase Agreement, dated April 4, 2002, among Dura
Operating Corp., Dura Automotive Systems, Inc., the
subsidiary guarantors named therein (the "Subsidiary
Guarantors") and Banc of America Securities LLC, J.P. Morgan
Securities Inc., Salomon Smith Barney Inc., Comerica
Securities Inc., and Scotia Capital (USA) Inc.
(collectively, the "Initial Purchasers").*
3.1 Restated Certificate of Incorporation of Dura Automotive
Systems, Inc. incorporated by reference to Exhibit 3.1 of
the Registration Statement on Form S-4 (Registration No.
33381213) (the "S-4").
3.2 Amendment and Restated By-laws of Dura Automotive Systems,
Inc. incorporated by reference to Exhibit 3.2 of the
Registration Statement on Form S-1 (Registration No.
333-06601) (the "S-1").
3.3 Certificate of Incorporation of Dura Operating Corp.
incorporated by reference to Exhibit 3.3 of the S-4.
3.4 By-laws of Dura Operating Corp. incorporated by reference to
Exhibit 3.4 of the S-4.
3.5 Certificate of Incorporation of Universal Tool and Stamping
Company, Inc. incorporated by reference to Exhibit 3.7 of
the S-4.
3.6 By-laws of Universal Tool & Stamping Inc. incorporated by
reference to Exhibit 3.8 of the S-4.
3.7 Certificate of Incorporation of Dura Automotive Systems
Cable Operations, Inc. incorporated by reference to Exhibit
3.9 of the S-4.
3.8 By-laws of Dura Automotive Systems Cable Operations, Inc.
incorporated by reference to Exhibit 3.10 of the S-4.
3.9 Certificate of Incorporation of Adwest Electronics, Inc.
incorporated by reference to Exhibit 3.11 of the S-4.
3.10 By-laws of Adwest Electronics, Inc. incorporated by
reference to Exhibit 3.12 of the S-4.
3.11 Certificate of Incorporation of Dura Automotive Systems of
Indiana, Inc. incorporated by reference to Exhibit 3.19 of
the S-4.
3.12 By-laws of Dura Automotive Systems of Indiana, Inc.
incorporated by reference to Exhibit 3.20 of the S-4.
3.13 Certificate of Incorporation of Atwood Automotive, Inc.
incorporated by reference to Exhibit 3.27 of the S-4.
II-4
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.14 By-laws of Atwood Automotive, Inc. incorporated by reference
to Exhibit 3.28 of the S-4.
3.15 Certificate of Incorporation of Mark I Molded Plastics of
Tennessee, Inc. incorporated by reference to Exhibit 3.31 of
the S-4.
3.16 By-laws of Mark I Molded Plastics of Tennessee, Inc.
incorporated by reference to Exhibit 3.32 of the 5-4.
3.17 Restated Articles of Incorporation of Atwood Mobile
Products, Inc. incorporated by reference to Exhibit 3.17 of
the Registration Statement on Form S-4 (Registration No.
333-65470-01) (the "2001 S-4").
3.18 By-laws of Atwood Mobile Products, Inc. incorporated by
reference to Exhibit 3.18 of the 2001 S-4.
3.19 Statement of Partnership Existence of Dura G.P.*
3.20 Partnership Agreement of Dura G.P.*
4.1 Indenture, dated April 18, 2002, between Dura Operating
Corp., Dura Automotive Systems, Inc., the Subsidiary
Guarantors and U.S. Bank Trust National Association, as
trustee, incorporated by reference to Exhibit 4.7 of the
S-4.
4.2 Supplemental Indenture, dated July 29, 1999 between Dura
Operating Corp., Dura Automotive Systems, Inc., the
Subsidiary Guarantors, and U.S. Bank Trust National
Association, as trustee, incorporated by reference to
Exhibit 4.1 of the report filed on Form 10-Q dated August
16, 1999.
4.3 Second Supplemental Indenture, dated June 22, 2001, between
Dura Operating Corp., Dura Automotive Systems, Inc., the
Guaranteeing Subsidiary, the Original Guarantors and U.S.
