sv4
As filed with the Securities and
Exchange Commission on December 22, 2010
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Tenneco Inc.
Tenneco Automotive Operating Company Inc.
Clevite Industries Inc.
The Pullman Company
Tenneco Global Holdings Inc.
Tenneco International Holding Corp.
TMC Texas Inc.
(Exact name of
registrant as specified in its charter)
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Delaware
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3714
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76-0515284
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Delaware
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3714
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74-1933558
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Delaware
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3714
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22-2940561
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Delaware
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3714
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02-0359911
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Delaware
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3714
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76-0450674
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Delaware
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3714
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74-2067082
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Delaware
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3714
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76-0523810
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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500 North Field Drive
Lake Forest, Illinois 60045
(847) 482-5000
(Address, Including
Zip Code, and Telephone Number, Including Area Code, of
Registrants Principal Executive Offices)
James D. Harrington
Senior Vice President, General Counsel
and Corporate Secretary
500 North Field Drive
Lake Forest, Illinois 60045
(847) 482-5000
(Name, Address,
including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
with copy to:
Jodi A. Simala
Mayer Brown LLP
71 South Wacker Drive
Chicago, Illinois
60606
(312) 782-0600
Approximate date of commencement of the proposed sale of the
securities to the public: As soon as practicable
after this Registration Statement becomes effective.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check
the following
box. o
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
accelerated
filer o
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Accelerated
filer þ
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Non-accelerated
filer o
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Smaller reporting
company o
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(Do not check if a smaller
reporting company)
CALCULATION OF REGISTRATION
FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount
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Offering
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Aggregate
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Registration
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Securities to be Registered
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to be Registered
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Price per
Unit(1)
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Offering
Price(1)
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Fee
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73/4% Senior
Notes due 2018
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$225,000,000
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100%
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$225,000,000
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$16,043
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Guarantees of
73/4% Senior
Notes due 2018
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None
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None
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None
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None(2)
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(1)
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Estimated solely for the purpose of determining the registration
fee in accordance with Rule 457(f) under the Securities Act of
1933, as amended.
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(2)
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No further fee is payable pursuant to Rule 457(n) under the
Securities Act of 1933, as amended.
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The Registrants hereby amend this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrants shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, or until this Registration
Statement shall become effective on any date as the Securities
and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
The
information in this preliminary prospectus is not complete and
may be changed. We may not sell these securities until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell these securities and it is not soliciting an offer
to buy these securities in any state where the offer or sale is
not permitted.
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SUBJECT TO COMPLETION, DATED
DECEMBER 22, 2010
Tenneco Inc.
OFFER TO EXCHANGE
All outstanding
$225,000,000 principal amount of
73/4% senior
notes due 2018 issued August 3, 2010
for $225,000,000 principal amount of
73/4% senior
notes due 2018 which have been
registered under the Securities Act of 1933
Principal
Terms of the Exchange Offer:
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We will exchange all old
73/4% senior
notes due 2018 that were issued on August 3, 2010 in a
private offering that are validly tendered and not validly
withdrawn for an equal principal amount of exchange notes that
have been registered.
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The exchange offer expires at 5:00 p.m., New York City
time,
on ,
2011, unless we extend the offer. You may withdraw tenders of
old notes at any time prior to the expiration of the exchange
offer.
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The exchange offer is not subject to any condition other than
that it will not violate applicable law or interpretations of
the staff of the Securities and Exchange Commission and that no
proceedings with respect to the exchange offer have been
instituted or threatened in any court or by any governmental
agency.
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Principal
Terms of the Exchange Notes:
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The terms of the exchange notes to be issued in the exchange
offer are substantially identical to the old notes, except that
the exchange notes will be freely tradeable by persons who are
not affiliated with us and will not have registration rights.
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No public market currently exists for the old notes. We do not
intend to list the exchange notes on any securities exchange
and, therefore, no active public market is anticipated.
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The exchange notes will be fully and unconditionally and jointly
and severally guaranteed by all of our domestic subsidiaries
that guarantee the old notes.
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The exchange notes and the guarantees thereof will rank:
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equal in right of payment with all of our and our subsidiary
guarantors other existing and future senior debt;
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senior in right of payment to all of our and our subsidiary
guarantors existing and future subordinated debt; and
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junior in right of payment to all of our and our subsidiary
guarantors existing and future senior secured debt to the
extent of the value of the collateral securing such indebtedness.
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You should carefully consider the risk factors beginning on
page 12 of this prospectus before participating in the
exchange offer.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
This date of this prospectus
is ,
.
TABLE OF
CONTENTS
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Page
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Forward-Looking Statements
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ii
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Prospectus Summary
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1
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Risk Factors
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12
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Ratio of Earnings to Fixed Charges
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27
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Use of Proceeds
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28
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The Exchange Offer
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29
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Description of the Notes
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39
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Registration Rights
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81
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Book-Entry; Delivery and Form
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82
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Material United States Federal Income Tax Considerations
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84
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Plan of Distribution
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88
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Legal Matters
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88
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Experts
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88
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Independent Registered Public Accounting Firm
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89
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Where you can Find More Information
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89
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Incorporation by Reference
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90
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You should rely only on the information contained or
incorporated by reference in this prospectus. We have not
authorized anyone to provide you with any information or
represent anything not contained in this prospectus. If you
receive any other information, you should not rely on it. We are
not making an offer of these securities in any state or other
jurisdiction where the offer is not permitted. You should not
assume that the information contained in this prospectus is
accurate as of any date other than the date on the front of this
prospectus. Our business, financial condition, results of
operation and prospects may have changed since that date.
Tenneco Inc. is a Delaware corporation. Our principal
executive offices are located at 500 North Field Drive, Lake
Forest, Illinois 60045 and our telephone number at that address
is
(847) 482-5000.
Our web site is located at
http://www.tenneco.com.
The information on our web site is not part of this
prospectus.
Monroe®
,
Rancho®,
Fric
Rottm,
Clevite
®
Elastomers,
Walker®,
Gillettm,
Quiet-Flow®,
Walker
Ultratm,
DynoMax®,
Sensa-Trac®,
Monroe
Reflex®,
Monroe®
Dynamics and Ceramics,
Thrush®
and
Armstrongtm
are some of our primary trademarks. All other trademarks,
service marks or trade names referred to in this prospectus are
the property of their respective owners.
Each broker-dealer that receives new notes for its own account
pursuant to this exchange offer must acknowledge that it will
deliver a prospectus in connection with any resale of such new
notes. The letter of transmittal accompanying this prospectus
states that by so acknowledging and by delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an
underwriter within the meaning of the Securities
Act. This prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with
resales of new notes received in exchange for outstanding old
notes where such outstanding old notes were acquired by such
broker-dealer as a result of market-making activities or other
trading activities. We have agreed that, for a period of not
less than 180 days after the expiration of this exchange
offer, we will make this prospectus available to any
broker-dealer for use in connection with any such resale. See
Plan of Distribution.
i
Industry and market data and other statistical information used
throughout this prospectus or the documents incorporated by
reference were obtained through company research, surveys and
studies conducted by third parties and industry and general
publications. We have not independently verified market and
industry data from third-party sources. Some data are also based
on our good faith estimates, which are derived from our review
of internal surveys, as well as the independent sources
described above. While we believe internal company survey data
are reliable and market definitions are appropriate, neither
these surveys nor these definitions have been verified by any
independent sources.
This prospectus incorporates by reference important business
and financial information about us which is not included in or
delivered with this prospectus. See Where you can Find
More Information and Incorporation by
Reference. This information, excluding exhibits to the
information unless the exhibits are specifically incorporated by
reference into the information, is available without charge to
any holder or beneficial owner of old notes upon written or oral
request to Tenneco Inc., 500 North Field Drive, Lake Forest,
Illinois 60045, Attn: General Counsel, telephone number
(847) 482-5000.
To obtain timely delivery of this information, you must request
this information no later than five (5) business days
before the expiration of the exchange offer. Therefore, you must
request information on or
before ,
2011.
FORWARD-LOOKING
STATEMENTS
Certain statements in this prospectus and the documents
incorporated by reference constitute
forward-looking
statements as that term is defined under Section 21E
of the Securities Exchange Act of 1934, as amended (the
Exchange Act), concerning, among other things, the
prospects and developments of our company and business
strategies for our operations, all of which are subject to risks
and uncertainties. These forward-looking statements are included
in various sections of this prospectus. They are identified as
forward-looking statements or by their use of terms
(and variations thereof) such as may,
will, believe, should,
could, plan, expect,
anticipate, estimate, and similar terms
(and variations thereof) and phrases.
Our actual results may differ significantly from those
anticipated in these forward-looking statements. These
forward-looking statements are affected by risks, uncertainties
and assumptions that we make, including, among other things, the
factors that are described in Risk Factors and:
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general economic, business and market conditions, including
without limitation the ongoing financial difficulties facing a
number of companies in the automotive industry as a result of
the difficult global economic environment, including the
potential impact thereof on labor unrest, supply chain
disruptions, weakness in demand and the collectability of any
accounts receivable due to us from such companies;
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changes in capital availability or costs, including increases in
our cost of borrowing (i.e., interest rate increases), the
amount of our debt, our ability to access capital markets at
favorable rates, and the credit ratings of our debt;
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the impact of the recent global economic crisis on the credit
markets, which continue to be volatile and more restricted than
they were previously;
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our ability to source and procure needed materials, components
and other products and services as the economy recovers from the
recent global economic crisis;
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changes in consumer demand, prices and our ability to have our
products included on top selling vehicles, such as the recent
shift in consumer preferences from light trucks, which tend to
be higher margin products for our customers and us, to other
vehicles, and other factors impacting the cyclicality of
automotive production and sales of automobiles which include our
products, and the potential negative impact on our revenues and
margins from such products;
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changes in automotive manufacturers production rates and
their actual and forecasted requirements for our products, such
as the significant production cuts during 2008 and 2009 by
automotive manufacturers in response to difficult economic
conditions;
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ii
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the overall highly competitive nature of the automotive parts
industry, and our resultant inability to realize the sales
represented by our awarded book of business (which is based on
anticipated pricing for the applicable program over its life,
and is subject to increases or decreases due to changes in
customer requirements, customer and consumer preferences, and
the number of vehicles actually produced by customers);
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the loss of any of our large original equipment manufacturer
(OEM) customers (on whom we depend for a substantial
portion of our revenues), or the loss of market shares by these
customers if we are unable to achieve increased sales to other
OEMs;
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industrywide strikes, labor disruptions at our facilities or any
labor or other economic disruptions at any of our significant
customers or suppliers or any of our customers other
suppliers (such as the 2008 strike at American Axle, which
disrupted our supply of products for significant General Motors
platforms);
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increases in the costs of raw materials, including our ability
to successfully reduce the impact of any such cost increases
through materials substitutions, cost reduction initiatives, low
cost country sourcing, and price recovery efforts with
aftermarket and OEM customers;
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the cyclical nature of the global vehicle industry, including
the performance of the global aftermarket sector and the longer
product lives of automobile parts;
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our continued success in cost reduction and cash management
programs and our ability to execute restructuring and other cost
reduction plans and to realize anticipated benefits from these
plans;
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costs related to product warranties;
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the impact of consolidation among automotive parts suppliers and
customers on our ability to compete;
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operating hazards associated with our business;
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changes in distribution channels or competitive conditions in
the markets and countries where we operate, including the impact
of changes in distribution channels for aftermarket products on
our ability to increase or maintain aftermarket sales;
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the negative impact of higher fuel prices and overall market
weakness on discretionary purchases of aftermarket products by
consumers;
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the cost and outcome of existing and any future legal
proceedings, including, but not limited to, proceedings against
us or our customers relating to intellectual property rights;
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economic, exchange rate and political conditions in the foreign
countries where we operate or sell our products;
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customer acceptance of new products;
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new technologies that reduce the demand for certain of our
products or otherwise render them obsolete;
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our ability to realize our business strategy of improving
operating performance;
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our ability to successfully integrate any acquisitions that we
complete;
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changes by the Financial Accounting Standards Board or the
Securities and Exchange Commission (the Commission)
of authoritative generally accepted accounting principles or
policies;
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changes in accounting estimates and assumptions, including
changes based on additional information;
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potential legislation, regulatory changes and other governmental
actions, including the ability to receive regulatory approvals
and the timing of such approvals;
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the impact of changes in and compliance with laws and
regulations, including environmental laws and regulations,
environmental liabilities in excess of the amount reserved, the
adoption of the current
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iii
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mandated timelines for worldwide emission regulation and any
changes to the timing of the funding requirements for our
pension and other postretirement benefit liabilities;
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decisions by federal, state and local governments to provide (or
discontinue) incentive programs related to automobile purchases;
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the potential impairment in the carrying value of our long-lived
assets and goodwill or our deferred tax assets;
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potential volatility in our effective tax rate;
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acts of war
and/or
terrorism, as well as actions taken or to be taken by the United
States and other governments as a result of further acts or
threats of terrorism, and the impact of these acts on economic,
financial and social conditions in the countries where we
operate; and
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the timing and occurrence (or non-occurrence) of other
transactions, events and circumstances which may be beyond our
control.
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Where, in any forward-looking statement, we or our management
expresses an expectation or belief as to future results, we
express that expectation or belief in good faith and believe it
has a reasonable basis, but we can give no assurance that the
statement of expectation or belief will result or be achieved or
accomplished.
You should be aware that any forward-looking statement made by
us in this prospectus, the documents incorporated herein by
reference or elsewhere, speaks only as of the date on which we
make it. New risks and uncertainties come up from time to time,
and it is impossible for us to predict these events or how they
may affect us. We have no duty to, and do not intend to, update
or revise the forward-looking statements after the date of this
prospectus. In light of these risks and uncertainties, you
should keep in mind that any scenarios or results contained in
any forward-looking statement made in this prospectus, the
documents incorporated herein by reference or elsewhere might
not occur.
iv
PROSPECTUS
SUMMARY
This summary highlights selected information contained
elsewhere in this prospectus. Because this is only a summary, it
may not contain all of the information you should consider in
making your decision of whether to participate in the exchange
offer. To understand all of the terms of this exchange offer and
for a more complete understanding of our business, you should
carefully read this entire prospectus, particularly the section
entitled Risk Factors, and the documents
incorporated by reference in this prospectus. In this
prospectus, except as set forth under Description of the
Notes and Material United States Federal Income Tax
Considerations, the words we, our
and us refer to Tenneco Inc. and its subsidiaries.
In this prospectus, we use the term old notes to refer to the
$225 million
73/4% Senior
Notes due 2018 that were issued on August 3, 2010 in a
private offering, the term exchange notes to refer to the
73/4% Senior
Notes due 2018 offered in the exchange offer described in this
prospectus and the term notes to refer to the old notes and the
exchange notes, collectively. All references to the old notes
and exchange notes include references to the related guarantees.
Some of the statements contained in this Prospectus
Summary are forward-looking statements. See
Forward-Looking Statements.
