Our consolidated financial statements as of December 31, 2002 and 2003 and
for each of the three years in the period ended December 31, 2003 included in
this prospectus, have been audited by Deloitte & Touche LLP, independent
registered public accounting firm, as stated in their report appearing herein
and elsewhere in this prospectus (which report expresses an unqualified opinion
and includes an explanatory paragraph regarding the adoption of SFAS 142,
"Goodwill and Other Intangible Assets"), and have been included in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
CHANGE IN INDEPENDENT ACCOUNTANTS
In 2002, with the requisite approval of our board of directors, we
dismissed Arthur Andersen LLP as our independent public accountants. We had not
had any material disagreements with Arthur Andersen LLP during the last two
fiscal years preceding such dismissal. Arthur Andersen LLP has not reissued its
audit report with respect to our audited consolidated financial statements
prepared by it. As a result, you will probably not have an effective
-124-
remedy against Arthur Andersen LLP in connection with a material misstatement or
omission with respect to our consolidated financial statements that were audited
by Arthur Andersen LLP. Even if you were able to assert such a claim
successfully, as a result of its conviction and other lawsuits and claims,
Arthur Andersen LLP may not have sufficient assets to satisfy claims made by us
or by our investors that might arise under the federal securities or other laws
relating to any alleged material misstatement or omission with respect to our
audited consolidated financial statements audited by Arthur Andersen LLP.
-125-
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Registered Public Accounting Firm................... F-2
Consolidated Balance Sheets as of December 31, 2002 and 2003
(audited), June 30, 2004 (unaudited).................................... F-3
Consolidated Statements of Operations for the years ended December 2001,
2002 and 2003 (audited) and the three and six months ended June 30, 2003
and 2004 (unaudited)...................................................... F-4
Consolidated Statements of Cash Flows for the years ended December 2001,
2002 and 2003 (audited) and the six months ended June 30, 2003 and
2004 (unaudited)........................................................ F-5
Consolidated Statements of Changes in Shareholders' Equity and Other
Comprehensive Loss...................................................... F-6
Notes to Consolidated Financial Statements................................ F-8
F-1
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Transportation Technologies Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Transportation
Technologies Industries, Inc. and subsidiaries (the "Company") as of December
31, 2003 and 2002, and the related consolidated statements of operations, of
cash flows and of changes in stockholders' equity and other comprehensive loss
for each of the three years in the period ended December 31, 2003. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the United States
Public Company Accounting Oversight Board. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Transportation Technologies
Industries, Inc. and Subsidiaries as of December 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the three years in
the period ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.
As discussed in Note 5 to the financial statements, the Company changed its
method of accounting for goodwill and certain identifiable intangible assets in
2002.
/s/ DELOITTE & TOUCHE LLP
April 19, 2004
(July 6, 2004 as to Notes 8 and 23)
F-2
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
------------------------- -------------
2002 2003 2004
--------- ------------ -------------
(unaudited)
(in thousands except per share data)
Assets:
Current assets:
Cash and cash equivalents........................................... $ 14,085 $ -- $ --
Accounts receivable (net of allowance: 2002--$1,058;
2003--$767; 2004--$752 (unaudited))................................ 35,261 50,884 72,107
Inventories--net.................................................... 35,086 44,314 49,956
Deferred income tax assets.......................................... 8,932 6,692 10,631
Other current assets................................................ 8,888 9,111 6,125
------------ ------------ ------------
Total current assets............................................... 102,252 111,001 138,819
Property, plant and equipment--net.................................... 91,996 87,414 84,995
Deferred financing costs and other--net............................... 14,317 11,002 9,458
Goodwill.............................................................. 199,079 199,079 199,079
Intangible assets--net................................................ 42,899 42,248 42,012
------------ ------------ ------------
Total assets...................................................... $ 450,543 $ 450,744 $ 474,363
============ ============ ============
Liabilities and shareholders' equity:
Liabilities:
Accounts payable.................................................... $ 28,086 $ 40,124 $ 52,549
Accrued payroll and employee benefits............................... 12,720 12,022 15,532
Other current liabilities........................................... 26,223 25,867 21,821
Current maturities of long-term debt................................ 18,829 19,473 1,150
------------ ------------ ------------
Total current liabilities.......................................... 85,858 97,486 91,052
Senior long-term debt less current maturities......................... 183,811 171,228 224,663
Subordinated notes.................................................... 145,196 118,428 100,000
Deferred income tax liabilities....................................... 3,524 11,304 11,304
Other long-term liabilities........................................... 57,529 32,529 30,749
------------ ------------ ------------
Total liabilities.................................................. 475,918 430,975 457,768
Shareholders' equity:
Preferred stock--400,000 shares authorized--all series Senior Series E
preferred stock, par $0.01--25% cumulative;
41,475 and 46,141 issued and outstanding as of December 31,
2003 and June 30, 2004 (unaudited), respectively .................. -- -- --
Series A junior preferred stock, par $0.01--14.5% cumulative;
103,806 and 119,752 and 128,475 issued and outstanding as of
December 31, 2002 and 2003 and June 30, 2004 (unaudited),
respectively....................................................... 1 1 1
Series C and Series D junior preferred stock, both par
$0.01--14,000 and 42,000 issued and outstanding as of
December 31, 2002 and 2003 and June 30, 2004 (unaudited),
respectively....................................................... -- 1 1
Common stock, par $0.01--20,000,000 shares, authorized and
1,860,464 issued and outstanding shares as of December 31,
2002 and 2003 and June 30, 2004 (unaudited), respectively;......... 19 19 19
Paid-in capital..................................................... 128,362 185,950 200,852
Accumulated deficit................................................. (139,209) (153,477) (171,553)
Accumulated other comprehensive loss and other...................... (14,548) (12,725) (12,725)
------------ ------------ ------------
Total shareholders' equity......................................... (25,375) 19,769 16,595
------------ ------------ ------------
Total liabilities and shareholders' equity......................... $ 450,543 $ 450,744 $ 474,363
============ ============ ============
See notes to consolidated financial statements.
F-3
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, Three months ended June 30, Six months ended June 30,
----------------------------------- ----------------------------- -------------------------
2001 2002 2003 2003 2004 2003 2004
---------- ---------- ----------- ------------ ----------- --------- -------------
(in thousands except per (unaudited)
share data)
Net sales.................. $ 391,401 $ 411,598 $ 440,009 $ 112,550 $ 144,788 $ 217,306 $ 279,568
Cost of sales.............. 330,873 340,103 368,931 93,560 121,855 181,347 235,338
---------- ---------- ----------- ------------ ----------- --------- -------------
Gross profit............... 60,528 71,495 71,078 18,990 22,933 35,959 44,230
Selling, general, and
administrative expense... 43,701 36,673 38,896 9,947 10,456 19,786 21,148
Net (gain) loss on
disposition of
property, plant and
equipment................ -- -- (2,600) -- 2,203 -- 2,203
Reduction in estimated
environmental
remediation liability.... -- -- (6,636) -- -- -- --
Restructuring costs........ 19,573 -- -- -- -- -- --
---------- ---------- ----------- ------------ ----------- --------- -------------
Operating (loss) income.. (2,746) 34,822 41,418 9,043 10,274 16,173 20,879
Gain on sale of rail
assets................... (5,000) -- (10,000) -- -- -- --
Loss on debt
extinguishment........... 796 -- 1,803 -- 4,107 -- 10,655
Transaction related costs.. 1,592 -- -- -- 4,107 -- --
Interest income............ (597) (92) (496) (8) -- (390) --
Interest expense........... 45,640 42,306 40,362 9,805 8,093 20,368 16,182
---------- ---------- ----------- ------------ ----------- --------- -------------
Income (loss) before
income taxes............. (45,177) (7,392) 9,749 (754) (1,926) (3,805) (5,958)
Income tax expense
(benefit)................ (15,151) (1,679) 6,248 (246) (1,198) (1,399) (2,784)
---------- ---------- ----------- ------------ ----------- --------- -------------
Net (loss) income before
cumulative effect of
accounting change........ (30,026) (5,713) 3,501 (508) (728) (2,406) (3,174)
Cumulative effect of
accounting change-- net
of income taxes.......... -- (3,794) -- -- -- -- --
Net (loss) income.......... (30,026) (9,507) 3,501 (508) (728) (2,406) (3,174)
Preferred stock dividends.. 13,393 15,267 17,769 4,281 7,580 8,423 14,902
---------- ---------- ----------- ------------ ----------- --------- -------------
Net loss available to
common shareholders...... $ (43,419) $ (24,774) $ (14,268)$ (4,789) $ (8,308) $ (10,829) $ (18,076)
========= ========== =========== ============ ======== ========= =========
Weighted average common
shares
outstanding--basic and
diluted.................. 2,102 2,280 2,605 2,581 2,674 2,535 2,674
Net loss per common
share before
cumulative effect of
accounting change........ $ (20.66) $ (9.21) (5.48) (1.86) (3.11) (4.27) (6.76)
---------- ---------- ----------- ------------ ----------- --------- -------------
Cumulative effect of
accounting change per
common share............. -- (1.66) -- -- -- -- --
---------- ---------- ----------- ------------ ----------- --------- -------------
Net loss per common
share--basic and diluted.. $ (20.66) $ (10.87) $ (5.48)$ (1.86) $ (3.11) $ (4.27) $ (6.76)
========= ========== =========== ============ ======== ========= =========
See notes to consolidated financial statements.
F-4
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31, Six months ended June 30,
----------------------- -------------------------
2001 2002 2003 2003 2004
---- ---- ---- ---- ----
(in thousands) (unaudited)
Cash flows from operating
activities:
Net income (loss).................. $ (30,026) $ (9,507) $ 3,501 $ (2,406) $ (3,174)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and intangible
asset amortization............... 25,054 15,518 15,546 8,114 7,000
Deferred financing cost and
senior subordinated note
discount amortization............ 3,185 3,541 4,114 1,948 1,276
Senior subordinated note
interest paid in kind............ 10,211 10,979 7,894 5,772 --
Deferred income taxes............. (8,452) (837) 9,694 2,730 (2,468)
Gain on sale of rail assets....... (5,000) -- (10,000) -- --
Reduction in estimated
environmental remediation
liability........................ -- -- (6,636) -- --
Net (gain) loss on
disposition of property,
plant and equipment.............. -- -- (2,600) -- 2,203
Loss on extinguishment of
long-term debt................... 796 -- 1,803 -- 10,655
Cumulative change in
accounting--net................... -- 3,794 -- -- --
Restructuring charges............. 19,552 -- -- -- --
Changes in assets and
liabilities:
Accounts receivable............. 12,276 (302) (15,623) (16,315) (21,223)
Inventories..................... 5,611 (3,339) (9,228) (2,074) (5,642)
Accounts payable................ (7,640) 2,290 12,038 11,261 12,425
Accrued payroll and
employee benefits.............. (1,899) (1,221) (698) 1,764 3,510
Other assets and liabilities.... (1,372) 2,278 (1,959) (416) (7,953)
---------- ----------- ------------ ---------- -----------
Cash provided by operating 23,194 (10,378)
activities.................... 22,296 7,846 (3,391)
---------- ----------- ------------ ---------- -----------
Cash flows from investing
activities:
Capital expenditures............... (5,450) (10,242) (15,044) (8,828) (2,960)
Proceeds from the sale of
property, plant and equipment...... -- -- 6,651 -- --
Proceeds from the sale of rail
assets............................. 15,000 -- -- -- --
---------- ----------- ------------ ---------- -----------
Cash provided by investing
activities.................... 9,550 (10,242) (8,393) (8,828) (2,960)
---------- ----------- ------------ ---------- -----------
Cash flows from financing
activities:
Net borrowing under the
revolving credit facility.......... -- -- 12,000 -- 8,000
Proceeds from stock issuances........ 10,000 -- 1,000 -- --
Proceeds from new revolving
credit facility.................... 215,000
Payments of term loans............... (28,996) (13,984) (23,939) (8,808) (287)
Prepayment of existing revolving
credit facility.................... -- -- -- -- (187,601)
Prepayment of old subordinated
notes -- (20,926)
Payments of debt financing and
equity issuance costs.............. (923) (1,162) (2,599) -- (7,835)
---------- ----------- ------------ ---------- -----------
Cash used in financing
activities.................... (19,919) (15,146) (13,538) (8,808) 6,351
---------- ----------- ------------ ---------- -----------
Net change in cash and cash
equivalents........................ 11,927 (2,194) (14,085) (7,258) --
Cash and cash
equivalents--beginning of period.... 4,352 16,279 14,085 14,085 --
---------- ----------- ------------ ---------- -----------
Cash and cash equivalents--end of
period............................. $ 16,279 $ 14,085 $ -- $ 6,827 $ --
========== =========== ============ ========== ===========
Supplemental Information:
Cash paid for:
Interest........................... $ 32,003 $ 27,414 $ 24,229 $ 12,418 $ 13,371
Income taxes....................... 1,249 231 838 293 2,800
Supplemental disclosure of non-cash
financing activities:
Issuance of senior preferred
stock............................. $ -- $ -- $ 40,475 -- --
Extinguishment of senior
subordinated notes................ -- -- (39,140) -- --
Exchange of senior
subordinated notes................ -- -- -- (100,000) --
See notes to consolidated financial statements.
F-5
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SHAREHOLDERS' EQUITY AND OTHER COMPREHENSIVE LOSS
Series A Series C Series D Series E Total Total
Preferred Preferred Preferred Preferred Preferred Preferred PreferredPreferred Preferred Preferred
Stock Stock Stock Stock Stock Stock Stock Stock Stock Stock
(in thousands) Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
BALANCE--January 1, 2001--as
restated....................... 78,073 $ 1 -- $ -- -- $ -- -- $ -- 78,073 $ 1
Shares released from Rabbi
Trust.........................
Preferred stock in-kind
dividends..................... 11,951 -- 11,951 --
Preferred stock accretion......
Net loss.......................
Unrealized loss on cash
flow hedge--net of tax of
$913..........................
Common stock issuance..........
Warrants issued to
subordinated note holders.....
Minimum pension liability
increase--net of tax of
$2,431........................
Total comprehensive loss.......
-------- -------- ----- ------- -------- ------- -------- ------ ------- --------
BALANCE -- December 31, 2001.... 90,024 1 -- -- -- -- -- -- 90,024 1
Shares released from Rabbi
Trust.........................
Preferred stock in-kind
dividends..................... 13,782 -- 13,782 --
Preferred stock accretion......
Net loss.......................
Change in unrealized loss
on cash flow hedge--net of
tax of $1,179.................
Minimum pension liability
increase--net of tax of
$6,525........................
Total comprehensive loss.......
-------- -------- ----- ------- -------- ------- -------- ------ ------- --------
BALANCE--December 31, 2002...... 103,806 1 -- -- -- -- -- -- 103,806 1
Preferred Stock in-kind
dividends..................... 15,946 -- 15,946 --
Preferred stock accretion......
Net income.....................
Change in unrealized loss
on cash flow hedge--net of
tax of $353...................
Minimum pension liability
increase--net of tax of
$795..........................
Senior preferred stock
issuance...................... 14,000 -- 42,000 -- 41,475 1 97,475 1
Total comprehensive loss.......
-------- -------- ----- ------- -------- ------- -------- ------ ------- --------
BALANCE--December 31, 2003...... 119,752 1 14,000 -- 42,000 -- 41,475 1 217,227 2
Preferred stock in-kind
dividends (unaudited).......... 8,889 -- 5,281 -- 14,170 --
Preferred stock accretion
(unaudited)...................
Net income (unaudited).........
-------- -------- ----- ------- -------- ------- -------- ------ ------- --------
BALANCE--June 30, 2004
(unaudited).................... 128,641 $ 1 14,000 $ -- 42,000 $ -- 46,756 $ 1 231,397 $ 2
======== ======== ====== ======= ======== ======= ======== ====== ======= ========
F-6
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY AND OTHER COMPREHENSIVE LOSS
Accumulated
Common Common Other Other
Stock Stock Paid-in Accumulated Comprehensive Comprehensive
Shares Amount Capital Deficit (Loss) Income Loss Other Total
------ ------ ------- ------- ------------- ---- ----- -----
BALANCE--January 1, 2001--as restated...... 1,395 $ 14 $ 86,707 $ (71,016) $ -- $ -- $ (2,650) $ 13,056
Shares released from Rabbi Trust.......... 545 545
Preferred stock in-kind dividends......... 12,023 (12,023) --
Preferred stock accretion................. 1,370 (1,370) --
Net loss.................................. (30,026) (30,026)
Unrealized loss on cash flow
hedge--net of tax of $913................. (2,343) (2,343) (2,343)
Common stock issuance..................... 465 5 9,995 10,000
Warrants issued to subordinated
note holders............................. 3,000 3,000
--
Minimum pension liability
increase--net of tax of $2,431............ -- -- (3,803) (3,803) -- (3,803)
---------
Total comprehensive loss.................. (6,146)
------ ------- -------- --------- --------- --------- -------- --------
BALANCE -- December 31, 2001.............. 1,860 19 113,095 (114,435) (6,146) (2,105) (9,571)
Shares released from Rabbi Trust.......... 2,105 2,105
Preferred stock in-kind dividends......... 13,864 (13,864)
Preferred stock accretion................. 1,403 (1,403) --
Net loss.................................. (9,507) (9,507)
Change in unrealized loss on cash
flow hedge--net of tax of $1,179.......... 1,814 1,814 1,814
Minimum pension liability
increase--net of tax of $6,525............ -- -- (10,216) (10,216) -- (10,216)
---------
Total comprehensive loss.................. (8,402)
------ ------- -------- --------- --------- --------- -------- --------
BALANCE--December 31, 2002.................. 1,860 19 128,362 (139,209) (14,548) (25,375)
Preferred Stock in-kind dividends......... 16,332 (16,332) --
Preferred stock accretion................. 1,437 (1,437) --
Net income................................ 3,501 3,501
--
Change in unrealized loss on cash
flow hedge--net of tax of $353............ 529 529 529
--
Minimum pension liability
increase--net of tax of $795.............. 1,294 1,294 1,294
---------
Senior preferred stock issuance........... 39,819 -- -- 39,820
Total comprehensive loss.................. 1,823
------ ------- -------- --------- --------- --------- -------- --------
BALANCE--December 31, 2003.................. 1,860 19 185,950 (153,477) (12,725) -- 19,769
Preferred stock in-kind dividends
(unaudited).............................. 14,170 (14,170) --
Preferred stock accretion
(unaudited).............................. 732 (732) -- --
Net income (unaudited).................... (3,174) (3,174)
------ ------- -------- --------- --------- -------- --------
BALANCE--June 30, 2004 (unaudited) 1,860 $ 19 $ 200,852 $(171,553) $(12,725) $ -- $ 16,595
====== ======= ======== ========= ========= ======== ========
See notes to consolidated financial statements.
F-7
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business
Transportation Technologies Industries, Inc. and its subsidiaries (the
"Company"), formed in October 1991, is a leading manufacturer of wheel-end
components, body and chassis components, seating assemblies, steerable drive
axles, gear boxes and castings for the heavy- and medium-duty truck industry.
The Company's operations comprise one operating segment conducted by wholly
owned subsidiaries located in North America.
2. Summary of Significant Accounting Policies
Principles of Consolidation--The consolidated financial statements include
the accounts of Transportation Technologies Industries, Inc. and its wholly
owned subsidiaries. All significant intercompany transactions and accounts have
been eliminated in the accompanying consolidated financial statements.
Interim Financial Information--The quarterly financial statements presented
herein and the related quarterly information contained within the following
footnotes are unaudited. Certain information and footnote disclosures normally
included in the financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission. Although the
registrant believes that all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation have been made, interim periods
are not necessarily indicative of the results of operations for a full year.
Reclassifications--Certain reclassifications have been made to prior year
financial statements and the notes to conform with current year presentation.
Use of Estimates--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of net sales and
expenses during the reporting period. Actual results could differ from those
estimates. Significant estimates include the allowance for doubtful accounts,
reserve for inventory valuation, reserve for returns and allowances, valuation
of goodwill and intangible assets having indefinite lives, pension benefits and
depreciation and amortization.
Cash and Cash Equivalents--The Company considers all short-term investments
with original maturities of three months or less when acquired to be cash
equivalents.
Allowance for Doubtful Accounts--The Company calculates allowances for
estimated losses resulting from the inability of customers to make required
payments. The Company assesses the creditworthiness of its customers based on
multiple sources of information and analyzes such factors as historical bad debt
experience, publicly available information regarding customers and the inherent
credit risk related to them, current economic trends and changes in customer
payment terms or payment patterns. The Company's calculation is then reviewed by
management to assess whether, based on economic events, additional analyses are
required to appropriately estimate losses.
Inventories--Inventories are stated at the lower of cost or market, the
cost being determined principally by the first-in, first-out ("FIFO") method,
with the cost of the remaining inventories determined on the last-in, first-out
method ("LIFO"). The Company regularly evaluates the composition and age of
inventory to identify slow-moving, excess and obsolete inventories. The method
of establishing the reserve is based on evaluating historical experience as well
as estimates of future sales. The reserve is adjusted for any expected changes
to ensure that the identified slow-moving, excess and obsolete inventories are
stated at net realizable value. The provision for such amounts is reflected as a
component of cost of sales. Had all inventories been determined on the FIFO
method, inventories would have been higher than those reported at December 31,
2002 and 2003 by $1.5 million and $1.6 million, respectively.
F-8
Long-lived Assets--Long-lived assets, including property, plant and
equipment, and certain identifiable finite intangible assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. When indications of
impairment are present, the carrying values of the assets are evaluated in
relation to the operating performance and estimated future net cash flows of the
underlying business. An impairment in the carrying value of an asset is
recognized whenever anticipated future cash flows (undiscounted and without
interest charges) from an asset are estimated to be less than its carrying
value. If such review indicates that the carrying amount of long-lived assets is
not recoverable, the carrying amount of such assets is reduced to the estimated
fair value. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
Property, Plant and Equipment--Property, plant and equipment is recorded at
cost and depreciated based on the following estimated useful lives:
buildings--20 to 40 years; building improvements--10 to 40 years; and machinery
and equipment--3 to 12 years. Depreciation is computed using the straight-line
method. Maintenance and repairs are charged to expense as incurred, while major
replacements and improvements are capitalized. For tax purposes, assets are
depreciated using accelerated methods.
Goodwill and Other Intangibles--As of January 1, 2002, upon the adoption of
Statement of Financial Accounting Standards ("SFAS") No. 142, Goodwill and Other
Intangible Assets, goodwill and intangibles with an indefinite life are no
longer amortized. Prior to the adoption of SFAS No. 142, goodwill was amortized
on a straight-line method over 40 years, and intangibles with indefinite lives
were amortized from 13 to 40 years. The Company's finite-lived acquired
intangible assets are amortized on a straight-line method and include the
following: patents, 8 years; and non-compete agreements, 4 years. See Note 6
"Goodwill and Other Intangibles."
Deferred Financing Costs--Deferred financing costs of $17.6 million, $19.1
million and $20.1 million at December 31, 2001, 2002 and 2003, respectively,
relate to the issuance and subsequent amendments to the Company's Credit
Facility, Subordinated Notes and Industrial Revenue Bond debt. Deferred
financing costs are amortized using the effective interest rate method over the
term of the related debt. During 2001, 2002 and 2003, the Company recorded
amortization expense of $2.5 million, $2.7 million and $3.4 million as a
component of interest expense.
Income Taxes--Deferred tax liabilities and assets are recognized for the
expected future tax consequences of events that have been included in the
consolidated financial statements or tax returns. Deferred tax liabilities and
assets are determined based on the differences between the consolidated
financial statements and the tax basis of assets and liabilities, using tax
rates in effect for the years in which the differences are expected to reverse.
A valuation allowance is provided to offset any deferred tax assets if, based
upon the available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.
Environmental Reserves--The Company is subject to comprehensive and
frequently changing federal, state and local environmental laws and regulations,
and will incur additional capital and operating costs in the future to comply
with currently existing laws and regulations, new regulatory requirements
arising from recently enacted statutes and possible new statutory enactments. In
addition to environmental laws that regulate the Company's ongoing operations,
the Company is also party to environmental remediation liability. It is the
Company's policy to provide and accrue for the estimated cost of environmental
matters, on a non-discounted basis, when it is probable that a liability has
been incurred and the amount of the liability can be reasonably estimated. Such
provisions and accruals exclude claims for recoveries from insurance carriers.
Revenue Recognition--Revenue from product sales is recognized upon shipment
whereupon title passes and the Company has no further obligations to the
customer. Provisions for discounts and rebates to customers, and returns and
other adjustments are provided for in the same period the related sales are
recorded as a percentage of sales based upon management's best estimate of
future returns and other claims considering the Company's historical experience.
Allowances for estimated returns, discounts, customer rebate programs and
pricing adjustments are recognized as a reduction of sales when the related
sales are recorded. The allowance for these items is estimated based on various
market data, historical trends and information from the Company's customers.
Adjustments to the allowances are recorded quarterly based on current estimates
available.
F-9
Financial Instruments--All derivatives are recorded on the balance sheet at
fair value. Changes in derivative fair values are recognized in earnings as
offsets to the changes in fair value of related hedged assets, liabilities and
firm commitments. The ineffective portion, if any, of a hedging derivative's
change in fair value is immediately recognized in earnings.
Concentration of Risk--The Company's principal business is the
manufacturing and sale of wheel-end components, body and chassis components,
seating assemblies, steerable drive axles, gear boxes and castings for the
heavy- and medium-duty truck industry. Due to the nature of its operations, the
Company is subject to significant concentration risks relating to business with
four customers in 2003 and three customers in 2002. These customers accounted
for 10%, 19% and 10%; 14%, 19% and 11%; and 17%, 16% and 10% of accounts
receivable at December 31, 2001, 2002 and 2003, respectively. The Company also
has concentrations of labor subject to collective bargaining arrangements. The
percentage of the Company's labor force covered by a collective bargaining
agreement is 44% at December 31, 2003.
Accounting Pronouncements--On April 30, 2003, the Financial Accounting
Standards Board, or FASB, issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. The statement amends and
clarifies derivative instruments embedded in other contracts, and for hedging
activities under Statement 133. SFAS 149 was effective for us on a prospective
basis for contracts entered into or modified and for hedging relationships
designated for fiscal periods beginning after June 30, 2003. This statement had,
and is expected to have, no effect on our consolidated financial statements.
On May 15, 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity. This
statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability, even though it might previously have been
classified as equity. SFAS 150 was effective for financial instruments entered
into or modified after May 31, 2003, and applies to all financial instruments in
the first interim period beginning after June 15, 2003. This statement had, and
is expected to have, no effect on our consolidated financial statements.
On December 24, 2003, the FASB issued a revision to Interpretation 46 (FIN
46R) to clarify some of the provisions of FASB Interpretation No. 46,
Consolidation of Variable Interest Entities. The term "variable interest" is
defined in FIN 46 as "contractual, ownership or other pecuniary interest in an
entity that change with changes in the entity's net asset value." Variable
interests are investments or other interests that will absorb a portion of an
entity's expected losses if they occur or receive portions of the entity's
expected residual returns if they occur. FIN 46R defers the effective date of
FIN 46 for certain entities and makes several other changes to FIN 46. We do not
expect the recognition provisions of FIN 46 or FIN 46R to have an impact on our
business, results of operations or financial position. This statement had, and
is expected to have, no effect on our consolidated financial statements.
3. Detail of Certain Assets and Liabilities
The following details certain assets and liabilities as of December 31,
2002 and 2003:
2002 2003
---- ----
(in thousands)
Reserve for LIFO inventory valuation:
--------------------------------------------------------
Balance--beginning of year............................ $ 1,693 $ 1,490
Provision............................................. (203) 143
--------- ---------
Balance--end of year.................................. $ 1,490 $ 1,633
========= =========
Property, plant and equipment:
Land.................................................. $ 5,040 $ 3,717
Buildings and improvements............................ 32,615 33,053
Machinery and equipment............................... 131,395 145,055
Construction in progress.............................. 8,756 5,843
--------- ---------
177,806 187,668
Less accumulated depreciation......................... 85,810 100,254
--------- ---------
F-10
2002 2003
---- ----
(in thousands)
Property, plant and equipment--net...................... $ 91,996 $ 87,414
--------- ---------
Other current liabilities:
Accrued interest...................................... $ 7,997 $ 6,921
Accrued workers' compensation......................... 5,681 5,037
Current portion of post-retirement medical and pension
benefit reserve....................................... 2,984 4,988
Other................................................. 9,561 8,921
--------- ---------
Total other current liabilities......................... $ 26,223 $ 25,867
--------- ---------
Other long-term liabilities:
Post-retirement medical and pension benefit reserve... $ 34,358 $ 25,490
Environmental reserves................................ 9,514 2,850
Deferred gain on rail asset sale...................... 10,000 --
Other................................................. 3,657 4,189
--------- ---------
Total other long-term liabilities....................... $ 57,529 $ 32,529
========= =========
Inventories of the Company consist of the following :
December 31, December 31, June 30,
2002 2003 2004
---- ---- ----
(unaudited)
(in thousands)
Raw materials........... $ 10,754 $ 12,999 $ 13,923
Work-in-progress........ 9,651 12,740 13,254
Finished goods.......... 14,681 18,575 22,779
------------ ------------ ------------
$ 35,086 $ 44,314 $ 49,956
============ ============ ============
4. Valuation and Qualifying Accounts
The following tables summarize the changes in the Company's valuation and
qualifying accounts:
December 31, December 31, December 31,
2001 2002 2003
---- ---- ----
(in thousands)
Allowance for doubtful accounts
Balance--beginning of year.................................. $ 2,017 $ 1,657 $ 1,058
Provision for doubtful accounts............................. 176 41 442
Net write-offs............................................. (536) (640) (733)
------- ------- -------
Balance--end of year........................................ $ 1,657 $ 1,058 $ 767
Reserve for excess and obsolete inventory
Balance--beginning of year.................................. $ 1,343 $ 909 $ 531
Provision................................................... 1,087 (291) 100
Net write-offs............................................. (1,521) (87) (55)
------- ------- -------
Balance--end of year........................................ $ 909 $ 531 $ 576
======= ======= =======
5. Goodwill and Other Intangibles
Effective January 1, 2002, the Company adopted SFAS No. 142. This statement
changed the accounting for goodwill and indefinite-lived intangible assets from
an amortization approach to an impairment-only approach.
As a result of the adoption of SFAS No. 142, the Company recorded a
transitional goodwill impairment charge in 2002 of $6.2 million ($3.8 million
net of tax), presented as a cumulative effect of accounting change. Upon its
adoption of SFAS No. 142, the Company determined that it has five reporting
units. The $6.2 million impairment recognized related to the Company's Imperial
Group reporting unit due to the decline in its operational performance since its
acquisition in 1999.
F-11
The Company selected December 31 as its annual testing date. The SFAS No.
142 goodwill impairment model is a two-step process. First, it requires a
comparison of the book value of net assets to the fair value of the related
operations that have goodwill assigned to them. The Company estimates the fair
values of the related operations using discounted cash flows. The cash flow
forecasts are adjusted by an appropriate discount rate derived from the
Company's market capitalization plus a suitable control premium at the date of
evaluation. If the fair value is determined to be less than book value, a second
step is performed to compute the amount of the impairment. In this process, a
fair value for goodwill is estimated, based in part on the fair value of the
operations used in the first step, and is compared to its carrying value. The
shortfall of the fair value below carrying value represents the amount of
goodwill impairment. SFAS No. 142 requires goodwill to be tested for impairment
annually at the same time every year, and when an event occurs or circumstances
change such that it is reasonably possible that impairment may exist. As a
result of the Company's assessment as of December 31, 2003, no impairment was
indicated and no impairment triggers have been identified.
The Company has determined that certain of its trademarks and technology
have indefinite lives. The Company's determination has been made in accordance
with paragraph 11 of SFAS No. 142 based on its conclusion that at present there
are no legal, regulatory, contractual, competitive, economic or other factors
that limit the useful life of such assets. The amounts tied to trademarks are
primarily attributable to the Company's Gunite and Brillion brand names. Each
such name has been widely known and respected in its respective markets since
the early 1900s, and the Company believes that they will continue to be widely
known and respected indefinitely into the future. Gunite and Brillion products
are two of the leading North American names in their respective product
categories and the Company continues to expand the Gunite and Brillion product
portfolios. The Company may continue to renew their legal status at minimal
cost, and there are no contractual restrictions on use. Finally, the
competitiveness of such companies in their respective markets has been, and the
Company believes will continue to be, widely accepted with the Gunite and
Brillion names representing such competitiveness. The technology with an
indefinite life is primarily attributable to Gunite. The technology to
manufacture Gunite's wheel-end products has proven to be a leading technology
for between 10 to 20 years. Such technology is expected to continue to
contribute cash flows to the Company's business for an indefinite period of time
due to the related products' life cycles and market and competitive trends. Such
technology presently has no legal, regulatory or contractual limitations on use,
and is expected to continue to enable Gunite to retain a leading position in its
market.
In accordance with SFAS No. 142, the effect of the standard is reflected
prospectively. Supplemental disclosure as if the standard has been adopted as of
December 31, 2001 is as follows:
2001 2002 2003
---- ---- ----
(in thousands except per share data)
Reported net loss........................................ $ (43,419) $ (24,774) $ (14,268)
Add back: Goodwill and indefinite life intangible
assets amortization, net of tax........................ 4,591 -- --
Pro forma net loss....................................... (38,828) (24,774) (14,268)
Net loss per share--basic and diluted
Reported net loss........................................ (20.66) (9.21) (5.48)
----------------- ---------------- ---------------
Add back: Goodwill amortization, net of tax.............. 2.18 -- --
----------------- ---------------- ---------------
Adjusted net loss per share--basic and diluted............ $ (18.48) $ (9.21) $ (5.48)
================= ================ ===============
F-12
There were no changes in the carrying amounts of goodwill in the quarter
ended June 30, 2004.
Amortization expense recognized in connection with the Company's
finite-lived intangible assets was $1.8 million, $0.8 million and $0.5 million
for the years ended December 31, 2001, 2002 and 2003, respectively, and $0.3
million and $0.2 million for the six months ended June 30, 2003 and 2004
(unaudited), respectively.
The Company expects amortization expense to be approximately $0.5 million
in 2004 and $0.3 million for each of the next four years.
F-13
6. Debt
As of December 31, 2002 and 2003, and June 30, 2004 (unaudited) total debt
consisted of the following:
December 31, June 30,
2002 2003 2004
---- ---- ----
(unaudited)
(in thousands)
Credit facility:
Revolving loans......................................$ -- $ 12,000 $ 8,000
Term loans........................................... 199,540 175,601 214,713
Senior subordinated notes--net discount of $4,157,
$1,823 and $-- (unaudited), respectively............. 145,196 118,428 100,000
Industrial revenue bonds............................... 3,100 3,100 3,100
----------- ------------ -------------
Total debt............................................. 347,836 309,129 325,813
Less current maturities................................ 18,829 19,473 1,150
----------- ------------ -------------
Total long-term debt...................................$ 329,007 $ 289,656 $ 324,663
=========== ============ =============
Credit Facility--As of December 31, 2003, the Company's Credit Facility
consisted of (i) a $175.6 million term loan facility comprising a $45.5 million
tranche A term loan ("Tranche A") and a $130.1 million tranche B term loan
("Tranche B"); and (ii) a $42.5 million Revolving Facility.
Borrowings bear interest at a rate equal to, at the Company's option, the
following: Tranche A and Revolving Facility, LIBOR plus 3.75% or Prime Rate plus
2.50%, and Tranche B, LIBOR plus 4.25% or Prime Rate plus 3.00%. The Company
also pays the lenders a commitment fee equal to 0.75% per annum of the undrawn
portion of each lender's commitment. The LIBOR and Prime Rate margins are
subject to reductions, based upon certain changes in the leverage ratio. The
Tranche A and Tranche B term loans mature on March 9, 2006 and March 9, 2007,
respectively. The Revolving Facility expires on March 9, 2005. Availability
under the Revolving Facility at December 31, 2003, after consideration of $12.0
million drawn and $15.9 million in outstanding letters of credit, was $14.6
million.
Substantially all assets of the Company and its material subsidiaries, and
a pledge of the stock of all subsidiaries, secure the obligations of the Company
under the Credit Facility. Loans under the Term Facility are required to be
prepaid with 75% of excess cash flow (as defined in the Credit Facility and
subject to reductions, based upon certain changes in the leverage ratio), the
proceeds of certain equity issuances of the Company, and 100% of net cash
proceeds of certain asset sales and debt issuances of the Company.
The Credit Facility contains covenants placing restrictions on: (i)
indebtedness, (ii) the sale of assets, (iii) mergers, acquisitions and other
business combinations, (iv) minority investments and (v) the payment of cash
dividends to shareholders. The Credit Facility also contains financial covenants
requirements to maintain certain levels of interest and fixed charge coverage,
debt to earnings before interest, taxes, depreciation and amortization
("EBITDA") as defined by the agreement, and to limit capital expenditures. The
Company was in compliance with all covenants at December 31, 2003.
Senior Subordinated Notes--On December 19, 2003, the Company amended the
terms of its Senior Subordinated Notes to permit the Company to issue $41.5
million of new Senior Preferred Stock in exchange for $40.0 million of its
Senior Subordinated Notes, $0.5 million of related accrued interest and $1.0
million in cash. Concurrently, certain existing shareholders of the Company,
including members of management, acquired $40.0 million in face value of the
Senior Subordinated Notes. These Senior Subordinated Notes were extinguished on
the same date in exchange for $40.0 million of newly issued Senior Preferred
Stock (see Note 8). The exchange was valued at the estimated fair value of the
Senior Preferred Stock. The loss on the extinguishment of $1.8 million was
determined as the difference between the fair value of the Senior Preferred
Stock and the carrying value of the exchanged Senior Subordinated Notes and
related debt issuance costs.
The Senior Subordinated Notes bear interest at 15% payable semiannually in
arrears. In 2001, 2002 and 2003, 50% of such interest payments were mandatorily
paid through the issuance of additional senior subordinated
F-14
notes with the same terms. These amounts are included in the cash flow statement
as Senior Subordinated Note Interest Paid-in-Kind. The Senior Subordinated Notes
are unsecured senior subordinated obligations of the Company, subordinated in
right of payment to all existing and future senior indebtedness.
The Indenture under which the notes are issued contains covenants that
restrict, among other things: (i) the ability of the Company and its
subsidiaries to incur additional indebtedness, (ii) pay dividends or make
certain other restricted payments, (iii) merge or consolidate with any other
person, (iv) minority investments, and (v) other various covenants that are
customary for transactions of this type. The remaining notes mature on June 30,
2009. The Company was in compliance with all covenants as of December 31, 2003.
The Senior Subordinated Notes are carried net of discounts ($6.0 million at
inception) representing the value assigned to warrants to purchase the Company's
common stock that were issued to the issuers of the Senior Subordinated Notes.
Such discounts are being accreted to interest expense through the maturity date
of the notes.
Debt Agreement Amendments--On December 19, 2003, the terms of the Company's
Credit Facility and Senior Subordinated Notes were amended. The amendment to the
Credit Facility (i) adjusted the levels and calculations of financial covenants,
(ii) increased the Revolving Facility commitment from $35 million to $42.5
million, (iii) increased the Revolving Facility letter of credit sublimit to $20
million from $18 million, and (iv) permitted the Company to issue $41.5 million
of new senior preferred stock in exchange for $40.0 million of its Senior
Subordinated Notes, $0.5 million of related accrued interest and $1.0 million in
cash. All other terms remain substantially unchanged.
The amendment to the Senior Subordinated Notes also provided for mandatory
payment in-kind of 50% of the scheduled interest payment in 2004 and payment
in-kind of 50% of any additional scheduled interest payments if specified
leverage ratio levels are not achieved. All other terms remain substantially
unchanged.
Industrial Revenue Bonds--On April 1, 1999, the Company, through its wholly
owned seating system subsidiary, issued Industrial Revenue Bonds for $3.1
million which bear interest at a variable rate (1.5% as of December 31, 2003)
and can be redeemed by the Company at any time. The bonds are secured by a
letter of credit issued by the Company. The bonds have no amortization and
mature in 2014. The bonds are also subject to a weekly "put" provision by the
holders of the bonds. In the event that any or all of the bonds are put to the
Company under this provision, the Company would either refinance such bonds with
additional borrowings under the Revolving Credit Facility or use available cash
on hand.
As of December 31, 2003, long-term debt maturities were as follows:
As of December 31, 2002 and 2003, the recorded balance of the Subordinated
Notes includes the following components:
2002 2003
---- ----
(in thousands)
Principal balance................... $ 149,353 $ 120,926
Unamortized discount................ (4,157) (2,498)
-------------- --------------
Recorded balance.................... $ 145,196 $ 118,428
============== ==============
On March 16, 2004, the Company entered into a new Senior Credit Facility
consisting of a five-year $50.0 million first lien revolving credit facility, a
five-year $115.0 million first lien term loan facility and a five- year $100.0
million second lien term loan facility. The first lien term loan facility is to
be repaid on a quarterly basis with 1% of the principal amount being repaid in
each of the first four years, 1% of the principal amount being repaid in each of
the first three quarters of the fifth year and the remainder repaid upon
maturity at the end of the fifth year. The second lien term loan facility has no
amortization until maturity. Subject to certain exceptions, we will be required
to make mandatory repayments of and corresponding reductions under the first
lien term loan facility (and after the first lien facilities have been repaid in
full, the second lien term loan facility) with the proceeds from (1) asset
sales, (2) the issuance of debt securities, (3) proceeds of equity issuances,
(4) insurance and condemnation awards and (5) annual excess cash flow.
Borrowings bear interest at a rate equal to, at the Company's option, the
following: first lien revolver facility, LIBOR plus 3.00% or Prime Rate plus
2.00%, first lien term loan, LIBOR plus 3.75% or Prime Rate plus 2.75%, and
second lien term loan, LIBOR plus 7.0% or Prime Rate plus 6.0%, with a LIBOR
floor of 1.75%. The Company also pays the lenders a commitment fee equal to
0.50% per annum of the undrawn portion of each lender's commitment. The new
Senior Credit Facility imposes certain restrictions on us, including
restrictions on our ability to incur indebtedness, pay dividends, make
investments, engage in transactions with affiliates, sell assets, and merge or
consolidate. All obligations under our new Senior Credit Facility are jointly
and severally guaranteed by all of our direct and indirect domestic
subsidiaries.
As a result of entering into a new Senior Credit Facility, the requirement
to pay 50% of interest due on the Senior Subordinated Notes in 2004 by issuing
additional Senior Subordinated Notes was eliminated.
The Company used $20.9 million of the proceeds from the new credit facility
to repay Senior Subordinated Notes. The remaining Senior Subordinated Notes were
amended to extend the maturity until June 30, 2009. The Company paid $7.0
million in financing costs and recorded a $6.5 million non-cash debt
extinguishment in connection with the new Senior Credit Facility.
On May 21, 2004, we exchanged our outstanding $100.0 million aggregate
principal amount of old 15.0% senior subordinated notes due June 30, 2009 for
$100.0 million principal amount of new senior subordinated exchange notes, which
we refer to in this section as the new notes. The new notes are due on March 31,
2010. The new notes have an interest rate of 12.5% per annum and are guaranteed
on an unsecured, senior subordinated basis by each of our present and future
restricted subsidiaries (excluding our restricted subsidiaries that have neither
assets not shareholders' equity in excess of $1.0 million and all of our foreign
restricted subsidiaries). The new notes are subordinated to all of our senior
debt and contain cross-default provisions. The new notes are subject to optional
redemption by us, in whole or in part, prior to maturity at our option at a
premium declining to par in 2008. Upon the occurrence of a change in control, we
will be required to offer to repurchase the new notes at a price equal to 101%
of the principal amount thereof plus accrued interest. We will pay interest on
the new notes in cash twice a year on each March 31 and September 30, provided
that we may at our option pay up to one-half of the September 30, 2004 interest
payment through the issuance of additional notes. The new notes contain
covenants which restrict our ability, among other things, to incur debt and
liens, sell assets, merge with other companies, pay dividends or repurchase our
shares, make investments and enter into transactions with affiliates. The
Company was in compliance with all covenants on June 30, 2004. We did not
receive any proceeds as a result of the exchange. The Company paid $0.8 million
in financing costs and recorded a $4.1 million non-cash debt extinguishment
charge in connection with the new Senior Subordinated Notes.
F-16
7. Derivative Financial Instruments
The Company uses derivative financial instruments to manage interest rate
risk. The Company does not enter into derivative financial instruments for
trading purposes. The Company uses interest rate swap agreements and interest
rate caps as a part of its program to manage the fixed and floating interest
rate mix of the total debt portfolio and related overall cost of borrowing.
When entered into, these financial instruments are designated as hedges of
underlying exposures. When a high correlation between the hedging instrument and
the underlying exposure being hedged exists, fluctuations in the value of the
instruments are offset by changes in the value of the underlying exposures. As
the critical terms of the swaps are designed to match those of the underlying
hedged debt, the change in fair value of the swaps is offset by changes in fair
value recorded on the hedged debt and no hedge ineffectiveness was recorded in
connection with the Company's derivative instruments.
The estimated fair values of derivatives used to hedge or modify our risks
fluctuate over time. These fair value amounts should not be viewed in isolation,
but rather in relation to the fair values of the underlying hedging transactions
and to the overall reduction in our exposure to adverse fluctuations in interest
rates. The notional amounts of the derivative financial instruments do not
necessarily represent amounts exchanged by the parties and, therefore, are not a
direct measure of our exposure from our use of derivatives. The amounts
exchanged are calculated by reference to the notional amounts and by other terms
of the derivatives, such as interest rates. There were no derivative instruments
outstanding at December 31, 2003.
8. Shareholders' Equity
Common and Preferred Stock--The Company authorized 20,000,000 shares of
common stock (voting) and 1,000,000 shares of Preferred Stock.
On December 19, 2003, the Company issued $41.5 million of Series E Senior
Preferred Stock ("Senior Preferred Stock") to affiliates of Trimaran Capital
Partners and Albion Alliance, as well as to several members of our management,
with dividends that accrete at 25% per annum, in a private placement in exchange
for the retirement of $40.0 million of Senior Subordinated Notes, the payment of
$1.0 million in cash and $0.5 million of accrued interest due on the Senior
Subordinated Notes retired. The Company paid $1.7 million in fees related to the
issuance of the Preferred Stock that were recorded as an offset to Additional
Paid-in Capital. In December 2003, no compensation expense was recorded with the
issuance of the Senior Preferred Stock as it was determined that the enterprise
value of the Company was less than the total debt and preferred equity.
Upon issuance, there were 41,475 shares of Senior Preferred Stock,
representing $41.5 million in aggregate liquidation preference. The Senior
Preferred Stock ranks, as to dividends and liquidation, ahead of the Company's
Series A, Series C and Series D Preferred Stock and the common stock, and is
entitled to a liquidation preference of $1,000 per share. The Senior Preferred
Stock is entitled to cumulative annual dividends, in the form of additional
Senior Preferred Stock, that are payable semiannually in arrears at the rate of
25.0% per annum. The Senior Preferred Stock is redeemable by the Company at any
time. The holders of the Senior Preferred Stock are entitled to a declining
early redemption fee if the stock is redeemed prior to December 31, 2010. At
December 31, 2003, the Senior Preferred Stock had a liquidation value of $41.8
million (including accrued dividends to such date). As of June 30, 2004
(unaudited), the Senior Preferred Stock had a liquidation value of $47.1 million
(including accrued dividends to such date).
The Series A Preferred Stock was issued to affiliates of Trimaran Capital
Partners, Albion Alliance and Caravelle Investment Fund in March 2000 upon
completion of the acquisition of the Company by its current stockholders. Upon
issuance, there were 70,000 shares of Series A Junior Preferred Stock,
representing $70.0 million in aggregate liquidation preference. Since that time,
because dividends on the Series A Junior Preferred Stock have been paid in
additional shares rather than in cash, an additional 59,307 shares of Series A
Junior Preferred Stock have been issued. The Series A Junior Preferred Stock,
which ranks in parity with the Series C Preferred Stock and senior to the Series
D Preferred Stock and junior to the Senior Preferred Stock, is entitled to
cumulative annual dividends that are payable quarterly in arrears at the rate of
14.5% per annum in the form of additional Series A Junior Preferred Stock until
the March 15, 2005 payment, at which time the dividends become payable in cash
and, if not
F-17
paid in cash, they would be payable in additional Series A Junior Preferred
Stock but at the rate of 16.5%, and after three consecutive quarters of
non-payment in cash entitle the holders of the Series A Junior Preferred Stock
to members on the Board of Directors equal to the lesser of two members or 20%
of the Board. The Company has the option to redeem the Series A Preferred Stock
at any time. If redeemed prior to March 9, 2010, the holders of the Series A
Junior Preferred Stock are also entitled to a declining redemption fee. At
December 31, 2003, the Series A Junior Preferred Stock, which is entitled to a
liquidation preference of $1,000 per share, had a liquidation value of $120.8
million (including accrued dividends to such date). As of June 30, 2004
(unaudited), the Series A Junior Preferred Stock had a liquidation value of
$129.3 million (including accrued dividends to such date).
The Series C Preferred Stock was issued in December 2003 simultaneously
with the issuance of the Series E Preferred Stock and Series D Preferred Stock
and was issued to members of our management and certain other holders of the
Company's common stock for the payment of $0.10 per share (or an aggregate of
$140), and such members and holders agreed, as a condition to receiving the
Series C Preferred Stock, to transfer an aggregate 80,233 shares of common stock
to the holders of the Company's Series A Preferred Stock as consideration for
their consenting to permit the Series C Preferred Stock to rank pari passu with
the Series A Preferred Stock. There are 14,000 shares of Series C Preferred
Stock issued, representing a maximum $16.5 million in liquidation preference.
The Series D Preferred Stock was issued in December 2003 to the holders of the
Company's Series A Preferred Stock and an institutional warrantholder
simultaneously with the issuance of the Series E Preferred Stock and Series C
Preferred Stock for the payment of $0.10 per share. There are 42,000 shares of
Series D Preferred Stock issued, representing a maximum $49.5 million in
liquidation preference. The Series C Preferred Stock and the Series D Preferred
Stock are not entitled to dividends and are redeemable only in the event of
certain significant equity sale or debt refinancing transactions. At December
31, 2003, the Series C Preferred Stock and the Series D Preferred Stock had no
liquidation value. As of June 30, 2004 (unaudited), the Series C Preferred Stock
and Series D Preferred Stock had no liquidation value.
Rabbi Trust--In 2000, the Company established a Rabbi Trust to hold shares
due to certain members of management. In 2002, the then-remaining shares were
released and the liability was satisfied in full.
Warrants and Options--As of December 31, 2003, certain of the Company's
common and preferred shareholders held warrants to purchase 813,953 shares of
common stock at $0.01 per share.
In conjunction with the Company's going-private transaction in 2000, the
Company entered into an agreement with its old senior subordinated noteholders
that provided the holders warrants for up to 20% of the common equity if the
Company was unable to repay the old senior subordinated notes by specified
dates. These warrants for 348,837 shares of common stock at an exercise price of
$0.01 per share were issued to the purchasers in the third quarter of 2000
through the first quarter of 2001. These warrants are exercisable for a period
of ten years from the original issuance date. As disclosed in Note 9, the
warrants were valued at $6.0 million. This value was based on $30.0 million of
common equity value of the Company at the time of the going-private transaction.
On February 28, 2001, certain of its common shareholders invested $10.0
million in the Company in exchange for 465,116 shares of common stock, warrants
for 100,000 shares at a conversion price of $21.50 per share, and contingent
warrants for an additional 465,116 shares at $0.01 per share. The warrants for
100,000 shares were exercisable immediately and for a period of nine years. The
465,116 contingent warrants became exercisable ratably at the end of each of the
five fiscal quarters of the Company, beginning with the fiscal quarter ending
June 30, 2002, as the leverage improvement requirements were not met by the
Company. No value was attributed to the 465,116 contingent warrants because the
common stock of the Company was deemed to have minimal value during the period
over which these warrants were issued as the enterprise value of the Company was
insufficient to provide value to the common equity holders. This determination
was made because the enterprise value of the Company was less than the total
debt and preferred equity, which had liquidation preference to the common stock
of approximately $460.0 million. Therefore, no compensation expense was recorded
related to these contingent warrants as the warrants were deemed worthless.
At the date of issuance, the fair market value of the 100,000 warrants was
deemed to be less than the $21.50 per share exercise price as supported by the
$21.50 per share of cash consideration paid for the common stock as part of that
transaction.
F-18
As of December 31, 2003, a key member of management held options to
purchase 10,000 shares of the Company's common stock at a price equal to $10.75
per share.
Accumulated Other Comprehensive Loss--Accumulated other comprehensive loss
comprises the following as of December 31, 2002 and 2003:
Earnings per share are calculated as net income divided by the weighted
average number of common shares outstanding during the period. Weighted average
common shares of 2,102,260, 2,279,643 and 2,605,352 are used to calculate basic
earnings (loss) per share as of December 31, 2001, 2002 and 2003, respectively.
These weighted average common shares include weighted average common stock
equivalents issuable for minimal cash consideration of 316,978, 419,178 and
744,877 as of December 31, 2001, 2002 and 2003, respectively. Diluted earnings
(loss) per share are calculated by dividing net income by this weighted-average
number of common shares outstanding plus common stock equivalents outstanding
during the year. Common stock equivalents for 110,000 shares with exercise
prices ranging from $10.75 to $21.50 per share were outstanding at December 31,
2001, 2002 and 2003, respectively, but were not included in the computation of
diluted earnings per share. Common stock equivalents have been excluded from the
calculation of diluted weighted average shares outstanding as they would be
antidilutive.
The following table presents information necessary to calculate basic and
diluted earnings per share and common equivalent shares as of December 31, 2001,
2002 and 2003:
2001 2002 2003
---- ---- ----
(in thousands except
per share data)
Net income (loss)(1)............................ $ (30,026) $ (9,507) $ 3,501
Preferred stock dividends....................... (13,393) (15,267) (17,769)
----------------- --------------- ---------------
Net loss available to common shareholders....... $ (43,419) $ (24,774) $ (14,268)
================= =============== ===============
Average common shares and common stock
equivalent outstanding........................ 2,102 2,280 2,605
Loss per share--basic........................... $ (20.66) $ (10.87) $ (5.48)
================= =============== ===============
Dilutive stock equivalents...................... -- -- --
Average common and common equivalent shares
outstanding................................... 2,102 2,280 2,605
Loss per share--diluted......................... $ (20.66) $ (10.87) $ (5.48)
================= =============== ===============
(1) Net income (loss) is the same for purposes of calculated basic and diluted
earnings per share.
Weighted average common shares of 2,581,395, 2,674,418, 2,535,140 and
2,674,418 are used to calculate basic earnings (loss) per share for the three
and six months ended June 30, 2003 and 2004, (unaudited) respectively. These
weighted average common shares include weighted average common stock equivalents
issuable for minimal cash consideration of 720,930, 813,953, 674,675 and 813,953
for the three and six months ended June 30, 2003 and 2004, (unaudited)
respectively. The following table presents information necessary to calculate
basic and diluted earnings per share and common equivalent shares as of for the
three and six months end June 30, 2003 and 2004:
F-19
Three months ended June 30, Six months ended June 30,
2003 2004 2003 2004
---- ---- ---- ----
(unaudited)
(in thousands except
per share data)
Net loss(1)...................................... $ (508) $ (728) $ (2,406) $ (3,174)
Preferred stock dividends........................ 4,281 7,580 8,423 14,902
--------------- --------------- --------------- ---------------
Net loss available to common shareholders........ $ (4,789) $ (8,308) $ (10,829) $ (18,076)
=============== =============== =============== ===============
Average common shares and common stock
equivalent outstanding......................... 2,581 2,674 2,535 2,674
Loss per share--basic............................ $ (1.86) $ (3.11) $ (4.27) $ (6.76)
=============== =============== =============== ===============
Dilutive stock equivalents....................... -- -- -- --
Average common and common equivalent
shares outstanding............................. 2,581 2,674 2,535 2,674
--------------- --------------- --------------- ---------------
Loss per share--diluted.......................... $ (1.86) $ (3.11) $ (4.27) $ (6.76)
=============== =============== =============== ===============
(1) Net loss is the same for purposes of calculated basic and diluted earnings
per share.
10. Employee Benefit Plans
Pension Benefits--Certain of the Company's subsidiaries have qualified
defined benefit plans covering a majority of their employees. Company
contributions to the plans were made based upon the minimum amounts required
under the Employee Retirement Income Security Act. The plans' assets are held by
independent trustees and consist primarily of equity and fixed income
securities.
Certain of the pension obligations of the Company's former freight car
operations were retained by the Company. Benefits under such plans were frozen
as of the sale date.
Post-retirement Benefits--The Company provides health care benefits and
life insurance for certain salaried and hourly retired employees. Employees may
become eligible for health care benefits if they retire after attaining
specified age and service requirements. These benefits are subject to
deductibles, co-payment provisions and other limitations.
The Company does not offer any other significant post-retirement benefits.
The following table sets forth the plans' funded status.
For measurement purposes, a 10% annual rate of increase in the per capita
cost of covered health care benefits was assumed for 2004 decreasing gradually
to an ultimate rate of 5% by the year 2008 and remains at that level thereafter.
2002 2003
---- ----
Pension Post-retirement Pension Post-retirement
------- --------------- ------- ---------------
(in thousands)
Change in benefit obligation:
Benefit obligations--beginning of year......... $ 48,334 $ 17,828 $ 57,472 $ 29,804
Service cost................................. 461 316 521 499
Interest cost................................ 3,717 1,496 3,609 2,162
Plan amendment............................... -- -- 37 --
Plan curtailment............................. -- -- -- --
Actuarial loss............................... 8,667 11,952 1,312 6,528
Benefits paid................................ (3,704) (1,788) (3,553) (2,277)
----------- ---------- ----------- ----------
Benefit obligations--end of year............... $ 57,475 $ 29,804 $ 59,398 $ 36,716
=========== ========== =========== ==========
Change in plan assets:
Fair value of plan assets--beginning of 36,047
year........................................ $ 39,914 $ -- $ $ --
Actual return on plan assets................. (3,616) -- 7,036 --
Employer contribution........................ 3,453 1,788 6,491 2,277
Benefits paid................................ (3,704) (1,788) (3,553) (2,277)
----------- ---------- ----------- ----------
F-20
2002 2003
---- ----
Pension Post-retirement Pension Post-retirement
------- --------------- ------- ---------------
(in thousands)
Fair value of plan assets--end of year....... $ 36,047 $ -- $ 46,021 $ --
----------- ---------- ----------- ----------
Benefit obligations in excess of plan (13,376)
assets...................................... $ (21,425) $ (29,805) $ $ (36,716)
Unrecognized net loss.......................... 22,965 19,247 20,876 24,484
Unrecognized prior service cost................ 1,488 (5,359) 1,383 (4,870)
----------- ---------- ----------- ----------
Net amount recognized.......................... $ 3,028 $ (15,917) $ 8,883 $ (17,102)
=========== =========== =========== ==========
Recognized in balance sheet:
Accrued benefit obligation................... $ (21,425) $ (15,917) $ (13,376) $ (17,102)
Intangible asset............................. 1,488 -- 1,383 --
Accumulated other comprehensive loss......... 22,965 -- 20,876 --
----------- ---------- ----------- ----------
Net amount recognized.......................... $ 3,028 $ (15,917) $ 8,883 $ (17,102)
=========== =========== =========== ==========
Weighted-average assumptions:
Discount rate................................ 6.75% 6.75% 6.25% 6.25%
Expected return on plan assets............... 9.00% -- 9.00% --
Rate of compensation increase................ N/A N/A N/A N/A
Service cost................................... $ 461 $ 316 $ 521 $ 499
Interest cost.................................. 3,714 1,496 3,609 2,162
Expected return on plan assets................. (3,992) -- (4,202) --
Amortization of unrecognized net loss.......... 278 640 568 1,277
Prior service cost............................. 139 (490) 141 (490)
----------- ---------- ----------- ----------
Net periodic benefit cost...................... $ 600 $ 1,962 $ 637 $ 3,448
=========== =========== =========== ==========
F-21
Three months ended June 30,
2003 2004
---- ----
Pension Post-retirement Pension Post-retirement
----------------------- ------- ---------------
(unaudited)
(in thousands)
Service cost................................... $ 130 $ 116 $ 156 $ 162
Interest cost.................................. 902 504 898 559
Expected return on plan assets................. (1,051) -- (1,083) --
Amortization of unrecognized net loss.......... 142 298 235 350
Prior service cost............................. 35 (114) 36 (123)
----------------------------------------------- -- ----- -- -----
Net periodic benefit cost...................... $ 158 $ 804 $ 242 $ 948
========== ======= ========== =======
Six months ended June 30,
2003 2004
---- ----
Pension Post-retirement Pension Post-retirement
------- --------------- ------- ---------------
(unaudited)
(in thousands)
Service cost................................... $ 260 $ 232 $ 312 $ 324
Interest cost.................................. 1,804 1,008 1,796 1,118
Expected return on plan assets................. (2,102) -- (2,166) --
Amortization of unrecognized net loss.......... 284 596 470 700
Prior service cost............................. 70 (228) 72 (246)
----------------------------------------------- -- ----- -- -----
Net periodic benefit cost...................... $ 316 $ 1,608 $ 484 $ 1,896
========== ======= ========== =======
Assumed health care cost trend rates have a significant effect on the
amounts reported for the health care plans. A one percentage-point change in
assumed health care cost trend rates would have the following effects:
December 31, 2003
-----------------
1-Percentage-Point 1-Percentage-Point
-------------------------------------
Increase Decrease
-------- --------
(in thousands)
Effect on total of service and interest
cost.................................... $ 391 $ (352)
Effect on post-retirement benefit
obligation.............................. 3,938 (3,544)
Plan Assets--The Company's pension plan weighted average asset allocations
at December 31, 2002 and 2003, by asset category, are as follows:
The Company expects to contribute $4.8 million to its pension plans and to
pay $2.3 million in post-retirement benefits in 2004.
Defined Contribution Plans--Certain of the Company's subsidiaries also
maintain qualified, defined contribution plans which provide benefits to their
employees based on employee contributions, years of service, employee earnings
or certain subsidiary earnings, with discretionary contributions allowed.
Expenses relating to these plans were $2.0 million for the year ended December
31, 2001 and $2.5 million each for the years ended December 31, 2002 and 2003.
F-22
11. Income Taxes
The provision for income taxes includes current and deferred components as
follows for the years ended December 31, 2001, 2002 and 2003:
In the consolidated balance sheets, these deferred benefits and deferred
obligations are classified as deferred income tax assets or deferred income tax
liabilities, based on the classification of the related liability or asset for
financial reporting purposes. A deferred tax asset or liability that is not
related to an asset or liability for financial reporting, including deferred tax
assets related to carryforwards, is classified according to the expected
reversal date
F-23
of the temporary difference as of the end of the year. Tax credit carryforwards,
which exist at December 31, 2003, consist of certain federal and state tax net
operating loss and credit carryforwards.
As of December 31, 2003, the Company has net operating loss carryforwards
of $26.3 million available to offset future taxable income, resulting in a
deferred tax asset of $9.3 million. Additionally, the Company has approximately
$47.2 million of available state net operating losses ("NOLs") available to
offset future taxable income, resulting in a deferred tax benefit of $4.6
million. However, due to the uncertainty of the Company's ability to utilize the
state NOLs in the future, a valuation reserve of $3.5 million has been booked
against this deferred tax asset.
IRC Section 382 imposes a limitation on the future utilization of NOLs if a
greater than 50% ownership change in the Company occurs. If such a change were
to occur in the future, an annual limitation would be imposed on the utilization
of the NOLs based on the value of the Company at the date of the ownership
change times the long-term tax-exempt rate at the time of the change. The
federal NOLs are scheduled to expire in the tax years ending December 31, 2020
through December 31, 2022. The state NOLs are scheduled to expire in the tax
years ending December 31, 2010 through December 31, 2022.
12. Product Warranties
The Company provides product warranties in conjunction with certain product
sales. Generally, sales are accompanied by a 1- to 5-year standard warranty.
These warranties cover factors such as non-conformance to specifications and
defects in material and workmanship.
Estimated standard warranty costs are recorded in the period in which the
related product sales occur. The warranty liability recorded at each balance
sheet date reflects the estimated number of months of warranty coverage
outstanding for products delivered times the average of historical monthly
warranty payments, as well as additional amounts for certain major warranty
issues that exceed a normal claims level. The following table summarizes product
warranty activity recorded as of December 31, 2002 and 2003.
December 31
-----------
2002 2003
---- ----
(in thousands)
Balance--beginning of year................... $ 851 $ 917
Provision for new warranties............... 1,296 1,131
Payments................................... (1,230) (1,205)
------- -------
Balance--end of year......................... $ 917 $ 843
========= =========
13. Environmental Matters
The Company is subject to comprehensive and frequently changing federal,
state and local environmental laws and regulations, and will incur additional
capital and operating costs in the future to comply with currently existing laws
and regulations, new regulatory requirements arising from recently enacted
statutes and possible new statutory enactments. In addition to environmental
laws that regulate the Company's subsidiaries' ongoing operations, the
subsidiaries also are subject to environmental remediation liability. Under the
federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA") and analogous state laws, the Company's subsidiaries may be liable as
a result of the release or threatened release of hazardous substances into the
environment. The Company's subsidiaries are currently involved in several
matters relating to the investigation and/or remediation of locations where the
subsidiaries have arranged for the disposal of foundry and other wastes. Such
matters include certain situations in which the Company has been named or is
believed to be a Potentially Responsible Party ("PRP") in the contamination of
the sites (primarily nine off-site locations related to the Company's wheel-end
and truck and industrial components operations). Additionally, environmental
remediation may be required at certain of the Company's facilities at which soil
and groundwater contamination has been identified.
The Company believes that it has valid claims for contractual
indemnification against prior owners for certain of the investigatory and
remedial costs at many of the above-mentioned sites. As a result of a private
party set-
F-24
tlement of litigation with a prior owner of the Company's wheel end subsidiary,
the Company will not be responsible (through a contractual undertaking by the
former owner) for certain liabilities and costs resulting from the wheel-end
subsidiary's waste disposal prior to September 1987 at certain of such sites.
The Company has been notified, however, by certain other contractual indemnitors
that they will not honor future claims for indemnification. Accordingly, the
Company has pursued indemnification claims but there is no assurance that even
if successful in any such claims, any judgments against the indemnitors will
ultimately be recoverable. In addition, the Company believes it is likely that
it has incurred some liability at various sites for activities and disposal
following acquisition that would not in any event be covered by indemnification
by prior owners.
From 1997 through 2003, the Company's environmental reserves decreased from
approximately $11.0 million to $9.5 million to reflect primarily legal and
remedial investigation costs during such periods. Due to events related to the
above-mentioned sites, including inactivity, the anticipated closure of certain
sites and consent decrees obtained at certain sites, the Company undertook in
early 2003 a review, with assistance from third party specialists, of its
exposure relating to these sites. The review indicated that there was a
substantial reduction in its exposure at these sites due primarily to the
inactive status or closure of many of the sites and consent decrees obtained at
certain of these sites. Accordingly, the Company reduced its reserves relating
to the sites to $3.0 million. The Company's 2003 expenditures relating to
environmental compliance and remedial investigation costs were not significant.
The Company currently anticipates spending approximately $0.1 million per
year in 2004 through 2008 for monitoring the various environmental sites
associated with the environmental reserve, including attorney and consultant
costs for strategic planning and negotiations with regulators and other PRPs,
and payment of remedial investigation costs. Based on all of the information
presently available to it, the Company believes that its environmental reserves
will be adequate to cover the future costs related to the sites associated with
the environmental reserves, and that any additional costs will not have a
material adverse effect on the financial condition, results of operations or
cash flows of the Company. However, the discovery of additional sites, the
modification of existing laws or regulations or the imposition of joint and
several liability under CERCLA could result in such a material adverse effect.
14. Commitments and Contingencies
The Company leases certain real property and equipment under long-term
leases expiring at various dates through 2015. The leases generally contain
specific renewal or purchase options at the then fair market value. Future
minimum lease payments at December 31, 2003 are as follows:
While the Company is liable for maintenance, insurance and similar costs
under most of its leases, such costs are not included in the future minimum
lease payments. Total rental expense for the year was $5.5 million.
On October 30, 2003, the Company sold the real property of its Emeryville,
California plant for $6.5 million and moved the operations into a leased
facility in the area. The transaction resulted in a net gain of $3.7 million and
a mandatory prepayment of senior credit facility term loans of $5.3 million.
The Company is involved in certain threatened and pending legal proceedings
including workers' compensation claims arising out of the conduct of its
businesses. In the opinion of management, the ultimate outcome of
F-25
such legal proceedings will not have a material adverse effect on the financial
position, results of operations or cash flows of the Company.
15. Operating Segment and Concentration of Sales
The Company consists of five operating units that manufacture and sell a
diversified product mix to the heavy- and medium-duty truck industry within
North America. These operating units are aggregated into a single reporting
segment as they have similar economic characteristics, products and production
processes, class of customer and distribution methods. The Company believes this
segmentation is appropriate based upon management's operating decisions and
performance assessment.
Major Customers--The Company's net sales in the aggregate to its four
largest customers during 2001, 2002 and 2003 were 54.0%, 58.2% and 58.8% of
total net sales in these periods, respectively. One customer accounted for
18.1%, 23.3% and 22.5% of total net sales in 2001, 2002 and 2003, respectively.
Product Information--Net Sales
Net sales for the Company's key products and brands were as follows for the
years ended December 31, 2001, 2002 and 2003, respectively:
2001 2002 2003
---- ---- ----
(in thousands)
Wheel-end components and assemblies.................................. $ 164,399 $ 172,948 $ 198,627
Truck body and chassis parts......................................... 66,459 87,438 88,607
Industrial components and farm implements............................ 75,217 73,627 79,003
Seating assemblies................................................... 42,205 43,649 43,877
Other truck components............................................... 43,121 33,936 29,895
------ ------ ------
Total.............................................................. $ 391,401 $ 411,598 $ 440,009
=========== =========== ===========
Net sales for the Company's key products and brands were as follows for the
three and six months ended June 30, 2003 and 2004, respectively:
Three months ended June 30, Six months ended June 30,
2003 2004 2003 2004
---- ---- ---- ----
(unaudited)
(in thousands)
Wheel-end components and assemblies................... $ 58,348 $ 72,074 $ 110,668 $ 139,192
Truck body and chassis parts.......................... 20,460 29,194 40,307 55,553
Industrial components and farm implements............. 20,032 25,034 40,922 49,308
Seating assemblies.................................... 11,425 14,629 20,950 28,338
Other truck components................................ 2,285 3,857 4,459 7,177
----- ----- ----- -----
Total............................................... $ 112,550 $ 144,788 $ 217,306 $ 279,568
=========== =========== =========== ===========
16. Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash in banks,
receivables, accounts payable, debt and interest rate swaps.
The carrying amounts for cash and cash equivalents, receivables and
accounts payable approximate fair value due to the short-term nature of these
instruments. The fair value of senior debt approximates $323.6 million. There is
no ready market for the Company's Senior Subordinated Notes. The Company
believes the fair market value of such notes approximates the face value.
The fair values of interest-rate swap agreements are the estimated amounts
that the Company would pay to terminate the agreements at the reporting date,
taking into account current interest rates and the market expectation for future
interest rates. The Company has entered into interest-rate swap agreements in
order to manage its expo-
F-26
sure to interest rate risk. These interest rate swaps were designated as cash
flow hedges of the Company's variable rate debt. During 2001, 2002, and 2003 no
ineffectiveness was recognized in the statement of operations on these hedges.
As of December 31, 2003, there were no outstanding cash flow hedges.
17. Restructuring Charges and Transaction Related Costs
During 2001, the Company recorded $19.6 million of restructuring charges,
which included $18.9 million of non-cash fixed asset impairment charges and $0.7
million of employee separation expense. The costs related primarily to the
closure of the Company's Erie, Pennsylvania iron casting and machining operation
to reduce the overall fixed costs of production.
Also during 2001, the Company recorded $1.6 million for underwriting fees
associated with the issuance of $10 million in common stock. In 2001, the
Company recorded a loss on debt extinguishment of $0.8 million for the non-cash
write-off of deferred financing costs related to the prepayment of $25.0 million
of its credit facility term loans.
18. Gain on Sale of Rail Assets
In 2001, the Company sold its minority equity interest in its former rail
car operations ("Rail Assets") to certain of its common shareholders for $15.0
million. As a part of the sale of the Rail Assets, the purchasers obtained the
unconditional right to sell up to two-thirds of such assets back to the Company
through December 31, 2003, in exchange for up to 465,116 shares of common stock
at $21.50 per share and up to 465,116 warrants to purchase common stock at $0.01
per share (the "Put Rights"). As a result of the contingent nature of the Rail
Asset sale, the Company had deferred recognition of two-thirds of the related
gain until the Put Rights expired in December 2003, resulting in recognition of
the remaining $10 million gain during the year ended December 31, 2003.
19. Restatement of Prior Period
Subsequent to the issuance of the Company's 2001 financial statements, the
Company's management determined that the estimated liability for workers'
compensation claims did not include the full development of incurred claims or
adequate amounts for incurred but not reported claims. As a result, the December
31, 2000 accumulated deficit amount has been increased by $1.4 million (net of
tax of $913) for inclusion of an estimated liability for both full development
of incurred claims and incurred but not reported claims.