Bank Trust National Association, as trustee, incorporated by
reference to Exhibit 4.3 of the 2001 S-4.
4.4 Indenture, dated June 22, 2001, between Dura Operating
Corp., Dura Automotive Systems, Inc., the Guarantors and
U.S. Bank Trust National Association, as trustee,
incorporated by reference to Exhibit 4.4 of the 2001 S-4.
4.5 Supplemental Indenture, dated February 21, 2002, by and
among Dura G.P., Dura Operating Corp., Dura Automotive
Systems, Inc., the Subsidiary Guarantors and U.S. Bank Trust
National Association, as trustee, incorporated by reference
to Exhibit 10.4 of the report filed on Form 10-Q dated May
15, 2002.
4.6 Indenture, dated April 18, 2002 between Dura Operating
Corp., Dura Automotive Systems, Inc., the Subsidiary
Guarantors, and BNY Midwest Trust Company, as trustee.*
4.7 Registration Rights Agreement, dated April 18, 2002, between
the Initial Purchasers, Dura Operating Corp., Dura
Automotive Systems, Inc. and the Guarantors.*
5.1 Opinion of Kirkland & Ellis regarding the validity of the
securities offered hereby.*
8.1 Opinion of Kirkland & Ellis regarding federal income tax
considerations.*
12.1 Statement of Computation of Ratio of Earnings to Fixed
Charges.*
23.1 Consent of Arthur Andersen LLP, Minneapolis, Minnesota.*
23.2 Consents of Kirkland & Ellis (included in Exhibits 5.1 and
8.1).*
24.1 Powers of Attorney.*
25.1 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939 of BNY Midwest Trust Company.*
99.1 Form of Letter of Transmittal for the Notes.*
99.2 Form of Notice of Guaranteed Delivery for the Notes.*
99.3 Form of Tender Instructions for the Notes.*
- ------------
* Filed herewith.All exhibits have been previously filed.
(b) No financial statement schedules are required to be filed herewith
pursuant to this Item.
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 20, or
II-5
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a directors, officer
or controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
(b) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as a part of this
Registration Statement in reliance on Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(l) or (4) or 497(h)
under the Securities Act shall be deemed to be a part of this registration
statement as of the time it was declared effective.
(c) For purposes of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities Il-S offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(d) The undersigned hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the date of the registration statement through the date of
responding to the request.
(e) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
Company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(f) 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 l0(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant
to Rule 424(b) under the Securities Act of 1933 if, in the aggregate,
the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (f)(i) and (f)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(g) 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.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Operating
Corp. has duly caused this registration statement on Form S-4 to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Rochester Hills, State of Michigan, on the 22nd5th day of May,June, 2002.
DURA OPERATING CORP.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
Vice President, Chief Financial
Officer
and Assistant Secretary (principal
financial
and accounting officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
* Chairman of the Board
- -----------------------------------------------------
Scott D. Rued
* President and Chief Executive Officer
- ----------------------------------------------------- (principal executive officer); Director
Karl F. Storrie
/s/ DAVID R. BOVEE Vice President, Chief Financial Officer and
- ----------------------------------------------------- Assistant Secretary (principal financial and
David R. Bovee accounting officer)
* Director
- -----------------------------------------------------
Robert E. Brooker, Jr.
* Director
- -----------------------------------------------------
Jack K. Edwards
* Director
- -----------------------------------------------------
James O. Futterknecht, Jr.
* Director
- -----------------------------------------------------
J. Richard Jones
* Director
- -----------------------------------------------------
S.A. Johnson
* Director
- -----------------------------------------------------
Eric J. Rosen
* Director
- -----------------------------------------------------
Ralph R. Whitney, Jr.
By: /s/ DAVID R. BOVEE
-------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems, Inc. has duly caused this registration statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Rochester Hills, State of Michigan, on the 22nd5th day of May,June, 2002.