The
Company
Tenneco Inc. is one of the worlds leading manufacturers of
automotive emission control and ride control products and
systems. We serve both original equipment (OE)
vehicle designers and manufacturers and the repair and
replacement markets, or aftermarket, globally through leading
brands, including
Monroe®,
Rancho®,
Clevite®
Elastomers, and Fric
Rottm
ride control products and
Walker®,
Fonostm,
and
Gillettm
emission control products. For 2009 and the nine months ended
September 30, 2010, we generated net sales of approximately
$4,649 million and $4,360 million, respectively. See
Summary Historical Consolidated Financial Data.
As an automotive parts supplier, we produce individual component
parts for vehicles as well as groups of components that are
combined as modules or systems within vehicles. These parts,
modules and systems are sold globally to most leading OEMs and
throughout all aftermarket distribution channels. During 2009,
we operated 84 manufacturing facilities and 14 engineering and
technical centers around the world. For 2009 and the nine months
ended September 30, 2010, we generated approximately
55 percent and 52 percent, respectively, of our net
sales outside of North America, including in expanding markets
such as China and Eastern Europe.
We manufacture and sell emission control components, such as
mufflers, catalytic converter shells, fabricated manifolds,
pipes, exhaust heat exchangers, diesel particulate filters and
complete exhaust systems. These products play a critical role in
reducing the level of pollutants in engine emission and managing
engine exhaust noise. Emission control products accounted for
63 percent and 64 percent of our net sales for 2009
and the nine months ended September 30, 2010, respectively.
We also manufacture and sell ride control products, such as
shock absorbers, struts, vibration control components and
suspension systems. These products are designed to function as
safety components for vehicles, provide a comfortable ride and
improve vehicle stability and handling. Ride control products
accounted for 37 percent and 36 percent of our net
sales for 2009 and the nine months ended September 30,
2010, respectively.
In the OE market, we serve a global customer base of more than
65 different OEMs that includes General Motors (GM),
Ford Motor Co. (Ford), Volkswagen, Toyota, Daimler,
BMW, SAIC Motor Corp., PSA Peugeot Citroen, Navistar and
Chrysler. The OE business accounted for 78 percent and
80 percent of our net sales in 2009 and the nine months
ended September 30, 2010, respectively.
Our aftermarket customers are comprised of full-line and
specialty warehouse distributors, retailers, jobbers, installer
chains and car dealers. These customers include National Auto
Parts Association (NAPA), Advance Auto Parts, Uni-Select, Pep
Boys and OReilly Automotive in North America and Temot,
Auto Distribution International, Group Auto Union, Kwik-Fit and
Mekonomen Grossist in Europe. Our top 10 aftermarket
customers accounted for 45 percent of our net aftermarket
sales and our aftermarket sales representing 22 percent of
our total net sales in 2009. Our aftermarket sales represented
20 percent of our total net sales for the nine months ended
September 30, 2010.
1
Our principal executive offices are located at 500 North Field
Drive, Lake Forest, Illinois 60045 and our telephone number at
that address is
(847) 482-5000.
Our website is located at
http://www.tenneco.com.
The information on our website is not incorporated by reference
in, and does not form a part of, this registration statement.
Recent
Developments
On December 9, 2010, we announced the pricing of a private
placement of $500 million in aggregate principal amount of
67/8% Senior
Notes due 2020 (the
67/8% Senior
Notes). We intend to use the proceeds of the offering of
the
67/8% Senior
Notes, net of related fees and expenses, together with cash on
hand and available liquidity, to purchase any and all of our
outstanding $500 million
85/8% senior
subordinated notes due 2014 (the Senior Subordinated
Notes) tendered in the tender offer described below and to
redeem any of such notes that are not tendered and to pay fees,
premiums, expenses and accrued interest related to the tender
offer or redemption. The offering is expected to settle on
December 23, 2010, subject to customary closing conditions.
On December 9, 2010, we launched a tender offer to purchase
for cash, subject to certain terms and conditions, any and all
of our Senior Subordinated Notes. Holders who validly tender
their Senior Subordinated Notes and provide their consents to
certain amendments to the related indenture prior to
5:00 p.m., New York City time, on December 22, 2010,
unless such date is extended or earlier terminated, will be
entitled to receive the total consideration of $1,032.50,
payable in cash for each $1,000 principal amount of Senior
Subordinated Notes accepted for payment, which includes a
consent payment of $30.00 per $1,000 principal amount of Senior
Subordinated Notes accepted for payment. Holders who validly
tender their Senior Subordinated Notes after 5:00 p.m., New
York City time, on December 22, 2010, but on or prior to
8:00 a.m., New York City time, on January 6, 2011 will
receive $1,002.50 for each $1,000 principal amount of Senior
Subordinated Notes accepted for purchase, which amount is equal
to the total consideration less the consent payment. Accrued and
unpaid interest, up to, but not including, the applicable
settlement date will be paid in cash on all validly tendered and
accepted Senior Subordinated Notes.
We intend to notify the registered holders of any outstanding
Senior Subordinated Notes that are not tendered in the tender
offer that we will redeem all of the remaining notes outstanding
at 102.875% of the principal amount, plus accrued and unpaid
interest.
2
Summary
of the Exchange Offer
On August 3, 2010, we completed the private offering of
$225 million of our
73/4% Senior
Notes due 2018. In connection with that private offering we
entered into a registration rights agreement with the initial
purchasers of the old notes. In that agreement, we agreed, among
other things, to deliver to you this prospectus for the exchange
of up to $225 million of new
73/4% Senior
Notes that have been registered under the Securities Act of
1933, as amended (the Securities Act) for up to
$225 million aggregate principal amount of the old
73/4% Senior
Notes that were issued on August 3, 2010. The exchange
notes will be substantially identical to the old notes, except
that:
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the exchange notes have been registered under the Securities Act
and will be freely tradable by persons who are not affiliated
with us;
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the exchange notes are not entitled to the rights that are
applicable to the old notes under the registration rights
agreement; and
|
|
|
|
our obligation to pay additional interest on the old notes does
not apply if the registration statement of which this prospectus
forms a part is declared effective or certain other
circumstances occur, as described under the heading
Registration Rights.
|
Old notes may be exchanged only in minimum denominations of
$2,000 and larger integral multiples of $1,000. You should read
the discussion under the headings Prospectus
SummaryThe Exchange Notes and Description of
the Notes for further information regarding the exchange
notes. You should also read the discussion under the heading
The Exchange Offer for further information regarding
the exchange offer and resale of the exchange notes.
|
|
|
Exchange offer |
|
We will exchange our exchange notes for a like aggregate
principal amount and maturity of our old notes as provided in
the registration rights agreement related to the old notes. The
exchange offer is intended to satisfy the rights granted to
holders of the old notes in that agreement. After the exchange
offer is complete you will no longer be entitled to any exchange
or registration rights with respect to your notes. |
|
Resales |
|
Based on an interpretation by the staff of the Commission set
forth in no-action letters issued to third parties, we believe
that the exchange notes may be offered for resale, resold and
otherwise transferred by you (unless you are our
affiliate within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided
that you: |
|
|
|
are acquiring the
exchange notes in the ordinary course of business, and
|
|
|
|
have not engaged in,
do not intend to engage in, and have no arrangement or
understanding with any person to participate in, a distribution
of the exchange notes.
|
|
|
|
By signing the letter of transmittal and exchanging your old
notes for exchange notes, as described below, you will be making
representations to this effect. |
|
|
|
Each participating broker-dealer that receives exchange notes
for its own account pursuant to the exchange offer in exchange
for the old notes that were acquired as a result of
market-making or other trading activity must acknowledge that it
will deliver a prospectus |
3
|
|
|
|
|
in connection with any resale of the exchange notes. See
Plan of Distribution. |
|
|
|
Any holder of old notes who: |
|
|
|
is our affiliate,
|
|
|
|
does not acquire the
exchange notes in the ordinary course of its business, or
|
|
|
|
cannot rely on the
position of the staff of the Commission expressed in Exxon
Capital Holdings Corporation, Morgan Stanley &
Co. Incorporated or similar no-action letters, must, in the
absence of an exemption, comply with registration and prospectus
delivery requirements of the Securities Act in connection with
the resale of the exchange notes. We will not assume, nor will
we indemnify you against, any liability you may incur under the
Securities Act or state or local securities laws if you transfer
any exchange notes issued to you in the exchange offer absent
compliance with the applicable registration and prospectus
delivery requirements or an applicable exemption.
|
|
Expiration time |
|
The exchange offer will expire at 5:00 p.m., New York City
time,
on ,
2011, or such later date and time to which we extend it. We do
not currently intend to extend the expiration time. |
|
Conditions to the exchange offer |
|
The exchange offer is subject to the following conditions, which
we may waive: |
|
|
|
the exchange offer
does not violate applicable law or applicable interpretations of
the staff of the Commission; and
|
|
|
|
there is no action or
proceeding instituted or threatened in any court or by any
governmental agency with respect to this exchange offer.
|
|
|
|
Please refer to the section in this prospectus entitled
The Exchange OfferConditions to the Exchange
Offer. |
|
Procedures for tendering the Old Notes |
|
If you wish to accept and participate in this exchange offer,
you must complete, sign and date the accompanying letter of
transmittal, or a copy of the letter of transmittal, according
to the instructions contained in this prospectus and the letter
of transmittal. You must also mail or otherwise deliver the
completed, executed letter of transmittal or the copy thereof,
together with the old notes and any other required documents, to
the exchange agent at the address set forth on the cover of the
letter of transmittal. If you hold old notes through The
Depository Trust Company (DTC) and wish to
participate in the exchange offer, you must comply with the
Automated Tender Offer Program procedures of DTC, by which you
will agree to be bound by the letter of transmittal. |
|
|
|
By signing or agreeing to be bound by the letter of transmittal,
you will represent to us that, among other things: |
|
|
|
any exchange notes
that you receive will be acquired in the ordinary course of your
business;
|
4
|
|
|
|
|
you have no
arrangement or understanding with any person or entity to
participate in the distribution of the exchange notes;
|
|
|
|
if you are a
broker-dealer that will receive exchange notes for your own
account in exchange for old notes that were acquired as a result
of market-making activities, you will deliver a prospectus, as
required by law, in connection with any resale of the exchange
notes; and
|
|
|
|
you are not our
affiliate as defined in Rule 405 under the
Securities Act.
|
|
Withdrawal of tenders |
|
A tender of old notes pursuant to the exchange offer may be
withdrawn at any time prior to the expiration time. To withdraw,
you must send a written or facsimile transmission notice of
withdrawal to the exchange agent at its address indicated under
The Exchange OfferExchange Agent before
5:00 p.m., New York City time, on the expiration date of
the exchange offer, or you must comply with the appropriate
procedure of DTCs Automated Tender Offer Program system. |
|
Acceptance of old notes and delivery of exchange notes |
|
If all the conditions to the completion of this exchange offer
are satisfied or waived by us, we will accept any and all old
notes that are properly tendered in this exchange offer and not
properly withdrawn on or before 5:00 p.m., New York City
time, on the expiration date. We will return any old note that
we do not accept for exchange to its registered holder at our
expense promptly after the expiration date. We will deliver the
exchange notes to the registered holders of old notes accepted
for exchange promptly after the expiration date and acceptance
of such old notes. Please refer to the section in this
prospectus entitled The Exchange OfferAcceptance of
Old Notes for Exchange and Delivery of Exchange Notes. |
|
Effect on holder of old Notes |
|
As a result of making, and upon acceptance for exchange of all
validly tendered old notes pursuant to the terms of, the
exchange offer, we will have fulfilled a covenant contained in
the registration rights agreement. If you are a holder of old
notes and do not tender your old notes in the exchange offer,
you will continue to hold your old notes and you will be
entitled to all the rights and limitations applicable to the old
notes in the indenture, except for any rights under the
registration rights agreement that by their terms terminate upon
the consummation of the exchange offer. |
|
Accrued interest on the exchange notes and the old notes |
|
Each exchange note will bear interest from August 3, 2010.
The holders of old notes that are accepted for exchange will be
deemed to have waived the right to receive payment of accrued
interest on those old notes from August 3, 2010 to the date
of issuance of the exchange notes. Interest on the old notes
accepted for exchange will cease to accrue upon issuance of the
exchange notes. |
|
|
|
Consequently, if you exchange your old notes for exchange notes,
you will receive the same interest payment on February 15,
2011 that you would have received if you had not accepted this
exchange offer. |
5
|
|
|
Consequences of failure to exchange |
|
All untendered old notes will continue to be subject to the
restrictions on transfer provided for in the old notes and in
the indenture. In general, the old notes may not be offered or
sold unless registered under the Securities Act, except pursuant
to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state or local securities laws.
Other than in connection with the exchange offer, we do not
currently anticipate that we will register the old notes under
the Securities Act. The trading market for your old notes will
become more limited to the extent that other holders of old
notes participate in the exchange offer. |
|
U.S. federal income tax considerations |
|
The exchange of old notes for exchange notes in the exchange
offer should not be a taxable event for United States federal
income tax purposes. See Material United States Federal
Income Tax Considerations. |
|
Exchange agent |
|
U.S. Bank National Association is the exchange agent for the
exchange offer. The address and telephone number of the exchange
agent are set forth in the section captioned The Exchange
OfferExchange Agent. |
|
Shelf registration statement |
|
We have agreed to register the old notes in a shelf registration
statement and use our best efforts to cause the shelf
registration statement to be declared effective by the
Commission if: |
|
|
|
we and our subsidiary
guarantors determine that any applicable law, Commission rules
or regulations or prevailing interpretations of such rules or
regulations by the staff of the Commission do not permit us to
effect the exchange offer as contemplated by the registration
rights agreement;
|
|
|
|
we do not complete the
exchange offer within 210 days after the original issue of
the old notes; or
|
|
|
|
any of the initial
purchasers of the old notes that holds old notes that have the
status of an unsold allotment in an initial distribution
requests us to do so in writing on or prior to the 60th day
after the consummation of the exchange offer.
|
|
|
|
We have agreed to maintain the effectiveness of the shelf
registration statement for, in some circumstances, up to two
years from the date of the original issuance of the old notes to
cover resales of the old notes held by the holders. See
The Exchange OfferPurpose and Effect of the Exchange
Offer. |
6
The
Exchange Notes
The following summary contains basic information about the
exchange notes and is not intended to be complete. It may not
contain all of the information that is important to you. For a
more complete description of the terms of the notes, see
Description of the Notes.
|
|
|
Issuer |
|
Tenneco Inc. |
|
General |
|
The form and terms of the exchange notes are identical in all
material respects to the form and terms of the old notes except
that: |
|
|
|
the exchange notes
will bear a Series B designation to
differentiate them from the old notes, which bear a
Series A designation;
|
|
|
|
the exchange notes
have been registered under the Securities Act and, therefore,
will not bear legends restricting their transfer; and
|
|
|
|
the holders of
exchange notes will not be entitled to rights under the
registration rights agreement, including any registration rights
or rights to additional interest.
|
|
|
|
The exchange notes will evidence the same debt as the old notes
and will be entitled to the benefits of the indenture under
which the old notes were issued. |
|
Securities offered |
|
$225 million aggregate principal amount of
73/4% Senior
Notes due 2018, Series B |
|
Maturity date |
|
August 15, 2018 |
|
Interest rate |
|
Annual rate:
73/4% |
|
|
|
Payment frequency: every six months on February 15 and
August 15 |
|
|
|
First payment: February 15, 2011 |
|
Interest payment dates on the exchange notes |
|
Holders of old notes whose old notes are accepted for exchange
in the exchange offer will be deemed to have waived the right to
receive any payment in respect of interest on the old notes
accrued from August 3, 2010 to the date of issuance of the
exchange notes. Consequently, holders who exchange their old
notes for exchange notes will receive the same interest payment
on February 15, 2011 (the first interest payment date with
respect to the old notes and the first interest payment date
with respect to the exchange notes following consummation of the
exchange offer) that they would have received if they had not
accepted the exchange offer. |
|
Guarantees |
|
Each of our material domestic wholly-owned subsidiaries that
guarantee our senior secured credit facility and the old notes
will also fully and unconditionally and jointly and severally
guarantee the exchange notes. These guarantees will be general
senior obligations of our subsidiary guarantors and will rank
equal in right of payment with all other existing and future
unsubordinated indebtedness of the respective guarantors and
senior in right of payment to existing and future subordinated
indebtedness of the respective guarantors. The exchange notes
and the guarantees will not be secured by |
7
|
|
|
|
|
any assets of the guarantors. Accordingly the exchange notes and
guarantees are effectively junior in right of payment to all
existing and future senior secured debt of the guarantors to the
extent of the value of the collateral securing such
indebtedness. Subject to limited exceptions, future domestic
subsidiaries will also be required to guarantee the exchange
notes in certain circumstances, including if they also guarantee
our senior secured credit facility. |
|
Ranking |
|
The exchange notes, like the old notes, will be general senior
obligations of us and our subsidiary guarantors and will rank
equal in right of payment with all other existing and future
unsubordinated indebtedness of us and our subsidiary guarantors
and senior in right of payment to all existing and future
subordinated indebtedness. The exchange notes will not be
secured by any assets of us or our subsidiary guarantors.