20. Quarterly Results of Operations (unaudited)
Unaudited quarterly financial data is as follows:
Second Fourth
First Quarter Quarter Third Quarter Quarter
------------- ------- ------------- -------
(in thousands except per share data)
2001
Net sales....................................... $ 109,894 $ 101,717 $ 92,603 $ 87,187
Gross profit.................................... 14,278 13,464 16,153 16,633
Net income available to common shareholders..... (6,707) (20,298) (6,832) (9,582)
Diluted earnings (loss) per share............... $ (3.78) $ (9.19) $ (3.09) $ (4.34)
2002
Net sales....................................... $ 99,389 $ 110,252 $ 109,698 $ 92,259
Gross profit.................................... 17,661 21,495 19,423 12,916
Net income available to common shareholders..... (8,189) (3,060) (3,840) (9,685)
Diluted earnings (loss) per share............... $ (3.71) $ (1.39) $ (1.67) $ (4.04)
2003
Net sales....................................... $ 104,756 $ 112,550 $ 111,002 $ 111,701
Gross profit.................................... 16,969 18,997 18,027 17,085
Net income available to common shareholders..... (6,040) (4,789) (5,636) 2,197
Diluted earnings (loss) per share............... $ (2.43) $ (1.86) $ (2.11) $ (0.82)
F-27
21. Related Party Transactions
The Company is a party to a monitoring agreement with Transportation
Investment Partners, L.L.C., Caravelle Advisors Investment Fund, L.L.C., Albion
Alliance Mezzanine Fund, L.P. and Albion Alliance Mezzanine Fund II, L.P. (the
"Monitors"), under which the Monitors have agreed to provide the Company with
ongoing monitoring services in exchange for an annual aggregate monitoring fee
of up to $1.25 million (the "original monitoring fee"). The Company has also
agreed to pay the Monitors annual aggregate director and observer fees of up to
$0.3 million in consideration for the Monitors (and certain of their affiliates)
providing their nominee and/or observers to our board of directors and have
further agreed to pay Trimaran Fund Management, L.L.C. and Albion Alliance, LLC
an additional aggregate annual monitoring fee of $0.3 million (the "additional
monitoring fee"). As of December 31, 2003, there were $0.3 million of accrued
but unpaid fees owed under the monitoring agreement. As of June 30, 2004, there
were $0.2 million of accrued but unpaid fees owed under the monitoring
agreement.
The fees under the monitoring agreement are permitted to be paid only to
the extent permitted under the Company's senior credit facilities and any other
financing agreement the Company has entered into. Notwithstanding the foregoing,
the monitoring and director fees described above will accrue and be earned on a
daily basis and will be payable (including all missed payments) on the first
date that such a payment is permitted under the senior credit facilities or
applicable financing agreement. The monitoring agreement provides that, upon an
initial public offering of the Company's common stock, the monitoring agreement
will terminate provided that the Company pays to the Monitors a $3.5 million
cash termination fee.
Through TMB Industries ("TMB"), members of management, including the
executive officers, hold ownership interests in, and in certain instances are
directors of, privately held companies. These privately held companies pay
management fees to TMB, portions of which are distributed to certain executive
officers. The Company provides certain administrative services and corporate
facilities to TMB and such companies and is reimbursed for the related costs.
These costs are recorded as offsets to selling, general and administrative
expense. The Company received reimbursements totaling approximately $0.3 million
for 2003. The Company's principal stockholders, executive officers and
directors, as a group, will be able to influence or control substantially all
matters requiring approval by its stockholders, including, without limitation,
the election of directors and mergers, consolidations and sales of all or
substantially all of the Company's assets.
22. Loan to Named Executive Officer
On June 10, 1999, pursuant a restated promissory note, the Company lent one
of its executive officers $100,000 to be used towards the purchase of his
residence. Interest of $6,000 relating to this loan has been forgiven each year
and is recognized as additional compensation expense.
23. Subsequent Event
In June 2004, the Company entered into negotiations with a buyer for the
sale of certain of its assets held for sale at its Erie, Pennsylvania location
at a price below carrying value. To comply with the requirements of SFAS No.
144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company
will record an impairment loss of approximately $1.6 million to $2.2 million in
the quarter ending June 30, 2004 based upon the anticipated proceeds to be
received from the buyer.
24. Subsequent Event (Unaudited)
On May 4, 2004, the Company filed a registration statement relating to the
initial public offering of the Company's common stock. On August 11, 2004, the
Company announced the postponement of the initial public offering. The Company's
registration with the Securities and Exchange Commission has not been withdrawn
and the Company expects to continue to evaluate the timing of that offering. The
consummation of the proposed initial public offering is subject to market and
other conditions beyond the Company's control. If the proposed initial public
offering is not consummated by December 31, 2004, costs of approximately $3.5
million, capitalized in anticipation of the offering, will be written off in the
fourth quarter of 2004.
F-28
On August 15, 2004, the Company's President, Andrew M. Weller, succeeded
Thomas M. Begel as the Company's Chief Executive Officer. This event resulted in
the termination of Mr. Begel's employment agreement and entitled him to a
payment of $2.7 million in addition to certain continuing benefits, including
retiree medical coverage.
F-29
$100,000,000
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
Offer to Exchange
$100,000,000 Aggregate Principal Amount of 12 1/2%
Senior Subordinated Notes due 2010
for
Transportation Technologies Industries, Inc.
$100,000,000 Aggregate Principal Amount of 12 1/2%
Senior Subordinated Notes due 2010
Registered Under the Securities Act of 1933, as Amended.
PROSPECTUS
, 2004
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 unauthorized information. This prospectus is not an offer to sell or buy
any securities in any jurisdiction where it is unlawful. The information in this
prospectus is current as of the date hereof.
Until , 2004, all dealers that effect transactions in the exchange notes,
whether or not participating in this distribution, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS.
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides that a
corporation may 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 (other than
an action by or in the right of the corporation) by reason of the fact that he
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, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if the person acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interest of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; and
further that a corporation may indemnify such person against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of action or suit by or in the right of the
corporation, if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper. To the extent that a present or former director or officer of
a corporation has been successful on the merits or otherwise in defense of any
such action describing in this paragraph, suit or proceeding, or in defense of
any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by such
person in connection therewith.
Section 102(b)(7) of the Delaware General Corporation Law allows a
corporation to include in its certificate of incorporation a provision to
eliminate or limit the personal liability of a director of a corporation to the
corporation or to any of its stockholders for monetary damages for a breach of
fiduciary duty as a director, except in the case where the director (i) breaches
his duty of loyalty to the corporation or its stockholders, (ii) fails to act in
good faith, engages in intentional misconduct or knowingly violates a law, (iii)
authorizes the unlawful payment of a dividend or approves a stock purchase or
redemption in violation of Section 174 of the Delaware General Corporation Law
or (iv) obtains an improper personal benefit. The Company's Certificate of
Incorporation includes a provision which eliminates directors' personal
liability to the fullest extent permitted under the Delaware General Corporation
Law.
The Company's Bylaws (the "Bylaws") provide that the Company shall
indemnify and hold harmless 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 he or she is or was a director or officer of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit, or proceeding, and such
person acted in good faith (as defined therein) and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, had the
reasonable cause to believe his or her conduct was unlawful; and that the
Company may, by action of its board of directors or stockholders, provide
indemnification to employees and agents of the Company with the same scope
and effect as indemnification of directors and officers.
Section 145 of the Delaware General Corporation Law further provides that a
corporation shall have power 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, partnership, joint venture, trust or
other enterprise against any liability asserted against such per-
II-1
son and incurred by such person in any such capacity, or arising out of such
person's status as such, whether or not the corporation would otherwise have the
power to indemnify such person against such liability under Section 145.
The Bylaws provide that the Company may purchase and maintain insurance on
behalf of any person who is or was a director, officer of the Company or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify such person
against such liability.
The Company expects to obtain policies of insurance under which, subject
to the limitations of such policies, coverage will be provided (a) to its
directors and officers against loss arising from claims made by reason of breach
of fiduciary duty or other wrongful acts as a director or officer, including
claims relating to public securities matters and (b) to the Company with
respect to payments which may be made by the Company to these officers and
directors pursuant to the above indemnification provision or otherwise as a
matter of law.
ITEM 21. EXHIBITS
The following Exhibits are filed herewith unless otherwise indicated.
2.1(1) -- Agreement and Plan of Merger between Transportation Technologies
Industries, Inc. and Transportation Acquisition I Corp., dated as of
January 28, 2000 (incorporated by reference to Exhibit (d)(1) to the
Company's Tender Offer Statement under Section 14(D)(1) or 13(E)(1) of the
Securities Exchange Act of 1934, as amended, filed February 3, 2000).
3.1 -- Certificate of Incorporation of Transportation Technologies Industries,
Inc.
3.2 -- Bylaws of Transportation Technologies Industries, Inc.
4.1(1) -- Indenture dated as of May 21, 2004 by and among Transportation
Technologies Industries, Inc., the Guarantors named therein and U.S. Bank
National Association, as Trustee.
4.2(1) -- Form of Notes (filed as part of Exhibit 4.1).
4.3 -- Registration Rights Agreement, dated as of May 21, 2004, by and among
Transportation Technologies Industries, Inc., the Guarantors named therein
and the Holders named therein.
4.4 -- Stockholders' Agreement dated as of March 9, 2000 by and among Caravelle
Investment Fund, L.L.C., CIBC WMC Inc., Albion Alliance Mezzanine Fund,
L.P., Albion Alliance Mezzanine Fund II, L.P., Transportation Technologies
Industries, Inc. and the surviving corporation in the Merger and the
persons listed on Exhibit A attached thereto.
4.5 -- Amendment No. 1 to Stockholders' Agreement dated as of February 28, 2001
by and among Caravelle Investment Fund, L.L.C., CIBC WMC Inc., Albion
Alliance Mezzanine Fund, L.P., Albion Alliance Mezzanine Fund II, L.P.,
Transportation Technologies Industries, Inc. and the surviving corporation
in the Merger and the persons listed on Exhibit A attached thereto.
4.6 -- Amendment No. 2 to Stockholders' Agreement dated as of December 19, 2003
by and among Caravelle Investment Fund, L.L.C., CIBC WMC Inc., Albion
Alliance Mezzanine Fund, L.P., Albion Alliance Mezzanine Fund II, L.P.,
Transportation Technologies Industries, Inc. and the surviving corporation
in the Merger and the persons listed on Exhibit A attached thereto.
4.7(1) -- First Lien Credit Agreement dated as of March 16, 2004 between
Transportation Technologies Industries, Inc., as Borrower, the Lenders
party thereto from time to time, as Lenders,
II-2
and Lehman Brothers Inc., as Joint Bookrunner and Joint Lead Arranger,
Lehman Commercial Paper Inc., as Co-Syndication Agent, Wachovia Capital
Markets, LLC, as Co-Syndication Agent, Joint Bookrunner and Joint Lead
Arranger, and Credit Suisse First Boston, as Administrative Agent,
Collateral Agent, Joint Bookrunner and Joint Lead Arranger.
4.8(1) -- Second Lien Credit Agreement dated as of March 16, 2004 between
Transportation Technologies Industries, Inc., as Borrower, the Lenders
party thereto from time to time, as Lenders, and Lehman Brothers Inc., as
Joint Bookrunner and Joint Lead Arranger, Lehman Commercial Paper Inc., as
Co-Syndication Agent, Wachovia Capital Markets, LLC, as Co-Syndication
Agent, Joint Bookrunner and Joint Lead Arranger, and Credit Suisse First
Boston, as Administrative Agent, Collateral Agent, Joint Bookrunner and
Joint Lead Arranger.
4.9(1) -- Bond Guaranty Agreement dated as of March 1, 1999 by Bostrom Seating,
Inc. in favor of NBD Bank as Trustee.
4.10(1) -- Warrant Agreement, dated as of March 9, 2000 by and between
Transportation Acquisition I Corp. and First Union National Bank.
4.11(1) -- Warrant Agreement dated as of February 28, 2001 by and between
Transportation Technologies Industries, Inc., Transportation Investment
Partners L.L.C., Caravelle Investment Fund, L.L.C. and the parties listed
on Schedule A thereto.
4.12(1) -- Contingent Warrant Agreement dated as of February 28, 2001 by and
between Transportation Technologies Industries, Inc., Transportation
Investment Partners L.L.C., Caravelle Investment Fund, L.L.C., the parties
listed on Schedule A thereto and First Union National Bank.
5.1 -- Opinion of Cahill Gordon & Reindel LLP.
10.1(2) -- Employment Agreement dated as of August 2, 2004 by and between
Transportation Technologies Industries, Inc. and Andrew M. Weller.
10.2(2) -- Employment Agreement dated as of August 2, 2004 by and between
Transportation Technologies Industries, Inc. and James D. Cirar.
10.3(2) -- Employment Agreement dated as of August 2, 2004 by and between
Transportation Technologies Industries, Inc. and Donald C. Mueller.
10.4(2) -- Employment Agreement dated as of August 2, 2004 by and between
Transportation Technologies Industries, Inc. and Kenneth M. Tallering.
10.5(1) -- Lease Agreement dated as of March 1, 1999 by and between the
Industrial Development Board of the City of Piedmont and Bostrom Seating,
Inc.
10.6(1) -- Remarketing Agent Agreement dated as of March 1, 1999 among Bostrom
Seating, Inc., as User, the Industrial Development Board of the City of
Piedmont as Issuer, and Merchant Capital, L.L.C. as Remarketing Agent.
10.7(2) -- Termination Agreement and General Release dated as of August 2, 2004
by and between Transportation Technologies Industries, Inc. and Thomas M.
Begel.
10.8 -- Amended and Restated Monitoring Services Agreement, dated as of May 17,
2004, by and among Transportation Technologies Industries, Inc.,
Transportation Investment Partners, L.L.C., Caravelle Investment Fund,
L.L.C., Albion Alliance Mezzanine Fund, L.P., Albion Mezzanine Fund II,
L.P., Trimaran Fund Management, L.L.C. and Albion Alliance, LLC.
II-3
12.1 -- Statement re Computation of Ratios of Earnings to Fixed Charges.
21.1(1) -- Subsidiaries of Transportation Techologies Industries, Inc.
23.1 -- Consent of Deloitte & Touche LLP.
23.2 -- Consent of Cahill Gordon & Reindel LLP (included in Exhibit 5.1).
24.1 -- Powers of Attorney (included in the signature pages to the Registration
Statement).
25.1 -- Statement of Eligibility and Qualifications under the Trust Indenture
Act of 1939 on Form T-1 of U.S. Bank National Association as Trustee under
the Indenture.
99.1 -- Form of Letter of Transmittal.
99.2 -- Form of Notice of Guaranteed Delivery.
(1) Incorporated by reference from Transportation Technologies Industries, Inc.
Registration Statement on Amendment No. 1 to Form S-1 filed on June 16,
2004.
(2) Incorporated by reference from Transportation Technologies Industries, Inc.
Registration Statement on Amendment No. 4 to Form S-1 filed on August 11,
2004.
ITEM 22. UNDERTAKINGS.
a) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrants of expenses incurred or paid by a director, officer or
controlling person of the registrants 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
registrants 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 Act and will be governed by the final
adjudication of such issue.
b) The undersigned registrants hereby undertake 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 equally prompt means. This includes information contained in
documents filed subsequent to the effective date of the registration
statement through the date of responding to the request.
c) The undersigned registrants hereby undertake 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.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ Donald C. Mueller
---------------------------
Name: Donald C. Mueller
Title:
II-5
POWER OF ATTORNEY
We, the undersigned directors and officers of Transportation Technologies
Industries, Inc., do hereby constitute and appoint Mark D. Dalton, Kenneth M.
Tallering and Andrew M. Weller, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to execute any and
all instruments for us and in our name in the capacities indicated below, which
said attorneys and agents, or any of them, may deem necessary or advisable to
enable Transportation Technologies Industries, Inc. to comply with the
Securities Act of 1933 and any rules, regulations and requirements of the
Securities and Exchange Commission in connection with this registration
statement or any registration statement for this offering of securities that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, including specifically, but without limitation, any and all amendments
(including post-effective amendments) hereto, and we hereby ratify and confirm
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
----------------------- (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and
----------------------- Chief Financial Officer
Donald C. Mueller (Principal Accounting Officer)
/s/ Thomas M. Begel Chairman
-----------------------
Thomas M. Begel
/s/ James D. Cirar Director
-----------------------
James D. Cirar
/s/ Jay R. Bloom Director
-----------------------
Jay R. Bloom
/s/ Mark D. Dalton Director
-----------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
-----------------------
Steven A. Flyer
/s/ Jay R. Levine Director
-----------------------
Jay R. Levine
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
TRUCK COMPONENTS INC.
By: /s/ Kenneth M. Tallering
--------------------------------
Name: Kenneth M. Tallering
Title:
II-7
TRUCK COMPONENTS INC.
POWER OF ATTORNEY
We, the undersigned directors and officers of Truck Components Inc., do
hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering and Andrew M.
Weller, and each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorneys and
agents, or any of them, may deem necessary or advisable to enable Truck
Components Inc. to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission in
connection with this registration statement or any registration statement for
this offering of securities that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, including specifically, but without
limitation, any and all amendments (including post-effective amendments) hereto,
and we hereby ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and
------------------------ Chief Financial Officer
Donald C. Mueller (Principal Accounting Officer)
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
GUNITE CORPORATION
By: /s/ Kenneth M. Tallering
------------------------------
Name: Kenneth M. Tallering
Title:
II-9
GUNITE CORPORATION
POWER OF ATTORNEY
We, the undersigned directors and officers of Gunite Corporation, do hereby
constitute and appoint Mark D. Dalton, Kenneth M. Tallering and Andrew M.
Weller, and each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorneys and
agents, or any of them, may deem necessary or advisable to enable Gunite
Corporation to comply with the Securities Act of 1933 and any rules, regulations
and requirements of the Securities and Exchange Commission in connection with
this registration statement or any registration statement for this offering of
securities that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, including specifically, but without limitation, any and
all amendments (including post-effective amendments) hereto, and we hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
----------------------- (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
----------------------- (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
-----------------------
Thomas M. Begel
/s/ James D. Cirar Director
-----------------------
James D. Cirar
/s/ Mark D. Dalton Director
-----------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
-----------------------
Steven A. Flyer
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
GUNITE EMI CORPORATION
By: /s/ Kenneth M. Tallering
-----------------------------
Name: Kenneth M. Tallering
Title:
II-11
GUNITE EMI CORPORATION
POWER OF ATTORNEY
We, the undersigned directors and officers of Gunite EMI Corporation, do
hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering and Andrew M.
Weller, and each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorneys and
agents, or any of them, may deem necessary or advisable to enable Gunite EMI
Corporation to comply with the Securities Act of 1933 and any rules, regulations
and requirements of the Securities and Exchange Commission in connection with
this registration statement or any registration statement for this offering of
securities that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, including specifically, but without limitation, any and
all amendments (including post-effective amendments) hereto, and we hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
----------------------- (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
----------------------- (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
-----------------------
Thomas M. Begel
/s/ James D. Cirar Director
-----------------------
James D. Cirar
/s/ Mark D. Dalton Director
-----------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
-----------------------
Steven A. Flyer
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
BRILLION IRON WORKS, INC.
By: /s/ Kenneth M. Tallering
------------------------------
Name: Kenneth M. Tallering
Title:
II-13
BRILLION IRON WORKS, INC.
POWER OF ATTORNEY
We, the undersigned directors and officers of Brillion Iron Works, Inc., do
hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering and Andrew M.
Weller, and each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorneys and
agents, or any of them, may deem necessary or advisable to enable Brillion Iron
Works, Inc. to comply with the Securities Act of 1933 and any rules, regulations
and requirements of the Securities and Exchange Commission in connection with
this registration statement or any registration statement for this offering of
securities that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, including specifically, but without limitation, any and
all amendments (including post-effective amendments) hereto, and we hereby
ratify and confirm all that said attorneys and agents, or any of them, shall do
or cause to be done by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
FABCO AUTOMOTIVE CORPORATION
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
II-15
FABCO AUTOMOTIVE CORPORATION
POWER OF ATTORNEY
We, the undersigned directors and officers of Fabco Automotive
Corporation, do hereby constitute and appoint Mark D. Dalton, Kenneth M.
Tallering and Andrew M. Weller, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to execute any and
all instruments for us and in our name in the capacities indicated below, which
said attorneys and agents, or any of them, may deem necessary or advisable to
enable Fabco Automotive Corporation to comply with the Securities Act of 1933
and any rules, regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any registration
statement for this offering of securities that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, any and all amendments (including
post-effective amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to be done by
virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-16
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
BOSTROM HOLDINGS, INC.
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
II-17
BOSTROM HOLDINGS, INC.
POWER OF ATTORNEY
We, the undersigned directors and officers of Bostrom Holdings, Inc.,
do hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering and Andrew
M. Weller, and each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorneys and
agents, or any of them, may deem necessary or advisable to enable Bostrom
Holdings, Inc. to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission in
connection with this registration statement or any registration statement for
this offering of securities that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, including specifically, but without
limitation, any and all amendments (including post-effective amendments) hereto,
and we hereby ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-18
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
BOSTROM SEATING, INC.
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
II-19
BOSTROM SEATING, INC.
POWER OF ATTORNEY
We, the undersigned directors and officers of Bostrom Seating, Inc., do
hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering and Andrew M.
Weller, and each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorneys and
agents, or any of them, may deem necessary or advisable to enable Bostrom
Seating, Inc. to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission in
connection with this registration statement or any registration statement for
this offering of securities that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, including specifically, but without
limitation, any and all amendments (including post-effective amendments) hereto,
and we hereby ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-20
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
BOSTROM SPECIALTY SEATING, INC.
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
II-21
BOSTROM SPECIALTY SEATING, INC.
POWER OF ATTORNEY
We, the undersigned directors and officers of Bostrom Specialty
Seating, Inc., do hereby constitute and appoint Mark D. Dalton, Kenneth M.
Tallering and Andrew M. Weller, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to execute any and
all instruments for us and in our name in the capacities indicated below, which
said attorneys and agents, or any of them, may deem necessary or advisable to
enable Bostrom Specialty Seating, Inc. to comply with the Securities Act of 1933
and any rules, regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any registration
statement for this offering of securities that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, any and all amendments (including
post-effective amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to be done by
virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-22
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
IMPERIAL GROUP HOLDING CORP.-1
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
II-23
IMPERIAL GROUP HOLDING CORP.-1
POWER OF ATTORNEY
We, the undersigned directors and officers of Imperial Group Holding
Corp.-1, do hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering
and Andrew M. Weller, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to execute any and
all instruments for us and in our name in the capacities indicated below, which
said attorneys and agents, or any of them, may deem necessary or advisable to
enable Imperial Group Holding Corp.-1 to comply with the Securities Act of 1933
and any rules, regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any registration
statement for this offering of securities that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, any and all amendments (including
post-effective amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to be done by
virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-24
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
IMPERIAL GROUP HOLDING CORP.-2
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
II-25
IMPERIAL GROUP HOLDING CORP.-2
POWER OF ATTORNEY
We, the undersigned directors and officers of Imperial Group Holding
Corp.-2, do hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering
and Andrew M. Weller, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to execute any and
all instruments for us and in our name in the capacities indicated below, which
said attorneys and agents, or any of them, may deem necessary or advisable to
enable Imperial Group Holding Corp.-2 to comply with the Securities Act of 1933
and any rules, regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any registration
statement for this offering of securities that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act of 1933, including
specifically, but without limitation, any and all amendments (including
post-effective amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to be done by
virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-26
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
IMPERIAL GROUP, L.P.
By: IMPERIAL GROUP HOLDING CORP.-1,
its General Partner
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-27
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on September 17, 2004.
JAII MANAGEMENT COMPANY
By: /s/ Kenneth M. Tallering
-------------------------------
Name: Kenneth M. Tallering
Title:
II-28
JAII MANAGEMENT COMPANY
POWER OF ATTORNEY
We, the undersigned directors and officers of JAII Management Company,
do hereby constitute and appoint Mark D. Dalton, Kenneth M. Tallering and Andrew
M. Weller, and each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our behalf in our
capacities as directors and officers and to execute any and all instruments for
us and in our name in the capacities indicated below, which said attorneys and
agents, or any of them, may deem necessary or advisable to enable JAII
Management Company to comply with the Securities Act of 1933 and any rules,
regulations and requirements of the Securities and Exchange Commission in
connection with this registration statement or any registration statement for
this offering of securities that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933, including specifically, but without
limitation, any and all amendments (including post-effective amendments) hereto,
and we hereby ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
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 17th day of September, 2004.
Signature Title
/s/ Andrew M. Weller President, Chief Executive Officer and Director
------------------------ (Principal Executive Officer)
Andrew M. Weller
/s/ Donald C. Mueller Vice President, Treasurer and Chief Financial Officer
------------------------ (Principal Accounting Officer)
Donald C. Mueller
/s/ Thomas M. Begel Chairman
------------------------
Thomas M. Begel
/s/ James D. Cirar Director
------------------------
James D. Cirar
/s/ Mark D. Dalton Director
------------------------
Mark D. Dalton
/s/ Steven A. Flyer Director
------------------------
Steven A. Flyer
II-29
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
FCD ACQUISITION CORP.
FIRST: The name of the Corporation is FCD Acquisition Corp. (hereinafter
the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 1000 shares of Common Stock, each having a par value
of one penny ($.01).
FIFTH: The name and mailing address of the Sole Incorporator is as follows:
Name Mailing Address
---- ---------------
Deborah M. Reusch P.O. Box 636
Wilmington, DE 19899
SIXTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders to
make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be as from time
to time fixed by, or in the manner provided in, the By-Laws of the
Corporation. Election of directors need not be by written ballot unless the
By-Laws so provide.
(4) No director shall be personally liable to the Corporation or any
of 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) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of this Article
SIXTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the
Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or
modification.
(5) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been adopted.
SEVENTH: Meetings of stockholders may be held within or without the State
of Delaware, as the By-Laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the GCL) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-Laws of the Corporation.
EIGHTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the GCL, do make this Certificate,
hereby declaring and certifying that this is my act and deed and the facts
herein stated are true, and accordingly have hereunto set my hands this 18th day
of October, 1991.
/s/ Deborah M. Reusch
--------------------------------
Deborah M. Reusch
Sole Incorporator
-2-
RESTATED CERTIFICATE OF INCORPORATION
OF
FCD ACQUISITION CORP.
Pursuant to Sections 245 and 241 of the General
Corporation Law of the State of Delaware
Pursuant to Sections 245 and 241 of the General Corporation Law of the
State of Delaware, FCD Acquisition Corp., a Delaware corporation (the
"Corporation"), does hereby certify:
1. That the Corporation was organized in the State of Delaware on October
18, 1991 under the name FCD Acquisition Corp.
2. That the Corporation has not received any payment for any of its stock.
3. That the Corporation's Certificate of Incorporation is hereby amended
and restated to read in its entirety as set forth in Exhibit A attached hereto.
IN WITNESS WHEREOF, FCD Acquisition Corp. has caused this certificate to be
duly executed in its corporate name this 24th day of October, 1991.
/s/ Thomas M. Begel
-----------------------------
Thomas M. Begel
Sole Director
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
JAC HOLDINGS, INC.
FIRST: The name of the Corporation is JAC Holdings, Inc. (hereinafter the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 30,000,000 shares of Common Stock, par value $.01 per
share (or in the case of Class I Common and Class J Common (each as defined
below), par value $.0001 per share) (the "Common Stock"), and 100,000 shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock"), which shall
include:
(i) 8,196,428 shares of Class A Common Stock, par value $.01 per share
(the "Class A Common");
(ii) 2,892,857 shares of Class B Common Stock, par value $.01 per
share (the "Class B Common");
(iii) 1,446,429 shares of Class C Common Stock, par value $.01 per
share (the "Class C Common");
(iv) 964,286 shares of Class D Common Stock, par value $.01 per share
(the "Class D Common");
(v) 1,000,000 shares of Class E Common Stock, par value $.01 per share
(the "Class E Common");
(vi) 2,892,857 shares of Class F Common Stock, par value $.01 per
share (the "Class F Common");
(vii) 100 shares of Class G Common Stock, par value $.01 per share
(the "Class G Common");
(viii) 450,000 shares of Class H Common Stock, par value $.01 per
share (the "Class H Common");
(ix) 500,000 shares of Class I Common Stock, par value $.0001 per
share (the "Class I Common"); and
(x) 1,304,347 shares of Class J Common Stock, par value $.0001 per
share (the "Class J Common").
COMMON STOCK
Except as otherwise provided in this Article Fourth or as otherwise
required by applicable law, all shares of Common Stock shall be identical in all
respects and shall entitle the holders thereof to the same rights and
privileges, subject to the same qualifications, limitations and restrictions.
Part 1. Voting Rights.
1A. General. Except as otherwise provided in this Article Fourth or as
otherwise required by applicable law, all holders of Class A Common, Class B
Common, Class C Common, Class D Common, Class E Common, Class H Common, Class I
Common and Class J Common shall be entitled to one vote per share on all matters
to be voted on by the Corporation's stockholders and shall vote together as a
single class. The holders of shares of Class F Common and Class G Common shall
have no voting rights. Except for the additional voting rights of Class A Common
and Class B Common in certain circumstances as provided in Section 1B below and
as otherwise required by applicable law, the required vote on all matters to be
voted on by the Corporation's stockholders shall be the affirmative vote of a
majority of the Common Stock present and entitled to vote at a meeting at which
a quorum is present voting together as a single class. With respect to any such
matter, the holders of a majority of shares of Common Stock entitled to vote
thereon shall constitute a quorum. With respect to any matter upon which the
holders of Class A Common and Class B Common are entitled to additional voting
rights as provided in Section 1B below, the holders of a majority of the
outstanding shares of each such class shall represent a quorum.
1B. Additional Voting Rights of Class A Common and Class B Common in
Certain Circumstances. No action shall be taken by the Corporation (or permitted
by the Corporation to be taken by any Subsidiary of the Corporation) in
connection with any of the following transactions unless, in addition to any
vote required pursuant to Section 1A above, the holders of a majority of the
outstanding Class A Common and the holders of a majority of the outstanding
Class B Common, each voting as a separate class, shall have approved such
transaction:
(i) any amendment to the Certificate of Incorporation or By-laws of
the Corporation which reasonably could adversely affect the relative
rights, preferences or limitations of shares of Class B Common or Class F
Common;
(ii) any liquidation, dissolution or winding up of the Corporation;
(iii) any acquisition (other than raw materials, inventory and capital
expenditures in the ordinary course of business, which capital expenditures
shall not exceed $2,500,000 prior to the first anniversary of the Closing
Date and $2,800,000 prior to the
-2-
second anniversary of the Closing Date) by the Corporation or any of its
Subsidiaries after the Closing Date and prior to the second anniversary of
the Closing Date (i) if the fair market value of aggregate consideration to
be paid with respect thereto (as determined in good faith by the Board of
Directors of the Corporation) shall equal or exceed $2,000,000 or (ii)
which, together with all other acquisitions by the Corporation or any of
its Subsidiaries after the Closing Date and prior to the second anniversary
of the Closing Date, would result in the fair market value of the aggregate
consideration paid or to be paid with respect to all such acquisitions (as
determined in good faith by the Board of Directors of the Corporation) to
equal or exceed $7,500,000;
(iv) any issuance of debt by the Corporation or any of its
Subsidiaries after the Closing Date and prior to the second anniversary of
the Closing Date which, together with all other issuances of debt by the
Corporation or any of its Subsidiaries after the Closing Date and prior to
the second anniversary of the Closing Date, would result in the issuance,
in the aggregate for all such issuances, of more than $2,000,000 of debt of
the Corporation and its Subsidiaries, taken as a whole (for purposes
hereof, the issuance of debt shall not include (x) amounts not to exceed
$30,000,000 borrowed pursuant to the Senior Secured Working Capital Notes
issued pursuant to the Credit Agreement, dated as of October 25, 1991,
among the Corporation, the lenders referred to therein and US West
Financial Services, Inc. ("US West"), as agent, or (y) trade credit,
letters of credit, performance bonds or other debt other than for money
borrowed incurred in the ordinary course of business); or
(v) any sale by the Corporation or any of its Subsidiaries of stock or
assets of the Corporation or any of its Subsidiaries whether by merger,
consolidation or otherwise (other than sales of inventory in the ordinary
course of business, sales of obsolete inventory and sales of obsolete or
worn out equipment) after the Closing Date and prior to the second
anniversary of the Closing Date which, together with all other such sales
(whether by merger, consolidation or otherwise) by the Corporation or any
of its Subsidiaries after the Closing Date and prior to the second
anniversary of the Closing Date, would result in the fair market value of
the aggregate consideration to be received with respect thereto (as
determined in good faith by the Board of Directors of the Corporation) to
equal or exceed $2,000,000.
Notwithstanding the foregoing, the applicability of the provisions of this
Section 1B shall be subject to the following:
(i) the provisions of this Section 1B shall become and thereafter
remain inapplicable at such time as Chemical Equity Associates, a
California Limited Partnership ("CEA"), as the initial holder of the Class
B Common and Class F Common, and its Affiliates have transferred shares of
Class B Common and Class F Common (excluding (i) shares transferred from
CEA to any Affiliate of CEA, from any Affiliate of CEA to CEA or from any
Affiliate of CEA to any other Affiliate of CEA and (ii) shares which CEA or
its Affiliates are required to transfer pursuant to drag-along rights
granted to Onex) such that the aggregate number of shares of Class B Common
and Class F Common so transferred by CEA and its Affiliates is greater than
964,286;
-3-
(ii) upon any transfer of shares of Class B Common or Class F Common
other than to an Affiliate of CEA, the transferee of such shares shall not
be entitled to vote such shares for purposes of this Section 1B; and
(iii) the provisions of this Section 1B shall be inapplicable with
respect to any bona fide, underwritten public offering of Securities of the
Corporation or any of its Subsidiaries.
Part 2. Distribution.
2A. Class A Common and Class G Common. At the same time as distributions
made pursuant to Sections 2B and 2C below, the holders of Class A Common and
Class G Common shall be entitled to receive, as a group, a percentage of all
distributions made to holders of Common Stock, whether in cash, property, or
securities of the Corporation and whether by dividend, liquidating distributions
or otherwise, such percentage to be determined by dividing (i) the aggregate
number of outstanding shares of Class A Common on the record date for the
applicable distribution, by (ii) the number of shares of Common Stock
outstanding on the record date for the applicable distribution (excluding Class
G Common but including the number of shares of Class I Common issuable upon
exercise of the Warrant (as defined in Section 2D(i) hereof) in full on the
record date for the applicable distribution) (the "A Distributions"). The A
Distributions shall be distributed to the holders of Class A Common and Class G
Common in the following priority:
(i) The holders of Class A Common shall be entitled to receive all A
Distributions, ratably based upon the aggregate Unreturned Original Cost
and Unpaid Yield of the Class A Common held by each such holder, until such
time as the holders of Class A Common, as a group, receive distributions
equal to the sum of (A) the aggregate Unreturned Original Cost of the Class
A Common and (B) the aggregate Unpaid Yield on the Class A Common. The
distributions made pursuant to this Section 2A(i) to holders of the Class A
Common shall first be designated as a payment of Yield on and then as a
return of Original Cost of the Class A Common.
(ii) Following the distributions described in Section 2A(i) above, the
holders of Class A Common shall be entitled to receive, as a class, all A
Distributions until such time as the holders of Class A Common receive, as
a class, distributions equal to the excess of (A) the sum of (x) the
aggregate Unreturned Original Cost of all Onex Loss Investments and (y) the
aggregate Unpaid Yield on all Onex Loss Investments over (B) the aggregate
Disposition Value of all Onex Loss Investments. The distributions made
pursuant to this Section 2A(ii) to holders of the Class A Common shall be
distributed ratably, based upon the number of outstanding shares of Class A
Common held by each such holder, and shall be designated first as payment
of Yield on and then as a return of Original Cost of the Onex Loss
Investments.
(iii) Following the distributions described in Section 2A(ii) above,
the holders of Class G Common shall be entitled to receive A Distributions,
ratably based upon the number of shares of Class G Common held by each such
holder, until such time as the holders of Class G Common receive, as a
class, distributions equal to 25% of all distribu-
-4-
tions made by all Portfolio Companies that were designated (according to
the distributing Portfolio Company's Certificate of Incorporation) as
payment of Yield on the Class A Common excluding distributions that were
designated as payment of Yield on Loss Investments.
(iv) Following the distributions described in Section 2A(iii) above,
the holders of Class A Common shall be entitled to receive, as a class, all
A Distributions until such time as the holders of Class A Common receive,
as a class, distributions equal to the excess of (A) the sum of (x) the
aggregate Unreturned Original Cost of all Onex Potential Loss Investments
and (y) the Aggregate Unpaid Yield on all Onex Potential Loss Investments
over (B) the aggregate Disposition Value of all Onex Potential Loss
Investments. The distributions made pursuant to this Section 2B(iv) to
holders of the Class A Common shall be distributed ratably, based upon the
number of outstanding shares of Class A Common held by each such holder,
and shall be designated first as payment of Yield on and then as a return
of Original Cost of the Onex Potential Loss Investments.
(v) Following the distributions described in Section 2A(iv) above, (A)
the holders of Class A Common shall be entitled to receive 80% of all
remaining A Distributions, ratably based upon the number of outstanding
shares of Class A Common held by each such holder and (B) the holders of
Class G Common shall be entitled to receive 20% of all remaining A
Distributions, ratably based upon the number of outstanding shares of Class
G Common held by each such holder.
2B. Class B Common, Class C Common, Class D Common, Class F Common, Class G
Common and Class I Common. At the same time as distributions made pursuant to
Section 2A above and Section 2C below, the holders of Class B Common, Class C
Common, Class D Common, Class F Common, Class G Common and Class I Common shall
be entitled to receive, each as a class, a percentage of all distributions made
to holders of Common Stock, whether in cash, property, or securities of the
Corporation and whether by dividend, liquidating distributions or otherwise,
such percentage to be determined by dividing (i) the aggregate number of
outstanding shares of Class B Common, Class C Common, Class D Common, Class F
Common and Class I Common on the record date for the applicable distribution by
(ii) the number of shares of Common Stock outstanding on the record date for the
applicable distributions (excluding Class G Common but including the number of
shares of Class I Common issuable upon exercise of the Warrant (as defined in
Section 2D(i) hereof) in full on the record date for the applicable
distributions) (the "Class Distributions"). The Class Distributions shall be
distributed to the holders of Class B Common, Class C Common, Class D Common,
Class F Common, Class G Common or Class I Common, as the case may be, in the
following priority:
(i) The holders of Class B Common, Class C Common, Class D Common,
Class F Common or Class I Common, as the case may be, shall be entitled to
receive all Class Distributions on such class of Common Stock, ratably
based upon the number of shares of Class B Common, Class C Common, Class D
Common, Class F Common or Class I Common, as the case may be, held by each
such holder, until such time as the holders of Class B Common, Class C
Common, Class D Common, Class F Common or Class I Common, each as a class,
receive distributions equal to the sum of (A) the aggre-
-5-
gate Unreturned Original Cost of the Class B Common, Class C Common, Class
D Common, Class F Common or Class I Common, as the case may be, and (B) the
aggregate Unpaid Yield on such class of Common Stock. The distributions
made pursuant to this Section 2B(i) to holders of the Class B Common, Class
C Common, Class D Common, Class F Common or Class I Common shall first be
designated as a payment of Yield and then as a return or Original Cost of
such class of Common Stock.
(ii) Following the distributions described in Section 2B(i) above, the
holders of Class G Common shall be entitled to receive all Class
Distributions, ratably based upon the number of shares of Class G Common
held by each such holder, until such time as the holders of Class G Common
receive, as a class, distributions equal to 25% of all distributions
distributed in accordance with subsection 2B(i)(B) above that were
designated as payment of Yield on the Class B Common, Class C Common, Class
D Common, Class F Common or Class I Common, as the case may be.
(iii) Following the distributions described in Section 2B(ii) above,
(A) the holders of Class B Common, Class C Common, Class D Common, Class F
Common and Class I Common, each as a class, shall be entitled to receive
80% of all remaining Class Distributions on such shares of Common Stock,
ratably based upon the number of outstanding shares of Class B Common,
Class C Common, Class D Common, Class F Common or Class I Common, as the
case may be, held by each such holder, and (B) the holders of Class G
Common shall be entitled to receive, as a class, 20% of all remaining Class
Distributions on each such class of Common Stock, ratably based upon the
number of outstanding shares of Class G Common held by each such holder.
2C. Class E Common, Class H Common and Class J Common. At the same time as
distributions made pursuant to Sections 2A and 2B above, the holders of Class E
Common, Class H Common and Class J Common shall be entitled to receive, each as
a class, a percentage of all distributions made to holders of Common Stock,
whether in cash, property, or securities of the Corporation and whether by
dividend, liquidating distributions or otherwise, such percentage to be
determined by dividing (i) the number of shares of Class E Common, Class H
Common or Class J Common, as the case may be, outstanding on the record date for
the applicable distribution, by (ii) the number of shares of Common Stock
outstanding on the record date for the applicable distribution (excluding Class
G Common but including the number of shares of Class I Common issuable upon
exercise of the Warrant (as defined in Section 2D(i) hereof) in full on the
record date for the applicable distribution). The distributions to the holders
of Class E Common, Class H Common or Class J Common shall be distributed ratably
among holders of such class of Common Stock on a per share basis.
2D. Class G Common.
(i) Notwithstanding any other provision of this Part 2, if, at the time of
any distribution made to holders of Common Stock, whether in cash, property, or
securities of the Corporation and whether by dividend, liquidating distributions
or otherwise, any of the Warrant originally issued on the Closing Date to US
West to purchase 500,000 shares of Class I Common (the "Warrant") is exercisable
but has not yet been exercised, then at the same time as distributions made
pursuant to Sections 2A, 2B or 2C hereof the holders of Class G Common shall be
-6-
entitled to receive, as a class, a percentage of all distributions made to
holders of Common Stock, whether in cash, property, or securities of the
Corporation and whether by dividend, liquidating distributions or otherwise,
such percentage to be determined by dividing (i) the number of shares of Common
Stock issuable upon exercise of the Warrant in full on the record date for the
applicable distribution, by (ii) the number of shares of Common Stock
outstanding on the record date for the applicable distribution (excluding Class
G Common but including the number of shares of Class I Common issuable upon
exercise of the Warrant in full on the record date for the applicable
distribution). The distributions to the holders of Class G Common shall be
distributed ratably among holders of Class G Common on a per share basis.
(ii) Except as provided in Sections 2A and 2B above and in this Section 2D,
the holders of Class G Common shall not be entitled to receive distributions
made to holders of Common Stock, whether in cash, property, or securities of the
Corporation and whether by dividend, liquidating distributions or otherwise.
2E. Treatment of Class B Common, Class C Common, Class D Common, Class F
Common or Class I Common Upon Certain Transfers. Upon a transfer of any shares
of Class B Common, Class C Common, Class D Common, Class F Common or Class I
Common (x) on or after the third anniversary of the Closing Date or (y) as a
part of a Sale of the Company, the shares of Class B Common, Class C Common,
Class D Common, Class F Common or Class I Common, as the case may be, so
transferred shall no longer be subject to or governed by the provisions of
Section 2B and, without further action on the part of such holder, shall
thereafter be governed by the provisions of Section 2C as it, for all purposes
of this Part 2, the shares so transferred were shares of Class E Common, Class H
Common or Class J Common.
Part 3. Conversion.
3A. Conversion of Class B Common. Each record holder of Class B Common
shall be entitled at any time, if such holder has or is reasonably expected to
have a Regulatory Problem, to convert any or all of the shares of such holder's
Class B Common into the same number of shares of Class F Common. For purposes of
this paragraph 3A, a holder will be deemed to have a "Regulatory Problem" when
such holder and such holder's affiliates would own, control or have power over a
greater quantity of securities of any kind issued by the Corporation than is
permitted under any applicable requirement of any governmental authority, or
would not be able to hold an investment or provide financing to the Corporation
in compliance with any applicable requirement of any governmental authority.
3B. Conversion of Class F Common.
(i) Upon the occurrence (or the expected occurrence as described in (iii)
below) of any Conversion Event, each holder of Class F Common shall be entitled
to convert into the same number of shares of Class B Common any or all of the
shares of such holder's Class F Common being (or expected to be) distributed,
disposed of or sold in connection with such Conversion Event.
(ii) For purposes of this Section 3B, a "Conversion Event" shall mean (a)
any public offering or public sale of securities of the Corporation (including a
public offering regis-
-7-
tered under the Securities Act of 1933 and a public sale pursuant to Rule 144 of
the Securities and Exchange Commission or any similar rule then in force), (b)
any sale of securities of the Corporation to a person or group of persons
(within the meaning of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) if, after such sale, such person or group of persons in the
aggregate would own or control securities which possess in the aggregate the
ordinary voting power to elect a majority of the Corporation's directors
(provided that such sale has been approved by the Corporation's Board of
Directors or a committee thereof), (c) any sale of securities of the Corporation
to a person or group of persons (within the meaning of the 1934 Act) if, after
such sale, such person or group of persons in the aggregate would own or control
securities of the Corporation (excluding any Class F Common being converted and
disposed of in connection with such Conversion Event) which possess in the
aggregate the ordinary voting power to elect a majority of the Corporation's
directors, (d) any sale of securities of the Corporation to a person or group of
persons (within the meaning of the 1934 Act) if, after such sale, such person or
group of persons would not, in the aggregate, own, control or have the right to
acquire more than two percent (2%) of the outstanding securities of any class of
voting securities of the Corporation, and (e) a merger, consolidation or similar
transaction involving the Corporation if, after such transaction, a person or
group of persons (within the meaning of the 1934 Act) in the aggregate would own
or control securities which possess in the aggregate the ordinary voting power
to elect a majority of the surviving corporation's directors (provided that the
transaction has been approved by the Corporation's Board of Directors or a
committee thereof). For purpose of this Section 3B, "person" shall include any
natural person and any corporation, partnership, joint venture, trust,
unincorporated organization and any other entity or organization.
(iii) Each holder of Class F Common shall be entitled to convert shares of
Class F Common in connection with any Conversion Event if such holder reasonably
believes that such Conversion Event will be consummated, and a written request
for conversion from any holder of Class F Common to the Corporation stating such
holder's reasonable belief that a Conversion Event shall occur shall be
conclusive and shall obligate the Corporation to effect such conversion in a
timely manner so as to enable each such holder to participate in such Conversion
Event. The Corporation will not cancel the shares of Class F Common so converted
before the tenth day following such Conversion Event and will reserve such
shares until such tenth day for reissuance in compliance with the next sentence.
If any shares of Class F Common are converted into shares of Class B Common in
connection with a Conversion Event and such shares of Class B Common are not
actually distributed, disposed of or sold pursuant to such Conversion Event,
such shares of Class B Common shall be promptly converted back into the same
number of shares of Class F Common.
3C. Conversion Procedure.
(i) Unless otherwise provided in connection with a Conversion Event with
respect to the Class F Common, each conversion of shares of one class of Common
Stock into shares of the other class of Common Stock shall be effected by the
surrender of the certificate or certificates representing the shares to be
converted at the principal office of the Corporation at any time during normal
business hours, together with a written notice by the holder of such Common
Stock stating that such holder desires to convert the shares, or a stated number
of the shares, of such Common Stock represented by such certificate or
certificates into shares of the
-8-
other class of Common Stock. Unless otherwise provided in connection with a
Conversion Event, each conversion shall be deemed to have been effected as of
the close of business on the date on which such certificate or certificates have
been surrendered and such notice has been received, and at such time the rights
of the holder of the converted Class F Common or Class B Common, as the case may
be, as such holder shall cease and the person or persons in whose name or names
the certificate or certificates for shares of Class B Common or Class F Common
are to be issued upon such conversion shall be deemed to have become the holder
or holders of record of the shares of Class B Common or Class F Common
represented thereby.
(ii) Promptly after the surrender of certificates and the receipt of
written notice, the Corporation shall issue and deliver in accordance with the
surrendering holder's instructions (a) the certificate or certificates for the
Class B Common or Class F Common issuable upon such conversion and (b) a
certificate representing any Class F Common or Class B Common which was
represented by the certificate or certificates delivered to the Corporation in
connection with such conversion but which was not converted.
(iii) The issuance of certificates for Class B Common upon conversion of
Class F Common and for Class F Common upon conversion of Class B Common will be
made without charge to the holders of such shares for any issuance tax in
respect thereof or other cost incurred by the Corporation in connection with
such conversion and the related issuance of Class B Common or Class F Common, as
the case may be.
(iv) The Corporation shall at all times reserve and keep available out of
its authorized but unissued shares of Class B Common and Class F Common, solely
for the purpose of issuance upon the conversion of the Class F Common and Class
B Common, respectively, such number of shares of Class F Common and Class B
Common issuable upon the conversion of all outstanding Class B Common and Class
F Common, as the case may be. All shares of Common Stock which are so issuable
shall, when issued, be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens and charges. The Corporation shall take all such
actions as may be necessary to assure that all such shares of Common Stock may
be so issued without violation of any applicable law or governmental regulation
or any requirements of any domestic securities exchange upon which shares of
Common Stock may be listed (except for official notice of issuance, which will
be immediately transmitted by the Corporation upon issuance).
(v) The Corporation shall not close its books against the transfer of
shares of Common Stock in any manner which would interfere with the timely
conversion of any shares of Common Stock.
3D. Regulated Holders.
(i) The Corporation shall not be a party to any merger, consolidation or
recapitalization pursuant to which any Regulated Stockholder (as defined in
subsection (iii) below) would be required to take (a) any voting securities
which would cause such holder to hold more than 4.99% of the outstanding shares
of any "class" of voting securities, or (b) any securities convertible into
voting securities which if such conversion took place would cause such holder to
hold more than 4.99% of the outstanding shares of any "class" of voting
securities other than securities which are specifically provided to be
convertible only in the event that such conversion
-9-
may occur without any violation of Regulation Y (as defined below), provided
that each such Regulated Stockholder shall convert or take such other action
(which action does not adversely affect such Regulated Stockholder) with respect
to the Common Stock it owns, controls or has the power to vote in order to
permit the Corporation to consummate any such merger, consolidation or
recapitalization. The term "class" shall be determined by reference to
Regulation Y of the Board of Governors of the Federal Reserve System (12 C.F.R.
Part 225), or any successor to such regulation ("Regulation Y") and all
authoritative interpretations of Regulation Y.
(ii) The Corporation shall not convert or directly or indirectly redeem,
purchase or otherwise acquire any shares of capital stock of the Corporation or
take any other action affecting the voting rights of such shares, if such action
will increase the percentage of any class of outstanding voting securities owned
or controlled by any Regulated Stockholder (other than any such stockholder
which requested that the Corporation take such action, or which otherwise waives
in writing its rights under this subsection (ii)) to more than 4.99% of the
outstanding shares of such voting securities, unless the Corporation gives
written notice (the "Deferral Notice") of such action to each Regulated
Stockholder. The Corporation will defer making any such conversion, or taking
any such other action for a period of 30 days (the "Deferral Period") after
giving the Deferral Notice in order to allow each Regulated Stockholder to
convert or take any other action with respect to the Common Stock it owns,
controls or has the power to vote in order to permit the Corporation to
consummate any such conversion or other action specified in the Deferral Notice
without violating this Section 3D. Each such Regulated Stockholder shall convert
or take such other action (which action does not adversely affect such Regulated
Stockholder) with respect to the Common Stock it owns, controls or has the power
to vote in order to permit the Corporation to consummate any such conversion or
other action without violating this Section 3D and shall notify the Corporation
in writing within 20 days of the issuance of the Deferral Notice of the
conversion or other action to be taken with respect to such Shares of Common
Stock. Thereupon, the Corporation shall (i) defer taking the pending action
until the end of the Deferral Period, (ii) promptly notify from time to time
each other Regulated Stockholder holding shares of such proposed conversion and
the proposed transactions, and (iii) effect the conversions requested by all
Regulated Stockholders in response to the notices issued pursuant to this
subsection (ii) at the end of the Deferral Period. The Corporation will not
directly or indirectly redeem, purchase, acquire or take any other action
affecting outstanding shares of Common Stock if such action will increase above
24.9% the percentage of outstanding Common Stock owned or controlled by any
Regulated Stockholder and its affiliates (other than a stockholder which waives
in writing its rights under this subsection (ii)), provided that each such
Regulated Stockholder shall convert or take such other action (which action does
not adversely affect such Regulated Stockholder) with respect to the Common
Stock it owns, controls or has the power to vote in order to permit the
Corporation to consummate any such conversion or other action without violating
this Section 3D.
(iii) As used herein, the term "Regulated Stockholder" shall mean any
stockholder that is subject to the provisions of Regulation Y or any successor
to such regulation, provided that, except in the case of Chemical Equity
Associates, a California Limited Partnership, such stockholder gives the
Corporation written notice that it is subject to such provisions of Regulation
Y.
-10-
3E. Amendment and Waiver. Notwithstanding anything to the contrary herein,
no amendment or waiver of any provision of this Part 3 shall be effective
without the prior approval of the holders of a majority of the then outstanding
Class B Common voting as a separate class.
Part 4. Stock Splits and Stock Dividends.
The Corporation shall not in any manner subdivide (by stock split, stock
dividend or otherwise), or combine (by stock split, stock dividend or otherwise)
the outstanding Common Stock of one class unless the outstanding Common Stock of
all the other classes shall be proportionately subdivided or combined. All such
subdivisions and combinations shall be payable only in shares of the same class
of Common Stock held by a holder of Common Stock. In no event shall a stock
split or stock dividend be designated as a payment of Yield or a return of
Original Cost.
Part 5. Registration of Transfer.
The Corporation shall keep at its principal office (or such other place as
the Corporation reasonably designates) a register for the registration of shares
of Common Stock. Upon the surrender of any certificate representing shares of
any class of Common Stock at such place, the Corporation shall, at the request
of the registered holder of such certificate, execute and deliver a new
certificate or certificates in exchange therefor representing in the aggregate
the number of shares of such class represented by the surrendered certificate,
and the Corporation forthwith shall cancel such surrendered certificate. Each
such new certificate will be registered in such name and will represent such
number of shares of such class as is requested by the holder of the surrendered
certificate and shall be substantially identical in form to the surrendered
certificate. The issuance of new certificates shall be made without charge to
the holders of the surrendered certificates for any issuance tax in respect
thereof or other cost incurred by the Corporation in connection with such
issuance.
Part 6. Replacement.
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder will be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing one or
more shares of any class of Common Stock, and in the case of any such loss,
theft of destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if the holder is a financial institution or other
institutional investor its own agreement will be satisfactory), or, in the case
of any such mutilation upon surrender of such certificate, the Corporation shall
(at its expense) execute and deliver in lieu of such certificate a new
certificate of like kind representing the number of shares of such class
represented by such lost, stolen, destroyed or mutilated certificate and dated
the date of such lost, stolen, destroyed or mutilated certificate.
Part 7. Notices.
All notices referred to herein shall be dated and in writing, to the
Corporation at its principal executive offices and to any stockholder at such
holder's address as it appears in the
-11-
stock records of the Corporation (unless otherwise specified in a written notice
to the Corporation by such holder), and shall be deemed to have been given (i)
when delivered, if delivered personally, sent by confirmed telecopy or certified
mail, return receipt requested, postage prepaid, (ii) on the next business day
if sent by overnight courier and (iii) when received if delivered otherwise.
Part 8. Amendment and Waiver.
No amendment or waiver of any provision of this Article Fourth (including,
without limitation, any merger, consolidation or other transaction subject to
stockholder approval in which any class of Common Stock is treated differently
from any other class in a manner not contemplated by this Article Fourth) shall
be effective without the prior written consent of the holders of a majority of
the then outstanding shares of each class of Common Stock voting as a separate
class.
Part 9. Definitions.
"Affiliate" shall have the meaning given such term in Rule 12b-2
promulgated under the Securities Exchange Act of 1934, as amended.
"Carried Interest" shall mean the rights and benefits provided hereunder to
the Class G Common.
"Closing Date" shall mean October 25, 1991.
"Disposition Value" of (i) any share of any Loss Investment means an amount
equal to (a) the amount realized on disposition of such share in connection with
the disposition by Onex of such Loss Investment or (b) if no amount is realized
on such share in connection with such disposition, the fair market value (as
determined in good faith by the Board of Directors of the Corporation) of such
share on its Loss Investment Date or (ii) any shares of any Potential Loss
Investment means an amount equal to the fair market value (as determined in good
faith by the Board of Directors of the Corporation) of such share on the date of
any distribution. The Disposition Value of any share shall not exceed its Unpaid
Yield and Unreturned Original Cost.
"Loss Investment" means any Portfolio Company previously disposed of and
with respect to which Onex has not, at the time any distribution is made
pursuant to Part 2 of Article Fourth, received its Original Cost and Yield on
such Onex Loss Investment through the Loss Investment Date.
"Loss Investment Date" means the date that a Loss Investment was disposed
of or determined by Onex in good faith to be worthless.
"Onex Loss Investment" means any common stock originally issued by any Loss
Investment to Onex or its Affiliates that has rights and preferences
substantially similar to those of the Class A Common.
-12-
"Onex Potential Loss Investment" means any common stock originally issued
by any Potential Loss Investment to Onex or its Affiliates that has rights and
preferences substantially similar to those of the Class A Common.
"Original Cost" of any shares of any class of common stock of any Portfolio
Company as of any particular date will be equal to the amount of cash originally
paid for such shares when they were issued.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization
or a governmental entity or any department, agency or political subdivision
thereof.
"Portfolio Company" means (i) for purposes of Section 2A of Article Fourth,
(a) a Person that now or hereafter has common stock originally issued to Onex or
its Affiliates that has rights and preferences substantially similar to those of
the Class A Common and common stock originally issued to TMB Industries
Investments Inc., a Delaware corporation, or its Affiliates that has rights and
preferences substantially similar to those of the Class B Common and (b) Dayton
Superior Corporation, an Ohio corporation, and (ii) for purposes of Section 2B
of Article Fourth, the Corporation.
"Potential Loss Investment" means any Portfolio Company with respect to
which Onex has reasonably determined at the time any distribution is made
pursuant to Part 2 of Article Fourth that the value of such Onex Potential Loss
Investment is less than the Original Cost and Yield on such Onex Potential Loss
Investment.
"Sale of the Corporation" shall mean a sale of the Corporation to a Person
or Persons (other than Onex or any Affiliate of Onex) pursuant to which such
Person or Persons acquire (i) a number shares of Common Stock which represents a
majority of the outstanding shares of Common Stock (whether pursuant to the sale
of shares of Common Stock or by merger, consolidation, recapitalization,
reorganization or otherwise) or (ii) a number shares of Common Stock, par value
$.01 per share ("JAC Common Stock"), of Johnstown America Corporation, a
Delaware corporation and a wholly owned subsidiary of the Corporation ("JAC"),
which represents a majority of the outstanding shares of JAC Common Stock
(whether pursuant to the sale of shares of JAC Common Stock or by merger,
consolidation, recapitalization, reorganization or otherwise) or (iii) all or
substantially all of the assets of JAC.
"Securities" shall mean "securities" as defined in Section 2(l) of the
Securities Act of 1933, as amended.
"Subsidiary" shall mean, with respect to any Person, any corporation of
which the shares of stock having a majority of the general voting power in
electing the board of directors are, at the time as of which any determination
is being made, owned by such Person either directly or indirectly through
Subsidiaries.
"Unpaid Yield" of any share of common stock of any Portfolio Company means
an amount equal to the excess, if any, of (a) the aggregate Yield accrued and
accumulated on such share over (b) the aggregate amount of distributions made by
all Portfolio Companies that
-13-
are designated (according to the distributing Portfolio Company's Certificate of
Incorporation) as payment of Yield on such share.
"Unreturned Original Cost" of any share of common stock of any Portfolio
Company means an amount in cash equal to the excess, if any, of (a) the Original
Cost of such share over (b) the aggregate amount of distributions in cash made
by all Portfolio Companies that are designated (according to the distributing
Portfolio Company's Certificate of Incorporation) as a return of Original Cost
of such share.
"Yield" means (i) for purposes of all shares of Common Stock other than
shares of Class A Common, a yield on each share of Common Stock that will accrue
and accumulate at the rate of 20.0% per annum of the Unreturned Original Cost
thereof commencing on the date of issuance of such share, which yield shall
accumulate and compound if not paid in cash at least annually or (ii) except as
provided in (i) above, with respect to each share of common stock of any
Portfolio Company, a yield on each share of common stock that will accrue and
accumulate at the rate of 20.0% per annum of the Unreturned Original Cost
thereof commencing on the date of the issuance of such share, which yield shall
accumulate and compound if not paid in cash at least annually; provided that,
solely for the purposes of clause (ii) above, the Yield on any share of common
stock of any Portfolio Company shall cease accruing, accumulating and
compounding on the Loss Investment Date of such share. In computing the amount
of Yield accrued in respect of a fractional year, such amount shall be computed
on the basis of a 365-day year and actual number of days elapsed.
PREFERRED STOCK
The Board of Directors shall have the express authority from time to time
to fix or change the division of the Preferred Stock into series and the
designation and authorized number of shares of each series and to provide for
each such series: voting powers, full or limited or no voting powers; dividend
rates; dates of payment of dividends; dates from which dividends are cumulative;
liquidation prices; redemption rights and prices; sinking fund requirements;
conversion rights; restrictions on the issuance of shares of other series of
Preferred Stock; and such other designations, preferences and relative
participating options or other special rights and qualifications, powers,
limitations or restrictions thereon as may be determined by the Board of
Directors.
FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
(1) The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors.
(2) The directors shall have concurrent power with the stockholders to
make, alter, amend, change, add to or repeal the By-Laws of the
Corporation.
(3) The number of directors of the Corporation shall be five. Election
of directors need not be by written ballot unless the By-Laws so provide.
-14-
(4) No director shall be personally liable to the Corporation or any
of 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) pursuant to Section 174 of the Delaware General
Corporation Law or (iv) for any transaction from which the director derived
an improper personal benefit. Any repeal or modification of this Article
Fifth by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time
of such repeal or modification with respect to acts or omissions occurring
prior to such repeal or modification.
(5) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions to the GCL, this Certificate of Incorporation, and any By-Laws
adopted by the stockholders; provided, however, that no By-Laws hereafter
adopted by the stockholders shall invalidate any prior act of the directors
which would have been valid if such By-Laws had not been adopted.
SIXTH: Meetings of stockholders may be held within or without the State of
Delaware, as the By-Laws may provide. The books of the Corporation may be kept
(subject to any provision contained in the GCL) outside the State of Delaware at
such place or places as may be designated from time to time by the Board of
Directors or in the By-Laws of the Corporation.
SEVENTH: Subject to Article Fourth, the Corporation reserves the right to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
-15-
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
JAC HOLDINGS, INC.
Pursuant to Sections 242 and 228 of the
General Corporation Law of the State of Delaware
JAC Holdings, Inc., a Delaware corporation (hereinafter called the
"Corporation"), does hereby certify as follows:
FIRST: Clause (viii) of Article FOURTH of the Corporation's Restated
Certificate of Incorporation is hereby amended to read in its entirety as set
forth below:
"(viii) 975,000 shares of Class H Common Stock par value $.01 per
share (the "Class H. Common");"
SECOND: The foregoing amendment was duly adopted in accordance with
Sections 242 and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, JAC Holdings, Inc. has caused this Certificate to be
duly executed in its corporate name this 22nd day of July, 1992.
JAC HOLDINGS, INC.
By: /s/ Anthony J. Garcia
-------------------------------
Name: Anthony J. Garcia
Title: Vice President
ATTEST:
By: /s/ Edward Whalen
--------------------------------
Name: Edward Whalen
Title: Secretary
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
JAC HOLDINGS, INC.
Pursuant to Sections 242 and 228 of the
General Corporation Law of the State of Delaware
JAC Holdings, Inc., a Delaware corporation (hereinafter called the
"Corporation"), does hereby certify as follows:
FIRST: Article FIRST of the Corporation's Restated Certificate of
Incorporation is hereby amended to read in its entirety as set forth below:
"The name of the Corporation is Johnstown America Industries, Inc.
(hereinafter the "Corporation")."
SECOND: The foregoing amendment was duly adopted in accordance with
Sections 242 and 228 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, JAC Holdings, Inc. has caused this Certificate to be
duly executed in its corporate name this 21st day of May, 1993.
JAC HOLDINGS, INC.
By: /s/ Anthony J. Garcia
----------------------------------
Name: Anthony J. Garcia
Title: Vice President
ATTEST:
By: /s/ Edward Whalen
-----------------------------
Name: Edward Whalen
Title: Secretary
RESTATED CERTIFICATE OF INCORPORATION
OF
JOHNSTOWN AMERICA INDUSTRIES, INC.
Pursuant to Section 103, Section 242 and
Section 245 of the General Corporation Law of
the State of Delaware
The undersigned, Anthony J. Garcia and Edward J. Whalen, certify that they
are Executive Vice President and Secretary, respectively, of Johnstown America
Industries, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), and do hereby further certify as follows:
FIRST: The name of the Corporation is Johnstown America Industries, Inc.
SECOND: The original Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on October 18, 1991
under the name FCD Acquisition Corp.
THIRD: This Restated Certificate of Incorporation was duly adopted by the
stockholders of the Corporation in accordance with Sections 242 and 245 of the
General Corporation Law of the State of Delaware (the "GCL").
FOURTH: Upon this Restated Certificate of Incorporation becoming effective
pursuant to the GCL (the "Effective Time"), and without any further action on
the part of the Corporation or its stockholders: (i) the 7,896,428 shares of the
Corporation's Class A Common Stock, par value $.01 per share, issued and
outstanding immediately prior to the Effective Time shall automatically be
reclassified, changed and converted into 2,548,357 shares of common stock, par
value $.01 per share ("Common Stock"), of the Corporation; (ii) the 618,965
shares of the Corporation's Class B Common Stock, par value $.01 per share,
issued and outstanding immediately prior to the Effective Time shall
automatically be reclassified, changed and converted into 373,680 shares of
Common Stock; (iii) the 1,446,429 shares of the Corporation's Class C Common
Stock, par value $.01 per share, issued and outstanding immediately prior to the
Effective Time shall automatically be reclassified, changed and converted into
483,521 shares of Common Stock; (iv) the 964,286 shares of the Corporation's
Class D Common Stock, par value $.01 per share, issued and outstanding
immediately prior to the Effective Time shall automatically be reclassified,
changed and converted into 322,347 shares of Common Stock; (v) the 1,000,000
shares of Class E Common Stock, par value $.01 per share, issued and outstanding
immediately prior to the Effective Time shall automatically be reclassified,
changed and converted into 400,000 shares of Common Stock; (vi) the 2,273,892
shares of Class F Common Stock, par value $.01 per share, issued and outstanding
immediately prior to the Effective Time shall automatically be reclassified,
changed and converted into 593,361 shares of Class B Common Stock, par value
$.01 per share ("Class B Common Stock"), of the Corporation; (vii) the
100 shares of Class G Common Stock, par value $.01 per share, issued and
outstanding immediately prior to the Effective Time shall automatically be
reclassified, changed and converted into 991,591 shares of Common Stock; (viii)
the 1,012,700 shares of Class H Common Stock, par value $.01 per share, issued
and outstanding or subject to issuance immediately prior to the Effective Time
shall automatically be reclassified, changed and converted into 405,080 shares
of Common Stock; (ix) the 500,000 shares of Class I Common Stock, par value $.01
per share, subject to issuance immediately prior to the Effective Time shall
automatically be reclassified, changed and converted into 167,142 shares of
Common Stock; and (x) the 1,304,348 shares of Class J Common Stock, par value
$.01 per share, subject to issuance immediately prior to the Effective Time
shall automatically be reclassified, changed and converted into 521,739 shares
of Common Stock. No fractional shares of Common Stock or Class B Common Stock
will be issued after the Restated Certificate becomes effective; instead, each
fractional share will be rounded to the nearest whole shares.
FIFTH: The text of the Restated Certificate of Incorporation of the
Corporation, as amended, is hereby further amended and restated to read in its
entirety as set forth in Exhibit A attached hereto.
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IN WITNESS WHEREOF, Johnstown America Industries, Inc. has caused this
Restated Certificate of Incorporation to be signed by Anthony J. Garcia, its
Executive Vice President, and attested by Edward J. Whalen, its Secretary, this
14th day of July, 1993.
JOHNSTOWN AMERICA INDUSTRIES, INC.
By: /s/ Anthony J. Garcia
----------------------------
Anthony J. Garcia
Executive Vice President
Attest:
/s/ Edward J. Whalen
--------------------------
Edward J. Whalen
Secretary
-3-
EXHIBIT A
RESTATED CERTIFICATE OF INCORPORATION
OF
JOHNSTOWN AMERICA INDUSTRIES, INC.
FIRST: The name of the corporation is Johnstown America Industries, Inc.
(hereinafter the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at that address is The Corporation
Trust Company.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
FOURTH: The total number of shares of stock which the Corporation shall
have the authority to issue is 221,000,000 shares consisting of 200,000,000
shares of common stock with a par value of $.01 per share (the "Common Stock"),
1,000,000 shares of Class B Common Stock with a par value of $.01 per share (the
"Class B Common Stock"), and 20,000,000 shares of preferred stock with a par
value of $.01 per share (the "Preferred Stock").
I. Common Stock and Class B Common Stock. Except as otherwise provided in
this Article Fourth or as otherwise required by applicable law, shares of Common
Stock and Class B Common Stock shall be identical and shall entitle the holders
thereof to the same rights and privileges, subject to the same qualifications,
limitations and restrictions.
(a) Voting Rights. Except as otherwise provided in this Article Fourth or
as otherwise required by applicable law, holders of Common Stock shall be
entitled to one vote per share on all matters to be voted on by the
Corporation's stockholders and holders of shares of Class B Common Stock shall
have no voting rights.
(b) Conversion Rights. Each record holder of Common Stock shall be entitled
at any time, if such holder has or is reasonably expected to have a Regulatory
Issue, to convert any or all of the shares of such holder's Common Stock into
the same number of shares of Class B Common Stock. For purposes of this
paragraph, a holder will be deemed to have a "Regulatory Issue" when such holder
and such holder's affiliates would own, control or have power over a greater
quantity of securities of any kind issued by the Corporation than is permitted
under any applicable requirement of any governmental authority, or would not be
able to hold an investment or provide financing to the Corporation in compliance
with any applicable requirement of any governmental authority.
Upon the occurrence (or the expected occurrence as described in the next
paragraph) of any Conversion Event, each record holder of Class B Common Stock
shall be entitled to convert into the same number of shares of Common Stock any
or all of the shares of such
holder's Class B Common Stock being (or expected to be) distributed, disposed of
or sold in connection with the occurrence (or the expected occurrence as
described below) of a Conversion Event. For purposes of this paragraph, a
"Conversion Event" shall mean (i) any public offering or public sale of
securities of the Corporation (including a public offering registered under the
Securities Act of 1933 and a public sale pursuant to Rule 144 of the Securities
and Exchange Commission or any similar rule then in force), (ii) any sale of
securities of the Corporation to a person or group of persons (within the
meaning of the Securities Exchange Act of 1934, as amended (the "1934 Act")) if,
after such sale, such person or group of persons in the aggregate would own or
control securities which possess in the aggregate the ordinary voting power to
elect a majority of the Corporation's directors (provided that such sale has
been approved by the Corporation's Board of Directors (the "Board of Directors")
or a committee thereof), (iii) any sale of securities of the Corporation to a
person or group of persons (within the meaning of the 1934 Act) if, after such
sale, such person or group of persons in the aggregate would own or control
securities of the Corporation (excluding any Class B Common Stock being
converted and disposed of in connection with such Conversion Event) which
possess in the aggregate the ordinary voting power to elect a majority of the
Corporation's directors, (iv) any sale of securities of the Corporation to a
person or group of persons (within the meaning of the 1934 Act) if, after such
sale, such person or group of persons would not, in the aggregate, own, control
or have the right to acquire more than two percent (2%) of the outstanding
securities of any class of voting securities of the Corporation, and (v) a
merger, consolidation or similar transaction involving the Corporation if, after
such transaction, a person or group of persons (within the meaning of the 1934
Act) in the aggregate would own or control securities which possess in the
aggregate the ordinary voting power to elect a majority of the surviving
corporation's directors (provided that the transaction has been approved by the
Board of Directors or a committee thereof). For purpose of this paragraph,
"person" shall include any natural person and any corporation, partnership,
joint venture, trust, unincorporated organization and any other entity or
organization.
Each record holder of Class B Common Stock shall also be entitled to
convert shares of Class B Common Stock in connection with any Conversion Event
if such holder reasonably believes that such Conversion Event will be
consummated, and a written request for conversion from any holder of Class B
Common Stock to the Corporation stating such holder's reasonable belief that a
Conversion Event will occur shall be conclusive and shall obligate the
Corporation to effect such conversion in a timely manner so as to enable each
such holder to participate in such Conversion Event. The Corporation will not
cancel the shares of Class B Common Stock so converted before the tenth day
following such Conversion Event and will reserve such snares until such tenth
day for reissuance in compliance with the next sentence. If any shares of Class
B Common Stock are converted into shares of Common Stock in connection with a
Conversion Event and such shares of Common Stock are not actually distributed,
disposed of or sold pursuant to such Conversion Event, such shares of Common
Stock shall be promptly converted back into the same number of shares of Class B
Common Stock.