DURA AUTOMOTIVE SYSTEMS, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
Vice President, Chief Financial
Officer and
Assistant Secretary (principal
financial and
accounting officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
* Chairman of the Board
- -----------------------------------------------------
Scott D. Rued
* President and Chief Executive Officer
- ----------------------------------------------------- (principal executive officer); Director
Karl F. Storrie
/s/ DAVID R. BOVEE Vice President, Chief Financial Officer and
- ----------------------------------------------------- Assistant Secretary (principal financial and
David R. Bovee accounting officer)
* Director
- -----------------------------------------------------
Robert E. Brooker, Jr.
* Director
- -----------------------------------------------------
Jack K. Edwards
* Director
- -----------------------------------------------------
James O. Futterknecht, Jr.
* Director
- -----------------------------------------------------
J. Richard Jones
* Director
- -----------------------------------------------------
S. A. Johnson
* Director
- -----------------------------------------------------
Eric J. Rosen
* Director
- -----------------------------------------------------
Ralph R. Whitney, Jr.
By: /s/ DAVID R. BOVEE
-------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems Cable Operations, Inc. has duly caused this registration statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Rochester Hills, State of Michigan, on the 22nd5th day of
May,June, 2002.
DURA AUTOMOTIVE SYSTEMS CABLE
OPERATIONS, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
President, Chief Financial
Officer and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
/s/ DAVID R. BOVEE President, Chief Financial Officer and
- ----------------------------------------------------- Treasurer (principal executive officer)
David R. Bovee (principal financial accounting officer);
Director
* Assistant Secretary; Director
- -----------------------------------------------------
Brian Ghesquiere
By: /s/ DAVID R. BOVEE
------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura Automotive
Systems of Indiana, Inc. has duly caused this registration statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Rochester Hills, State of Michigan, on the 22nd5th day of May, 2002,June, 2002.
DURA AUTOMOTIVE SYSTEMS OF
INDIANA, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
President, Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
/s/ DAVID R. BOVEE President, Chief Financial Officer and
- ----------------------------------------------------- Treasurer (principal executive officer)
David R. Bovee (principal financial and accounting officer);
Director
* Assistant Secretary; Director
- -----------------------------------------------------
Brian Ghesquiere
By: /s/ DAVID R. BOVEE
------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Adwest
Electronics, Inc. has duly caused this registration statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Rochester Hills, State of Michigan, on the 22nd5th day of May,June, 2002.
ADWEST ELECTRONICS, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
President, Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
/s/ DAVID R. BOVEE President, Chief Financial Officer and
- ----------------------------------------------------- Treasurer (principal executive officer)
David R. Bovee (principal financial and accounting officer);
Director
* Assistant Secretary; Director
- -----------------------------------------------------
Brian Ghesquiere
By: /s/ DAVID R. BOVEE
-------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Atwood
Automotive, Inc. has duly caused this registration statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Rochester Hills, State of Michigan, on the 22nd5th day of May,June, 2002.
ATWOOD AUTOMOTIVE, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
President, Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
/s/ DAVID R. BOVEE President, Chief Financial Officer and
- ----------------------------------------------------- Treasurer (principal executive officer)
David R. Bovee (principal financial and accounting officer);
Director
* Assistant Secretary; Director
- -----------------------------------------------------
Brian Ghesquiere
By: /s/ DAVID R. BOVEE
-------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Atwood Mobile
Products, Inc. has duly caused this registration statement on Form S-4 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Rochester Hills, State of Michigan, on the 22nd5th day of May,June, 2002.
ATWOOD MOBILE PRODUCTS, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
President, Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
/s/ DAVID R. BOVEE President, Chief Financial Officer (principal
- ----------------------------------------------------- executive officer) (principal financial and
David R. Bovee accounting officer); Director
* Assistant Secretary; Director
- -----------------------------------------------------
Brian Ghesquiere
By: /s/ DAVID R. BOVEE
-------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Mark I Molded
Plastics of Tennessee, Inc. has duly caused this registration statement on Form
S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Rochester Hills, State of Michigan, on the 22nd5th day of May,June, 2002.