Accordingly, the exchange notes will be effectively junior in
right of payment to all of our and our subsidiary
guarantors existing and future senior secured debt to the
extent of the value of the collateral securing such
indebtedness. The exchange notes will also be effectively junior
in right of payment to all existing and future liabilities,
including trade payables, of our foreign subsidiaries, which
will not guarantee the exchange notes, and of those of our
domestic subsidiaries that do not guarantee the exchange notes. |
|
|
|
As of September 30, 2010, on a pro forma basis after
giving effect to the offering of the
67/8% Senior
Notes and the use of proceeds therefrom, we would have had
outstanding: |
|
|
|
$225 million of
old notes;
|
|
|
|
$500 million of
67/8% Senior
Notes;
|
|
|
|
$572 million of
other senior indebtedness, including $236 million of loans
outstanding under our senior secured credit facility, which is
secured and guaranteed on a senior secured basis by our material
domestic wholly-owned subsidiaries, which would have been
effectively senior in right of payment to the old notes and
exchange notes to the extent of the value of the collateral
securing such indebtedness; and
|
|
|
|
$614 million of
unused capacity under the revolving credit facility and the
tranche B-1
letter of credit/revolving loan facility and $52 million in
outstanding letters of credit under the revolving credit
facility, all of which is secured and guaranteed on a senior
secured basis by our material domestic wholly-owned subsidiaries
and all of which, if drawn, would have been effectively senior
in right of payment to the old notes and the exchange notes to
the extent of the value of the collateral securing such
indebtedness.
|
|
|
|
As of September 30, 2010 and December 31, 2009, our
non-guarantor subsidiaries had $1,504 million and
$1,030 million, respectively, of liabilities recorded on
their balance sheets. |
|
Optional redemption |
|
We may redeem some or all of the notes at any time on or after
August 15, 2014 at specified redemption prices. We also may |
8
|
|
|
|
|
redeem up to 35% of the aggregate principal amount of the
exchange notes using the proceeds of certain equity offerings
completed on or before August 15, 2013. We may also redeem
the exchange notes, in whole or in part, at any time prior to
August 15, 2014 at a price equal to 100% of the principal
amount thereof plus the Applicable Premium. The redemption
prices and the calculation of the Applicable Premium are
described under Description of the
NotesRedemptionOptional Redemption. |
|
Change of control and asset sales |
|
If we experience specific kinds of changes of control or we sell
assets under certain circumstances, we will be required to make
an offer to repurchase the exchange notes at the prices listed
in Description of the NotesChange of Control
and Description of the NotesCertain
CovenantsLimitation on Asset Sales. |
|
Restrictive covenants |
|
We will issue the exchange notes under the indenture dated
August 3, 2010 with U.S. Bank National Association, as
trustee. The indenture, among other things, restricts our
ability and the ability of our restricted subsidiaries to: |
|
|
|
incur additional
indebtedness or contingent obligations;
|
|
|
|
pay dividends or make
distributions to our stockholders;
|
|
|
|
repurchase or redeem
equity interests;
|
|
|
|
make investments;
|
|
|
|
grant liens;
|
|
|
|
make capital
expenditures;
|
|
|
|
enter into
transactions with our shareholders and affiliates;
|
|
|
|
sell assets; and
|
|
|
|
acquire the assets of,
or merge or consolidate with, other companies.
|
|
|
|
These covenants are subject to important exceptions and
qualifications which are described in Description of the
Notes. |
|
|
|
During any period that the credit rating on the exchange notes,
as determined by both Moodys Investors Service, Inc. and
Standard and Poors Ratings Services, equals or exceeds
Baa3 and BBB-, respectively, and no default or event of default
has occurred and is continuing, we will not be subject to most
of the restrictive covenants and corresponding events of default
contained in the indenture. Any restrictive covenants or
corresponding events of default that cease to apply as a result
of achieving these ratings will be restored if one or both of
the credit ratings on the exchange notes later falls below these
thresholds. See Description of NotesCovenant
Suspension. |
Investing in the exchange notes and participating in the
exchange offer involve substantial risks. See Risk
Factors beginning on page 12 for a discussion of
certain risks relating to us, our business and an investment in
the exchange notes that you should carefully consider before
participating in the exchange offer.
9
SUMMARY
HISTORICAL CONSOLIDATED FINANCIAL DATA
The following summary historical consolidated financial data as
of and for the years ended December 31, 2005, 2006, 2007,
2008 and 2009 were derived from the audited financial statements
of Tenneco Inc. and its consolidated subsidiaries. See the
section of this prospectus entitled Experts. The
following summary historical consolidated financial data as of
and for each of the nine months ended September 30, 2009
and 2010 were derived from our unaudited condensed financial
statements. In our opinion, the summary historical consolidated
financial data as of and for the nine months ended
September 30, 2009 and 2010 include all adjusting entries,
consisting only of normal recurring adjustments, necessary to
present fairly the information set forth therein. You should not
regard the results of operations for the nine months ended
September 30, 2010 as indicative of the results that may be
expected for the entire fiscal year.
The following information should be read in conjunction with our
historical consolidated financial statements and the related
notes and Managements Discussion and Analysis of
Financial Condition and Results of Operations included in
our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009 and our
Quarterly Reports on
Form 10-Q
for the quarterly periods ended March 31, 2010,
June 30, 2010 and September 30, 3010, incorporated by
reference herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
Nine Months
|
|
|
|
December 31,
|
|
|
Ended September 30,
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
(Dollars in millions)
|
|
|
Statements of income data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and operating revenues
|
|
$
|
4,440
|
|
|
$
|
4,682
|
|
|
$
|
6,184
|
|
|
$
|
5,916
|
|
|
$
|
4,649
|
|
|
$
|
3,327
|
|
|
$
|
4,360
|
|
Cost of sales (exclusive of depreciation and amortization shown
below)
|
|
|
3,578
|
|
|
|
3,836
|
|
|
|
5,210
|
|
|
|
5,063
|
|
|
|
3,875
|
|
|
|
2,783
|
|
|
|
3,575
|
|
Goodwill impairment charge
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineering, research, and development
|
|
|
83
|
|
|
|
88
|
|
|
|
114
|
|
|
|
127
|
|
|
|
97
|
|
|
|
72
|
|
|
|
90
|
|
Selling, general, and administrative
|
|
|
384
|
|
|
|
373
|
|
|
|
399
|
|
|
|
392
|
|
|
|
344
|
|
|
|
256
|
|
|
|
307
|
|
Depreciation and amortization of other intangibles
|
|
|
177
|
|
|
|
184
|
|
|
|
205
|
|
|
|
222
|
|
|
|
221
|
|
|
|
162
|
|
|
|
163
|
|
Other expense, net
|
|
|
1
|
|
|
|
5
|
|
|
|
4
|
|
|
|
1
|
|
|
|
20
|
|
|
|
15
|
|
|
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before interest expense, income taxes, and
noncontrolling interests
|
|
|
217
|
|
|
|
196
|
|
|
|
252
|
|
|
|
(3
|
)
|
|
|
92
|
|
|
|
39
|
|
|
|
219
|
|
Interest expense (net of interest capitalized)
|
|
|
133
|
|
|
|
136
|
|
|
|
164
|
|
|
|
113
|
|
|
|
133
|
|
|
|
101
|
|
|
|
100
|
|
Income tax expense
|
|
|
26
|
|
|
|
5
|
|
|
|
83
|
|
|
|
289
|
|
|
|
13
|
|
|
|
18
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
58
|
|
|
$
|
55
|
|
|
$
|
5
|
|
|
$
|
(405
|
)
|
|
$
|
(54
|
)
|
|
$
|
(80
|
)
|
|
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
2
|
|
|
|
6
|
|
|
|
10
|
|
|
|
10
|
|
|
|
19
|
|
|
|
10
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Tenneco Inc.
|
|
$
|
56
|
|
|
$
|
49
|
|
|
$
|
(5
|
)
|
|
$
|
(415
|
)
|
|
$
|
(73
|
)
|
|
$
|
(90
|
)
|
|
$
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per share of common stock
|
|
|
1.30
|
|
|
|
1.11
|
|
|
|
(0.11
|
)
|
|
|
(8.95
|
)
|
|
|
(1.50
|
)
|
|
|
(1.93
|
)
|
|
|
0.97
|
|
Diluted earnings (loss) per share of common stock
|
|
|
1.24
|
|
|
|
1.05
|
|
|
|
(0.11
|
)
|
|
|
(8.95
|
)
|
|
|
(1.50
|
)
|
|
|
(1.93
|
)
|
|
|
0.94
|
|
Cash dividends declared per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
43,088,558
|
|
|
|
44,625,220
|
|
|
|
45,809,730
|
|
|
|
46,406,095
|
|
|
|
48,572,463
|
|
|
|
46,694,885
|
|
|
|
59,102,041
|
|
Diluted
|
|
|
45,321,225
|
|
|
|
46,755,573
|
|
|
|
45,809,730
|
|
|
|
46,406,095
|
|
|
|
48,572,463
|
|
|
|
46,694,885
|
|
|
|
60,859,093
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
(Dollars in millions)
|
|
|
Balance sheet data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
2,945
|
|
|
$
|
3,274
|
|
|
$
|
3,590
|
|
|
$
|
2,828
|
|
|
$
|
2,841
|
|
|
$
|
2,939
|
|
|
$
|
3,270
|
|
Short-term debt
|
|
|
22
|
|
|
|
28
|
|
|
|
46
|
|
|
|
49
|
|
|
|
75
|
|
|
|
73
|
|
|
|
70
|
|
Long-term debt
|
|
|
1,361
|
|
|
|
1,357
|
|
|
|
1,328
|
|
|
|
1,402
|
|
|
|
1,145
|
|
|
|
1,395
|
|
|
|
1,227
|
|
Redeemable noncontrolling interests
|
|
|
3
|
|
|
|
4
|
|
|
|
6
|
|
|
|
7
|
|
|
|
7
|
|
|
|
5
|
|
|
|
10
|
|
Total Tenneco Inc. shareholders equity
|
|
|
137
|
|
|
|
226
|
|
|
|
400
|
|
|
|
(251
|
)
|
|
|
(21
|
)
|
|
|
(244
|
)
|
|
|
5
|
|
Noncontrolling interests
|
|
|
21
|
|
|
|
24
|
|
|
|
25
|
|
|
|
24
|
|
|
|
32
|
|
|
|
26
|
|
|
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity (deficit)
|
|
|
158
|
|
|
|
250
|
|
|
|
425
|
|
|
|
(227
|
)
|
|
|
11
|
|
|
|
(218
|
)
|
|
|
38
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended
|
|
|
Nine Months
|
|
|
|
December 31,
|
|
|
Ended September 30,
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
(Dollars in millions)
|
|
|
Statement of cash flows data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
123
|
|
|
$
|
203
|
|
|
$
|
158
|
|
|
$
|
160
|
|
|
$
|
241
|
|
|
$
|
108
|
|
|
$
|
64
|
|
Net cash used by investing activities
|
|
|
(164
|
)
|
|
|
(172
|
)
|
|
|
(202
|
)
|
|
|
(261
|
)
|
|
|
(119
|
)
|
|
|
(86
|
)
|
|
|
(112
|
)
|
Net cash provided (used) by financing activities
|
|
|
(28
|
)
|
|
|
12
|
|
|
|
(10
|
)
|
|
|
58
|
|
|
|
87
|
|
|
|
(21
|
)
|
|
|
64
|
|
Cash payments for plant, property and equipment
|
|
|
(140
|
)
|
|
|
(177
|
)
|
|
|
(177
|
)
|
|
|
(233
|
)
|
|
|
(120
|
)
|
|
|
(86
|
)
|
|
|
(105
|
)
|
11
RISK
FACTORS
You should carefully consider the risks described below and
in the documents incorporated by reference before participating
in the exchange offer. Any of the following risks could
materially adversely affect our business, financial condition or
results of operations. In such case, the trading price of our
securities, including the exchange notes, could decline, and you
might lose all or part of your original investment. You are
encouraged to perform your own investigation with respect to the
notes and our company. Some of the statements in this discussion
of risk factors are forward-looking statements. See
Forward-Looking Statements.
Risks
Relating to our Existing Indebtedness, the Old Notes and the
Exchange Notes
Our
substantial debt could adversely affect our ability to raise
additional capital to fund our operations, limit our ability to
react to changes in the economy or our industry and prevent us
from making payments on the notes.
We are a highly leveraged company. As of September 30,
2010, on a pro forma basis after giving effect to the
offering of the
67/8% Senior
Notes and the use of proceeds therefrom, we would have had
(i) $1,297 million of outstanding senior indebtedness
and (ii) $614 million of unused capacity under the
revolving credit facility and
tranche B-1
letter of credit/revolving loan facility and $52 million in
outstanding letters of credit under the revolving credit
facility, all of which if drawn also would have been senior
debt. Our substantial amount of debt requires significant
interest payments. We also incur additional debt from time to
time to finance working capital, capital expenditures,
investments or acquisitions, or for other general corporate
purposes.