Unless otherwise provided in connection with a Conversion Event, each
conversion of shares of one class of common stock into shares of the other class
of common stock shall be effected by the surrender of the certificate or
certificates representing the shares to be converted at the principal office of
the Corporation at any time during normal business hours, together with a
written notice by the holder of such common stock stating that such holder
desires
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to convert the shares, or a stated number of the shares, of such common stock
represented by such certificate or certificates into shares of the other class
of common stock. Unless otherwise provided in connection with a Conversion
Event, each conversion shall be deemed to have been effected as of the close of
business on the date on which such certificate or certificates have been
surrendered and such notice has been received, and at such time the rights of
the holder of the converted Common Stock or Class B Common Stock, as the case
may be, as such holder shall cease and the person or persons in whose name or
names the certificate or certificates for shares are to be issued upon such
conversion shall be deemed to have become the holder or holders of record of the
shares represented thereby. Promptly after the surrender of certificates and the
receipt of written notice, the Corporation shall issue and deliver in accordance
with the surrendering holder's instructions (a) the certificate or certificates
for the shares issuable upon such conversion and (b) a certificate representing
any shares which were represented by the certificate or certificates delivered
to the Corporation in connection with such conversion but which were not
converted. The issuance of certificates upon conversion will be made without
charge to the holders of such shares for any issuance tax in respect thereof or
other cost incurred by the Corporation in connection with such conversion.
The Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock solely for the purpose of
issuance upon the conversion of the Class B Common Stack, such number of shares
of Common Stock issuable upon the conversion of all outstanding Class B Common
Stock. All shares of Common Stock which are so issuable shall, when issued, be
duly and validly issued, full paid and nonassessable and free from all taxes,
liens and charges. The Corporation shall take all such actions as may be
necessary to assure that all such shares of Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Common
Stock may be listed (except for official notice of issuance which will be
immediately transmitted by the Corporation upon issuance). The Corporation shall
not close its books against the transfer of shares in an manner which would
interfere with the timely conversion of any shares.
The Corporation shall not be a party to any merger, consolidation or
recapitalization pursuant to which any Regulated Stockholder (as defined in the
following paragraph) would be required to take (a) any voting securities which
would cause such holder to hold more than 4.99% of the outstanding shares of any
"class" of voting securities, or (b) any securities convertible into voting
securities which if such conversion took place would cause such holder to hold
more than 4.99% of the outstanding shares of any "class" of voting securities
other than securities which are specifically provided to be convertible only in
the event that such conversion may occur without any violation of Regulation Y
(as defined below), provided that each such Regulated Stockholder shall convert
or take such other action (which action does not adversely affect such Regulated
Stockholder) with respect to the common stock it owns, controls or has the power
to vote in order to permit the Corporation to consummate any such merger,
consolidation or recapitalization. The term "class" shall be determined by
reference to Regulation Y of the Board of Governors of the Federal Reserve
System (12 C.F.R. Part 225), or any successor to such regulation ("Regulation
Y") and all authoritative interpretations of Regulation Y. The Corporation shall
not convert or directly or indirectly redeem, purchase or otherwise acquire any
shares of capital stock of the Corporation or take any other action affecting
the voting rights of
-3-
such shares, if such action will increase the percentage of any class of
outstanding voting securities owned or controlled by any Regulated Stockholder
(other than any such stockholder which has requested that the Corporation take
such action, or which otherwise waives in writing its rights hereunder to more
then 4.99% of the outstanding shares of such voting securities), unless the
Corporation gives written notice (the "Deferral Notice") of such action to each
Regulated Stockholder. The Corporation will defer making any such conversion or
taking any such other action for a period of 30 days (the "Deferral Period")
after giving the Deferral Notice in order to allow each Regulated Stockholder to
convert or take any other action with respect to the common stock it owns,
controls or has the power to vote in order to permit the Corporation to
consummate any such conversion or other action specified in the Deferral Notice
without violating this paragraph. Each such Regulated Stockholder shall convert
or take such other action (which action does not adversely affect such Regulated
Stockholder) with respect to the common stock it owns, controls or has the power
to vote in order to permit the Corporation to consummate any such conversion or
other action without violating this paragraph and shall notify the Corporation
in writing within 20 days of the issuance of the Deferral Notice of the
conversion or other action to be taken with respect to such shares of common
stock. Thereupon, the Corporation shall (i) defer taking the pending action
until the end of the Deferral Period, (ii) promptly notify from time to time
each other Regulated Stockholder holding shares of each proposed conversion and
the proposed transactions, and (iii) effect the conversions requested by all
Regulated Stockholders in response to the notices issued pursuant to this
paragraph at the end of the Deferral Period. The Corporation will not directly
or indirectly redeem, purchase, acquire or take any other action affecting
outstanding shares of common stock if such action will increase above 24.9% the
percentage of outstanding common stock owned or controlled by any Regulated
Stockholder and its affiliates (other than a stockholder which waives in writing
its rights under this paragraph), provided that each such Regulated Stockholder
shall convert or take such other action (which action does not adversely affect
such Regulated Stockholder) with respect to the common stock it owns, controls
or has the power to vote in order to permit the Corporation to consummate any
such conversion or other action without violating this paragraph.
As used herein, the term "Regulated Stockholder" shall mean any stockholder
that is subject to the provision of Regulation Y or any successor to such
regulation, provided that, except in the case of Chemical Equity Associates, a
California Limited Partnership, such stockholder gives the Corporation written
notice that it is subject to such provisions of Regulation Y.
Notwithstanding anything to the contrary herein, no amendment or waiver of
any provision pertaining to the conversion rights of the Common Stock and Class
B Common Stock shall be effective without the prior approval of the holders of a
majority of the then outstanding Class B Common stock voting as a separate
class.
II. Preferred Stock. Shares of the Preferred Stock of the Corporation may
be issued from time to time in one or more classes or series, each of which
class or series shall have such distinctive designation or title as shall be
fixed by the Board of Directors prior to the issuance of any shares thereof.
Each such class or series of Preferred Stock shall have such voting powers, full
or limited, or no voting powers, and such preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof as shall be stated in such resolution or
resolutions providing for the issue of such class or series of Preferred
-4-
Stock as may be adopted from time to time by the Board of Directors prior to the
issuance of any shares thereof pursuant to the authority hereby expressly vested
in it, all in accordance with the laws of the State of Delaware.
FIFTH: The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The number of directors of the
Corporation shall be not less than three nor more than nine, the exact number to
be fixed from time to time by the Board of Directors. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall be qualified, subject, however, to
prior death, resignation, retirement, disqualification or removal from office.
SIXTH: At the earlier of (x) such time as Onex U.S. Investments Inc., an
Ontario corporation ("Onex"), has sold or otherwise transferred in one or more
transactions to any persons or entities other than Affiliates (as hereinafter
defined) of Onex 50% or more of (i) the 2,308,450 shares of Common Stock held by
it after consummation of the initial public offering (the "Offering") of shares
of Common Stock or (ii) if the over-allotment option granted to the underwriters
in connection with the Offering is exercised, the 2,017,500 shares of Common
Stock held by it after exercise of such over-allotment option or (y) such time
as Onex has given its consent in writing to the Corporation, and without any
further action by the Corporation, the Board of Directors or the Corporation's
stockholders, the provisions of this Article Sixth shall become and thereafter
shall remain effective. The number of shares referred to in clauses (x) and (y)
of the previous sentence shall be adjusted to reflect any stock split or other
amendments to, or reclassifications of, the capital stock of the Corporation.
The Board of Directors shall be divided into three classes, designated Class I,
Class II and Class III, with each class consisting, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors. The then chairman of the Board of the Corporation shall
designate the initial class of each director. The term of the initial Class I
directors shall terminate on the date of the first annual meeting of
stockholders thereafter; the term of the initial Class II directors shall
terminate on the date of the second annual meeting of stockholders thereafter;
and the term of the initial Class III directors shall terminate on the date of
the third annual meeting of stockholders thereafter. At the first annual meeting
of stockholders after the Board of Directors has been divided into classes and
at each annual meeting of stockholders thereafter, successors to the class of
directors whose term expires at that annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as nearly equal as possible, and any additional directors of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. Any vacancy on the Board of Directors, howsoever
resulting, may be filled only by a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director. Any director
elected to fill a vacancy shall hold office for a term that shall coincide with
the term of the class to which such director shall have been elected. Any or all
of the directors of the Corporation may be removed from office at any time, but
only for cause and only by the affirmative vote of the holders of a majority of
the outstanding shares of stock of the Corporation then entitled to vote
generally in the election of directors.
-5-
For purposes of this Restated Certificate of Incorporation, the term
"Affiliate" shall mean, with respect to any person, any of (a) a director or
executive officer of such person, (b) a spouse, parent, sibling or descendant of
such person (or a spouse, parent, sibling or descendant of any director or
executive officer of such person), and (c) any other person that, directly or
indirectly, controls or is controlled by or is under common control with such
person. For the purpose of this definition, "control" (including the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
person, whether through the ownership of voting securities or by contract or
agency or otherwise.
SEVENTH: At the earlier of (x) such time as Onex has sold or otherwise
transferred in one or more transactions to any persons or entities other than
Affiliates of Onex 50% or more of (i) the 2,308,450 shares of Common Stock held
by it after consummation of the Offering or (ii) if the over-allotment option
granted to the underwriters in connection with the Offering is exercised, the
2,017,500 shares of Common Stock held by it after exercise of such
over-allotment option or (y) such time as Onex has given its consent in writing
to the Corporation, and without any further action by the Corporation, the Board
of Directors or the Corporation's stockholders, the provisions of this Article
Seventh shall become and thereafter shall remain effective. The number of shares
referred to in clauses (x) and (y) of the previous sentence shall be adjusted to
reflect any stock split or other amendments to, or reclassifications of, the
capital stock of the Corporation. Special meetings of stockholders of the
Corporation for any purpose or purposes may be called at any time by a majority
of the Board of Directors, the Chairman of the Board of Directors or the
President of the Corporation. Special meetings of the stockholders of the
Corporation may not be called by any other person or persons. Any action
required or permitted to be taken at any annual or special meeting of
stockholders may be taken only upon the vote of the stockholders at an annual or
special meeting duly noticed and called, as provided in the By-laws of the
Corporation, and may not be taken by a written consent of the stockholders
pursuant to the GCL.
EIGHTH: No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (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) pursuant to Section 174 of the
GCL or (iv) for any transaction from which the director derived an improper
personal benefit. No amendment to or repeal of this Article Eighth shall apply
to or have any effect on the liability or alleged liability of any director of
the Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.
NINTH: Meetings of the stockholders may be held within or without the State
of Delaware, as the By-laws may provide. The books of the Corporation may be
kept (subject to any provision contained in the GCL) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-laws of the Corporation.
-6-
TENTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the By-laws of the Corporation; provided, however, that Article
IX of the By-laws shall be amended (i) only with the affirmative vote of the
holders of at least 80% of the outstanding shares of stock of the Corporation
then entitled to vote generally in the election of directors or (ii) by the
unanimous vote of the Board of Directors then in office.
ELEVENTH: Except as contemplated by Article Twelfth, the affirmative vote
of the holders of at least 80% of the outstanding shares of stock of the
Corporation then entitled to vote generally in the election of directors shall
be required to amend Article Fifth, Sixth, Seventh, Eighth, Ninth, Tenth,
Eleventh or Twelfth of this Restated Certificate of Incorporation, other than
technical amendments.
TWELFTH: Except as otherwise contemplated by the provisions of this
Restated Certificate of Incorporation, the Corporation reserves the right to
repeal, alter, amend, or rescind any provision contained in this Restated
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred on stockholders herein are granted subject to
this reservation.
-7-
CERTIFICATE OF DESIGNATION, PREFERENCES
AND RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
OF
JOHNSTOWN AMERICA INDUSTRIES, INC.
Pursuant to Section 151 of the General Corporation Law of the State of Delaware
The undersigned officer of Johnstown America Industries, Inc., a
corporation organized and existing under the General Corporation Law of the
State of Delaware, in accordance with the provisions of Section 103 thereof,
DOES HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Certificate of Incorporation of the said Corporation, the
said Board of Directors on October 4, 1995, adopted the following resolution
creating a series of 20,000 shares of Preferred Stock designated as Series A
Junior Participating Preferred Stock:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of this Corporation in accordance with the provision of its Amended and Restated
Certificate of Incorporation, a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and other
special rights of the shares of such series, and the qualifications, limitations
or restrictions thereof are as follows:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" and the number of
shares constituting such series shall be 20,000.
Section 2. Dividends and Distributions.
(A) The holders of shares of Series A Junior Participating Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the last day of March, June, September and December in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Junior Participating Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (a) $0.01 or (b) subject to the provision for adjustment hereinafter set
forth, 1000 times the aggregate per share amount of all cash dividends, and 1000
times the aggregate per share amount (payable in kind) of all non-cash dividends
or other distributions other than a dividend payable in shares of Common Stock
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock, par value $0.01 per share, of the
Corporation (the "Common Stock") since the immediately preceding Quarterly
Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment
Date, since the first issuance of any share or fraction of a share of Series A
Junior Participating Preferred Stock. In the event the Corporation shall at any
time after October 4, 1995 (the "Rights Declaration Date") (i) declare any
dividend
on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock, or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
shares of Series A Junior Participating Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Junior Participating Preferred Stock as provided in Paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $1.00 per share on the
Series A Junior Participating Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series A Junior Participating Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A Junior
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of Series
A Junior Participating Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series A Junior Participating Preferred Stock in an amount
less than the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board of Directors may fix a record date for
the determination of holders of shares of Series A Junior Participating
Preferred Stock entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series A Junior
Participating Preferred Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series A Junior Participating Preferred Stock shall entitle the holder
thereof to 1000 votes on all matters submitted to a vote of the stockholders of
the Corporation. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the number of votes per share to which holders of shares of Series A Junior
Participating Preferred
-2-
Stock were entitled immediately prior to such event shall be adjusted by
multiplying such number by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of shares of
Series A Junior Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.
(C) (i) If at any time dividends on any Series A Junior Participating
Preferred Stock shall be in arrears in an amount equal to six (6) quarterly
dividends thereon, the occurrence of such contingency shall mark the beginning
of a period (herein called a "default period") which shall extend until such
time when all accrued and unpaid dividends for all previous quarterly dividend
periods and for the current quarterly dividend period on all shares of Series A
Junior Participating Preferred Stock then outstanding shall have been declared
and paid or set apart for payment. During each default period, all holders of
Preferred Stock (including holders of the Series A Junior Participating
Preferred Stock) with dividends in arrears in an amount equal to six (6)
quarterly dividends thereon, voting as a class, irrespective of series, shall
have the right to elect two (2) Directors.
(ii) During any default period, such voting right of the holders of Series
A Junior Participating Preferred Stock may be exercised initially at a special
meeting called pursuant to subparagraph (iii) of this Section 3(c) or at any
annual meeting of stockholders, and thereafter at annual meetings of
stockholders, provided that such voting right shall not be exercised unless the
holders of ten percent (10%) in number of shares of Preferred Stock outstanding
shall be present in person or by proxy. The absence of a quorum of the holders
of Common Stock shall not affect the exercise by the holders of Preferred Stock
of such voting right. At any meeting at which the holders of Preferred Stock
shall exercise such voting right initially during an existing default period,
they shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of the Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors shall not be increased or decreased except by vote of the holders of
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Junior
Participating Preferred Stock.
(iii) Unless the holders of Preferred Stock shall, during an existing
default period, have previously exercised their right to elect Directors, the
Board of Directors may order, or any stockholder or stockholders owning in the
aggregate not less than ten percent (10%) of the total number of shares of
Preferred Stock outstanding, irrespective of series, may request, the calling of
a special meeting of the holders of Preferred Stock, which meeting shall
thereupon be called by the President, a Vice-President or the Secretary of the
Corporation. Notice of such
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meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this Paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice to him or
her at his or her last address as the same appears on the books of the
Corporation. Such meeting shall be called for a time not earlier than 20 days
and not later than 60 days after such order or request or in default of the
calling of such meeting within 60 days after such order or request, such meeting
may be called on similar notice by any stockholder or stockholders owning in the
aggregate not less than ten percent (l0%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this Paragraph
(C) (iii), no such special meeting shall be called during the period within 60
days immediately preceding the date fixed for the next annual meeting of the
stockholders.
(iv) In any default period, the holders of Common Stock, and other classes
of stock of the Corporation if applicable, shall continue to be entitled to
elect the whole number of Directors until the holders of Preferred Stock shall
have exercised their right to elect two (2) Directors voting as a class, after
the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in Paragraph
(C)(ii) of this Section 3) be filled by vote of a majority of the remaining
Directors theretofore elected by the holders of the class of stock which elected
the Director whose office shall have become vacant. References in this Paragraph
(C) to Directors elected by the holders of a particular class of stock shall
include Directors elected by such Directors to fill vacancies as provided in
clause (y) of the foregoing sentence.
(v) Immediately upon the expiration of a default period, (x) the right of
the holders of Preferred Stock as a class to elect Directors shall cease, (y)
the term of any Directors elected by the holders of Preferred Stock as a class
shall terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or by-laws irrespective of any
increase made pursuant to the provisions of Paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner provided
by law or in the certificate of incorporation or by-laws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.
(D) Except as set forth herein, holders of Series A Junior Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series A Junior Participating Preferred Stock as provided in
Section 2 are in arrears, thereafter and until all accrued and unpaid dividends
and distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not
-4-
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares of
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Junior Participating Preferred
stock;
(ii) declare or pay dividends on or make any other distributions on
any shares of stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the Series A Junior
Participating Preferred Stock, except dividends paid ratably on the Series
A Junior Participating Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to the total amounts to
which the holders of all such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for consideration shares
of any stock ranking on a parity (either as to dividends or upon
liquidation, dissolution or winding up) with the series A Junior
Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock
in exchange for shares of any stock of the Corporation ranking junior
(either as to dividends or upon dissolution, liquidation or winding up) to
the Series A Junior Participating Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any shares of
Series A Junior Participating Preferred Stock, or any shares of stock
ranking on a parity with the Series A Junior Participating Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders of
such shares upon such terms as the Board of Directors, after consideration
of the respective annual dividend rates and other relative rights and
preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective
series or classes.
(B) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under Paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series A Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock and may be reissued as part of a new series
of Preferred Stock to be created by resolution or resolutions of the Board of
Directors, subject to the conditions and restrictions on issuance set forth
herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
(voluntary or otherwise), dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of Shares of Series A Junior Participating Preferred Stock shall have received
an amount equal to 1000 times the Exercise Price, plus an amount equal to
accrued and unpaid
-5-
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of shares of Series A Junior
Participating Preferred Stock unless, prior thereto, the holders of shares of
Common Stock shall have received an amount per share (the "Common Adjustment")
equal to the quotient obtained by dividing (i) the Series A Liquidation
Preference by (ii) 1000 (as appropriately adjusted as set forth in subparagraph
(C) below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Junior Participating Preferred Stock and Common Stock,
respectively, holders of Series A Junior Participating Preferred stock and
holders of shares of Common Stock shall receive their ratable and proportionate
share of the remaining assets to be distributed in the ratio of the Adjustment
Number to 1 with respect to such Preferred Stock and Common Stock, on a per
share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.
(C) In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.
Section 7. Consolidation, Merger, etc. In case the Corporation shall enter
into any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Junior Participating Preferred Stock shall at the same time be
similarly exchanged or changed in an amount per share (subject to the provision
for adjustment hereinafter set forth) equal to 1000 times the aggregate amount
of stock, securities, cash and/or any other property (payable in kind), as the
case may be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the Rights
Declaration Date (i) declare any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such case
the amount set forth in the preceding sentence with respect to the exchange or
change of shares of Series A Junior Participating Preferred Stock shall be
adjusted by multiplying such amount by a fraction the nu-
-6-
merator of which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Junior Participating
Preferred Stock shall not be redeemable.
Section 9. Amendment. The Amended and Restated Certificate of Incorporation
of the Corporation shall not be further amended in any manner which would
materially alter or change the powers, preferences or special rights of the
Series A Junior Participating Preferred Stock so as to affect them adversely
without the affirmative vote of the holders of a majority or more of the
outstanding shares of Series A Junior Participating Preferred Stock, voting
separately as a class.
Section 10. Fractional Shares. Series A Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holder, in
proportion to such holders fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Junior Participating Preferred Stock.
-7-
IN WITNESS WHEREOF, I have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 4th day of
October, 1995.
JOHNSTOWN AMERICA INDUSTRIES, INC.
By: /s/ Andrew M. Weller
-----------------------------
Andrew M. Weller
Executive Vice President and
Chief Financial Officer
-8-
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
WITH AND INTO
JOHNSTOWN AMERICA INDUSTRIES, INC.
(Pursuant to Section 253 of the
General Corporation Law of the State of Delaware)
JOHNSTOWN AMERICA INDUSTRIES, INC., a Delaware corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), DOES
HEREBY CERTIFY:
FIRST: The Corporation owns all of the outstanding shares of common stock
(the only outstanding class of stock) of TRANSPORTATION TECHNOLOGIES INDUSTRIES,
INC., a corporation incorporated on the 11th day of June, 1999 (the
"Subsidiary"), pursuant to the General Corporation Law of the State of Delaware,
8 Del. C. ss. 101 et seq. (the "DGCL").
SECOND: The Corporation, by resolutions (the "Resolutions of Merger") duly
adopted by its Board of Directors, at a meeting thereof duly called and held on
the 9th day of June, 1999, at which a quorum was present and acting throughout,
determined to effect a merger of said Subsidiary into itself, pursuant to
Section 253 of the DGCL, in which the Corporation shall be the surviving
corporation (the "Merger"). A true and correct copy of the Resolutions of Merger
is annexed hereto as Exhibit A and incorporated herein by reference. The
Resolutions of Merger have not been amended, modified, rescinded or revoked and
are in full force and effect on the date hereof.
THIRD: That, as provided in the Resolutions of Merger: (a) Pursuant to
Section 253(b) of the DGCL, upon the Merger becoming effective, the name of the
surviving corporation shall be changed from "Johnstown America Industries, Inc."
to "Transportation Technologies Industries, Inc."
FIFTH: The certificate of incorporation of the Corporation as in effect
immediately prior to the effective time of the Merger shall be the certificate
of incorporation of the surviving corporation.
[signature page follows]
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Ownership and Merger to be executed by its duly authorized officer this 11th day
of June, 1999.
JOHNSTOWN AMERICA INDUSTRIES, INC.
By: /s/ Kenneth M. Tallering
-------------------------------------------
Name: Kenneth M. Tallering
Office: Vice President, General Counsel and
Secretary
-2-
EXHIBIT A
RESOLUTIONS OF MERGER
WHEREAS, Johnstown America Industries, Inc., a Delaware corporation (the
"Corporation"), owns all of the outstanding shares of the capital stock of
Transportation Technologies Industries, Inc., a Delaware corporation
("Subsidiary"); and
WHEREAS, the Board of Directors of the Corporation has deemed it advisable
that the Subsidiary be merged with and into the Corporation pursuant to Section
253 of the General Corporation Law of the State of Delaware (the "DGCL");
NOW, THEREFORE, BE IT RESOLVED, that the Subsidiary be merged with and into
the Corporation pursuant to Section 253 of the DGCL (the "Merger");
RESOLVED, FURTHER, the Corporation shall be the corporation surviving the
Merger and shall continue its corporate existence under the DGCL, including,
without limitation, the provisions of Section 259 of the DGCL, and shall possess
all of the rights and assets of the constituent corporations and be subject to
and be deemed to have hereby assumed, all the liabilities and obligations of
each of the constituent corporations in accordance with the provisions of the
DGCL;
RESOLVED, FURTHER, that by virtue of the Merger and without any action on
the part of the holder thereof, each then outstanding share of common stock of
the Corporation shall remain unchanged and continue to remain outstanding as one
share of common stock of the Corporation, held by the person who was the holder
of such share of common stock of the Corporation immediately prior to the
Merger;
RESOLVED, FURTHER,, that by virtue of the Merger and without any action on
the part of the holder thereof, each then outstanding share of common stock of
the Subsidiary shall be canceled and no consideration shall be issued in respect
thereof;
RESOLVED, FURTHER, that the certificate of incorporation of the
Corporation, as in effect immediately prior to the effective time of the Merger,
shall continue in full force and effect as the certificate of incorporation of
the surviving corporation, until amended as provided by law, except that upon
the effective time of the Merger, in accordance with Section 253(b) of the DGCL,
the certificate of incorporation of the Corporation shall be, and hereby is,
amended to change the name of the Corporation from "Johnstown America
Industries, Inc." to "Transportation Technologies Industries, Inc." Pursuant to
Section 104 of the DGCL, the filed Certificate of Ownership and Merger shall
have the effect of striking the text of Article I of the certificate of
incorporation of the Corporation in its entirety and inserting in lieu thereof
the following:
"ARTICLE I
NAME
The name of the corporation is Transportation Technologies Industries, Inc.
(the "Corporation")."
RESOLVED, FURTHER , that the By-laws of the Corporation, as in effect
immediately prior to the effective time of the Merger, shall continue in full
force and effect as the By-laws of the surviving corporation until amended or
repealed as therein provided, except that the By-laws of the Corporation shall
be, and hereby are, amended to delete the name "Johnstown America Industries,
Inc." wherever it may therein appear, and substitute therefor in all such places
the name "Transportation Technologies Industries, Inc.";
RESOLVED, FURTHER, that the officers and directors of the Corporation
immediately prior to the effective time of the Merger shall continue to be the
officers and directors of the surviving corporation and shall serve until their
respective successors have been duly appointed or duly elected and qualified, as
the case may be;
RESOLVED, FURTHER, that the proper officers of the Corporation be and they
hereby are authorized and directed to make, execute and acknowledge, in the name
and under the corporate seal of the Corporation, a Certificate of Ownership and
Merger for the purpose of effecting the Merger and to file the same in the
office of the Secretary of State of the State of Delaware, and to do all other
acts and things that may be necessary to carry out and effectuate the purpose
and intent of the resolutions relating to the Merger.
-2-
CERTIFICATE OF OWNERSHIP AND MERGER
OF
TRANSPORTATION ACQUISITION I CORP.
WITH AND INTO
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
Pursuant to Section 253 of the General
Corporation Law of the State of Delaware
Transportation Acquisition I Corp. (the "Company"), pursuant to Section 253
of the General Corporation Law of the State of Delaware (the "DGCL"), hereby
certifies as follows:
FIRST: That the name and state of incorporation of each of the constituent
corporations to the merger are as follows:
Name State of Incorporation
---- ----------------------
Transportation Acquisition I Corp. Delaware
Transportation Technologies Industries, Inc. Delaware
SECOND: That the Company owns more than 90% of the outstanding shares of
the Common Stock, par value $0.01 per share, of Transportation Technologies
Industries, Inc., which is the only outstanding class of capital stock of
Transportation Technologies Industries, Inc.;
THIRD: That the sole director of the Company, by written consent dated
March 9, 2000, pursuant to Section 141(f) of the DGCL, duly adopted resolutions
authorizing the merger of the Company with and into Transportation Technologies
Industries, Inc. pursuant to Section 253 of the DGCL (the "Merger"). A true copy
of such resolutions is annexed hereto as Exhibit A. Such resolutions have not
been modified or rescinded and are in full force and effect on the date hereof.
FOURTH: That the stockholders of the Company, by written consent dated
March 9, 2000, pursuant to Section 228 of the DGCL, have approved the merger of
the Company with and into Transportation Technologies Industries, Inc. pursuant
to Section 253 of the DGCL.
FIFTH: That the Company will be merged with and into Transportation
Technologies Industries, Inc., with Transportation Technologies Industries, Inc.
as the corporation surviving the Merger.
SIXTH: That at the effective time of the Merger (the "Effective Time"), the
Restated Certificate of Incorporation of Transportation Technologies Industries,
Inc., shall be
amended in its entirety to read in the form attached hereto as Exhibit B, and
such Restated Certificate of Incorporation shall be the Certificate of
Incorporation of the, surviving corporation.
SEVENTH: That in accordance with Section 103(d) of the DGCL, the Merger
shall be effective upon the filing of this Certificate of Ownership and Merger
with the Secretary of State of the State of Delaware.
-2-
IN WITNESS WHEREOF, Transportation Acquisition I Corp. has caused this
Certificate of Ownership and Merger to be executed in its corporate name this
9th day of March, 2000.
TRANSPORTATION ACQUISITION I CORP.
By: /s/ Thomas M. Begel
--------------------------------------------
Name: Thomas M. Begel
Office: Chairman of the Board and President
-3-
EXHIBIT A
CONSENT IN LIEU OF MEETING
OF
THE SOLE DIRECTOR
OF
TRANSPORTATION ACQUISITION I CORP.
The undersigned., being the sole director of Transportation Acquisition I
Corp., a Delaware corporation (the "Company"), acting pursuant to Section 141(f)
of the General Corporation Law of the State of Delaware, hereby adopts, by this
written consent, the following resolutions and directs that this written consent
be filed with the minutes of the proceedings of the Board of Directors of the
Company:
RESOLVED, that the Company merge itself (the "Merger") with and into
Transportation Technologies Industries, Inc., a Delaware corporation
("TTII"), which shall be the surviving corporation (the "Surviving
Corporation"), pursuant to Section 253 of the General Corporation Law of
the State of Delaware (the "DGCL"); and
FURTHER RESOLVED, that by virtue of the Merger, each issued and
outstanding share of common stock, par value $0.01 per share, of the
Company shall be converted into and become one validly issued, fully paid
and nonassessable share of preferred stock, per value $0.01 per share, of
the Surviving Corporation; and
FURTHER RESOLVED, that by virtue of the Merger, each issued and
outstanding share of preferred stock, par value $0.01 per share, of the
Company shall be converted into and become one validly issued, fully paid
and nonassesssble share of preferred stock, par value $0.01 per share, of
the Surviving Corporation; and
FURTHER RESOLVED, that by virtue of the Merger, each issued and
outstanding share of common stock, par value $0.01 per share, of TTII
immediately prior to the effective time of the Merger (collectively,
"Shares") (other than (i) shares held in TTII's treasury, (ii) shares held
directly or indirectly by the Company or by a Participant (as such term is
defined in the Agreement and Plan of Merger, dated as of January 28, 2000,
between the Company and TTII) and (iii) shares which are held by a
stockholder who has properly exercised appraisal rights with respect
thereto in accordance with Section 262 of the DGCL) shall be converted into
the right to receive $21.50 in cash, without interest (the "Per Share
Amount"), upon surrender of the certificate formerly representing such
Share in accordance with the Agreement and Plan of Merger, dated as of
January 28, 2000, between the Company and TTII; and
FURTHER RESOLVED, that by virtue of the Merger, each Share that is
held in TTII's treasury or that is owned by the Company or any subsidiary
of the Company, shall automatically be cancelled and shall cease to exist,
and no cash or other consideration shall be delivered or deliverable in
exchange therefore; and
FURTHER RESOLVED, that by virtue of the Merger, each Share that is
held by a Participant shall be converted into the right to retain one fully
paid and nonassessable share of common stock, par value $0.01 per share, of
the Surviving Corporation (a "Retained Share"), or the right to receive the
Per Share Amount, upon surrender of the certificate formerly representing
such Share, as agreed to between the Company and each Participant; and
FURTHER RESOLVED, that by virtue of the Merger; each Share to be
converted into the right to receive either the Per Share Amount or the
Retained Shares, when so converted, shall no longer be outstanding and
shall be cancelled and retired and shall cease to exist; and
FURTHER RESOLVED, that at the effective time of the Merger (the
"Effective Time"), the certificate of incorporation of TTII shall be
amended and restated in its entirety to read in the form of the certificate
of incorporation of the Company as in effect immediately prior to the
Effective Time, and such amended and restated certificate of incorporation
shall be the certificate of incorporation of the Surviving Corporation
until thereafter changed or amended in accordance with the provisions
thereof and applicable law; and
FURTHER RESOLVED, that at the effective time of the Merger (the
"Effective Time"), the by-laws of TTII shall be amended and restated in its
entirety to read in the form of the by-laws of the Company as in effect
immediately prior to the Effective Time, and such amended and restated
by-laws shall be the by-laws of the Surviving Corporation until thereafter
changed or amended in accordance with the provisions thereof and applicable
laws; and
FURTHER RESOLVED, that the directors of the Company immediately prior
to the Merger shall be the directors of the Surviving Corporation, each to
hold office until their respective successors are duly elected or appointed
and qualified in the manner provided in the by-laws of the Surviving
Corporation, or as otherwise provided by law; and
FURTHER RESOLVED, that the President or any Vice-President of the
Company, acting individually, and the Secretary of the Company be, and each
of them hereby is, authorized and directed to execute and acknowledge in
the name of and on behalf of the Company, a Certificate of Ownership and
Merger setting forth, among other things, a copy of these resolutions and
the date of their adoption; and that such officers are hereby authorized
and directed to cause such executed Certificate of Ownership and Merger to
be filed in the Office of the Secretary of State of the State of Delaware
and to cause a certified copy of such Certificate to be recorded in the
Office of the Recorder of Deeds of New Castle County, all in accordance
with Sections 103 and 253 of the DGCL; and
FURTHER RESOLVED, that the Merger shall become effective and the
corporate existence of the Company shall cease upon the filing of such
Certificate of Ownership and Merger with the Secretary of State of the
State of Delaware in accordance with Sections 103 and 253 of the DGCL; and
-2-
FURTHER RESOLVED, that the appropriate officers of the Company be, and
each of them hereby is, authorized and directed to take or cause to be
taken all such further actions and to execute and deliver or cause to be
delivered all such further instruments and documents in the name and on
behalf of the Company, and to incur all such fees and expenses as in their
judgment shall be necessary or advisable in order to carry out fully the
intent and purposes of the foregoing resolutions; and
FURTHER RESOLVED, that all actions previously taken by an officer or
director of the Company in connection with the transactions contemplated by
these resolutions are hereby adopted, ratified, confirmed and approved in
all respects.
-3-
EXHIBIT B
RESTATED
CERTIFICATE OF INCORPORATION OF
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
FIRST: The name of the Corporation is TRANSPORTATION TECHNOLOGIES
INDUSTRIES, INC. (the "Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, in the City of Wilmington, County of New
Castle. The name of its registered agent at that address is Corporation Service
Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the
"GCL").
FOURTH: (a) The total number of shares of stock which the Corporation shall
have authority to issue is 20,000,000 shares of common stock, par value $0.01
per share (the "Common Stock"), and 400,000 shares of preferred stock, par value
$0.01 per share (the "Preferred Stock"). The Board of Directors of the
Corporation (the "Board of Directors") has authorized the issuance of 173,000
shares of the 14 1/2% Senior Redeemable Preferred Stock, Series A, with such
powers, preferences, rights, qualifications, limitations and restrictions as are
set forth in Exhibit 1 to this Exhibit B.
(b) The powers, preferences and rights, and the qualifications, limitations
and restriction, of each class of the Common Stock are as follows:
(1) Subject to clause (2) of this paragraph (b) of this Article FOURTH, the
powers, preferences and rights of the shares of Common Stock, and the
qualifications, limitations and restriction thereof, shall be in all respects
identical.
(2) The holders of any outstanding shares of Common Stock shall be entitled
to one vote for each share of Common Stock held of record by such holder and
shall be entitled to vote with respect to all matters as to which a stockholder
of a Delaware corporation would be entitled to vote. Notwithstanding the
foregoing, unless permitted under applicable law (as determined by the affected
holder of Common Stock), if shares of Common Stock owned by any person subject
to the provisions of the Bank Holding Company Act of 1956, as amended (the "BHC
Act") (such person is referred to herein as a "Regulated Entity") represent more
than 5% of the total issued and outstanding shares of Common Stock (including
shares of Common Stock held by affiliates (as defined in the BHC Act) of the
Regulated Entity), those shares that represent the excess over the 5% limit
shall be non-voting Common Stock so long as such shares continue to be held by a
Regulated Entity or its affiliates (as defined in the BHC Act), such shares of
non-voting Common Stock shall not be included in determining whether the
requisite percentage
B-1
of shares has consented to, approved, adopted or taken any action and shall in
all other respects be equivalent to all other outstanding shares of Common
Stock; provided that such shares shall not be non-voting on matters that
significantly and adversely affect the rights or preferences of the Common Stock
as determined by such Regulated Entity. Any Common Stock that is non-voting
pursuant to this paragraph while held by a Regulated Entity shall become voting
upon transfer to any entity that is not a Regulated Entity.
(3) Subject to the rights of the holders of Preferred Stock, holders of
shares of Common Stock shall be entitled to receive dividends and other
distributions in cash, stock or property of the Corporation when, as and if
declared thereon by the Board of Directors from time to time out of assets or
funds of the Corporation legally available therefore.
(4) In the event of any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, the holders of shares of Common
Stock shall be entitled to receive the assets and funds of the Corporation
available for distribution after payments to creditors and to the holders of any
Preferred Stock that may at the time be outstanding, in proportion to the number
of shares held by them, respectively.
(5) Except as otherwise agreed to by the Corporation, no holder of shares
of Common Stock shall be entitled to preemptive or subscription rights.
FIFTH: (a) The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders.
(1) Subject to the other provisions in this Article FIFTH, the business and
affairs off the Corporation shall be managed by or under the direction of the
Board of Directors. The number of directors of the Corporation shall be not less
than 3 nor more than 10, the exact number to be fixed from time to time by the
Board of Directors.
(2) Except as otherwise required by law or the provisions hereof, at all
meetings of the Board of Directors, a majority of the entire Board of Directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting of the time and place of the adjourned meeting, until a quorum shall be
present. Unless otherwise provided herein or in the by-laws of the Corporation,
any action required or permitted to be taken at any meeting of the Board of
Directors or of any committee thereof may be taken without a meeting, if all the
members of the Board of Directors or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
(3) Except as otherwise provided by law or by the by-laws of the
Corporation, the holders of a majority of the capital stock of the Corporation
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders of the Corporation for the transaction of business. If, how-
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ever, such quorum shall not be present or represented at any meeting of the
stockholders of the Corporation, the stockholders of the Corporation entitled to
vote thereat, present in person or represented by proxy, shall have power to
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of the Corporation
entitled to vote at the meeting. Unless otherwise required by law, the by-laws
of the Corporation or by the provisions of Stockholders' Agreement, dated as of
March 9, 2000 (the "Stockholders Agreement"), by and among Caravalle Investment
Fund, L.L.C., CIBC WMC Inc. Albion Alliance Mezzanine Fund, L.P., Albion
Alliance Mezzanine Fund II, L.P., Transportation Technologies Industries, Inc.,
and the persons listed on Exhibit A attached thereto, who are or become
signatories to the Stockholders Agreement, any question brought before any
meeting of stockholders of the Corporation shall be decided by the vote of the
holders of a majority of the stock represented and entitled to vote thereat.
Each stockholder of the Corporation represented at a meeting of stockholders of
the Corporation shall be entitled to cast one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. Any action required or
permitted to be taken at any annual or special meeting of stockholders of the
Corporation, may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those shareholders of the
Corporation who have not consented in writing.
(4) Nothing contained herein or in the Stockholders Agreement, express or
implied, shall relieve any officer or director of the Corporation or any of its
subsidiaries, or any stockholder of the Corporation, of any fiduciary or other
duties or obligations they may have to the stockholders of the Corporation.
(5) Subject to the provisions of the Stockholders Agreement, the directors
shall have concurrent power with the stockholders of the Corporation to make,
alter, amend, change, add to or repeal the by-laws of the Corporation.
(6) The number of directors of the Corporation shall be as from time to
time fixed by, or in the manner provided in, the by-laws of the Corporation.
Election of directors need not be by written ballot unless the by-laws of the
Corporation so provide.
(7) No director shall be personally liable to the Corporation or any of 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)
pursuant to Section 174 of the GCL or (iv) for any transaction from which the
director derived an improper personal benefit. Any repeal or modification of
this Article FIFTH by the stockholders of the Corporation shall not adversely
affect any right or protection
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of a director of the Corporation existing at the time of such repeal or
modification with respect to acts or omissions occurring prior to such repeal or
modification.
(8) In addition to the powers and authority hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation, subject, nevertheless, to the provisions of the GCL, this
Amended and Restated Certificate of Incorporation, any by-laws adopted by the
stockholders and the Stockholders Agreement; provided, however, that no by-laws
hereafter adopted by the stockholders shall invalidate any prior act of the
directors which would have been valid if such by-laws had not been adopted.
SIXTH: At such time as the Corporation has consummated a public offering
and sale of Common Stock for cash pursuant to an effective registration
statement under the Securities Act of 1933, as amended, which public offering
accounted for at least 20% of the outstanding Common Stock of the Corporation on
a fully-diluted basis and yielded net proceeds of not less than $75.0 million,
and without any further action by the Corporation, the Board of Directors or the
Corporation's stockholders, the provisions of this Article SIXTH shall become
and thereafter shall remain effective.
(a) The Board of Directors shall be divided into three classes, designated
Class I, Class II and Class III, with each class consisting, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors. The then Chairman of the Board of the Corporation shall
designate the initial class of each director. The total of the initial Class I
directors shall terminate on the date of the first annual meeting of
stockholders thereafter; the term of the initial Class II directors shall
terminate on the date of the second annual meeting of stockholders thereafter;
and the term of the initial Class III directors shall terminate on the date of
the third annual meeting of stockholders thereafter. At the first annual meeting
of stockholders after the Board of Directors has been divided into classes and
at each annual meeting of stockholders thereafter, successors to the class of
directors whose term expires at that annual meeting shall be elected for a
three-year term. If the number of directors is changed, any increase or decrease
shall be apportioned among the classes so as to maintain the number of directors
in each class as neatly equal as possible, and any additional directors of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of my incumbent director. Any vacancy on the Board of Directors, however
resulting, may be filled only by a majority of the directors then in office,
even if less than a quorum, or by a sole remaining director. Any director
elected to fill a vacancy shall hold office for a term that shall coincide with
the term of the class to which such director shall have been elected. Any or all
of the directors of the Corporation may be removed from office at any time, but
only for cause and only by the affirmative vote of the holders of a majority of
the outstanding shares of stock of the Corporation then entitled to vote
generally in the election of directors.
(b) Special meetings of stockholders of the Corporation for any purpose or
purposes may be called at any time by a majority of the Board of Directors, the
Chairman of the Board of Directors or the President of the Corporation. Special
meetings of stockholders of the
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Corporation may not be called by any other person or persons. Any action
required or permitted to be taken at any annual or special meeting of
stockholders may be taken only upon the vote of the stockholders at an annual or
special meeting duly noticed and called, as provided in the by-laws of the
Corporation, and may not be taken by a written consent of the stockholders
pursuant to the GCL.
SEVENTH: Meetings of stockholders of the Corporation may be held within or
without the State of Delaware, as the by-laws of the Corporation may provide.
The books of the Corporation may be kept (subject to any provision contained in
the GCL) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the by-laws of the
Corporation.
EIGHTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, repeal, alter,
amend or rescind the bylaws of the Corporation; provided, however, that Article
IX of the by-laws of the Corporation shall be amended (a) only with the
affirmative vote of the holders of at least 80% of the outstanding shares of
stock of the Corporation than entitled to vote generally in the election of
directors or (b) by the unanimous vote of the Board of Directors then in office.
NINTH: Except as contemplated by Article TENTH, the affirmative vote of the
holders of at least 80% of the outstanding shares of stock of the Corporation
then entitled to vote generally in the election of directors shall be required
to amend Articles FIFTH, SIXTH, SEVENTH, EIGHTH or NINTH of this Amended and
Restated Certificate of Incorporation, other than technical amendments.
TENTH: Except as otherwise contemplated by the provisions of this Amended
and Restated Certificate of Incorporation, the Corporation reserves the right to
amend, alter, change or repeal any provision contained in this Amended and
Restated Certificate of Incorporation, in the manner now or hereafter prescribed
by statute, and all rights conferred upon stockholders of the Corporation herein
are granted subject to this reservation.
B-5
EXHIBIT 1 TO EXHIBIT B
THE POWERS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 14 1/2%
SENIOR REDEEMABLE PREFERRED STOCK, SERIES A, AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
(a) Designation. There is hereby created out of the authorized and unissued
shares of Preferred Stock of the Corporation a class of Preferred Stock
designated as the "14 1/2% Senior Redeemable Preferred Stock." The number of
shares constituting such class shall be 173,000 and are referred to herein as
the "Senior Preferred Stock." 70,000 shares of Senior Preferred Stock,
designated as the "14 1/2% Senior Redeemable Preferred Stock, Series A," shall
be initially issued with an additional 103,000 shares of Senior Preferred Stock
reserved for issuance in accordance with paragraph (c) (i) hereof. The
Corporation may issue up to one additional series of the Senior Preferred Stock
(designated as the "14 l/2% Senior Redeemable Preferred Stock, Series S")
pursuant to this Resolution and Certificate of Designation to Holders of the 14
1/2% Senior Redeemable Preferred Stock, Series A, in exchange for shares of the
14 1/2% Senior Redeemable Preferred Stock, Series A, as is necessary to comply
with the registration and exchange provisions of the Registration Rights
Agreement and for issuance in accordance with paragraph (c)(i) hereof following
such exchange. The liquidation preference of the Senior Preferred Stock shall be
$1,000.00 per share.
(b) Rank. The Senior Preferred Stock shall, with respect to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation, rank (i) senior (to the extent set forth herein) to all classes
of Common Stock of the Corporation and to each other class of Capital Stock of
the Corporation or series of Preferred Stock of the Corporation hereafter
created the terms of which do not expressly provide that it ranks senior to, or
on a parity with, the Senior Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution of the Corporation
(collectively referred to, together with all classes of Common Stock of the
Corporation, as "Junior Securities"); (ii) on a parity with any class of Capital
Stock of the Corporation or series of Preferred Stock of the Corporation
hereafter created the terms of which expressly provide that such class or series
will rank on a parity with the Senior Preferred Stock as to dividend
distributions and distributions upon liquidation, winding-up and dissolution
(collectively referred to as "Parity Securities"), provided that any such Parity
Securities that were not approved by the Holder in accordance with paragraph
(f)(ii)(A) hereof (to the extent such approval is required) shall be deemed to
be Junior Securities and not Parity Securities; and (iii) junior to each other
class of Capital Stock of the Corporation or series of Preferred Stock of the
Corporation hereafter created the terms of which expressly provide that such
class or series will rank senior to the Senior Preferred Stock as to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation (collectively referred to as "Senior Securities"), provided that
any such Senior Securities that were not approved by the Holders in accordance
with paragraph (f)(ii)(B) hereof shall be deemed to be Junior Securities and not
Senior Securities.
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(c) Dividends.
(i) From the Issue Date, the Holders of the outstanding shares of Senior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available therefor, dividends on each
share of Senior Preferred Stock at a rate per annum, equal to 14 1/2% of the
liquidation preference per share of Senior Preferred Stock. All dividends shall
be cumulative, whether or not earned or declared, an a daily basis from the
Issue Date and shall be payable quarterly in arrears on each Dividend Payment
Date, commencing on the first Dividend Payment Date after the Issue Date. All
unpaid dividends will compound on a quarterly basis at a rate per annum equal to
the then applicable dividend rate. Dividends accumulating on or prior to March
15, 2005, shall be paid by the issuance of additional shares of Senior Preferred
Stock (including fractional shares) having an aggregate liquidation preference
equal to the amount of such dividends. In the event that on or prior to March
15, 2005, dividends are declared and paid through the issuance of additional
shares of Senior Preferred Stock as provided in the previous sentence, such
dividends shall be deemed paid in full and shall not accumulate. Dividends
accumulating after March 15, 2005, must be paid in cash (when, as and if
declared by the Board of Directors out of funds legally available therefor). If
(A) any dividend payable on any Dividend Payment Date subsequent to March 15,
2005, is not paid in full in cash on such Dividend Payment Date, or (B) at any
time, any of the types of Voting Rights Triggering Events described in clauses
(2), (3), (4) or (5) of paragraph (f)(iv)(A) shall have occurred, the per annum
dividend rate will be increased by 2.0% per annum (y) from such Dividend Payment
Date until such dividend is paid in full in cash (in the case of clause (A)
above) or (z) from the occurrence of any such Voting Rights Triggering Event
until the termination of any such Voting Rights Triggering Event (in case of
clause (B) above), as the case may be. After the date on which such dividend is
paid in cash or such Voting Rights Triggering Event ceases to exist, the
dividend rate will revert to the rate originally borne by the Senior Preferred
Stock. Each dividend shall be payable to the Holders of record as they appear on
the stock books of the Corporation on the Dividend Record Date immediately
preceding the related Dividend Payment Date.
(ii) All dividends paid with respect to shares of the Senior Preferred
Stock pursuant to paragraph (c)(i) shall be paid pro rata to the Holders
entitled thereto.
(iii) Dividends accruing after March 15, 2005, on the Senior Preferred
Stock for any past Dividend Period and dividends in connection with any optional
redemption pursuant to paragraph (e)(i) may be declared and paid at any time,
without reference to any Dividend Payment Date, to Holders of record on such
date, not more than forty-five (45) days prior to the payment thereof, as may be
fixed by the Board of Directors.
(iv) (A) No full dividends shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on any Parity Securities for
any period unless (1) full cumulative dividends have been or contemporaneously
are declared and paid in full, or declared and, if payable in cash, a sum in
cash set apart sufficient for such payment, on the Senior Preferred Stock for
all Dividend Periods terminating on or prior to the date of payment of such full
dividends on such Parity Securities and (2) such payment is in compliance with
paragraph (k)(ii) hereof. If any dividends are not so paid, all dividends
declared upon shares of the
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Senior Preferred Stock and any other Parity Securities shall be declared pro
rata so that the amount of dividends declared per share on the Senior Preferred
Stock and such Parity Securities shall in all cases bear to each other the same
ratio that accrued dividends per share on the Senior Preferred Stock and such
Parity Securities bear to each other.
(B) So long as any share of the Senior Preferred Stock is outstanding, the
Corporation shall not declare, pay or set apart for payment any dividend on any
of the Junior Securities (other than dividends in Junior Securities to the
holders of Junior Securities), or make any payment on account of, or set apart
for payment money for a sinking or other similar fund for, the purchase,
redemption or other retirement of, any of the Junior Securities or any warrants,
rights, calls or options exercisable for or convertible into any of the Junior
Securities whether in cash, obligations or shares of the Corporation or other
property (other than in exchange for Junior Securities), and shall not permit
any corporation or other entity directly or indirectly controlled by the
Corporation to purchase or redeem any of the Junior Securities or any such
warrants, rights, calls or options (other than in exchange for Junior
Securities) unless (1) full cumulative dividends determined in accordance
herewith on the Senior Preferred Stock have been paid in full for all full
quarterly dividend periods ended prior to the date of such payment in respect of
Junior Securities and (2) such payment is in compliance with paragraph (k)(ii)
hereof.
(C) So long as any share of the Senior Preferred Stock is outstanding, the
Corporation shall not (except with respect to dividends as permitted by
paragraph (c)(iv)(A)) make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of the Parity Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Parity Securities whether
in cash, obligations or shares of the Corporation or other property, and shall
not permit any corporation or other entity directly or indirectly controlled by
the Corporation to purchase or redeem any of the Parity Securities or any such
warrants, rights, calls or options unless (1) full cumulative dividends
determined in accordance herewith on the Senior Preferred Stock have been or
contemporaneously are paid in full and (2) such payment is in compliance with
paragraph (k)(ii) hereof.
(v) Dividends payable on the Senior Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months and, for periods not involving a full calendar month, the actual number
of days elapsed (not to exceed 30 days).
(vi) Additional Dividends shall become due and payable with respect to the
Senior Preferred Stock on the terms and subject to the conditions set forth in
the Registration Rights Agreement.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the affairs of the Corporation, the Holders of shares of Senior
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders an amount in
cash equal to the liquidation preference for each share outstanding, plus,
without duplication, an amount in cash equal to accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount
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equal to a prorated dividend for the period from the last Dividend Payment Date
to the date fixed for liquidation, dissolution or winding-up) before any
distribution shall be made or any assets distributed in respect of Junior
Securities to the holders of any Junior Securities including, without
limitation, Common Stock of the Corporation. If upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, the
amounts payable with respect to the Senior Preferred Stock and all other Parity
Securities are not paid in full, the Holders of the Senior Preferred Stock and
the Parity Securities will share equally and ratably in any distribution of
assets of the Corporation first in proportion to the full liquidation preference
to which each is entitled until such preferences are paid in full, and then in
proportion to their respective amounts of accumulated but unpaid dividends.
(ii) For the purposes of this paragraph (d), neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding-up
of the affairs of the Corporation.
(e) Redemption.
(i) Optional Redemption. (A) The Corporation may redeem the Senior
Preferred Stock at its option, in whole at any time or in part from time to
time, on or after the Issue Date, subject to contractual and other restrictions
with respect thereto, from any source of funds legally available therefor, in
the manner provided for in paragraph (e)(iii) hereof, at the redemption prices
in cash (expressed as a percentage of the liquidation preference) set forth
below, plus, without duplication, an amount in cash equal to all accumulated and
unpaid dividends (including Additional Dividends, if any) (including an amount
in cash equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date) if
redeemed during the 12-month period beginning on each date listed below:
Issue Date................................. 114.500%
March 15, 2001............................. 114.500%
March 15, 2002............................. 114.500%
March 15, 2003............................. 112.083%
March 15, 2004............................. 109.667%
March 15, 2005............................. 107.250%
March 15, 2006............................. 104.833%
March 15, 2007............................. 102.417%
March 15, 2008 and thereafter ............. 100.000%;
provided that no redemption pursuant to this paragraph (e)(i)(A) shall be
authorized or made unless prior thereto full accumulated and unpaid dividends
(including Additional Dividends, if any) are declared and paid in full, or
declared and a sum in cash is set apart sufficient for such
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payment, on the Senior Preferred Stock for all Dividend Periods terminating on
or prior to the Redemption Date.
(B) In the event of a redemption pursuant to paragraph (e)(i)(A) hereof of
only a portion of the then outstanding shares of Senior Preferred Stock, the
Corporation shall effect such redemption on a pro rata basis according to the
number of shares held by each Holder of Senior Preferred Stock, except that the
Corporation may redeem such shares held by Holders of fewer than one share (or
shares held by Holders who would hold less than one share as a result of such
redemption), as may be determined by the Corporation.
(ii) Mandatory Redemption. On March 15, 2010 (the "Mandatory Redemption
Date"), the Corporation shall redeem, to the extent of funds legally available
therefor, all of the shares of Senior Preferred Stock then outstanding at a
redemption price equal to 100% of the liquidation preference per share, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends (including Additional Dividends, if any) per share (including an
amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date) (the
"Mandatory Redemption Price").
(iii) Procedures for Redemption. At least 15 days and not more than 90 days
prior to the date fixed for any redemption of the Senior Preferred Stock,
written notice (the "Redemption Notice") shall be given by first-class mail,
postage prepaid, to each Holder of record on the record date fixed for such
redemption of the Senior Preferred Stock at such Holder's address as it appears
in the register maintained by the transfer agent for the Senior Preferred Stock,
provided that no failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the redemption of any shares of Senior
Preferred Stock to be redeemed except as to the Holder or Holders to whom the
Corporation has failed to give said notice or except as to the Holder or Holders
whose notice was defective. The Redemption Notice shall state:
(1) that the redemption is pursuant to paragraph (e)(i)(A) hereof;
(2) the redemption price;
(3) whether all or less than all the outstanding shares of Senior
Preferred Stock are to be redeemed and the total number of shares of Senior
Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the Holder is to surrender to the Corporation, in the manner,
at the place or places and at the price designated, his certificate or
certificates representing the shares of Senior Preferred Stock to be
redeemed; and
(6) that dividends on the shares of Senior Preferred Stock to be
redeemed shall cease to accumulate on such Redemption Date unless the
Corporation defaults in the payment of the redemption price.
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(C) Each Holder of Senior Preferred Stock shall surrender the certificate
or certificates representing such shares of Senior Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full redemption price for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(D) On and after the Redemption Date, unless the Corporation defaults in
the payment in full of the applicable redemption price, dividends on Senior
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and all rights of the Holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the redemption price; provided, however, that if a notice of redemption
shall have been given as provided in paragraph (iii)(A) above and the funds
necessary for redemption (including an amount in cash in respect of all
dividends that will accumulate to the Redemption Date) shall have been
irrevocably deposited in trust for the equal and ratable benefit for the Holders
of the shares of Senior Preferred Stock to be redeemed, then, at the close of
business on the Business Day on which such funds are segregated and set aside,
the Holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the redemption price.
(f) Voting Rights.
(i) The Holders of Senior Preferred Stock, except as otherwise required
under Delaware law or as set forth in paragraphs (ii), (iii) and (iv) below,
shall not be entitled or permitted to vote on any matter required or permitted
to be voted upon by the stockholders of the Corporation.
(ii) (A) So long as any shares of Senior Preferred Stock are outstanding,
the Corporation shall not authorize or issue any class of Parity Securities
without the affirmative vote or consent of Holders of at least a majority of the
then outstanding shares of Senior Preferred Stock, voting or consenting, as the
case may be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting; provided, however, that no
such vote or consent shall be necessary in connection with the issuance of
additional shares of Senior Preferred Stock pursuant to the provisions of
paragraph (c) of this Certificate of Designation.
(B) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not authorize or issue any class of Senior Securities without
the affirmative vote or consent of Holders of at least a majority of the
outstanding shares of Senior Preferred Stock, voting or consenting, as the case
may be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(C) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not amend its Certificate of Incorporation or this Resolution
and Certificate of Designation so as to affect adversely the rights,
preferences, privileges or voting rights of
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Holders of shares of Senior Preferred Stock without the affirmative vote or
consent of Holders of at least a majority of the issued and outstanding shares
of Senior Preferred Stock, voting or consenting, as the case may be, as one
class, given in person or by proxy, either in writing or by resolution adopted
at an annual or special meeting; provided, however, that, without the
affirmative vote or consent of each Holder of shares of Senior Preferred Stock
affected, an amendment may not: (I) reduce the percentage of outstanding shares
of Senior Preferred Stock whose Holders must consent to an amendment; (II)
reduce the rate of or change the time for payment of dividends (including
Additional Dividends) on any share of Senior Preferred Stock; (III) reduce the
liquidation preference of or change or have the effect of changing the fixed
redemption date of any share of Senior Preferred Stock, or change the date on
which any share of Senior Preferred Stock may be subject to redemption or
repurchase, or reduce the redemption or repurchase price therefor; (IV) make any
share of Senior Preferred Stock payable in money other than that stated herein;
or (V) affect the ranking of the Senior Preferred Stock in a manner adverse to
the Holders.
(iii) Without the affirmative vote or consent of Holders of a majority of
the issued and outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, as a separate class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting, the Corporation shall not, in a single transaction or series of related
transactions, consolidate with or merge with or into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets to,
another Person unless: (I) at or prior to the consummation of such transaction
all of the then outstanding shares of the Senior Preferred Stock are redeemed in
accordance with the provisions of this Certificate of Designation or (II) (A)
either (1) the Corporation is the continuing Person or (2) the Person (if other
than the Corporation) formed by such consolidation or into which the Corporation
is merged or to which the properties and assets of the Corporation are sold,
assigned, transferred, leased, conveyed or otherwise disposed of shall be a
corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia and shall expressly assume all of the
obligations of the Corporation under this Resolution and Certificate of
Designation and the obligations hereunder and thereunder shall remain in full
force and effect; (B) if the Corporation is not the surviving Person, the Senior
Preferred Stock shall be converted into or exchanged for and shall become shares
of such successor, transferee or resulting Person, having in respect of such
successor, transferee or resulting Person the same powers, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, and ranking in relation to
all other Capital Stock then outstanding, that the Senior Preferred Stock had
immediately prior to such transaction; (C) except in the case of the Merger,
immediately after giving effect to such transaction on a pro forma basis the
Corporation or such Person (1) could incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with paragraph
(k)(i) and (2) will have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Corporation immediately prior to such transaction;
and (D) except in the case of the Merger, immediately after giving effect to
such transaction (including any Indebtedness incurred or anticipated to be
incurred in connection with the transaction), no Voting Rights Triggering Event
shall have occurred or be continuing.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the
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properties or assets of one or more Restricted Subsidiaries of the Corporation,
the Capital Stock of which constitutes all or substantially all of the
properties and assets of the Corporation shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Corporation.
(iv) (A) If (1) after March 15, 2005, cash dividends on the Senior
Preferred Stock are in arrears and unpaid for three or more quarterly Dividend
Periods (whether or not consecutive) (a "Dividend Default"); (2) the Corporation
fails to redeem all of the then outstanding shares of Senior Preferred Stock on
or before the Mandatory Redemption Date or otherwise fails to discharge any
redemption obligation with respect to the Senior Preferred Stock; (3) the
Corporation fails to make a Change of Control Offer following a Change of
Control if such Change of Control Offer is required by paragraph (g) hereof or
fails to purchase shares of Senior Preferred Stock from Holders who elect to
have such shares purchased pursuant to the Change of Control Offer; (4) the
Corporation breaches or violates one of the provisions set forth in paragraph
(c)(iv), (d), (f)(ii), (f)(iii) or (k) hereof and the breach or violation
continues for a period of 60 says or more after the Corporation receives written
notice thereof specifying the default from the Holders of at least 25% of the
shares of Senior Preferred Stock then outstanding; or (5) the Corporation fails
to pay when due (giving effect to any applicable grace periods and any waiver or
extension thereof) principal, interest or premium with respect to any
Indebtedness of the Corporation or any Restricted Subsidiary thereof, or any
such Indebtedness is accelerated, if the aggregate amount of such Indebtedness,
together with the amount of any other such Indebtedness in default for failure
to pay principal, interest or premium or which has been accelerated, aggregates
$10.0 million or more at any time; then in the case of any of clauses (1)
through (5) (each of such clauses (1) through (5) a "Voting Rights Triggering
Event"), the number of directors constituting the Board of Directors shall be
adjusted by the number, if any, necessary to permit the Holders of the Senior
Preferred Stock, voting or consenting separately and as one class, to elect the
lesser of two directors or that number of directors constituting at least 20% of
the Board of Directors; provided, that, in the event more than one of the above
defaults occurs, at the same or at different times, the maximum number of
directors that such Holders shall be entitled to elect is the lesser of two
directors and that number of directors constituting 20% of the Board of
Directors. Holders of a majority of the issued and outstanding shares of Senior
Preferred Stock, voting separately and as one class, shall have the exclusive
right to elect the lesser of two directors or 20% of the members of the Board of
Directors at a meeting therefor called upon occurrence of such Voting Rights
Triggering Event, and at every subsequent meeting at which the terms of office
of the directors so elected by the Holders of Senior Preferred stock expire
(other than as described in paragraph (f)(iv)(B) below).
(B) The right of the Holders of the Senior Preferred Stock voting or
consenting together as a separate class to elect members of the Board of
Directors as set forth in paragraph (f)(iv)(A) above shall continue until such
time as (x) in the event such right arises due to a Dividend Default, all
accumulated dividends that are in arrears on the Senior Preferred Stock are paid
in full in cash, and (y) in all other cases, the failure, breach or default
giving rise to such Voting Rights Triggering Event is remedied, cured or waived
by the Holders of at least a majority of the shares of Senior Preferred Stock
then outstanding and entitled to vote thereon, at which time (1) the special
right of the Holders of Senior Preferred Stock so to vote or consent as a class
for the election of directors and (2) the term of office of the directors
elected by the Holders of
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Senior Preferred Stock shall each terminate and the directors elected by the
holders of Common Stock or Capital Stock (other than the Senior Preferred Stock)
shall constitute the entire Board of Directors. At any time after voting power
to elect directors shall have become vested and be continuing in the Holders of
Senior Preferred Stock pursuant to this paragraph (f)(iv), or if vacancies shall
exist in the offices of directors elected by the Holders of Senior Preferred
Stock, (1) the Holders of a majority of the issued and outstanding shares of
Senior Preferred Stock may consent to the election of directors which such
Holders are entitled to elect or (2) a proper officer of the Corporation may,
and upon the written request of the Holders of record of at least 25% of the
shares of Senior Preferred Stock then outstanding addressed to the secretary of
the Corporation shall, call a special meeting of the Holders of Senior Preferred
Stock, for the purpose of electing the directors which such Holders are entitled
to elect. If such meeting shall not be called by a proper officer of the
Corporation within 20 days after personal service of said written request upon
the secretary of the Corporation, or within 20 days after mailing the same
within the United States by certified mail, addressed to the secretary of the
Corporation at its principal executive offices, then the Holders of record of at
least 25% of the outstanding shares of Senior Preferred Stock may designate in
writing one Holder to call such meeting at the expense of the Corporation, and
such meeting may be called by the Person so designated upon the notice required
for the annual meetings of stockholders of the Corporation and shall be held at
the place for holding the annual meetings of stockholders. Any Holder of Senior
Preferred Stock so designated shall have, and the Corporation shall provide,
access to the lists of stockholders to be called pursuant to the provisions
hereof.
(C) At any meeting held for the purpose of electing directors at which the
Holders of Senior Preferred Stock shall have the right, voting together as a
separate class, to elect directors as aforesaid, the presence in person or by
proxy of the Holders of at least a majority of the outstanding shares of Senior
Preferred Stock entitled to vote thereat shall be required to constitute a
quorum of the Senior Preferred Stock.
(D) Any vacancy occurring in the office of a director elected by the
Holders of the Senior Preferred Stock may be filled by the remaining director
elected by the Holders of the Senior Preferred Stock unless and until such
vacancy shall be filled by the Holders of the Senior Preferred Stock.
(v) In any case in which the Holders of the Senior Preferred Stock shall be
entitled to vote pursuant to this paragraph (f) or pursuant to Delaware law,
each holder of Senior Preferred Stock entitled to vote with respect to such
matter shall be entitled to one vote for each share of Senior Preferred Stock
held.
(g) Change of Control.
(i) Upon the occurrence of a Change of Control (the date of such occurrence
being the "Change of Control Date"), the Corporation shall make an offer to
purchase (the "Change of Control Offer") the outstanding shares of Senior
Preferred Stock at a purchase price equal to 101% of the liquidation preference
thereof, plus, without duplication, an amount in cash equal to all accumulated
and unpaid dividends (including Additional Dividends, if any) thereon (including
an amount in cash equal to a prorated dividend for the period from the
immediately
B-1-9
preceding Dividend Payment Date to the Change of Control Payment Date) (the
"Change of Control Purchase Price").
(ii) Within 30 days of the occurrence of a Change of Control, the
Corporation also shall send by first-class mail, postage prepaid, to each Holder
of Senior Preferred Stock, at the address appearing in the register maintained
by the transfer agent for the Senior Preferred Stock, a notice stating:
(1) that the Change of Control Offer is being made pursuant to this
paragraph (g) and that all of the Senior Preferred Stock tendered will be
accepted for payment, and otherwise subject to the terms and conditions set
forth herein;
(2) the Change of Control Purchase Price and the purchase date (which
shall be a Business Day no earlier than 30 days nor later than 45 days from
the date such notice is mailed (the "Change of Control Payment Date"));
(3) that any of the Senior Preferred Stock not tendered will continue
to accumulate dividends;
(4) that, unless the Corporation defaults in the payment of the Change
of Control Purchase Price, any of the Senior Preferred Stock accepted for
payment pursuant do the Change of Control Offer shall cease to accumulate
dividends after the Change of Control Payment Date;
(5) that Holders accepting the offer to have their Senior Preferred
Stock purchased pursuant to a Change of Control Offer will be required to
surrender their certificates representing the Senior Preferred Stock to the
Corporation, properly endorsed for transfer together with such customary
documents as the Corporation and the transfer agent may reasonably require,
in the manner and at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control Payment
Date;
(6) that Holders will be entitled to withdraw their acceptance if the
Corporation receives, not later than the close of business on the third
Business Day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the number of shares of Senior Preferred Stock delivered for
purchase, and a statement that such Holder is withdrawing its election to
have such Senior Preferred Stock purchased;
(7) that Holders whose shares of Senior Preferred Stock are being
purchased only in part will be issued new certificates representing the
number of shares of Senior Preferred Stock equal to the unpurchased portion
of the certificates surrendered; and
(8) any other reasonable procedures that a Holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance.
B-1-10
(iii) The Corporation 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 shares of Senior Preferred Stock pursuant to a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the provisions of this paragraph (g), the Corporation will comply
with the applicable securities laws and regulations and will not be deemed to
have breached its obligations under this paragraph (g) by virtue thereof.
(iv) On the Change of Control Payment Date, the Corporation shall (A)
accept for payment the shares of Senior Preferred Stock validly tendered
pursuant to the Change of Control Offer, (B) promptly mail to the Holders of
shares so accepted the Change of Control Purchase Price therefor in cash and (C)
cancel and retire each surrendered certificate and execute a new certificate
representing that number of shares of Senior Preferred Stock equal to any
unpurchased shares represented by a certificate surrendered. Unless the
Corporation defaults in the payment for the shares of Senior Preferred Stock
tendered pursuant to the Change of Control Offer, dividends shall cease to
accumulate with respect to the shares of Senior Preferred Stock tendered and all
rights of Holders of such tendered shares shall terminate, except for the right
to receive payment therefor, on the Change of Control Payment Date.
(v) If the repurchase of the Senior Preferred Stock pursuant to this
paragraph (g) would violate or constitute a default or be otherwise prohibited
under any Indebtedness of the Corporation then outstanding, then,
notwithstanding anything to the contrary contained above, prior to complying
with the foregoing provisions, but in any event within 30 days following the
Change of Control Date, the Corporation shall, to the extent required to permit
the repurchase of the Senior Preferred Stock required by this paragraph (g),
either (A) repay in full all obligations and terminate all commitments under or
in respect of all outstanding Indebtedness the terms of which prohibit the
purchase by the Corporation of the Senior Preferred Stock upon a Change of
Control in compliance with the terms of this paragraph (g) or offer to repay in
full all obligations and terminate all commitments under or in respect of all
such Indebtedness and repay the Indebtedness owed to each such lender who has
accepted such offer or (B) obtain the requisite consents, if any, under such
Indebtedness containing such prohibition to permit the repurchase of the Senior
Preferred Stock required by this paragraph (g). The Corporation must first
comply with the covenant described in the preceding sentence before it shall be
required to purchase shares of Senior Preferred Stock in the event of a Change
of Control; provided that the Corporation's failure to consummate a Change of
Control Offer in accordance with the provisions of this covenant due to the
covenant described in the immediately preceding sentence shall constitute a
Voting Rights Triggering Event described in clause (3) of the definition of
"Voting Rights Triggering Event."
(h) Conversion or Exchange. The Holders of shares of Senior Preferred Stock
shall not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Corporation other than as provided in
this Resolution and Certificate of Designation and the Registration Rights
Agreement.
B-1-11
(i) Reissuance of Senior Preferred Stock. Shares of Senior Preferred Stock
that have been issued and reacquired in any manner, including shares purchased
or redeemed or exchanged, shall (upon compliance with any applicable provisions
of the laws of Delaware) have the status of authorized and unissued shares of
Preferred Stock undesignated as to series and may be redesignated and reissued
as part of any series of Preferred Stock; provided that shares of Senior
Preferred Stock reacquired pursuant to the exchange offer contemplated by the
Registration Rights Agreement shall be reissued as Senior Preferred Stock with
the series designation referred to in paragraph (a) hereof; and provided,
further, that any issuance of such shares of Senior Preferred Stock must be in
compliance with the terms hereof.
(j) Business Day. If any payment, redemption or exchange shall be required
by the terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(k) Certain Covenants.
(i) Limitation on Additional Indebtedness. The Corporation will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
incur any Indebtedness (including Acquired Indebtedness); provided that, from
and after the Effective Time, the Corporation or any of its Restricted
Subsidiaries may incur Indebtedness (including Acquired Indebtedness) if, after
giving effect to the incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, the Corporation's Consolidated Fixed Charge
Coverage Ratio is at least 2.0 to 1 if the Indebtedness is incurred prior to
September 9, 2001 and 2.25 to 1 if the Indebtedness is incurred thereafter.
Notwithstanding the foregoing, the Corporation and its Restricted
Subsidiaries may incur Permitted Indebtedness.
Notwithstanding any other provision of this paragraph (k)(i), in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness or is otherwise entitled to be incurred
pursuant to this paragraph (k)(i), the Corporation may, in its sole discretion,
classify (or reclassify) such item of Indebtedness in any manner that complies
with this paragraph and such items of Indebtedness will be treated as having
been incurred pursuant to only one of the categories of Permitted Indebtedness
or pursuant to the first paragraph hereof. Accrual of interest or accretion of
accreted value will not be deemed to be an incurrence of Indebtedness for
purposes of this paragraph.
(ii) Limitation on Restricted Payments.