MARK I MOLDED PLASTICS OF
TENNESSEE, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
President, Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
/s/ DAVID R. BOVEE President, Chief Financial Officer and
- ----------------------------------------------------- Treasurer (principal executive officer)
David R. Bovee (principal financial and accounting officer);
Director
* Assistant Secretary; Director
- -----------------------------------------------------
Brian Ghesquiere
By: /s/ DAVID R. BOVEE
------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Universal Tool
& Stamping Company, Inc. has duly caused this registration statement on Form S-4
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Rochester Hills, State of Michigan, on the 22nd5th day of May,June, 2002.
UNIVERSAL TOOL & STAMPING
COMPANY, INC.
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
President, Chief Financial Officer
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the 22nd5th day of May,June, 2002.
SIGNATURE TITLE
--------- -----
/s/ DAVID R. BOVEE President, Chief Financial Officer and
- ----------------------------------------------------- Treasurer (principal executive officer)
David R. Bovee (principal financial and accounting officer);
Director
* Assistant Secretary; Director
- -----------------------------------------------------
Brian Ghesquiere
By: /s/ DAVID R. BOVEE
------------------------------------------------
David R. Bovee
Attorney in Fact
- ------------
* The undersigned by signing his or her name hereto, does sign and execute this
registration statement pursuant to the Power of Attorney executed by the
above-named officers and directors of the registrant and previously filed with
the Commission.
II-15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dura G.P. has
duly caused this registration statement on Form S-4 to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Rochester Hills,
State of Michigan, on the 22nd5th day of May,June, 2002.
DURA G.P.
By: Dura Operating Corp.
Its: Managing General Partner
By: /s/ DAVID R. BOVEE
------------------------------------
David R. Bovee
Vice President, Chief Financial
Officer and
Assistant Secretary (principal
financial and
accounting officer)
II-16
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
1.1 Purchase Agreement, dated April 4, 2002, among Dura
Operating Corp., Dura Automotive Systems, Inc., the
subsidiary guarantors named therein (the "Subsidiary
Guarantors") and Banc of America Securities LLC, J.P. Morgan
Securities Inc., Salomon Smith Barney Inc., Comerica
Securities Inc., and Scotia Capital (USA) Inc.
(collectively, the "Initial Purchasers").*
3.1 Restated Certificate of Incorporation of Dura Automotive
Systems, Inc. incorporated by reference to Exhibit 3.1 of
the Registration Statement on Form S-4 (Registration No.
33381213) (the "S-4").
3.2 Amendment and Restated By-laws of Dura Automotive Systems,
Inc. incorporated by reference to Exhibit 3.2 of the
Registration Statement on Form S-1 (Registration No.
333-06601) (the "S-1").
3.3 Certificate of Incorporation of Dura Operating Corp.
incorporated by reference to Exhibit 3.3 of the S-4.
3.4 By-laws of Dura Operating Corp. incorporated by reference to
Exhibit 3.4 of the S-4.
3.5 Certificate of Incorporation of Universal Tool and Stamping
Company, Inc. incorporated by reference to Exhibit 3.7 of
the S-4.
3.6 By-laws of Universal Tool & Stamping Inc. incorporated by
reference to Exhibit 3.8 of the S-4.
3.7 Certificate of Incorporation of Dura Automotive Systems
Cable Operations, Inc. incorporated by reference to Exhibit
3.9 of the S-4.
3.8 By-laws of Dura Automotive Systems Cable Operations, Inc.
incorporated by reference to Exhibit 3.10 of the S-4.
3.9 Certificate of Incorporation of Adwest Electronics, Inc.
incorporated by reference to Exhibit 3.11 of the S-4.
3.10 By-laws of Adwest Electronics, Inc. incorporated by
reference to Exhibit 3.12 of the S-4.
3.11 Certificate of Incorporation of Dura Automotive Systems of
Indiana, Inc. incorporated by reference to Exhibit 3.19 of
the S-4.