This level of indebtedness could have important consequences for
you, including the following:
|
|
|
|
|
a substantial portion of our cash flow from operations is
dedicated to the repayment of our indebtedness and would not be
available for other purposes;
|
|
|
|
it may limit our ability to borrow money or sell stock for our
working capital, capital expenditures, debt service requirements
or other purposes;
|
|
|
|
it may limit our flexibility in planning for, or reacting to,
changes in our operations, our business or the industry in which
we compete;
|
|
|
|
we are highly leveraged, which may place us at a competitive
disadvantage;
|
|
|
|
it may make us more vulnerable to downturns in our business or
the economy;
|
|
|
|
our ability to meet the debt service requirements of our
indebtedness could make it more difficult for us to make
payments on the notes; and
|
|
|
|
there would be a material adverse effect on our business and
financial condition if we were unable to service our
indebtedness or obtain additional financing, as needed.
|
Despite
our substantial indebtedness, we may still be able to incur
significantly more debt, including debt that is secured by our
assets. This could intensify many of the risks described
herein.
The terms of our senior secured credit facility, the indentures
governing the notes, the
67/8% Senior
Notes and our other senior notes and the agreements governing
our other indebtedness limit, but do not prohibit, us and our
subsidiaries from incurring significant additional indebtedness
in the future. As of September 30, 2010, on a pro forma
basis after giving effect to the offering of the
67/8% Senior
Notes and the use of proceeds therefrom, under our senior
secured credit facility, which is secured by a substantial
portion of our assets, we would have had $614 million of
unused capacity under the revolving credit facility and
tranche B-1
letter of credit/revolving loan facility capacity and
$52 million of letters of credit issued under the revolving
credit facility. In addition, the covenants under our debt
agreements would allow us to borrow a significant amount of
additional indebtedness, including secured indebtedness. The
more we become leveraged, the more we, and in turn our security
holders, become exposed to many of the risks described herein.
12
Your
right to receive payments on the notes and guarantees is
effectively junior to our and our subsidiary guarantors
senior debt that is secured.
Payment on the notes and guarantees will be effectively junior
in right of payment to all of our and our subsidiary
guarantors senior debt that is secured, including our
senior secured credit facility. Upon any distribution to our
creditors or the creditors of any guarantor in a bankruptcy,
liquidation or reorganization or similar proceeding relating to
us or such guarantor or our or its property, the holders of
senior debt that is secured will be entitled to be paid in full
in cash before any payment may be made on these notes or the
subsidiary guarantees. In these cases, we and the guarantors may
not have sufficient funds to pay all of our creditors, and
holders of notes may receive less, ratably, than the holders of
senior debt that is secured.
In addition, our senior secured credit facility is
(i) secured by substantially all of the tangible and
intangible assets of us and our subsidiary guarantors,
(ii) collateralized by a perfected security interest in all
of the capital stock of our and the subsidiary guarantors
domestic subsidiaries and (iii) secured by up to
66 percent of the capital stock of our and the subsidiary
guarantors direct foreign subsidiaries. Accordingly, upon
our bankruptcy, liquidation or reorganization or similar
proceeding, the holders of the notes offered hereby will have no
claim against these assets or the capital stock of these
subsidiaries until the lenders under the senior secured credit
facility have been paid in full.
We
rely on our subsidiaries to fund our financial obligations,
including the notes. Additionally, not all of our subsidiaries
will guarantee the notes and assets of our non-guarantor
subsidiaries may not be available to make payments on the
notes.
Tenneco Inc., the issuer of the notes, is a holding company and
relies on its subsidiaries for all funds necessary to meet its
financial obligations, including the notes. The assets of
Tenneco Inc. consist of the stock of subsidiaries and certain
intellectual property. If distributions from our subsidiaries to
us were eliminated, delayed, reduced or otherwise impaired, our
ability to make payments on the notes would be substantially
impaired.
Although some of our subsidiaries will guarantee the notes, a
substantial number of them will not. Payments on the notes will
only be required to be made by Tenneco Inc. and the subsidiary
guarantors. The non-guarantor subsidiaries consist of all of our
foreign subsidiaries, immaterial domestic subsidiaries and other
finance-related subsidiaries. Because the non-guaranteeing
subsidiaries may have other creditors and are not obligated to
repay and do not guarantee repayment of the notes, you cannot
rely on such subsidiaries to make any payments on the notes
directly to you or to make sufficient distributions to enable us
to satisfy our obligations to you under the notes. As of, and
for the nine months ended, September 30, 2010, and the year
ended December 31, 2009, the non-guarantor subsidiaries
represented approximately 75 percent and 77 percent,
respectively, of our consolidated assets, approximately
56 percent and 59 percent, respectively, of our
consolidated net sales (excluding intercompany sales) and
approximately 63 percent and 186 percent,
respectively, of our consolidated operating income. To the
extent we expand our international operations, a larger
percentage of our consolidated assets, net sales and operating
income may be derived from non-guarantor foreign subsidiaries.
Our ability to repatriate cash from foreign subsidiaries may be
limited. See Risks Relating to our BusinessWe
are subject to risks related to our international
operations. We will depend in part on the non-guarantor
subsidiaries for dividends and other payments to generate the
funds necessary to meet our financial obligations, including the
payment of principal and interest on the notes. Further, the
earnings from, or other available assets of, these non-guarantor
subsidiaries, together with our guarantor subsidiaries, may not
be sufficient to make distributions to enable us to pay interest
on the notes when due or principal of the notes at maturity.
If any or all of our non-guarantor subsidiaries become the
subject of a bankruptcy, liquidation or reorganization, the
creditors of the subsidiary or subsidiaries, including debt
holders, must be paid in full out of the subsidiarys or
subsidiaries assets before any monies may be distributed
to us as the holder of the equity in the subsidiary or
subsidiaries. As of September 30, 2010 and
December 31, 2009, our non-guarantor subsidiaries had
$1,504 million and $1,030 million, respectively, of
liabilities recorded on their balance sheets.
13
The indenture governing the notes limits, but does not prohibit,
our subsidiaries from incurring additional indebtedness.
We are
required to make substantial debt service payments, and we may
not be able to generate sufficient cash to service all of our
indebtedness, including the notes. In addition, a substantial
amount of our debt is secured.
Our ability to make payments on our indebtedness, including the
notes, depends on our ability to generate cash in the future.
Our annual debt service obligations in 2010, assuming we incur
no further indebtedness, will consist primarily of interest and
required principal payments under our senior secured credit
facility and the agreements governing the debt incurred by our
foreign subsidiaries, interest payments on, until we use the
proceeds of the offering of the
67/8% Senior
Notes to retire our Senior Subordinated Notes, our Senior
Subordinated Notes and senior notes and interest payments on the
notes and the
67/8% Senior
Notes. We will have to generate significant cash flows from
operations to meet our debt service requirements. If we do not
generate sufficient cash flow to meet our debt service and
working capital requirements, we may need to seek additional
financing or sell assets. This may make it more difficult for us
to obtain financing on terms that are acceptable to us, or at
all. Without any such financing, we could be forced to sell
assets to make up for any shortfall in our payment obligations
under unfavorable circumstances.
Our senior secured credit facility and the indentures governing
the notes, the
67/8% Senior
Notes and our other senior notes limit our ability to sell
assets and also restrict the use of proceeds from any asset
sale. Moreover, our senior secured credit facility is secured on
a first priority basis by substantially all of our and our
subsidiary guarantors tangible and intangible domestic
assets, pledges of all of the stock of our and our subsidiary
guarantors direct domestic subsidiaries and pledges of up
to 66 percent of the stock of our and our subsidiary
guarantors direct foreign subsidiaries. If necessary, we
may not be able to sell assets quickly enough or for sufficient
amounts to enable us to meet our obligations. Furthermore, a
substantial portion of our assets are, and may continue to be,
intangible assets. Therefore, it may be difficult for us to pay
you in the event of an acceleration of the notes.
Our
variable rate indebtedness subjects us to interest rate risk,
which could cause our annual debt service obligations to
increase significantly.
Certain of our borrowings, including borrowings under our senior
secured credit facility, are at variable rates of interest and
expose us to interest rate risk. If interest rates increase, our
debt service obligations on the variable rate indebtedness would
increase even though the amount borrowed remained the same, and
our net income would decrease. An increase of 1.0 percent
in the interest rates payable on our existing variable rate
indebtedness would have increased our 2009 estimated debt
service requirements by approximately $2 million after
taxes on a pro forma basis after giving effect to the
offering of the
67/8% Senior
Notes and the use of proceeds therefrom. We have no interest
rate hedge agreements that would shield us from this risk. We
might consider entering into
fixed-to-floating
interest rate swaps on all or any portion of our remaining
fixed-rate debt. Such a transaction could initially reduce our
interest expense, but may expose us to an increase in interest
rates in the future.
Our
failure to comply with the covenants contained in the agreement
governing our senior secured credit facility, the indentures
governing the notes, the
67/8% Senior
Notes, our other senior notes or our other debt agreements,
including as a result of events beyond our control, could result
in an event of default which could materially and adversely
affect our operating results and our financial
condition.
Our senior secured credit facility and receivables
securitization program in the U.S. require us to maintain
certain financial ratios. Our senior secured credit facility and
our other debt instruments require us to comply with various
operational and other covenants. If there were an event of
default under any of our debt instruments that was not cured or
waived, the holders of the defaulted debt could cause all
amounts outstanding with respect to that debt to be due and
payable immediately. We cannot assure you that our assets or
cash flow would be sufficient to fully repay borrowings under
our outstanding debt instruments, either upon
14
maturity or if accelerated, upon an event of default, or that we
would be able to refinance or restructure the payments on those
debt instruments.
For example, in February 2009, we sought an amendment to our
senior credit facility to revise the financial ratios we are
required to maintain thereunder. The revised financial ratios
were based on a set of projections that we shared with our
lenders. If, in the future, we are required to obtain similar
amendments as a result of our inability to meet the financial
ratios in those projections, there can be no assurance that
those amendments will be available on commercially reasonable
terms or at all. If, as or when required, we are unable to
repay, refinance or restructure our indebtedness under our
senior secured credit facility, or amend the covenants contained
therein, the lenders under our senior secured credit facility
could elect to terminate their commitments thereunder, cease
making further loans and institute foreclosure proceedings
against our assets. Under such circumstances, we could be forced
into bankruptcy or liquidation. In addition, any event of
default or declaration of acceleration under one of our debt
instruments could also result in an event of default under one
or more of our other financing agreements, including our other
debt instruments
and/or the
agreements under which we sell certain of our accounts
receivable. This would have a material adverse impact on our
liquidity, financial position and results of operations.
We may
not be able to repay, refinance or replace our senior secured
credit facility or senior notes when they terminate or become
due, which will occur before the maturity of the
notes.
Amounts borrowed under our senior secured credit facility, which
is secured by a substantial portion of our assets, will mature
at varying times prior to the maturity of the notes. The
revolving credit facility will mature on May 31, 2014.
However, the revolving credit facility will mature on
December 14, 2013 if our
tranche B-1
letter of credit/revolving loan facility is not refinanced by
that date. The term loan B facility will mature on June 3,
2016. Certain of our other senior notes mature on
November 15, 2015, which is also prior to the maturity of
the notes offered hereby.
We may not be able to (i) repay or refinance amounts due
under the senior secured credit facility prior to their maturity
dates, (ii) repay or replace the revolving portions of our
senior secured credit facility prior to their termination or
(iii) repay, refinance or extend the maturity of our other
senior notes prior to the applicable dates described above. If
we are unable to repay, refinance or restructure all or any part
of our senior secured credit facility, the lenders thereunder
could proceed against any collateral securing such indebtedness.
If we are unable to repay, refinance or extend the maturity of
this indebtedness or the indebtedness under our other senior
notes prior to the applicable dates described above, our
liquidity and financial flexibility would be substantially
impaired.
Releases
of the guarantees of the notes or additional guarantees may be
controlled under some circumstances by the administrative agent
under our senior secured credit facility.
The notes will be guaranteed by each of our current and future
domestic subsidiaries that guarantees the obligations under our
senior secured credit facility. If we create or acquire a
material domestic subsidiary in the future and the
administrative agent under our senior secured credit facility
does not require that subsidiary to guarantee the obligations
under the senior secured credit facility, then the subsidiary
will not be required to guarantee the notes unless it incurs
indebtedness. In addition, under the terms of the indenture, a
guarantee of the notes made by a guarantor will be released
without any action on the part of the trustee or any holder of
the notes if the administrative agent under our senior secured
credit facility releases the guarantee of obligations under our
senior secured credit facility made by that guarantor (unless
the guarantor remains or becomes a guarantor of is otherwise
liable on account of any our indebtedness). Additional releases
of the guarantees of the notes are permitted under some
circumstances. See Description of the NotesBrief
Description of the Notes and the GuaranteesThe
Guarantees.
15
Because
each of our subsidiary guarantors liability under its
guarantee may be reduced to zero, avoided or released under
certain circumstances, you may not receive any payments from
some or all of the guarantors.
The holders of the notes have the benefit of guarantees from our
subsidiary guarantors. However, the guarantees from our
subsidiary guarantors are limited to the maximum amount which
the subsidiary guarantors are permitted to guarantee under
applicable law. As a result, each subsidiary guarantors
liability under its guarantee could be reduced to zero,
depending upon the amount of other obligations of the subsidiary
guarantor or based on other defenses available to guarantors.
Federal
and state statutes allow courts, under specific circumstances,
to void the subsidiary guarantees and require noteholders to
return payments received from us or the subsidiary guarantors.
If that occurs, you may not receive any payments on the
notes.
Our issuance of the notes and the issuance of the guarantees by
the subsidiary guarantors may be subject to review under federal
and state fraudulent transfer and conveyance statutes. While the
relevant laws may vary from state to state, under such laws the
payment of consideration will be a fraudulent conveyance if
(i) we paid the consideration with the intent of hindering,
delaying or defrauding creditors or (ii) we or any of the
subsidiary guarantors, as applicable, received less than
reasonably equivalent value or fair consideration in return for
issuing either the notes or a guarantee, and, in the case of
(ii) only, one of the following is true:
|
|
|
|
|
we or any of the subsidiary guarantors were or was insolvent, or
rendered insolvent, by reason of such transactions;
|
|
|
|
paying the consideration left us or any of the subsidiary
guarantors with an unreasonably small amount of capital to carry
on the business; or
|
|
|
|
we or any of the subsidiary guarantors intended to, or believed
that we or it would, be unable to pay debts as they matured.
|
If a court were to find that the issuance of the notes or a
guarantee was a fraudulent conveyance, the court could avoid the
payment obligations under the notes, such guarantee or further
subordinate the notes or such guarantee to presently existing
and future indebtedness of us or of such guarantor, or require
the holders of the notes to repay any amounts received with
respect to the notes or such guarantee. In the event of a
finding that a fraudulent conveyance occurred, you may not
receive any repayment on the notes.
Generally, an entity would be considered insolvent if, at the
time it incurred indebtedness:
|
|
|
|
|
the sum of its liabilities (contingent or otherwise) was greater
than the fair value of all its assets;
|
|
|
|
the present fair saleable value of its assets is less than the
amount required to pay the probable liability on its existing
debts and liabilities as they become due;
|
|
|
|
it cannot pay its debts as they become due; or
|
|
|
|
it had at such time an unreasonably small amount of capital with
which to conduct its business.
|
Restrictive
covenants in our senior secured credit facility and in the
indentures governing the notes, the
67/8% Senior
Notes and our other senior notes may prevent us from pursuing
business strategies that could otherwise improve our results of
operations.