(A) The Corporation will not make, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, make any Restricted Payment;
provided that from and after the Effective Time the Corporation and its
Restricted Subsidiaries may make Restricted Payments if:
(1) no Voting Rights Triggering Event shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
B-1-12
(2) immediately after giving pro forma effect to such Restricted
Payment, the Corporation could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with paragraph (k)(i);
and
(3) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of, without duplication:
(a) 50% of the Corporation's Cumulative Consolidated Net Income
(or minus 100% of any cumulative deficit in Consolidated Net Income
during such period);
(b) 100% of the aggregate Net Proceeds received by the
Corporation from the issue or sale after the Issue Date of Capital
Stock (other than Disqualified Capital Stock or Capital Stock of the
Corporation issued to any Subsidiary of the Corporation or to an
employee stock ownership plan or other trust established by the
Corporation or any of its Subsidiaries for the benefit of their
employees to the extent the purchase by such plan or trust is financed
by Indebtedness of such plan or trust and for which the Corporation is
liable as guarantor or otherwise) of the Corporation or any
Indebtedness or other securities of the Corporation convertible into
or exercisable or exchangeable for Capital Stock (other than
Disqualified Capital Stock) of the Corporation which have been so
converted, exercised or exchanged, as the case may be;
(c) without duplication of any amounts included in clause (3) (b)
above, 100% of the aggregate Net Proceeds received by the Corporation
from any equity contribution from a holder of the Corporation's
Capital Stock; and
(d) without duplication, the sum of:
(i) the aggregate amount returned in cash on or with respect
to an investment; (other than a Permitted Investment) made
subsequent to the Issue Date whether through interest payments,
principal payments, dividends and other distributions;
(ii) the net proceeds received by the Corporation or any of
its Restricted Subsidiaries from the disposition (other than to
the Corporation or a Subsidiary of the Corporation), retirement
or redemption of all or any portion of an Investment described in
clause (3) (d)(i); and
(iii) upon redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary, the fair market value of the net assets of
such Subsidiary;
provided, however, that, with respect to an Investment in any Person,
the sum of clauses (i), (ii) and (iii) above with respect to the
Investment in such Person may
B-1-13
not exceed the aggregate amount of all Investments made in such Person
subsequent to the Issue Date.
For purposes of determining under clause (3) above, the amount expended for
Restricted Payments, cash distributed shall be valued at the face amount thereof
and property other than cash shall be valued at its fair market value.
(B) The provisions of this covenant shall not prohibit
(1) from and after the Effective Time, the payment of any
distribution within 60 days after the date of declaration thereof, if
at such date of declaration such payment would comply with the
provisions of this Resolution and Certificate of Designation;
(2) from and after the Effective Time, the repurchase,
redemption, defeasance or other acquisition or retirement of any
shares of Capital Stock of the Corporation by conversion into, or by
or in exchange for, shares of Capital Stock of the Corporation (other
than Disqualified Capital Stock), or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the
Corporation or to an employee stock ownership plan or other trust
established by the Corporation or any of its Subsidiaries for the
benefit of their employees to the extent the purchase by such plan or
trust is financed by Indebtedness of such plan or trust and for which
the Corporation is liable as guarantor or otherwise) of other shares
of Capital Stock of the Corporation (other than Disqualified Capital
Stock);
(3) Restricted Payments made pursuant to the terms of the Tender
Offers and the Agreement and Plan of Merger, Including transaction
fees and expenses;
(4) the repurchase of shares of, or options to purchase shares
of, Common Stock of the Corporation or any of its Subsidiaries from
employees, former employees, directors or former directors of the
Corporation or any of its Subsidiaries (or permitted transferees of
such employees, former employees, directors or former directors),
pursuant to the terms of the agreements (including employment
agreements and stockholders' agreements) or plans (or amendments
thereto) approved by the Board of Directors under which such persons
purchase or sell or are granted the option to purchase or sell, shares
of such Common Stock; provided, however, that the aggregate amount of
such repurchases shall not exceed $1.0 million; and
(5) so long as no Voting Rights Triggering Event shall have
occurred and be continuing, the payment of management and other
related fees (including, without limitation, director's fees) not to
exceed during any fiscal year an amount equal to $1.5 million plus the
amount of previously accrued but unpaid management fees and related
fees from prior fiscal years.
(C) In calculating the aggregate amount of Restricted Payments made
subsequent to the Issue Date for purposes of clause (A)(3), amounts expended
pursuant to clauses (B)(1) and (4) shall be included in such calculation.
B-1-14
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 acquired, transferred or issued to or by the Corporation or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
(iii) Limitation on Transactions with Affiliates.
(A) The Corporation will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction or series of
related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or services) with or for the benefit of
any Affiliate (each, an "Affiliate Transaction") or extend, renew, waive or
otherwise modify the terms of any Affiliate Transaction entered into prior to
the Issue Date unless
(1) such Affiliate Transaction is between or among the Corporation and
one or more of its Wholly Owned Subsidiaries; or
(2) the terms of such Affiliate Transaction are fair and reasonable to
the Corporation or such Restricted Subsidiary, as the case may be, and the
terms of such Affiliate Transaction are at least as favorable as the terms
which could be obtained by the Corporation or such Restricted Subsidiary,
as the case may be, in a comparable transaction made on an arm's-length
basis between unaffiliated parties.
(B) In any Affiliate Transaction (or any series of related Affiliate
Transactions which are similar or part of a common plan) involving an amount or
having a fair market value in excess of $1.0 million which is not permitted
under clause (A)(1) above, the Corporation must obtain a resolution of the Board
of Directors of the Corporation certifying that such Affiliate Transaction
complies with clause (A)(2) above. In any Affiliate Transaction (or any series
of related Affiliate Transactions which are similar or part of a common plan)
involving an amount or having a fair market value in excess of $5.0 million
which is not permitted under clause (A)(1) above, the Corporation must obtain a
favorable written opinion as to the fairness of such transaction or
transactions, as the case may be, from an Independent Financial Advisor.
(C) The foregoing provisions will not apply to
(1) from and after the Effective Time, any Restricted Payment that is
not prohibited by paragraph (k)(ii);
(2) from and after the Effective Time, reasonable fees and
compensation paid to, and indemnity provided on behalf of, officers,
directors or employees of the Corporation or any Restricted Subsidiary of
the Corporation as determined in good faith by the Corporation's Board of
Directors;
(3) the grant of stock options, restricted stock or similar rights to
employees and directors of the Corporation pursuant to plans approved by
the Corporation's Board of Directors;
B-1-15
(4) loans or advances to employees in the ordinary course of business
in accordance with the past practices of the Corporation or its Restricted
Subsidiaries, but in any event not to exceed $1.0 million in the aggregate
outstanding at any one time;
(5) any agreement as in effect as of the Issue Date or any amendment
thereto or any transaction contemplated thereby (including pursuant to any
amendment thereto) in any replacement agreement thereto so long as any such
amendment or replacement agreement is not more disadvantageous to the
Holders in any material respect than the original agreement as in effect on
the Issue Date;
(6) issuances of Capital Stock of the Corporation (other than
Disqualified Capital Stock);
(7) any transaction between the Corporation and any of its Affiliates
involving ordinary course of business investment banking, commercial
banking, financial advisory services and related activities;
(8) any of the Transactions; and
(9) the payment of management and other related fees (including,
without limitation, director's fees) not to exceed during any fiscal year
an amount equal to $1.5 million plus the amount of previously accrued but
unpaid management fees and related fees from prior fiscal years.
(iv) Limitation on Asset Sales.
(A) Prior to the Effective Time, the Corporation will not, and will not
permit any of its Restricted Subsidiaries to, consummate an Asset Sale. From and
after the Effective Time, the Corporation will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless
(1) the Corporation or such Restricted Subsidiary, as the case may be,
receives consideration at the time of such sale or other disposition at
least equal to the fair market value of the assets sold or otherwise
disposed of;
(2) not less than 80% of the consideration received by the Corporation
or such Restricted Subsidiary, as the case may be, is in the form of cash
or Cash Equivalents other than in the case where the Corporation is
undertaking a Permitted Asset Swap; provided that the following will be
deemed to be cash for purposes of this clause (2):
(a) any liabilities (as shown on the Corporation's or such
Restricted Subsidiary's most recent balance sheet) of the Corporation
or any Restricted Subsidiary (other than contingent liabilities) that
are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Corporation or such
Restricted Subsidiary from further liability; and
B-1-16
(b) any securities, notes or other obligations received by the
Corporation or any such Restricted Subsidiary from such transferee
that are converted by the Corporation or such Restricted Subsidiary
into cash (to the extent of the cash received in that conversion)
within 180 days after the applicable Asset Sale; and
(3) the Asset Sale Proceeds received by the Corporation or such
Restricted subsidiary are applied:
(a) first, to the extent the Corporation or any such Restricted
Subsidiary, as the case may be, elects, or is required, to prepay,
repay or purchase Indebtedness under any then existing Indebtedness of
the Corporation or any such Restricted Subsidiary within 180 days
following the receipt of the Asset Sale Proceeds from any Asset Sale;
provided that any such repayment, to the extent relating to revolving
credit, must result in a permanent reduction of the commitments
thereunder in an amount equal to the principal amount so repaid;
(b) second, to the extent of the balance of Asset Sale Proceeds
after application as described above, to the extent the Corporation
elects, to an Investment in property or other assets (including
Capital Stock or other securities purchased in connection with the
acquisition of Capital Stock or property of another Person) in
compliance with paragraph (k) (v) within 365 days following receipt of
such Asset Sale Proceeds; and
(c) third, if on such 180th day in the case of clause (3)(a) or
on such 365th day in the case of clause (3)(b) with respect to any
Asset Sale, the Available Asset Sale Proceeds exceed $5.0 million, the
Corporation must apply an amount equal to the Available Asset Sale
Proceeds to an offer to repurchase the Senior Preferred Stock (the
"Excess Proceeds Offer"), at a purchase price in cash equal to 100% of
the liquidation preference thereof plus, without duplication, an
amount in cash equal to all accumulated and unpaid dividends
(including Additional Dividends, if any) (including an amount in cash
equal to a prorated dividend from the period from the Dividend Payment
Date immediately prior to the Excess Proceeds Payment Date to the
Excess Proceeds Payment Date (an "Excess Proceeds Purchase Price").
(B) If an Excess Proceeds Offer is not fully subscribed, the Corporation
may retain the portion of the Available Asset Sale Proceeds not required to
repurchase Senior Preferred Stock.
(C) If the Corporation is required to make an Excess Proceeds Offer, the
Corporation shall send by first-class mail, postage prepaid, within 30 days
following the date specified in clause (3)(c) above, a notice to each Holder of
Senior Preferred Stock stating:
(1) that such Holders have the right to require the Corporation to
apply the Available Asset Sale Proceeds to repurchase Senior Preferred
Stock in accordance with this paragraph (k)(iv);
B-1-17
(2) the Excess Proceeds Purchase Price and the purchase date (which
shall be a Business Day no earlier than 30 days and not later than 45 days
from the date such notice in mailed (the "Excess Proceeds Payment Date"));
(3) that any Senior Preferred Stock not tendered will continue to
accumulate dividends;
(4) that, unless the Corporation defaults in the payment of the Excess
Proceeds Purchase Price, any Senior Preferred Stock accepted for payment
pursuant to the Excess Proceeds Offer, shall cease to accumulate dividends
after the Excess Proceeds Payment Date;
(5) that Holders accepting the offer to have their Senior Preferred
Stock purchased pursuant to an Excess Proceeds Offer will be required to
surrender their the certificates representing the Senior Preferred Stock to
the Corporation, properly endorsed for transfer together with such
customary documents as the Corporation and the transfer agent may
reasonably require, in the manner and at the address specified in the
notice prior to the close of business on the Business Day preceding the
Excess Proceeds Payment Date;
(6) that Holders will be entitled to withdraw their acceptance of the
Excess Proceeds Offer if the Corporation receives, not later than the close
of business on the third Business Day preceding the Excess Proceeds Payment
Date, a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the number of shares of Senior Preferred Stock
delivered for purchase, and a statement that such Holder is withdrawing its
election to have such Senior Preferred Stock purchased;
(7) that if the aggregate liquidation preference of the Senior
Preferred Stock surrendered by Holders exceeds the amount of Available
Asset Sale Proceeds, the Corporation shall select the Senior Preferred
Stock to be purchased on a pro rata basis;
(8) that Holders whose Senior Preferred Stock are being purchased only
in part will be issued new certificates representing the number of shares
of Senior Preferred Stock equal to the unpurchased portion of the
certificates surrendered;
(9) the calculations used in determining the amount of Available Asset
Sale Proceeds to be applied to the purchase of such Senior Preferred Stock;
and
(10) any other procedures that a Holder must follow to accept an
Excess Proceeds Offer or effect withdrawal of such acceptance.
On the Excess Proceeds Payment Date, the Corporation shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, Senior
Preferred Stock or portions thereof tendered pursuant to the Excess Proceeds
Offer. The Corporation shall promptly mail to each Holder so accepted payment in
an amount equal to the purchase price for such Senior Preferred Stock, and the
Corporation shall execute and issue to such Holder, a new certificate
representing any unpurchased portion of the Senior Preferred Stock surrendered.
B-1-18
(D) In the event of the transfer of substantially all of the property and
assets of the Corporation and its Restricted Subsidiaries as an entirety to a
Person in a transaction permitted under paragraph (f)(iii), the successor Person
shall be deemed to have sold the properties and assets of the Corporation and
its Restricted Subsidiaries not so transferred for purposes of this covenant,
and shall comply with the provisions of this covenant with respect to such
deemed sale as if it were an Asset Sale.
(E) The Corporation will comply with the requirements of Rule 14e-1 under
the Exchange Act and other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Senior Preferred Stock pursuant to an Excess Proceeds Offer. To
the extent that the provisions of any securities laws or regulations conflict
with the provisions of this paragraph (k)(iv), the Corporation will comply with
the applicable securities laws and regulations and will not be deemed to have
breached its obligations under the provisions of this paragraph (k)(iv) by
virtue thereof.
(v) Limitation on Conduct of Business. The Corporation and its Restricted
Subsidiaries will not engage in any businesses which are not the same, similar,
ancillary, complementary or related to the businesses in which the Corporation
and its Restricted Subsidiaries are engaged in on the Issue Date.
Notwithstanding the foregoing, the Corporation may acquire and operate any
business which at the time of acquisition is primarily the same, similar,
ancillary or related to the businesses in which the Corporation and its
Restricted Subsidiaries are engaged in on the Issue Date. Notwithstanding the
foregoing, prior to the Effective Time, the Corporation shall not engage in any
business or activities other than holding the TTII Stock and activities related
thereto.
(vi) Limitation on Sale and Lease-Back Transactions. The Corporation will
not, and will not permit any of its Restricted Subsidiaries to, enter into any
Sale and Lease-Back Transaction; provided that from and after the Effective Time
the Corporation or any Restricted Subsidiary may enter into a Sale and
Lease-Back Transaction if:
(1) the Corporation or such Restricted Subsidiary could have
(a) incurred Indebtedness (other than Permitted Indebtedness) in
an amount equal to the Attributable Indebtedness relating to such Sale
and Lease-Back Transaction under paragraph (k)(i); and
(b) incurred a Lien to secure such Indebtedness pursuant to
paragraph (k)(vii) (assuming solely for purposes of this clause (b)
that the Attributable Indebtedness relating to such Sale and
Lease-Back Transactions constituted Capitalized Lease Obligations);
(2) the gross cash proceeds of that Sale and Lease-Back Transaction
are at least equal to the fair market value of the property sold; and
(3) the transfer of assets in that Sale and Lease-Back Transaction is
permitted by, and the Corporation or such Restricted subsidiary, as the
case may be, applies the proceeds of such transaction in compliance with,
paragraph (k)(iv).
B-1-19
(vii) Limitation on Liens. The Corporation will not, and will not permit
any of its Restricted Subsidiaries to, create, incur or otherwise cause or
suffer to exist or become effective any Liens of any kind (other than Permitted
Liens) upon any property or asset of the Corporation or any of its Restricted
Subsidiaries or any shares of Capital Stock or Indebtedness of any Restricted
Subsidiary of the Corporation which owns property or assets, now owned or
hereafter acquired. Notwithstanding the foregoing, prior to the Effective Time,
the Corporation will not create, incur or otherwise suffer to exist any Liens of
any kind on the TTII Stock.
(viii) Limitation on Creation of Subsidiaries. The Corporation will not
create or acquire, and will not permit any of its Restricted Subsidiaries to
create or acquire, any Subsidiary other than
(1) a Restricted Subsidiary existing as of the Issue Date;
(2) a Restricted Subsidiary that is acquired or created after the
Issue Date; or
(3) from and after the Effective Time, an Unrestricted Subsidiary.
(ix) Limitation on Preferred Stock of Restricted Subsidiaries. The
Corporation will not permit any of its Restricted Subsidiaries to issue any
Preferred Stock (except Preferred Stock issued to the Corporation or a Wholly
Owned Subsidiary of the Corporation) or permit any Person (other than the
Corporation or a Wholly Owned Subsidiary of the Corporation) to hold any such
Preferred Stock unless such Restricted Subsidiary would be entitled to incur or
assume Indebtedness (other than Permitted Indebtedness) in compliance with
paragraph (k)(i) in the aggregate principal amount equal to the aggregate
liquidation value of the Preferred Stock to be issued.
(x) Limitation on Capital Stock of Restricted Subsidiaries. The Corporation
will not
(1) sell, pledge, hypothecate or otherwise convey or dispose of any
Capital Stock of a Restricted Subsidiary of the Corporation (other than any
such transaction resulting in a Lien which constitutes a Permitted Lien);
or
(2) permit any of its Restricted Subsidiaries to issue any Capital
Stock, other than to the Corporation or a Wholly Owned Subsidiary of the
Corporation.
From and after the Effective Time, the foregoing restrictions will not apply to
an Asset Sale made in compliance with paragraph (k)(iv) (provided that if such
Asset Sale is for less than all of the outstanding Capital Stock of any
Restricted Subsidiary held by the Corporation or any of its Restricted
Subsidiaries, such Asset Sale must also comply with paragraph (k)(ii)) or the
issuance of Preferred Stock in compliance with paragraph (k)(ix).
(xi) Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries. The Corporation will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary of the Corporation to
B-1-20
(1) pay dividends or make any other distributions to the Corporation
or any Restricted Subsidiary of the Corporation
(a) on its Capital Stock or
(b) with respect to any other interest or participation in, or
measured by, its profits;
(2) repay any Indebtedness or any other obligations owed to the
Corporation or any Restricted Subsidiary of the Corporation;
(3) make loans or advances or capital contributions to the Corporation
or any of its Restricted Subsidiaries; or
(4) transfer any of its properties or assets to the Corporation or any
of its Restricted Subsidiaries;
except for such encumbrances or restrictions existing under or by reason of
(1) encumbrances or restrictions existing on the Issue Date to the
extent and in the manner such encumbrances and restrictions are in effect
on the Issue Date;
(2) the (a) Senior Credit Facility, (b) Notes Purchase Agreement and
the Notes, (c) the Take-Out Notes and (d) the guarantee of the Notes and
the Take-Out Notes by Subsidiaries of the Corporation;
(3) applicable law;
(4) any instrument governing Acquired Indebtedness, which 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 (including any Subsidiary of the Person), so acquired or any
contract to which the Person (including any Subsidiary of such Person) so
acquired is a party so long as such contract was not entered into in
contemplation of such acquisition;
(5) customary non-assignment provisions in leases or other agreements
entered in the ordinary course of business and consistent with past
practices;
(6) Refinancing Indebtedness; provided that such restrictions are no
more restrictive than those contained in the agreements governing the
Indebtedness being refunded, refinanced or extended;
(7) customary restrictions in Capitalized Lease Obligations, security
agreements or mortgages securing Indebtedness of the Corporation or a
Restricted Subsidiary to the extent such restrictions restrict the transfer
of the property subject to such Capitalized Lease Obligations, security
agreements and mortgages;
B-1-21
(8) customary restrictions with respect to a Restricted Subsidiary of
the Corporation pursuant to an agreement that has been entered into for the
sale or disposition of all or substantially all of the Capital Stock or
assets of such Restricted Subsidiary; or
(9) customary provisions restricting dispositions of real property
interests set forth in any reciprocal easement agreements of the
Corporation or any Restricted Subsidiary.
(xii) Consummation of Merger. The Corporation shall cause the Merger to be
consummated as promptly as practical and in accordance with the terms of the
Agreement and Plan of Merger, but in no event later than August 31, 2000.
(xiii) Pre-Merger Activities of TTII. From and after the Issue Date and
prior to the Effective Time, the Corporation will not permit TTII to issue any
Capital Stock or declare or pay any dividend or distribution on its Capital
Stock. At the Effective Time, TTII will have no outstanding Capital Stock other
than Common Stock which shall constitute Junior Securities.
(xiv) Payments for Consent. The Corporation will not, and will not permit
any of its Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder of
Senior Preferred Stock for or as an inducement to any consent, waiver or
amendment of any of the terms or provisions of this Resolution and Certification
of Designation or the Senior Preferred Stock unless such consideration is
offered to be paid or agreed to be paid to all Holders of Senior Preferred Stock
which so consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or agreement.
(xv) Reports. Whether or not required by the Commission, so long as any
shares of Senior Preferred Stock are outstanding, the Corporation will furnish
to the Holders, within the time periods specified in the Commission's rules and
regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and
10-K if the Corporation were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report on
the annual financial statements by the Corporation's certified independent
accountants; and
(2) all current reports that would be required to be filed with the
Commission on Form 8-K if the Corporation were required to file such
reports.
If the Corporation has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph will include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of the financial condition and results of operations of the
Corporation and its Restricted Subsidiaries separate from the financial
condition and results of operations of the Unrestricted Subsidiaries of the
Corporation.
B-1-22
In addition, whether or not required by the Commission, the Corporation
will file a copy of all of the information and reports referred to in clauses
(1) and (2) above with the Commission for public availability within the time
periods specified in the Commission's rules and regulations (unless the
Commission will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. The Corporation will
also furnish to Holders, securities analysts and prospective investors upon
request the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
(l) Definitions. As used in this Resolution and Certificate of Designation,
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary) existing at the time such Person becomes a Restricted
Subsidiary or is merged into or consolidated with any other Person or which is
assumed in connection with the acquisition of assets from such Person and, in
each case, whether or not incurred by such Person in connection with, or in
anticipation or contemplation of, such Person becoming a Restricted Subsidiary
or such merger, consolidation or acquisition.
"Additional Dividends" has the meaning provided in the Registration Rights
Agreement.
"Affiliate" means, with respect to any specific Person, any other Person
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
used with respect to any Person, means 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, for purposes of paragraph (k)(iii), ownership of at
least 10% of the voting securities of a Person, either directly or indirectly,
shall be deemed to be control.
"Affiliate Transaction" shall have the meaning provided in paragraph
(k)(iii)(A).
"Agreement and Plan of Merger" means the Agreement and Plan of Merger dated
as of January 28, 2000 by and between the Corporation and TTII.
"Asset Acquisition" means
(1) an Investment by the Corporation or any Restricted Subsidiary of
the Corporation in any other Person (other than Investments in the
Corporation or any existing Restricted Subsidiary of the Corporation)
pursuant to which such Person becomes a Restricted Subsidiary of the
Corporation or any Restricted Subsidiary of the Corporation, or is merged
with or into the Corporation or any Restricted Subsidiary of the
Corporation; or
B-1-23
(2) the acquisition by the Corporation or any Restricted Subsidiary of
the Corporation of the assets of any Person (other than a Restricted
Subsidiary of the Corporation) which constitute all or substantially all of
the assets of such Person or comprise any division or line of business of
such Person or any other properties or assets of such Person other than in
the ordinary course of business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
assignment, transfer, lease or other disposition (including any Sale and
Lease-Back Transaction), other than to the Corporation or any of its Wholly
Owned Subsidiaries, in any single transaction or series of related transactions
of
(1) any Capital Stock of or other equity interest in any Restricted
Subsidiary of the Corporation; or
(2) any other property or assets of the Corporation or of any
Restricted Subsidiary thereof;
provided that Asset Sales shall not include
(1) receipt of proceeds from transactions that involve assets, in each
fiscal year of the Corporation having a fair market value or for which the
Corporation or its Restricted Subsidiaries receive aggregate consideration
of no more than $1.0 million;
(2) sales of inventory and the Corporation's products in the ordinary
course of business and consistent with past practices;
(3) the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of the Corporation as permitted under
paragraph (f)(iii);
(4) sales of Cash Equivalents;
(5) granting of Liens not otherwise prohibited by this Resolution and
Certificate of Designation;
(6) leases or subleases to third persons in the ordinary course of
business that do not interfere in any material respect with the business of
the Corporation or any of its Restricted Subsidiaries;
(7) sales or other disposition of assets that are obsolete,
uneconomic, negligible, worn out or surplus in the ordinary course of
business;
(8) sales of assets in connection with Sale and Lease-Back
Transactions that occur substantially contemporaneously with the
acquisition of such assets by the Corporation and its Restricted
Subsidiaries; provided that such Sale
B-1-24
and Lease-Back Transactions occur no later than 180 days after the
acquisition of such assets; and
(9) issuances of directors' qualifying shares.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(1) cash received by the Corporation or any Restricted Subsidiary of
the Corporation from such Asset Sale (including cash received as
consideration for the assumption of liabilities incurred in connection with
or in anticipation of such Asset Sale), after
(a) provision for all income or other taxes measured by or
resulting from such Asset Sale,
(b) payment of all brokerage commissions, underwriting and other
fees and expenses related to, and other costs and charges incurred in
connection with, such Asset Sale,
(c) provision for minority interest holders in any Restricted
Subsidiary of the Corporation as a result of such Asset Sale,
(d) repayment of Indebtedness that is secured by the assets
subject to such Asset Sale or otherwise required to be repaid in
connection with such Asset Sale, and
(e) deduction of appropriate amounts to be provided by the
Corporation or a Restricted Subsidiary of the Corporation as a
reserve, in accordance with GAAP, against any liabilities associated
with the assets sold or disposed of in such Asset Sale and retained by
the Corporation or a Restricted Subsidiary after such Asset Sale,
including, without limitation, pension and other post-employment
liabilities and liabilities related to environmental matters or
against any indemnification obligations associated with the assets
sold or disposed of in such Asset Sale; and
(2) promissory notes and other noncash consideration received by the
Corporation or any Restricted Subsidiary of the Corporation from such Asset
Sale or other disposition upon the liquidation or conversion of such
promissory notes or noncash consideration into cash.
"Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction
means, as at the time of determination, the present value (discounted at the
rate of interest implicit in such transaction, determined in accordance with
GAAP) of the total obligations of the lessee for rental payments during the
remaining term of the lease included in such Sale and Lease-Back Transaction
(including any period for which such lease has been extended).
B-1-25
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in
accordance with clause (3)(a) or (3)(b), and which have not yet been the basis
for an Excess Proceeds Offer in accordance with clause (3)(c) of paragraph
(k)(iv)(A).
"Board of Directors" shall have the meaning provided in the first paragraph
of this Resolution and Certificate of Designation.
"Borrowing Base" means, as of any date, an amount equal to the sum of (i)
60% of the aggregate book value of inventory (adjusted to include any LIFO
reserves) and (ii) 85% of the aggregate book value of all accounts receivable
(net of bad debt reserves) of the Corporation and its Restricted Subsidiaries on
a consolidated basis, as determined in accordance with GAAP consistently
applied. To the extent that information is not available as to the amount of
inventory or accounts receivable as of a specific date, the Corporation shall
use the most recent available information for purposes of calculating the
Borrowing Base.
"Business Day" means any day except a Saturday, a Sunday or any day on
which banking institutions in New York, New York or Chicago, Illinois are
required or authorized by law or other governmental action to be closed.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, partnership or limited liability company
interests or any other participation, right or other interest in the nature of
an equity interest in such Person including, without limitation, Common Stock
and Preferred Stock of such Person, or any option, warrant or other security
convertible into any of the foregoing.
"Capitalized Lease Obligations" means, with respect to any Person,
Indebtedness represented by obligations under a lease that is required to be
capitalized for financial reporting purposes in accordance with GAAP, and the
amount of such Indebtedness shall be the capitalized amount of such obligations
determined in accordance with GAAP.
"Cash Equivalents" means
(1) marketable direct obligations issued by, or unconditionally
guaranteed by, the United States Government or issued by any agency or
instrumentality thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition thereof;
(2) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings obtainable from either Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's");
B-1-26
(3) commercial paper maturing no more than one year from the date of
creation thereof and, at the time of acquisition, having a rating of at
least A-1 from S&P or at least P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia or any U.S. branch of a foreign bank having at the
date of acquisition thereof combined capital and surplus of not less than
$250.0 million;
(5) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (1) above entered
into with any bank meeting the qualifications specified in clause (4)
above; and
(6) investments in money market funds which invest substantially all
their assets in securities of the types described in clauses (1) through
(5) above.
"Certificate of Designation" means this Certificate of Designation creating
the Senior Preferred Stock.
"Certificate of Incorporation" shall have the meaning provided in the first
paragraph of this Resolution and Certificate of Designation.
A "Change of Control" of the Corporation will be deemed to have occurred at
such time as
(1) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a "Group"), other than a Permitted Holder,
becomes the beneficial owner (as defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time) of more than 50% of the
total voting power of the Corporation's Capital Stock; it being understood
that the Senior Preferred Stock shall not be included in any calculation of
the voting power of the Corporation's Capital Stock for purposes of this
definition;
(2) there is consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation and its Restricted
Subsidiaries, taken as a whole, to any Person or Group, together with any
Affiliates thereof (whether or not otherwise in compliance with the
provisions of this Resolution and Certificate of Designation) other than to
the Corporation, any of its Restricted Subsidiaries or the Permitted
Holders; or
(3) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Corporation
B-1-27
(together with any new directors whose election by such Board of Directors
or whose nomination for election by the shareholders of the Corporation has
been approved by a majority of the directors then still in office who
either were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute
a majority of the Board of Directors of the Corporation.
"Change of Control Date" shall have the meaning provided in paragraph
(g)(i).
"Change of Control Offer" shall have the meaning provided in paragraph
(g)(i).
"Change of Control Payment Date" shall have the meaning provided in
paragraph (g)(ii).
"Change of Control Purchase Price" shall have the meaning provided in
paragraph (g)(i).
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to
(1) vote in the election of directors of such Person; or
(2) if such Person is not a corporation, vote or otherwise participate
in the selection of the governing body, partners, managers or others that
will control the management and policies of such Person.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of EBITDA of such Person during the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for
the Four Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "EBITDA" and "Consolidated Fixed Charges" shall
be calculated after giving effect on a pro forma basis for the period of such
calculation to
(1) the incurrence or repayment of any Indebtedness of such Person or
any of its Restricted Subsidiaries or the issuance or redemption or other
repayment of Preferred Stock of any such Restricted Subsidiary (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness, and, in
the case of any Restricted Subsidiary, the issuance or redemption or other
repayment of Preferred Stock (and the application of the proceeds thereof),
other than the incurrence or repayment of Indebtedness in the ordinary
course of business for working capital purposes pursuant to working capital
facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to
B-1-28
the Transaction Date, as if such incurrence or repayment or issuance or
redemption or other repayment, as the case may be (and the application of
the proceeds thereof), occurred on the first day of the Four Quarter
Period; and
(2) any Asset Sale or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted
Subsidiaries (including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise being
liable for Acquired Indebtedness and also including any EBITDA (provided
that such EBITDA shall be included only to the extent that Consolidated Net
Income would be includable pursuant to the definition of "Consolidated Net
Income") (including any pro forma expense and cost reductions calculated on
a basis consistent with Regulation S-X of the Exchange Act) attributable to
the assets which are the subject of the Asset Acquisition or Asset Sale
during the Four Quarter Period) occurring during the Four Quarter Period or
at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Asset Sale or Asset Acquisition
(including the incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter Period.
If such Person or any of its Restricted Subsidiaries directly or indirectly
guarantees Indebtedness of a third Person, the preceding sentence shall
give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Restricted Subsidiary of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator
(but not the numerator) of this "Consolidated Fixed Charge Coverage Ratio,"
(1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue
to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the rate of interest on such
Indebtedness in effect on the Transaction Date;
(2) if interest on any Indebtedness actually incurred on the
Transaction Date may optionally be determined at an interest rate
based upon a factor of a prime or similar rate, a eurocurrency
interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect
during the Four Quarter Period; and
(3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is
covered by one or more agreements in respect of Hedging Obligations,
shall be deemed to accrue at the rate per annum resulting after giving
effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person, for any
period, the sum, without duplication, of
(1) Consolidated Interest Expense, plus
B-1-29
(2) the product of
(a) the amount of all dividend payments (whether or not in
cash) on any series of Preferred Stock of the Restricted
Subsidiaries of such Person (other than dividends paid in Capital
Stock (other than Disqualified Capital Stock)) paid, accrued or
scheduled to be paid in cash or accrued during such period plus
the amount of all dividend payments (whether or not in cash) on
any series of Preferred Stock of the Corporation that is
Disqualified Capital Stock paid, accrued, or scheduled to be paid
or accrued during such period, times
(b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person, without
duplication, for any period, the aggregate amount of interest expense which, in
conformity with GAAP, would be set forth opposite the caption "interest expense"
or any like caption on an income statement for such Person and its Restricted
Subsidiaries on a consolidated basis including, but not limited to,
(1) imputed interest included in Capitalized Lease
Obligations;
(2) all commissions, discounts and other fees and charges
owed with respect to letters of credit and bankers' acceptance
financing;
(3) the net payment obligations associated with Hedging
Obligations;
(4) amortization of financing fees and expenses and the
write-offs of deferred financing costs;
(5) the interest portion of any deferred payment obligation;
(6) amortization of discount or premium, if any;
(7) all non-cash interest expense (other than interest
amortized to cost of sales);
(8) all capitalized interest for such period; and
(9) all interest incurred or paid under any guarantee of
Indebtedness (including a guarantee of principal, interest or any
combination thereof) of any Person.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that
B-1-30
(1) the Net Income of any Person, other than a Restricted
Subsidiary of the referent Person, will be included only to the
extent of the amount of dividends or distributions paid to the
referent Person or a Restricted Subsidiary of such referent
Person;
(2) the Net Income of any Restricted Subsidiary of the
Person in question that is subject to any restriction or
limitation on the payment of dividends or the making of other
distributions will be excluded to the extent of such restriction
or limitation;
(3) solely for the purposes of determining the aggregate
amount available for Restricted Payments under clause (3)(a) of
paragraph (k)(ii)(A), the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date
of such acquisition will be excluded;
(4) any net gain (but not loss) resulting from an Asset Sale
by the Person in question or any of its Restricted Subsidiaries
other than in the ordinary course of business will be excluded;
(5) extraordinary gains and losses will be excluded;
(6) income or loss attributable to discontinued operations
(including, without limitation, operations disposed of during
such period whether or not such operations were classified as
discontinued) will be excluded; and
(7) in the case of a successor to the referent Person by
consolidation or merger or as a transferee of the referent
Person's assets, any earnings of the successor corporation prior
to such consolidation, merger or transfer of assets will be
excluded.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Cumulative Consolidated Net Income" means, with respect to any Person, as
of any date of determination, Consolidated Net Income from January 1, 2000 to
the end of such Person's most recently ended full fiscal quarter prior to such
date, taken as a single accounting period.
"Corporation" shall have the meaning provided in the first paragraph of
this Certificate of Designation.
"Disqualified Capital Stock" means any Capital Stock of a Person or a
Restricted Subsidiary thereof which, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable at the
option of the holder), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or
B-1-31
in part, on or prior to the mandatory redemption date of the Senior Preferred
Stock, for cash; provided, however, that (i) Preferred Stock of a Person that is
issued with the benefit of provisions requiring a change of control offer or an
asset sale offer to be made for such Preferred Stock in the event of a change of
control or the sale of assets of such Person or Restricted Subsidiary which
provisions have substantially the same effect as the provisions of paragraphs
(g) and (k)(iv), respectively, shall not be deemed to be Disqualified Capital
Stock solely by virtue of such provisions and (ii) the Senior Preferred Stock
shall be deemed to not be Disqualified Capital Stock.
"Dividend Default" shall have the meaning provided in paragraph (f)(iv)(A).
"Dividend Payment Date" means March 15, June 15, September 15 and December
15 of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter, each
quarterly period from a Dividend Payment Date to the next following Dividend
Payment Date (but without including such Dividend Payment Date).
"Dividend Record Date" means March 1, June 1, September 1 and December 1 of
each year.
"EBITDA" means, with respect to any Person and its Restricted Subsidiaries,
for any period, an amount equal to
(1) the sum of
(a) Consolidated Net Income for such period, plus
(b) the provision for taxes for such period based on income or
profits to the extent such income or profits were included in
computing Consolidated Net Income and any provision for taxes utilized
in computing net loss under clause (a) hereof, plus
(c) Consolidated Interest Expense for such period, plus
(d) depreciation for such period on a consolidated basis, plus
(e) amortization of intangibles for such period on a consolidated
basis, plus
(f) any other non-cash items reducing Consolidated Net Income for
such period, other than non-cash items that represent accruals of, or
reserves for, cash disbursements to be made in any future period,
minus
(2) all non-cash items increasing Consolidated Net Income for such
period, all for such Person and its Restricted Subsidiaries determined on a
consolidated basis in accordance with GAAP.
B-1-32
"Effective Time" means the time at which the Merger is consummated.
"Excess Proceeds Offer" shall have the meaning provided in paragraph
(k)(iv)(A)(3)(c).
"Excess Proceeds Payment Date" shall have the meaning provided in paragraph
(k)(iv)(A)(3)(c).
"Excess Proceeds Purchase Price" shall have the meaning provided in
paragraph (k)(iv)(A)(3)(c).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair market value
shall be determined by the Board of Directors of the Corporation acting
reasonably and in good faith.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"Hedging Obligations" means, with respect to any Person, the net payment
obligations of such Person under (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (b) other agreements
or arrangements entered into in order to protect such Person against
fluctuations in commodity prices, interest rates or currency exchange rates.
"Holder" means a holder of shares of Senior Preferred Stock as reflected in
the register maintained by the transfer agent for the Senior Preferred Stock.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"incurrence," "incurred," "incurable," and "incurring" shall have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness shall
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property if and to the extent and of the foregoing indebtedness would
B-1-33
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, and shall also include, to the extent not otherwise included
(1) any Capitalized Lease Obligation of such Person;
(2) obligations secured by a lien to which the property or assets
owned or held by such Person is subject, whether or not the obligation or
obligations secured thereby shall have been assumed; provided that the
amount of Indebtedness attributed to such obligations shall not exceed the
fair market value of the property or assets securing such obligations;
(3) guarantees of (or obligations with respect to letters of credit
supporting) obligations of other Persons which would be included within
this definition as Indebtedness for such other Persons (whether or not such
items would appear upon the balance sheet of the guarantor);
(4) all obligations for the reimbursement of any obligor on any letter
of credit, banker's acceptance or similar credit transaction;
(5) Disqualified Capital Stock of such Person or any Restricted
Subsidiary thereof; and
(6) hedging obligations of any such Person applicable to any of the
foregoing (if and to the extent such hedging obligations would appear as a
liability upon a balance sheet of such Person prepared in accordance with
GAAP).
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum reasonably
anticipated liability upon the occurrence of the contingency giving rise to the
obligation as determined in good faith by the Person incurring such liability;
provided that
(1) the amount outstanding at any time of any Indebtedness issued with
original issue discount is the principal amount of such Indebtedness less
the remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP; and
(2) Indebtedness shall not include:
(a) any liability for federal, state, local or other taxes, and
(b) any accounts payable, trade payables and other accrued
liabilities arising in the ordinary course of business.
"Independent Financial Advisor" means an investment banking firm of
national reputation in the United States
B-1-34
(1) which does not, and whose directors, officers and employees or
Affiliates do not, have a direct or indirect financial interest in the
Corporation, and
(2) which, in the judgment of the Board of Directors of the
Corporation, is otherwise independent and qualified to perform the task for
which it is to be engaged.
"Initial Dividend Period" means the dividend period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"Investments" means, with respect of any Person, directly or indirectly,
any advance, account receivable (other than an account receivable arising in the
ordinary course of business of such Person), loan or capital contribution to (by
means of transfers of property to others, payments for property or services for
the account or use of others or otherwise), the purchase of any Capital Stock,
bonds, notes, debentures, partnership or joint venture interests or other
securities of, the acquisition, by purchase or otherwise, of all or
substantially all of the business or assets or stock or other evidence of
beneficial ownership of, any Person or the making of any investment in any
Person. Investments shall exclude
(1) extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices of such Person; and
(2) the repurchase of securities of any Person by such Person.
For the purposes of paragraph (k)(ii), "Investments" (1) (a) include and
are valued at the fair market value of the net assets of any Restricted
Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary and (b) exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary; provided that in no event
may such amount exceed the net amount of any Investments constituting
Restricted Payments made in such Subsidiary after the Issue Date and (2)
the amount of any Investment shall be the original cost of such Investment
plus the cost of all additional Investments by the Corporation or any of
its Restricted Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to
such Investment, reduced by the (i) amount returned in cash with respect to
such Investment whether through interest payments, principal payments,
dividends or other distributions and (ii) proceeds received by the
Corporation or any of its Restricted Subsidiaries from the disposition,
retirement or redemption of all or any portion of such Investment; provided
that the aggregate of all such reductions may not exceed the amount of such
initial Investment plus the cost of all additional Investments; provided,
further, that no such payment or distributions or receipt of any such other
amounts may reduce the amount of any Investment if such payment of
distributions or receipt of any such amounts would be included in
Consolidated Net Income. If the Corporation or any Restricted Subsidiary of
the Corporation sells or otherwise disposes of any Common Stock of any
direct or indirect Restricted Subsidiary of the Corporation such that,
after giving effect to any such
B-1-35
sale or disposition, the Corporation no longer owns, directly or
indirectly, 100% of the outstanding Common Stock of such Restricted
Subsidiary, the Corporation 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 Common Stock of such Restricted Subsidiary not sold or disposed of.
"Issue Date" means March 9, 2000.
"Junior Securities" shall have the meaning provided in paragraph (b).
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Mandatory Redemption Date" shall have the meaning provided in paragraph
(e)(ii).
"Mandatory Redemption Price" shall have the meaning provided in paragraph
(e)(ii).
"Merger" means the merger of the Corporation with and into TTII in
accordance with the terms of the Agreement and Plan of Merger.
"Net Income" means, with respect to any Person, for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means
(1) in the case of any sale of Capital Stock by or equity contribution
to any Person, the aggregate net cash proceeds received by such Person,
after payment of expenses, commissions and the like incurred in connection
therewith; and
(2) in the case of any exchange, exercise, conversion or surrender of
outstanding securities of any kind for or into shares of Capital Stock of
the Corporation which is not Disqualified Capital Stock, the net book value
of such outstanding securities on the date of such exchange, exercise,
conversion or surrender (plus any additional amount required to be paid by
the holder to such Person upon such exchange, exercise, conversion or
surrender, less any and all payments made to the holders, e.g., on account
of fractional shares and less all expenses incurred by such Person in
connection therewith).
"Notes" means (i) the Senior Subordinated Increasing Rate Notes of TTII
issued concurrently with the Senior Preferred Stock pursuant to the Notes
Purchase Agreement
B-1-36
and (ii) the senior subordinated notes of TTII issued in exchange for
outstanding Notes pursuant to the trust indenture attached as an exhibit to the
Notes Purchase Agreement in accordance with the terms of the Notes Purchase
Agreement.
"Notes Purchase Agreement" means the Purchase Agreement governing the Notes
dated March 9, 2000 among TTII, its Subsidiaries, as guarantors, and the
purchasers named therein, and also includes the trust indenture attached as an
exhibit thereto following the issuance of the senior subordinated notes of TTII
issued pursuant thereto in exchange for outstanding Notes.
"Parity Securities" shall have the meaning provided in paragraph (b).
"Permitted Asset Swap" means, with respect to any Person, the substantially
concurrent exchange of assets of such Person for assets of another Person which
are useful to the business of such aforementioned Person.
"Permitted Holders" means (a) (i) CIBC WMC Inc., (ii) Caravelle Investment
Fund, L.L.C., (iii) Albion Alliance Mezzanine Fund, L.P., (iv) Albion Alliance
Mezzanine Fund II, L.P., (v) Trimaran Fund II, L.L.C., (vi) any Affiliate of any
Person named in clauses (a)(i) through (a)(v) (collectively, the "Institutional
Investors") and (vii) with respect to any Institutional Investor, any person
managed by such Institutional Investor or any of its Affiliates (other than
their other portfolio companies) and (b) (i) Thomas M. Begel, (ii) Andrew
Weller, (iii) Camillo M. Santomero III, (iv) James D. Cirar and (v) Persons that
are wholly-owned by the individuals named in clauses (b)(i) through (b)(iv)
above.
"Permitted Indebtedness" means
(1) Indebtedness of the Corporation incurred pursuant to the Term Loan
Facility not to exceed $250.0 million aggregate principal amount at any
time outstanding, less the amount of any repayments of principal made since
the Issue Date;
(2) Indebtedness of the Corporation incurred pursuant to the Revolving
Facility in principal amount outstanding at any time not to exceed the
greater of (A) $50.0 million and (B) the Borrowing Base;
(3) Indebtedness under (a) the Notes in aggregate principal amount
outstanding not to exceed the sum of (i) $125.0 million plus (ii) the
principal amount of any Notes issued as in-kind interest on Notes in
accordance with the terms of the Note Purchase Agreement as in effect on
the Issue Date less (iii) the principal amount of Notes redeemed or
repurchased or which otherwise cease to be outstanding; (b) the Take-Out
Notes in a principal amount equal to the principal amount of the Notes
redeemed with the proceeds from the issuance thereof and (c) the guarantees
of the Notes and the Take-Out Notes by TTII's Subsidiaries;
B-1-37
(4) Indebtedness not covered by any other clause of this definition
which is outstanding on the Issue Date reduced by the amount of any
mandatory prepayments, permanent reductions or scheduled payments actually
made thereunder;
(5) Indebtedness of the Corporation to any Wholly Owned Subsidiary and
Indebtedness of any Wholly Owned Subsidiary to the Corporation or another
Wholly Owned Subsidiary, in each case subject to no Lien held by a Person
other than the Corporation; provided, however, that if as of any date any
Person other than the Corporation or a Wholly Owned Subsidiary of the
Corporation owns or holds any such Indebtedness or if as of any date any
Person other than the Corporation holds a Lien in respect of such
Indebtedness, such date will be deemed to be the incurrence of Indebtedness
not constituting Permitted Indebtedness by the issuer of such Indebtedness;
(6) Purchase Money Indebtedness of the Corporation or any Restricted
Subsidiary and Capitalized Lease Obligations of the Corporation or any
Restricted Subsidiary incurred to acquire property in the ordinary course
of business which Purchase Money Indebtedness and Capitalized Lease
Obligations do not in the aggregate exceed $10.0 million at any one time
outstanding;
(7) Indebtedness of the Corporation or any Restricted Subsidiary
arising from the honoring by a bank or other financial institution of a
check, draft or similar instrument inadvertently (except in the case of
daylight overdrafts) drawn against insufficient funds in the ordinary
course of business; provided that such Indebtedness is extinguished within
two business days of incurrence;
(8) the incurrence by the Corporation or any Restricted Subsidiary of
Hedging Obligations that are incurred in the ordinary course of business of
the Corporation or such Restricted Subsidiary and not for speculative
purposes; provided that, in the case of any Hedging Obligation that relates
to (i) interest rate risk, the notional principal amount of such Hedging
Obligation does not exceed the principal amount of the Indebtedness to
which such Hedging Obligation relates and (ii) currency risk, such Hedging
Obligation does not increase the Indebtedness of the Corporation and its
Restricted Subsidiaries outstanding other than as a result of fluctuations
in foreign currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(9) Indebtedness in respect of performance bonds, bankers'
acceptances, letters of credit and surety or appeal bonds provided by the
Corporation and the Restricted Subsidiaries to their customers in the
ordinary course of their business;
(10) Refinancing Indebtedness;
B-1-38
(11) from and after the Effective Time, additional Indebtedness of the
Corporation and its Restricted Subsidiaries not to exceed a $10.0 million
in aggregate principal amount at any one time outstanding;
(12) Indebtedness of the Corporation or any Restricted Subsidiary
consisting of guarantees, indemnities or obligations in respect of purchase
price adjustments (including adjustments in the purchase price related to
the performance or results of any acquired business) in connection with the
acquisition or disposition of assets permitted under this Resolution and
Certificate of Designation;
(13) Indebtedness of the Corporation or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Corporation or such Restricted Subsidiary, as the case may be, issued in
the ordinary course of business of the Corporation or such Restricted
Subsidiary, including, without limitation, in order to provide security for
workers' compensation claims or payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business
and other Indebtedness with respect to workers' compensation claims,
self-insurance obligations, performance, surety and similar bonds and
completion guarantees provided by the Corporation or any Restricted
Subsidiary in the ordinary course of business; or
(14) guarantees of Indebtedness otherwise permitted under this
Resolution and Certificate of Designation.
"Permitted Investments" means Investments made on or after the Issue Date
consisting of
(1) Investments by the Corporation, or by a Restricted Subsidiary
thereof, in the Corporation or a Restricted Subsidiary;
(2) Investments by the Corporation, or by a Restricted Subsidiary
thereof, in a Person, if as a result of such Investment
(a) such Person becomes a Restricted Subsidiary of the
Corporation or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or
is liquidated into, the Corporation or a Restricted Subsidiary
thereof;
(3) Investments in cash and Cash Equivalents;
(4) receivables owing to the Corporation or any Restricted Subsidiary,
if created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however,
that such trade terms may include such concessionary trade terms as the
Corporation or any such Restricted Subsidiary deems reasonable under the
circumstances;
B-1-39
(5) payroll, travel and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses
for accounting purposes and that are made in the ordinary course of
business;
(6) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Corporation or such
Restricted Subsidiary not to exceed $1.0 million in the aggregate
outstanding at any one time;
(7) stock, obligations or securities received in settlement of debts
created in the ordinary course of business and owing to the Corporation or
any Restricted Subsidiary or in satisfaction of judgments;
(8) an Investment that is made by the Corporation or a Restricted
Subsidiary thereof in the form of any Capital Stock, bonds, notes,
debentures, partnership or joint venture interests or other securities that
are issued by a third party to the Corporation or such Restricted
Subsidiary solely as partial consideration for the consummation of an Asset
Sale that is otherwise permitted under paragraph (k)(iv);
(9) Investments in securities of trade creditors or customers received
pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers;
(10) Hedging Obligations entered into in the ordinary course of the
Corporation's or its Restricted Subsidiaries' business and not for
speculative purposes;
(11) from and after the Effective Time, Capital Stock of a joint
venture or similar entity primarily engaged in a business which is the
same, similar, ancillary or related to the businesses in which the
Corporation and its Restricted Subsidiaries are engaged in on the Issue
Date; provided that such Investments shall not exceed $10.0 million at any
time outstanding;
(12) notes or chattel paper received by the Corporation or a
Restricted Subsidiary as consideration for the ordinary course of business
sale or lease of trucks or other products or inventory;
(13) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and workers compensation, performance and
similar deposits entered into as a result of the operations of the business
in the ordinary course of business; and
(14) obligations of one or more officers or other employees of the
Corporation or any of its Restricted Subsidiaries in connection with such
officer's or employee's acquisition of shares of Common Stock of the
Corporation so long as no cash is paid by the Corporation or any of its
Restricted Subsidiaries to such officers or employees in connection with
the acquisition of any such obligations.
B-1-40
"Permitted Liens" means
(1) Liens on property or assets of, or any shares of Capital Stock of
or secured Indebtedness of, any Person existing at the time such Person
becomes a Restricted Subsidiary of the Corporation or at the time such
Person is merged into the Corporation or any of its Restricted
Subsidiaries; provided that such Liens
(a) are not incurred in connection with, or in contemplation of,
such Person becoming a Restricted Subsidiary of the Corporation or
merging into the Corporation or any of its Restricted Subsidiaries,
and
(b) do not extend to or cover any property, assets, Capital Stock
or Indebtedness other than those of such Person at the time such
Person becomes a Restricted Subsidiary or is merged into the
Corporation or any of its Restricted Subsidiaries;
(2) Liens securing Indebtedness incurred in compliance with paragraph
(k)(i);
(3) Liens existing on the Issue Date;
(4) Liens securing the Notes and the Take-Out Notes;
(5) Liens securing Refinancing Indebtedness; provided that any such
Lien does not extend to or cover any property, asset, Capital Stock or
Indebtedness other than the property, assets, Capital Stock or Indebtedness
so refunded, refinanced or extended;
(6) Liens in favor of the Corporation or any of its Restricted
Subsidiaries;
(7) Liens to secure Purchase Money Indebtedness that is otherwise
permitted under this Resolution and Certificate of Designation; provided
that
(a) the principal amount of the Indebtedness secured by such Lien
does not exceed 100% of the purchase price, or the cost of
installation, construction or improvement, of the property or asset to
which such Purchase Money Indebtedness relates,
(b) such Lien does not extend to or cover any Property or asset
other than such item of property or asset and any improvements on such
property or asset, and
(c) such Lien is created within 180 days of such acquisition or
the completion of such installation, construction or improvement, as
the case may be;
B-1-41
(8) statutory Liens or landlords', carriers', warehouseman's,
mechanics', suppliers', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which do not secure any
Indebtedness and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings; provided that with
respect to any amounts so contested a reserve or other appropriate
provision, if any, as is required in conformity with GAAP shall have been
made therefor;
(9) Liens for taxes, assessments or governmental charges that are
being contested in good faith by appropriate proceedings;
(10) Liens securing Capitalized Lease Obligations permitted to be
incurred under clause (5) of the definition of "Permitted Indebtedness";
provided that such Lien does not extend to any property other than that
subject to the underlying lease;
(11) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the
Corporation or any of its Restricted Subsidiaries;
(12) other Liens securing obligations incurred in the ordinary course
of business which obligations do not exceed $1.0 million in the aggregate
at any one time outstanding;
(13) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other similar obligations (other than
obligations for borrowed money) in the ordinary course of business;
(14) Liens securing the payment of workers' compensation, unemployment
insurance, other social security benefits or other insurance-related
obligations in the ordinary course of business;
(15) Liens securing Hedging Obligations permitted by this Resolution
and Certificate of Designation;
(16) Liens arising out of judgments, decrees, orders or awards in
respect of which the Corporation shall in good faith be prosecuting an
appeal or proceedings for review; and
(17) any extensions, substitutions, replacements or renewals of the
foregoing.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
B-1-42
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Purchase Money Indebtedness" means Indebtedness of any Person incurred for
the purpose of financing all or any part of the purchase price, or the cost of
installation, construction or improvement of, any property or asset.
"Purchasers" means, collectively, CIBC WMC Inc., a Delaware corporation,
Caravelle Investment Fund, L.L.C., a Delaware limited liability company, Albion
Alliance Mezzanine Fund, L.P., a Delaware limited partnership, and Albion
Alliance Mezzanine Fund II, L.P., a Delaware limited partnership.
"Redemption Date," with respect to any shares of Senior Preferred Stock,
means the date on which such shares of Senior Preferred Stock are redeemed by
the Corporation.
"Redemption Notice" shall have the meaning provided in paragraph (e)(iii).
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Corporation outstanding on the Issue Date or
other Indebtedness permitted to be incurred by the Corporation or its Restricted
Subsidiaries pursuant to the terms of this Resolution and Certificate of
Designation, but only to the extent that
(1) the Refinancing Indebtedness is scheduled to mature either
(a) no earlier than the Indebtedness being refunded, refinanced
or extended, or
(b) after the mandatory redemption date of the Senior Preferred
Stock;
(2) the portion, if any, of the Refinancing Indebtedness that is
scheduled to mature on or prior to the mandatory redemption date of the
Senior Preferred Stock has a Weighted Average Life to Maturity at the time
such Refinancing Indebtedness is incurred that is equal to or greater than
the Weighted Average Life to Maturity of the portion of the Indebtedness
being refunded, refinanced or extended that is scheduled to mature on or
prior to the mandatory redemption date of the Senior Preferred Stock;
(3) such Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the sum of
(a) the aggregate principal amount then outstanding under the
Indebtedness being refunded, refinanced or extended,
B-1-43
(b) the amount of accrued and unpaid interest, if any, and
premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or
extended, and
(c) the amount of customary fees, expenses and costs related to
the incurrence of such Refinancing Indebtedness; and
(4) such Refinancing Indebtedness is incurred by the same Person that
initially incurred the Indebtedness being refunded, refinanced or extended;
provided that the Corporation may incur Refinancing Indebtedness to refund,
refinance or extend Indebtedness that was initially incurred by a
Restricted Subsidiary.
"Registration Rights Agreement" means the Preferred Stock Registration
Rights Agreement dated as of the Issue Date among the Corporation and the
Purchasers.
"Resolution" shall have the meaning provided in the first paragraph of this
Resolution and Certificate of Designation.
"Restricted Payment" means any of the following:
(1) the declaration or payment of any dividend or any other
distribution or payment on Capital Stock of the Corporation or any
Restricted Subsidiary of the Corporation or any payment made to the direct
or indirect holders (in their capacities as such) of Capital Stock of the
Corporation or any Restricted Subsidiary of the Corporation (other than (a)
dividends or distributions in respect of Senior Securities of the
Corporation, (b) dividends or distributions payable solely in Capital Stock
(other than Disqualified Capital Stock) or in options, warrants or other
rights to purchase such Capital Stock (other than Disqualified Capital
Stock), and (c) in the case of Restricted Subsidiaries of the Corporation,
dividends or distributions payable to the Corporation or to a Restricted
Subsidiary of the Corporation);
(2) the purchase, redemption or other acquisition or retirement for
value of any Capital Stock of the Corporation or any of its Restricted
Subsidiaries (other than (a) Senior Securities of the Corporation and (b)
Capital Stock owned by the Corporation or a Wholly Owned Subsidiary of the
Corporation, excluding Disqualified Capital Stock) or any option, warrants
or other rights to purchase such Capital Stock;
(3) the making of any Investment or guarantee of any Investment in any
Person other than a Permitted Investment;
(4) any designation of a Subsidiary as an Unrestricted Subsidiary
(valued at the fair market value of the net assets of such Restricted
Subsidiary on the date of such designation); and
B-1-44
(5) the forgiveness of any Indebtedness of an Affiliate of the
Corporation to the Corporation or a Restricted Subsidiary of the
Corporation.
"Restricted Subsidiary" means a Subsidiary of the Corporation other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Corporation
existing as of the Issue Date, including, without limitation, TTII and its
Subsidiaries. The Board of Directors of the Corporation may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if immediately after giving
effect to such action (and treating any Acquired Indebtedness as having been
incurred at the time of such action),
(1) the Corporation could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to paragraph
(k)(i); and
(2) no Voting Rights Triggering Event has occurred and is continuing
or results therefrom.
"Revolving Facility" means the revolving credit facility provided to the
Corporation as a portion of the Senior Credit Facility.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Corporation or any Restricted Subsidiary of the
Corporation of any real or tangible personal property, which property has been
or is to be sold or transferred by the Corporation or such Restricted Subsidiary
to such Person in contemplation of such leasing.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Credit Facility" means the Credit Agreement dated as of March 9,
2000, among TTII, TTII's Subsidiaries, the lenders party thereto in their
capacities as lenders thereunder and Canadian Imperial Bank of Commerce, as
syndication agent, First Union National Bank, as administrative agent, and CIBC
World Markets Corp. and First Union Securities, Inc., as arrangers, together
with the related documents thereto (including, without limitation, any guarantee
agreements and security documents, including as provided by any Subsidiaries of
TTII), in each case as such agreements may be amended (including any amendment
and restatement thereof), supplemented or otherwise modified from time to time,
including any agreement extending the maturity of, refinancing, replacing or
otherwise restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by paragraph
(k)(i)) or adding Subsidiaries of TTII as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agents,
lender or group of lenders.
"Senior Securities" shall have the meaning provided in paragraph (b).
"Senior Preferred Stock" shall have the meaning provided in paragraph (b).
B-1-45
"Subsidiary" or any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired,
(1) in the case of a corporation, of which more than 50% of the total
voting power of the Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof is held by such first-named Person or any of
its Subsidiaries; or
(2) in the case of a partnership, limited liability company, joint
venture, association or other business entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or
cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with GAAP such entity is
consolidated with the first-named Person for financial statement purposes.
"Take-Out Notes" means the senior subordinated debt securities of TTII the
proceeds from the issuance of which are concurrently used to redeem the Notes in
accordance with the terms of the Notes Purchase Agreement.
"Tender Offers" means (i) the offer to purchase by the Corporation and TTII
of any and all shares of the common stock, par value $.01 per share, of TTII
pursuant to the Offer to Purchase Statement dated March 3, 2000 and (ii) the
offers to purchase and related consent solicitations by TTII relating to its
outstanding 11 3/4% Senior Subordinated Notes due 2005 and its outstanding 11
3/4% Series C Senior Subordinated Notes due 2005 pursuant to the Offers to
Purchase and Consent Solicitations Statement dated March 3, 2000.
"Term Loan Facility" means the term loans under the Senior Credit Facility.
"Transactions" means the transactions contemplated by the Agreement and
Plan of Merger, including, without limitation, the Tender Offers.
"TTII" means Transportation Technologies Industries, Inc., a Delaware
corporation.
"TTII Stock" means the common stock, par value $.01 per share, of TTII
held, directly or indirectly, by the Corporation or any of its Subsidiaries.
"Unrestricted Subsidiary" means
(1) any Subsidiary of an Unrestricted Subsidiary; and
(2) any Subsidiary of the Corporation which is designated after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the
Board of Directors of the Corporation;
B-1-46
provided that a Subsidiary may be so designated as an Unrestricted
Subsidiary only if
(a) such designation is in compliance with paragraph (k)(ii);
(b) immediately after giving effect to such designation, the
Corporation could have incurred at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to paragraph
(k)(i);
(c) no Voting Rights Triggering Event has occurred and is
continuing or results therefrom; and
(d) neither the Corporation nor any Restricted Subsidiary shall
at any time
(i) provide a guarantee of, or similar agreement or
undertaking as credit support to, any Indebtedness of such
Subsidiary (including any undertaking, agreement or instrument
evidencing such Indebtedness),
(ii) be directly or indirectly liable for any Indebtedness
of such Subsidiary or
(iii) be directly or indirectly liable for any other
Indebtedness which provides that the holder thereof may (upon
notice, lapse of time or both) declare a default thereon (or
cause the payment thereof to be accelerated or payable prior to
its final scheduled maturity) upon the occurrence of a default
with respect to any other Indebtedness that is Indebtedness of
such Subsidiary (including any corresponding right to take
enforcement action against such Subsidiary),
except in the case of clause (i) or (ii) to the extent
(i) that the Corporation or such Restricted Subsidiary could
otherwise provide such a guarantee or incur such Indebtedness
(other than as Permitted Indebtedness) pursuant to paragraph
(k)(i) and
(ii) the provisions of such guarantee and the incurrence of
such Indebtedness otherwise would be permitted under paragraph
(k)(ii).
"Voting Rights Triggering Event" shall have the meaning provided in
paragraph (f)(iv).
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing
(1) the then outstanding aggregate principal amount of such
Indebtedness into
B-1-47
(2) the sum of the total of the products obtained by multiplying
(a) the amount of each then remaining installment, sinking fund,
serial maturity or other required payment of principal, including
payment at final maturity, in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth)
which will elapse between such date and the making of such payment
"Wholly-Owned Subsidiary" means any Restricted Subsidiary, all of the
outstanding voting securities (other than directors' qualifying shares) of which
are owned, directly or indirectly, by the Corporation.
B-1-48
CERTIFICATE OF DESIGNATIONS, NUMBER, VOTING POWERS,
PREFERENCES AND RIGHTS OF SERIES C
PREFERRED STOCK
OF
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
The undersigned DOES HEREBY CERTIFY that the following
resolution was duly adopted by the Board of Directors (the "Board of Directors")
of Transportation Technologies Industries, Inc., a Delaware corporation (the
"Corporation"), with the preferences and rights set forth therein relating to
dividends, conversion, dissolution and distribution of assets of the Corporation
having been fixed by the Board of Directors pursuant to authority granted to it
under the Corporation's Certificate of Incorporation (the "Certificate of
Incorporation") and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware:
RESOLVED: That, pursuant to authority conferred upon the Board
of Directors by the Certificate of Incorporation, the Board of Directors hereby
authorizes the creation of 14,000 shares of Series C Preferred Stock of the
Corporation, and hereby fixes the designations, powers, preferences and
relative, participating, optional or other special rights, and the
qualifications, limitations or restrictions thereof, of such shares, in addition
to those set forth in the Certificate of Incorporation, as follows:
1. DESIGNATION AND AMOUNT. There is hereby created out of the authorized and
unissued shares of preferred stock of the Corporation ("Preferred Stock") a
series of Preferred Stock designated "Series C Preferred Stock" (the "Series C
Preferred Stock"), and the number of shares constituting such series shall be
14,000.
2. DIVIDENDS. The holders of Series C Preferred Stock shall not be entitled to
receive dividends on shares of Series C Preferred Stock.
3. MANDATORY REDEMPTION UPON AN INITIAL PUBLIC OFFERING.
(a) Concurrently with the consummation of an IPO (other than an IPO after a
Valuation Event), the Corporation shall redeem all of the outstanding shares of
Series C Preferred Stock. Such shares shall be redeemed from the holders thereof
at a per share redemption price equal to the IPO Redemption Price.
(b) At least 5 days and not more than 90 days prior to the date fixed for
any redemption of the Series C Preferred Stock pursuant to this Section 3,
written notice (the "IPO Redemption Notice") shall be given by first class mail,
postage prepaid (which notice shall be effective upon deposit for mailing), to
each holder of record on the record date fixed for such redemption of the Series
C Preferred Stock at such holder's address as it appears in the register
maintained by the transfer agent (which may be the Corporation) for the Series C
Preferred
Stock; provided that no failure to give such notice nor any deficiency
therein shall affect the validity of the procedure for the redemption of any
shares of Series C Preferred Stock to be redeemed except as to the holder or
holders to whom the Corporation has failed to give said notice or except as to
the holder or holders whose notice was defective. The IPO Redemption Notice
shall state:
(1) the IPO Redemption Price (and the type of consideration to be paid
in respect thereof);
(2) the date of such redemption; and
(3) that the holder is to surrender to the Corporation, in the manner
and at the plate or places designated, his certificate or certificates
representing the shares of Series C Preferred Stock to be redeemed.
(c) Each holder of Series C Preferred Stock shall surrender the certificate
or Certificates representing such shares of Series C Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
IPO Redemption Notice, and on the related redemption date the full IPO
Redemption Price for such shares shall be payable in cash (or in such other
consideration as provided in Section 3(e)) to the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired.
(d) On and after such redemption date, unless the Corporation defaults in
the payment in full of the IPO Redemption Price, all rights of the holders of
the Series C Preferred Stock to be redeemed shall terminate with respect
thereto, other than the right to receive the IPO Redemption Price; provided,
however, that if a notice of redemption shall have been given as provided in
Section 3(b) above and the funds (or property) necessary for redemption shall
have been irrevocably deposited in the trust for the equal and ratable benefit
for the holders of the shares of Series C Preferred Stock, then at the close of
business on the day on which such funds are segregated and set aside, the
holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the IPO Redemption Price.
(e) Anything in this Certificate of Designations to the contrary
notwithstanding, the Corporation shall pay the IPO Redemption Price in respect
of the Series C Preferred Stock pursuant to this Section 3 with such types of
consideration such that the holders of Series C Preferred Stock shall receive:
(i) an amount of cash equal to the sum of (A) the lesser of (x) the
IPO Cash Excess, if any, and (y) the product of (1) the Maximum Liquidation
Value and (2) a fraction, the numerator of which is the sum of the
Redemption Proceeds prior to the IPO and the Series A Cash Shortfall, and
the denominator of which is the sum of the Redeemed Series A Preferred
Accreted Value and the Series A Preferred Accreted Value, in each case
immediately prior to the consummation of the IPO, plus (B) the product of
(1) the Maximum Liquidation Value and a (2) fraction, the numerator of
which is the IPO Cash Excess less the Cash paid in respect of the Series C
Preferred Stock pursuant to the immediately preceding Clause (A), and the
denominator of which is the sum of the Re-
-2-
deemed Series A Preferred Accreted Value, the Series A Preferred Accreted
Value and the Maximum Liquidation Value, in each case immediately prior to
the consummation of the IPO; and
(ii) an amount of Common Stock (which shall be valued, per share, at
the IPO Value) equal to the aggregate IPO Redemption Price over the amount
of cash paid in redemption of the Series C Preferred Stock pursuant to this
Section 3; provided that the Board of Directors may elect to pay cash
instead of any non-cash consideration (based on the value of such non-cash
consideration as so determined by the Board of Directors) otherwise so
payable in respect of any share of the Series C Preferred Stock to any
holder of Series C Preferred Stock, if it concludes that paying such
non-cash consideration to such holder may create regulatory or compliance
burdens on the part of the Corporation or any other participant in the
transaction giving rise to such redemption event or is otherwise unable to
pay such non-cash consideration.
(f) Anything in this Section 3 to the contrary notwithstanding, the Board
of Directors may require that the holder of the Series C Preferred Stock execute
such agreements in respect of any non-cash consideration paid thereto upon
redemption as the Board of Directors may reasonably determine so long as the
holders of Series A Preferred Stock are also required to execute such agreements
in respect of such non-cash consideration; provided, that no holder of Series C
Preferred Stock shall be required to have liability under such agreements in
respect of breaches of representations and warranties in excess of the IPO
Redemption Price for such holders Series C Preferred Stock. Any holder's failure
to execute such agreement shall not affect the status of the Series C Preferred
Stock as redeemed, such holder's rights to be limited to the receipt of such
non-cash consideration upon its execution of such agreements.
4. MANDATORY REDEMPTION UPON LIQUIDITY EVENT (INCLUDING IPO) OCCURRING AFTER A
REFINANCING OR THIRD PARTY SALE.
(a) No later than 3 days after the occurrence of a Liquidity Event, the
Corporation shall redeem, to the extent of funds or property legally available
therefor, all of the outstanding shares of Series C Preferred Stock. Such shares
shall be redeemed from the holders thereof at a per share redemption price,
payable in cash, equal to the Liquidity Event Redemption Price.
(b) At least 1 day and not more than 90 days prior to the date fixed for
any redemption of the Series C Preferred Stock pursuant to this Section 4,
written notice (the "Mandatory Redemption Notice") shall be given by first class
mail, postage prepaid (which notice shall be effective upon deposit for
mailing), to each holder of record on the record date fixed for such redemption
of the Series C Preferred Stock at such holder's address as it appears in the
register maintained by the transfer agent (which may be the Corporation) for the
Series C Preferred Stock; provided that no failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for the redemption
of any shares of Series C Preferred Stock to be redeemed except as to the holder
or holders to whom the Corporation has failed to give said notice or except as
to the holder or holders whose notice was defective. The Mandatory Redemption
Notice shall state:
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(1) the Liquidity Event Redemption Price:
(2) the date of such redemption; and
(3) that the holder is to surrender to the Corporation, in the manner
and at the place or places designated, his certificate or certificates
representing the shares of Series C Preferred Stock to be redeemed.
(c) Each holder of Series C Preferred Stock shall surrender the certificate
or certificates representing such shares of Series C Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Mandatory Redemption Notice, and on the related redemption date the full
Liquidity Event Redemption Price for such shares shall be payable in cash to the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired.
(d) On and after such redemption date, unless the Corporation defaults in
the payment in full of the Liquidity Event Redemption Price, all rights of the
holders of the Series C Preferred Stock to be redeemed shaft terminate with
respect thereto, other than the right to receive the Liquidity Event Redemption
Price; provided, however that if a notice of redemption shall have been given as
provided in Section 4(b) above and the funds necessary for redemption shall have
been irrevocably deposited in the trust for the equal and ratable benefit for
the holders of the shares of Series C Preferred Stock, then, at the close of
business on the day on which such funds are segregated and set aside, the
holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the Liquidity Event Redemption
Price.
(e) The Corporation's obligations in this Section 4 shall be subject to its
compliance with the provisions of all Senior Preferred Stock and Parity
Securities.
5. OPTIONAL REDEMPTION.
(a) At any time, the Corporation may redeem, to the extent of funds legally
available therefor, all or any portion of the outstanding shares of Series C
Preferred Stock. Such shares shall be redeemed from the holders thereof pro rata
and the redemption shall be at a per share redemption price, payable in cash,
equal to the Option to Redemption Price.
(b) At least 5 days and not more than 90 days prior to the date fixed for
any redemption of the Series C Preferred Stock pursuant to this Section 5,
written notice (the "Optional Redemption Notice") shall be given by first class
mail, postage prepaid (which notice shall be effective upon deposit for
mailing), to each holder of record on the record date fixed for such redemption
of the Series C Preferred Stock at such holder's address as it appears in the
register maintained by the transfer agent (which may be the Corporation) for the
Series C Preferred Stock; provided that no failure to give such notice nor any
deficiency therein shall affect this validity of the procedure for the
redemption of any shares of Series C Preferred stock to be redeemed except as to
the holder or holders to whom the Corporation has failed to give said notice
-4-
or except as to the holier or holders whose notice was defective. The Optional
Redemption Notice shall state:
(1) the Optional Redemption Price;
(2) the date of such redemption; and
(3) that the holder is to surrender to the Corporation, in the manner
and at the place or places designated, his certificate or certificates
representing the shares of Series C Preferred Stock to be redeemed.
(c) Each holder of Series C Preferred Stock shall surrender the certificate
or certificates representing such shares of Series C Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Optional Redemption Notice, and on the related redemption date the full Optional
Redemption Price for such shares shall be payable in cash to the person whose
name appears an such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired.
(d) On and after such redemption date, unless the Corporation defaults in
the payment in full of the Optional Redemption Price, all rights of the holders
of the Series C Preferred Stock to be redeemed shall terminate with respect
thereto, other than the right to receive the Optional Redemption Price;
provided, however, that if a notice of redemption shall have been given as
provided in Section 5(b) above and the funds necessary for redemption shall have
been irrevocably deposited in the trust for the equal and ratable benefit for
the holders of the shares of Series C Preferred Stock, then, at the close of
business on the day on which such funds are segregated and set aside, the
holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the Optional Redemption Price.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) Upon the occurrence of a Liquidity Event and a related voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of shares of Series C Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, after and subject to the payment in full of
all amounts required to be distributed to the holders of all Senior Preferred
Stock but before any payment shall be made to the holders of Junior Securities,
an amount per share of Series C Preferred Stock held thereby equal to the
applicable Liquidity Event Redemption Price determined as of the time of such
Liquidity Event.