3.12 By-laws of Dura Automotive Systems of Indiana, Inc.
incorporated by reference to Exhibit 3.20 of the S-4.
3.13 Certificate of Incorporation of Atwood Automotive, Inc.
incorporated by reference to Exhibit 3.27 of the S-4.
3.14 By-laws of Atwood Automotive, Inc. incorporated by reference
to Exhibit 3.28 of the S-4.
3.15 Certificate of Incorporation of Mark I Molded Plastics of
Tennessee, Inc. incorporated by reference to Exhibit 3.31 of
the S-4.
3.16 By-laws of Mark I Molded Plastics of Tennessee, Inc.
incorporated by reference to Exhibit 3.32 of the 5-4.
3.17 Restated Articles of Incorporation of Atwood Mobile
Products, Inc. incorporated by reference to Exhibit 3.17 of
the Registration Statement on Form S-4 (Registration No.
333-65470-01) (the "2001 S-4").
3.18 By-laws of Atwood Mobile Products, Inc. incorporated by
reference to Exhibit 3.18 of the 2001 S-4.
3.19 Statement of Partnership Existence of Dura G.P.*
3.20 Partnership Agreement of Dura G.P.*
4.1 Indenture, dated April 18, 2002, between Dura Operating
Corp., Dura Automotive Systems, Inc., the Subsidiary
Guarantors and U.S. Bank Trust National Association, as
trustee, incorporated by reference to Exhibit 4.7 of the
S-4.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
4.2 Supplemental Indenture, dated July 29, 1999 between Dura
Operating Corp., Dura Automotive Systems, Inc., the
Subsidiary Guarantors, and U.S. Bank Trust National
Association, as trustee, incorporated by reference to
Exhibit 4.1 of the report filed on Form 10-Q dated August
16, 1999.
4.3 Second Supplemental Indenture, dated June 22, 2001, between
Dura Operating Corp., Dura Automotive Systems, Inc., the
Guaranteeing Subsidiary, the Original Guarantors and U.S.
Bank Trust National Association, as trustee, incorporated by
reference to Exhibit 4.3 of the 2001 S-4.
4.4 Indenture, dated June 22, 2001, between Dura Operating
Corp., Dura Automotive Systems, Inc., the Guarantors and
U.S. Bank Trust National Association, as trustee,
incorporated by reference to Exhibit 4.4 of the 2001 S-4.
4.5 Supplemental Indenture, dated as of February 21, 2002, by
and among Dura G.P., Dura Operating Corp., Dura Automotive
Systems, Inc., the Subsidiary Guarantors and U.S. Bank
National Association, as trustee, incorporated by reference
to Exhibit 10.4 of the report filed on Form 10-Q dated May
15, 2002.
4.6 Indenture, dated April 18, 2002 between Dura Operating
Corp., Dura Automotive Systems, Inc., the Subsidiary
Guarantors, and BNY Midwest Trust Company, as trustee.*
4.7 Registration Rights Agreement, dated April 18, 2002, between
the Initial Purchasers and Dura Operating Corp., Dura
Automotive Systems, Inc. and the Guarantors.*
5.1 Opinion of Kirkland & Ellis regarding the validity of the
securities offered hereby.*
8.1 Opinion of Kirkland & Ellis regarding federal income tax
considerations.*
12.1 Statement of Computation of Ratio of Earnings to Fixed
Charges.*
23.1 Consent of Arthur Andersen LLP, Minneapolis, Minnesota.*
23.2 Consents of Kirkland & Ellis (included in Exhibits 5.1 and
8.1).*
24.1 Powers of Attorney.*
25.1 Statement of Eligibility of Trustee on Form T-1 under the
Trust Indenture Act of 1939 of BNY Midwest Trust Company.*
99.1 Form of Letter of Transmittal for the Notes.*
99.2 Form of Notice of Guaranteed Delivery for the Notes.*
99.3 Form of Tender Instructions for the Notes.*
- ------------
* Filed herewith.All exhibits have been previously filed.