The indentures governing the notes, the
67/8% Senior
Notes and our other senior notes and our senior secured credit
facility limit our ability, among other things, to:
|
|
|
|
|
incur additional indebtedness or contingent obligations;
|
|
|
|
pay dividends or make distributions to our shareholders;
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repurchase or redeem our equity interests;
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make investments;
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grant liens;
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make capital expenditures;
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enter into transactions with our shareholders and affiliates;
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sell assets; and
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acquire the assets of, or merge or consolidate with, other
companies.
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In addition, our senior secured credit facility requires us to
maintain a minimum interest coverage ratio of consolidated
EBITDA to consolidated cash interest paid and a maximum net
leverage ratio of consolidated debt less unrestricted cash/cash
equivalents to consolidated EBITDA (each as defined in the
senior credit agreement). Complying with these restrictive
covenants and financial ratios may impair our ability to finance
our future operations or capital needs or to engage in other
favorable business activities.
We may
not have sufficient funds or be permitted by our other debt to
purchase notes upon a change of control.
Upon a change of control, we will be required to make an offer
to purchase all outstanding notes. However, we cannot assure you
that we will have or will be able to borrow sufficient funds at
the time of any change of control to make any required
repurchases of notes, or that restrictions in our senior secured
credit facility or other debt we may incur in the future would
permit us to make the required repurchases. For the foreseeable
future, our senior secured credit facility will not permit us to
make the required repurchases. Our failure to purchase, or give
notice of purchase of, the notes would be a default under the
indenture governing the notes, which would in turn be a default
under our senior secured credit facility and our other senior
notes. In addition, a change of control may be an event of
default under our senior secured credit facility and would
require us to make an offer to purchase the other senior notes
at 101 percent of the principal amount thereof. Subject to
limited exceptions, our senior secured credit facility prohibits
the purchase of outstanding notes prior to repayment of the
borrowings under our senior secured credit facility and any
exercise by the holders of the notes of their right to require
us to purchase the notes would cause an event of default under
our senior secured credit facility.
Many
of the covenants in the indenture will be suspended if the notes
are rated investment grade by both Moodys Investors
Service, Inc. and Standard & Poors Rating
Services.
Many of the covenants in the indenture governing the notes will
no longer apply to us during any time that the notes are rated
investment grade by both Moodys Investors Service, Inc.
and Standard & Poors Rating Services, provided
that at such time no default or event of default has occurred
and is continuing. These covenants will restrict, among other
things, our ability to pay distributions, incur debt and to
enter into certain other transactions. There can be no assurance
that the notes will ever be rated investment grade, or that if
they are rated investment grade, that the notes will maintain
these ratings. However, suspension of these covenants would
allow us to engage in certain transactions that would not be
permitted while these covenants were in force. See
Description of NotesCovenant Suspension.
You
may have difficulty selling the old notes that you do not
exchange.
If you do not exchange your old notes for exchange notes in the
exchange offer, you will continue to be subject to the
restrictions on transfer of your old notes described in the
legend on your old notes. The restrictions on transfer of your
old notes arise because we issued the old notes under exemptions
from, or in transactions not subject to, the registration
requirements of the Securities Act and applicable state
securities laws. In general, you may only offer or sell the old
notes if they are registered under the Securities Act and
applicable state securities laws, or offered and sold under an
exemption from these requirements. We do not intend to register
the old notes under the Securities Act. To the extent old notes
are tendered and accepted in the exchange offer, the trading
market, if any, for the remaining old notes would be adversely
affected. See The Exchange OfferConsequences of
Failure to Exchange for a discussion of the possible
consequences of failing to exchange your old notes.
17
You
may find it difficult to sell your exchange notes because there
is no existing trading market for the exchange
notes.
You may find it difficult to sell your exchange notes because an
active trading market for the exchange notes may not develop.
There is no existing trading market for the exchange notes. We
do not intend to apply for listing or quotation of the exchange
notes on any exchange, and so we do not know the extent to which
investor interest will lead to the development of a trading
market or how liquid that market might be. Although the initial
purchasers of the old notes have informed us that they intend to
make a market in the exchange notes, they are not obligated to
do so, and any market making may be discontinued at any time
without notice. As a result, the market price of the exchange
notes, as well as your ability to sell the exchange notes, could
be adversely affected.
Broker-dealers
or noteholders may become subject to the registration and
prospectus delivery requirements of the Securities
Act.
Any broker-dealer that:
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exchanges its old notes in the exchange offer for the purpose of
participating in a distribution of the exchange notes, or
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resells exchange notes that were received by it for its own
account in the exchange offer, may be deemed to have received
restricted securities and may be required to comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction by that
broker-dealer. Any profit on the resale of the exchange notes
and any commission or concessions received by a broker-dealer
may be deemed to be underwriting compensation under the
Securities Act.
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In addition to broker-dealers, any noteholder that exchanges its
old notes in the exchange offer for the purpose of participating
in a distribution of the exchange notes may be deemed to have
received restricted securities and may be required to comply
with the registration and prospectus delivery requirements of
the Securities Act in connection with any resale transaction by
that noteholder.
Risks
Relating to our Business
The
recent global economic crisis severely and negatively affected
the automotive industry and our business, financial position and
liquidity and future deterioration or prolonged difficulty in
economic conditions could have a material adverse impact on our
business, financial position and liquidity.
The economic crisis in 2008 and 2009 arising out of the subprime
mortgage market collapse and the resulting worldwide financial
industry turmoil resulted in a severe and global tightening of
credit and a liquidity crisis. As a result, nearly every major
economy in the world faced a widespread reduction of business
activity,
seized-up
credit markets and rising unemployment. These conditions led to
a low consumer confidence, which resulted in delayed and reduced
purchases of durable consumer goods such as automobiles. As a
result, our OEM customers significantly reduced their production
schedules. Light vehicle production during 2009 decreased by
32 percent in North America and 20 percent in Europe
as compared to 2008. These unprecedented conditions had a severe
and negative impact on our business and financial position and
vehicle production remains at historical lows.
We face several risks relating to difficult economic conditions,
including the following:
Disruptions in the financial markets may adversely impact the
availability and cost of credit which could materially and
negatively affect our company. The recent global
financial crisis materially and negatively impacted our business
and our customers businesses in the U.S. and
globally. Longer term disruptions in the capital and credit
markets could further adversely affect our customers and
our ability to access the liquidity that is necessary to fund
operations on terms that are acceptable to us or at all. The
recent global economic crisis also negatively impacted consumer
spending patterns in the automotive industry. During periods of
economic difficulty, purchases of our customers products
may be limited by their customers inability to
18
obtain adequate financing for such purchases. In addition, as
our customers and suppliers respond to rapidly changing consumer
preferences, they may require access to additional capital. If
that capital is not available or its cost is prohibitively high,
their businesses would be negatively impacted which could result
in further restructuring or even reorganization under bankruptcy
laws. Any such negative impact, in turn, could materially and
negatively affect our company either through loss of sales to
any of our customers so affected or through inability to meet
our commitments (or inability to meet them without excess
expense) because of loss of supplies from any of our suppliers
so affected.
Financial or other difficulties facing other automotive
companies may have a material and adverse impact on
us. Over the last several years, a number of
companies in the automotive industry have been facing severe
financial difficulties. GM, Ford and Chrysler undertook
significant restructuring actions in an effort to improve
profitability and remain solvent. The North American automotive
manufacturers were burdened with substantial structural and
embedded costs, such as facility overhead as well as pension and
healthcare costs, that led GM and Chrysler to reorganize under
bankruptcy protection in 2009. Automakers in other markets in
the world also have been experiencing difficulties from a
weakened economy, tightening credit markets and reduced demand
for their products. The automotive supply base in turn has also
been faced with severe cash flow problems as a result of the
significantly lower production levels of light vehicles,
increases in certain costs and restricted access to additional
liquidity through the credit markets. Several suppliers have
filed for bankruptcy protection or ceased operations.
Severe financial or other difficulties, including bankruptcy, of
any automotive manufacturer or significant automotive supplier
could have a significant disruptive effect on the entire
automotive industry, leading to supply chain disruptions and
labor unrest, among other things. For example, if a parts
supplier were to cease operations, it could force the automotive
manufacturers to whom the supplier provides parts to shut down
their operations. This, in turn, could force other suppliers,
including us, to shut down production at plants that are
producing products for these automotive manufacturers. Severe
financial or other difficulties at any of our major suppliers
could have a material adverse effect on us if we are unable to
obtain on a timely basis on similar economic terms the quantity
and quality of components we require to produce our products.
While the difficulties facing our customers and suppliers over
the last two years have been primarily financial in nature,
other difficulties, such as an inability to meet increased
demand as the economy recovers, could also result in supply
chain and other disruptions.
Financial or other difficulties at any of our major customers
could have a material adverse impact on us if such customer were
unable to pay for the products we provide or we experience a
loss of, or material reduction in, business from such customer.
In connection with the 2009 bankruptcies of GM and Chrysler, we
collected substantially all of our pre-petition receivables and
the reorganized GM and Chrysler assumed substantially all of the
pre-petition contracts we had with them. However, further
financial difficulties at any of our major customers could have
a material adverse impact on us, including as a result of lost
revenues, significant write offs of accounts receivable,
significant impairment charges or additional restructurings
beyond our current global plans. In addition, a bankruptcy
filing by one of our other large customers could result in a
default under our U.S. securitization agreement. Our
inability to collect receivables in a timely manner or to sell
receivables under our U.S. securitization program may have
a material adverse effect on our liquidity.
Our working capital requirements may negatively affect our
liquidity and capital resources. Our working
capital requirements can vary significantly, depending in part
on the level, variability and timing of our customers
worldwide vehicle production and the payment terms with our
customers and suppliers. Our liquidity could also be adversely
impacted if our suppliers were to suspend normal trade credit
terms and require payment in advance or payment on delivery of
purchases. If our working capital needs exceed our cash flows
from operations, we would look to our cash balances and
availability for borrowings under our borrowing arrangements to
satisfy those needs, as well as potential sources of additional
capital, which may not be available on satisfactory terms and in
adequate amounts, if at all.
Any further continuation of the global economic downturn or
other factors that reduce consumer demand for our products or
reduce prices could materially and adversely impact our
financial condition and results of
operations. Demand for and pricing of our
products are subject to economic conditions and other factors
19
present in the various domestic and international markets where
the products are sold. Demand for our OE products is subject to
the level of consumer demand for new vehicles that are equipped
with our parts. The level of new light vehicle purchases is
cyclical, affected by such factors as general economic
conditions, interest rates, consumer confidence, patterns of
consumer spending, fuel cost and the automobile replacement
cycle. Consumer preferences also impact the level of new light
vehicle purchases. For example, if increasing consumer awareness
of climate change issues causes consumers to increasingly prefer
electric vehicles, demand for the vehicles equipped with our
emission control products would decrease.
As described above, the recent unprecedented deterioration in
the global economy, global credit markets and the financial
services industry beginning in 2008 has negatively impacted our
operations, including by leading to a rapid decline in light
vehicle purchases. In 2009, North American light vehicle
production decreased 32 percent from 2008. During 2009,
European light vehicle production declined 20 percent as
compared to 2008. In addition, significant increases in gasoline
prices in the United States, starting in the first half of 2008,
accelerated the shift in the North American market away from
light trucks, which tend to be higher margin products for OEMs
and suppliers, to more fuel-efficient passenger cars. During
2009, SUV and
pick-up
truck business accounted for 55 percent of our North
American OE revenues, relatively unchanged from 54 percent
in 2008. OE production started to stabilize and overall the
production environment strengthened during the second half of
2009 compared to the first half of 2009 as production began to
track more closely to vehicle sales after inventory corrections
in the first half of 2009. Light vehicle production in the first
nine months of 2010 has continued to strengthen. North American
light vehicle production was up 53 percent
year-over-year,
while in Europe, light vehicle production in the first nine
months of 2010 was up 18 percent
year-over-year.
Current light vehicle production projections for the fourth
quarter of 2010 for North America and India are up
year-over-year
when compared to the fourth quarter of 2009, while projected
light vehicle production for the fourth quarter for China is
relatively even when compared to the fourth quarter of last
year. In Europe, South America and Australia, current light
vehicle production projections for the fourth quarter of 2010
are down
year-over-year
when compared to the fourth quarter of 2009. A further decline
in automotive sales and production would likely cause a decline
in our sales to vehicle manufacturers, and would likely result
in a decline in our results of operations and financial
condition.
Demand for our aftermarket, or replacement, products varies
based upon such factors as general economic conditions, the
level of new vehicle purchases, which initially displaces demand
for aftermarket products, the severity of winter weather, which
increases the demand for certain aftermarket products, and other
factors, including the average useful life of parts and number
of miles driven.
The highly cyclical nature of the automotive industry presents a
risk that is outside our control and that cannot be accurately
predicted. For example, we cannot assure you that we would be
able to maintain or improve our results of operations in a
stagnant or extended recessionary economic environment. Further
decreases in demand for automobiles and automotive products
generally, or in the demand for our products in particular,
could materially and adversely impact our financial condition
and results of operations.
We are
dependent on large customers for future revenue. The loss of any
of these customers or the loss of market share by these
customers could have a material adverse impact on
us.
We depend on major vehicle manufacturers for a substantial
portion of our net sales. For example, during fiscal year ended
December 31, 2009, GM and Ford accounted for
16 percent and 14 percent of our net sales,
respectively. The loss of all or a substantial portion of our
sales to any of our large-volume customers could have a material
adverse effect on our financial condition and results of
operations by reducing cash flows and our ability to spread
costs over a larger revenue base. We may make fewer sales to
these customers for a variety of reasons, including but not
limited to: (1) loss of awarded business; (2) reduced
or delayed customer requirements; (3) strikes or other work
stoppages affecting production by the customers; or
(4) reduced demand for our customers products. See
the risk factor Financial or other difficulties facing
other automotive companies may have a material and adverse
impact on us.
The major North American automakers have been facing intense
competition from Asian OEMs. While we are actively targeting
Japanese, Chinese and Korean automakers, any market share loss
by these
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North American-based and European-based automakers could,
if we are unable to achieve increased sales to the Asian OE
manufacturers, have a material adverse effect on our business.
We may
be unable to realize sales represented by our awarded business,
which could materially and adversely impact our financial
condition and results of operations.
The realization of future sales from awarded business is
inherently subject to a number of important risks and
uncertainties, including the number of vehicles that our OE
customers will actually produce, the timing of that production
and the mix of options that our OE customers and consumers may
choose. Prior to 2008, substantially all of our North American
vehicle manufacturing customers had slowed or maintained at
relatively flat levels new vehicle production for several years.
In 2009, new vehicle production decreased dramatically as a
result of the global economic crisis. In addition, our customers
generally have the right to replace us with another supplier at
any time for a variety of reasons and have demanded price
decreases over the life of awarded business. Accordingly, we
cannot assure you that we will in fact realize any or all of the
future sales represented by our awarded business. Any failure to
realize these sales could have a material adverse effect on our
financial condition, results of operations, and liquidity.