(b) After the payment of all preferential amounts required to be paid to
the holders of Senior Preferred Stock and Parity Securities, the holders of
Junior Securities then outstanding shall be entitled to receive the remaining
assets and funds of the Corporation available for distribution to its
stockholders.
(c) Nothing in this Section 6 shall affect the redemption rights of the
holders of the Series C Preferred Stock pursuant to Sections 3 and 4 in respect
of a redemption date that
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precedes the date on which a distribution in respect of the Series C Preferred
Stock is required pursuant to this Section 6.
7. DEFINITIONS.
(a) "Adjusted Liquidation Amount" means, in respect of a Liquidity Event:
(i) in respect of a Refinancing, the product of (A) the Maximum
Liquidation Value at the time of the Liquidity Event and (B) a fraction
(which, notwithstanding the remainder of this clause (e), may never exceed
1), the numerator of which is the Redemption Proceeds and the denominator
of which is the Redeemed Series A Preferred Accreted Value; and
(ii) in respect of a Third Party Sale, the product of (A) the Maximum
Liquidation Value at the time of the Liquidity Event and (B) a fraction,
the numerator of which is the lesser of (x) the sum of Redemption Proceeds
and Third Party Sale Proceeds and (y) the sum of the Redeemed Series A
Preferred Accreted Value and the Sold Series A Preferred Accreted Value,
and the denominator of which is the sum of the Redeemed Series A Preferred
Accreted Value and the Sold Series A Preferred Accretes Value.
(b) "Affiliate" means, in respect of any Person, any Person, directly or
indirectly, controlling, controlled by or under common control with such Person;
provided that, in respect of any Person who is an individual, Affiliate shall
also mean any Person related by blood or marriage (no more remote than first
cousin) to such Person or any Affiliate of such related person. The Corporation
shall not be deemed to be an Affiliate of any original Series A Holder.
(c) "Common Stock" has the meaning set forth in the Series A Certificate of
Designation.
(d) "IPO" means the initial public offering of Common Stock (or securities
convertible into, or exercisable for, Common Stock).
(e) "IPO Cash Excess" means, in respect of an IPO, the aggregate amount of
cash available to redeem shares of Series A Preferred Stock and Series C
Preferred Stock in connection with (but on or after the consummation of) the IPO
that is in excess of the Series A Cash Shortfall.
(f) "IPO Reallocation Percentage" means, in respect of an IPO, the
percentage obtained by dividing (A) the lesser of (x) the sum of the Redemption
Proceeds, the Series A Preferred Accreted Value and the Maximum Liquidation
Value and (y) the Total Equity Value plus the Redemption Proceeds, by (B) the
sum of the Redeemed Series A Preferred Accreted Value, the Series A Preferred
Accreted Value and the Maximum Liquidation Value, in each case immediately prior
to the consummation of such IPO.
(g) "IPO Redemption Price" means, an amount, determined in connection with
an IPO, equal to (A) the lesser of (i) the excess, if any, of the sum of the
Total Equity Value and the Redemption Proceeds immediately prior to the
consummation of such IPO, over $70 mil-
-6-
lion, or (ii) the product of (x) the Maximum Liquidation Value immediately prior
to the consummation of such IPO and (y) the IPO Reallocation Percentage, divided
by (B) 14,000.
(h) "IPO Value" means, in respect of an IPO, the offering price to the
public of the Common Stock in such IPO.
(i) "Junior Securities" means any capital stock of the Corporation ranking
on liquidation junior and not preferred to the Series C Preferred Stock and
shall include, in any event, the Series D Preferred Stock, par value $0.01 per
share, of the Corporation and Common Stork.
(j) "Liquidity Event" means the first to occur of any of the following
events after a Valuation Event: (A) the merger or consolidation of the
Corporation into or with another Corporation or the merger or consolidation of
another corporation into or with the Corporation, (B) the sale, conveyance or
lease (but not including a transfer by pledge or mortgage or lease to a bona
fide, third party lender) of all or substantially all the assets of the
Corporation, (C) the sale of any Common Stock by stockholders, in the case in
arty of clauses (A), (B) or (C) in which the stockholders of record of the
corporation immediately prior to such event shall beneficially own (as such term
is used for purposes of Section 13(d) of the Securities Exchange Art of 1934, as
amended, and the rules promulgated thereunder) less than 50% of the voting
securities of the corporation surviving such merger or consolidation or the
person acquiring such assets or shares, (D) the transfer by Transportation
Investment Partners L.L.C. ("TIP") of the right to elect at least a of the 5
directors that TIP is entitled to elect as of the date hereof to a Person other
than its Affiliates or any other Original Series A Holder (provided, that, if
the holders of the Series C Preferred Stock have elected not to exercise their
rights to transfer such shares pursuant to Section 8B of that certain
Stockholders' Agreement dated as of March 9, 2000, as amended on February 28,
2001 end on December 18, 2003, the event contemplated by this clause (D) shall
not be a Liquidity Event), or (E) an IPO.
(k) "Liquidity Redemption Price" means, in respect of a Liquidity Event,
(A) the applicable Adjusted Liquidation Amount divided by (B) 14,000.
(l) "Maximum Liquidation Value" means $14,000,000 if a Liquidity Event
occurs on or prior to December 31, 2004, and $16,500,000 if a Liquidity Event
occurs after December 31, 2004.
(m) "Optional Redemption Price" means a per share redemption price, in
cash, equal to (A) the lesser of (x) $16,500,000 or (y) if a Valuation Event
occurred, the Adjusted Liquidation Amount, divided by (B) 14.000; provided that
after any transfer of Sores C Preferred Stock pursuant to Section 8A or Section
8B of that certain Stockholders' Agreement dated as of March 9, 2000, as amended
on February 28, 2001 and on December 18, 2003, the Optional Redemption Price
shall be $0.10 per share and in no event shall the Corporation be required to
pay an amount greater than $0.10 per share in respect of any redemption thereof.
(n) "Original Series A Holder" means, in respect of shares of the Series A
Preferred Stock, any Person holding such shares as of the date of this
Certificate of Designations, or any of such Person's Affiliates who acquire
shares of Series A Preferred Stock from such Per-
-7-
son; provided that in respect of shares of Series A Preferred Stock hereafter
acquired by any Original Series A Holder from a Person that is not an Original
Series A Holder in respect of such shares, such acquiring Person shall not be
deemed to be an Original Series A Holder in respect of the shares so acquired.
(o) "Parity Securities" means any preferred stock of the Corporation
ranking on liquidation on a parity with the Series C Preferred stock, and, in
any event, shall include the Series A Preferred Stock, and the Series B
Preferred Stock of the Corporation, par value $0.01 per share.
(p) "Person" means an individual, partnership, joint-stock company,
corporation, limited liability company, trust, estate or unincorporated
organization, and a government or agency be subdivision thereof.
(q) "Publicly Traded Securities" means, in respect of a Third Party Sale,
securities (A) of a class that is listed on the New York Stock Exchange, NASDAQ
National Market, or other nationally recognized stock exchange, (B) which are
tradeable on such exchange without legal or contractual restraint (other than
prohibitions on the use of material non-public information), and (C) which, in
the reasonable judgment of the Board of Directors, may be transferred in their
entirety to the public within 30 days of receipt thereof without discount to the
average market price thereof for the 30 days immediately prior to the date of
such event.
(r) "Redeemed Series A Preferred Accreted Value" means, as of any time, in
respect of shares of Series A Preferred Stock redeemed by the Corporation or a
subsidiary thereof prior to such time, the sum of (A) the product of $1,000 and
the number of such shares, (B) the aggregate premium paid payable in respect of
such shares payable pursuant to paragraph (e)(i) of the Series A Certificate of
Designation on the date such shares were redeemed (whether or not such premium
was actually paid by Corporation or such shares were actually redeemed by the
Corporation at such time) and (C) an amount equal to all accumulated and unpaid
dividends on such shares as of the time such shares wore so redeemed.
(s) "Redemption Proceeds" means an amount, as of any time, equal to the
aggregate value of the cash and Publicly Traded Securities (which shall be
valued, as of the time of receipt, by the Board of Directors) received by
holders of Series A Preferred Stack in respect of redemptions of such shares by
the Corporation or a subsidiary thereof prior to such time.
(t) "Refinancing" means the redemption by the Corporation or a subsidiary
thereof of all outstanding shares of Series A Preferred Stock in one or more
redemptions pursuant to the Series A Certificate of Designation with the
proceeds of debt or equity financings of the Corporation.
(u) "Senior Preferred Stock" means any other preferred stock of the
Corporation ranking on liquidation prior and in preference to the Series C
Preferred Stock and, in any event, shall include the Series E Preferred Stock of
the Corporation, par value $0.01 per share.
(v) "Series A Cash Shortfall" means, in respect of an IPO, excess of $70
million over the Redemption Proceeds prior to the IPO.
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(w) "Series A Certificate of Designation" means the Certificate of
Designation of the Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of 14 1/2% Senior Redeemable Preferred Stock, Series A, and
Qualifications, Limitations and Restrictions thereof, dated as of March 13,
2000, as amended on December 18, 2003 and as the same may be hereafter amended,
modified or supplemented.
(x) "Series A Preferred Accreted Value" means, as of any point in time, the
sum of (A) the product of $1,000 and the number of shares of Series A Preferred
Stock outstanding immediately prior to such time, (e) the aggregate premium
payable in respect of such Shares of Series A Preferred Stock, had the
Corporation redeemed all such shares pursuant to paragraph (e)(i) of the Series
A Certificate of Designation at such time (whether or not actually redeemed by
the Corporation pursuant to such paragraph) and (C) an amount equal to all
accumulated and unpaid dividends immediately prior to such Time on such shares
of Series A Preferred Stock.
(y) "Series A Preferred Stock" means the 14 1/2% Senior Redeemable
Preferred Stock, Series A, of the Corporation, with a slated value of $1.000 per
share.
(z) "Sold Series A Preferred Accreted Value" means in respect of shares of
Series A Preferred Stock sold or otherwise transferred in a Third Party Sale,
the sum of (A) the product of $1,000 and the number of such shares, and (B) an
amount equal to all accumulated and unpaid dividends on such shares as of the
time such shares were so sold or otherwise transferred.
(aa) "Third Party Sale" means the transfer or all outstanding snares of
Series A Preferred Stock in one transaction to a person who is not an Affiliate
of any Original Series A Holder solely for cash and Publicly Traded Securities.
(bb) "Third Party Sale Proceeds" means an amount, determined upon a Third
Party Sale, equal to the aggregate value of the cash and Publicly Traded
Securities (which shall be valued, as of the time of receipt, by the Board of
Directors) received by holders of Series A Preferred Stock in respect of a Third
Party Sale.
(cc) "Total Equity Value" means, in respect of an IPO, an amount equal to
the aggregate value of Parity Securities and Junior Securities immediately prior
to the consummation of the IPO (such value to be determined in good faith by the
Board of Directors, with shares of Common Stock valued, per share, at the IPO
Value).
(dd) "Valuation Event" means a Refinancing or Third Party Sale.
8. VOTING.
(a) The Series C Preferred Stock shall have no voting rights except as may
be required by law or as set forth in Section 8(b); provided, that the
Corporation shall not amend, alter or repeal the preferences, special rights or
other powers of the Series C preferred Stock so as to affect adversely the
Series C Preferred Stock, without the written consent or affirmative vote of the
holders of at least a majority of the then outstanding shares of Series C
Preferred
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Stock, given in writing or by vote at a meeting, consenting or voting (as the
case may be) separately as a class. For this purpose, the authorization or
issuance of any series of Preferred Stock with preference or priority over, or
being on a parity with, the Series C Preferred Stock as to the right to receive
amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed so to affect adversely the series C Preferred
Stock.
(b) Without the prior consent of holders of a majority of the outstanding
shares of Series C Preferred Stock, after a Valuation Event, the Corporation
shall not pay any dividends on nor shall the Corporation or any subsidiary
thereof purchase, redeem or otherwise acquire any Junior Securities; provided,
that the Corporation may make payments permitted by paragraph (k)(ii)(B) of the
Series A Certificate of Designation and the terms of any other indebtedness of
the Corporation or Senior Securities similar thereto.
9. CONVERSION. The Series C Preferred Stock is not convertible into any other
Class of capital stock of the Corporation.
10. PAYMENTS SUBJECT TO CREDIT AGREEMENT AND SENIOR PREFERRED STOCK.
Notwithstanding anything to the contrary herein, no payment (whether as a
dividend, liquidation preference, optional or mandatory redemption or otherwise)
may be made in cash in respect of any shares of Series C Preferred Stock unless
all obligations under that certain Credit Agreement dated as of March 9, 2000,
among the Corporation, the Corporation's subsidiaries, the lenders party thereto
in their capacities as lenders thereunder and Wachovia Bank, National
Association (as successor to First Union National Bank), as administrative agent
(the "Credit Agreement"), together with the related documents thereto
(including, without limitation, any guarantee agreements and security documents,
including as provided by any subsidiaries of the Corporation), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder or adding subsidiaries of the Corporation as additional borrowers or
guarantors thereunder) all or any portion of the indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agents, lender or group of lenders that shall have been paid in full
in cash or the Credit Agreement shall permit such payment. Notwithstanding
anything to the contrary herein, no payment (whether as a dividend, liquidation
preference, optional or mandatory redemption or otherwise) may be made in cash
in respect of any shares of Series C Preferred Stock unless the terms of any
Senior Preferred Stock shall permit such payment.
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IN WITNESS WHEREOF, Transportation Technologies Industries, Inc. has caused
this Certificate of Designations, Number, Voting Powers, Preferences and Rights
of Series C Preferred Stock to be duly executed by a duly authorized officer
this 19th day of December, 2003.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ Donald C. Mueller
----------------------------------------
Name: Donald C. Mueller
Title: Chief Financial Officer
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CERTIFICATE OF DESIGNATIONS, NUMBER, VOTING POWERS,
PREFERENCES AND RIGHTS OF SERIes D
PREFERRED STOCK
OF
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors (the "Board of Directors") of Transportation
Technologies Industries, Inc., a Delaware corporation (the "Corporation"), with
the preferences and rights set forth therein relating to dividends, conversion,
dissolution and distribution of assets of the Corporation having been fixed by
the Board of Directors pursuant to authority granted to it under the
Corporation's Certificate of Incorporation (the "Certificate of Incorporation")
and in accordance with the provisions of Section 151 of the General corporation
Law of the State of Delaware:
RESOLVED: That, pursuant to authority conferred upon the Board of Directors
by the Certificate of Incorporation, the Board of Directors hereby authorizes
the creation of 42,000 shares of Series D Preferred Stock of the Corporation,
and hereby fixes the designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such shares, in addition to those set
forth in the Certificate of Incorporation, as follows:
1. DESIGNATION AND AMOUNT. There is hereby created out of the authorized and
unissued shares of preferred stock of the Corporation ("Preferred Stock") a
series of Preferred Stock designated "Series D Preferred Stock" (the "Series D
Preferred"), and the number of shares constituting such series shall be 42,000.
2. DIVIDENDS. The holders of Series D Preferred stock shall not be entitled to
receive dividends on shares of Series D Preferred Stock,
3. MANDATORY REDEMPTION UPON AN INITIAL PUBLIC OFFERING.
(a) Concurrently with the consummation of an IPO (other than an IPO after a
Valuation Event), the Corporation shall redeem all of the outstanding shares of
Series D Preferred Stock. Such shares shall be redeemed from the holders thereof
at a per share redemption price equal to the IPO Redemption Price.
(b) At least 5 days and not more than 90 days prior to the date fixed for
any redemption of the Series D Preferred Stock pursuant to this Section 3,
written notice (the "IPO Redemption Notice") shall be given by first class mail,
postage prepaid (which notice shall be effective upon deposit for mailing), to
each holder of record on the record date fixed for such redemption of the Series
D Preferred Stock at such holder's address as it appears in the register
maintained by the transfer agent (which may be the Corporation) for the Series D
Preferred
Stock; provided that no failure to give such notice nor any deficiency therein
shall affect the validity of the procedure for the redemption of any shares of
Series D Preferred Stock to be redeemed except as to the holder or holders to
whom the Corporation has failed to give said notice or except as to the holder
or holders whose notice was defective. The IPO Redemption Notice shall state:
(i) the IPO Redemption Price (and the type of consideration to be paid
in respect thereof).
(ii) the date of such redemption; and
(iii) that the holder is to surrender to the Corporation, in the
manner and at the place or places designated, his certificate or
certificates representing the shares of Series D Preferred Stock to be
redeemed.
(c) Each holder of Series D Preferred Stock shall surrender the certificate
or certificates representing such shares of Series D Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
IPO Redemption Notice, and on the related redemption date the full IPO
Redemption Price for such shares shall be payable in cash (or in such other
consideration as provided in Section 3(e)) to the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shaft be canceled and retired.
(d) On and after such redemption date, unless the Corporation defaults in
the payment in full of the IPO Redemption Price, all rights of the holders of
the Series D Preferred Stock to be redeemed shall terminate with respect
thereto, other than the right to receive the IPO Redemption Price; provided,
however, that if a notice of redemption shall have been given as provided in
Section 3(b) above and the funds (or property) necessary for redemption shall
have been irrevocably deposited to the trust for the equal and ratable benefit
for the holders of the shares of Series D Preferred Stock, then, at the close of
business on the day on which such funds are segregated and set aside, the
holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the IPO Redemption Price.
(e) Anything in this Certificate of Designations to the contrary
notwithstanding, the Corporation shall pay the IPO Redemption Price in respect
of the Series D Preferred Stock pursuant to this Section 3 with such types of
consideration such that the holders of Series D Preferred Stock shall receive
(x) an amount in cash equal to the aggregate amount of cash that is available to
redeem securities of the Corporation after payments of all amounts required to
be paid in respect of Senior Preferred Stock; and (y) an amount of Common Stock
(which shall be valued, per share, at the IPO Value) equal to the aggregate IPO
Redemption Price over the amount of cash paid in redemption of the Series D
Preferred Stock pursuant to this Section 3.
(f) Anything in this Section 3 to the contrary notwithstanding, the Board
of Directors may require that the holder of the Series D Preferred Stock execute
such agreements in respect of any non-cash consideration paid thereto upon
redemption as the Board of Directors may reasonably determine so long as the
holders of Series A Preferred Stock are also required to execute such agreements
in respect of such non-cash consideration; provided, that no holder of
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Series D Preferred Stock shall be required to have liability under such
agreements in respect of breaches of representations and warranties in excess of
the IPO Redemption Price for such holder's Series D Preferred Stock, Any
holder's failure to execute such agreement shall not affect the status of the
Series D Preferred Stock as redeemed, such holder's rights to be limited to the
receipt of such non-cash consideration upon its execution of such agreements.
4. MANDATORY REDEMPTION UPON LIQUIDITY EVENT (INCLUDING IPO) OCCURRING AFTER A
REFINANCING OR THIRD PARTY SALE.
(a) No later than 3 days after the occurrence of a Liquidity Event, the
Corporation shall redeem, to the extent of funds or property legally available
therefor, all of the outstanding shares of Series D Preferred Stock. Such shares
shall be redeemed from the holders thereof at a per share redemption price,
payable in cash, equal to the Liquidity Event Redemption Price.
(b) At least 1 day and not more then 90 days prior to the date fixed for
any redemption of the Series D Preferred Stock pursuant to this Section 4,
written notice (the "Mandatory Redemption Notice") shall be given by first class
mail, postage prepaid (which notice shall be effective upon deposit for
mailing), to each holder of record on the record date fixed for such redemption
of the Series D Preferred Stock at such holder's address as it appears in the
register maintained by the transfer agent (which may be the Corporation) for the
Series D Preferred Stock; provided that no failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for the redemption
of any shares of Series D Preferred Stock to be redeemed except as to the holder
or holders to whom the Corporation has failed to give said notice or except as
to the holder or holders whose notice was defective. The Mandatory Redemption
Notice shall state:
(i) the Liquidity Event Redemption Price;
(ii) the date of such redemption; and
(iii) that the holder is to surrender to the Corporation, in the
manner and at the place or places designated, his certificate or
certificates representing the shares of Series D Preferred Stock to be
redeemed.
(c) Each holder of Series D Preferred Stock shall surrender the certificate
or certificates representing such shares of Series D Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Mandatory Redemption Notice, and on the related redemption date the full
Liquidity Event Redemption Price for such shares shall be payable in cash to the
person whose name appears on such certificate or certificates as the owner
thereof, and each surrendered certificate shall be canceled and retired.
(d) On and after such redemption date, unless the Corporation defaults in
the payment in full of the Liquidity Event Redemption Price, all rights of the
holders of the Series D Preferred Stock to be redeemed shell terminate with
respect thereto, other than the right to receive the liquidity Event Redemption
Price; provided, however, that if a notice of redemption
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shall have been given as provided in Section 4(b) above and the funds necessary
for redemption shall have been irrevocably deposited in the trust for the equal
and ratable benefit for the holders of the shares of Series D Preferred Stock,
then, at the close of business on the day on which such funds are segregated and
set aside, the holders of the shares to be redeemed shall cease to be
stockholders of the Corporation and shah be entitled only to receive the
Liquidity Event Redemption Price.
(e) The Corporation's obligations in this Section 4 shall be subject to its
compliance with the provisions of all Senior Preferred Stock and Parity
Securities.
5. FINAL REDEMPTION.
(a) At any time, the Corporation may redeem, to the extent of funds legally
available therefor, all or any portion of the outstanding shares of Series D
Preferred Stock. Such shares shall be redeemed from the holders thereof pro rata
and the redemption shall be at a per share redemption price, payable in cash,
equal to the Optional Redemption Price.
(b) At least 5 days and not more than 90 days prior to the date fixed for
any redemption of the Series D Preferred Stock pursuant to this Section 5,
written notice (the "Optional Redemption Notice") shall be given by first class
mail, postage prepaid (which notice shall be effective upon deposit for
mailing), to each holder of record on the record date fixed for such redemption
of the Series D Preferred Stock at such holder's address as it appears in the
register maintained by the transfer agent (which may be the Corporation) for the
Series D Preferred Stock; provided that no failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for the redemption
of any shares of Series D Preferred Stock to be redeemed except as to the holder
or holders to whom the Corporation has failed to give said notice or except as
to the holder or holders whose notice was defective. The Optional Redemption
Notice shall state:
(i) the Optional Redemption Price;
(ii) the date of such redemption; and
(iii) that the holder is to surrender to the Corporation, in the
manner and at the place or places designated, his certificate or
certificates representing the shares of Series D Preferred Stock to be
redeemed.
(c) Each holder of Series D Preferred Stock shall surrender the certificate
or certificates representing such shares of Series D Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Optional Redemption Notice, and on the related redemption date the full Optional
Redemption Price for such shares shall be payable in cash to the person whose
name appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired.
(d) On and after such redemption date, unless the Corporation defaults in
the payment in full of the Optional Redemption Price, all rights of the holders
of the Series D Pre-
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ferred Stock to be redeemed shall terminate with respect thereto, other than the
right to receive the Optional Redemption Price; provided, however, that if a
notice of redemption shall have been given as provided in Section 5(b) above and
the funds necessary for redemption shall have been irrevocably deposited in the
trust for the equal and ratable benefit for the holders of the shares of Series
D Preferred Stock, then, at the close of business on the day on which such funds
are segregated and set aside, the holders of the shares to be redeemed shall
cease to be stockholders of the Corporation and shall be entitled only to
receive the Optional Redemption Price.
6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(a) Upon the occurrence of a Liquidity Event and a related voluntary or
involuntary liquidation, dissolution at winding-up of the affairs of the
Corporation, the holders of shares of Series D Preferred Stock then outstanding
shall be entitled to be paid out of the assets of the Corporation available for
distribution to its stockholders, after and subject to the payment in full of
all amounts required to be distributed to the holders of all Senior Preferred
Stock but before any payment shall be made to the holders of Junior Securities,
an amount per share of Series D Preferred Stock held thereby equal to the
applicable Liquidity Event Redemption Price, determined as of the time of such
Liquidity Event.
(b) After the payment of all preferential amounts required to be paid to
the holders of Senior Preferred Stock and Parity Securities, the holders of
Junior Securities then outstanding shall be entitled to receive the remaining
assets and funds of the Corporation available for distribution to its
stockholders.
(c) Nothing in this Section 6 shall affect the redemption rights of the
holders of the Series D Preferred Stock pursuant to Sections 3 and 4 in respect
of a redemption date that precedes the date on which a distribution in respect
of the Series D Preferred Stock is required pursuant to this Section 6.
7. DEFINITIONS.
(a) "Adjusted Liquidation Amount" means, in respect of a Liquidity Event:
(i) in respect of a Refinancing, the product of (A) the Maximum
Liquidation Value at the time of the Liquidity Event and (B) a
fraction (which, notwithstanding the remainder of this clause
(B), may never exceed 1), the numerator of which is the
Redemption Proceeds and the denominator of which is the Redeemed
Series A Preferred Accreted Value;
(ii) in respect of a Third Party Sale, the product of (A) the Maximum
Liquidation Value at the time of the Liquidity Event and (B) a
fraction, the numerator of which is the lessor of (x) the sum of
Redemption Proceeds and Third Party Sale Proceeds and (y) the sum
of the Redeemed Series A Preferred Accreted Value and the Sold
Series A Preferred Accreted Value, and the denominator of which
-5-
is the sum of the Redeemed Series A Preferred Accreted Value and
the Sold Series A Preferred Accreted Value; and
(iii) in respect of a Series A Total Sale, the product of (A) the
Maximum Liquidation Value at the time of the Liquidity Event and
(B) a fraction, the numerator of which is the aggregate
consideration received by the holders of the Series C Preferred
Stock in the Series A Total Sale, and the denominator of which is
Series C Maximum Liquidation Value.
(b) "Affiliate" means, in respect of any Person, any Person, directly or
indirectly, controlling, controlled by or under common control with such Person;
provided that, in respect of any Person who is an individual, "Affiliate" shall
also mean any Person related by blood or marriage (no more remote than first
cousin) to such Person or any Affiliate of such related person. The Corporation
shall not be deemed to be an Affiliate of any Original Series A Holder.
(c) "Common Stock" has the meaning set forth in the Series A Certificate of
Designation.
(d) "IPO" means the initial public offering of Common Stock (or securities
convertible into, or exercisable for, Common Stock).
(e) "IPO Redemption Price" means, an amount, determined in connection with
an IPO, equal to (A) the lesser of (i) the Maximum Liquidation Value immediately
prior to the consummation of the IPO and (ii) the IPO Residual Equity Value
immediately prior to the consummation of the IPO, divided by (B) 42,000.
(f) "IPO Residual Equity Value" means, in respect of an IPO, an amount
equal to the aggregate value of Parity Securities and Junior Securities
immediately prior to the consummation of the IPO (such value to be determined in
good faith by the Board of Directors, with shares of Common Stock valued, per
share, at the IPO Value).
(g) "IPO Value" means, in respect of an IPO, the offering price to the
public of the Common Stock in such IPO.
(h) "Junior Securities" means any capital stock of the Corporation, ranking
on liquidation junior and not preferred to the Series D Preferred Stock and
shall include, in any event, Common Stock.
(i) "Liquidity Event" means the first to occur of any of the following
events after a Valuation Event: (A) the merger or consolidation of the
Corporation into or with another Corporation or the merger or consolidation of
another corporation into or with the Corporation, (B) the sale, conveyance or
lease (but not including a transfer by pledge or mortgage or lease to a bona
fide, third party lender) of all or substantially all the assets of the
Corporation, (C) the sale of any Common Stock by stockholders, in the case in
any of clauses (A), (B) or (C) in which the stockholders of record of the
Corporation immediately prior to such event shall beneficially own
-6-
(as such term is used for purposes of Section 13(d) of the Securities Exchange
Act of 1934, as amended, and the rules promulgated thereunder) less than 50% of
the voting securities of the corporation surviving such merger or consolidation
or the person acquiring such assets or shares, (D) the transfer by
Transportation Investment Partners L.L.C. ("TIP") of the right to elect at least
3 of the 5 directors that TIP is entitled to elect as of the date hereof to a
Person other than its Affiliates or any other Original Series A Holder;
provided, that, if the holders of the Series C Preferred Stock have elected not
to exercise their rights to transfer such shares pursuant to Section 8B of that
certain Stockholders' Agreement dated as of March 9, 2000, as amended on
February 28, 2001 and on December 18, 2003, the event contemplated by this
clause (D) shall not be a Liquidity Event), or (E) an IPO.
(j) "Liquidity Event Redemption Price" means, in respect of a Liquidity
Event, (A) the applicable Adjusted Liquidation Amount divided by (B) 42,000.
(k) "Maximum Liquidation Value" means $42,000,000 if a Liquidity Event
occurs on or prior to December 31, 2004, and $49,500,000 if a Liquidity Event
occurs after December 31, 2004.
(l) "Option Redemption Price" means a per share redemption price, in cash,
equal to (A) the lesser of (x) $49,500,000 or (y) if a Valuation Event has
occurred, the Adjusted Liquidation Amount, divided by (B) 42,000; provided that
after any transfer of Series D Preferred Stock pursuant to Section 8A of that
certain Stockholders' Agreement dated as of March 9, 2000, as amended on
February 28, 2001 and on December 18, 2003, the Optional Redemption Price shall
be $0.10 per share and in no event shall the Corporation be required to pay an
amount greater then $0.10 per share in respect of any redemption thereof.
(m) "Original Series A Holder" means, in respect of shares of the Series A
Preferred Stock, any Person holding such shares as of the date of this
Certificate of Designations, or any of such Person's Affiliates who acquire
shares of Series A Preferred Stock from such Person; provided that, in respect
of shares of Series A Preferred stock hereafter acquired by any Original Series
A Holder from a Person that is not an Original Series A Holder in respect of
such shares, such acquiring Person shall not be deemed to be an Original Series
A Holder in respect of the shares so acquired.
(n) "Parity Securities" means any preferred Stock of the Corporation
ranking on liquidation on a parity with the Series D Preferred stock.
(o) "Person" means an individual, partnership, joint-stock company,
corporation, limited liability company, trust, estate or unincorporated
organization, and a government or agency or subdivision thereof.
(p) "Publicly Traded Securities" means, in respect of a Third Party Sale,
securities (A) of a class that is listed on the New York Stock Exchange, NASDAQ
National Market, or other nationally recognized stock exchange, (B) which are
tradeable on such exchange without legal or contractual restraint (other than
prohibitions on the use of material non-public information), and (C) which, in
the reasonable judgment of the Board of Directors, may be transferred in
-7-
their entirety to the public within 30 days of receipt thereof without discount
to the average market price thereof for the 30 days immediately prior to the
date of such event.
(q) "Redeemed Series A Preferred Accreted Value" means, as of any time, in
respect of shares of Series A Preferred Stock redeemed by the Corporation or a
subsidiary thereof prior to such time, the sure of (A) the product of $1,000 and
the number of such shares, (B) the aggregate premium paid payable in respect of
such shares payable pursuant to paragraph (e)(i) of the Series A Certificate of
Designation on the date such shares were redeemed (whether or not such premium
was actually paid by Corporation or such shares were actually redeemed by the
Corporation at such time) and (C) in amount equal to all accumulated and unpaid
dividends on such shares as of the time such shares were so redeemed.
(r) "Redemption Proceeds" means an amount, as of any time, equal to the
aggregate value of the cash and Publicly Traded Securities (which shall be
valued, as of the time of receipt by the Board of Directors) received by holders
of Series A Preferred Stock in respect of redemptions of such shares by the
Corporation or a subsidiary thereof prior to such time.
(s) "Refinancing" means the redemption by the Corporation or a subsidiary
thereof of all outstanding shares of Series A Preferred Stock in one or more
redemptions pursuant to the Series A Certificate of Designation with the
proceeds of debt or equity financings of the Corporation.
(t) "Senior Preferred Stock" means any other preferred stock of the
Corporation ranking on liquidation prior and in preference to the Series D
Preferred Stock and, in any event, shall include the Series A Preferred Stock,
Series B Preferred Stock, par value $0.01 per share, Series C Preferred Stock
and Series E Preferred Stock, par value $0.01 per share, in each case of the
Corporation.
(u) "Series A Certificate of Designation" means the Certificate of
Designation of the Powers, Preferences and Relative, Participating, Optional and
Other Special Rights of 14 1/2% Senior Redeemable Preferred Stock Series A, and
Qualifications, Limitations and Restrictions thereof, dated as of March 13,
2000, as amended on December 18, 2003 and as the same may be hereafter amended,
modified or supplemented.
(v) "Series A Preferred Accreted Value" means, as of any point in time, the
sum of (A) the product of $1,000 and the number of shares of Series A Preferred
Stock outstanding immediately prior to such time (B) the aggregate premium
payable in respect of such shares of Series A Preferred Stock, had the
Corporation redeemed all such shares pursuant to paragraph (a)(i) of the Series
A Certificate of Designation at such time (whether or not actually redeemed by
the Corporation pursuant to such paragraph) and (C) an amount equal to all
accumulated and unpaid dividends immediately prior to such time an such shares
of Serial A Preferred Stock.
(w) "Series A Preferred Stock" means the 14 1/2% Senior Redeemable
Preferred Stock, Series A, of the Corporation, with a stated value of $1,000 per
share.
-8-
(x) "Series A Total Sale" means any transfer of Series A Preferred Stock
and Series C Preferred Stock pursuant to Section 8B of that certain
Stockholders' Agreement dated as of March 9, 2000, as amended on February 28,
2001 and on December 18, 2003.
(y) "Series C Maximum Liquidation Value" means, in respect of a Series A
Total Sale, $14,000,000 if such event occurs on or prior to December 31, 2004,
and $16,500,000 if such event occurs after December 31, 2004.
(z) "Series C Preferred Stock" means the Series C Preferred Stock, par
value $0.01 per share, of the Corporation.
(aa) "Sold Series A Preferred Accreted Value" means in respect of shares of
Series A Preferred Stock sold or otherwise transferred in a Third Party Sale,
the sum of (A) the product of $1,000 and the number of such shares, and (B) an
amount equal to all accumulated and unpaid dividends on such shares as of the
time such shares were so sold or otherwise transferred.
(bb) "Third Party Sale" means the transfer of all outstanding shares of
Series A Preferred Stock in one transaction to a Person who is not an Affiliate
of any Original Series A Holder solely for cash and Publicly Traded Securities.
(cc) "Third Party Sale Proceeds" means an amount, determined upon a Third
Party Sale, equal to the aggregate value of the cash and Publicly Traded
Securities (which shall be valued, as of the time of receipt, by the Board of
Directors) received by holders of Series A Preferred Stock in respect of a Third
Party Sale.
(dd) "Valuation Event" means a Refinancing, Series A Total Sale or Third
Party Sale.
8. VOTING.
(a) The Series D Preferred Stock shall have no eating rights except as may
be required by law or as provided in Section 8(b); provided, that the
Corporation shall not amend, alter or repeal the preferences, special rights or
other powers of the Series D Preferred Stock so as to affect adversely the
Series C Preferred Stock, without the written consent or affirmative vote of the
holders of at least a majority of the then outstanding shares of Series D
Preferred Stock, given in writing or by vote at a meeting, consenting or voting
(as the case may be) separately as a class. For this purpose, the authorization
or issuance of any series of Preferred Stock with preference or priority over,
or being on a parity with, the Series D Preferred Stock as to the right to
receive amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall not be deemed so to affect adversely the Series D Preferred
Stock.
(b) Without the prior consent of holders of a majority of the outstanding
shares of Series D Preferred Stock, after the date on which there are no shares
of Series C Preferred Stock outstanding, the Corporation shall not pay any
dividends on nor shall the Corporation or any subsidiary thereof purchase,
redeem or otherwise acquire any Junior Securities; provided, that the
Corporation may make payments permitted by paragraph (k)(ii)(b) of the Series A
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Certificate of Designation and the terms of any other indebtedness of the
Corporation or Senior Securities similar thereto.
9. CONVERSION. The Series D Preferred Stock is not convertible into any other
class of capital stock of the Corporation.
10. PAYMENTS SUBJECT TO CREDIT AGREEMENT AND SENIOR PREFERRED STOCK.
Notwithstanding anything to the contrary herein, no payment whether as a
dividend, liquidation preference, optional or mandatory redemption or otherwise)
may be made in cash in respect of any shares of Series D Preferred Stock unless
all obligations under that certain Credit Agreement dated as of March 9, 2000,
among the Corporation, the Corporation's subsidiaries, the lenders party thereto
in their capacities as lenders thereunder and Wachovia Bank, National
Association (as successor to First Union National Bank), as administrative agent
(the "Credit Agreement"), together with the related documents thereto
(including, without limitation, any guarantee agreements and security documents,
including as provided by any subsidiaries of the Corporation), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder or adding subsidiaries of the Corporation as additional borrowers or
guarantors thereunder) all or any portion of the indebtedness under such
agreement or any successor or replacement agreement and whether by the same or
any other agents, lender or group of lenders shall have been paid in full in
cash or the Credit Agreement shall permit such payment. Notwithstanding anything
to the contrary herein, no payment (whether as a dividend, liquidation
preference, optional or mandatory redemption or otherwise) may be made in cash
in respect of any shares of Series D Preferred Stock unless the terms of any
Senior Preferred Stock shall permit such payment.
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IN WITNESS WHEREOF, Transportation Technologies Industries, Inc. has caused
this Certificate of Designations, Number, Voting Powers, Preferences and Rights
of Series D Preferred Stock be duly executed by duly authorized officer this
10th day of December, 2003.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By /s/ Donald C. Mueller
----------------------------------------
Name: Donald C. Mueller
Title: Chief Financial Officer
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CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 25%
SENIOR REDEEMABLE PREFERRED STOCK, SERIES E, AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Transportation Technologies Industries, Inc. (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, does hereby certify that, pursuant to authority conferred
upon the board of directors of the Corporation (the "Board of Directors") by its
Certificate of Incorporation, as amended (hereinafter referred to as the
"Certificate of Incorporation"), and pursuant to the provisions of Section 151
of the General Corporation Law of the State of Delaware, said Board of
Directors, by unanimous written consent dated December 13, 2003, duly approved
and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by the Corporation's Certificate of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance of 25%
Senior Redeemable Preferred Stock, Series E, Par value $.01 per share, with
a stated value of $l,000.00 per share, consisting of 41,475 shares, having
the designations, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof
that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
(a) Designation. There is hereby created out of the authorized and unissued
shares of Preferred Stock of the Corporation a class of Preferred Stock
designated as the "25% Senior Redeemable Preferred Stock." The number of shares
constituting such class shall be 41,475 and is referred to herein as the "Senior
Preferred Stock." The liquidation preference of the Senior Preferred Stock shall
be $1,000.00 per share (the "Liquidation Preference").
(b) Rank. The Senior Preferred Stock shall, with respect to dividend
distributions and distributions upon liquidation, winding-up and dissolution of
the Corporation, rank (i) senior (to the extent set forth herein) to all classes
of Common Stock of the Corporation and to each other class of Capital Stock of
the Corporation or series of Preferred Stock of the Corporation now in existence
or hereafter created the terms of which do not expressly provide that it ranks
senior to, or on a parity with, the Senior Preferred Stock as to dividend
distributions and distributions upon redemption, liquidation, winding-up and
dissolution or Change of Control of the Corporation (collectively referred to,
together with all classes of Common Stock of the Corporation, as "Junior
Securities"); (ii) on a parity with any class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation hereafter created
the terms of which expressly provide that such class or series will rank on a
parity with the Senior Preferred Stock as to dividend distributions and
distributions upon liquidation, winding up and dissolution (collectively
referred to as "Parity Securities"), provided that any such Parity Securities
that were not
approved by the Holders in accordance with paragraph (f)(ii)(A) hereof shall be
deemed to be Junior Securities and not Parity Securities; and (iii) junior to
each other class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation hereafter created the terms of which expressly provide
that such class or series will rank senior to the Senior Preferred Stock as to
dividend distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation (collectively referred to as "Senior
Securities"), provided that any such Senior Securities that were not approved by
the Holders in accordance with paragraph (f)(ii)(B) hereof shall be deemed to be
Junior Securities and not Senior Securities. The Senior Preferred Stock shall
rank senior to the outstanding 14 1/2% Senior Redeemable Preferred Stock of the
Corporation originally issued on March 9, 2000 (the "Existing Preferred Stock"),
the Series C Preferred Stock of the Corporation issued on December 18, 2003 (the
"Series C Preferred Stock") and the Series D Preferred Stock of the Corporation
issued on December 18, 2003 (the "Series D Preferred Stock") and shall
constitute "Senior Securities" under the "Certificate of Designations,
Preferences and Relative, Participatory, Optional and Other Special Rights of 14
1/2% Senior Redeemable Preferred Stock, Series A, and Qualifications,
Limitations and Restrictions Thereof" governing the terms of the Existing
Preferred Stock and "Senior Preferred Stock" under the "Certificate of
Designations, Number, Voting Powers, Preferences and Rights of Series C
Preferred Stock" governing the terms of the Series C Preferred Stock and the
"Certificate of Designations, Number, Voting Powers, Preferences and Rights of
Series D Preferred Stock" governing the terms of the Series D Preferred Stock.
(c) Dividends.
(i) From the Issue Date, the Holders of the outstanding shares of Senior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available therefor, dividends on each
share of Senior Preferred Stock at a rate per annum equal to 25% of the
Liquidation Preference per share of Senior Preferred Stock. All dividends shall
be cumulative, whether or not earned or declared, on a daily basis from the
Issue Date and shall be payable semi-annually in arrears on each Dividend
Payment Date, commencing on the first Dividend Payment Date after the Issue
Date. All unpaid dividends will compound on a semi-annual basis at a rate per
annum equal to the then applicable dividend rate. Dividends shall be payable in
cash (when, as and if declared by the Board of Directors out of funds legally
available therefor). Each dividend shall be payable to the Holders of record as
they appear on the stock books of the Corporation on the Dividend Record Date
immediately preceding the related Dividend Payment Date.
(ii) All dividends paid with respect to shares of the Senior Preferred
Stock pursuant to paragraph (e)(i) shall be paid pro rata to the Holders
entitled thereto.
(iii) Dividends accruing on the Senior Preferred Stock for any past
Dividend Period may be declared and paid at any time, without reference to any
Dividend Payment Date to Holders of record on such date, not more than ten (10)
days prior to the payment hereof as may be fixed by the Board of Directors.
(iv) (A) No full dividends shall be declared by the Board of Directors or
paid or set apart for payment by the Corporation on any Parity Securities for
any period unless full cumulative dividends have been or contemporaneously are
declared and paid in full, or declared
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and a sum in cash set apart sufficient for such payment, on the Senior Preferred
Stock for all Dividend Periods terminating on or prior to the date of payment of
such full dividends on such Parity Securities. If any dividends are not so paid,
all dividends declared upon shares of the Senior Preferred Stock and any other
Parity Securities shall be declared pro rata so that the amount of dividends
declared per share on the Senior Preferred Stock and such Parity Securities
shall in all cases bear to each other the same ratio that accrued dividends per
share on the Senior Preferred Stock and such Parity Securities bear to each
other.
(B) So long as any share of the Senior Preferred Stock is outstanding, the
Corporation shall not declare, pay or set apart for payment any dividends on any
of the Junior Securities (other than dividends in the form of the same class of
Junior Securities), or make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of the Junior Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Junior Securities whether
in cash, obligations or shares of the Corporation or other property (other than
in exchange for Junior Securities), and shall not permit any corporation or
other entity directly or indirectly controlled by the Corporation to purchase or
redeem any of the Junior Securities or any such warrants, rights, calls or
options (other than in exchange for Junior Securities).
(C) So long as any share of the Senior Preferred Stock is outstanding, the
Corporation shall not (except with respect to dividends as permitted by
paragraph (c)(iv)(A)) make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of the Parity Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Parity Securities whether
in cash, obligations or shares of the Corporation or other property, and shall
not permit any corporation or other entity directly or indirectly controlled by
the Corporation to purchase or redeem any of the Parity Securities or any such
warrants, rights, calls or options.
(v) Dividends payable on the Senior Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months and, for periods not involving a full calendar month, the actual number
of days elapsed (not to exceed 30 days).
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation, dissolution
or winding-up of the affairs of the Corporation, the Holders of shares of Senior
Preferred Stock then outstanding shall be entitled to be paid out of the assets
of the Corporation available for distribution to its stockholders an amount in
cash equal to the Liquidation Preference for each share outstanding, plus,
without duplication, an amount in cash equal to accumulated and unpaid dividends
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding-up)
before any distribution shall be made or any assets distributed in respect of
Junior Securities to the holders of any Junior Securities including, without
limitation, Common Stock of the Corporation. If upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation, the
amounts payable with respect to the Senior Preferred Stock and all other Parity
Securities are not paid in full, the Holders of the Senior Preferred Stock and
the Parity Securities will share equally and ratably in any distribution of
as-
-3-
sets of the Corporation first in proportion to the full liquidation preference
to which each is entitled until such preferences are paid in full, and then in
proportion to their respective amounts of accumulated but unpaid dividends.
(ii) For the purposes of this paragraph (d), neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more entities shall be deemed to be a liquidation, dissolution or winding-up
of the affairs of the Corporation.
(e) Redemption.
(i) Optional Redemption. (A) The Corporation may redeem the Senior
Preferred Stock at its option in whole at any time or in part from time to time,
on or after the Issue Date, subject to contractual and other restrictions with
respect thereto, from any source of funds legally available therefor, in the
manner provided for in paragraph (e)(ii) hereof, at the redemption prices in
cash (expressed as a percentage of the Liquidation Preference) set forth below,
plus, without duplication, an amount in cash equal to all accumulated and unpaid
dividends (including an amount in cash equal to a prorated dividend for the
period from the Dividend Payment Date immediately prior to the Redemption Date
to the Redemption Date) if redeemed during the 12-month period beginning on each
date listed below:
Issue Date - December 31, 2004................... 118.75%
January 1, 2005 - December 31, 2009.............. 112.50%
January 1, 2010 - December 31, 2010.............. 106.25%
January 1, 2011 and thereafter................... 100.00%
; provided that no redemption pursuant to this paragraph (e)(i)(A) shall be
authorized or made unless prior thereto full accumulated and unpaid dividends
are declared and paid in full, or declared and a sum in each is set apart
sufficient to such payment, on the Senior Preferred Stock for all Dividend
Periods terminating on or prior to the Redemption Date.
(B) In the event of a redemption pursuant to paragraph (e)(i)(A) hereof of
only a portion of the then outstanding shares of Senior Preferred Stock, the
Corporation shall effect such redemption on a pro rata basis according to the
number of shares held by each Holder of Senior Preferred Stock, except that the
Corporation may redeem such shares held by Holders of fewer than one share (or
shares held by Holders who would hold less than one share as a result of such
redemption), as may be determined by the Corporation.
(ii) Procedures for Redemption. (A) At least 15 days and not more than 90
days prior the date fixed for any redemption of the Senior Preferred Stock,
written notice (the "Redemption Notice") shall be given by first-class mail,
postage prepaid, to each Holder of record on the record date fixed for such
redemption of the Senior Preferred Stock at such Holder's address as it appears
in the register maintained by the transfer agent for the Senior Preferred Stock,
provided that no failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the redemption of any shares of Senior
Preferred Stock to be redeemed
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except as to the Holder or Holders to whom the Corporation has failed to give
said notice or except as to the Holder or Holders whose notice was defective.
The Redemption Notice shall state:
(1) that the redemption is pursuant to paragraph (e)(i)(A) hereof;
(2) the redemption price;
(3) whether all or less than all the outstanding shares of Senior
Preferred Stock are to be redeemed and the total number of shares of Senior
Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the Holder is to surrender to the Corporation, in the manner,
at the place or places and at the price designated, his certificate or
certificates representing the shares of Senior Preferred Stock to be
redeemed; and
(6) that dividends on the shares of Senior Preferred Stock to be
redeemed shall cease to accumulate on such Redemption Date unless the
Corporation defaults in the payment of the redemption price.
(B) Each Holder of Senior Preferred Stock shall surrender the certificate
or certificates representing such shares of Senior Preferred Stock to the
Corporation, duly endorsed (or otherwise in proper form for transfer, as
determined by the Corporation), in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full redemption price for such
shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued on the Redemption Date representing the unredeemed shares.
(C) On and after the Redemption Date, unless the Corporation defaults in
the payment in full of the applicable redemption price, dividends on Senior
Preferred Stock called for redemption shall cease to accumulate on the
Redemption Date, and all rights of the Holders of redeemed shares shall
terminate with respect thereto on the Redemption Date, other than the right to
receive the redemption price; provided, however, that if a notice of redemption
shall have been given as provided in paragraph (ii)(A) above and the funds
necessary for redemption (including an amount in cash in respect of all
dividends that will accumulate to the Redemption Date) shall have been
irrevocably deposited in trust for the equal and ratable benefit for the Holders
of the shares of Senior Preferred Stock to be redeemed, then, at the close of
business on the Business Day on which such funds are segregated and set aside,
the Holders of the shares to be redeemed shall cease to be stockholders of the
Corporation and shall be entitled only to receive the redemption price.
(f) Voting Rights.
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(i) The Holders of Senior Preferred Stock, except as otherwise required
under Delaware law or as set forth in paragraphs (ii), (iii) and (iv) below,
shall not be entitled or permitted to vote on any matter required or permitted
to be voted upon by the stockholders of the Corporation.
(ii) (A) So long as any shares of Senior Preferred Stock are outstanding,
the Corporation shall not authorize or issue any class of Parity Securities
without the affirmative vote or consent of Holders of at least 66 2/3% of the
then outstanding shares of Senior Preferred Stock, voting or consenting, as the
case may be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(B) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not authorize or issue any class of Senior Securities without
the affirmative vote or consent of Holders of at least 66 2/3% of the
outstanding shares of Senior Preferred Stock, voting or consenting, as the case
may be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(C) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not amend, alter or repeal (whether by merger, consolidation,
operation of law, or otherwise) its Certificate of Incorporation including,
without limitation, increasing the total number of shares of Preferred Stock
that the corporation has the authority to issue so as to affect adversely the
rights, preferences, privileges or voting rights of Holders of shares of Senior
Preferred Stock or amend, alter or repeal this Resolution and Certificate of
Designation in any way (whether by merger, consolidation, operation of law, or
otherwise) without the affirmative vote or consent of Holders of at least 66
2/3% of the issued and outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or special meeting;
provided, however, that, no amendment that adversely affects the rights of a
specific Holder, as opposed to all Holders, shall be in effect against such
Holder without its prior consent; provided, further, however, that, without the
affirmative vote or consent of 98% of the Holders of shares of Senior Preferred
Stock affected, an amendment may not: (I) reduce the percentage of outstanding
shares of Senior Preferred Stock whose Holders must consent to an amendment;
(II) reduce the rate of or change the time for payment of dividends on any share
of Senior Preferred Stock; (III) reduce the Liquidation Preference of any share
of Senior Preferred Stock, or change the date on which any share of Senior
Preferred Stock may be subject to redemption or repurchase, or reduce the
redemption or repurchase price therefor; (IV) make any share of Senior Preferred
Stock payable in money other than that stated herein; (V) except as provided in
paragraphs (f)(ii)(A) and (f)(ii)(B) above, affect the ranking of the Senior
Preferred Stock in a manner adverse to the Holders; or (VI) reduce or increase
the number of authorized shares of Senior Preferred Stock.
(D) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not permit any Subsidiary of the Corporation to issue any
Capital Stock, or securities convertible into or exercisable or exchangeable for
Capital Stock or other securities of such Subsidiary, to any person or entity
other than the Corporation without the affirmative vote or consent of Holders of
at least 66 2/3% of the issued and outstanding shares of Senior Preferred Stock.
-6-
(E) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not reclassify any Capital Stock in a manner that alters the
designations, preferences, powers and/or the relative, participating, optional
or other special rights, or the restrictions provided for the benefit of, the
Senior Preferred Stock without the affirmative vote or consent of Holders of at
least 66 2/3% of the issued and outstanding shares of Senior Preferred Stock.
(F) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not take any other action not described in paragraph (f)(ii)
if such action would have the effect of adversely altering or changing the
preferences, rights, privileges or powers of, or the restrictions provided for
the benefit of, the Senior Preferred Stock without the affirmative vote or
consent of Holders of at least 66 2/3% of the issued and outstanding shares of
Senior Preferred Stock.
(G) So long as any shares of Senior Preferred Stock are outstanding, the
Corporation shall not enter into any agreement to do any of the foregoing that
is not expressly made conditional on obtaining the vote or consent of Holders of
at least 66 2/3% of the outstanding shares of Senior Preferred Stock.
(iii) Without the affirmative vote or consent of Holders of 66 2/3% of the
issued and outstanding shares of Senior Preferred Stock, voting or consenting,
as the case may be, as a separate class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting, the
Corporation shall not in a single transaction or series of related transactions,
consolidate with or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, another
Person unless: (I) at or prior to the consummation of such transaction all of
the then outstanding shares of the Senior Preferred Stock are redeemed in
accordance with the provisions of this Certificate of Designation or (II) (A)
either (1) the Corporation is the continuing Person or (2) the Corporation has
complied with all of its obligations hereunder and the Person (if other than the
Corporation) formed by such consolidation or into which the Corporation is
merged or to which the properties and assets of the Corporation are sold,
assigned, transferred, leased, conveyed or otherwise disposed of shall be a
corporation organized and existing under the laws of the United States or any
State thereof or the District of Columbia and shall expressly assume all of the
obligations of the Corporation under this Resolution and Certificate of
Designation and all the obligations hereunder and thereunder shall remain in
full force and effect; and (B) if the Corporation is not the surviving Person,
the Senior Preferred Stock shall be converted into or exchanged for and shall
become shares of such successor, transferee or resulting Person, having in
respect of such successor, transferee or resulting Person the same powers,
preferences and relative, participating, optional or other special rights and
the qualifications, limitations or restrictions thereon, and ranking in relation
to all other Capital Stock then outstanding, that the Senior Preferred Stock had
immediately prior to such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of related transactions) of all or
substantially all of the properties or assets of one or more Subsidiaries of the
Corporation, the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Corporation shall be deemed to be the transfer
of all or substantially all of the properties and assets of the Corporation.
-7-
(iv) In any case in which the Holders of the Senior Preferred Stock shall
be entitled to vote pursuant to this paragraph (f) or pursuant to Delaware law,
each Holder of Senior Preferred Stock entitled to vote with respect to such
matter shall be entitled to one vote for each share of Senior Preferred Stock
held.
(g) Change of Control.
(i) in connection with, and as part of and as a condition to the
effectiveness of, a Change of Control (the date of such occurrence being the
"Change of Control Date"), the Corporation shall redeem the outstanding shares
of Senior Preferred Stock tendered for redemption at a purchase price equal to
the Applicable Redemption Price plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends thereon (including an amount in
cash equal to a prorated dividend for the period from the immediately preceding
Dividend Payment Date to the Change of Control Payment Date) (the "Change of
Control Purchase Price"), such amount to be payable in cash, and no payment
shall be made to the holders of the Common Stock, Junior Securities or any other
capital stock ranking with regard to dividend rights, rights upon liquidation or
a Change of Control or redemption rights junior to the Senior Preferred Stock
unless such amount is paid in full.
The Corporation shall not participate in any Change of Control or make or
agree to have made any payments to the holders of Junior Securities or shares of
Common Stock or any other class or series of capital stock of the Corporation
ranking in a Change of Control on a parity with the Senior Preferred Stock
unless the holders of Senior Preferred Stock shall have received the full
preferential amount to which they are entitled hereunder in a Change of Control.
(ii) Not less than fifteen (15) days prior to the occurrence of a Change of
Control, the Corporation shall send by first-class mail, postage prepaid, to
each Holder of Senior Preferred Stock, at the address appearing in the register
maintained by the transfer agent for the Senior Preferred Stock, a notice (the
"Change of Control Offer") stating:
(1) that the Change of Control Offer is being made pursuant to this
paragraph (g) and that all of the Senior Preferred Stock tendered will be
accepted for payment, and otherwise subject to the terms and conditions set
forth herein;
(2) the Change of Control Purchase Price and the date proposed for the
Change of Control (which shall be a Business Day no later than 30 days from
the date such notice if mailed);
(3) that any of the Senior Preferred Stock not tendered will continue
to accumulate dividends;
(4) that, unless the Corporation defaults in the payment of the Change
of Control Purchase Price, any of the Senior Preferred Stock accepted for
payment pursuant to the Change of Control Offer shall cease to accumulate
dividends after the Change of Control;
-8-
(5) that Holders accepting the offer to have their Senior Preferred
Stock purchased pursuant to a Change of Control Offer will be required to
surrender their certificates representing the Senior Preferred Stock to the
Corporation, properly endorsed for transfer together with such customary
documents as the Corporation and the transfer agent may reasonably require,
in the manner and at the address specified in the notice prior to the close
of business on the Business Day preceding the Change of Control;
(6) that Holders will be entitled to withdraw their acceptance if the
Corporation receives, not late than the close of business on the third
Business Day preceding the Change of Control, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the number of
shares of Senior Preferred Stock delivered to purchase, and a statement
that such Holder is withdrawing its election to have such Senior Preferred
Stock purchased;
(7) that Holders whose shares of Senior Preferred Stock are being
purchased only in part will be issued new certificates representing the
number of shares of Senior Preferred Stock equal to the unpurchased portion
of the certificates surrendered; and
(8) any other reasonable procedures that a Holder must follow to
accept a Change of Control Offer or effect withdrawal of such acceptance.
(iii) The Corporation 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 shares of Senior Preferred Stock pursuant
to a Change of Control Offer. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this
paragraph (g), the Corporation will comply with the applicable securities
laws and regulations and will not be deemed to have breached its
obligations under this paragraph (g) by virtue thereof.
(iv) On the Change of Control, the Corporation shall (A) accept for
payment the shares of Senior Preferred Stock validly tendered pursuant to
the Change of Control Offer, (B) mail to the Holders of shares so accepted
the Change of Control Purchase Price therefor in cash and (C) cancel and
retire each surrendered certificate and execute a new certificate
representing that number of shares of Senior Preferred Stock equal to any
unpurchased shares represented by a certificate surrendered. Unless the
Corporation defaults in the payment for the shares of Senior Preferred
Stock, tendered pursuant to the Change of Control Offer, dividends shall
cease to accumulate with respect to the shares of Senior Preferred Stock
tendered and all rights of Holders of such tendered shares shall terminate,
except for the right to receive payment therefor, upon the Change of
Control.
(h) No Avoidance. The Corporation shall not, by amendment to its
Certificate of Incorporation or this Resolution and Certificate Designation (by
way of merger, consolidation, operation of law, or otherwise) or through any
Change of Control or other reorganization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities, agreement or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Corporation and shall at
all times in good faith as-
-9-
sist in the carrying out of all the provisions of this Certificate of
Designation and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holders of the Senior
Preferred Stock against impairment. Any successor to the Corporation shall agree
in writing, as a condition to such succession, to carry out and observe the
obligations of the Corporation hereunder with respect to the Senior Preferred
Stock.
(i) Contractual Rights of Holders. The various provisions set forth herein
for the benefit of the holders of the Senior Preferred Stock shall be deemed
contract rights enforceable by them, including, without limitation, one or more
actions for specific performance.
(j) Conversion or Exchange. The Holders of shares of Senior Preferred Stock
shall not have any rights hereunder to convert such shares into or exchange such
shares for shares of any other class or classes or of any other series of any
class or classes of Capital Stock of the Corporation other than as provided in
this Resolution and Certificate of Designation.
(k) Reissuance of Senior Preferred Stock. Shares of Senior Preferred Stock
that have been issued and reacquired in any manner, including shares purchased
or redeemed or exchanged, shall (upon compliance with any applicable provisions
of the laws of Delaware) have the status of authorized and unissued shares of
Preferred Stock, undesignated as to series and may be redesignated and resissued
as part of any series of Preferred Stock, but in no event shall such shares be
reissued as additional shares of Senior Preferred Stock.
(l) Business Day. If any payment, redemption or exchange shall be required
by the terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(m) Payments Subject to Credit Agreement. Notwithstanding anything to the
contrary herein, no payment (whether as a dividend, liquidation preference,
optional or mandatory redemption or otherwise) may be made in cash in respect of
any shares of Senior Preferred Stock unless all obligations under that certain
Credit Agreement dated as of March 9, 2000, among the Corporation, the
Corporation's subsidiaries, the lenders party thereto in their capacities as
lenders thereunder and Wachovia Bank, National Association (as successor to
First Union National Bank), as administrative agent (the "Credit Agreement"),
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents, including as provided by any
subsidiaries of the Corporation), in each cash as such agreements may be amended
(including any amendment and restatement thereof), supplemented or otherwise
modified from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amount of available borrowings thereunder or adding subsidiaries of the
Corporation as additional borrowers or guarantors thereunder) all or any portion
of the indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agents, lender or group of
lenders shall have been paid in full in cash or the Credit Agreement shall
permit such payment.
(n) Taxes. The Company shall treat the Senior Preferred Stock as "common
stock" for all federal income tax purposes, including for purposes for Section
305 of the Internal Revenue Code of 1986, as amended.
-10-
(o) Definitions. As used in this Resolution and Certificate of Designation,
the following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Affiliate" means, with respect to any specific Person, any other Person
that directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means 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.
"Applicable Redemption Price" means the redemption price at which the
Senior Preferred Stock is optionally redeemable on such date pursuant to
paragraph (e)(i).
"Board of Directors" shall have the meaning provided in the first paragraph
of this Resolution and Certificate of Designation.
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York or Chicago, Illinois are
required or authorized by law or other governmental action to be closed.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated and whether
or not voting) of corporate stock, partnership or limited liability company
interests or any other participation, right or other interest in the nature of
an equity interest in such Person including, without limitation, Common Stock
and Preferred Stock of such Person, or any option, warrant or other security
convertible into any of the foregoing.
"Certificate of Designation" means this Certificate of Designation creating
the Senior Preferred Stock
"Certificate of Incorporation" shall have the meaning provided in the first
paragraph of this Resolution and Certificate of Designation.
A "Change of Control" of the Corporation will be deemed to have occurred at
such time as
(1) any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a "Group"), other than a Permitted Holder,
becomes the beneficial owner (as defined under Rule 13d-3 or any successor
rule or regulation promulgated under the Exchange Act, except that a Person
shall be deemed to have "beneficial ownership" of all securities that such
Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time) of more than 50% of the
total voting power of the Corporation's Capital Stock; it being understood
that the Senior Pre-
-11-
ferred Stock shall not be included in any calculation of the voting power
of the Corporation's Capital Stock for purposes of this definition;
(2) there is consummated any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all or
substantially all of the assets of the Corporation and its Subsidiaries,
taken as a whole, to any Person or Group, together with any Affiliates
thereof (whether or not otherwise in compliance with the provisions of this
Resolution and Certificate of Designation) other than to the Corporation,
any of its Subsidiaries or the Permitted Holders;
(3) there is consummated any merger or consolidation of the
Corporation with or into another corporation (with respect to which less
than a majority of the outstanding voting power of the surviving or
consolidated corporation immediately following such event is held by
persons or entities who were stockholders of the Corporation immediately
prior to such event); or
(4) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Corporation (together with any new directors whose election by such Board
of Directors whose nomination for election by the shareholders of the
Corporation has been approved by a majority of the directors then still in
office who either were directors at the beginning of such period or whose
election or recommendation for election was previously so approved) cease
to constitute a majority of the Board of Directors of the Corporation.
"Change of Control Date" shall have the meaning provided in paragraph
(g)(i).
"Change of Control Offer" shall have the meaning provided in paragraph
(g)(i).
"Change of Control Purchase Price" shall have the meaning provided in
paragraph (g)(i).
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to
(1) vote in the election of directors of such Person; or
(2) if such Person is not a corporation, vote or otherwise participate
in the selection of the governing body, partners, managers or others that
will control the management and policies of such Person.
"Corporation" shall have the meaning provided in the first paragraph of
this Certificate of Designation.
"Credit Agreement" shall have the meaning provided in paragraph (m).
"Dividend Payment Date" means June 1 and December 1 of each year.
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"Dividend Period" means the Initial Dividend Period and, thereafter, each
semi-annual period from a Dividend Payment Date to the next following Dividend
Payment Date (but without including such Dividend Payment Date).
"Dividend Record Date" means May 15 and November 15 of each year.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Holder" means a holder of shares of Senior Preferred Stock as reflected in
the register maintained by the transfer agent for the Senior Preferred Stock.
"Initial Dividend Period" means the dividend period commencing on the Issue
Date and ending on the first Dividend Payment Date to occur thereafter.
"Issue Date" means December 18, 2003.
"Junior Securities" shall have the meaning provided in paragraph (b).
"Liquidation Preference" shall have the meaning provided in paragraph (a).
"Parity Securities" shall have the meaning provided in paragraph (b).
"Permitted Holders" means (a)(i) Transportation Investment Partners,
L.L.C., (ii) Caravelle Investment Fund, L.L.C., (iii) Albion Alliance Mezzanine
Fund, L.P., (iv) Albion Alliance Mezzanine Fund II, L.P., (v) Trimaran Fund II,
L.L.C., (vi) any Affiliate of any Person named in clauses (a)(i) through (a)(v)
(collectively, the "Institutional Investors") and (vii) with respect to any
Institutional Investor, any person managed by such Institutional Investor or any
of its Affiliates (other than their other portfolio companies) and (b)(i) Thomas
B. Begel, (ii) Andrew Weller, (iii) Camillo M. Santomero III, (iv) James D.
Cirar and (v) Persons that are wholly-owned by the individuals named in clauses
(b)(i) through (b)(iv) above.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Redemption Date", with respect to any shares of Senior Preferred Stock are
redeemed by the Corporation.
"Redemption Notice" shall have the meaning provided in paragraph (e)(ii).
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"Resolution" shall have the meaning provided in the first paragraph of this
Resolution and Certificate of Designation.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Senior Securities" shall have the meaning provided in paragraph (b).
"Senior Preferred Stock" shall have the meaning provided in paragraph (b).
-14-
IN WITNESS WHEREOF, Transportation Technologies Industries, Inc., has
caused this Resolution and Certificate of Designation to be signed by a duly
authorized officer this 19th day of December, 2003.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By /s/ Donald C. Mueller
--------------------------------------
Name: Donald C. Mueller
Title: Chief Financial Officer
-15-
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
14 1/2% SENIOR REDEEMABLE PREFERRED STOCK, SERIES a, AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Transportation Technologies Industries, Inc. (the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State Delaware (the "DGCL"), for the purpose of amending
the Corporation's Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of 14 1/2% Senior
Redeemable Preferred Stock, Series A, and Qualifications, Limitations and
Restrictions Thereof (the "Certificate of Designation") filed pursuant to
Section 151 of the DGCL, hereby certifies, pursuant to Sections 242 and 103 of
the DGCL, as follows:
FIRST: The amendments effected hereby have been duly adopted in accordance
with the provisions of Section 242 of the DGCL.
SECOND: That paragraph (b) of the Certificate of Designation is hereby
amended by adding the following to the end thereof:
"Notwithstanding anything contained herein to the contrary, with respect to
dividends distributions and distributions upon liquidation, winding-up and
dissolution of the Corporation, (i) the Series C Preferred Stock, par value
$0.01 per share, of the Corporation (the "Series C Preferred Stock") shall rank
on a parity with the Senior Preferred Stock and be deemed to be "Parity
Securities," (ii) the Series D Preferred Stock, par value $0.01 per share, of
the Corporation (the "Series D Preferred Stock") shall rank junior to the Senior
Preferred Stock and be deemed to be "Junior Securities" and (iii) and the Series
E Preferred Stock, par value $0.01 per share, of the Corporation (the "Series E
Preferred Stock") shall rank senior to the Senior Preferred Stock and be deemed
to be "Senior Securities." Notwithstanding anything to the contrary herein, no
payment (whether as a dividend, liquidation preference, optional or mandatory
redemption or otherwise) may be made in cash in respect of any shares of Senior
Preferred Stock unless all obligations under that certain Credit Agreement dated
as of March 9, 2000, among the Corporation, the Corporation's subsidiaries, the
lenders party thereto in their capacities as lenders thereunder and Wachovia
Bank, National Association (as successor to First Union National Bank), as
administrative agent (the "Credit Agreement"), together with the related
documents thereto (including, without limitation, any guarantee agreements and
security documents, including as provided by any subsidiaries of the
Corporation), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder or adding subsidiaries of the Corporation as
additional borrowers or guarantors thereunder) all or any portion of the
indebtedness under such agreement or any successor or replacement agree-
ment and whether by the same of any other agents, lender or group of lenders
shall have been paid in full in cash or the Credit Agreement shall permit such
payment."
THIRD: A. That the following is added to paragraph (k)(ii)(B) of the
Certificate of Designation:
"(6) The issuance of the Series C Preferred Stock, Series D Preferred Stock
and Series E Preferred Stock and any dividend or distribution on shares of
Senior Preferred Stock or Series E Preferred Stock, or acquisition of, any
shares of Senior Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock or Series E Preferred Stock by the Corporation or any Subsidiary thereof;
(7) The payment of the 2003 SD/PS Transaction Costs and the fees and
expenses incurred in connection with the formation and management of TTI
Securities Acquisition, LLC and Albion/TTI Securities Acquisition, LLC; and
(8) The payment of a monitoring fee to Trimaran Fund II, L.L.C. and Albion
Alliance Mezzanine Fund, L.P. (or their Affiliates) in an annual aggregate
amount not to exceed $300,000 which monitoring fee will be paid in full on or
about December 19, 2003 for fiscal year 2003 and will be permitted to be paid in
equal quarterly installments for subsequent fiscal years, provided that such
quarterly installments may be accrued, but not paid in cash, if a Voting Rights
Triggering Event has occurred and is continuing."
B. That the phrase ", but amounts expended pursuant to clauses (2), (3),
(6), (7) and (8) shall not be included in such calculation" be added at the end
of the first sentence of subparagraph (k)(ii)(C) of the Certificate of
Designation.
FOURTH: That the definition, "Disqualified Capital Stock", in paragraph (l)
of the Certificate of Designation is hereby amended by adding the following at
the end of such definition:
"and (iii) the Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock shall be deemed not to be Disqualified Capital Stock."
FIFTH: That the following definitions be added to paragraph (l) of the
Certificate of Designation:
"2003 Subordinated Debt/Preferred Stock Transactions" shall mean (i) the
filing of certificates of designation by the Corporation to create the Series C
Preferred Stock, the Series D Preferred Stock and Series E Preferred Stock, (ii)
the exchange by certain management shareholders of 80,223 shares of Common Stock
to be transferred to certain holders of Preferred Stock for 14,000 shares of
Series C Preferred Stock to be issued by the Corporation, (iii) the issuance of
42,000 shares of Series D Preferred Stock to the holders of the Common Stock
(other than certain management shareholders) for a purchase price of $4,200,
(iv) the issuance of up to 40,575 shares of Series E Preferred Stock in exchange
for $40,000,000 in principal amount of subordinated debt and up to $575,000 in
accrued PIK interest thereon, (v) the issuance of up to 1,000 shares of Series E
Preferred Stock for a purchase price of $1,000,000, the proceeds of
-2-
which shall prepay up to $1,000,000 in accrued and unpaid cash interest on the
subordinated debt and the remainder, if any, shall pay a portion of the fees and
expenses incurred in connection with the transactions described in clauses (i),
(ii), (iii) and (iv) above and this clause (v) (the "2003 SD/PS Transaction
Costs") and (vi) the payment of up to $2,250,000 in cash in respect of the
portion of the 2003 SD/PS Transaction Costs not paid with the proceeds of the
Series E Preferred Stock described in clause (v) above; provided, however, that
the Company shall have the option to issue additional shares of Series E
Preferred Stock in connection with the other transactions described in clauses
(i) through (vi) above resulting in additional proceeds not to exceed
$4,000,000.
"Series C Preferred Stock" means the Series C Preferred Stock of the
Corporation.
"Series D Preferred Stock" means the Series D Preferred Stock of the
Corporation.
"Series E Preferred Stock" means the Series E Preferred Stock of the
Corporation.
IN WITNESS WHEREOF, the undersigned has made and signed this Certificate of
Amendment this 19th day of December, 2003 and affirms the statements contained
herein as true under penalties of perjury.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ Donald C. Mueller
---------------------------------------
Name: Donald C. Mueller
Title: Chief Financial Officer
-3-
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
14 1/2% SENIOR REDEEMABLE PREFERRED STOCK, SERIES A, AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Transportation Technologies Industries, Inc. (the "Corporation"), a
corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware (the "DGCL"), for the purpose of
amending the Corporation's Certificate of Designation of the Powers, Preferences
and Relative, Participating, Optional and Other Special Rights of 14 1/2% Senior
Redeemable Preferred Stock, Series A, and Qualifications, Limitations and
Restrictions Thereof (the "Certificate of Designation") filed pursuant to
Section 151 of the DGCL, hereby certifies, pursuant to Sections 242 and 103 of
the DGCL, as follows:
FIRST: The amendments effected hereby have been duly adopted in accordance
with the provisions of Section 242 of the DGCL.
SECOND: That paragraph (k)(ii)(B)(8) of the Certificate of Designation is
hereby amended to replace the reference to "$300,000" with a reference to
"$550,000."