In many cases, we must commit substantial resources in
preparation for production under awarded OE business well in
advance of the customers production start date. In certain
instances, the terms of our OE customer arrangements permit us
to recover these pre-production costs if the customer cancels
the business through no fault of our company. Although we have
been successful in recovering these costs under appropriate
circumstances in the past, we can give no assurance that our
results of operations will not be materially impacted in the
future if we are unable to recover these types of pre-production
costs related to OE cancellation of awarded business.
The
hourly workforce in the automotive industry is highly unionized
and our business could be adversely affected by labor
disruptions.
Although we consider our current relations with our employees to
be satisfactory, if major work disruptions were to occur, our
business could be adversely affected by, for instance, a loss of
revenues, increased costs or reduced profitability. We have not
experienced a material labor disruption in our workforce in the
last ten years, but there can be no assurance that we will not
experience a material labor disruption at one of our facilities
in the future in the course of renegotiation of our labor
arrangements or otherwise. In addition, substantially all of the
hourly employees of North American vehicle manufacturers and
many of their other suppliers are represented by the United
Automobile, Aerospace and Agricultural Implement Workers of
America or other labor organizations under collective bargaining
agreements. Vehicle manufacturers and such suppliers and their
employees in other countries are also subject to labor
agreements. A work stoppage or strike at our production
facilities, at those of a significant customer, or at a
significant supplier of ours or any of our customers, such as
the 2008 strike at American Axle which resulted in 30 GM
facilities in North America being idled for several months,
could have an adverse impact on us by disrupting demand for our
products
and/or our
ability to manufacture our products.
In the
past, we have experienced significant increases in raw materials
pricing; and future changes in the prices of raw materials or
utilities could have a material adverse impact on
us.
Significant increases in the cost of certain raw materials used
in our products or the cost of utilities required to produce our
products, to the extent they are not timely reflected in the
price we charge our customers or are otherwise mitigated, could
materially and adversely impact our results. For example, from
2004 through 2008, we experienced significant increases in
processed metal and steel prices. We addressed these increases
by evaluating alternative materials and processes, reviewing
material substitution opportunities, increasing component and
assembly outsourcing to low cost countries and aggressively
negotiating with our customers to allow us to recover these
higher costs from them. In addition to these actions, we
continue to pursue productivity initiatives and review
opportunities to reduce costs through restructuring activities.
We cannot assure you that we will not face increased prices in
the future or, if we do, whether these actions will be effective
in containing margin pressures from any further raw material or
utility price increases.
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We may
be unable to realize our business strategy of improving
operating performance, growing our business and generating
savings and improvements.
We regularly implement strategic and other initiatives designed
to improve our operating performance and grow our business. The
failure to achieve the goals of these initiatives could have a
material adverse effect on our business, particularly since we
rely on these initiatives to offset pricing pressures from our
suppliers and our customers, as described above, as well as to
manage the impacts of production cuts such as the significant
production decreases we are experiencing as a result of the
recent global economic crisis. Furthermore, the terms of our
senior credit facility may restrict the types of initiatives we
undertake, as these agreements restrict our uses of cash,
certain of these agreements require us to maintain financial
ratios and otherwise prohibit us from undertaking certain
activities. In the past we have been successful in obtaining the
consent of our senior lenders where appropriate in connection
with our initiatives. We cannot assure you, however, that we
will be able to pursue, successfully implement or realize the
expected benefits of any initiative or that we will be able to
sustain improvements made to date.
In addition, we believe that increasingly stringent
environmental standards for emissions have presented and will
continue to present an important opportunity for us to grow our
emissions control business. We cannot assure you, however, that
environmental standards for emissions will continue to become
more stringent or that the adoption of any new standards will
not be delayed beyond our expectations.
We may
incur material costs related to product warranties,
environmental and regulatory matters and other claims, which
could have a material adverse impact on our financial condition
and results of operations.
From time to time, we receive product warranty claims from our
customers, pursuant to which we may be required to bear costs of
repair or replacement of certain of our products. Vehicle
manufacturers are increasingly requiring their outside suppliers
to guarantee or warrant their products and to be responsible for
the operation of these component products in new vehicles sold
to consumers. Warranty claims may range from individual customer
claims to full recalls of all products in the field. We cannot
assure you that costs associated with providing product
warranties will not be material, or that those costs will not
exceed any amounts reserved in our consolidated financial
statements. For a description of our accounting policies
regarding warranty reserves, see Managements
Discussion and Analysis of Financial Condition and Results of
OperationsCritical Accounting Policies included in
Item 7 of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009.
We are subject to extensive government regulations worldwide.
Foreign, Federal, state and local laws and regulations may
change from time to time and our compliance with new or amended
laws and regulations in the future may require a material
increase in our costs and could adversely affect our results of
operations and competitive position. For example, we are subject
to a variety of environmental and pollution control laws and
regulations in all jurisdictions in which we operate. Soil and
groundwater remediation activities are being conducted at
certain of our current and former real properties. We record
liabilities for these activities when environmental assessments
indicate that the remedial efforts are probable and the costs
can be reasonably estimated. On this basis, we have established
reserves that we believe are adequate for the remediation
activities at our current and former real properties for which
we could be held responsible. Although we believe our estimates
of remediation costs are reasonable and are based on the latest
available information, the cleanup costs are estimates and are
subject to revision as more information becomes available about
the extent of remediation required. In future periods, we could
be subject to cash or non-cash charges to earnings if we are
required to undertake material additional remediation efforts
based on the results of our ongoing analyses of the
environmental status of our properties, as more information
becomes available to us.
We also from time to time are involved in legal proceedings,
claims or investigations that are incidental to the conduct of
our business. Some of these proceedings allege damages against
us relating to environmental liabilities, intellectual property
matters, personal injury claims, taxes, employment matters or
commercial or contractual disputes. For example, we are subject
to a number of lawsuits initiated by a significant number of
claimants alleging health problems as a result of exposure to
asbestos. Many of these cases involve significant numbers of
individual claimants. Many of these cases also involve numerous
defendants, with the number of
22
defendants in some cases exceeding 100 defendants from a variety
of industries. As major asbestos manufacturers or other
companies that used asbestos in their manufacturing processes
continue to go out of business, we may experience an increased
number of these claims.
We vigorously defend ourselves in connection with all of the
matters described above. We cannot, however, assure you that the
costs, charges and liabilities associated with these matters
will not be material, or that those costs, charges and
liabilities will not exceed any amounts reserved for them in our
consolidated financial statements. In future periods, we could
be subject to cash costs or non-cash charges to earnings if any
of these matters is resolved unfavorably to us. See
Managements Discussion and Analysis of Financial
Condition and Results of OperationsEnvironmental and Other
Matters included in Item 7 of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009.
We may
have difficulty competing favorably in the highly competitive
automotive parts industry.
The automotive parts industry is highly competitive. Although
the overall number of competitors has decreased due to ongoing
industry consolidation, we face significant competition within
each of our major product areas, including from new competitors
entering the markets which we serve. The principal competitive
factors include price, quality, service, product performance,
design and engineering capabilities, new product innovation,
global presence and timely delivery. As a result, many suppliers
have established or are establishing themselves in emerging,
low-cost markets to reduce their costs of production and be more
conveniently located for customers. Although we are also
pursuing a low-cost country production strategy and otherwise
continue to seek process improvements to reduce costs, we cannot
assure you that we will be able to continue to compete favorably
in this competitive market or that increased competition will
not have a material adverse effect on our business by reducing
our ability to increase or maintain sales or profit margins.
The
decreasing number of automotive parts customers and suppliers
could make it more difficult for us to compete
favorably.
Our financial condition and results of operations could be
adversely affected because the customer base for automotive
parts is decreasing in both the original equipment market and
aftermarket. As a result, we are competing for business from
fewer customers. Due to the cost focus of these major customers,
we have been, and expect to continue to be, requested to reduce
prices as part of our initial business quotations and over the
life of vehicle platforms we have been awarded. We cannot be
certain that we will be able to generate cost savings and
operational improvements in the future that are sufficient to
offset price reductions requested by existing customers and
necessary to win additional business.
Furthermore, the trend toward consolidation and bankruptcies
among automotive parts suppliers is resulting in fewer, larger
suppliers who benefit from purchasing and distribution economies
of scale. If we cannot achieve cost savings and operational
improvements sufficient to allow us to compete favorably in the
future with these larger companies, our financial condition and
results of operations could be adversely affected due to a
reduction of, or inability to increase, sales.
We may
not be able to successfully respond to the changing distribution
channels for aftermarket products.
Major automotive aftermarket retailers, such as AutoZone, are
attempting to increase their commercial sales by selling
directly to automotive parts installers in addition to
individual consumers. These installers have historically
purchased from their local warehouse distributors and jobbers,
who are our more traditional customers. We cannot assure you
that we will be able to maintain or increase aftermarket
revenues through increasing our sales to retailers. Furthermore,
because of the cost focus of major retailers, we have
occasionally been requested to offer price concessions to them.
Our failure to maintain or increase aftermarket sales, or to
offset the impact of any reduced sales or pricing through cost
improvements, could have an adverse impact on our business and
operating results.
23
Longer
product lives of automotive parts are adversely affecting
aftermarket demand for some of our products.
The average useful life of automotive parts has steadily
increased in recent years due to innovations in products and
technologies. The longer product lives allow vehicle owners to
replace parts of their vehicles less often. As a result, a
portion of sales in the aftermarket has been displaced. This has
adversely impacted, and could continue to adversely impact, our
aftermarket sales. Also, any additional increases in the average
useful lives of automotive parts would further adversely affect
the demand for our aftermarket products. Recently, we have
experienced relative stabilization in our aftermarket business
due to our ability to win new customers and recover steel price
increases through selling price increases. However, there can be
no assurance that we will be able to maintain this
stabilization. Aftermarket sales represented approximately
22 percent and 20 percent of our net sales in the
fiscal year ended December 31, 2009 and the nine months
ended September 30, 2010, respectively.
Assertions
against us or our customers relating to intellectual property
rights could materially impact our business.
We and others in our industry hold a number of patents and other
intellectual property rights that are critical to our respective
businesses. On occasion, third parties may assert claims against
us and our customers and distributors alleging our products or
technology infringe upon third-party intellectual property
rights. Similarly, we may assert claims against third-parties
who are taking actions that we believe are infringing on our
intellectual property rights. These claims, regardless of their
merit or resolution, are frequently costly to prosecute, defend
or settle and divert the efforts and attention of our management
and employees. Claims of this sort also could harm our
relationships with our customers and might deter future
customers from doing business with us. If any such claim were to
result in an adverse outcome, we could be required to take
actions which may include: cease the manufacture, use or sale of
the infringing products; pay substantial damages to third
parties, including to customers to compensate them for their
discontinued use or replace infringing technology with
non-infringing technology; or expend significant resources to
develop or license non-infringing products. Any of the foregoing
results could have a material adverse effect on our business,
financial condition and results of operations.
Any
acquisitions we make could disrupt our business and seriously
harm our financial condition.
We may, from time to time, consider acquisitions of
complementary companies, products or technologies. Acquisitions
involve numerous risks, including difficulties in the
assimilation of the acquired businesses, the diversion of our
managements attention from other business concerns and
potential adverse effects on existing business relationships
with current customers and suppliers. In addition, any
acquisitions could involve the incurrence of substantial
additional indebtedness. We cannot assure you that we will be
able to successfully integrate any acquisitions that we pursue
or that such acquisitions will perform as planned or prove to be
beneficial to our operations and cash flow. Any such failure
could seriously harm our business, financial condition and
results of operations.
We are
subject to risks related to our international
operations.
We have manufacturing and distribution facilities in many
regions and countries, including Australia, China, India, North
America, Europe and South America, and sell our products
worldwide. For the fiscal year ended December 31, 2009 and
the nine months ended September 30, 2010, approximately
55 percent and 52 percent, respectively, of our net
sales were derived from operations outside North America.
International operations are subject to various risks which
could have a material adverse effect on those operations or our
business as a whole, including:
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exposure to local economic conditions;
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exposure to local political conditions, including the risk of
seizure of assets by a foreign government;
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exposure to local social unrest, including any resultant acts of
war, terrorism or similar events;
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24
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exposure to local public health issues and the resultant impact
on economic and political conditions;
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currency exchange rate fluctuations;
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hyperinflation in certain foreign countries;
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controls on the repatriation of cash, including imposition or
increase of withholding and other taxes on remittances and other
payments by foreign subsidiaries; and
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export and import restrictions.
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Exchange
rate fluctuations could cause a decline in our financial
condition and results of operations.
As a result of our international operations, we are subject to
increased risk because we generate a significant portion of our
net sales and incur a significant portion of our expenses in
currencies other than the U.S. dollar. For example, where
we have significantly more costs than revenues generated in a
foreign currency, we are subject to risk if the foreign currency
in which our costs are paid appreciates against the currency in
which we generate revenue because the appreciation effectively
increases our cost in that country.
The financial condition and results of operations of some of our
operating entities are reported in foreign currencies and then
translated into U.S. dollars at the applicable exchange
rate for inclusion in our consolidated financial statements. As
a result, appreciation of the U.S. dollar against these
foreign currencies generally will have a negative impact on our
reported revenues and operating profit while depreciation of the
U.S. dollar against these foreign currencies will generally
have a positive effect on reported revenues and operating
profit. For example, our European operations were positively
impacted in 2007 due to the strengthening of the Euro against
the U.S. dollar. However, in 2008 and the first half of
2010, the dollar strengthened against the Euro which had a
negative effect on our results of operations. Our South American
operations were negatively impacted by the devaluation in 2000
of the Brazilian currency as well as by the devaluation of the
Argentine currency in 2002. We do not generally seek to mitigate
this translation effect through the use of derivative financial
instruments. To the extent we are unable to match revenues
received in foreign currencies with costs paid in the same
currency, exchange rate fluctuations in that currency could have
a material adverse effect on our business.
Entering
new markets poses new competitive threats and commercial
risks.
As we have expanded into markets beyond light vehicles, we
expect to diversify our product sales by leveraging technologies
being developed for the light vehicle segment. Such
diversification requires investments and resources which may not
be available as needed. We cannot guarantee that we will be
successful in leveraging our capabilities into new markets and
thus, in meeting the needs of these new customers and competing
favorably in these new markets. Further, a significant portion
of our growth potential is dependent on our ability to increase
sales to commercial vehicle customers. While we believe that we
can achieve our growth targets with the production contracts
that have been awarded to us, our future prospects will be
negatively affected if those customers underlying these
contracts experience reduced demand for their products or
financial difficulties.
Impairment
in the carrying value of long-lived assets and goodwill could
negatively affect our operating results.
We have a significant amount of long-lived assets and goodwill
on our consolidated balance sheet. Under generally accepted
accounting principles, long-lived assets, excluding goodwill,
are required to be reviewed for impairment whenever adverse
events or changes in circumstances indicate a possible
impairment. If business conditions or other factors cause
profitability and cash flows to decline, we may be required to
record non-cash impairment charges. Goodwill must be evaluated
for impairment annually or more frequently if events indicate it
is warranted. If the carrying value of our reporting units
exceeds their current fair value as determined based on the
discounted future cash flows of the related business, the
goodwill is considered impaired and is reduced to fair value by
a non-cash charge to earnings. Events and conditions that could
result in impairment in the value of our long-lived assets and
goodwill include changes in the industries in which we
25
operate, particularly the impact of the current downturn in the
global economy, as well as competition and advances in
technology, adverse changes in the regulatory environment, or
other factors leading to reduction in expected long-term sales
or profitability. For example, during the fiscal year ended
December 31, 2008, we were required to record a
$114 million asset impairment charge to write-off the
remaining goodwill related to our 1996 acquisition of Clevite
Industries.
The
value of our deferred tax assets could become impaired, which
could materially and adversely affect our operating
results.
As of December 31, 2009, we had approximately
$63 million in net deferred tax assets. These deferred tax
assets include net operating loss carryovers that can be used to
offset taxable income in future periods and reduce income taxes
payable in those future periods. We periodically determine the
probability of the realization of deferred tax assets, using
significant judgments and estimates with respect to, among other
things, historical operating results, expectations of future
earnings and tax planning strategies. For example, we were
required to record charges during the fiscal year ended
December 31, 2008 for a valuation allowance against our
U.S. deferred tax assets. These charges were attributable
to the significant decline in production which resulted from the
recent global economic crisis and the accounting requirement to
project that the current negative operating environment will
continue through the expiration of the net operating loss
carry-forward periods. If we determine in the future that there
is not sufficient positive evidence to support the valuation of
these assets, due to the risk factors described herein or other
factors, we may be required to further adjust the valuation
allowance to reduce our deferred tax assets. Such a reduction
could result in material non-cash expenses in the period in
which the valuation allowance is adjusted and could have a
material adverse effect on our results of operations.
Our
expected annual effective tax rate could be volatile and
materially change as a result of changes in mix of earnings and
other factors.
Our overall effective tax rate is equal to our total tax expense
as a percentage of our total profit or loss before tax. However,
tax expenses and benefits are determined separately for each tax
paying entity or group of entities that is consolidated for tax
purposes in each jurisdiction. Losses in certain jurisdictions
may provide no current financial statement tax benefit. As a
result, changes in the mix of projected profits and losses
between jurisdictions, among other factors, could have a
significant impact on our overall effective tax rate.
26
RATIO OF
EARNINGS TO FIXED CHARGES
The following table shows our ratio of earnings to fixed charges
for the nine months ended September 30, 2010 and for each
of the years ended December 31, 2009, 2008, 2007, 2006 and
2005. For the purpose of computing these ratios, the numerator,
earnings, consists of income from continuing operations before
provision for income taxes plus interest expense and an estimate
of interest within rent expense divided by the denominator,
fixed charges, which consists of interest expense including
amounts capitalized and an estimate of interest within rent
expense.
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Nine Months Ended
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September 30,
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Year Ended December 31,
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2010
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2005
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2006
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2007
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2008
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2009
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Ratio of earnings to fixed
charges(a)
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2.04
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1.55
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1.35
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1.46
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(a) |
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Earnings were inadequate to cover fixed charges by
$39 million for the year ended December 31, 2009 and
by $121 million for the year ended December 31, 2008. |
27
USE OF
PROCEEDS
We will not receive any cash proceeds from the issuance of the
exchange notes. In consideration for issuing the exchange notes
as contemplated in this prospectus, we will receive in exchange
old notes in like principal amount, which will be cancelled and
as such will not result in any increase in our indebtedness.
We used all of the net proceeds of the offering of the old
notes, which were $220 million after deducting discounts to
the initial purchasers and offering fees and expenses, together
with cash on hand and available liquidity, to redeem
approximately $245 million aggregate principal amount of
our senior secured notes, at a price of 101.708% of the
principal amount, plus accrued and unpaid interest on
September 2, 2010. Our outstanding senior secured notes
bore interest at the rate of
101/4%
per year and would have matured in July 2013.
28
THE
EXCHANGE OFFER
Purpose
and Effect of the Exchange Offer
Contemporaneously with issuing the $225 million of the old
notes in the private placement on August 3, 2010, we
entered into a registration rights agreement with the initial
purchasers of the old notes. In that agreement we agreed to file
a registration statement relating to an offer to exchange the
old notes for exchange notes. The registration statement of
which this prospectus forms a part was filed in compliance with
that obligation. We also agreed to use our commercially
reasonable efforts to cause that exchange offer to be
consummated within 210 days following the original issue of
the old notes.
The exchange notes we propose to issue will have terms
substantially identical to the old notes except that the
exchange notes will not contain terms with respect to transfer
restrictions, registration rights or additional interest payable
for the failure to complete the exchange offer or, if the
exchange offer is not permitted, have a shelf registration
statement declared effective within 210 days following the
original issue of the old notes.
We reserve the right, in our sole discretion, to purchase or
make offers for any old notes that remain outstanding following
the expiration or termination of this exchange offer and, to the
extent permitted by applicable law, to purchase old notes in the
open market or privately negotiated transactions, in one or more
additional tender or exchange offers or otherwise. The terms and
prices of these purchases or offers could differ significantly
from the terms of this exchange offer.
Under the circumstances set forth below, we will use our
commercially reasonable efforts to cause the Commission to
declare effective a shelf registration statement with respect to
the resale of the old notes and keep the statement effective for
up to two years after the original issuance of the old notes.
These circumstances include:
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if we and our subsidiary guarantors determine that any
applicable law, Commission rules or regulations or prevailing
interpretations of such rules or regulations by the staff of the
Commission do not permit us to effect the exchange offer as
contemplated by the registration rights agreement;
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if the exchange offer is not consummated within 210 days
after the original issue of the old notes; or
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if any of the initial purchasers in the private offering of the
old notes (i) holds old notes that have the status of an
unsold allotment in an initial distribution, and (ii) such
initial purchaser so requests in writing on or before the
60th day after the consummation of the exchange offer.
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If we fail to comply with our obligations under the registration
rights agreement to complete the exchange offer or, if the
exchange offer is not permitted, have a shelf registration
statement declared effective, within 210 days following the
original issue of the old notes, we will be required to pay
additional interest to holders of the old notes as described
under the heading Registration Rights.
Each holder of old notes that wishes to exchange such old notes
for exchange notes in the exchange offer will be required, among
other things, to make the following representations:
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any exchange notes will be acquired in the ordinary course of
its business;
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such holder has no arrangement or understanding with any person
to participate in the distribution of the exchange notes;
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if such holder is a broker-dealer that will receive exchange
notes for its own account in exchange for old notes that were
acquired as a result of market making activities, that such
holder will deliver a prospectus, as required by law, in
connection with any resale of exchange notes; and
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such holder is not an affiliate, as defined in
Rule 405 of the Securities Act, of either us or any of the
subsidiary guarantors.
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29
Resale of
Exchange Notes
Based on interpretations of the Commission staff set forth in no
action letters issued to unrelated third parties, we believe
that exchange notes issued under the exchange offer in exchange
for old notes may be offered for resale, resold and otherwise
transferred by any exchange note holder without compliance with
the registration and prospectus delivery provisions of the
Securities Act, if:
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such holder is not an affiliate of us or our
subsidiary guarantors within the meaning of Rule 405 under
the Securities Act;
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such exchange notes are acquired in the ordinary course of the
holders business; and
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the holder does not intend to participate in the distribution of
such exchange notes.
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Any holder who tenders in the exchange offer with the intention
of participating in any manner in a distribution of the exchange
notes cannot rely on the position of the staff of the Commission
set forth in Exxon Capital Holdings Corporation or
similar interpretive letters and must comply with the
registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction.
If as stated above a holder cannot rely on the position of the
staff of the Commission set forth in Exxon Capital
Holdings Corporation or similar interpretive letters, any
effective registration statement used in connection with a
secondary resale transaction must contain the selling security
holder information required by Item 507 of
Regulation S-K
under the Securities Act.
This prospectus may be used for an offer to resell, for the
resale or for other retransfer of exchange notes only as
specifically set forth in this prospectus. With regard to
broker-dealers, only broker-dealers that acquired the old notes
as result of market-making activities or other trading
activities may participate in the exchange offer. Each
broker-dealer that receives exchange notes for its own account
in exchange for old notes, where such old notes were acquired by
such broker-dealer as a result of market-making activities or
other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of the exchange
notes. Please read the section captioned Plan of
Distribution for more details regarding these procedures
for the transfer of exchange notes.
Terms of
Exchange Offer
Upon the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal, we will accept for
exchange any old notes properly tendered and not withdrawn prior
to the expiration time. We will issue $1,000 principal amount of
exchange notes in exchange for each $1,000 principal amount of
old notes surrendered under the exchange offer. Old notes may be
tendered only in minimum denominations of $2,000 and larger
integral multiples of $1,000.
The form and terms of the exchange notes will be substantially
identical to the form and terms of the old notes except that the
exchange notes will:
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be registered under the Securities Act,
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not bear legends restricting their transfer,
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bear a Series B designation to differentiate
them from the old notes, which bear a Series A
designation, and
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not provide for any additional interest upon our failure to
fulfill our obligations under the registration rights agreement
to file and cause to be effective a registration statement.
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The exchange notes will evidence the same debt as the old notes.
The exchange notes will be issued under and entitled to the
benefits of the same indenture that authorized the issuance of
the old notes. Consequently, both series will be treated as a
single class of debt securities under that indenture.
The exchange offer is not conditioned upon any minimum aggregate
principal amount of exchange notes being tendered for exchange.
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As of the date of this prospectus, $225 million aggregate
principal amount of the old notes are outstanding. This
prospectus and the letter of transmittal are being sent to all
registered holders of old notes. There will be no fixed record
date for determining registered holders of old notes entitled to
participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the
provisions of the registration rights agreement, the applicable
requirements of the Securities Act and the Securities Exchange
Act of 1934 and the rules and regulations of the Commission. Old
notes that are not tendered for exchange in the exchange offer
will remain outstanding and continue to accrue interest and will
be entitled to the rights and benefits such holders have under
the indenture relating to the old notes.
We will be deemed to have accepted for exchange properly
tendered old notes when we have given oral or written notice of
the acceptance to the exchange agent. The exchange agent will
act as agent for the tendering holders for the purposes of
receiving the exchange notes from us and delivering exchange
notes to such holders. Subject to the terms of the exchange and
the registration rights agreement, we expressly reserve the
right to amend or terminate the exchange offer, and not to
accept for exchange any old notes not previously accepted for
exchange, upon the occurrence of any of the conditions specified
below under the caption Conditions to the Exchange
Offer.
Holders who tender old notes in the exchange offer will not be
required to pay brokerage commissions or fees, or, subject to
the instructions in the letter of transmittal, transfer taxes
with respect to the exchange of old notes. We will pay all
charges and expenses, other than those transfer taxes described
below, in connection with the exchange offer. It is important
that you read the section labeled Fees and
Expenses below for more details regarding fees and
expenses incurred in the exchange offer.
Expiration
Time; Extensions; Amendments
The exchange offer will expire at 5:00 p.m., New York City
time
on ,
2011, unless, in our sole discretion, we extend it.
In order to extend the exchange offer, we will notify the
exchange agent orally or in writing of any extension. We will
notify the registered holders of old notes in writing or by
public announcement of the extension no later than
9:00 a.m., New York City time, on the business day after
the previously scheduled expiration date.
We expressly reserve the right, in our sole discretion:
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to delay accepting for exchange any old notes due to an
extension of the exchange offer;
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to extend the exchange offer or to terminate the exchange offer
and to refuse to accept old notes not previously accepted if any
of the conditions set forth below under Conditions
to the Exchange Offer have not been satisfied, by giving
oral or written notice of such extension or termination to the
exchange agent; or
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subject to the terms of the registration rights agreement, to
amend the terms of the exchange offer in any manner.
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Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or
written notice or public announcement thereof to the registered
holders of old notes. If we amend the exchange offer in a manner
that we determine to constitute a material change, we will
promptly disclose such amendment in a manner reasonably
calculated to inform the holders of old notes of such amendment.
Without limiting the manner in which we may choose to make
public announcements of any delay in acceptance, extension,
termination or amendment of the exchange offer, we shall have no
obligation to publish, advertise, or otherwise communicate any
such public announcement, other than by issuing a timely press
release to a financial news service. If we make any material
change to this exchange offer, we will disclose this change by
means of a post-effective amendment to the registration
statement which includes this
31
prospectus and will distribute an amended or supplemented
prospectus to each registered holder of old notes. In addition,
we will extend this exchange offer for an additional five to ten
business days as required by the Exchange Act, depending on the
significance of the amendment, if the exchange offer would
otherwise expire during that period. We will promptly notify the
exchange agent by oral notice, promptly confirmed in writing, or
written notice of any delay in acceptance, extension,
termination or amendment of this exchange offer.
Conditions
to the Exchange Offer
Notwithstanding any other terms of the exchange offer, we will
not be required to accept for exchange, or exchange any exchange
notes for, any old notes, and we may terminate the exchange
offer as provided in this prospectus before accepting any old
notes for exchange, if we determine in our sole discretion that:
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the exchange offer would violate applicable law or any
applicable interpretation of the staff of the Commission; or
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any action or proceeding has been instituted or threatened in
any court or by any governmental agency with respect to the
exchange offer.
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In addition, we will not be obligated to accept for exchange the
old notes of any holder that has not made the representations
described in the letter of transmittal and under
Purpose and Effect of the Exchange Offer,
Procedures for Tendering the Old Notes and
Plan of Distribution, and such other representations
as may be reasonably necessary under applicable Commission
rules, regulations or interpretations to make available to it an
appropriate form for registration of the exchange notes under
the Securities Act.
We expressly reserve the right, at any time or at various times,
to extend the period of time during which the exchange offer is
open. Consequently, we may delay acceptance of any old notes by
giving oral or written notice of such extension to the
registered holders of the old notes. During any such extensions,
all old notes previously tendered will remain subject to the
exchange offer, and we may accept them for exchange unless they
have been previously withdrawn. We will return any old notes
that we do not accept for exchange for any reason without
expense to their tendering holder promptly after the expiration
or termination of the exchange offer.
We expressly reserve the right to amend or terminate the
exchange offer, and to reject for exchange any old notes not
previously accepted for exchange, upon the occurrence of any of
the conditions of the exchange offer specified above. We will
give oral or written notice or public announcement of any
extension, amendment, non-acceptance or termination to the
registered holders of the old notes as promptly as practicable.
In the case of any extension, such notice will be issued no
later than 9:00 a.m., New York City time, on the business
day after the previously scheduled expiration date.
These conditions are for our sole benefit and we may assert them
regardless of the circumstances that may give rise to them or
waive them in whole or in part at any or at various times in our
sole discretion; provided that any waiver of a condition of
tender will apply to all old notes and not only to particular
old notes. If we fail at any time to exercise any of the
foregoing rights, that failure will not constitute a waiver of
such right. Each such right will be deemed an ongoing right that
we may assert at any time or at various times.