THIRD: That paragraph (k)(iv)(A)(3)(a) of the Certificate of Designation is
hereby amended to replace the reference to "180 days" with a reference to "270
days."
FOURTH: That paragraph (k)(iv)(A)(3)(e) of the Certificate of Designation
is amended to replace the reference to "180th day" with a reference to "270th
day."
FIFTH: That clause (l) of the definition, "Permitted Indebtedness", in
paragraph (l) of the Certificate of Designation is hereby amended and restated
in its entirety as follows:
"(1) Indebtedness of the Company or any Subsidiary incurred pursuant to one
or more Term Loan Facilities not to exceed $250.0 million aggregate principal
amount at any time outstanding, less the amount of any repayments of principal
made since the Amendment Effective Date."
SIXTH: That the definition, "Senior Credit Facility", in paragraph (l) of
the Certificate of Designation is hereby amended and restated in its entirety as
follows:
"Senior Credit Facility" means prior to the Amendment Effective Date, the
Credit Agreement dated as of March 9, 2000, among TTII, TTII's Subsidiaries, the
lenders party thereto in their capacities as lenders thereunder and Canadian
Imperial Bank of Commerce, as syndication agent, First Union National Bank, as
administrative agent, and CIBC World Markets Corp. and First Union Securities,
Inc., as arrangers, together with the related documents thereto (in-
-18-
cluding without limitation, any guarantee agreements and security documents,
including as provided by any Subsidiaries of TTII), and from and after the
Amendment Effective Date, the New Credit Facilities, in each case as such
agreements may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including one or more
agreements extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder (provided that such increase in borrowings is permitted by paragraph
(k)(i)) or adding Subsidiaries of TTII as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
such successor or replacement agreement and whether by the same or any other
agents, lender or group of lenders.
SEVENTH: That the following definitions be added to paragraph (l) of the
Certificate of Designation:
"Amendment Effective Date" shall mean March 16, 2004.
"First Lien Credit Agreement" means the First Lien Secured Credit
Facility, dated as of March 16, 2004, by and among the Company, the lenders
party thereto from time to time and Lehman Brothers Inc., Lehman Commercial
Paper Inc., Wachovia Capital Markets, LLC and Credit Suisse First Boston,
as amended from time to time.
"New Credit Facilities" means the First Lien Credit Agreement together
with the Second Lien Credit Agreement.
"Second Lien Credit Agreement" means the Second Lien Secured Credit
Facility, dated as of March 16, 2004, by and among the Company, the lenders
party thereto from time to time and Lehman Brothers Inc., Lehman Commercial
Paper Inc., Wachovia Capital Markets, LLC and Credit Suisse First Boston,
as amended from time to time.
-2-
IN WITNESS WHEREOF, the undersigned has made and signed this Certificate of
Amendment this 16th day of March, 2004 and affirms the statements contained
herein as true under penalties of perjury.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ Donald C. Mueller
------------------------------------------
Name: Donald C. Mueller
Title: Vice President and CFO
-3-
Exhibit 3.2
RESTATED BY-LAWS
OF
JOHNSTOWN AMERICA INDUSTRIES, INC.
(HEREINAFTER CALLED THE "CORPORATION")
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders for the election
of directors or for any other purpose shall be held at such time and place,
either within or without the State of Delaware, as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting or in
a duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meetings of stockholders shall be
held on such date and at such time as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors
and transact such other business as may properly be brought before the meeting.
Written notice of the annual meeting stating the place, date and hour of the
meeting shall be given to each stockholder entitled to vote at such meeting not
less than ten nor more than sixty days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or by the
Certificate of Incorporation, Special Meetings of Stockholders, for any purpose
or purposes, may be called by either (i) the Chairman, if there be one, (ii) the
President, (iii) any Vice President, if there be one, (iv) the Secretary or (v)
any Assistant Secretary, if there be one, and shall be called by any such
officer at the request in writing of a majority of the Board of Directors or of
Onex U.S. Investment Inc. ("Onex"); provided, however, that Onex's right to call
a special meeting of stockholders shall terminate upon the earlier of (x) such
time as Onex has sold or otherwise
transferred in one or more transactions to any persons or entities other than
Affiliates (as hereinafter defined) of Onex 50% or more of (i) the 2,308,450
shares of Common Stock of the Corporation held by it after consummation of the
initial public offering (the "Offering") of shares of Common Stock, or (ii) if
the overallotment option granted to the underwriters in connection with the
Offering is exercised, the 2,017,500 shares of Common Stock held by it after
exercise of such overallotment option or (y) such time as Onex has given its
consent to the Corporation in writing. The number of shares referred to in
clauses (x) and (y) of the previous sentence shall be adjusted to reflect any
stock split or other amendments to, or reclassifications of, the capital stock
of the Corporation. If such officers fail to call a special meeting of
stockholders within 20 days after Onex's request, than Onex may call such
meeting and shall provide the written notice to stockholders contemplated in the
last sentence of this paragraph. Such request shall state the purpose or
purposes of the proposed meeting. Written notice of a Special Meeting stating
the place, date and hour of the meeting and the purpose or purposes for which
the meeting is called shall be given not less than ten nor more than sixty days
before the date of the meeting to each stockholder entitled to vote at such
meeting.
For purposes of these Restated By-Laws, the term "Affiliate" shall mean,
with respect to any Person, any of (a) a director or executive officer of such
Person, (b) a spouse, parent, sibling or descendant of such Person (or a spouse,
parent, sibling or descendant of any director or executive officer of such
Person), and (c) any other Person that, directly or indirectly, controls, or is
controlled by or is under common control with such Person. For the purpose of
this definition, "control" (including the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities or by contract or agency or otherwise.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by proxy, shall have
power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented. At
such adjourned meeting at which a quorum shall be present or represented, any
business may be transacted which might have been transacted at the meeting as
originally noticed. If the adjournment is for more than thirty days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder entitled to vote at
the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate of
Incorporation or these By-Laws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Unless otherwise provided in the
Certificate of Incorporation, each stockholder represented at a meeting of
stockholders shall be entitled to case one vote for each share of the capital
stock entitled to vote thereat held by such stockholder. Such votes may be cast
in person or by proxy but no proxy shall be voted on or after three years from
its date, unless such proxy provides for a longer period. The Board of
Directors, in its discretion, or the officer of the
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Corporation presiding at a meeting of stockholders, in his discretion, may
require that any votes cast at such meeting shall be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meetings. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any annual or special meeting of stockholders of the Corporation
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Section 7. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof and may be inspected by any stockholder of the Corporation who is
present.
Section 8. Business at Annual Meeting. The provisions of this Section 8
shall become and shall thereafter remain effective upon the earlier of (x) such
time as Onex has sold or otherwise transferred in one or more transactions to
any persons or entitles other than affiliates of Onex 50% or more of (i) the
2,308,450 shares of Common Stock of the Corporation held by it after
consummation of the Offering or (ii) if the overallotment option granted to the
underwriters in connection with the Offering is exercised, the 2,017,500 shares
of Common Stock held by it after exercise of such overallotment option and (y)
such time as Onex has given its consent to the Corporation in writing. The
number of shares referred to in clauses (x) and (y) of the previous sentence
shall be adjusted to reflect any stock split or other amendments to, or
reclassifications of, the capital stock of the Corporation.
No business may be transacted at an annual meeting of stockholders, other
than business that is either (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors) (or
any duly authorized committee thereof), (b) otherwise properly brought before
the annual meeting by or at the direction of the Board of Directors (or any duly
authorized committee thereof) or (c) otherwise properly brought before the
annual meeting by any stockholder of the Corporation (i) who is a stockholder of
record on the date of the giving of the notice provided for in this Section 8
and on the record date for the determination of stockholders entitled to vote at
such annual meeting and (ii) who complies with the notice procedures set forth
in this Section 8.
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In addition to any other applicable requirements, for business to be
properly brought before an annual meeting by a stockholder, such stockholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal execution offices of the Corporation not
less than sixty (60) days nor more than ninety (90) days prior to the date of
the annual meeting; provided, however, that in the event that less than seventy
(70) days' notice or prior public disclosure of the date of the annual meeting
is given or made to stockholders, notice by the stockholder in order to be
timely must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth as to each matter such stockholder proposes to bring before the annual
meeting (i) a brief description of the business desired to be brought before the
annual meeting and the reasons for conducting such business at the annual
meeting, (ii) the name and record address of such stockholder, (iii) the class
or series and number of shares of capital stock of the Corporation which are
owned beneficially or of record by such stockholder, (iv) a description of all
arrangements or understandings between such stockholder and any other person or
persons (including their names) in connection with the proposal of such business
by such stockholder and any material interest of such stockholder in such
business and (v) a representation that such stockholder intends to appear in
person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of stockholders except
business brought before the annual meeting in accordance with the procedures set
forth in this Section 8; provided, however, that once business has been properly
brought before the annual meeting in accordance with such procedures, nothing in
this Section 8 shall be deemed to preclude discussion by any stockholder of any
such business. If the Chairman of an annual meeting determines that business was
not properly brought before the annual meeting in accordance with the foregoing
procedures, the Chairman shall declare to the meeting that the business was not
properly brought before the meeting and such business shall not be transacted.
Section 9. Stock Ledger. The stock ledger of the Corporation shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 7 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.
ARTICLE III
DIRECTORS
Section 1. Number and Election of Directors. The Board of Directors shall
consist of not less than three nor more than nine members, the exact number of
which shall be fixed from time to time by the Board of Directors. Except as
provided in Section 4 of this Article or by the Certificate of Incorporation,
directors shall be elected by a plurality of the votes cast at annual meetings
of stockholders, and each director so elected shall hold office until the
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next annual meeting and until his successor is duly elected and qualified, or
until his earlier resignation or removal. Any director may resign at any time
upon notice to the Corporation. Directors need not be stockholders.
Section 2. Nomination of Directors. The provisions of this Section 2 shall
become and shall thereafter remain effective upon the earlier of (x) such time
as Onex has sold or otherwise transferred in one or more transactions to any
persons or entitles other than affiliates of Onex 50% or more of (i) the
2,308,450 shares of Common Stock of the Corporation held by it after
consummation of the Offering or (ii) if the overallotment option granted to the
underwriters in connection with the Offering is exercised, the 2,017,500 shares
of Common Stock held by it after exercise of such overallotment option and (y)
such time as Onex has given its consent to the Corporation in writing. The
number of shares referred to in clauses (x) and (y) of the previous sentence
shall be adjusted to reflect any stock split or other amendments to, or
reclassifications of, the capital stock of the Corporation.
Only persons who are nominated in accordance with the following procedures
shall be eligible for election as directors of the Corporation. Nominations of
persons for election to the Board of Directors may be made at any annual meeting
of stockholders (a) by or at the direction of the Board of Directors (or any
duly authorized committee thereof) or (b) by any stockholder of the Corporation
(i) who is a stockholder of record on the date of the giving of the notice
provided for in this Section 2 and on the record date for the determination of
stockholders entitled to vote at such annual meeting and (ii) who complies with
the notice procedures set forth in this Section 2.
In addition to any other applicable requirements, for a nomination to be
made by a stockholder, such stockholder must have given timely notice thereof in
proper written form to the Secretary of the Corporation.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Corporation not
less than sixty (60) days nor more than ninety (90) days prior to the date of
the annual meeting; provided, however, that in the event that less than seventy
(70) days' notice or prior public disclosure of the date of the annual meeting
is given or made to stockholders, notice by the stockholder in order to be
timely must be so received not later than the close of business on the tenth
(10th) day following the date on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence address
of the person, (ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the Corporation
which are owned beneficially or of record by the person and (iv) any other
information relating to the person that would be required to be disclosed in a
proxy statement or other filing required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number
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of shares of capital stock of the Corporation which are owned beneficially or of
record by such stockholder, (iii) a description of all arrangements or
understandings between such stockholder and each proposed nominee and any other
person or persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholder, (iv) a representation that such stockholder
intends to appear in person or by proxy at the annual meeting to nominate the
persons named in its notice and (v) any other information relating to such
stockholder that would be required to be disclosed in a proxy statement or other
filing required to be made in connection with solicitations of proxies for
election of directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder. Such notice must be accompanied by a
written consent of each proposed nominee to being named as a nominee and to
serve as a director if elected.
No person shall be eligible for election as a director of the Corporation
unless nominated in accordance with the procedures set forth in this Section 2.
If the Chairman of the annual meeting determines that a nomination was not made
in accordance with the foregoing procedures, the Chairman shall declare to the
meeting that the nomination was defective and such defective nomination shall be
disregarded.
Section 3. Removal. Except as otherwise provided in the Certificate of
Incorporation, any director or the entire Board of Directors may be removed with
or without cause by the holders of a majority of the shares of capital stock
then entitled to vote at an election of directors.
Section 4. Vacancies. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until the
next annual election and until their successors are duly elected and qualified,
or until their earlier resignation or removal; provided, however, that vacancies
created by the removal of directors by the stockholders of the Corporation shall
be filled only by the stockholders of the Corporation; provided, further,
however, that the foregoing proviso shall no longer be effective upon the
earlier of (x) such time as Onex has sold or otherwise transferred in one or
more transactions to any persons or entities other than affiliates of Onex 50%
or more of (i) the 2,308,450 shares of Common Stock of the Corporation held by
it after consummation of the Offering or (ii) if the overallotment option
granted to the underwriters in connection with the Offering is exercised, the
2,017,500 shares of Common Stock held by it after exercise of such overallotment
option and (y) such time as Onex has given its consent to the Corporation in
writing. The number of shares referred to in clauses (x) and (y) of the previous
sentence shall be adjusted to reflect any stock split or other amendments to, or
reclassifications of, the capital stock of the Corporation.
Section 5. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors, which may exercise
all such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these By-Laws
directed or required to be exercised or done by the stockholders.
Section 6. Meetings. The Board of Directors of the Corporation may hold
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meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called by
the Chairman, if there be one, the President or any directors. Notice thereof
stating the place, date and hour of the meeting shall be given to each director
either by mail not less than forty-eight (48) hours before the date of the
meeting, by telephone or telegram on twenty-four (24) hours' notice, or on such
shorter notice as the person or persons calling such meeting may deem necessary
or appropriate in the circumstances, which notice shall include a brief summary
of the subject matter of the meeting.
Section 7. Quorum. Except as may be otherwise specifically provided by law,
the Certificate of Incorporation or these By-Laws, at all meetings of the Board
of Directors, a majority of the entire Board of Directors shall constitute a
quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present thereat may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 8. Actions of Board. Unless otherwise provided by the Certificate
of Incorporation or these By-Laws, any action required or permitted to be taken
at any meeting of the Board of Directors or of any committee thereof may be
taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.
Section 9. Meetings by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these By-Laws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 9 shall constitute
presence in person at such meeting.
Section 10. Committees. The Board of Directors may, by resolution passed by
a majority of the entire Board of Directors, designate one or more committees,
each committee to consist of one or more of the directors of the Corporation.
The Board of Directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of any such committee. In the absence or disqualification of a member of
a committee, and in the absence of a designation by the Board of Directors of an
alternate member to replace the absent or disqualified member, the member or
members thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any absent or
disqualified member. Any committee, to the extent allowed by law and provided in
the resolution establishing such committee, shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business
and affairs of the Corporation. Each committee shall keep regular minutes and
report to
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the Board of Directors when required. Onex shall have the right to appoint one
of its directors to each committee established by the Board of Directors, which
director cannot be removed from such committees without the consent of Onex;
provided, however, that Onex's right to appoint one of its directors to each
committee established by the Board of Directors shall terminate upon the earlier
of (x) such time as Onex has sold or otherwise transferred in one or more
transactions to any persons or entities other than affiliates of Onex 50% or
more of (i) the 2,308,450 shares of Common Stock of the Corporation held by it
after consummation of the Offering or (ii) if the overallotment option granted
to the underwriters in connection with the Offering is exercised, the 2,017,500
shares of Common Stock held by it after exercise of such overallotment option
and (y) such time as Onex has given its consent to the Corporation in writing.
The number of shares referred to in clauses (x) and (y) of the previous sentence
shall be adjusted to reflect any stock split or other amendments to, or
reclassifications of, the capital stock of the Corporation. The Corporation
shall have an Executive Committee which shall have the power to act on behalf of
the Board of Directors between meetings of the Board of Directors and to act as
an advisory body to the Board of Directors by reviewing various matters prior to
their submission to the Board of Directors. The Executive Committee shall only
be empowered to act by the unanimous vote of the members thereof.
Section 11. Compensation. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors or a stated salary
as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Section 12. Interested Directors. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorizes the contract or transaction, or solely because his or their votes are
counted for such purpose, if (i) the material facts as to his or their
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board of Directors
or committee in good faith authorizes the contract or transaction by the
affirmative votes of a majority of the disinterested directors, even though the
disinterested directors be less than a quorum; or (ii) the material facts as to
his or their relationship or interest and as to the contract or transaction are
disclosed or are known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board of Directors,
a committee thereof or the stockholders. Common or interested directors may be
counted in determining the presence of a quorum at a meeting of the Board of
Directors or of a committee which authorizes the contract or transaction.
Section 13. Approval of Certain Transactions. During such time as Onex has
the right to vote at least 51% of the voting power of the Corporation on a fully
diluted basis, whether through direct ownership of shares of Common Stock or
pursuant to voting agreements
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and proxies, approval of the following transactions shall require the prior
written consent of Onex in addition to approval of the Board of Directors: (i) a
merger or consolidation of the Corporation with any other Person; (ii) a sale of
all or substantially all of the Corporation's assets; (iii) a recapitalization;
(iv) an acquisition of any stock or assets of any Person which upon consummation
of such acquisition would represent 50% or more of the total assets of the
Corporation; (v) capital expenditures in excess of $10 million per calendar
year; and (vi) the issuance by the Corporation of newly issued shares of Common
Stock, or securities convertible into or exchangeable for shares of Common
Stock, other than pursuant to conversion of shares of Class B Common Stock into
shares of Common Stock, conversion of shares of Common Stock into shares of
Class B Common Stock, exercise of currently outstanding warrants or pursuant to
stock option or other employee benefit plans of the Corporation or its
subsidiaries.
ARTICLE IV
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by the
Board of Directors and shall be a President, a Secretary and a Treasurer. The
Board of Directors, in its discretion, may also choose a Chairman of the Board
of Directors (who must be a director) and one or more Vice Presidents, Assistant
Secretaries, Assistant Treasurers and other officers. Any number of offices may
be held by the same person, unless otherwise prohibited by law, the Certificate
of Incorporation or these By-Laws. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman of the
Board of Directors, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors at its first meeting held after
each annual meeting of stockholders shall elect the officers of the Corporation,
who shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board of
Directors; and all officers of the Corporation shall hold office until their
successors are chosen and qualified, or until their earlier resignation or
removal. Any officer elected by the Board of Directors may be removed at any
time by the affirmative Vote of a majority of the Board of Directors. Any
vacancy occurring in any office of the Corporation shall be filled by the Board
of Directors. The salaries of all officers of the Corporation shall be fixed by
the Board of Directors.
Section 3. Voting Securities Owned by the Corporation. Powers of attorney,
proxies, waivers of notice of meeting, consents and other instruments relating
to securities owned by the Corporation may be executed in the name of and on
behalf of the Corporation by the President or any Vice President and any such
officer may, in the name of and on behalf of the Corporation, take all such
action as any such officer may deem advisable to vote in person or by proxy at
any meeting of security holders of any corporation in which the Corporation may
own securities and at any such meeting shall possess and may exercise any and
all rights and powers incident to the ownership of such securities which, as the
owner thereof, the Corporation might have exercised and possessed if present.
The Board of Directors may, by resolution, from time to time confer like powers
upon any other person or persons.
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Section 4. Chairman of the Board of Directors. The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the stockholders
and of the Board of Directors. He shall be the Chief Executive Officer of the
Corporation, and except where by law the signature of the President is required,
the Chairman of the Board of Directors shall possess the same power as the
President to sign all contracts, certificates and other instruments of the
Corporation which may be authorized by the Board of Directors. During the
absence or disability of the President, the Chairman of the Board of Directors
shall exercise all the powers and discharge all the duties of the President. The
Chairman of the Board of Directors shall also perform such other duties and may
exercise such other powers as from time to time may be assigned to him by these
By-Laws or by the Board of Directors.
Section 5. President. The President shall, subject to the control of the
Board of Directors and, if there be one, the Chairman of the Board of Directors,
have general supervision of the business of the Corporation and shall see that
all orders and resolutions of the Board of Directors are carried into effect. He
shall execute all bonds, mortgages, contracts and other instruments of the
Corporation requiring a seal, under the seal of the Corporation, except where
required or permitted by law to be otherwise signed and executed and except that
the other officers of the Corporation may sign and execute documents when so
authorized by these By-Laws, the Board of Directors or the President. In the
absence or disability of the Chairman of the Board of Directors, or if there be
none, the President shall preside at all meetings of the stockholders and the
Board of Directors. If there be no Chairman of the Board of Directors, the
President shall be the Chief Executive Officer of the Corporation. The President
shall also perform such other duties and may exercise such other powers as from
time to time may be assigned to him by these By-Laws or by the Board of
Directors.
Section 6. Vice Presidents. At the request of the President or in his
absence or in the event of his inability or refusal to act (and if there be no
Chairman of the Board of Directors), the Vice President or the Vice Presidents
if there are more than one (in the order designated by the Board of Directors)
shall perform the duties of the President, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President. Each
Vice President shall perform such other duties and have such other powers as the
Board of Directors from time to time may prescribe. If there be no Chairmen of
the Board of Directors and no Vice President, the Board of Directors shall
designate the officer of the Corporation who, in the absence of the President or
in the event of the inability or refusal of the President to act, shall perform
the duties of the President and, when so acting, shall have all the powers of
and be subject to all the restrictions upon the President.
Section 7. Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of stockholders and record all the proceedings
thereat in a book or books to be kept for that purpose; the Secretary shall also
perform like duties for the standing committees when required. The Secretary
shall give, or cause to be given, notice of all meetings of the stockholders and
special meetings of the Board of Directors, and shall perform such other duties
as may be prescribed by the Board of Directors or President, under whose
supervision he shall be. If the Secretary shall be unable or shall refuse to
cause to be given notice of all meetings of the stockholders and special
meetings of the Board of Directors, and if there be no Assistant Secretary, then
either the Board of Directors or the President may choose another officer to
cause such notice to be given. The Secretary shall have custody of the seal of
the
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Corporation and the Secretary or any Assistant Secretary, if there be one, shall
have authority to affix the same to any instrument requiring it and, when so
affixed, it may be attested by the signature of the Secretary or by the
signature of any such Assistant Secretary. The Board of Directors may give
general authority to any other officer to affix the seal of the Corporation and
to attest the affixing by his signature. The Secretary shall see that all books,
reports, statements, certificates and other documents and records required by
law to be kept or filed are properly kept or filed, as the case may be.
Section 8. Treasurer. The Treasurer shall have the custody of the corporate
funds and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the Corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the Corporation in
such depositories as may be designated by the Board of Directors. The Treasurer
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, taking proper vouchers for such disbursements, and shall render to
the President and the Board of Directors, at its regular meetings, or when the
Board of Directors so requires, an account of all his transactions as Treasurer
and of the financial condition of the Corporation. If required by the Board of
Directors, the Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 9. Assistant Secretaries. Except as may be otherwise provided in
these By-Laws, Assistant Secretaries, if there be any, shall perform such duties
and have such powers as from time to time may be assigned to them by the Board
of Directors, the President, any Vice President, if there be one, or the
Secretary, and in the absence of the Secretary or in the event of his disability
or refusal to act, shall perform the duties of the Secretary and, when so
acting, shall have all the powers of and be subject to all the restrictions upon
the Secretary.
Section 10. Assistant Treasurers. Assistant Treasurers, if there be any,
shall perform such duties and have such powers as from time to time may be
assigned to them by the Board of Directors, the President, any Vice President,
if there be one, or the Treasurer, and in the absence of the Treasurer or in the
event of his disability or refusal to act, shall perform the duties of the
Treasurer and, when so acting, shall have all the powers of and be subject to
all the restrictions upon the Treasurer. If required by the Board of Directors,
an Assistant Treasurer shall give the Corporation a bond in such sum and with
such surety or sureties as shall be satisfactory to the Board of Directors for
the faithful performance of the duties of his office and for the restoration to
the Corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the Corporation.
Section 11. Other Officers. Such other officers as the Board of Directors
may choose shall perform such duties and have such powers as from time to time
may be assigned to them by the Board of Directors. The Board of Directors may
delegate to any other officer of the Corporation the power to choose such other
officers and to prescribe their respective duties and powers.
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ARTICLE V
STOCK
Section 1. Form of Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed in the name of the Corporation
(i) by the Chairman of the Board of Directors, the President or a Vice President
and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary, of the Corporation certifying the number of shares owned by
him in the Corporation.
Section 2. Signatures. Any or all of the signatures on a certificate may be
a facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such certificate is
issued, it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his legal representative, to advertise the same in such manner
as the Board of Directors shall require and/or to give the Corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable in the
manner prescribed by law and in these By-Laws. Transfers of stock shall be made
on the books of the Corporation only by the person named in the certificate or
by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued.
Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than sixty days nor less than ten days
before the date of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive
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dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
shares or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by law.
ARTICLE VI
NOTICES
Section 1. Notices. Whenever written notice is required by law, these
Certificate of Incorporation or thee By-Laws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder at his address
as it appears on the records of the Corporation, with postage thereon prepaid,
and such notice shall be deemed to be given at the time when the same shall be
deposited in the United States mail. Written notice may also be given personally
or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by law, the
Certificate of Incorporation or these By-Laws to be given to any director,
member of a committee or stockholder, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereof.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the Corporation,
subject to the provisions of the Certificate of Incorporation, if any, may be
declared by the Board of Directors at any regular or special meeting, and may be
paid in cash, in property or in shares of the capital stock. Before payment of
any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, deems proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation or for any proper purpose, and the Board of
Directors may modify or abolish any such reserve.
Section 2. Disbursements. All checks or demands for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed
by resolution of the Board of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed thereon
the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware." The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
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ARTICLE VIII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings Other than
Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VIII, 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 (other than an action by or in the right of the Corporation), by
reason of the fact that he is or was a director of officer of the Corporation,
or is or was a director or officer of the Corporation serving at the request of
the Corporation as a director or officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonable believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in the
Right of the Corporation. Subject to Section 3 of this Article VIII, 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 or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director or officer of the Corporation, or is or was a
director or officer of the officer of the Corporation serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or nor opposed to the best interests of the Corporation; except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification under this
Article VIII (unless ordered by a court) shall be made by the Corporation only
as authorized in the specific case upon a determination that indemnification of
the director or officer is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1 or Section 2 of this
Article VIII, as the case may be. Such determination shall be made (i) by the
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Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (ii) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (iii) by the
stockholders. To the extent, however, that a director or officer of the
Corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding described above, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith, without
the necessity of authorization in the specific case.
Section 4. Good Faith Defined. For purposes of any determination under
Section 3 of this Article VIII, a person shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise for which such person is or was serving at the request
of the Corporation as a director, officer, employee or agent. The provisions of
this Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Section 1 or 2 of this Action VIII, as the case
may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VIII, and
notwithstanding the absence of any determination thereunder, any director or
officer may apply to any court of competent jurisdiction in the State of
Delaware for indemnification to the extent otherwise permissible under Sections
1 and 2 of this Article VIII. The basis of such indemnification by a court shall
be a determination by such court that indemnification of the director or officer
is proper in the circumstances because he has met the applicable standards of
conduct set forth in Section 1 or 2 of this Article VIII, as the case may be.
Neither a contrary determination in the specific case under Section 3 of this
Article VIII nor the absence of any determination thereunder shall be a defense
to such application or create a presumption that the director or officer seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director or officer seeking indemnification shall also be
entitled to be paid the expense of prosecuting such application.
Section 6. Expenses Payable in Advance. Expenses incurred by a director or
officer in defending or investigating a threatened or pending action, suit or
proceeding shall be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding upon receipt of an undertaking by or on
behalf of such director or officer to repay such amount if it shall ultimately
be determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article VIII.
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Section 7. Nonexclusively of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by or granted pursuant
to this Article VIII shall not be deemed exclusive of any other rights to which
those seeking indemnification or advancement of expenses may be entitled under
any By-Law, agreement, contract or vote of stockholders or disinterested
directors or pursuant to the direction (however embodied) of any court of
competent jurisdiction or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, it being this
policy of the Corporation that indemnification of the persons specified in
Sections 1 and 2 of this Article VIII shall be made to the fullest extent
permitted by law. The provisions of this Article VIII shall not be deemed to
preclude the indemnification of any person who is not specified in Section 1 or
2 of this Article VIII but whom the Corporation has the power or obligation to
indemnify under the provisions of this General Corporation Law of the State of
Delaware, or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director or officer of the Corporation,
or is or was a director or officer of the Corporation serving at the request of
the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such, whether or not the
Corporation would have the power or the obligation to indemnify him against such
liability under the provisions of this Article VIII.
Section 9. Certain Definitions. For purpose of this Article VIII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors or officers, so that any person who is or was a director or officer of
such constituent corporation, or is or was a director or officer of such
constituent corporation serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, shall stand in
the same position under the provisions of this Article VIII with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued. For purposes of
this Article VIII, references to "fines" shall include any excise taxes assessed
on a person with respect an employee benefit plan; and references to "serving at
the request of the Corporation" shall include any services as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director or officer with respect to any employee
benefit plan, its participants or beneficiaries; and a person who acted in good
faith and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation" as
referred to in this Article VIII.
Section 10. Survival of Indemnification and Advancement of Expenses. The
indemnification and advancement of expense provided by, or granted pursuant to,
this Article VIII shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director or officer and shall
inure to the benefit of the heirs, executors and administrators of such a
person.
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Section 11. Limitation on Indemnification. Notwithstanding anything
contained in this Article VIII to the contrary, except for proceedings to
enforce rights to indemnification (which shall be governed by Section 5 hereof),
the Corporation shall not be obligated to indemnify any director or officer in
connection with a proceeding (or part thereof) initiated by such person unless
such proceeding was authorized or consented to by the Board of Directors of the
Corporation.
Section 12. Indemnification of Employees and Agents. The Corporation may,
to the extent authorized from time to time by the Board of Directors, provide
rights to indemnification and to the advancement of expenses to employees and
agents of the Corporation similar to those conferred in this Article VIII on
directors and officers of the Corporation.
ARTICLE IX
AMENDMENTS
Section 1. These By-Laws may be altered, amended or repealed, in whole or
in part, or new By-Laws may be adopted by the stockholders or by the Board of
Directors as provided in the following sentence; provided, however, that notice
of such alteration, amendment, repeal or adoption of new By-Laws be contained in
the notice of such meeting of stockholders or Board of Directors, as the case
may be. All such amendments must be approved by either (x) the holders of a
majority of the outstanding shares of stock of the Corporation entitled to vote
thereon or, in the case of Sections 3 and 8 of Article II hereof and Sections 1,
2, 3, 4, 6, 7 and 10 of Article III hereof, by 80% of the outstanding shares of
stock entitled to vote thereon or (y) a majority of the Board of Directors then
in office, or, in case of Sections 3, 6 and 8 of Article II hereof and Sections
1, 2, 3, 4, 6, 7, 10 and 13 of Article III hereof, by all of the Board of
Directors then in office.
Section 2. Entire Board of Directors. As used in this Article IX and in
these By-Laws generally, the term "entire Board of Directors" means the total
number of directors which the Corporation would have if there were no vacancies.
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Exhibit 4.3
REGISTRATION RIGHTS AGREEMENT
Dated as of May 21, 2004
by and among
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.,
as Issuer,
THE GUARANTORS named herein
and
THE HOLDERS named herein
12.5% SENIOR SUBORDINATED NOTES DUE 2010
TABLE OF CONTENTS
Page
1. Definitions.........................................................1
2. Exchange Offer......................................................4
3. Shelf Registration..................................................7
4. Additional Interest.................................................8
5. Registration Procedures.............................................9
6. Registration Expenses..............................................17
7. Indemnification....................................................18
8. Rules 144 and 144A.................................................20
9. Underwritten Registrations.........................................21
10. Miscellaneous......................................................21
(a) No Inconsistent Agreements................................21
(b) Actions Affecting Registrable Notes.......................21
(c) Amendments and Waivers....................................21
(d) Notices...................................................22
(e) Successors and Assigns....................................23
(f) Counterparts..............................................23
(g) Headings..................................................23
(h) Governing Law.............................................23
(i) Severability..............................................23
(j) Notes Held by Any Issuer or Its Affiliates................23
(k) Third-Party Beneficiaries.................................23
(l) Entire Agreement..........................................23
(m) Joint and Several Obligations.............................24
-i-
NOTES REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into as of May 21, 2004, by and among Transportation Technologies Industries,
Inc., a Delaware corporation (the "Company"), the Guarantors (as defined below)
and the holders of the Notes (as defined below) whose signatures appear on the
execution pages of this Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the following
meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Agreement: See the introductory paragraph to this Agreement.
Applicable Period: See Section 2(b).
Business Day: A day that is not a Saturday, a Sunday, or a day on which
banking institutions in New York, New York or Chicago, Illinois are required to
be closed.
Commission: The Securities and Exchange Commission.
Company: See the introductory paragraph to this Agreement.
Effectiveness Date: The 200th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 120th day after the Issue Date.
Guarantee: The guarantee by each Guarantor of the obligations of the
Company with respect to the Notes.
Holder: Any registered holder of Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of May 21, 2004, by and among the
Issuers and U.S. Bank National Association, as trustee, pursuant to which the
Notes are being issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the Notes are first issued under the
Indenture.
Issuers: The Company and the Guarantors, collectively.
NASD: National Association of Securities Dealers, Inc.
Notes: $100,000,000 aggregate principal amount of 12.5% Senior Subordinated
Notes due 2010 that may be issued pursuant to the Indenture, and such term also
includes any Notes issued pursuant to the terms of the Indenture in payment of
accrued interest on the outstanding Notes in lieu of cash interest thereon.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
Person: Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and
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supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
Records: See Section 5(o).
Registrable Notes: Each Note upon original issuance thereof and at all
times subsequent thereto, each Exchange Note as to which Section 2(c)(iv) hereof
is applicable upon original issuance thereof and at all times subsequent thereto
and each Private Exchange Note upon original issuance thereof and at all times
subsequent thereto, until, in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) a
Registration Statement (other than with respect to any Exchange Note as to which
Section 2(c)(iv) hereof is applicable) covering such Note, Exchange Note or
Private Exchange Note, as the case may be, has been declared effective by the
Commission and such Note, Exchange Note or Private Exchange Note, as the case
may be, has been disposed of in accordance with such effective Registration
Statement, (ii) such Note, Exchange Note or Private Exchange Note, as the case
may be, is sold in compliance with Rule 144, (iii) in the case of any Note, such
Note has been exchanged pursuant to the Exchange Offer for an Exchange Note or
Exchange Notes which may be resold without restriction under federal securities
laws, or (iv) such Note, Exchange Note or Private Exchange Note, as the case may
be, ceases to be outstanding for purposes of the Indenture.
Registration Statement: Any registration statement of the Company,
including, but not limited to, the Exchange Registration Statement, that covers
any of the Registrable Notes pursuant to the provisions of this Agreement,
including the Prospectus, amendments and supplements to such registration
statement, including post-effective amendments, all exhibits, and all material
incorporated by reference or deemed to be incorporated by reference in such
registration statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule (other than Rule 144A) or regulation
hereafter adopted by the Commission providing for offers and sales of securities
made in compliance therewith resulting in offers and sales by subsequent holders
that are not affiliates of an issuer of such securities being free of the
registration and prospectus delivery requirements of the Securities Act.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be amended
from time to time, or any similar rule (other than Rule 144) or regulation
hereafter adopted by the Commission.
Rule 415: Rule 415 under the Securities Act, as such Rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by the
Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
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Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the trustee
under any indenture governing the Exchange Notes and Private Exchange Notes (if
any).
Underwritten registration or underwritten offering: A registration in which
securities of one or more of the Issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) The Issuers agree to file with the Commission, no later than the Filing
Date, a Registration Statement with respect to an offer to exchange (the
"Exchange Offer") any and all of the Registrable Notes (other than Private
Exchange Notes, if any) for a like aggregate principal amount of debt securities
of the Company which are identical in all material respects to the Notes (the
"Exchange Notes") (and which are entitled to the benefits of the Indenture or a
trust indenture which is identical in all material respects to the Indenture
(including, without limitation, the guarantee provisions thereof) (other than
such changes to the Indenture or any such identical trust indenture as are
necessary to comply with any requirements of the Commission to effect or
maintain the qualification thereof under the TIA) and which, in either case, has
been qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective Registration Statement under the Securities
Act and shall contain no restrictive legend thereon. The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the "Exchange
Registration Statement") and shall comply with all applicable tender offer rules
and regulations under the Exchange Act. Each of the Issuers agrees to use its
reasonable best efforts to (x) cause the Exchange Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 20 Business Days (or longer if
required by applicable law) after the date that notice of the Exchange Offer is
first mailed to the Holders; and (z) consummate the Exchange Offer on or prior
to the 30th day following the date on which the Exchange Registration Statement
is declared effective. If after such Exchange Registration Statement is
initially declared effective by the Commission, the Exchange Offer or the
issuance of the Exchange Notes thereunder is interfered with by any stop order,
injunction or other order or requirement of the Commission or any other
governmental agency or court, such Exchange Registration Statement shall be
deemed not to have become effective, for purposes of this Agreement, during the
period of interference, until the Exchange Offer and issuance resume. Each
Holder who participates in the Exchange Offer will be required to represent that
any Exchange Notes received by it will be acquired in the ordinary course of its
business, that at the time of the consummation of the Exchange Offer such Holder
will have no arrangement or understanding with any Person to participate in the
distribution of the Exchange Notes, that such Holder is not an affiliate of any
Issuer within the meaning of the Securities Act, and any additional
representations that in the opinion of counsel to the Issuers are necessary
under then existing interpretations of the Commission in order for the Exchange
Registration Statement to be declared effective. Upon consummation of the
Exchange Offer in accordance with this Section 2, the provisions of this
Agreement shall continue to apply, mutatis mutandis, solely with respect to
Registrable Notes that are Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers, if any, and the Issuers shall have no fur-
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ther obligation to register Registrable Notes (other than Private Exchange Notes
and other than in respect of any Exchange Notes as to which clause 2(c)(iv)
hereof applies) pursuant to Section 3 of this Agreement.
(b) The Issuers shall include within the Prospectus contained in the
Exchange Registration Statement a section, entitled "Plan of Distribution,"
reasonably acceptable to the Holders, which shall contain a summary statement of
the positions taken or policies made by the staff of the Commission with respect
to the potential "underwriter" status of any broker-dealer that is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Notes received by such broker-dealer in the Exchange Offer (a "Participating
Broker-Dealer"), whether such positions or policies have been publicly
disseminated by the staff of the Commission or such positions or policies, in
the judgment of the Holders, represent the prevailing views of the staff of the
Commission. Such "Plan of Distribution" section shall also allow, to the extent
permitted by applicable policies and regulations of the Commission, the use of
the Prospectus by all Persons subject to the prospectus delivery requirements of
the Securities Act, including, to the extent so permitted, all Participating
Broker-Dealers, and shall include a statement describing the manner in which
Participating Broker-Dealers may resell the Exchange Notes.
Each of the Issuers shall use its reasonable best efforts to keep the
Exchange Registration Statement effective and to amend and supplement the
Prospectus contained therein, in order to permit such Prospectus to be lawfully
delivered by all Persons, subject to the prospectus delivery requirements of the
Securities Act for such period of time beginning when the Exchange Notes are
first issued in the Exchange Offer and ending upon the earlier of the expiration
of the 180th day after the Exchange Offer has been completed, and such Persons
are no longer required to comply with the prospectus delivery requirements in
connection with offers and sales of the Exchange Notes (the "Applicable
Period").
If, upon consummation of the Exchange Offer, any Holder holds any Notes
acquired by it and having the status of an unsold allotment in the initial
distribution and, as a result, such Holder does not receive Exchange Notes on
the date of exchange that may be sold without restriction under the federal
securities laws, the Issuers, upon the request of such Holder, shall,
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to such Holder, in exchange (the "Private Exchange") for the
Notes held by such Holder, a like principal amount of debt securities of the
Company that are identical in all material respects to the Exchange Notes,
except for the existence of restrictions on transfer thereof under the
Securities Act and securities laws of the several states of the United States of
America (the "Private Exchange Notes") (and which are issued pursuant to the
same indenture as the Exchange Notes). The Private Exchange Notes shall bear the
same CUSIP number as the Exchange Notes. Interest on the Exchange Notes and
Private Exchange Notes will accrue from the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or, if no
interest has been paid on the Notes, from the Issue Date.
In connection with the Exchange Offer, the Issuers shall:
(1) mail to each Holder a copy of the Prospectus forming part of the
Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;
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(2) utilize the services of a depositary for the Exchange Offer with
an address in the Borough of Manhattan, The City of New York, which may be
the Trustee or an affiliate thereof;
(3) permit Holders to withdraw tendered Registrable Notes at any time
prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(4) otherwise comply in all material respects with all applicable
laws.
As soon as practicable after the close of the Exchange Offer or the Private
Exchange, as the case may be, the Issuers shall:
(1) accept for exchange all Registrable Notes validly tendered and not
validly withdrawn pursuant to the Exchange Offer or the Private Exchange;
(2) deliver to the Trustee for cancellation all Registrable Notes so
accepted for exchange; and
(3) cause the Trustee to authenticate and deliver promptly to each
Holder tendering such Registrable Notes, Exchange Notes or Private Exchange
Notes, as the case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be issued under (i)
the Indenture or (ii) an indenture identical in all material respects to the
Indenture, which in either event will provide that the Exchange Notes will not
be subject to the transfer restrictions set forth in the Indenture and that the
Exchange Notes, the Private Exchange Notes and the Notes, if any, will vote and
consent together on all matters as one class and that none of the Exchange
Notes, the Private Exchange Notes or the Notes, if any, will have the right to
vote or consent as a separate class on any matter.
(c) If (i) because of any change in law or in currently prevailing
interpretations of the Staff of the Commission, the Company is not permitted to
effect an Exchange Offer, (ii) the Exchange Offer is not consummated within 230
days of the Issue Date and the Holders of 25% of the Registrable Securities so
request, (iii) any holder of Private Exchange Notes so requests in writing to
the Company, (iv) in the case of any Holder that participates in the Exchange
Offer (and tenders its Registrable Notes prior to the expiration thereof), such
Holder does not receive Exchange Notes on the date of the exchange that may be
sold without restriction under federal securities laws (other than due solely to
the status of such Holder as an affiliate of any Issuer within the meaning of
the Securities Act) and so notifies the Company within 30 days following the
consummation of the Exchange Offer (and providing a reasonable basis for its
conclusions), or (v) there are any Notes outstanding after the earlier of (x)
the 180th day after the Issue Date or (y) the completion of an Exchange Offer
(unless the Issuers successfully complete an additional Exchange Offer with
respect to Exchange Notes issued upon exchange for all such Notes), in the case
of each of clauses (i)-(v), then the Issuers shall promptly deliver to the
Holders and the Trustee written notice thereof (the "Shelf Notice") and shall
file a Shelf Registration pursuant to Section 3.
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3. Shelf Registration
If a Shelf Notice is delivered as contemplated by Section 2(c), then:
(a) Shelf Registration. The Issuers shall, as promptly as reasonably
practicable after delivery of the Shelf Notice, file with the Commission a
Registration Statement for an offering to be made on a continuous basis
pursuant to Rule 415 covering all of the Registrable Notes (the "Initial
Shelf Registration"). If the Issuers shall not have yet filed the Exchange
Registration Statement, the Issuers shall file with the Commission the
Initial Shelf Registration on or prior to the Filing Date and shall use
their reasonable best efforts to cause such Initial Shelf Registration to
be declared effective under the Securities Act on or prior to the
Effectiveness Date. Otherwise, the Issuers shall file with the Commission
the Initial Shelf Registration within 60 days of the delivery of the Shelf
Notice and shall use their reasonable best efforts to cause such Shelf
Registration to be declared effective under the Securities Act on or prior
to the 60th day after filing of the Initial Shelf Registration Statement.
The Initial Shelf Registration shall be on Form S-1 or another appropriate
form permitting registration of such Registrable Notes for resale by
Holders in the manner or manners designated by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in such
Registration Statement (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other
than the Registrable Notes to be included in any Shelf Registration. Each
of the Issuers shall use its reasonable best efforts to keep the Initial
Shelf Registration continuously effective under the Securities Act until
the date which is 24 months from the Issue Date (or, if Rule 144(k) under
the Securities Act is amended to permit unlimited resales by non-affiliates
within a lesser period, such lesser period) (subject to extension pursuant
to the last paragraph of Section 5 hereof) (the "Effectiveness Period") or
such shorter period ending when (i) all Registrable Notes covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration or (ii) a Subsequent Shelf
Registration covering all of the Registrable Notes has been declared
effective under the Securities Act.
(b) Subsequent Shelf Registrations. If the Initial Shelf Registration
or any Subsequent Shelf Registration ceases to be effective for any reason
at any time during the Effectiveness Period (other than because of the sale
of all of the securities registered thereunder), each of the Issuers shall
use its reasonable best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall, within
30 days of such cessation of effectiveness, amend the Shelf Registration in
a manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional "shelf" Registration Statement pursuant to
Rule 415 covering all of the Registrable Notes (a "Subsequent Shelf
Registration"). If a Subsequent Shelf Registration is filed, each of the
Issuers shall use its reasonable best efforts to cause the Subsequent Shelf
Registration to be declared effective as soon as practicable after such
filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness
Period less the aggregate number of days during which the Initial Shelf
Registration or any Subsequent Shelf Registrations was previously
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continuously effective. As used herein, the term "Shelf Registration" means
the Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly supplement
and amend any Shelf Registration if required by the rules, regulations or
instructions applicable to the registration form used for such Shelf
Registration, if required by the Securities Act, or if reasonably requested
by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Shelf Registration or by any underwriter
of such Registrable Notes, in each case, with each Issuer's consent, which
consent shall not be unreasonably withheld or delayed.
4. Additional Interest
(a) The Issuers and the Holders agree that the Holders of Registrable Notes
will suffer damages if the Issuers fail to fulfill their respective obligations
under Section 2 or Section 3 hereof and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, the Issuers,
jointly and severally, agree to pay, as liquidated damages, additional interest
on the Registrable Notes ("Additional Interest") under the circumstances and to
the extent set forth below (each of which shall be given independent effect):
(i) if (A) neither the Exchange Registration Statement nor the Initial
Shelf Registration has been filed on or prior to the Filing Date or (B)
notwithstanding that the Issuers have consummated or will consummate an
Exchange Offer, the Issuers are required to file a Shelf Registration and
such Shelf Registration is not filed on or prior to the 60th day after
delivery of the Shelf Notice, then, in the case of subclause (A),
commencing on the day after the Filing Date or, in the case of subclause
(B), commencing on the 61st day following delivery of the Shelf Notice,
Additional Interest shall accrue on the Registrable Notes over and above
the stated interest at a rate of 0.50% per annum for the first 90 days
immediately following the Filing Date or such 60th day, as the case may be,
such Additional Interest rate increasing by an additional 0.25% per annum
at the beginning of each subsequent 90-day period;
(ii) if (A) neither the Exchange Registration Statement nor the
Initial Shelf Registration is declared effective on or prior to the
Effectiveness Date or (B) notwithstanding that the Issuers have consummated
or will consummate an Exchange Offer, the Issuers are required to file a
Shelf Registration and such Shelf Registration is not declared effective by
the Commission on or prior to the 60th day after filing of the Initial
Shelf Registration Statement, then, commencing on the day after the
Effectiveness Date or such 60th day, as the case may be, Additional
Interest shall accrue on the Registrable Notes over and above the stated
interest at a rate of 0.50% per annum for the first 90 days immediately
following the day after the Effectiveness Date or such 60th day, as the
case may be, such Additional Interest rate increasing by an additional
0.25% per annum at the beginning of each subsequent 90-day period; and
(iii) if (A) the Issuers have not exchanged Exchange Notes for all
Notes validly tendered in accordance with the terms of the Exchange Offer
on or prior
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to the 230th day after the Issue Date, (B) the Exchange Registration
Statement ceases to be effective prior to consummation of the Exchange
Offer or (C) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any time
during the Effectiveness Period, then Additional Interest shall accrue on
the Registrable Notes over and above the stated interest at a rate of 0.50%
per annum for the first 90 days commencing on the (x) 231st day after the
Issue Date in the case of (A) above or (y) the day such Exchange
Registration Statement or Shelf Registration ceases to be effective in the
case of (B) and (C) above, such Additional Interest rate increasing by an
additional 0.25% per annum at the beginning of each such subsequent 90-day
period;
provided, however, that, in the case of clauses (i), (ii) and (iii) above, the
Additional Interest rate on the Registrable Notes may not exceed in the
aggregate 2.0% per annum; provided further that (1) upon the filing of the
Exchange Registration Statement or each Shelf Registration (in the case of (i)
above), (2) upon the effectiveness of the Exchange Registration Statement or
each Shelf Registration, as the case may be (in the case of (ii) above), or (3)
upon the exchange of Exchange Notes for all Registrable Notes tendered (in the
case of (iii)(A) above) or upon the effectiveness of an Exchange Registration
Statement or Shelf Registration which had ceased to remain effective (in the
case of (iii)(B) and (C) above), Additional Interest on any Registrable Notes
then accruing Additional Interest as a result of such clause (or the relevant
subclause thereof), as the case may be, shall cease to accrue.
(b) The Issuers shall notify the Trustee within one Business Day after each
and every date on which an event occurs in respect of which Additional Interest
is required to be paid (an "Event Date"). Any amounts of Additional Interest due
pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable in
cash semiannually on each regular interest payment date specified in the
Indenture (to the Holders of Registrable Notes of record on the regular record
date therefor (as specified in the Indenture) immediately preceding such dates),
commencing with the first such regular interest payment date occurring after any
such Additional Interest commences to accrue. The amount of Additional Interest
will be determined by multiplying the applicable Additional Interest rate by the
principal amount of the Notes subject thereto, multiplied by a fraction, the
numerator of which is the number of days such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement pursuant to
Section 2 or 3 hereof, the Issuers shall effect such registrations to permit the
sale of such securities covered thereby in accordance with the intended method
or methods of disposition thereof, and, pursuant thereto and in connection with
any Registration Statement filed by the Issuers hereunder, the Issuers shall:
(a) Prepare and file with the Commission prior to the Filing Date, the
Exchange Registration Statement or, if the Exchange Registration Statement
is not filed or is unavailable, a Shelf Registration as prescribed by
Section 2 or 3, and each Issuer shall use its reasonable best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein; provided that, if (1) a Shelf Registration is
filed pursuant to Section 3 or (2) a Prospectus contained in an Exchange
Registration
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Statement filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period and has advised the Issuers
that it is a Participating Broker-Dealer, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto, the
Issuers shall, if requested, furnish to and afford the Holders of the
Registrable Notes to be registered pursuant to such Shelf Registration or
each such Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if
any, a reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference therein
and all exhibits thereto) proposed to be filed (in each case at least five
Business Days prior to such filing). The Issuers shall not file any such
Registration Statement or Prospectus or any amendments or supplements
thereto if the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement, or any such
Participating Broker-Dealer, as the case may be, their counsel, or the
managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to keep
such Registration Statement continuously effective for the Effectiveness
Period or the Applicable Period, as the case may be; cause the related
Prospectus to be supplemented by any Prospectus supplement required by
applicable law, and as so supplemented to be filed pursuant to Rule 424 (or
any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act applicable
to it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any securities
being sold by a Participating Broker-Dealer covered by any such Prospectus.
The Issuers shall be deemed not to have used their reasonable best efforts
to keep a Registration Statement effective during the Applicable Period if
they voluntarily take any action that would result in selling Holders of
the Registrable Notes covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Registrable
Notes or such Exchange Notes during that period unless such action is
required by applicable law, rule or regulation or unless the Issuers comply
with this Agreement, including, without limitation, the provisions of
paragraph 5(k) hereof and the last paragraph of Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3 or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period from whom the Issuers have received written notice that
it will be a Participating Broker-Dealer, notify the selling Holders of
Registrable Notes, and each such Participating Broker-Dealer, their counsel
and the managing underwriters, if any, promptly (but in any event within
two Business Days), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective (including in
such notice a written statement that any Holder may, upon request, obtain,
without charge, one
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conformed copy of such Registration Statement or post-effective amendment,
including financial statements and schedules, documents incorporated or
deemed to be incorporated by reference and exhibits), (ii) of the issuance
by the Commission of any stop order suspending the effectiveness of a
Registration Statement or of any order preventing or suspending the use of
any preliminary prospectus or the initiation of any proceedings for that
purpose, (iii) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the Registrable
Notes the representations and warranties of any Issuer contained in any
agreement (including any underwriting agreement contemplated by Section
5(n) hereof) cease to be true and correct in any material respect, (iv) of
the receipt by any Issuer of any notification with respect to the
suspension of the qualification or exemption from qualification of a
Registration Statement or any of the Registrable Notes or the Exchange
Notes to be sold by any Participating Broker-Dealer for offer or sale in
any jurisdiction, or the initiation or threatening of any proceeding for
such purpose, (v) of the happening of any event, the existence of any
condition or any information becoming known that makes any statement made
in such Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and that, in the case of the Prospectus,
it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) of the Issuers' reasonable
determination that a post-effective amendment to a Registration Statement
would be appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3 or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their reasonable best efforts to prevent the
issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus
or suspending the qualification (or exemption from qualification) of any of
the Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer, for sale in any jurisdiction, and, if any such order is
issued, to use their reasonable best efforts to obtain the withdrawal of
any such order at the earliest possible date.
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Registrable Notes being sold
in connection with an underwritten offering, (i) as promptly as practicable
incorporate in a prospectus supplement or post-effective amendment such
information or revisions to information therein relating to such
underwriters or selling Holders as the managing underwriters, if any, or
such Holders or their counsel reasonably request to be included or made
therein, (ii) make all required filings of such prospectus supplement or
such post-effective amendment as soon as practicable after the
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Issuers have received notification of the matters to be incorporated in
such prospectus supplement or post-effective amendment, and (iii)
supplement or make amendments to such Registration Statement.
(f) If (1) a Shelf Registration is filed pursuant to Section 3 or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, furnish to each selling Holder of Registrable Notes and
to each such Participating Broker-Dealer who so requests and to counsel and
each managing underwriter, if any, without charge, one conformed copy of
the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to be
incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3 or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer, deliver to each selling Holder of Registrable
Notes or each such Participating Broker-Dealer, as the case may be, their
respective counsel, and the underwriters, if any, without charge, as many
copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Issuers
hereby consent to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders of Registrable Notes and
each Participating Broker-Dealer, and the underwriters or agents, if any,
and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers
of the Exchange Notes pursuant to, such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable Notes or any delivery
of a Prospectus contained in the Exchange Registration Statement by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, use their reasonable best efforts to register or
qualify, and cooperate with the selling Holders of Registrable Notes and
each such Participating Broker-Dealer, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Notes or Exchange Notes, as the case may be, for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States
as any selling Holder, Participating Broker-Dealer, or the managing
underwriter or underwriters, if any, reasonably request in writing;
provided that, where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered pursuant to an underwritten offering, counsel
to the underwriters shall, at the cost and expense of the Issuers, perform
the Blue Sky investigations and file registrations and qualifications
required to be filed pursuant to this Section 5(h); keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective, and do
any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Ex-
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change Notes by Participating Broker-Dealers or the Registrable Notes
covered by the applicable Registration Statement; provided that no Issuer
shall be required to (A) qualify generally to do business in any
jurisdiction where it is not then so qualified, (B) take any action that
would subject it to general service of process in any such jurisdiction
where it is not then so subject or (C) subject itself to taxation in excess
of a nominal dollar amount in any such jurisdiction where it is not then so
subject.
(i) If a Shelf Registration is filed pursuant to Section 3, cooperate
with the selling Holders of Registrable Notes, any Participating
Broker-Dealer and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates representing
Registrable Notes to be sold, which certificates shall not bear any
restrictive legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Notes to be in such
denominations and registered in such names as the managing underwriter or
underwriters, if any, or Holders may reasonably request at least two
Business Days prior to the closing of any sale of Registrable Notes.
(j) Use their reasonable best efforts to cause the Registrable Notes
covered by the Registration Statement to be registered with or approved by
such governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Notes, except as may be required as a
consequence of the nature of the seller's business, in which case the
Issuers will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3 or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, upon the occurrence of any event contemplated by
paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare
and (subject to Section 5(a) hereof) file with the Commission, at the
Issuers' sole expense, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by reference, or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Notes being sold thereunder or to the
purchasers of the Exchange Notes to whom such Prospectus will be delivered
by a Participating Broker-Dealer, any such Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(l) Use their reasonable best efforts to cause the Registrable Notes
covered by a Registration Statement to be rated with the appropriate rating
agencies, if so requested by the Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration
Statement or the managing underwriter or underwriters, if any.
(m) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with printed
certificates for the Registrable
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Notes or the Exchange Notes, as the case may be, in a form eligible for
deposit with The Depository Trust Company and (ii) provide a CUSIP number
for the Registrable Notes or the Exchange Notes, as the case may be.
(n) In connection with an underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as
is customary in underwritten offerings of debt securities similar to the
Notes and take all such other actions as are reasonably requested by the
managing underwriter or underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Notes and, in such
connection, (i) make such representations and warranties to the
underwriters, with respect to the business of the Issuers and their
subsidiaries and the Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in
each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and confirm
the same in writing if and when requested; (ii) obtain the opinion of
counsel to the Issuers and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested
in underwritten offerings of debt securities similar to the Notes; (iii)
obtain "cold comfort" letters and updates thereof in form and substance
reasonably satisfactory to the managing underwriter or underwriters from
the independent certified public accountants of the Issuers (and, if
necessary, any other independent certified public accountants of any
subsidiary of any Issuer or of any business acquired by any Issuer for
which financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each of the
underwriters, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings of debt securities similar to the Notes and such
other matters as reasonably requested by the managing underwriter or
underwriters; and (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less
favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration
Statement and the managing underwriter or underwriters or agents) with
respect to all parties to be indemnified pursuant to said Section. The
above shall be done at each closing under such underwriting agreement, or
as and to the extent required thereunder.
(o) If (1) a Shelf Registration is filed pursuant to Section 3 or (2)
a Prospectus contained in an Exchange Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during the
Applicable Period, make available for inspection by any selling Holder of
such Registrable Notes being sold, and each Participating Broker-Dealer,
any underwriter participating in any such disposition of Registrable Notes,
if any, and any attorney, accountant or other agent retained by any such
selling Holder, each Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), at the offices where normally
kept, during reasonable business hours, all financial and other records,
pertinent corporate documents and properties of each Issuer and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary
to enable them
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to exercise any applicable due diligence responsibilities, and cause the
officers, directors and employees of each Issuer and its subsidiaries to
supply all information reasonably requested by any such Inspector in
connection with such Registration Statement. Records which an Issuer
determines, in good faith, to be confidential and any Records which it
notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in such Registration Statement, (ii)
the release of such Records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction, (iii) the information in such
Records has been made generally available to the public other than as a
result of a disclosure or failure to safeguard by such Inspector or (iv)
disclosure of such information is, in the opinion of counsel for any
Inspector, necessary or advisable in connection with any action, claim,
suit or proceeding, directly or indirectly, involving or potentially
involving such Inspector and arising out of, based upon, related to, or
involving this Agreement, or any transactions contemplated hereby or
arising hereunder. Each selling Holder of such Registrable Notes and each
Participating Broker-Dealer will be required to agree that information
obtained by it as a result of such inspections shall be deemed confidential
and shall not be used by it as the basis for any market transactions in the
securities of any Issuer unless and until such is made generally available
to the public. Each Inspector, each selling Holder of such Registrable
Notes and each Participating Broker-Dealer will be required to further
agree that it will, upon learning that disclosure of such Records is sought
in a court of competent jurisdiction pursuant to clauses (ii) or (iv) above
or otherwise, give notice to the Issuers and allow the Issuers to undertake
appropriate action to obtain a protective order or otherwise prevent
disclosure of the Records deemed confidential at its expense.
(p) Provide an indenture trustee for the Registrable Notes or the
Exchange Notes, as the case may be, and cause the Indenture or the trust
indenture provided for in Section 2(a), as the case may be, to be qualified
under the TIA not later than the effective date of the Exchange Offer or
the first Registration Statement relating to the Registrable Notes; and in
connection therewith, cooperate with the trustee under any such indenture
and the Holders of the Registrable Notes, to effect such changes to such
indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use its reasonable
best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents required
to be filed with the Commission to enable such indenture to be so qualified
in a timely manner.
(q) Comply with all applicable rules and regulations of the Commission
and make generally available to its securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Registrable Notes are
sold to underwriters in a firm commitment or best efforts underwritten
offering and (ii) if not sold to underwriters in such an offering,
commencing on the first day of the first fiscal
-15-
quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(r) Upon consummation of the Exchange Offer or a Private Exchange,
obtain an opinion of counsel to the Issuers, in a form customary for
underwritten transactions, addressed to the Trustee for the benefit of all
Holders of Registrable Notes participating in the Exchange Offer or the
Private Exchange, as the case may be, that the Exchange Notes or the
Private Exchange Notes, as the case may be, the Guarantees and the related
indenture constitute legally valid and binding obligations of the Issuers,
enforceable against the Issuers in accordance with their respective terms.
(s) If the Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Notes by Holders to the Issuers (or to
such other Person as directed by the Company) in exchange for the Exchange
Notes or the Private Exchange Notes, as the case may be, mark, or caused to
be marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes,
as the case may be; in no event shall such Registrable Notes be marked as
paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in
connection with any filings required to be made with the NASD.
(u) Use their reasonable best efforts to take all other steps
reasonably necessary to effect the registration of the Registrable Notes
covered by a Registration Statement contemplated hereby.
The Issuers may require each seller of Registrable Notes as to which any
registration is being effected to furnish to the Issuers such information
regarding such seller and the distribution of such Registrable Notes as the
Issuers may, from time to time, reasonably request. The Issuers may exclude from
such registration the Registrable Notes of any seller who fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Issuers all information required to be disclosed in order to
make the information previously furnished to the Issuers by such seller not
materially misleading.
Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes to be sold by
such Participating Broker-Dealer, as the case may be, that, upon receipt of any
notice from the Issuers of the happening of any event of the kind described in
Section 5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith
discontinue disposition of such Registrable Notes covered by such Registration
Statement or Prospectus or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, and, in each case,
dissemination of such Prospectus until such Holder's or Participating
Broker-Dealer's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k), or until it is advised in writing (the "Advice")
by the Company that the use of the applicable Prospectus may be resumed, and has
received copies of any
-16-
amendments or supplements thereto. In the event the Issuers shall give any such
notice, each of the Effectiveness Period and the Applicable Period shall be
extended by the number of days during such periods from and including the date
of the giving of such notice to and including the date when each seller of
Registrable Notes covered by such Registration Statement or Exchange Notes to be
sold by such Participating Broker-Dealer, as the case may be, shall have
received (x) the copies of the supplemented or amended Prospectus contemplated
by Section 5(k) or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance with
this Agreement by the Issuers shall be borne by the Issuers whether or not the
Exchange Offer or a Shelf Registration is filed or becomes effective, including,
without limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
in connection with an underwritten offering and (B) fees and expenses of
compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Registrable Notes or Exchange Notes and determination
of the eligibility of the Registrable Notes or Exchange Notes for investment
under the laws of such jurisdictions (x) where the holders of Registrable Notes
are located, in the case of the Exchange Notes, or (y) as provided in Section
5(h) hereof, in the case of Registrable Notes or Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of
prospectuses is requested by the managing underwriter or underwriters, if any,
or by the Holders of a majority in aggregate principal amount of the Registrable
Notes included in any Registration Statement or by any Participating
Broker-Dealer, as the case may be, (iii) reasonable messenger, telephone and
delivery expenses incurred in connection with the Exchange Registration
Statement and any Shelf Registration, (iv) fees and disbursements of counsel for
the Issuers and reasonable fees and disbursements of special counsel for the
sellers of Registrable Notes, (v) fees and disbursements of all independent
certified public accountants referred to in Section 5(n)(iii) (including,
without limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) rating agency fees, (vii)
Securities Act liability insurance, if any Issuer desires such insurance, (viii)
fees and expenses of all other Persons retained by the Issuers, (ix) internal
expenses of the Issuers (including, without limitation, all salaries and
expenses of officers and employees of the Issuers performing legal or accounting
duties), (x) the expense of any annual or special audit, (xi) the fees and
expenses incurred in connection with the listing of the securities to be
registered on any securities exchange, (xii) the fees and disbursements of
underwriters, if any, customarily paid by issuers or sellers of securities (but
not including any underwriting discounts or commissions or transfer taxes, if
any, attributable to the sale of the Registrable Notes which discounts,
commissions or taxes shall be paid by Holders of such Registrable Notes) and
(xiii) the expenses relating to printing, word processing and distributing all
Registration Statements, underwriting agreements, securities sales agreements,
indentures and any other documents necessary in order to comply with this
Agreement.
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7. Indemnification
(a) Each of the Issuers jointly and severally agrees to indemnify and hold
harmless each Holder of Registrable Notes and each Participating Broker-Dealer,
the officers, directors, employees and agents of each such Person, and each
Person, if any, who controls any such Person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant") from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
reasonable expenses actually incurred in connection with any suit, action or
proceeding or any claim asserted) caused by, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus (as amended or supplemented if the Issuers
shall have furnished any amendments or supplements thereto) or caused by,
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
any Participant furnished to the Issuers in writing by or on behalf of such
Participant expressly for use therein; provided, however, that the Issuers shall
not be liable if such untrue statement or omission or alleged untrue statement
or omission was contained or made in any preliminary prospectus and corrected in
the Prospectus or any amendment or supplement thereto and the Prospectus does
not contain any other untrue statement or omission or alleged untrue statement
or omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by the Participants resulted from any action, claim or suit by any
Person who purchased Registrable Notes or Exchange Notes which are the subject
thereof from such Participant and it is established in the related proceeding
that such Participant failed to deliver or provide a copy of the Prospectus (as
amended or supplemented) to such Person with or prior to the confirmation of the
sale of such Registrable Notes or Exchange Notes sold to such Person if required
by applicable law, unless such failure to deliver or provide a copy of the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Issuers with Section 5 of this Agreement.
(b) Each Participant will be required to agree, severally and not jointly,
to indemnify and hold harmless each Issuer, its directors and officers and each
Person who controls each Issuer within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Issuers to each Participant, but only with
reference to information relating to such Participant furnished to the Issuers
in writing by such Participant expressly for use in any Registration Statement
or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the net proceeds received by such Participant from sales of
Registrable Notes or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any Person in respect of which indemnity may be sought pursuant to Section 7(a)
or 7(b), such Person (the "Indemnified Person") shall promptly notify the Person
against whom such indemnity may be sought (the "In-
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demnifying Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel satisfactory to the Indemnified Person
to represent the Indemnified Person and any others the Indemnifying Person may
reasonably designate in such proceeding and shall pay the reasonable fees and
expenses actually incurred by such counsel related to such proceeding; provided,
however, that the failure to so notify the Indemnifying Person shall not relieve
it of any obligation or liability which it may have hereunder or otherwise. In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed in writing to the contrary, (ii)
the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and the Indemnified Person shall
have reasonably concluded that there may be one or more legal defenses available
to it that are not available to such Indemnifying Person. It is understood that,
unless there is a conflict among Indemnified Persons, the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to one local counsel in any jurisdiction) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed as they are
incurred. Any such separate firm for the Participants shall be designated in
writing by Participants who sold a majority in interest of Registrable Notes
sold by all such Participants and any such separate firm for the Issuers, their
respective directors, officers and such control Persons of the Issuers shall be
designated in writing by the Company. The Indemnifying Person shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there is a final non-appealable
judgment for the plaintiff, the Indemnifying Person agrees to indemnify any
Indemnified Person from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an Indemnified Person shall have requested an Indemnifying Person to reimburse
the Indemnified Person for reasonable fees and expenses actually incurred by
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its consent if (i) such settlement is entered into
more than 30 days after receipt by such Indemnifying Person of the aforesaid
request and (ii) such Indemnifying Person shall not have reimbursed the
Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Person shall not be liable
for any settlement effected without its consent pursuant to this sentence if the
Indemnifying Person is contesting, in good faith, the request for reimbursement.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement (A) includes an unconditional release of such Indemnified
Person, in form and substance satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and (B) does
not include any statement as to an admission of fault, culpability or failure to
act by or on behalf of an Indemnified Person.
(d) If the indemnification provided for in Sections 7(a) and (b) is
unavailable to, or insufficient to hold harmless, an Indemnified Person in
respect of any losses, claims, dam-
-19-
ages or liabilities referred to therein for which it is entitled to
indemnification, then each Indemnifying Person under such paragraphs, in lieu of
indemnifying such Indemnified Person thereunder and in order to provide for just
and equitable contribution, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the Indemnifying Person or Persons on the one hand and the Indemnified Person
or Persons on the other in connection with the statements or omissions (or
alleged statements or omissions) that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuers on the one hand or
by the Participants or such other Indemnified Person, as the case may be, on the
other, the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission and any other
equitable considerations appropriate under the circumstances.
(e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
(even if the Participants were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any reasonable
legal or other expenses actually incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which the net proceeds received by such Participant from sales of Registrable
Notes or Exchange Notes, as the case may be, exceeds the amount of any damages
that such Participant has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this Section 7
will be in addition to any liability which the Indemnifying Persons may
otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
Each of the Issuers covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder in a timely manner and, if at
any time it is not required to file such reports, it will, upon the request of
any Holder of Registrable Notes, make available to any Holder or beneficial
owner of Registrable Notes in connection with any sale thereof and any
prospective purchaser of such Registrable Notes from such Holder or beneficial
owner, the information re-
-20-
quired by Rule 144A(d)(4) under the Securities Act in order to permit resales of
such Registrable Notes pursuant to Rule 144A.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration are to be
sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will manage the offering will be selected by the
Holders of a majority in aggregate principal amount of such Registrable Notes
included in such offering and reasonably acceptable to the Issuers.
No Holder of Registrable Notes may participate in any underwritten
registration hereunder unless such Holder (a) agrees to sell such Holder's
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
(a) No Inconsistent Agreements. None of the Issuers has entered, as of the
date hereof, and none of the Issuers shall enter, after the date of this
Agreement, into any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Notes in this
Agreement or otherwise conflicts with the provisions hereof.
(b) Actions Affecting Registrable Notes. None of the Issuers shall,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, otherwise than with the prior written
consent of (A) the Holders of not less than a majority in aggregate principal
amount of then outstanding Registrable Notes and (B) in circumstances that would
adversely affect Participating Broker-Dealers, the Participating Broker-Dealers
holding not less than a majority in aggregate principal amount of the Exchange
Notes held by all Participating Broker-Dealers; provided, however, that Section
7 and this Section 10(c) may not be amended, modified or supplemented without
the prior written consent of each Holder and each Participating Broker-Dealer
(including any person who was a Holder or Participating Broker-Dealer of
Registrable Notes or Exchange Notes, as the case may be, disposed of pursuant to
any Registration Statement). Notwithstanding the foregoing, a waiver or consent
to depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of Holders of Registrable Notes whose securities are
being tendered pursuant to the Exchange Offer or sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Registrable Notes may be given by
Holders of at least a majority in aggregate principal amount of the Registrable
Notes being tendered or being sold by such Holders pursuant to such Registration
Statement.
-21-
(d) Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, next-day air courier or telecopier:
(1) if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the
registrar under the Indenture, with a copy to:
CIBC World Markets Corp.
425 Lexington Avenue
New York, New York 10017
Attention: Brian Perman
and
Wachovia Capital Markets, LLC
One Wachovia Center
301 South College Street
Charlotte, North Carolina 28288-0604
Attention: High Yield Origination
(2) if to the Issuers, as follows:
Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, Illinois 60611
Facsimile No.: (312) 280-4820
Attention: General Counsel
with copies to:
Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005
Facsimile No.: (212) 269-5420
Attention: Roger Meltzer, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; one Business Day after
being timely delivered to a next-day air courier guaranteeing overnight
delivery; and when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee under the
Indenture at the address specified in such Indenture.
-22-
(e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto and
the Holders; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and to
the extent such successor or assign holds Registrable Notes.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(i) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(j) Notes Held by Any Issuer or Its Affiliates. Whenever the consent or
approval of Holders of a specified percentage of Registrable Notes is required
hereunder, Registrable Notes held by any Issuer or its affiliates (as such term
is defined in Rule 405 under the Securities Act) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
(k) Third-Party Beneficiaries. Holders of Registrable Notes and
Participating Broker-Dealers are intended third-party beneficiaries of this
Agreement and this Agreement may be enforced by such Persons.
(l) Entire Agreement. This Agreement, together with the Indenture, is
intended by the parties as a final and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein and any and all prior oral or written agreements,
representations, or warranties, contracts, understandings, correspondence,
conversations and memoranda among the Holders on the one hand and the Issuers on
-23-
the other, or between or among any agents, representatives, parents,
subsidiaries, affiliates, predecessors in interest or successors in interest
with respect to the subject matter hereof and thereof are merged herein and
replaced hereby.
(m) Joint and Several Obligations. All of the obligations of the Issuers
hereunder shall be joint and several obligations of each of them.
-24-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ Donald C. Mueller
---------------------------------------------
Name: Donald C. Mueller
Title: Chief Financial Officer, Treasurer and
Vice President
TRUCK COMPONENTS INC.
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
GUNITE CORPORATION
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
GUNITE EMI CORPORATION
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
BRILLION IRON WORKS, INC.
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
-25-
FABCO AUTOMOTIVE CORPORATION
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
BOSTROM HOLDINGS, INC.
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
BOSTROM SEATING, INC.
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
BOSTROM specialty SEATING, INC.
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
IMPERIAL GROUP HOLDING CORP.-1
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
IMPERIAL GROUP HOLDING CORP.-2
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
-26-
IMPERIAL GROUP, L.P.
By: Imperial Group Holding Corp.-1,
its General Partner
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
JAII MANAGEMENT COMPANY
By: /s/ Kenneth M. Tallering
---------------------------------------------
Name: Kenneth M. Tallering
Title: Secretary
HOLDERS:
CIBC WORLD MARKETS CORP.
By: /s/ Brian S. Perman
---------------------------------------------
Name: Brian S. Perman
Title: Managing Director
WACHOVIA CAPITAL MARKETS, LLC
By: /s/ Rit Amin
---------------------------------------------
Name: Rit Amin
Title: Vice President
-27-
Exhibit 4.4
STOCKHOLDERS' AGREEMENT
Stockholders' Agreement (this "Agreement"), dated as of March 9, 2000, by
and among Caravelle Investment Fund, L.L.C., a Delaware limited liability
company ("Caravelle"), CIBC WMC Inc., a Delaware corporation ("CIBCWMC"), Albion
Alliance Mezzanine Fund, L.P., a Delaware limited partnership ("Albion I"),
Albion Alliance Mezzanine Fund II, L.P., a Delaware limited partnership ("Albion
II" and, together with Caravelle, CIBCWMC and Albion I, the "Preferred
Investors" and, in their capacity as holders of shares of Common Stock (as
defined) (and together with any of their Affiliates, Associated Entities or
Managed Funds that may become transferees of any Common Stock held by them), the
"Preferred Investor Common Stockholders"), Transportation Technologies
Industries, Inc., a Delaware corporation and the surviving corporation in the
Merger (as defined) (the "Company"), and the persons listed on Exhibit A
attached hereto, who now or hereafter become signatories to this Agreement (the
"Individual Investors" and, together with the Preferred Investor Common
Stockholders, the "Stockholders").
RECITALS
WHEREAS, pursuant to the Agreement and Plan of Merger, dated as of January
28, 2000 (the "Merger Agreement"), by and between the Company and Transportation
Acquisition I Corp., a Delaware corporation ("Acquisition"), (i) the Company and
Acquisition have commenced a joint tender offer to purchase all of the
outstanding shares of common stock, par value $.01 per share, of the Company
(the "Shares"), at a purchase price of $21.50 per Share (the "Offer Price") and
(ii) following the completion of the joint tender offer and the satisfaction or
waiver of certain other conditions, Acquisition will be merged with and into the
Company (the "Merger"), with the Company being the surviving corporation in the
Merger;
WHEREAS, at the effective time of the Merger (the "Effective Time"), (i)
each outstanding Share (other than certain Shares specified in the Merger
Agreement, including certain Shares owned by the Individual Investors) will be
converted into the right to receive the Offer Price without interest thereon,
(ii) each outstanding share of common stock of Acquisition, par value $.01 per
share ("Acquisition Common Stock"), including all of such shares held by the
Preferred Investor Common Stockholders, will be converted into one share of
common stock, par value $.01 per share (the "Common Stock"), of the Company and
(iii) each outstanding share of preferred stock of Acquisition, par value $.01
per share, will be converted into one share of preferred stock, par value $.01
per share, of the surviving corporation in the Merger (the "Preferred Stock");
and
WHEREAS, the Preferred Investor Common Stockholders collectively
beneficially own 697,974 shares of Acquisition Common Stock, which will be
converted into
697,974 shares of the common stock, par value $0.01 per share, of the Company at
the Effective Time;
WHEREAS, the Individual Investors will collectively beneficially own
697,974 Shares at the Effective Time; and
WHEREAS, the Stockholders believe it to be in their best interests and in
the best interests of the Company that they enter into this Agreement providing
for certain rights and restrictions with respect to the shares of Capital Stock
(as defined below) of the Company owned by them or their transferees, all as
hereinafter provided.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Agreement, the receipt and sufficiency of which are
acknowledged by each of the parties hereto, effective as of the Effective Time
(except as provided herein), the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Representations and Warranties. Each party hereto represents and
warrants that (a) this Agreement has been duly authorized, executed and
delivered by such party and constitutes the valid and binding obligation of such
party, enforceable against such party in accordance with its terms, and (b) such
party has not granted and is not a party to any proxy, voting trust or other
agreement which conflicts with or violates any provision of this Agreement. No
party to this Agreement shall grant any proxy or become party to any voting
trust or other agreement which conflicts with or violates any provision of this
Agreement.
2. Corporate Governance.
(a) Subject to Sections 2(b) and (c), from the Effective Time, each
Stockholder and each of its Permitted Transferees shall vote or cause to be
voted all shares of Common Stock owned or hereafter acquired (whether by
purchase or otherwise) by each such Stockholder or Permitted Transferee, as the
case may be, or over which each such Stockholder or Permitted Transferee, as the
case may be, has control, and shall take all other necessary actions within its
control, in order to cause:
(i) subject to Section 2(a)(vi), the number of directors on the Board
to be seven;
(ii) the election to the Board of three directors designated jointly
by Caravelle and CIBCWMC and any of their Affiliates or Associated Entities
that may become transferees of the Common Stock held by them (the
"Preferred Designators");
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(iii) the election to the Board of four directors designated by the
Individual Investors;
(iv) in the event of any vacancy in the Board occurring for any
reason, the filling of the vacancy in such a manner that the Board will be
comprised of seven directors designated as set forth above;
(v) at the written request of the Preferred Designators or the
Individual Investors, the removal or replacement of any of the directors
designated by such Stockholders; and
(vi) if, at any time, the Company shall have defaulted under any of
its obligations under its indebtedness or under the terms of its preferred
stock, which default shall not have been cured within 30 calendar days
after the Company has been notified in writing of such default, the
election to the Board of one director designated jointly by the Preferred
Designators and an increase in the size of the Board to permit the
inclusion of such appointee (and, provided that such default shall not have
been cured, at the written request of the Preferred Designators, the
removal and/or replacement of the director designated by such Preferred
Designators pursuant to this Section 2(a)(vi)).
(b) The right of the Preferred Designators to designate directors under
Section 2(a), and the obligation of the Stockholders to vote their shares as
provided in this Section 2 with respect to such designees, shall terminate at
such time and for so long as the Preferred Designators collectively own less
than 50% of the number of shares of Common Stock held by the Preferred
Designators as of the Effective Time. The right of the Individual Investors to
designate directors under Section 2(a), and the obligation of the Stockholders
to vote their shares as provided in this Section 2 with respect to such
designees, shall terminate at such time as the Individual Investors and their
Permitted Transferees collectively own less than 50% of the number of shares of
Common Stock held by them as of the Effective Time (excluding any shares placed
in escrow in connection with the Debt Financing). Notwithstanding Section 2(a),
the Individual Investors shall be entitled to designate no more than three
directors at such time as the Individual Investors and their Permitted
Transferees collectively own at least 50% but less than 80% of the number of
shares of Common Stock held by them as of the Effective Time (excluding any
shares placed in escrow in connection with the Debt Financing). Each director
designated by the Preferred Designators or the Individual Investors (or one
director designated by the Individual Investors, in the case of the preceding
sentence) shall be deemed to have resigned as of the date on which the right of
the Preferred Designators or the Individual Investors, as applicable, to
designate directors terminates pursuant to this Section 2(b), and such vacancy
or vacancies shall be filled as designated by the remaining directors on the
Board. The right of the Preferred Investor Common Stockholders to designate a
director under Section 2(a)(vi), and the obligation of the Stockholders to vote
their
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shares as provided in this Section 2 with respect to such designee, shall
terminate at such time as the Company shall have cured the default giving rise
to such appointment under Section 2(a)(vi) and shall have cured any and all
defaults of the nature specified in Section 2(a)(vi) (but without regard to the
grace period specified in Section 2(a)(vi)) that shall have occurred subsequent
to the default giving rise to such appointment, and such designee shall be
deemed to have resigned as of the date such default is cured.
(c) The initial members of the Board from and after the Effective Time
shall be:
Thomas M. Begel
Jason Block
Jay Bloom
James D. Cirar
Mark Dalton
Camillo M. Santomero III
Andrew M. Weller
(d) The Company shall use its reasonable best efforts to cause any
designees selected in accordance with this Agreement to be elected to the Board.
Each Stockholder shall vote such Stockholder's shares of Common Stock at any
regular or special meeting of stockholders of the Company or in any written
consent executed in lieu of such a meeting of stockholders and shall take all
other actions necessary (whether in such Stockholder's capacity as Stockholder
or otherwise, including, without limitation, causing any directors to take all
such necessary action, whether at a meeting or by an action by written consent
in lieu of a meeting): (i) to give effect to the agreements contained in
Sections 2(a)-(c) and (h) and Section 8 and (ii) to ensure that the certificate
of incorporation and by-laws of the Company do not, at any time hereafter,
conflict in any respect with the provisions of this Agreement.
(e) For so long as either is a Preferred Investor Common Stockholder,
Albion I and Albion II and their Affiliates and Managed Funds shall be entitled
to jointly appoint one non-voting observer to the Board (the "Albion Observer").
The Albion Observer shall be given access to all meetings and other proceedings
of the Board, and shall be given copies of all original materials delivered to
the members of the Board (including, without limitation, any materials relating
to the budget), but shall have no vote on any matter before the Board and shall
not be counted for purposes of establishing a quorum or otherwise. In addition,
for so long as either is a Preferred Investor Common Stockholder, each of Albion
I and Albion II and their Affiliates and Managed Funds shall have (i) the right
to submit business proposals or suggestions to the Company's management from
time to time with the requirement that the Company's management agree to discuss
such proposals or suggestions with Albion I or Albion II, as applicable, within
a reasonable period after such submission,
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(ii) the right to call a meeting with management in order to discuss such
proposals or suggestions and (iii) the right to submit such proposals or
suggestions to the Board of Directors of the Company if not adopted or
implemented by management.
(f) Meetings of the Board and any committee thereof shall be held at the
principal offices of the Company or at such other place as may be determined by
the Board or such committee. Regular meetings of the Board shall be held on such
dates and at such times as shall be determined by the Board; provided that there
shall be at least one meeting held during each fiscal quarter. Special meetings
of the Board or any committee thereof may be called by any director (or, in the
case of a special meeting of any committee of the Board, by any member thereof)
on at least ten days' prior notice to the other directors, which notice shall
state the purpose or purposes for which such meeting is being called. The
Company shall pay all reasonable out-of-pocket expenses incurred by any director
and the Albion Observer in connection with the participation by directors and
the Albion Observer in attending meetings of the Board (and committees thereof)
and the boards of directors (and committees thereof) of any Subsidiaries of the
Company. The directors of the Company shall be indemnified by the Company to the
extent set forth in the Company's by-laws. The Company shall maintain directors'
and officers' insurance in an amount reasonably acceptable to the Stockholders.
(g) Except as otherwise required by law or the certificate of incorporation
of the Company, at all meetings of the Board, a majority of the entire Board
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board. If a quorum shall not be present at any meeting
of the Board, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting of the time and
place of the adjourned meeting, until a quorum shall be present. Unless
otherwise provided in the certificate of incorporation or by-laws of the
Company, any action required or permitted to be taken at any meeting of the
Board or of any committee thereof may be taken without a meeting, if all the
members of the Board or committee, as the case may be, consent thereto in
writing, and the writing or writings are filed with the minutes of proceedings
of the Board.
(h) The composition of the board of directors of each Subsidiary of the
Company shall be identical to the composition of the Board. Except to the extent
required by applicable law or stock exchange rule, the composition of each
committee of the Board of Directors of the Company and each Subsidiary of the
Company shall be designated by the Individual Investors and by the Preferred
Designators in proportion to the number of directors that they have designated
to serve on the Board of Directors of the Company.
(i) Nothing in this Agreement, express or implied, shall relieve any
officer or director of the Company or any of its Subsidiaries, or any
Stockholder, of any fiduciary or other duties or obligations they may have to
the Company's stockholders.
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3. Required Vote of Preferred Investor Common Stockholders. In addition to
those matters which the DGCL, the certificate of incorporation or the bylaws of
the Company require be submitted to the Board and/or the Company's stockholders,
the Stockholders agree that the affirmative vote (or written consent) of
Preferred Investor Common Stockholders holding 75% of the number of fully
diluted shares of Common Stock then held by all Preferred Investor Common
Stockholders (excluding non-voting Common Stock) shall be required to authorize
the following actions with respect to the Company or any Subsidiary thereof:
(a) the authorization or execution of any agreement providing for the
issuance of any debt securities or the creation, incurrence, assumption or
suffering to exist any Indebtedness (other than Indebtedness described in
clauses (1) (but not any Indebtedness which refinances such Indebtedness
outstanding at the Effective Time), (2), (3), (4), (5), (7), (8) (but only
to the extent permitted by clause (d) below), (9), (13) or (14) (to the
extent that the Indebtedness to be guaranteed may otherwise be incurred
without the required vote (or consent) of the Preferred Investor Common
Stockholders) of the definition of Permitted Indebtedness) in excess of (i)
$5.0 million in any calendar year, and (ii) $15.0 million in the aggregate
outstanding at any one time;
(b) the sale (whether by merger or otherwise) of all or substantially
all of the Capital Stock or the sale (whether by merger or otherwise),
lease or other disposition of all or substantially all of the assets of the
Company or any Subsidiary, in any transaction or series of related
transactions or the sale of any assets other than in the ordinary course of
business;
(c) any Investment by the Company or any Subsidiary other than (i) any
Investment described in clause (1), (2) (but only to the extent permitted
by the immediately succeeding clause (d)), (3), (4), (5) (but not to exceed
$1.0 million in the aggregate at any one time outstanding), (6), (7), (9),
(10) (but only to the extent required by the Senior Credit Facility), (11)
(but only to the extent required by the Senior Credit Facility), (12) or
(13) of the definition of Permitted Investments and (ii) other than any
Investment in (A) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any agency
thereof, (B) commercial paper rated at least A-1 by Standard & Poor's
Rating Group and P-1 by Moody's Investors Service, Inc., (C) time deposits
with, including certificates of deposit issued by, any office located in
the United States of any bank or trust company which is organized under the
laws of the United States or any state thereof and has capital, surplus and
undivided profits aggregating at least $500,000,000 and which issues (or
the parent of which issues) certificates of deposit or commercial paper
with a rating described in clause (B) above, or (D) money market mutual
funds with a right
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of redemption on a daily basis and having assets of at least $500,000,000,
substantially all of which assets consist of investments of a type
described in the foregoing clauses; provided, in each case that any
investment referred to in clauses (A) through (C), above, matures within
one year from the date of acquisition thereof by the Company or any such
Subsidiary;
(d) the making of capital expenditures, the purchase of new facilities
or the making of acquisitions involving consideration exceeding in the
aggregate in any calendar year: (i) $29.0 million in 2000, (ii) $27.0
million in 2001 and (iii) $26.0 million in any calendar year thereafter;
(e) entering into any transaction with any director of the Company,
Thomas M. Begel ("Begel"), Andrew M. Weller or James D. Cirar, or any
successor to such individual (each, a "Senior Officer") or any individual
related by blood or marriage (no more remote than first cousin) (a "Related
Person") to such director or Senior Officer, any Affiliate of a director,
Senior Officer (other than as contemplated by Section 17), Related Person
or any entity in which such director, Senior Officer or Related Person has
an interest;
(f) the issuance of any Capital Stock, stock options or similar
securities or the adoption of any stock ownership, stock option, long-term
incentive or similar plans, in each case, of the Company or any Subsidiary;
(g) the redemption of any Capital Stock, or the payment of any
dividend or other distribution on any Capital Stock of the Company or any
Subsidiary (other than as contemplated by Section 17 and other than the
payment of dividends or the redemption of the Preferred Stock in accordance
with the terms of the Certificate of Designation as in effect at the
Effective Time);
(h) the liquidation or dissolution of the Company or any Subsidiary in
any form of transaction (including, without limitation, a forward or
reverse merger);
(i) the appointment or removal of any Senior Officer, or the making of
any determination with respect to the compensation payable to any Senior
Officer;
(j) the amendment or modification of the Company's or any Subsidiary's
certificate of incorporation or by-laws;
(k) the approval or modification in any material respect of the
Company's or any Subsidiary's annual operating budget;
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(l) increasing the size of the Board (other than as contemplated by
Section 2(a)(vi) and other than as contemplated by the Certificate of
Designations in effect at the Effective Time following a Voting Rights
Triggering Event);
(m) the selection of the Company's and each Subsidiary's independent
accountants (it being understood and agreed that the Preferred Investor
Common Stockholders consent to the use of Arthur Andersen LLP as the
Company's and each Subsidiary's independent accountants); and (n) the
determination to make an initial registration of the Company's Common Stock
(or any successor security) under the Securities Act (other than a Demand
Registration pursuant to Section 11 hereof).
4. Grant of Proxy; Voting.
(a) Until such time as a Qualified Public Offering shall have been
consummated, each Individual Investor hereby grants an irrevocable (except as
set forth in Section 4(b) below) proxy ("Proxy") to vote all of such Individual
Investor's shares of Common Stock, whether now owned or hereafter acquired, to
Begel, on all matters which may properly come before the Stockholders in
accordance with the DGCL, the certificate of incorporation or by-laws of the
Company or this Agreement. Such Proxy may be evidenced by a certificate in a
form acceptable to Begel.
(b) Such Proxy shall be deemed to be revoked automatically, without notice,
on the earliest to occur of (i) the date on which the percentage of
fully-diluted shares of Common Stock held by Begel and his Permitted Transferees
collectively is less than 50% of the aggregate number of fully-diluted shares of
Common Stock held by Begel and his Permitted Transferees on the date hereof
(excluding any shares placed in escrow in connection with the Debt Financing),
(ii) a Qualified Public Offering, or (iii) Begel ceases, for any reason, to
serve as Chief Executive Officer of the Company.
(c) The Proxy shall be binding on each Individual Investor, his heirs,
executors, assigns and Permitted Transferees and shall not be affected by the
death or disability of the Stockholder or the Transfer of such Stockholder's
Common Stock; provided, that the Proxy shall terminate with respect to any
shares of Common Stock upon any transfer of such shares of Common Stock to any
Preferred Investor Common Stockholder or any Affiliate or Associated Entity
thereof. Begel may not assign or otherwise transfer his rights under this
Section 4 without the consent of each Individual Investor affected.
(d) On all matters coming before the Stockholders (as stockholders) for a
vote, as required by the DGCL, the certificate of incorporation or by-laws of
the Company or
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this Agreement, Begel, the Individual Investors and their Permitted Transferees
hereby agree that they shall all vote, with respect to each issue, unanimously
as determined by the holders of a majority-in-interest of the fully- diluted
shares of Common Stock held by the Individual Investors and their Permitted
Transferees.
5. Transfer of Common Stock.
(a) None of the shares of Common Stock held by any Individual Investor or
his Permitted Transferee(s) may be Transferred except in accordance with the
terms of this Agreement. Any attempted Transfer of shares of Common Stock other
than in accordance with the terms of this Agreement shall be null and void and
the Company shall refuse to recognize any such Transfer and shall not reflect on
its records any change in record ownership of the shares of Common Stock.
Notwithstanding anything contained in this Section 5(a) or Section 5(b) to the
contrary, but subject to the other provisions of this Section 5, each Individual
Investor (and the Permitted Transferees thereof) shall be permitted to Transfer
its shares of Common Stock in accordance with the applicable provisions of
Section 6 (Right of First Offer), Section 7 (Tag-Along Rights), Section 8
(Drag-Along Rights) and Section 17 (Put and Call Rights).
(b) The shares of Common Stock held by the Individual Investors from and
after the date of this Agreement shall not be Transferable until the earlier to
occur of (i) the third anniversary of the Effective Time or (ii) the
consummation of a Qualified Public Offering, except as follows:
(i) each of Camillo M. Santomero III, Begel, Andrew M. Weller and
James D. Cirar (collectively, the "Named Investors") may Transfer shares
among themselves;
(ii) each of the Named Investors may Transfer, in one or a series of
transactions, in the aggregate up to 5% of the fully-diluted shares held by
each of them at the Effective Time to other Individual Investors or to new
persons who become members of management of the Company after the Effective
Time ("New Management");
(iii) each Individual Investor as of the Effective Time (other than
the Named Investors) may Transfer shares to any other Individual Investor
or to New Management;
(iv) each Individual Investor which is not an individual may Transfer
shares to an Affiliate that is wholly owned by one or more of such
Individual Investors and its Related Persons; and
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(v) each Individual Investor may Transfer shares to a Related Person
of such Individual Investor, or a trust or similar entity which is
controlled by such Individual Investor and is established entirely for the
benefit of such Individual Investor or his Related Persons, or an
individual retirement account or pension plan for the Individual Investor's
benefit (each Individual Investor agrees to provide the Company and each
other Stockholder, upon request, with evidence reasonably acceptable to it
that each such Transfer complies with this clause (v)).
The transferee in each of the Transfers described in clauses (i) through
(v) above (to the extent such Transfer is made pursuant to one of such clauses)
is herein referred to as a "Permitted Transferee."
(c) Notwithstanding anything contained in this Agreement to the contrary,
in no event shall any issuance of shares, or any exchange, reclassification, or
other conversion of shares into any cash, securities or other property, in each
case pursuant to a recapitalization or a merger or consolidation of the Company
or any Subsidiary of the Company with, any sale of all or substantially all of
the shares to, or any sale or Transfer by the Company or any Subsidiary of the
Company of all or substantially all of its assets to, any Person be subject to
the provisions of Section 5 (Transfer of Common Stock), Section 6 (Right of
First Offer), Section 7 (Tag-Along Rights) or Section 18(b) (Preemptive Rights).
(d) Notwithstanding anything contained in this Agreement to the contrary,
any Transfer made pursuant to this Section 5 shall in no way affect or revoke
the Proxy granted under Section 4(a).
(e) Prior to the earlier to occur of (i) the third anniversary of the
Effective Time and (ii) the consummation of a Qualified Public Offering, each
certificate representing shares of Common Stock held by a Stockholder shall
contain upon its face or upon the reverse side thereof the following legend:
This certificate represents securities which are restricted and which are
subject to the terms and conditions of a Stockholders' Agreement, dated as
of March 9, 2000, by and among the stockholders of Transportation
Technologies Industries, Inc. (a copy of which is on file at the principal
office of Transportation Technologies Industries, Inc.). No sale, transfer,
assignment, pledge, hypothecation or other disposition of this certificate
or any of the interests or securities represented hereby shall be made
except in compliance with the terms and conditions of said Agreement.
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(f) Each certificate representing shares of Common Stock held by a
Stockholder shall contain upon its face or upon the reverse side thereof the
following additional legend:
The Securities evidenced by this certificate have not been registered under
the Securities Act of 1933, as amended, and must be held indefinitely
unless they are transferred pursuant to an effective registration statement
under the Act, or after receipt of an opinion of counsel satisfactory to
Transportation Technologies Industries, Inc. that registration is not
required or an appropriate no-action letter is received from the Securities
and Exchange Commission.
(g) Each Stockholder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the shares of Common
Stock in order to implement the restrictions on transfer established in this
Agreement.
(h) Each Stockholder agrees that, prior to any proposed Transfer of any
shares of Common Stock (other than a Transfer not involving a change in
beneficial ownership), unless there is in effect a registration statement under
the Securities Act covering the proposed Transfer, the Stockholder shall give
written notice to the Company of such holder's intention to effect such
Transfer. Each such notice shall describe the manner and circumstances of the
proposed Transfer in reasonable detail, and, if requested by the Company, shall
be accompanied, at such Stockholder's expense, by either (i) a written opinion
of legal counsel who shall be, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed Transfer of the Common Stock may be effected without registration under
the Securities Act, or (ii) a "no action" letter from the Securities and
Exchange Commission (the "Commission") to the effect that the Transfer of such
Securities without registration will not result in a recommendation by the staff
of the Commission that action be taken with respect thereto, whereupon the
holder of such shares of Common Stock shall be entitled to transfer such Common
Stock in accordance with the terms of the notice delivered by such Stockholder
to the Company, and in accordance with the other provisions of this Agreement.
Each certificate evidencing shares of Common Stock transferred as above shall
bear, except if such Transfer is made pursuant to an effective registration
statement under the Securities Act covering such shares, or under Rule 144 under
the Securities Act, the appropriate restrictive legends set forth in this
Section 5 except that such certificate shall not bear such restrictive legends
if, in the opinion of counsel for such Stockholder and the Company, such legend
is not required in order to establish compliance with any provision of the
Securities Act. Notwithstanding the foregoing, each Stockholder agrees that it
will not request that a Transfer of shares of Capital Stock be made (or that the
appropriate restrictive legends set forth in this Section 5 be removed from the
certificate evidencing shares of Capital Stock) solely in reliance on Rule
144(k) under the Securities Act, if as a result of
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such proposed transfer the Company would be rendered subject to the reporting
requirements of the Exchange Act.
Notwithstanding the foregoing, any Preferred Investor Common Stockholder
and each of its Affiliates and Associated Entities may (i) pledge Capital Stock
held by such entity, in whole or in part, to its lenders or security holders or
any trustee or agent therefor and (ii) transfer any Capital Stock held by it to
any entity formed for the purpose of holding such Capital Stock and/or other
securities held by such entity, in each case without complying with the
requirements of this paragraph (h); provided in the case of clause (i) and (ii)
above that the transferee agrees in writing to be bound by the provisions of
this Agreement.
(i) The parties hereto acknowledge that (i) CIBCWMC and/or Caravelle may
transfer all or any portion of the shares of Common Stock held by them at the
Effective Time without compliance with paragraph (h) to any of (A) CIBC World
Markets Corp. ("CIBC") or Caravelle or any of their respective Affiliates or
associates, (B) Trimaran Fund II, L.L.C. ("Trimaran") or any of its Affiliates
or associates, (C) any of Messrs. Jay Bloom, Andrew Heyer or Dean Kehler or any
Affiliates of any of them, (D) any Person (I) managed by CIBC, Trimaran or
Caravelle or Messrs. Bloom, Heyer or Kehler or any Affiliate of any of them and
(II) substantially all the equity interests which are owned, directly or
indirectly, by (1) members in Trimaran, (2) employees of CIBC or Caravelle or
any of their Affiliates, (3) any Affiliate or associate of any such members or
employees, (4) any investor in the Trimaran program that has co-investment
rights or (5) any combination of the persons named in the immediately preceding
clauses (1), (2), (3), or (4) (each of the foregoing, an "Associated Entity"),
and (ii) upon any transfer described clause (i) above, the definition of
"CIBCWMC" and "Caravelle," respectively, shall be deemed to be modified to
include each such transferee of CIBCWMC and Caravelle, respectively; provided,
in each case, that the transferee(s) agree in writing agree to be bound by the
provisions of this Agreement. The parties further acknowledge that Albion I and
Albion II may transfer all or any portion of the shares of Common Stock held by
them at the Effective Time without compliance with paragraph (h) to any of their
respective Affiliates or associates or funds that they manage (collectively, the
"Managed Funds").
6. Right of First Offer.
(a) Until such time as a Qualified Public Offering has been consummated, if
an Individual Investor or Permitted Transferee thereof (an "Offering
Stockholder") proposes to Transfer (in one transaction or in a series of
transactions) any shares of Common Stock (other than a Transfer pursuant to
Sections 8 or 17) to another Person who is not a Permitted Transferee of such
Stockholder (whether or not such other Person is currently a Stockholder), the
Offering Stockholder shall give written notice at least 30 days prior to making
any such Transfer (the "Offer Notice") to the Company and the other Stockholders
of such
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proposal. The Offer Notice shall specify the number of shares proposed to be
transferred, the proposed price (which must be in cash), terms and conditions of
the Transfer and the identity of the prospective transferee(s) (if any).
(b) The Individual Investors shall have the right and option (the "First
Option"), exercisable within 10 days after the date of the Offer Notice (the
"First Option Period"), to purchase the shares at the price (which must be in
cash) and on the terms and conditions set forth in the Offer Notice, in the
proportions upon which they mutually agree, or, if they are unable to agree upon
an allocation of such shares among themselves, then in proportion to the number
of fully-diluted shares owned by each such Individual Investor who wishes to
participate in the purchase of such shares pursuant to the First Option, by
providing written notice of that election to the Offering Stockholder. If any
Individual Investor fails or refuses to purchase his proportionate share of the
shares, then those Individual Investors who do offer to purchase their
proportionate share may proportionately purchase the balance thereof (or commit
to purchase all of the balance thereof) at the price and on the terms and
conditions set forth in the Offer Notice by providing written notice of that
election to the Offering Stockholder within five days after the expiration of
the First Option Period ("Individual Investors Option Period").
(c) If all of the shares are not purchased pursuant to Section 6(b), then
the Preferred Investor Common Stockholders and their Affiliates and Associated
Entities to the extent they hold shares of Common Stock (the "Second Optionee")
shall have the right and option (the "Second Option"), exercisable within 10
days after the expiration of the Individual Investors Option Period ("Second
Option Period"), to purchase all or a portion of the remaining balance of the
shares at the price, and on the terms and conditions, set forth in the Offer
Notice, in the proportions upon which they mutually agree, or, if they are
unable to agree upon an allocation of such shares among themselves, then in
proportion to the number of fully-diluted shares of Common Stock owned by each
such Second Optionee who wishes to participate in the purchase of such shares
pursuant to the Second Option, by providing written notice of that election to
the Offering Stockholder. If any Second Optionee fails or refuses to purchase
its proportionate share of the shares, then those Second Optionees who do offer
to purchase their proportionate share may proportionately purchase the balance
thereof (or commit to purchase all of the balance thereof) at the price and on
the terms and conditions set forth in the Offer Notice by providing written
notice of that election to the Offering Stockholder within 5 days after the
expiration of the Second Option Period ("Preferred Investors Option Period").
(d) The failure of any Stockholder to advise the Offering Stockholder of
such Stockholder's decision to purchase shares within the applicable period
described above shall be deemed to constitute a notification to the Offering
Stockholder of a decision not to
-13-
exercise the option described herein. No acceptance of the offer concerning the
shares shall contain a financing or similar contingency.
(e) The closing for all sales of the shares purchased under this Section 6
shall occur within 30 days the last day of the Preferred Investors Option
Period, or at such other time as may be mutually agreed upon by the Offering
Stockholder and the applicable Stockholders purchasing the shares, with the
purchase price being paid in immediately available funds at such closing, and
with the Offering Stockholder being required to provide representations and
indemnification to such purchasers only with respect to due authorization, valid
execution and delivery, good title to the shares and no liens or encumbrances on
such shares. The failure of the purchasers to close within the time designated
for closing shall relieve the Offering Stockholder of such Offering
Stockholder's obligations under this Section 6 with respect to that particular
proposed Transfer and such Offering Stockholder shall be free to sell the shares
to one or more third parties, whether or not to the person or persons identified
in the Offer Notice, at a price no less than 85% of the price per share
specified in the Offer Notice and with other terms (other than the amount of
consideration) no more favorable to the transferees thereof than offered to the
Stockholders in the Offer Notice, provided that such Transfer shall be effected
within 180 days after the failure of the purchasers to purchase pursuant to the
Offer Notice; provided, however, that if any purchasing Stockholder shall
default in its obligations to purchase shares pursuant to this clause (e), the
other purchasing Stockholders shall be entitled to purchase such defaulting
Stockholder's shares on the same basis as the other shares purchased by the
non-defaulting Stockholders. Any shares not Transferred within such 180 day
period shall be re-offered to the Stockholders in accordance with this Section 6
prior to any subsequent Transfer.
(f) If offers to purchase all the shares which are the subject of the Offer
Notice are not received by the Offering Stockholder after complying with the
procedures contained in this Section 6, the Offering Stockholder (i) shall not
be required to sell any of the shares to any Stockholder, and (ii) may, without
any further notice, during a 60 day period commencing on the expiration of the
Preferred Investors Option Period, Transfer all (but not less than all) of the
shares to one or more third parties at a price no less favorable and on terms no
more favorable to the transferee than offered to the Stockholders in the Offer
Notice.
7. Tag-Along Rights.
(a) Until such time as a Qualified Public Offering has been consummated, if
an Offering Stockholder proposes to Transfer (in one transaction or in a series
of transactions) shares of Common Stock (other than a Transfer pursuant to
Sections 8 or 17) and after giving effect to such Transfer 5% or more of the
fully-diluted shares of Common Stock outstanding at the Effective Time shall
have been Transferred to one or more Persons who are not Permitted Transferees
of the Individual Investors (whether or not such other Person or
-14-
Persons are currently a Stockholder), then in such case the Offer Notice
delivered pursuant to Section 6 shall also state (the "Participation Offer")
that, in lieu of exercising the options provided under Section 6, as applicable,
(or, in the event that the rights provided by Section 6 are not applicable
because the options provided under Section 6 are not exercised as to all of the
shares proposed to be Transferred), each Stockholder shall have the right to
have included in the proposed Transfer up to that number of shares held by such
Stockholder that does not exceed such Stockholder's pro rata portion of the
shares of Common Stock to be Transferred (which shall be the percentage of the
shares proposed to be Transferred that is equal to the percentage of
fully-diluted shares held by such Stockholder divided by the percentage of
fully-diluted shares held by the Offering Stockholder and all Stockholders
exercising tag-along rights under this Section 7) (the "Participation Rights").
(b) If the Participation Offer has been accepted with respect to any shares
proposed to be Transferred, then the Offering Stockholder may not effect any
Transfer of any shares to any transferee (as otherwise permitted by Section 6)
unless such transferee shall also purchase from the Stockholders accepting such
Participation Offer the shares permitted to be included by such Stockholders in
such Transfer pursuant to this Section 7. To the extent that any Stockholder
does not fully exercise such Stockholder's Participation Rights hereunder, the
under-allotment shall be exercisable on a pro rata basis among the other
participating Stockholders.
(c) The Offering Stockholder shall use its reasonable best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Stockholders who desire to exercise Participation Rights under this Section
7. The Offering Stockholder shall not Transfer any shares to the prospective
transferee(s) if the prospective transferee(s) (i) refuses to allow the
participation of the Stockholders who desire to exercise their Participation
Rights, or (ii) refuses to purchase the shares owned by such Participating
Stockholder.
(d) After compliance with this Section 7, the Offering Stockholder and the
Stockholders who exercise Participation Rights shall be permitted to Transfer
the number of shares specified in the Offer Notice to the prospective
transferee(s) on terms no more advantageous to them than those specified in the
Offer Notice, with such Stockholder exercising Participation Rights providing
the same representations, warranties and indemnifications as the Offering
Stockholder, except that the liability of any participating Stockholder for
breach of representations or for indemnification payments will be several and
not joint, and will be limited to any net proceeds received or receivable by it
arising from such sale.
(e) Any Stockholder desiring to exercise such Stockholder's Participation
Rights must advise the Offering Stockholder of such Stockholder's election to so
participate within 30 days of receipt of the Offer Notice.
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(f) No Stockholder exercising its Participation Rights under this Section 7
shall be required to comply with the provisions of Section 6 in connection with
such sale.
8. Drag-Along Rights.
(a) Until such time as a Qualified Public Offering shall have been
consummated (subject to the voting rights of the Preferred Investor Common
Stockholders in Section 3 and to the voting rights of directors elected by the
holders of Preferred Stock in accordance with the terms of the Certificate of
Designation), if Individual Investors (or their Permitted Transferees) holding a
majority of the fully-diluted shares of Common Stock held by all such Individual
Investors (and their Permitted Transferees) propose a sale, merger or other
Transfer involving all or substantially all of the shares or assets of the
Company on an arm's length basis to a third party or an affiliated group of
third parties who is not (i) a Stockholder or (ii) an Affiliate of a
Stockholder, and provided that such transaction is approved in accordance with
the terms of this Agreement, then the remaining Stockholders and their Permitted
Transferees (the "Remaining Stockholders") shall (subject to the voting rights
of the Preferred Investor Common Stockholders in Section 3 and to the voting
rights of directors elected by the holders of Preferred Stock in accordance with
the terms of the Certificate of Designation) consent to and raise no objection
with respect to (and will not exercise statutory appraisal rights in connection
with) such transaction and, if such transaction is structured as a sale of
shares (including a sale structured as a merger, whether a forward, reverse or
other merger), the Remaining Stockholders will, at the option of a
majority-in-interest of the fully-diluted shares of Common Stock held by the
Individual Investors (subject to the voting rights of the Preferred Investor
Common Stockholders in Section 3 and to the voting rights of directors elected
by the holders of Preferred Stock in accordance with the terms of the
Certificate of Designation), agree to sell their shares on the terms and
conditions approved by the Board and the Stockholders entitled to cast a
majority of the votes which all Stockholders are entitled to cast; provided,
however, that (i) any options as to the type of consideration offered to any
Individual Investor must be offered to the Remaining Stockholders, (ii) the
consideration offered for any proposed Transfer must be at least 80% cash or
marketable securities, (iii) at least 95% of the Stockholders other than the
Remaining Stockholders, shall have agreed to, and voted in favor of, such sale
and there shall be no adverse tax consequences which relate or impact only the
Remaining Stockholders (as distinguished from all Stockholders) arising from
such transaction.
(b) To exercise the drag-along rights provided in this Section 8, the
Company shall first give to the Remaining Stockholders a written notice (a
"Drag-Along Notice") containing (i) the name and address of the proposed
transferee and (ii) the proposed purchase price, terms of payment and other
material terms and conditions of the proposed transferee's offer. The Remaining
Stockholders shall, at the option of a majority-in-interest of the Individual
Investors voting for such transaction, thereafter be obligated, subject to the
terms and
-16-
conditions of this Section 8, to sell to the proposed transferee, simultaneously
with the other Stockholders' sale, its shares.
(c) At the closing of any Transfer of shares pursuant to this Section 8,
the Remaining Stockholders shall enter into agreements with the purchaser of the
shares containing terms substantially similar to the terms on which the
Individual Investors are Transferring their shares; provided, however, that
notwithstanding anything contained in this Agreement to the contrary, neither
the Remaining Stockholders nor any of its Permitted Transferees shall be
required to (i) make any representations or warranties, or provide
indemnification, to any person (other than representations and related
indemnification regarding the due authorization to enter and to perform the
agreement of sale, the validity and enforceability of the agreement of Transfer,
good title to the shares Transferred and regarding the absence of liens or
encumbrances on the shares so Transferred), and (ii) each of the Remaining
Stockholders' liability for breach thereof will be several and not joint, will
be proportionate to the percentage of the fully-diluted shares it Transfers, and
will be limited to any proceeds received or receivable by it arising from such
Transfer.
(d) Each Stockholder (or such Stockholder's transferees) shall bear its
pro-rata share (based upon the percentage of shares of Common Stock Transferred)
of the costs of any Transfer of shares pursuant to a sale or merger described in
this Section 8 to the extent such costs are incurred for the benefit of all
holders of shares and are not otherwise paid by the Company or the acquiring
party, with the understanding that the Company shall pay such costs unless
prohibited from doing so by the terms of the transaction. Costs incurred by
Stockholders (or their transferees) on their own behalf shall not be considered
costs of the transaction hereunder.
9. Subsequent Purchasers of Stock. Any transferee (including a Permitted
Transferee) who shall acquire (either voluntarily or involuntarily, by operation
of law or otherwise) any shares of Common Stock from any Stockholder, shall be
bound by all of the provisions of this Agreement, to the same extent as the
parties hereto and, prior to registration of the Transfer of any such securities
on the books of the Company, any transferee shall execute an agreement with the
parties hereto agreeing to be bound by such provisions, and shall thereupon be
deemed a Stockholder.
10. Holdback Agreement. No Stockholder (or Permitted Transferee) shall
effect any public sale or distribution of any shares of Common Stock of the
Company, or Successor Securities, during the seven days prior to, and during the
period provided in the underwriting agreement (not to exceed 180 days) beginning
on the effective date of any underwritten public offering (except as part of
such offering) unless the underwriters managing such offering otherwise agree;
provided that the foregoing shall, with respect to the Preferred Investor Common
Stockholders and their transferees, apply only to shares of Common Stock
-17-
held by them at the Effective Time; provided, further, that no Stockholder (or
transferee thereof) shall be obligated to comply with this Section 10 on more
than one occasion in any twelve month period.
11. Demand Registration.
(a) Subject to the provisions of this Agreement, if at any time after the
earlier to occur of (i) an initial public offering of the Company's Common
Stock, (ii) a Change of Control of the Company, (iii) the fifth anniversary of
the Effective Time or (iv) the listing of Common Stock on a national securities
exchange or on the National Association of Securities Dealers ("NASD") automated
quotation system (each of the events listed under (i) through (iv) being
referred to in this Agreement as an "Exercisability Event"), the Company shall
receive a written request from one or more Stockholders (including, without
limitation, any Affiliate or Associated Entity of any Preferred Investor Common
Stockholder that is a transferee of any Preferred Investor Common Stockholder)
requesting that the Company file a registration statement under the Securities
Act covering the registration for the offer and sale of outstanding Registrable
Securities ("a Demand Registration") valued (based on the Fair Market Value, on
the date of such request) at not less than $5,000,000 in the aggregate when
calculated together with any shares included by any other Stockholders in
accordance with the terms of this Section 11(a) (the "Minimum Value"), then the
Company shall promptly notify in writing all other Stockholders of such request.
Within 20 days after such notice has been given by the Company, any other
Stockholder may give written notice to the Company of its election to include
its Registrable Securities in the registration. As soon as practicable after the
expiration of such 20 day period, the Company shall use its best efforts to
cause the registration of all Registrable Securities with respect to which
registration has been so requested by the Stockholders. The right to demand the
registration of Registrable Securities hereunder may be exercised no more than
(i) three times in the aggregate by the Preferred Investor Common Stockholders
and their Affiliates and Associated Entities as follows: (A) one demand by
CIBCWMC and any of its Affiliates and Associated Entities that acquire Common
Stock from CIBCWMC after the date of this Agreement, (B) one demand by Caravelle
and any of its Affiliates and Associated Entities that acquire Common Stock from
Caravelle after the date of this Agreement and (C) one demand by Albion I and
Albion II and each of their Affiliates and Managed Funds that acquire Common
Stock from any of them after the date of this Agreement and (ii) three times in
the aggregate by the Individual Investors. All registrations demanded pursuant
to this Section 11(a) are referred to herein as "Demand Registrations." If any
Stockholder that has exercised its Demand Registration rights pursuant to this
Section 11(a) is not able to sell all of its Registrable Securities covered by
such Demand Registration, then such registration shall not count as a Demand
Registration for purposes of this Section 11.
-18-
(b) Notwithstanding subsection (a) above, without the consent of the
Company, no registration filed pursuant to Section 11(a) hereof shall be
required to be declared effective within 180 days after the effective date of
any registration statement filed by the Company under the Securities Act for any
offering of Common Stock (other than a registration statement filed on Form S-4
or Form S-8 or any successor or similar form). In addition, the Company may
postpone for up to 90 days the filing or effectiveness of a registration
statement pursuant to a request under this section if the Board (with the
concurrence of the managing underwriters, if any) determines in good faith that
such registration would be reasonably expected to have an adverse effect on any
proposal or plan by the Company to engage in any acquisition of assets, merger,
consolidation, tender offer, financing or similar transaction; provided that the
Company may not exercise this right more than once in any 12-month period.
(c) In the event of any postponement described in subsection (b), the
applicable Stockholder exercising its Demand Registration right shall, upon
written notice to the Company, be entitled to withdraw such request and, if such
request is withdrawn, such request shall not count as a request for registration
pursuant to this Section.
(d) If a Demand Registration is an underwritten registration, and the
managing underwriters advise the Company and the participating Stockholders in
writing that in their opinion the number of Registrable Securities requested to
be included in such registration exceeds the number which can be sold in such
offering without adversely affecting such offering, the Company will include in
such registration the Registrable Securities that the Stockholder exercising its
Demand Registration rights proposes to sell and the Registrable Securities
requested to be included in such registration pursuant by the other Stockholders
and the holders of any other securities to be included in such registration
pursuant to Section 11, pro rata among the holders of such Registrable
Securities on the basis of the number of shares that each holder has requested
to be included in such registration; provided that, in case such managing
underwriters deliver to the Company their written opinion that the participation
of any officer or employee of the Company or of any of its Subsidiaries (or any
of such Person's Affiliates), as such, materially and adversely affects the
ability of the Company to effect such offering or the pricing or amount of the
securities included in such offering, such officer or employee (and his
Affiliates) shall only include such number of Registrable Securities as, in the
opinion of such managing underwriters, does not cause such effect by virtue of
such officer's or employee's status as an officer or employee of the Company or
of any of its Subsidiaries (provided that any such shares excluded pursuant to
this proviso shall have priority to be included in the underwriters'
over-allotment option in such registration, except to the extent that the
managing underwriters deliver to the Company their written opinion that the
inclusion of any such officer's or employee's shares in the over-allotment
option would materially and adversely affect the ability of the Company to
effect such offering or the pricing or amount of
-19-
the securities included in such offering, and any remaining shares included in
the over-allotment option shall be allocated on a pro rata basis among the
holders of Registrable Securities included in the offering before giving effect
to the over-allotment); provided, further, that if, notwithstanding the
foregoing, the managing underwriters advise the Company and the participating
Stockholders in writing that the number of shares that the Stockholder
exercising its Demand Registration rights proposes to include in such
registration statement exceeds its Demand Registration rights proposes to
include in such registration statement exceeds the number which can be sold in
such offering without adversely affecting such offering, such Stockholder will
be entitled to withdraw its shares from such registration statement and such
registration statement shall not count as a Demand Registration under this
Section 11.
(e) If the Stockholder exercising its Demand Registration rights requests
that such Demand Registration be an underwritten offering, then the Company
shall select a nationally recognized underwriter or underwriters to manage and
administer such offering, such underwriter or underwriters, as the case may be,
to be reasonably acceptable to the holders of a majority of the Registrable
Securities to be included in such registration. Notwithstanding the foregoing,
(i) if any of Albion, Caravelle, CIBCWMC, Trimaran and CIBC or their Affiliates
and Associated Entities (collectively, the "Designated Stockholders") have
requested a Demand Registration and collectively own a majority of the
Registrable Securities held by the Preferred Investor Common Stockholders as of
the Effective Time, the Designated Stockholders (other than Albion and its
Affiliates and Associated Entities) shall select the lead underwriter in any
such underwritten offering, which shall be reasonably acceptable to the Company,
and the Company shall select the co-managers in such underwritten offering,
which shall be reasonably acceptable to the Designated Stockholders") and (ii)
if any of the Individual Investors or their Permitted Transferees have requested
a Demand Registration and collectively own a majority of the Registrable
Securities held by the Individual Investors at the Effective Time, the
Individual Investors shall select the lead underwriter in any such underwritten
offering, which shall be reasonably acceptable to the Company and the Company
shall select the co-managers in such underwritten offering, which shall be
reasonably acceptable to the Individual Investors.
(f) The Company will not permit any person other than a Stockholder
exercising its rights under this Agreement or the Common Stock Registration
Rights and Stockholder Agreement, dated as of the date hereof, between
Acquisition, CIBC Inc., First Union Securities, Inc. and the other parties named
therein, to include any securities in a registration statement under this
Agreement without the consent of the Stockholder exercising its Demand
Registration rights hereunder (which may be withheld by such Stockholder in its
absolute discretion).
12. Piggyback Registrations.
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(a) Right to Piggyback. Following an Exercisability Event, whenever the
Company proposes to register any of its securities under the Securities Act,
whether or not for sale for its own account (other than pursuant to a
registration on Form S-4 or Form S-8 or any successor or similar forms), and the
registration form to be used may be used for the registration of Registrable
Securities, the Company will give prompt written notice to all holders of
Registrable Securities of its intention to effect such a registration and will
include in such registration all Registrable Securities with respect to which
the Company has received written requests for inclusion therein within 15 days
after the receipt of the Company's notice. All registrations requested pursuant
to this Section 12(a) are referred to herein as "Piggyback Registrations."
(b) Priority on Primary Registrations. If a Piggyback Registration is an
underwritten primary registration on behalf of the Company, and the managing
underwriters advise the Company in writing (with a copy to each holder of
Registrable Securities requesting registration of Registrable Securities) that
in their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting such offering, the Company will include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration pursuant to
the Piggyback Registration rights granted herein, pro rata among the holders of
such Registrable Securities on the basis of the number of shares that each
holder has requested to be included in such registration, and (iii) third, other
securities requested to be included in such registration; provided that, in case
such managing underwriters deliver their written opinion to the Company that the
participation of any officer or employee of the Company or of any of its
Subsidiaries (or any of such Person's Affiliates), as such, materially and
adversely affects the ability of the Company to effect such offering or the
pricing or amount of the securities included therein, such officer or employee
(and his Affiliates) shall only include such number of Registrable Securities
as, in the opinion of such managing underwriters, does not cause such effect by
virtue of such officer's or employee's status as an officer or employee of the
Company or of any of its Subsidiaries, and such amount of securities, the
inclusion of which does not, in the opinion of such managing underwriters result
in such effect, shall nevertheless be subject to the provisions of the
immediately preceding clause (ii) (provided that any such shares excluded
pursuant to this proviso shall have priority to be included in the underwriters'
over-allotment option in such registration, except to the extent that the
managing underwriters deliver to the Company their written opinion that the
inclusion of any such officer's or employee's shares in the over-allotment
option would materially and adversely affect the ability of the Company to
effect such offering or the pricing or amount of the securities included in such
offering, and any remaining shares included in the over-allotment option shall
be allocated on a pro rata basis among the holders of Registrable Securities
included in the offering before giving effect to the over-allotment option).
-21-
13. Registration Procedures. Whenever the holders of Registrable Securities
have requested that any Registrable Securities be registered pursuant to this
Agreement, the Company will use its reasonable efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company will as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and thereafter use its reasonable
best efforts to cause such registration statement to become effective
(provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will furnish to the counsel
selected by the holders of a majority of the Registrable Securities covered
by such registration statement copies of all such documents proposed to be
filed, which documents will be subject to the review of such counsel);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of either (i) not less than 120 days
(subject to extension pursuant to Section 16(b) hereof) or, if such
registration statement relates to an underwritten offering, such longer
period as in the opinion of counsel for the underwriters a prospectus is
required by law to be delivered in connection with sales of Registrable
Securities by an underwriter or dealer or (ii) such shorter period as will
terminate when all of the securities covered by such registration statement
have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement until such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in the registration
statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement
thereto, the prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such seller may
reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests or, in the alternative, to
obtain exemptions from the registration requirements of such securities
law, and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition
in such
-22-
jurisdictions of the Registrable Securities owned by such seller; provided,
however, that the Company will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any
such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the discovery of the happening
of any event as a result of which, the prospectus included in such
registration statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not misleading in
the light of the circumstances under which they were made, and, at the
request of any such seller, the Company will prepare and furnish to such
seller a reasonable number of copies of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed and, if not so listed, to be listed on a national securities
exchange or over-the-counter market such as the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by
such registration statement as a NASDAQ "national market system security"
within the meaning of Rule 11Aa2-1 of the Exchange Act or, failing that, to
secure NASDAQ authorization for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable
Securities with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the
holders of a majority of the Registrable Securities (except in the case of
a Demand Registration under Section 11 in which case it shall be at the
request of the Stockholder exercising its Demand Registration Rights) being
sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Securities (including,
without limitation, effecting a stock split or a combination of shares);
-23-
(i) subject to complying with such confidentiality requirements as the
Company may reasonably impose, and subject to the requirements of the
federal and state securities laws, the rules of the NASD and the rules of
any securities exchange on which the Company's securities are traded, make
available for inspection by any underwriter participating in any
disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such underwriter, all financial
and other records, pertinent corporate documents and properties of the
Company and its Subsidiaries, and cause the Company's and each of its
Subsidiaries' officers, directors, employees and independent accountants to
supply all information reasonably requested by any such underwriter,
attorney, accountant or agent in connection with such registration
statement;
(j) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement will satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in its
reasonable judgment, might be deemed to be an underwriter or a controlling
person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein
of material, furnished to the Company in writing, which in the reasonable
judgment of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any Registrable Securities included in such registration
statement for sale in any jurisdiction, the Company will use its reasonable
best efforts promptly to obtain the withdrawal of such order;
(m) obtain a comfort letter, dated the effective date of such
registration statement (and, it such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), signed by the Company's independent public accountants in
customary form and covering such matters of the type customarily covered by
comfort letters as the holders of a majority of the Registrable Securities
being sold reasonably request; and
(n) provide a legal opinion of the Company's outside counsel addressed
to each holder (in form or substance satisfactory to each such holder and
its counsel) of
-24-
Registrable Securities included in such registration, dated the effective
date of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), with respect to the registration statement, each
amendment and supplement thereto, the prospectus included therein
(including the preliminary prospectus) and such other documents relating
thereto in customary form and covering such matters of the type customarily
covered by legal opinions of such nature; provided, however, that nothing
contained herein shall prohibit the Company from abandoning or
discontinuing its efforts to register its securities, unless such
registration is being effected in accordance with the provisions of Section
11(a).
14. Registration Expenses. The Company will pay all expenses incident to
the Company's performance of or compliance with Sections 11, 12 and 13 of this
Agreement, including, without limitation, all registration and filing fees, fees
and expenses of compliance with securities or blue sky laws, listing fees,
printing expenses, messenger and delivery expenses, and fees and disbursements
of counsel for the Company and its independent certified public accountants, and
underwriters' fees and expenses (excluding discounts and commissions, which
shall be paid by the holders selling the Registrable Securities) and all other
Persons retained by the Company as well as the fees and expenses of one legal
counsel retained by the holders of a majority of the Registrable Securities
included in such registration statement and, if such registration statement
includes Registrable Securities of any Preferred Investor Common Stockholder or
any of its Affiliates or Associated Entities, one additional legal counsel
retained by such Preferred Investor Common Stockholders and their Affiliated and
Associates Entities (all such expenses being collectively referred to herein as
"Registration Expenses").
15. Indemnification.
(a) The Company agrees to indemnify and hold harmless, to the extent
permitted by law, each holder of Registrable Securities, its officers and
directors and each Person who controls such holder (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities, joint or
several, to which such holder or any such director or officer or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue or alleged untrue statement of material fact contained (A) in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or (B) in any application or other document or communication (in this
Section 15 collectively called an "application") executed by or on behalf of the
Company or based upon written information furnished by or on behalf of the
Company filed in any jurisdiction in order to qualify any securities covered by
such registration statement under the "blue sky" or securities laws thereof, or
(ii) any omission or alleged omis-
-25-
sion of a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Company will reimburse such holder
and each such director, officer and controlling person for any legal or any
other expenses incurred by them in connection with investigating or defending
any such loss, claim, liability, action or proceeding; provided, however, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or omission made in
such registration statement, any such prospectus or preliminary prospectus or
any amendment or supplement thereto, or in any application, in reliance upon,
and in conformity with, written information prepared and furnished to the
Company by such holder expressly for use therein or by such holder's failure to
deliver a copy of the prospectus or any amendments or supplements thereto after
the Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company will indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify and hold harmless
the Company, its directors and officers and each other Person who controls the
Company (within the meaning of the Securities Act) against any losses, claims,
damages, liabilities, to which the Company or any such director or officer or
controlling person may become subject under the Securities Act or otherwise, to
the extent that such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) result from
(i) any untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or in any application, (ii) any omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only in the case of clauses (i) and (ii) to the extent that such
untrue statement or omission is made in such registration statement, any such
prospectus or preliminary prospectus or any amendment or supplement thereto, or
in any application, in reliance upon and in conformity with written information
prepared and furnished to the Company by such holder expressly for use therein,
or (iii) the failure by such holder of Registrable Securities to deliver a
prospectus to the extent required under the Securities Act but only if the
Company shall have complied with its obligation under this Agreement to provide
such holder with such a prospectus.
(c) Any Person entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemni-
-26-
fication but the failure to provide notice as is required by this sentence shall
not relieve the indemnifying party of its obligations hereunder except to the
extent that the failure to provide such notice has prejudiced such indemnifying
party in any material respect and (ii) unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim or unless in the
indemnified party's reasonable judgment there may be one or more legal defenses
available to it that are different from or additional to those available to any
such indemnifying party, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party. If
such defense is assumed, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably withheld). An indemnifying party who
is not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel (in addition to
any required local counsel) for all parties indemnified by such indemnifying
party as well as one additional counsel (in addition to any required local
counsel) for all Preferred Investor Common Stockholders and their Affiliates,
Associated Entities and Managed Funds to the extent any of them may be an
indemnified party hereunder with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities. The Company or
the holders of Registrable Securities also agrees to make such provisions, as
are reasonably requested by any indemnified party, for contribution to such
party in the event the Company's or the holders of Registrable Securities
indemnification is unavailable for any reason.
16. Participation in Underwritten Registrations.
(a) No Person may participate in any registration hereunder which is
underwritten unless such Person (i) agrees to sell such Person's securities on
the basis provided in any underwriting arrangements approved by the Company
(including, without limitation, pursuant to the terms of any over-allotment or
"green shoe" option requested by the managing underwriter(s), except that no
holder of Registrable Securities will be required to sell more than the number
of Registrable Securities that such holder has requested the Company to include
in any registration), (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements; provided, however,
that no holder of Registrable Securities included in any underwritten
registration will be required to make any representations or warran-
-27-
ties to the Company or the underwriters other than representations and
warranties regarding such holder and such holder's intended method of
distribution, due and valid execution of any agreements relating to such
offering, and good title to, and the absence of liens or encumbrances on, any
Registrable Securities to be sold by such Stockholders in such registration, and
to the extent that any underwriter or underwriters may require any Stockholder
to make additional representations and warranties which the other participants
in such underwritten offering have agreed to make, then such Stockholder will
not be permitted to participate in such registration unless such Stockholder
agrees to make the same representations and warranties, (iii) timely furnishes
to the Company and/or the underwriters managing such registration, all
information regarding such holder, the Registrable Securities held by such
holder and its intended method of distribution of such Registrable Securities as
the Company or such underwriters reasonably request, and (iv) agrees (and such
holder hereby agrees) to notify the Company and/or any underwriter managing such
registration of any untrue statement of material fact contained in the
prospectus in connection with such registration or any omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, but only to the extent that such untrue statement or omission is
made in such prospectus in reliance upon and in conformity with written
information prepared and furnished to the Company by such holder expressly for
use therein.
(b) Each Person that is participating in any Registration hereunder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 13(e) hereof, such Person will forthwith
discontinue the disposition of its Registrable Securities pursuant to the
registration statement until such Person's receipt of the copies of a
supplemented or amended prospectus as contemplated by such Section 13(e). In the
event the Company will give any such notice, the applicable time period
mentioned in Section 13(b) during which a Registration Statement is to remain
effective will be extended by the number of days during the period from and
including the date of the giving of such notice pursuant to this Section 16(b)
to and including the date when each seller of a Registrable Security covered by
such registration statement will have received the copies of the supplemented or
amended prospectus contemplated by Section 13(e).
17. Put and Call Rights. Capitalized terms used in this Section 17 but not
defined in this Agreement shall, with respect to any Individual Investor who is
employed by the Company pursuant to an employment agreement, have the meanings
ascribed to such terms in such Individual Investor's employment agreement;
provided that with respect to any Individual Investor who is employed by the
Company but is not party to an employment agreement, the definitions of "Cause"
and "Good Reason" shall have the meanings set forth in Section 20. For purposes
of this Section 17, "Affiliated Transferees" refers to Persons who are Permitted
Transferees within the meaning of clauses (iv) and (v) of the definition of
Permitted Transferee in Section 5(b); provided, that for purposes of Section
17(b), the term "Affiliated Transferee" shall also include any Person who is a
Permitted Transferee of an Indi-
-28-
vidual Investor within the meaning of clauses (i), (ii) and (iii) of the
definition of Permitted Transferee in Section 5(b) if and to the extent that
such Individual Investor transferred shares of Common Stock to such Permitted
Transferee in contemplation of the Individual Investor's termination of
employment in the manner contemplated by Section 17(b).
(a) Put Right.
(i) If an Individual Investor's employment with the Company is terminated
(A) due to death or disability, (B) by the Individual Investor for Good Reason
or (C) by the Company without Cause, the Individual Investor shall have the
right, subject to the provisions of Section 17(e), for a period of 90 days
following the date of termination of employment of such Individual Investor (or
until a determination of Fair Market Value or Cost shall have been made, as the
case may be, if such time is later) (the "Put Period"), to sell to the Company,
and the Company (or, at the Company's option, a Subsidiary thereof) shall be
required to purchase (subject to the provisions of Section 17(e)), all but not
less than all of the shares of Common Stock then held by the Individual Investor
and any Affiliated Transferee of such Individual Investor at a price per share
equal to the applicable purchase price determined in accordance with Section
17(a)(iii).
(ii) The Individual Investor who desires to exercise the put right in
accordance with this Section 17(a) shall, not later than the last day of the Put
Period, send written notice of his intention to sell such shares pursuant to
this Section 17, specifying the number of shares to be sold. The closing of the
purchase shall take place at the principal office of the Company on the tenth
day following the giving of such notice.
(iii) In the event of a purchase by the Company pursuant to Section
17(a)(i), the purchase price per share shall be the Fair Market Value per share.
(b) Call Right.
(i) If an Individual Investor's employment is terminated by the Individual
Investor without Good Reason prior to the third anniversary of the date hereof
or by the Company for Cause, the Company shall have the right and option to
purchase (for the purpose of selling such shares to members of New Management),
for a period of 30 days following the date of termination of employment of such
Individual Investor (the "First Call Period"), and the Individual Investor shall
be required to offer to the Company, any or all of the shares then held by such
Individual Investor and any Affiliated Transferee, at a price per share equal to
the applicable purchase price determined pursuant to Section 17(b)(iv).
(ii) In the event that the call right provided for in Section 17(b)(i) is
not fully exercised during the First Call Period, the Individual Investors
(other than the Individual
-29-
Investor whose employment has been terminated) shall have the right and option
for 30 days after the First Call Period (the "Second Call Period") to purchase
any or all the shares of Common Stock then held by the terminated Individual
Investor and any Affiliated Transferee, and such Individual Investor (and any
Affiliated Transferee) shall be required to offer to the other Individual
Investors, any or all of such shares not purchased pursuant to Section 17(b)(i)
at a price per share equal to the applicable purchase price determined pursuant
to Section 17(b)(iv). If the Individual Investors' call right is not exercised
during the Second Call Period, the Preferred Investor Common Stockholders shall
have the right and option for 30 days after the Second Call Period (the "Third
Call Period") to purchase any or all shares then held by the terminated
Individual Investor and any Affiliated Transferee not purchased pursuant to
Section 17(b)(i) or the preceding sentence, and the Individual Investor (and any
Affiliated Transferee) shall be required to offer to the Preferred Investor
Common Stockholders any or all of such shares at a price per share equal to the
applicable purchase price determined pursuant to Section 17(b)(iv). If the
Preferred Investor Common Stockholders' call right is not exercised during the
Third Call Period, the Company shall have the right and option for 30 days after
the Third Call Period (the "Fourth Call Period") to purchase any or all shares
then held by the terminated Individual Investor and any Affiliated Transferee
not purchased pursuant to Section 17(b)(i) or the preceding sentence, and the
Individual Investor (and any Affiliated Transferee) shall be required to offer
to the Company any or all of such shares at a price per share equal to the
applicable purchase price determined pursuant to Section 17(b)(iv).
(iii) If the Company desires to exercise its right and option to purchase
any shares of Common Stock pursuant to Section 17(b)(i) or the last sentence of
Section (b)(ii), the Company shall, not later than the end of the First Call
Period or the Fourth Call Period (as applicable), send written notice of its
intention to purchase shares to the Individual Investor whose employment has
been terminated (and any applicable Affiliated Transferee) and to the other
Individual Investors and to the Preferred Investor Common Stockholders. If the
Individual Investors desire to exercise their option to purchase any shares of
Common Stock pursuant to Section 17(b)(ii), the Individual Investors shall, not
later than the end of the Second Call Period, send written notice of their
intention to purchase shares to the Individual Investor whose employment has
been terminated (and any applicable Affiliated Transferee) and to the Company
and to the Preferred Investor Common Stockholders. If the Preferred Investor
Common Stockholders desire to exercise their option to purchase any shares
pursuant to Section 17(b)(ii), they shall, not later than the end of the Third
Call Period, send written notice of their intention to the Individual Investor
whose employment has been terminated (and any applicable Affiliated Transferee)
and to the Preferred Investor Common Stockholders.
(iv) In the event of a purchase by any Individual Investor, the Company or
the Preferred Investor Common Stockholders pursuant to this Section 17(b), the
purchase price per share shall be:
-30-
(1) in the case of a termination of employment by the Individual
Investor without Good Reason (prior to the third anniversary of the
date hereof), an amount equal to the lesser of (a) Cost plus interest
at an annual rate of 8% from and after the Effective Time to the date
of termination or (b) Fair Market Value; or
(2) in the case of a termination of employment by the Company for
Cause, an amount equal to the lesser of (a) Cost or (b) Fair Market
Value.
(c) Limitations on Obligation to Purchase Shares.
(i) The Company shall not be obligated to purchase any shares at any time
pursuant to this Section 17, regardless of whether it has in the case of Section
17(b) delivered a notice of its election to purchase any such shares, to the
extent that the purchase of such shares (together with any other purchases of
shares pursuant to this Section 17) would conflict with or result in a violation
of, any law, statute, rule, regulation, policy, guideline, order, writ,
injunction, decree or judgment promulgated or entered by any federal, state,
local or foreign court or governmental authority applicable to the Company or
any of its Subsidiaries or any of its or their property or the restrictions of
any financing agreements to which the Company is a party (provided that the
Company shall use its commercially reasonable efforts to have such restrictions
waived) (any of such results described in (i) or (ii) being sometimes
hereinafter referred to as a "Violation"). To the extent a purchase or proposed
purchase of shares pursuant to this Section 17 constitutes a Violation, and the
Company does not purchase such shares during the relevant period for purchase
specified in this Section 17, the Company's right or obligation to purchase such
shares shall be suspended. In the case of the put right described in Section
17(a), when the Company is no longer prohibited from purchasing such shares, the
Company shall provide written notice of such fact to the Individual Investor
entitled to such put right, and such Individual Investor will have the right,
for an additional period of 90 days from such written notice, to exercise its
put right under Section 17(a). In the case of the call right described in
Section 17(b), when the Company is no longer prohibited from purchasing such
shares, the Company's right and obligation shall be reinstated with the same
effect as if such suspension had not occurred.
(ii) If at any time consummation of all purchases of shares to be made by
the Company pursuant to this Section 17 is prohibited pursuant to this Section
17(c), then the Company shall purchase from the applicable Individual
Investor(s) the maximum number of shares which it is able to repurchase without
a resulting Violation.
(iii) Notwithstanding anything contained in this Agreement to the contrary,
any shares which an Individual Investor has elected to sell to the Company
pursuant to Section 17(a) or which the Company has elected to purchase from the
Individual Investor pursuant to Section 17(b) shall be purchased by the Company
on the tenth day after such date or
-31-
dates that the Company learns that it is no longer permitted to defer purchasing
such shares under this Section 17(c) at the relevant purchase price set forth in
this Section 17 at the time of such purchase, and the Company shall give the
Individual Investor seven days prior notice of any such purchase and, with
respect to sales pursuant to Section 17(a), the terminated Individual Investor
shall have the right, but not the obligation, to sell such shares, and, with
respect to sales pursuant to Section 17(b), the Company shall thereafter have
the right and the obligation to purchase, and the terminated Individual Investor
(and Affiliated Transferees thereof) shall have the obligation to sell, such
shares.
(d) Payment for Stock. The purchase price of shares purchased by the
Company pursuant to this Section 17 will be paid by the Company's delivery of a
bank cashier's check or certified check.
18. Additional Covenants.
(a) Preemptive Rights. In the event that, prior to the consummation of a
Qualified Public Offering, the Company seeks to sell shares (other than shares
issued pursuant to employee benefit and stock option plans of the Company and
other than in connection with acquisitions or the exercise of any warrants
issued in the Debt Financing) in a private or similar non-public placement, each
of the Preferred Investor Common Stockholders and the Individual Investors shall
be entitled to acquire, at the proposed offering price of such shares, that
number of shares equal to the aggregate number of shares proposed to be so
offered multiplied by a fraction, the numerator of which shall be the number of
fully-diluted shares owned by each respective Stockholder and, without
duplication, such Stockholder's Permitted Transferees (or, in the case of any
Preferred Investor Common Stockholder, any transferee of such Preferred Investor
Common Stockholder), and the denominator of which shall be the aggregate number
of fully-diluted shares owned by all Stockholders and, without duplication,
their Permitted Transferees (or, in the case of any Preferred Investor Common
Stockholder, any transferee of such Preferred Investor Common Stockholder). In
connection with any proposed issuance of such shares, the Company shall give to
each Stockholder at least 15 days prior written notice of its intention to
effect such issuance, specifying in such notice the number of shares to be sold,
and the proposed offering price per share. Each Stockholder shall have the
right, exercisable within 10 days after receipt of such notice, to elect to
purchase up to the maximum number of shares to which such Stockholder is
entitled to acquire hereunder with such purchase being effected by such
Stockholder's payment to the Company, on or before the 20th day after such
notice, by wire transfer of immediately available funds, an amount equal to the
number of shares to be purchased by such Stockholder, multiplied by the offering
price per share, against delivery of certificates evidencing the number of
shares so acquired, which will be issued in the name of such Stockholder. To the
extent any shares proposed to be sold in such private placement shall not have
been subscribed to by an existing Stockholder, the Company shall be free
thereafter to sell such shares by way of a private
-32-
placement, or similar offering, at an offering price per share not less than
that set forth in the notice to the Stockholders.
(b) Cash Flow Sweep. The Company shall use no less than 75% of its Excess
Cash Flow (as defined in the Senior Credit Facility (as in effect on the date
hereof)) to repay its outstanding Indebtedness until such time as the ratio of
funded debt to EBITDA (as defined in the Certificate of Designations as in
effect on date hereof) of the Company is less than 3.0 to 1, at which time the
Company shall use no less than 50% of its Excess Cash Flow to repay its
outstanding Indebtedness.
(c) Further Assurances. Each party hereto or person subject hereto shall do
and perform or cause to be done and performed all such further acts and things
and shall execute and deliver all such other agreements, certificates,
instruments and documents as any other party hereto or person subject hereto may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby,
including, without limitation, compliance with all applicable laws and
regulations. Following the consummation of a Qualified Public Offering, the
Preferred Investor Common Stockholders and the Individual Investors shall
cooperate in making any amendment to any voting and director nomination
provisions under this Agreement as is appropriate for such a public company.
(d) Rollover Equity Financing. Each of the Individual Investors, jointly
and severally, covenants to each of the Company and the Preferred Investor
Common Stockholders that he will, concurrently with the consummation of the
Merger, make a common equity investment in the Company through the rollover of
Common Stock of the Company (valued at a per share purchase price in the Tender
Offer), through the conversion in the Merger of options (valued at the per share
purchase price in the Tender Offer less the exercise price per share) into
interests in a rabbi trust that holds shares of Common Stock of the Company and
through additional purchases of Company Common Stock which will result in an
aggregate continuing investment in the Common Stock of the Company of $15.0
million at the Effective Time, of which not less than $10.0 million shall
reflect a common equity investment by Thomas M. Begel, Andrew M. Weller, Camillo
M. Santomero III and James D. Cirar, collectively.
(e) Escrow of Shares. Each of the Individual Investors has on the date of
this Agreement placed into escrow pursuant to the terms of the Escrow Agreement
dated the date hereof among the Company, Acquisition, the Individual Investors,
the Preferred Investor Common Stockholders, CIBC Inc., First Union Investors,
Inc. and the escrow agent named therein an aggregate of 41,040 shares of Common
Stock (the "Escrow Shares") pursuant to which the Individual Investors have
agreed to transfer or cause the transfer under certain circumstances their
Escrow Shares in accordance with the terms of the Escrow Agreement to the
-33-
Preferred Investor Common Stockholders. Each Individual Investor hereby
authorizes and instructs the Company to transfer (and appoints the Company as
its attorney-in-fact for such purposes) the Escrow Shares of such Individual
Investor in accordance with the terms of such Escrow Agreement.
19. Term. This Agreement shall terminate, and be of no further force or
effect, automatically without any further action on the part of any parties
hereto, upon the earliest of (a) the tenth anniversary of the Effective Time,
(b) the completion of a Qualified Public Offering, (c) a sale of all or
substantially all of the assets or Capital Stock of the Company to a Person that
is not an Affiliate of the Company (whether by merger, consolidation, sale of
assets or Capital Stock or otherwise) or (d) upon the agreement of holders of
75% of the Common Stock (including the agreement of Preferred Investor Common
Stockholders holding not less than 75% of the shares of Common Stock held by all
Preferred Investor Common Stockholders); provided that, in the event of a
Qualified Public Offering, the provisions of Sections 1-3, 5(g), 5(h), 5(i) and
9-21 (other than Section 17) shall continue in full force and effect until the
earliest to occur of the events set forth in clauses (a), (c), or (d); provided,
further, that the provisions of Sections 11-16, 20 and 21 shall survive in all
instances until terminated pursuant to clause (d).
20. Definitions. Capitalized terms set forth below shall have the following
meanings. Certain other capitalized terms may be defined elsewhere in the text
of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement:
"Affiliate" of a Person means any other Person directly or indirectly
through one or more intermediaries controls, is controlled by or is under common
control with such Person. The term "control" shall mean, as applied to any
Person, the possession directly or indirectly of the power to direct or cause
the direction of the management of such Person through the ownership of voting
securities or otherwise and the terms "controlling" and "controlled" have the
correlative meanings.
"Associated Entity" shall have the meaning ascribed to such term in Section
5(i) hereof.
"Board" shall have the meaning ascribed to such term in Section 1 hereof.
"Capital Stock" shall have the meaning ascribed to such term in the
Certificate of Designations.
"Cause" shall mean, with respect to any Individual Investor who does not
have an employment agreement with the Company,
-34-
(i) the willful and continuous neglect or refusal to perform such
Individual Investor's ability duties or responsibilities, or the willful
taking of actions (or willful failures to take actions) which materially
impair the Individual Investor's ability to perform his duties or
responsibilities which in each case continues after being brought to the
attention of the Individual Investor (other than any such failure resulting
from the Individual Investor's incapacity due to physical or mental illness
or any such actual or anticipated failure after the issuance of a notice of
termination); or
(ii) any act by the Individual Investor which constitutes gross
negligence or willful misconduct in the performance of his duties
hereunder, or the conviction of the Individual Investor of any felony, in
each case which is materially and manifestly injurious to the Company and
which is brought to the attention of the Individual Investor in writing not
more than 30 days from the date of its discovery by the Company or the
Board.
"Certificate of Designations" means the Certificate of Designations of
Acquisition relating to its 14-1/2% Senior Redeemable Preferred Stock.
"Change of Control" shall mean the occurrence of a "Change of Control"
under the Certificate of Designations; and shall also mean any such time when
(i) the Preferred Investor Common Stockholders and their Affiliates, Associated
Entities and Managed Funds collectively beneficially own less than 50% of the
shares of Common Stock of the Company collectively held by them on the date of
this Agreement or (ii) the Individual Investors and their Permitted Transferees
collectively beneficially own less than 50% of the shares of Common Stock of the
Company beneficially owned by them on the date of this Agreement.
"Commission" means the United States Securities and Exchange Commission and
any successor federal agency administering the Securities Act.
"Common Stock" has the meaning ascribed to such term in the Recitals to
this Agreement.
"Cost" means the amount of money or property per share contributed to the
Company in exchange for the relevant shares of Capital Stock.
"Debt Financing" shall mean the financing transactions entered into in
connection with the closing of the Tender Offer.
"DGCL" means the Delaware General Corporation Law, as the same may
hereafter be amended from time to time.
-35-
"Effective Time" shall have the meaning ascribed to such term in the
recitals to this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934 and all rules,
regulations and orders issued thereunder, as any of the same may be amended.
"Fair Market Value" means the fair market value of all of the outstanding
shares of voting and non-voting Common Stock, divided by the aggregate number of
outstanding shares of voting and non-voting Common Stock. Fair Market Value
shall be determined in good faith by the Board, on the basis of a hypothetical
sale price to an unaffiliated third party, without discounts, after due
consideration of a number of factors, including, the Company's earnings and
other operating and financial information as of the end of the monthly reporting
period immediately preceding the month in which the event requiring a
determination of Fair Market Value occurs, and the future prospects for the
Company. From and after the six month anniversary of the Effective Time, if an
Individual Investor whose employment is terminated does not agree with the fair
market value determination of the Board, then the Fair Market Value shall be
determined by a nationally recognized, independent investment banking firm (the
"Referee") chosen by the Company and reasonably acceptable to each of the
Individual Investors immediately affected or, if there is a dispute as to the
selection of such investment banking firm, chosen by the American Arbitration
Association in New York, upon application of any Individual Investor then
immediately affected by such determination. All affected Individual Investors
shall be afforded adequate opportunities to discuss the valuation with the
investment bankers. The expense of such independent valuation shall be borne by
the Company; provided, however, that in the event such independent firm's
determination of Fair Market Value is no more than 10% higher than the Board's
determination of Fair Market Value, 75% of the expense of such independent
valuation shall be borne by the Company and 25% of the expense of such
independent valuation shall be borne by the Individual Investor.
"fully-diluted" shall be calculated to include warrants, options,
convertible securities and any other security convertible into or exercisable
for common stock of the Company, but only to the extent that such security is
"in the money" (in the reasonable judgment of the Board of Directors of the
Company) and is exercisable for or convertible into Common Stock within 180 days
of the date of determination.
"Good Reason" shall mean, with respect to any Individual Investor who does
not have an employment agreement with the Company, without the Individual
Investor's express written consent, the occurrence of any of the following
circumstances unless such circumstances are fully corrected prior to the date of
termination specified in the notice of termination given in respect thereof: (i)
a material change in the Individual Investor's position, duties,
responsibilities (including reporting responsibilities) or authority (except
during period
-36-
when the Individual Investor is unable to perform all or substantially all of
his duties and/or responsibilities on account of the Individual Investor's
illness (either physical or mental) or other incapacity, (ii) a reduction in
either the Individual Investor's annual rate of base salary or level of
participation in any bonus plans for which he is eligible, or (iii) the failure
to provide facilities or services which are suitable as determined by the Board
of the Company to the Individual Investor's position and adequate for the
performance of the Individual Investor's duties and responsibilities.
"Indebtedness" shall have the meaning ascribed to such term in the
Certificate of Designations (as in effect on the date hereof).
"Investments" shall have the meaning ascribed to such term in the
Certificate of Designations (as in effect on the date hereof).
"Permitted Indebtedness" shall have the meaning ascribed to such term in
the Certificate of Designations (as in effect on the date hereof).
"Permitted Investments" shall have the meaning ascribed to such term in the
Certificate of Designations (as in effect on the date hereof).
"Permitted Transferee" shall have the meaning ascribed to such term in
Section 5(b).
"Person" means any individual, partnership, corporation, limited liability
company, trust, joint venture, unincorporated organization or other entity.
"Preferred Stock" has the meaning ascribed to such term in the Recitals to
this Agreement.
"Qualified Public Offering" means a public offering and sale of Common
Stock for cash pursuant to an effective registration statement under the
Securities Act which public offering accounted for at least 20% of the
outstanding Common Stock of the Company on a fully-diluted basis and yielded net
proceeds of not less than $75.0 million.
The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement by the Commission.
"Registrable Securities" means (i) any Common Stock, (ii) any common stock
or other equity securities of the Company issued or issuable directly or
indirectly with respect to the securities referred to in clause (i) by way of
stock dividend, stock conversion or
-37-
stock split or in connection with a combination of shares, recapitalization,
merger, consolidation or other reorganization and (iii) any Successor Securities
thereof, all to the extent held by a Stockholder, or any transferee thereof.
"Related Person" shall have the meaning set forth in Section 3(e).
"Securities Act" means the Securities Act of 1933 and all rules,
regulations and orders issued thereunder, as any of the same may he amended from
time to time.
"Senior Credit Facility" means the Credit Agreement, dated as of March 9,
2000, among the Company, certain of the Company's Subsidiaries, the lenders
party thereto in their capacity as lenders thereunder and Canadian Imperial Bank
of Commerce, as syndication agent, and First Union National Bank, as
administrative agent.
"Subsidiary" of any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business entity,
whether now or hereafter existing or hereafter organized or acquired,
(i) in the case of a corporation, of which more than 50% of the total
voting power of the Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
officers or trustees thereof is held by such first-named Person or any of
its Subsidiaries; or
(ii) in the case of a partnership, limited liability company, joint
venture, association or other business entity, with respect to which such
first-named Person or any of its Subsidiaries has the power to direct or
cause the direction of the management and policies of such entity by
contract or otherwise or if in accordance with generally accepted
accounting principles such entity is consolidated with the first-named
Person for financial statement purposes.
"Successor Securities" means any securities of the Company or any successor
Person (by merger, consolidation, operation of law or otherwise) which shall
have been issued in exchange for the Common Stock or into which the Common Stock
shall have been converted (by reclassification, recapitalization, merger,
consolidation or otherwise).
"Transfer" (or any correlative term) means with respect to any share of
Capital Stock, any sale, transfer, assignment or other disposition of such share
of Capital Stock.
21. Miscellaneous.
(a) Amendment and Waiver. Except as otherwise provided herein, no
modification, amendment or waiver of any provision of this Agreement shall be
effective
-38-
against the Company or the Stockholders unless such modification, amendment or
waiver is approved in writing by (i) a majority-in-interest of the Individual
Investors and (ii) a majority-interest of the Preferred Investor Common
Stockholders; provided that no such amendment or waiver that has a materially
disproportionate effect on any Stockholder shall be effective unless approved in
writing by the Stockholder(s) so affected. The failure of any party to enforce
any of the provisions of this Agreement shall in no way be construed as a waiver
of such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
(b) Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
(c) Entire Agreement. Except as otherwise expressly set forth herein, this
document embodies the complete agreement and understanding among the parties
hereto with respect to the subject matter hereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
(d) Successors and Assigns. Except as otherwise expressly provided herein,
this Agreement shall bind and inure to the benefit of and be enforceable by the
respective successors, personal representatives and assigns of the parties
hereto whether or not expressed.
(e) Reorganization, etc. The provisions of this Agreement shall apply,
mutatis mutandi to any shares or other securities resulting from any stock split
or reverse split, stock dividend, reclassification, subdivision, consolidation
or reorganization of any shares or other securities of the Company and to any
shares or other securities of the Company or of any successor company which may
be received by any of the parties hereto by virtue of their respective ownership
of any shares of Capital Stock of the Company.
(f) Counterparts. This Agreement may be executed in separate counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of this Agreement by telefacsimile shall be
equally as effective as delivery of a manually executed counterpart of this
Agreement, but the failure to deliver a manually executed counterpart of this
Agreement shall not effect the delivery, enforceability or binding effect of
this Agreement.
-39-
(g) Remedies. The Company and the Stockholders shall be entitled to enforce
their rights under this Agreement specifically to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company and any Stockholder may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
(h) Notice. All notices, demands or other communication to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Company at the address indicated below, with
a copy to Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York,
New York 10036, Attention: Joseph A. Coco, Esq., and to any other recipient at
the address indicated on Exhibit A attached hereto and to any subsequent holder
of shares of Capital Stock subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. The Company's address is:
Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
(i) Governing Law. All questions concerning the relative rights of the
Company and its Stockholders and the construction, validity and interpretation
of this Agreement and the exhibits and schedules hereto shall be governed by and
construed in accordance with the domestic laws of the State of Delaware, without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.
(j) Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
[signature pages follow]
-40-
IN WITNESS WHEREOF, the parties hereto have executed this Stockholders
Agreement on the day and year first above written.
PREFERRED INVESTORS
CARAVELLE INVESTMENT FUND, L.L.C.
By: Caravelle Advisors, L.L.C., its
investment manager and attorney-in-fact
/s/ Jason Block
-------------------------------------------
Name: Jason Block
Title: Executive Director
CIBC WMC INC.
By: /s/ Jay Bloom
-------------------------------------------
Name: Jay Bloom
Title: Managing Director
ALBION ALLIANCE MEZZANINE FUND, L.P.
By: Albion Alliance LLC, its general partner
/s/ U. Peter C. Gummeson
-------------------------------------------
Name: U. Peter C. Gummeson
Title: Senior Vice President
ALBION ALLIANCE MEZZANINE FUND II, L.P.
By: AA MEZZ II GP, LLC, its general partner
By: Albion Alliance LLC, its sole member
/s/ U. Peter C. Gummeson
-------------------------------------------
Name: U. Peter C. Gummeson
Title: Senior Vice President
-41-
INDIVIDUAL INVESTORS
/s/ Thomas M. Begel
------------------------------------------
Thomas M. Begel
/s/ Timothy A. Masek
------------------------------------------
Timothy A. Masek
/s/ Kenneth M. Tallering
------------------------------------------
Kenneth M. Tallering
/s/ Andrew M. Weller
------------------------------------------
Andrew M. Weller
/s/ James D. Cirar
------------------------------------------
James D. Cirar
/s/ Camillo M. Santomero III
------------------------------------------
Camillo M. Santomero III
/s/ John Wilkinson
------------------------------------------
John Wilkinson
/s/ Robert L. Jackson
------------------------------------------
Robert L. Jackson
/s/ Donald C. Mueller
------------------------------------------
Donald C. Mueller
/s/ Lee Swafford
------------------------------------------
Lee Swafford
/s/ Kelly Bodway
------------------------------------------
Kelly Bodway
/s/ David W. Riesmeyer
------------------------------------------
David W. Riesmeyer
-42-
/s/ Brent Williams
------------------------------------------
Brent Williams
/s/ Jeffrey Elmer
------------------------------------------
Jeffrey Elmer
/s/ Adam Gottlieb
------------------------------------------
Adam Gottlieb
-43-
C+H ENTERPRISES GROUP, INC.
By: /s/ Joe A. Hicks
---------------------------------------
Name: Joe A. Hicks
Title: Chief Executive Officer
-44-
TRANSPORTATION TECHNOLOGIES
INDUSTRIES, INC.
By: /s/ Kenneth M. Tallering
---------------------------------------
Name: Kenneth M. Tallering
Title: Vice President, General Counsel
and Secretary
-45-
EXHIBIT A
LIST OF INDIVIDUAL INVESTORS
Thomas M. Begel
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Timothy M. Masek
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Camillo M. Santomero III
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Kenneth M. Tallering
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Andrew M. Weller
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
James D. Cirar
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
A-1
John Wilkinson
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Robert C. Jackson
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Donald C. Mueller
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Lee Swafford
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Kelly Bodway
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
David W. Riesmeyer
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
A-2
Brent Williams
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Jeffrey Elmer
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
Adam Gottlieb
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
C+H Enterprises Group, Inc.
c/o Transportation Technologies Industries, Inc.
980 North Michigan Avenue
Suite 1000
Chicago, IL 60611
A-3
LIST OF PREFERRED INVESTOR COMMON STOCKHOLDERS
Caravelle Investment Fund, L.L.C.
425 Lexington Avenue
New York, NY 10017
CIBC WMC Inc.
425 Lexington Avenue
New York, NY 10017
Albion Alliance Mezzanine Fund, L.P.
Albion Alliance Mezzanine Fund II, L.P.
c/o Albion Alliance LLC
1345 Avenue of the Americas
37th Floor
New York, NY 10105
A-4
Exhibit 4.5
AMENDMENT NO. 1 TO STOCKHOLDERS' AGREEMENT
This Amendment No. 1, dated as of February 28, 2001 (this "Amendment"), to
the Stockholders' Agreement (the "Original Agreement"), dated as of March 9,
2000, by and among Caravelle Investment Fund, L.L.C., a Delaware limited
liability company ("Caravelle"), CIBC WMC Inc., a Delaware corporation
("CIBCWMC"), Albion Alliance Mezzanine Fund, L.P., a Delaware limited
partnership ("Albion"), Albion Alliance Mezzanine Fund II, L.P., a Delaware
limited partnership ("Albion II" and, together with Caravelle, CIBCWMC and
Albion I, the "Preferred Investors" and, in their capacity as holders of shares
of Common Stock (and together with any of their Affiliates or Associated
Entities or Managed Funds (including Trimaran Fund II, L.L.C., the Trimaran
Co-Investors and TIP (as defined in the second and first recitals hereto)) that
have or may become transferees of any Common Stock held by them), the "Preferred
Investor Common Stockholders"), Transportation Technologies Industries, Inc., a
Delaware corporation and the surviving corporation in the Merger (the
"Company"), and the persons listed on Exhibit A attached hereto who are
signatories to such agreement (the "Individual Investors" and, together with the
Preferred Investor Common Stockholders, the "Stockholders"), is entered into by
and among the Preferred Investor Common Stockholders (other than CIBCWMC,
Trimaran and the Trimaran Co-Investors) and the Individual Investors. Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
ascribed thereto in the Original Agreement.
RECITALS
WHEREAS, Transportation Investment Partners L.L.C. ("TIP"), Caravelle and
certain of the Individual Investors have purchased an aggregate of 465,116
shares of Common Stock, warrants (the "Warrants") to purchase an aggregate of
100,000 shares of Common Stock, contingent warrants (the "New Equity Contingent
Warrants") to purchase an aggregate of 465,116 shares of Common Stock, a
conversion option (the "Conversion Option") pursuant to which, upon exercise
thereof, the Company has agreed to issue to such Persons up to an aggregate of
697,674 shares of Common Stock and contingent warrants (the "Conversion
Contingent Warrants" and, together with the New Equity Contingent Warrants, the
"Contingent Warrants") to purchase up to an aggregate of 697,674 shares of
Common Stock;
WHEREAS, pursuant to the Assignment and Assumption Agreement, dated as of
June 30, 2000, Caravelle has assigned a portion of the Common Stock and
Preferred Stock acquired thereby to Trimaran Fund II, L.L.C. ("Trimaran"), and
the other Trimaran Co-Investors (as defined in the aforesaid Assignment and
Assumption Agreement), CIBC WMC, Inc. ("CIBCWMC"), pursuant to an Assignment and
Assumption Agreement, dated as of June 30, 2000, has assigned all the Common
Stock and Preferred Stock acquired thereby to Trimaran and the Trimaran
Co-Investors and Trimaran and the Trimaran Co-Investors, pursuant to an
Assignment and Assumption Agreement, dated as of February 27, 2001, have
assigned all the Common Stock and Preferred Stock acquired by Trimaran and the
Trimaran Co-Investors pursuant to the aforesaid assignment and assumption
agreement to TIP;
WHEREAS, pursuant to the aforesaid assignment and assumption agreements:
(a) CIBCWMC is no longer a party to the Original Agreement nor to the
other Ancillary Agreements (as defined in the aforesaid assignment and
assumption agreements) and has assigned its rights under the Ancillary
Agreements to Trimaran and the Trimaran Co-Investors and they have assumed
all CIBCWMC's liabilities thereunder; and
(b) Caravelle has assigned certain of its rights under the Ancillary
Agreements to Trimaran and the Trimaran Co-Investors and they have assumed
certain of Caravelle's liabilities thereunder; and
(c) Trimaran and the Trimaran Co-Investors are no longer a party to
the Original Agreement nor to the other Ancillary Agreements (as defined in
the aforesaid assignment and assumption agreements) and have assigned their
rights under the Ancillary Agreements to TIP and TIP has assumed all
Trimaran's and the Trimaran Co-Investor's liabilities thereunder; and
(d) by virtue of the aforesaid and Section 5(i) of the Original
Agreement, TIP became party to the Original Agreement;
WHEREAS, the parties hereto wish to amend the Original Agreement to
provide, among other things, for the election of new directors.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Amendment, the receipt and sufficiency of which are
acknowledged by each of the parties hereto, effective as of the date hereof
(except as provided herein), the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Representations and Warranties. Each party hereto represents and
warrants that (a) this Amendment has been duly authorized, executed and
delivered by such party and constitutes the valid and binding obligation of such
party, enforceable against such party in accordance with its terms, and (b) such
party has not granted and is not a party to any proxy, voting trust or other
agreement which conflicts with or violates any provision of the Original
Agreement, as amended by this Amendment. No party to this Amendment shall grant
any proxy or become party to any voting trust or other agreement which conflicts
with or violates any provision of the Original Agreement, as amended by this
Amendment.
2. Amendments to Original Agreement.
(a) The number of directors specified in Section 2(a)(i) of the
Original Agreement is hereby changed to nine. The Stockholders shall take
all action to cause the Company's Certificate of Incorporation and By-Laws
so to provide as of the date hereof.
(b) The number of directors specified in Section 2(a)(ii) of the
Original Agreement is hereby changed to five. TIP, and, at its election,
any of its Affiliates or Associated Entities that may become transferees of
Common Stock, shall designate four of such directors and Caravelle, and, at
its election, any of its Affiliates or Associated Enti-
-2-
ties that may become transferees of Common Stock, shall designate the
remaining such director. In addition to the directors already designated
thereby, TIP hereby designates Steven Flyer and Anthony Pui to serve as
directors.
(c) Section 2(a)(vi), and the last sentence of Section 2(b), of the
Original Agreement (and all references thereto in such agreement) are
hereby deleted.
(d) The amount in Section 3(d)(ii) of the Original Agreement is hereby
changed to $15.0 million and the amount in Section 3(d)(iii) thereof is
hereby changed to $20.0 million.
(e) Section 5(i)(ii) of the Original Agreement is hereby amended by
inserting immediately after the word, "above", therein: "or the transfers
described in the recitals to Amendment No. 1 to this Agreement, dated as of
February 28, 2001".
(f) Sections 8(a), (b) and (c) of the Original Agreement are hereby
restated in their entirety as follows:
(a) Until such time as a Qualified Public Offering shall have
been consummated (subject to the voting rights of directors elected by
the holders of Preferred Stock in accordance with the terms of the
Certificate of Designation), if Preferred Investor Common Stockholders
(such holders being the "Initiators") holding at least 75% of the
fully-diluted shares of Common Stock held by all Preferred Investor
Common Stockholders, assuming full conversion of the Preferred Stock,
propose a sale, merger or other Transfer involving all or
substantially all of the shares or assets of the Company on an arm's
length basis to a third party or an affiliated group of third parties
who is not (i) a Stockholder or (ii) an Affiliate of a Stockholder,
then the remaining Stockholders and their Permitted Transferees (the
"Remaining Stockholders") shall (subject to the voting rights of
directors elected by the holders of Preferred Stock in accordance with
the terms of the Certificate of Designation) consent to and raise no
objection with respect to (and will not exercise statutory appraisal
rights in connection with) such transaction and, if such transaction
is structured as a sale of shares (including a sale structured as a
merger, whether a forward, reverse or other merger), the Remaining
Stockholders will, at the option of the Initiators (subject to the
voting rights of the directors elected by the holders of Preferred
Stock in accordance with the terms of the Certificate of Designation),
agree to sell their shares on the terms and conditions approved by the
Board and the Initiators; provided, however, that (x) subject to the
first proviso to Section 8(c), any options as to the type of
consideration offered to any Initiator must be offered to the
Remaining Stockholders, (y) the consideration offered for any proposed
Transfer must be at least 80% cash or marketable securities and (iii)
there shall be no adverse tax consequences which relate or impact only
the Remaining Stockholders (as distinguished from all Stockholders)
arising from such transaction.
(b) To exercise the drag-along rights provided in this Section 8,
the Company shall first give to the Remaining Stockholders a written
notice (a
-3-
"Drag-Along Notice") containing (i) the name and address of the
proposed transferee and (ii) the proposed purchase price, terms of
payment and other material terms and conditions of the proposed
transferee's offer. The Remaining Stockholders shall, at the option of
the Initiators, thereafter be obligated, subject to the terms and
conditions of this Section 8, to sell to the proposed transferee,
simultaneously with the other Stockholders' sales, its shares.
(c) At the closing of any Transfer of shares pursuant to this
Section 8, the Remaining Stockholders shall enter into agreements with
the purchaser of the shares containing terms substantially similar to
the terms on which the Initiators are Transferring their shares;
provided, however, that the consideration to be received in respect of
the Common Stock and Preferred Stock (i) in the case of a merger or
consolidation of the Company or a transfer of shares, shall be
determined on the basis of the Company's having distributed the
aggregate proceeds to be received by all holders of its capital stock
in such transaction in a liquidation thereof and (ii) in the case of a
sale of assets of the Company, shall be determined on the basis of the
Company having discharged all its remaining liabilities (or having
duly created reserves therefor) and then liquidating; and provided
further that (x) all claims in respect of breaches of representation
and warranties by the Stockholders or the Company (or claims for
indemnification in respect thereof) not described in the immediately
succeeding clause (y)(A) of this proviso (as if such clause applied to
the Initiators as well) shall first be paid by holders of Common Stock
(based on the number of shares of Common Stock Transferred thereby in
such transaction), and, to the extent such claims exceed such
aggregate consideration, by the holders of the Preferred Stock (based
on the number of shares of Preferred Stock Transferred thereby in such
transaction); and (y) notwithstanding anything contained in this
Agreement to the contrary, neither the Remaining Stockholders nor any
of their respective Permitted Transferees shall be required to (A)
make any representations or warranties, or provide indemnification, to
any person (other than representations and related indemnification
regarding the due authorization to enter and to perform the agreement
of sale, the validity and enforceability of the agreement of Transfer,
good title to the shares Transferred, regarding the absence of liens
or encumbrances on the shares so Transferred and as provided in the
immediately succeeding clause (B) of this proviso), and (B) each of
the Remaining Stockholders' liability for breach of any
representations and warranties in respect of the Company will be
several and not joint, will be proportionate to the percentage of the
shares it Transfers, and will be limited to any proceeds received or
receivable by it arising from such Transfer.
(g) (i) Section 17(a) of the Original Agreement (and all references
thereto in such agreement) are hereby deleted. Each Individual Investor
hereby agrees to such amendments, as may be reasonably requested by the
Company, to his employment agreement so as to reflect such deletion.
(ii) The first and second sentences of Section 17(b)(ii) of the
Original Agreement are hereby replaced with the following:
-4-
"If the call right provided for in Section 17(b)(i) is not fully
exercised during the First Call Period, the Stockholders (other than
the terminated Individual Investor and any Affiliated Transferee)
shall have the right and option for 30 days after the First Call
Period (the "Second Call Period") to purchase any or all shares then
held by the terminated Individual Investor and any Affiliated
Transferee not purchased pursuant to Section 17(b)(i), and the
Individual Investor (and any Affiliated Transferee) shall be required
to offer to such Stockholders any or all such shares at a price per
share equal to the applicable purchase price determined to pursuant to
Section 17(b)(iv). Each Stockholder having an option to acquire shares
pursuant to the immediately preceding sentence may elect to acquire up
to all the shares so offered. If the aggregate number of shares
elected to be purchased by the Stockholders exceeds the number of
shares so offered, each Stockholder may first purchase up to his pro
rata portion of the shares so offered (which shall be the percentage
of the shares so offered that is equal to the percentage of
fully-diluted shares held by such Stockholder divided by the
percentage of fully-diluted shares held by all Stockholders electing
to purchase portions of the shares so offered), and the balance of any
shares to be so purchased shall be allocated among Stockholders who
elected to purchase more than such pro rata share in the proportion in
which such pro rata share of each such Stockholder bears to the
others."
(iii) (x) The phrase, "Preferred Investor Common", in the last
sentence of Section 17(b)(ii) of the Original Agreement is hereby deleted,
(y) the reference in such sentence to "the preceding sentence" is hereby
changed to "the first sentence" and (z) the reference in such sentence and
in Section 17(b)(iii) of the Original Agreement to "Third Call Period" and
"Fourth Call Period" is hereby changed to "Second Call Period" and "Third
Call Period", respectively.
(iv) (x) The second sentence of Section 17(b)(iii) of the Original
Agreement (and all references thereto in such agreement) are hereby
deleted; and (y) the phrase, "Preferred Investor Common", in the last
sentence of Section 17(b)(iii) of the Original Agreement is hereby deleted
in each instance.
(h) The following is hereby added as a new Section 3A to the Original
Agreement:
"Without the affirmative vote (or written consent) of (A) Individual
Investors (and their Permitted Transferees) holding a majority of
shares of Common Stock held by all Individual investors (and their
Permitted Transferee) or (B) all members of the Board, the Company
shall not:
(a) (nor shall it permit any of its Subsidiaries to) engage in
any transaction with any Affiliate of the Company that is a Preferred
Investor Common Stockholder (or an Affiliate thereof) (i) that is not
fair from a financial point of view to the Company and its
Subsidiaries or (ii) which, either alone or together with a series of
related transactions involving such Persons, involves amounts having a
fair market value in excess of $5 mil-
-5-
lion without having obtained an opinion of an Independent Financial
Expert (as defined in the Contingent Warrant Agreement) that the terms
of such transaction are fair to the Company and its Subsidiaries from
a financial point of view;
(b) amend its Certificate of Incorporation or By-Laws in a manner
that is designed to affect an Individual Investor in a materially
different manner from the manner in which such amendment affects other
holders of Common Stock who are not Individual Investors or their
Permitted Transferees; provided that this Section 3A shall not apply
to any transaction or amendment made in connection with a transaction
subject to Section 8."
(i) The following is hereby added as new Section 3B to the Original
Agreement:
(a) "(a) Without the prior consent of the Company (which consent
may be given or withheld for any reason, whether reasonable or
unreasonable), no Individual Investor, while employed by the Company
or any Subsidiary of the Company, shall (nor shall he permit any of
his Related Persons or any Affiliates of him or of such Related
Persons to) enter into any agreement or understanding with respect to
the acquisition or other purchase of any direct or indirect ownership
interest (other than less than 1% of a class of publicly traded
securities) in any business that is competitive with the Company or
any of its Subsidiaries (i) until 20 business days after the date on
which the Company and the Board received the written request
contemplated by Section 3B(b) in respect of any such acquisition or
purchase; and (ii) at any time after the Board rejects such request
(as evidenced by a notice given to the Individual Investor making such
request (as contemplated by Section 3B(b)) from the Company to such
effect no later than the end of such 20 business day period.
(b) (b) Any Individual Investor may bring to the attention of the
Board any transaction described in Section 3B(a) of the immediately
preceding sentence. If the Board elects not to pursue such
transaction, such Individual Investor may request in writing that the
Board permit him to pursue the same, in which event the Board shall
consider such request; provided that the Board shall be under no
obligation to grant such request and may deny the same for any reason,
whether reasonable or unreasonable."
(j) The following proviso is hereby added to the definition of "fully
diluted" in Section 20 of the Original Agreement:
"provided that Contingent Warrants shall only be included to the extent
they are exercisable at the time of determination".
(k) The following definitions are hereby added to Section 20 of the
Original Agreement:
-6-
""Contingent Warrants" shall have the meaning ascribed to such term in the
second recital to Amendment No. 1 to this Agreement, dated as of February 28,
2001.
"Conversion Contingent Warrants" shall have the meaning ascribed to such
term in the second recital to Amendment No. 1 to this Agreement, dated as of
February 28, 2001.
"Initiators" shall have the meaning ascribed to such term in Section 8(a)
of this Agreement, as amended by Amendment No. 1 to this Agreement, dated as of
February 28, 2001.
"New Equity Contingent Warrants" shall have the meaning ascribed to such
term in the first recital to Amendment No. 1 to this Agreement, dated as of
February 28, 2001.
"Santomero" shall have the meaning ascribed to such term in the second
recital to Amendment No. 1 to this Agreement, dated as of February 28, 2001.
"TIP" shall have the meaning ascribed to such term in the first recital to
Amendment No. 1 to this Agreement, dated as of February 28, 2001.
"Warrants" shall have the meaning ascribed to such term in the first
recital to Amendment No. 1 to this Agreement, dated as of February 28, 2001."
(l) The following is hereby added to the end of Section 21 (a) of the
Original Agreement:
"Notwithstanding the foregoing, the Company shall enter into such
amendments to this Agreement such that each Person acquiring shares of
Common Stock upon exercise of the Conversion Option, the Warrants or
the Contingent Warrants shall become a party to this Agreement and
that such Person shall, for purposes of this Agreement (in respect of
such shares), be (x) a Preferred Investor Common Stockholder, if the
initial holder of the portion of the Conversion Option or the initial
holder of the Warrants or Contingent Warrants, as the case may be, in
respect of the exercise of which such shares were acquired by such
Person was a Preferred Investor Common Stockholder, or (y) an
Individual Investor, if the initial holder of the portion of the
Conversion Option or the initial holder of the Warrants or Contingent
Warrants, as the case may be, in respect of the exercise of which such
shares were acquired by such Person was an Individual Investor."
3. (a) Each Individual Investor agrees to such amendments, as may be
reasonably requested by the Company, to his employment agreement so as to
provide that this Amendment and the transactions contemplated hereby do not
constitute a Change of Control.
(b) The parties hereto hereby agree to use their respective reasonable
commercial efforts to make such amendments to all other agreements and
documentation in respect of the Company to effectuate the amendments to the
Original Agreement herein contemplated.
-7-
4. At the Closing Time (as defined in the Purchase Agreement, dated as of
February 20, 2001, by and among the Company and the purchasers named therein),
the Company, Thomas M. Begel, Timothy A. Masek, Kenneth M. Tallering, John
Wilkinson and Andrew M. Weller shall execute and deliver to each other a letter
substantially in the form attached as Exhibit A hereto.
5. Except as provided in Section 2 of this Amendment, the Original
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on the
day and year first above written.
PREFERRED INVESTORS
CARAVELLE INVESTMENT FUND L L C
By: Caravelle Advisors, L.L.C.,
its investment manager and attorney-in-fact
By: /s/ Jason Block
---------------------------------------------
Name:
Title:
TRANSPORTATION INVESTMENT PARTNERS L.L.C.
By: /s/ Dean C. Kehler
-------------------------------------------
Name:
Title:
/s/ Thomas M. Begel
---------------------------------
Thomas M. Begel
/s/ Timothy A. Masek
---------------------------------
Timothy A. Masek
/s/ Kenneth M. Tallering
---------------------------------
Kenneth M. Tallering
/s/ Andrew M. Weller
---------------------------------
Andrew M. Weller
/s/ James D. Cirar
---------------------------------
James D. Cirar
/s/ Camillo M. Santomero III
---------------------------------
Camillo M. Santomero III
/s/ John Wilkinson
---------------------------------
John Wilkinson
/s/ Robert L. Jackson
---------------------------------
Robert L. Jackson
/s/ Donald C. Mueller
---------------------------------
Donald C. Mueller
/s/ Lee Swafford
---------------------------------
Lee Swafford
/s/ Kelly Bodway
---------------------------------
Kelly Bodway
/s/ David W. Riesmeyer
---------------------------------
David W. Riesmeyer
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/s/ Brent Williams
---------------------------------
Brent Williams
/s/ Jeffrey Elmer
---------------------------------
Jeffrey Elmer
/s/ Adam Gottlieb
---------------------------------
Adam Gottlieb
-11-
C+H ENTERPRISES GROUP, INC.
By: /s/ Fred Culbreath
-----------------------------------------
Name: Fred Culbreath
Title: Partner
-12-
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
By: /s/ Donald C. Mueller
-----------------------------------------
Name: Donald C. Mueller
Title: Chief Financial Officer,
Treasurer and Vice President
-13-
Exhibit 4.6
AMENDMENT NO.2 TO STOCKHOLDERS' AGREEMENT
This Amendment No. 2, dated as of December 19, 2003 (this "Amendment"), to
the Stockholders' Agreement (the "Original Agreement"), dated as of March 9,
2000, as amended by Amendment No. 1 thereto ("Amendment No. 1," collectively,
the "Stockholders' Agreement"), dated as of February 28, 2001, by and among
Transportation Investment Partners, LLC ("TIP"), a Delaware limited liability
company, Caravelle Investment Fund, L.L.C., a Delaware limited liability company
("Caravelle"), Albion Alliance Mezzanine Fund, L.P., a Delaware limited
partnership ("Albion"), Albion Alliance Mezzanine Fund II, L.P., a Delaware
limited partnership ("Albion II" and, together with TIP, Caravelle, and Albion
I, the "Preferred Investors" and, solely in their capacity as holders of shares
of Common Stock (and together with any of their Affiliates or Associated
Entities or Managed Funds that have or may become transferees of any Common
Stock held by them), the "Preferred Investor Common Stockholders"),
Transportation Technologies Industries, Inc., a Delaware corporation and the
surviving corporation in the Merger (the "Company"), and the persons listed on
Exhibit A attached hereto who are signatories to such agreement (the "Individual
Investors" and, together with the Preferred Investor Common Stockholders, the
"Stockholders"), is entered into by and among the Preferred Investor Common
Stockholders and the Individual Investors. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed thereto in the
Original Agreement.
RECITALS
WHEREAS, the Company is undertaking the following actions: (i) the filing
of certificates of designation to create the Series C Preferred Stock, par value
$0.01 per share, of the Company (the "Series C Preferred Stock"), Series D
Preferred Stock, par value $0.01 per share, of the Company (the "Series D
Preferred Stock"), and Series E Senior Preferred Stock, par value $0.01 per
share, of the Company (the "Series E Preferred Stock"), (ii) the exchange
between certain Individual Investors, the Company and certain Stockholders of
80,233 shares of common stock of the Company for 14,000 shares of Series C
Preferred Stock, (iii) the issuance of 42,000 shares of Series D Preferred Stock
to the holders of the Company's common stock (other than certain Individual
Investors) for a purchase price of $4,200, (iv) the issuance of up to 40,575
shares of Series E Preferred Stock in exchange for $40,000,000 in principal
amount of subordinated debt and up to $575,000 in accrued PIK interest thereon,
(v) the issuance of up to 1,000 shares of Series E Preferred Stock for a
purchase price of $1,000,000, the proceeds of which shall prepay up to
$1,000,000 in accrued and unpaid cash interest on the subordinated debt and the
remainder, if any, shall pay a portion of the fees and expenses incurred in
connection with the transactions described in clauses (i), (ii), (iii) and (iv)
above and this clause (v), (vi) the payment of up to $2,250,000 in cash in
respect of the portion of the transaction costs not paid with the proceeds of
the Series E Preferred Stock described in clause (v) above, and (vii) the
Company shall have the option to issue additional shares of Series E Preferred
Stock in connection with the other transactions described in clauses (i) through
(vi) above resulting in additional proceeds not to exceed $4,000,000
(collectively, the "Transactions");
WHEREAS, in connection with the Transactions, the Stockholders and the
Company wish to amend the Stockholders' Agreement to provide, among other
things, for the application of certain provisions of the Stockholders' Agreement
to shares issued in the Transactions
and for the joinder of certain individuals acquiring shares issued in the
Transactions as parties to the Stockholders' Agreement;
WHEREAS, the Stockholders and the Company wish to amend the Stockholders'
Agreement to provide, among other things, for the treatment of the Series A
Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock and
the Common Stock in a Total Sale and Series A Total Sale (each as defined
herein);
WHEREAS, pursuant to Section 18(b) of the Stockholders' Agreement, if at
any time the Company proposes to sell shares, subject to certain exceptions, in
a private or a similar non-public placement, the Company shall offer to sell
such shares to the Stockholders, who shall have the right to purchase a certain
amount of such shares, such rights comprising the "Preemptive Rights"; and
WHEREAS, the Stockholders wish to (i) waive the Preemptive Rights with
respect to the issuance of shares pursuant to the Transactions, (ii) waive the
provisions of Section 5 (Transfer of Common Stock), Section 6 (Right of First
Offer) and Section 7 (Tag-Along Rights) of the Stockholders' Agreement with
respect to the transactions contemplated by the Transactions (the "Transfer
Restrictions") and (iii) consent to the Transactions.
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants and obligations
set forth in this Amendment, the receipt and sufficiency of which are
acknowledged by each of the parties hereto, effective as of the date hereof
(except as provided herein), the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Representations and Warranties. Each party hereto represents and
warrants that (a) this Amendment has been duly authorized, executed and
delivered by such party and constitutes the valid and binding obligation of such
party, enforceable against such party in accordance with its terms, and (b) such
party has not granted and is not a party to any proxy, voting trust or other
agreement which conflicts with or violates any provision of the Stockholders'
Agreement, as amended by this Amendment. No party to this Amendment shall grant
any proxy or become party to any voting trust or other agreement which conflicts
with or violates any provision of the Stockholders' Agreement, as amended by
this Amendment.
2. Amendments to Stockholders' Agreement. The Stockholders' Agreement is
hereby amended as follows:
(a) The heading to Section 5 and the entirety of Sections 5(a) and (b)
are hereby replaced with the following:
"5. Transfer of Common Stock, Series C Preferred Stock, Series E
Preferred Stock and Special Warrants held by Individual Investors.
(a) None of the shares of Common Stock, Series C Preferred
Stock, Series E Preferred Stock or Special Warrants held by any
Individual Investor or his Permitted Transferees may be
Transferred except in ac-
-2-
cordance with this Agreement. Any attempted Transfer of shares of
Common Stock, Series C Preferred Stock, Series E Preferred Stock
or Special Warrants other than in accordance with the terms of
this Agreement shall be null and void and the Company shall
refuse to recognize any such Transfer and shall not reflect on
its records any change in record ownership of such securities.
Notwithstanding anything contained in this Section 5(a) or
Section 5(b) to the contrary, but subject to the other provisions
of this Section 5, each Individual Investor (and the Permitted
Transferees thereof) shall be permitted to Transfer its shares of
Common Stock (and, in the case of Section 17, its Series C
Preferred Stock, Series E Preferred Stock and Special Warrants)
in accordance with the applicable provisions of Section 6 (Right
of First Offer), Section 7 (Tag-Along Rights), Section 8
(Drag-Along Rights), Section 8A (Total Sale Event), Section 8B
(Total Sale of Series A Preferred Stock) and Section 17 (Call
Rights).
(b) The shares of Common Stock, Series C Preferred Stock,
Series E Preferred and Special Warrants, in each case held by the
Individual Investors from and after the date of this Agreement,
shall not be Transferable until the earlier to occur of (i) the
fifth anniversary of the Effective Time (or, with respect to the
Series E Preferred Stock, a proportionate number of shares of
Series E Preferred Stock, based on amounts owned on the date
hereof, to that sold in earlier sales of Series E Preferred Stock
by Preferred Investor Common Stockholders or their respective
Affiliates, other than sales from them to their Affiliates or
from their Affiliates to them or their other Affiliates) or (ii)
the consummation of a Qualified Public Offering, in each case
held by the Individual Investors from and after the date of this
Agreement shall not be Transferable, except as follows:
(1) each of Camillo M. Santomero II, Begel, Andrew M.
Weller and James D. Cirar (collectively, the "Named
Investors") may Transfer such securities among themselves;
(2) each of the Named Investors may Transfer, in one or
a series of transactions, in the aggregate up to 5% of the
fully-diluted shares of Common Stock (either through the
Transfer of Common Stock or Special Warrants) and up to 5%
of the Series C Preferred Stock and up to 5% of the Series E
Preferred Stock, in each case held by such Named Investor on
the date of Amendment No. 2 to this Agreement to other
Individual Investors or to new persons who become members of
management of the Company after the Effective Time ("New
Management");
(3) each Individual Investor as of the date of
Amendment No. 2 to this Agreement (other than the Named
Investors) may Transfer such securities to any other
Individual Investor or to New Management;
-3-
(4) each Individual investor which is not an individual
may Transfer such securities to an Affiliate that is wholly
owned by one or more of such Individual Investors and its
Related Persons; and
(5) each Individual Investor may Transfer such
securities to a Related Person of such Individual Investor,
or a trust or similar entity which is controlled by such
Individual Investor and is established entirely for the
benefit of such Individual Investor or his Related Persons,
or an individual retirement account or pension plan for the
Individual Investor's benefit (each Individual Investor
agrees to provide the Company and each other Stockholder,
upon request, with evidence reasonably acceptable to it that
each such Transfer complies with this clause (5)).
The transferee in each of the Transfers described in clauses (1) through
(5) above (to the extent such Transfer is made pursuant to one of such clauses)
is herein referred to as a "Permitted Transferee."
(b) Sections 5(e) and (f) are hereby replaced with:
"(e) Prior to the earlier to occur of (i) the fifth anniversary
of the Effective Time and (ii) the consummation of a Qualified Public
Offering, each certificate representing shares of Common Stock, Series
C Preferred Stock, Series E Preferred Stock or Special Warrants held
by an Individual Investor shall contain upon its face or upon the
reverse side thereof the following legend:
This certificate represents securities which are restricted and
which are subject to the terms and conditions of a Stockholders'
Agreement, dated as of March 9, 2000, as amended on February 28,
2001 and December 19, 2003, by and among the stockholders and
certain security holders of Transportation Technologies
Industries, Inc. (a copy of which is on file at the principal
office of Transportation Technologies Industries, Inc.). No sale,
transfer, assignment, pledge, hypothecation or other disposition
of this certificate or any of the interests or securities
represented hereby shall be made except in compliance with the
terms and conditions of said Agreement.
(f) Each certificate representing shares of Common Stock, Series
C Preferred Stock, Series E Preferred Stock and Special Warrants held
by a Stockholder shall contain upon its face or upon the reverse side
thereof the following additional legend:
The Securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, and must
be held indefinitely unless they are transferred pursuant to an
effective registration statement under the Act, or after receipt
of an opinion of counsel satisfactory to
-4-
Transportation Technologies Industries, Inc. that registration is
not required or an appropriate no-action letter is received from
the Securities and Exchange Commission."
(c) The first paragraph of Section 5(h) is hereby replaced with:
"(h) Each Stockholder agrees that, prior to any proposed Transfer
of any shares of Common Stock, and each Individual Investor agrees
that, prior to any proposed Transfer of any shares of Series C
Preferred Stock, Series E Preferred Stock or Special Warrants (other
than, in each case, a Transfer not involving a change in beneficial
ownership), unless there is in effect a registration statement under
the Securities Act covering the proposed Transfer, the Stockholder
shall give written notice to the Company of such holder's intention to
effect such Transfer. Each such notice shall describe the manner and
circumstances of the proposed Transfer in reasonable detail, and, if
requested by the Company, shall be accompanied, at such Stockholder's
expense, by either (i) a written opinion of legal counsel who shall
be, and whose legal opinion shall be, reasonably satisfactory to the
Company, addressed to the Company, to the effect that the proposed
Transfer of such securities may be effected without registration under
the Securities Act, or (ii) a "no action" letter from the Securities
and Exchange Commission (the "Commission") to the effect that the
Transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken
with respect thereto, whereupon the holder of such securities shall be
entitled to transfer such securities in accordance with the terms of
the notice delivered by such Stockholder to the Company, and in
accordance with the other provisions of this Agreement. Each
certificate evidencing such securities transferred as above shall
bear, except if such Transfer is made pursuant to an effective
registration statement under the Securities Act covering such shares,
or under Rule 144 under the Securities Act, the appropriate
restrictive legends set forth in this Section 5 except that such
certificate shall not bear such restrictive legends if, in the opinion
of counsel for such Stockholder and the Company, such legend is not
required in order to establish compliance with any provision of the
Securities Act. Notwithstanding the foregoing, each Stockholder agrees
that it will not request that a Transfer of such securities be made
(or that the appropriate restrictive legends set forth in this Section
5 be removed from the certificate evidencing shares of Capital Stock)
solely in reliance on Rule 144K under the Securities Act, if as a
result of such proposed transfer the Company would be rendered subject
to the reporting requirements of the Exchange Act.
(d) The following is hereby added as a new Section 5(k): "(k)
References in this Section 5 to Common Stock, Series C Preferred Stock,
Series E Preferred Stock and Special Warrants shall include any acquired
after the Effective Date."
(e) The phrase, "of Common Stock" is hereby inserted immediately after
the word, "share", in the twelfth line of Section 7(a).
-5-
(f) The following is hereby added as a new Section 8(e): "(e) All
references to shares herein shall include all shares of Common Stock
acquired after the Effective Date and Special Warrants."
(g) The following is hereby added as a new Section 8A:
"Section 8A. Total Sale Event.
(a) Until such time as a Valuation Event (as defined in the
Series C Certificate of Designation) occurs or an IPO (as defined in
the Series C Certificate of Designation) is consummated, if the
Preferred Investor Common Stockholders (the "Consenting Stockholders")
approve a sale, merger or other Transfer involving (i) at least 50% of
the outstanding series A Preferred Stock and at least 50% of the then
outstanding Common Stock (including shares of Common Stock issuable
upon the exercise of all options, warrants and other rights to acquire
such shares then exercisable or which become exercisable in connection
with such event) and in which, if applicable, the Company complies
with its obligations pursuant to paragraph (g) of the Series A
Certificate of Designation, or (ii) all or substantially all of the
assets of the Company to be followed by a liquidation, dissolution or
winding up of the Company, to a person or affiliated group of persons
who is not (A) a Stockholder or (B) an Affiliate of a Stockholder
(such an event, a "Total Sale"), then all other Stockholders (the
"Remaining Stockholders") shall consent to and raise no objection with
respect to (and not exercise statutory appraisal rights in connection
with) such transaction and, if such transaction is structured as a
sale of shares (including a sale structured as a merger, whether a
forward, reverse or other merger), the Remaining Stockholders will
agree to sell all of their Series C Preferred Stock and Series D
Preferred Stock and an equivalent percentage of their Common Stock to
that being transferred by the Consenting Stockholders on the terms and
conditions approved by the Board and the Consenting Stockholders
consistent with the provisions of this Section 8A. The Company,
instead of the purchaser, may acquire the Series C Preferred Stock and
Series D Preferred Stock otherwise to be transferred in a Total Sale
for the same consideration as the purchaser would have paid therefor
after applying the provisions of this Section 8A, and the holders of
such securities shall sell them to the Company in such event. If a
purchaser other than the Company (or its Subsidiaries) acquires such
shares in a Total Sale, the Company shall, promptly after the Total
Sale, redeem such shares (subject to compliance with Section 10 of the
Series C Certificate of Designation). The provisions of Section 6
(Right of First Offer), Section 7 (Tag-Along Rights), Section 8
(Drag-Along Rights) and Section 8B (Total Sale of Series A Preferred
Stock) shall not apply to Transfers in. connection with a Total Sale.
(b) The aggregate consideration (including, without duplication,
any Redemption Proceeds payable in connection with such transaction)
received in the Total Sale in respect of the aforementioned securities
shall be allocated among and be receivable by the Stockholders
transferring shares in the Total Sale (in-
-6-
cluding any Stockholder from whom shares of Series A Preferred Stock
are to be redeemed in connection with such transaction) in the
following order and priority:
(i) first, the holders of shares of Series A Preferred Stock and
Series C Preferred Stock shall be entitled to receive, pro rata,
out of such aggregate consideration an amount equal to the Series
A Preferred Accreted Value in respect of the Series A Preferred
Stock to be sold or transferred in connection with such
transaction (including, without duplication, shares of Series A
Preferred Stock to be redeemed in connection with such
transaction) and the Maximum Series C Liquidation Value,
respectively, before any payment shall be made to the holders of
securities ranking on liquidation junior to the Series A
Preferred Stock and Series C Preferred Stock; provided, that if
the aggregate consideration (which shall be valued, at such time,
by the Board) is less than the sum of the Series A Preferred
Accreted Value in respect of the Series A Preferred Stock to be
transferred in connection with such transaction (including,
without duplication, shares of Series A Preferred Stock to be
redeemed in connection with such transaction) and the Maximum
Series C Liquidation Value, the holders of Series A Preferred
Stock to be sold shall be entitled to receive, pro rata, based on
the amount of shares to be so transferred, an amount equal to
such aggregate consideration less the Adjusted Series C
Liquidation Value, and such Adjusted Series C Liquidation Value
shall be distributed, pro rata, to the holders of Series C
Preferred Stock;
(ii) second, after and subject to the payment of all preferential
amounts required to be paid to the holders of Series A Preferred
Stock and Series C Preferred Stock pursuant to clause (i), the
holders of the Series D Preferred Stock shall be entitled to
receive, pro rata, out of such consideration (which shall be
valued, at such time, by the Board) an amount equal to the
Maximum Series D Liquidation Value (or, if less, all remaining
consideration); and
(iii) third, after and subject to the payment of all preferential
amounts required to be paid to the holders of Series A Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock
pursuant to clauses (i) and (ii), the holders of Common Stock
shall be entitled to receive, pro rata, the remaining
consideration.
(c) At the closing of any sale, merger or other Transfer of
shares pursuant to this Section 8A, the Remaining Stockholders shall
enter into agreements with the purchaser of the shares containing
terms substantially similar to the terms on which the Consenting
Stockholders are Transferring their shares; provided, that no
Stockholder shall be required to enter into any non-competition or
non-solicitation provisions (although any existing non-competition and
non-solicitation provisions shall not be affected by this proviso);
provided, further, however, that (x) all claims in respect of breaches
of representation and warranties by the Stockholders or the Company
(or claims for indemnification in respect
-7-
thereof) not described in the parenthetical clause in the immediately
succeeding clause (y)(A) of this proviso (as if such clause applied to
the Consenting Stockholders as well) shall first be paid by holders of
Common Stock (based on the number of shares of Common Stock
Transferred thereby in such transaction), and, to the extent such
claims exceed such aggregate consideration (valued as determined in
agreements with the acquiror) received by the holders of Common Stock,
by the holders of the Series D Preferred Stock (based on the number of
shares of Series D Preferred Stock Transferred thereby in such
transaction), and, to the extent such claims exceed such aggregate
consideration (valued as determined in agreements with the acquiror)
received by the holders of Series D Preferred Stock, by the holders of
the Series A Preferred Stock and Series C Preferred Stock (based on
the amount by which such holder's consideration would be reduced after
recalculating amounts to be distributed pursuant to Section 8A(b)(i)
in light of required indemnification payments); and (y)
notwithstanding anything contained in this Agreement to the contrary,
except clause (y)(B) of this proviso, neither the Remaining
Stockholders nor any of their respective Permitted Transferees shall
be required to (A) make any representations or warranties, or provide
indemnification, to any person (other than representations and related
indemnification regarding the due authorization to enter and to
perform the agreement of sale, the validity and enforceability of the
agreement of Transfer, good title to the shares Transferred, regarding
the absence of liens or encumbrances on the shares so Transferred) and
(B) each of the Remaining Stockholders' liability for breach of any
representations and warranties in respect of the Company will be
several and not joint with respect to each class or series of Capital
Stock's liability as set forth in clause (x) of this proviso and will
be proportionate to the percentage of such shares it Transfers in such
class or series, and will be limited to any proceeds received by it
arising from such Transfer.
(d) The types of consideration received in the Total Sale shall
be distributed as follows:
(i) to the extent the consideration received in respect of the Total
Sale consists of cash, (A) the holders of Series A Preferred
Stock transferring shares in the Total Sale and the holders of
the Series C Preferred Stock shall be entitled to receive the
amounts such holders are entitled to receive pursuant to Section
8A(b)(i) in cash (allocated among such holders such that an
amount of cash equal to the excess of $70 million over the
Redemption Proceeds as of the time of such event is first paid in
respect of the shares of Series A Preferred Stock being so
transferred and then the balance of such cash is paid in respect
of such shares of Series A Preferred Stock and the Series C
Preferred Stock so that, to the nearest extent possible, the
aggregate of cash so allocated pursuant to this clause (A) is in
proportion to the respective amounts the holders of such shares
are to receive pursuant to Section 8A(b)(i)), (B) the holders of
Series D Preferred Stock shall be entitled to receive the amounts
such holders are entitled to receive pursuant to Section
8A(b)(ii), pro rata, in cash to the extent of any cash remaining
after payments of cash to the holders of Series A Preferred
-8-
Stock and Series C Preferred Stock, and (C) the holders of Common
Stock transferring shares in such Total Sale shall be entitled to
receive, pro rata, the remaining cash consideration after
payments of cash to the holders of Series A Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock;
(ii) to the extent the consideration received in respect of the Total
Sale consists of Publicly Traded Securities (which Publicly
Traded Securities, for all purposes of this Section 8A, shall be
valued at the time of the Total Sale by the Board), (A) the
holders of Series A Preferred Stock transferring shares in such
Total Sale and the holders of the Series C Preferred Stock shall
be entitled to receive the remaining amounts such holders are
entitled to receive pursuant to Section 8A(b)(i) (taking into
account the aggregate of cash allocated thereto pursuant to
Section 8A(d)(i)(A)) in Publicly Traded Securities (allocated
among such holders such that an amount of such Publicly Traded
Securities equal to the excess of $70 million over the sum of
aggregate Redemption Proceeds as of such time and the amount of
cash allocated to the holders of Series A Preferred Stock
pursuant to Section 8A(d)(i)(A) is delivered in respect of the
shares of Series A Preferred Stock being so transferred and then
the balance of such Publicly Traded Securities is delivered in
respect of such Series A Preferred Stock and the Series C
Preferred Stock so that, to the nearest extent possible, the
aggregate of cash allocated thereto pursuant to Section
8A(d)(i)(A) and Publicly Traded Securities allocated pursuant to
this Section 8A(d)(ii)(A) is in proportion to the respective
amounts the holders of such shares are to receive pursuant to
Section 8A(b)(i)), (B) the holders of Series D Preferred Stock
shall be entitled to receive the remaining amounts such holders
are entitled to receive pursuant to Section 8A(b)(ii) (taking
into account the aggregate of cash allocated thereto pursuant to
Section 8A(d)(i)(B)) in Publicly Traded Securities, pro rata, to
the extent of any Publicly Traded Securities remaining after
payments of Publicly Traded Securities to the holders of Series A
Preferred Stock and Series C Preferred Stock, and (C) the holders
of Common Stock transferring shares in such Total Sale shall be
entitled to receive, pro rata, the remaining Publicly Traded
Securities after payments of cash to the holders of Series A
Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock; and
(iii) to the extent the consideration received in respect of the Total
Sale consists of anything other than cash or Publicly Traded
Securities (which other consideration, for all purposes of this
Section 8A, shall be valued at the time of the Total Sale by the
Board), (A) the holders of Series A Preferred Stock transferring
shares in such sale and the holders of the Series C Preferred
Stock shall be entitled to receive the remaining amounts such
holders are entitled to receive pursuant to Section 8A(b)(i)
(taking into account the aggregate of cash and Publicly Traded
Securities allocated thereto pursuant to Section 8A(d)(i)(A) and
(ii)(A)) in such other consid-
-9-
eration received in the Total Sale (allocated among such holders
pro rata based upon the amounts such holders are entitled to
receive pursuant to Section 8A(b)(i) (after giving effect to
Section 8A(d)(i)(A) and (ii)(A)), (B) the holders of Series D
Preferred Stock shall be entitled to receive, pro rata, the
remaining amounts such holders are entitled to receive pursuant
to Section 8A(b)(ii) (after giving effect to Section 8A(d)(i)(B)
and (ii)(B)) in such other consideration to the extent of any
such other consideration remaining after payments of such other
consideration to the holders of Series A Preferred Stock and
Series C Preferred Stock, and (C) the holders of Common Stock
transferring shares in such sale shall be entitled to receive,
pro rata, the remaining other consideration after payments of
cash to the holders of Series A Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock;
provided, however, that the types of consideration shall be
reallocated among the Stockholders in accordance with the foregoing to
reflect any change in the amount or types of consideration as a result
of consideration held in escrow, released from escrow or paid in
respect of breaches of representations or warranties or
indemnification to the extent necessary to give full effect to the
foregoing; provided further, that the Board may elect to pay cash
instead of any non-cash consideration (based on the value of such
non-cash consideration as so determined by the Board of Directors)
otherwise so payable in respect of any share of the Capital Stock, if
it concludes that paying such non-cash consideration to such holder
may create regulatory or compliance burdens on the part of the Company
or any other participant in the transaction giving rise to such
redemption event or is otherwise unable to pay such non-cash
consideration."
(h) The following is hereby added as a new Section 8B:
"Section 8B. Total Sale of Series A Preferred Stock.
(a) Until such time as a Valuation Event (as defined in the
Series C Certificate of Designation) occurs or an IPO (as defined
in the Series C Certificate of Designation) is consummated, if
the Preferred Investor Common Stockholders (the "Consenting
Stockholders") approve a sale, merger or other Transfer involving
at least 100% of the outstanding Series A Preferred Stock to a
person or affiliated group of persons who is not (A) a
Stockholder or (B) an Affiliate of a Stockholder, and in which
TIP transfers to such person or group the right to elect at least
3 of the 5 directors that TIP is entitled to elect as of the date
hereof (such an event, a "Series A Total Sale"), then all other
Stockholders (the "Remaining Stockholders") shall consent to and
raise no objection with respect to (and not exercise statutory
appraisal rights in connection with) such transaction and, the
Remaining Stockholders will have the right to, and, to the extent
so elected by the holders of a majority of the Series C Preferred
pursuant to the following sentence, shall agree to, sell all of
their Series C Preferred Stock on the terms and conditions
approved by the Board and the Consenting Stockholders consistent
with the provisions of this Section 8B. If the Remaining
Stockholders holding a majority of the shares of Series C
Preferred Stock wish to sell such shares in the Series A
-10-
Total Sale, such Remaining Stockholders must provide notice
thereof to the Consenting Stockholders within 10 days after
notice of such an event from the Consenting Stockholders. The
Company, instead of the purchaser, may acquire the Series C
Preferred Stock otherwise to be transferred in a Series A Total
Sale for the same consideration as the purchaser would have paid
therefor after applying the provisions of this Section 8B, and
the holders of such securities shall sell them to the Company in
such event. If a purchaser other than the Company (or its
Subsidiaries) acquires such shares in a Series A Total Sale, the
Company shall, promptly after such Series A Total Sale, redeem
such shares (subject to compliance with Section 10 of the Series
C Certificate of Designation). The provisions of Section 6 (Right
of First Offer), Section 7 (Tag-Along Rights) and Section 8
(Drag-Along Rights) shall not apply to Transfers in connection
with a Series A Total Sale.
(b) The aggregate consideration (including, without
duplication, any Redemption Proceeds payable in connection with
such transaction) received in the Series A Total Sale in respect
of the aforementioned securities shall be allocated among and be
receivable by the Stockholders transferring shares in the Series
A Total Sale (including any Stockholder from whom shares of
Series A Preferred Stock are to be redeemed in connection with
such transaction) in the following order and priority:
(i) first, the holders of shares of Series A Preferred Stock and
Series C Preferred Stock shall be entitled to receive, pro
rata, out of such consideration an amount equal to the
Series A Preferred Accreted Value in respect of the Series A
Preferred Stock to be sold or transferred in connection with
such transaction (including, without duplication, shares of
Series A Preferred Stock to be redeemed in connection with
such transaction) and the Maximum Series C Liquidation
Value, respectively, before any payment shall be made to the
holders of securities ranking on liquidation junior to the
Series A Preferred Stock and Series C Preferred Stock;
provided, that if the aggregate consideration (which shall
be valued, at such time, by the Board) is less than the sum
of the Series A Preferred Accreted Value in respect of the
Series A Preferred Stock to be transferred in connection
with such transaction (including, without duplication,
shares of Series A Preferred Stock to be redeemed in
connection with such transaction) and the Maximum Series C
Liquidation Value, the holders of Series A Preferred Stock
to be sold shall be entitled to receive, pro rata, based on
the amount of shares to be so transferred, an amount equal
to such aggregate consideration less the Adjusted Series C
Liquidation Value, and such Adjusted Series C Liquidation
Value shall be distributed, pro rata, to the holders of
Series C Preferred Stock;
(ii) second, after and subject to the payment of all preferential
amounts required to be paid to the holders of Series A
Preferred Stock and Series C Preferred Stock pursuant to
clause (i), the holders of the Series A Preferred Stock
shall be entitled to receive the remaining consideration.
-11-
(c) At the closing of any sale, merger or other Transfer of
shares pursuant to this Section 8B, the Remaining Stockholders
shall enter into agreements with the purchaser of the shares
containing terms substantially similar to the terms on which the
Consenting Stockholders are Transferring their shares; provided,
that no Stockholder shall be required to enter into any
non-competition or non-solicitation provisions (although any
existing non-competition and non-solicitation provisions shall
not be affected by this proviso); provided, further, however,
that (x) all claims in respect of breaches of representation and
warranties by the Stockholders or the Company (or claims for
indemnification in respect thereof) not described in the
parenthetical clause in the immediately succeeding clause (y)(A)
of this proviso (as if such clause applied to the Consenting
Stockholders as well) shall first be paid by the holders of the
Series A Preferred Stock and Series C Preferred Stock (based on
the amount by which such holder's consideration would be reduced
after recalculating amounts to be distributed pursuant to Section
8B(b)(i) or (ii) in light of required indemnification payments);
and (y) notwithstanding anything contained in this Agreement to
the contrary, except clause (y)(B) of this proviso, neither the
Remaining Stockholders nor any of their respective Permitted
Transferees shall be required to (A) make any representations or
warranties, or provide indemnification, to any person (other than
representations and related indemnification regarding the due
authorization to enter and to perform the agreement of sale, the
validity and enforceability of the agreement of Transfer, good
title to the shares Transferred, regarding the absence of liens
or encumbrances on the shares so Transferred), and (B) each of
the Remaining Stockholders' liability for breach of any
representations and warranties in respect of the Company will be
several and not joint, and will be limited to any proceeds
received or receivable by it arising from such Transfer.
(d) The types of consideration received in the Series A
Total Sale shall be distributed as follows:
(i) to the extent the consideration received in respect of the
Series A Total Sale consists of cash, (A) the holders of
Series A Preferred Stock and the holders of the Series C
Preferred Stock shall be entitled to receive the amounts
such holders are entitled to receive pursuant to Section
8B(b)(i) in cash (allocated among such holders such that an
amount of cash equal to the excess of $70 million over the
Redemption Proceeds as of the time of such event is first
paid in respect of the shares of Series A Preferred Stock
being so transferred and then the balance of such cash is
paid in respect of such shares of Series A Preferred Stock
and the Series C Preferred Stock so that, to the nearest
extent possible, the aggregate of cash so allocated pursuant
to this clause (A) is in proportion to the respective
amounts the holders of such shares are to receive pursuant
to Section 8B(b)(i)), and (B) the holders of such shares of
Series A Preferred Stock shall be entitled to receive, pro
rata, any cash remaining after payments of cash to the
holders of Series A Preferred Stock and Series C Preferred
Stock pursuant to Section 8B(d)(i)(A);
-12-
(ii) to the extent the consideration received in respect of the
Series A Total Sale consists of Publicly Traded Securities
(which Publicly Traded Securities, for all purposes of this
Section 8B, shall be valued at the time of the Series A
Total Sale by the Board), (A) the holders of Series A
Preferred Stock and the holders of the Series C Preferred
Stock shall be entitled to receive the remaining amounts
such holders are entitled to receive pursuant to Section
8B(b)(i) (taking into account the aggregate of cash
allocated thereto pursuant to Section 8B(d)(i)(A)) in
Publicly Traded Securities (allocated among such holders
such that an amount of such Publicly Traded Securities equal
to the excess of $70 million over the sum of aggregate
Redemption Proceeds as of such time and the amount of cash
allocated to the holders of Series A Preferred Stock
pursuant to Section 8B(d)(i)(A) is delivered in respect of
the shares of Series A Preferred Stock being so transferred
and then the balance of such Publicly Traded Securities is
delivered in respect of such Series A Preferred Stock and
the Series C Preferred Stock so that, to the nearest extent
possible, the aggregate of cash allocated thereto pursuant
to Section 8B(d)(i)(A) and Publicly Traded Securities
allocated pursuant to this Section 8B(d)(ii)(A) is in
proportion to the respective amounts the holders of such
shares are to receive pursuant to Section 8B(b)(i)), and (B)
the holders of such shares of Series A Preferred Stock shall
be entitled to receive, pro rata, any Publicly Traded
Securities remaining after payments of Publicly Traded
Securities to the holders of Series A Preferred Stock and
Series C Preferred Stock pursuant to Section 8B(d)(ii)(A);
and
(iii) to the extent the consideration received in respect of the
Series A Total Sale consists of anything other than cash or
Publicly Traded Securities (which other consideration, for
all purposes of this Section 8B, shall be valued at the time
of the Series A Total Sale by the Board), (A) the holders of
Series A Preferred Stock transferring shares in such sale
and the holders of the Series C Preferred Stock shall be
entitled to receive such other consideration received in the
Series A Total Sale (allocated among such holders pro rata
based upon the amounts such holders are entitled to receive
pursuant to Section 8B(b)(i) (after giving effect to Section
8B(d)(i)(A) and (ii)(A)), and (B) the holders of such shares
of Series A Preferred Stock shall be entitled to receive,
pro rata, any other consideration remaining after payments
of such other consideration to the holders of Series A
Preferred Stock and Series C Preferred Stock pursuant to
Section 8B(d)(iii)(A);
provided, however, that the types of consideration shall be reallocated
among the Stockholders in accordance with the foregoing to reflect any
change in the amount or types of consideration as a result of consideration
held in escrow, released from escrow or paid in respect of breaches of
representations or warranties or indemnification to the extent necessary to
give full effect to the foregoing; provided further, that the Board may
elect to pay cash instead of any non-cash consideration (based on the value
of such non-cash consideration as so determined by the Board of Directors)
otherwise so payable in respect of
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any share of the Capital Stock, if it concludes that paying such non-cash
consideration to such holder may create regulatory or compliance burdens on
the part of the Company or any other participant in the transaction giving
rise to such redemption event or is otherwise unable to pay such non-cash
consideration."
(i) The phrase, "or any Series C Preferred Stock, Series E Preferred
Stock or Special Warrants", is hereby inserted immediately after the word,
"Stockholder", in the third line of Section 9.
(j) The following phrase is hereby inserted at the end of Section 9:
"Any transferee (including a Permitted Transferee) who shall
acquire (either voluntarily or involuntarily, by operation of law or
otherwise) any shares of Series A Preferred Stock from a Preferred
Investor Common Stockholder, shall be bound by all provisions of this
Agreement, to the same extent as the parties hereto and, prior to
registration of the Transfer of any such shares on the books of the
Company, any transferee shall execute an agreement with the parties
hereto agreeing to be bound by such provisions, and shall thereupon be
deemed a Preferred Investor Common Stockholder."
(k) The phrase, "(including the Special Warrants)", is hereby inserted
immediately after the word, "shares", in each case in Section 17(b)(i).
(l) The phrase, "Preferred Investor Common", is hereby deleted from
Section 17(b)(iv).
(m) The following definitions are hereby added to Section 20 of the
Original Agreement:
(i) "Special Warrants" means the warrants to purchase shares of
Common Stock acquired from Wachovia or CIBC by certain Individual
Investors on the date hereof.
(ii) "Adjusted Series C Liquidation Value" means
1. in respect of a Total Sale, in an amount equal to the lesser
of (i) the excess, if any, of the sum of Redemption Proceeds
immediately prior to the Total Sale and the aggregate
consideration payable with respect to the Series A Preferred
Stock and Series C Preferred Stock in connection with the
Total Sale (including, without duplication, any Redemption
-14-
Proceeds payable in connection with such transaction), over
$70 million, or (ii) the product of (x) the Maximum Series C
Liquidation Value immediately before the time of such Total
Sale and (y) a fraction, the numerator of which is the sum
of the Redemption Proceeds immediately prior to the Total
Sale, the aggregate consideration paid with respect to the
Series A Preferred Stock and Series C Preferred Stock in
connection with the Total Sale (including, without
duplication, any Redemption Proceeds payable in connection
with such transaction) and the Series A Accreted Value in
respect of shares of Series A Preferred Stock which are not
sold or redeemed in the Total Sale, and the denominator of
which is the sum of the Redeemed Series A Preferred Accreted
Value, the Series A Preferred Accreted Value and the Maximum
Series C Liquidation Value; and
2. in respect of a Series A Total Sale, in an amount equal to
the lesser of (i) the excess, if any, of the sum of
Redemption Proceeds immediately prior to the Series A Total
Sale and the aggregate consideration payable with respect to
the Series A Preferred Stock and Series C Preferred Stock in
connection with the Series A Total Sale (including, without
duplication, any Redemption Proceeds payable in connection
with such transaction), over $70 million, or (ii) the
product of (x) the Maximum Series C Liquidation Value
immediately before the time of such Series A Total Sale and
(y) a fraction, the numerator of which is the sum of the
Redemption Proceeds immediately prior to the Series A Total
Sale and the aggregate consideration paid with respect to
the Series A Preferred Stock and Series C Preferred Stock in
connection with the Total Sale (including, without
duplication, any Redemption Proceeds payable in connection
with such transaction) and the Series A Accreted Value in
respect of shares of Series A Preferred Stock which are not
sold or redeemed in the Series A Total Sale, and the
denominator of which is the sum of the Redeemed Series A
Preferred Accreted Value, the Series A Preferred Accreted
Value and the Maximum Series C Liquidation Value.
(iii) "Maximum Series C Liquidation Value" means $14,000,000 if a
Total Sale occurs on or prior to December 31, 2004, and
$16,500,000 if a Total Sale occurs after December 31, 2004.
(iv) "Maximum Series D Liquidation Value" means $42,000,000 if a Total
Sale occurs on or prior to December 31, 2004, and $49,500,000 if
a Total Sale occurs after December 31, 2004.
(v) "Publicly Traded Securities" means, in respect of a Total Sale or
Series A Total Sale, securities (A) of a class that is listed on
the New York Stock Exchange, NASDAQ National Market, or other
nationally recognized stock exchange, (B) which are tradeable on
such exchange without legal or contractual restraint (other than
prohibitions on the use of material non-public information), and
(C) which, in the reasonable judgment of the Board of Directors,
may be transferred in their entirety to the public within 30 days
of receipt thereof without discount to the average market price
thereof for the 30 days immediately prior to the date of such
event.
-15-
(vi) "Redeemed Series A Preferred Accreted Value" means, as of any
time, in respect of shares of Series A Preferred Stock redeemed
by the Company or a Subsidiary thereof prior to such time, the
sum of (A) the product of $1,000 and the number of such shares,
(B) the aggregate premium paid payable in respect of such shares
payable pursuant to paragraph (e)(i) of the Series A Certificate
of Designation on the date such shares were redeemed (whether or
not such premium was actually paid by Company or such shares were
actually redeemed by the Company at such time) and (C) an amount
equal to all accumulated and unpaid dividends on such shares as
of the time such shares were so redeemed.
(vii) "Redemption Proceeds" means an amount, as of any time, equal to
the aggregate value of the cash and Publicly Traded Securities
(which shall be valued, as of the time of receipt, by the Board
of Directors) received by holders of Series A Preferre
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