In addition, we will not accept for exchange any old notes
tendered, and will not issue exchange notes in exchange for any
such old notes, if at such time any stop order will be
threatened or in effect with respect to the registration
statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture
Act of 1939.
32
Procedures
for Tendering the Old Notes
Only a holder of old notes may tender such old notes in the
exchange offer. To tender in the exchange offer, a holder must:
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complete, sign and date the letter of transmittal, or a
facsimile of the letter of transmittal; have the signature on
the letter of transmittal guaranteed if the letter of
transmittal so requires; and mail or deliver such letter of
transmittal or facsimile to the exchange agent prior to the
expiration date; or
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comply with DTCs Automated Tender Offer Program procedures
described below.
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In addition, either:
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the exchange agent must receive old notes along with the letter
of transmittal; or
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the exchange agent must receive, prior to the expiration date, a
timely confirmation of book-entry transfer of such old notes
into the exchange agents account at DTC according to the
procedures for book-entry transfer described below or a properly
transmitted agents message.
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To be tendered effectively, the exchange agent must receive any
physical delivery of the letter of transmittal and other
required documents at the address set forth below under
Exchange Agent prior to the expiration time.
The tender by a holder that is not withdrawn prior to the
expiration time will constitute an agreement between such holder
and us in accordance with the terms and subject to the
conditions set forth in this prospectus and in the letter of
transmittal.
The method of delivery of old notes, the letter of transmittal
and all other required documents to the exchange agent is at the
holders election and risk. Rather than mail these items,
we recommend that holders use an overnight or hand delivery
service. In all cases, holders should allow sufficient time to
assure delivery to the exchange agent before the expiration
time. Holders should not send us the letter of transmittal or
old notes. Holders may request their respective brokers,
dealers, commercial banks, trust companies or other nominees to
effect the above transactions for them.
We will determine in our sole discretion all questions as to the
validity, form, eligibility (including time of receipt) and
acceptance of tendered old notes and withdrawal of tendered old
notes. Our determination will be final and binding. We reserve
the absolute right to reject any old notes not properly tendered
or any old notes the acceptance of which would, in the opinion
of our counsel, be unlawful. We also reserve the right to waive
any defects, irregularities or conditions of tender as to
particular old notes; provided that any waiver of a condition of
tender will apply to all old notes and not only to particular
old notes. Our interpretation of the terms and conditions of the
exchange offer (including the instructions in the letter of
transmittal) will be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders
of old notes must be cured within such time as we shall
determine. However, all conditions must be satisfied or waived
prior to the expiration of the exchange offer (as extended, if
applicable). Although we intend to notify holders of defects or
irregularities with respect to tenders of old notes, neither we,
the exchange agent nor any other person will incur any liability
for failure to give such notification. Tenders of old notes will
not be deemed made until such defects or irregularities have
been cured or waived. Any old notes received by the exchange
agent that are not properly tendered and as to which the defects
or irregularities have not been cured or waived will be returned
by the exchange agent without cost to the tendering holder,
unless otherwise provided in the letter of transmittal, promptly
following the expiration of the exchange offer.
In all cases, we will issue exchange notes for old notes that we
have accepted for exchange under the exchange offer only after
the exchange agent timely receives:
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old notes or a timely book-entry confirmation of such old notes
into the exchange agents account at DTC; and
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properly completed and duly executed letter of transmittal and
all other required documents or a properly transmitted
agents message.
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33
By signing the letter of transmittal, each tendering holder of
the old notes represents, among other things, that:
(i) any exchange notes that the holder receives will be
acquired in the ordinary course of its business;
(ii) the holder has no arrangement or understanding with
any person or entity to participate in the distribution of the
exchange notes;
(iii) if the holder is a broker-dealer that will receive
exchange notes for its own account in exchange for old notes
that were acquired as a result of market-making activities, that
it will deliver a prospectus, as required by law, in connection
with any resale of such exchange notes; and
(iv) the holder is not an affiliate, as defined
in Rule 405 of the Securities Act, of us or any of our
subsidiary guarantors.
Any beneficial owner whose old notes are registered in the name
of a broker, dealer, commercial bank, trust company or other
nominee and who wishes to tender should contact the registered
holder promptly and instruct it to tender on the owners
behalf. If such beneficial owner wishes to tender on its own
behalf, it must, prior to completing and executing the letter of
transmittal and delivering its old notes, either make
appropriate arrangements to register ownership of the old notes
in such owners name or obtain a properly completed bond
power from the registered holder of old notes. The transfer of
registered ownership may take considerable time and may not be
completed prior to the expiration time.
Signatures on a letter of transmittal or a notice of withdrawal
described below must be guaranteed by a member firm of a
registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or
trust company having an office or correspondent in the United
States or another eligible guarantor institution
within the meaning of
Rule 17Ad-15
under the Exchange Act, unless the old notes tendered pursuant
thereto are tendered by a registered holder who has not
completed the box entitled Special Issuance
Instructions or Special Delivery Instructions
on the letter of transmittal or for the account of an eligible
guarantor institution.
If the letter of transmittal is signed by a person other than
the registered holder of any old notes listed on the old notes,
such old notes must be endorsed or accompanied by a properly
completed bond power. The bond power must be signed by the
registered holder as the registered holders name appears
on the old notes and an eligible guarantor institution must
guarantee the signature on the bond power.
If the letter of transmittal or any old notes or bond powers are
signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in
a fiduciary or representative capacity, such persons should so
indicate when signing. Unless waived by us, they should also
submit evidence satisfactory to us of their authority to deliver
the letter of transmittal.
The exchange agent and DTC have confirmed that any financial
institution that is a participant in DTCs system may use
DTCs Automated Tender Offer Program to tender.
Participants in the program may, instead of physically
completing and signing the letter of transmittal and delivering
it to the exchange agent, transmit their acceptance of the
exchange offer electronically. They may do so by causing DTC to
transfer the old notes to the exchange agent in accordance with
its procedures for transfer. DTC will then send an agents
message to the exchange agent. The term agents
message means a message transmitted by DTC, received by
the exchange agent and forming part of the book-entry
confirmation, to the effect that: (1) DTC has received an
express acknowledgement from a participant in its Automated
Tender Offer Program that is tendering old notes that are the
subject of such book-entry confirmation; (2) such
participant has received and agrees to be bound by the terms of
this prospectus and the letter of transmittal; and (3) the
agreement may be enforced against such participant.
Book-Entry
Transfer
The exchange agent will make a request to establish an account
with respect to the old notes at DTC for purposes of the
exchange offer promptly after the date of this prospectus and
any financial institution participating
34
in DTCs system may make book-entry delivery of old notes
by causing DTC to transfer such old notes into the exchange
agents account at DTC in accordance with DTCs
procedures for transfer.
Withdrawal
of Tenders
Except as otherwise provided in this prospectus, holders of old
notes may withdraw their tenders at any time prior to the
expiration of the exchange offer. For a withdrawal to be
effective the exchange agent must receive a written notice
(which may be by telegram, telex, facsimile transmission or
letter) of withdrawal at one of the addresses set forth below
under Exchange Agent, or the holder must
comply with the appropriate procedure of DTCs Automated
Tender Offer Program system.
Any such notice of withdrawal must specify the name of the
person who tendered the old notes to be withdrawn, identify the
old notes to be withdrawn (including the principal amount of
such old notes and, if applicable, the registration numbers and
total principal amount of such old notes), and where
certificates for old notes have been transmitted, specify the
name in which such old notes were registered, if different from
that of the withdrawing holder. Any such notice of withdrawal
must also be signed by the person having tendered the old notes
to be withdrawn in the same manner as the original signature on
the letter of transmittal by which these old notes were
tendered, including any required signature guarantees, or be
accompanied by documents of transfer sufficient to permit the
trustee for the old notes to register the transfer of these
notes into the name of the person having made the original
tender and withdrawing the tender, and, if applicable because
the old notes have been tendered through the book-entry
procedure, specify the name and number of the participants
account at DTC to be credited, if different than that of the
person having tendered the old notes to be withdrawn.
If certificates for old notes have been delivered or otherwise
identified to the exchange agent, then, prior to the release of
such certificates, the withdrawing holder must also submit the
serial numbers of the particular certificates to be withdrawn,
and a signed notice of withdrawal with signatures guaranteed by
an eligible guarantor institution unless such holder is an
eligible guarantor institution.
If old notes have been tendered pursuant to the procedure for
book-entry transfer described above, any notice of withdrawal
must specify the name and number of the account at DTC to be
credited with the withdrawn old notes and otherwise comply with
the procedures of such facility. We will determine all questions
as to the validity, form and eligibility (including time of
receipt) of such notices, and our determination shall be final
and binding on all parties. We will deem any old notes so
withdrawn not to have been validly tendered for exchange for
purposes of the exchange offer. Any old notes that have been
tendered for exchange but that are not exchanged for any reason
will be returned to their holder without cost to the holder (or,
in the case of old notes tendered by book-entry transfer into
the exchange agents account of DTC according to the
procedures described above, such old notes will be credited to
an account maintained with DTC for old notes) promptly after
withdrawal, rejection of tender or termination of the exchange
offer. Properly withdrawn old notes may be retendered by
following one of the procedures described under
Procedures for Tendering the Old Notes
above at any time prior to the expiration time.
Acceptance
of Old Notes for Exchange and Delivery of Exchange
Notes
Your tender of old notes will constitute an agreement between
you and us governed by the terms and conditions provided in this
prospectus and in the related letter of transmittal.
We will be deemed to have received your tender as of the date
when your duly signed letter of transmittal accompanied by your
old notes tendered, or a timely confirmation of a book-entry
transfer of these notes into the exchange agents account
at DTC with an agents message is received by the exchange
agent.
All questions as to the validity, form, eligibility, including
time of receipt, acceptance and withdrawal of tenders will be
determined by us in our sole discretion. Our determination will
be final and binding.
We reserve the absolute right to reject any and all old notes
not properly tendered or any old notes which, if accepted,
would, in our judgment or our counsels judgment, be
unlawful. We also reserve the absolute right to waive any
conditions of this exchange offer or irregularities or defects
in tender as to particular notes;
35
provided that any waiver of a condition of tender will apply to
all old notes and not only to particular old notes. Our
interpretation of the terms and conditions of this exchange
offer, including the instructions in the letter of transmittal,
will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of old
notes must be cured within such time as we shall determine.
However, all conditions must be satisfied or waived prior to the
expiration of the exchange offer (as extended, if applicable).
We, the subsidiary guarantors, the exchange agent or any other
person will be under no duty to give notification of defects or
irregularities with respect to tenders of old notes. We, the
subsidiary guarantors, the exchange agent or any other person
will incur no liability for any failure to give notification of
these defects or irregularities. Tenders of old notes will not
be deemed to have been made until such irregularities have been
cured or waived. The exchange agent will return without cost to
their holders any old notes that are not properly tendered and
as to which the defects or irregularities have not been cured or
waived promptly following the expiration date.
If all the conditions to the exchange offer are satisfied or
waived on the expiration date, we will accept all old notes
properly tendered and will issue the exchange notes promptly
thereafter. Please refer to the section of this prospectus
entitled Conditions to the Exchange Offer
above. For purposes of this exchange offer, old notes will be
deemed to have been accepted as validly tendered for exchange
when, as and if we give oral or written notice of acceptance to
the exchange agent.
If any tendered old notes are not accepted for any reason
provided by the terms and conditions of this exchange offer or
if old notes are submitted for a greater principal amount than
the holder desires to exchange, the unaccepted or non-exchanged
old notes will be returned without expense to the tendering
holder, or, in the case of old notes tendered by book-entry
transfer procedures described above, will be credited to an
account maintained with the book-entry transfer facility,
promptly after withdrawal, rejection of tender or the expiration
or termination of the exchange offer.
By tendering into this exchange offer, you will irrevocably
appoint our designees as your attorney-in-fact and proxy with
full power of substitution and resubstitution to the full extent
of your rights on the notes tendered, subject to the indenture.
This proxy will be considered coupled with an interest in the
tendered notes. This appointment will be effective only when and
to the extent that we accept your notes in this exchange offer.
All prior proxies on these notes will then be revoked and you
will not be entitled to give any subsequent proxy. Any proxy
that you may give subsequently will not be deemed effective.
Exchange
Agent
U.S. Bank National Association has been appointed as
exchange agent for the exchange offer. You should direct
questions and requests for assistance or requests for additional
copies of this prospectus or of the letter of transmittal to the
exchange agent addressed as follows:
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By Registered and Certified Mail:
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By Facsimile: (Eligible Guarantor Institutions Only)
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By Overnight Courier or Regular Mail:
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By Hand Delivery:
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U.S. Bank Corporate Trust Services
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(651) 495-8158
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U.S. Bank Corporate Trust Services
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U.S. Bank Corporate Trust Services
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Attn: Lori Buckles Specialized Finance Department 60 Livingston
Avenue St. Paul, Minnesota 55107
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To Confirm by Telephone or for Information Call: (651) 495-4738
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Attn: Lori Buckles Specialized Finance Department 60 Livingston
Avenue St. Paul, Minnesota 55107
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Attn: Lori Buckles Specialized Finance Department 60 Livingston
Avenue St. Paul, Minnesota 55107
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Delivery to an address other than as set forth above or
transmission via facsimile other than as set forth above does
not constitute a valid delivery to the exchange agent.
36
Fees and
Expenses
We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail, however, we may make
additional solicitations by telephone or in person by our
officers and regular employees and those of our affiliates.
We have not retained any dealer-manager in connection with the
exchange offer and will not make any payments to broker-dealers
or others soliciting acceptances of the exchange offer. We will,
however, pay the exchange agent reasonable and customary fees
for its services and reimburse it for its related reasonable
out-of-pocket
expenses. We will also pay brokerage houses and other
custodians, nominees and fiduciaries their reasonable
out-of-pocket
expenses for forwarding copies of the prospectus, letters of
transmittal and related documents to the beneficial owners of
the old notes and for handling or forwarding tenders for
exchange to their customers.
Our expenses in connection with the exchange offer include
Commission registration fees, fees and expenses of the exchange
agent and trustee, accounting and legal fees, printing costs,
transfer taxes and related fees and expenses.
Transfer
Taxes
We will pay all transfer taxes, if any, applicable to the
exchange of old notes under the exchange offer. The tendering
holder, however, will be required to pay any transfer taxes
(whether imposed on the registered holder or any other person)
if:
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certificates representing old notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are
to be issued in the name of, any person other than the
registered holder of old notes tendered;
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tendered old notes are registered in the name of any person
other than the person signing the letter of transmittal; or
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transfer tax is imposed for any reason other than the exchange
of old notes under the exchange offer.
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If satisfactory evidence of payment of such taxes is not
submitted with the letter of transmittal, the amount of such
transfer taxes will be billed to that tendering holder.
Consequences
of Failure to Exchange
Holders of old notes who do not exchange their old notes for
exchange notes under the exchange offer will remain subject to
the restrictions on transfer of such old notes as set forth in
the legend printed on the old notes as a consequence of the
issuance of the old notes pursuant to the exemptions from, or in
transactions not subject to, the registration requirements of
the Securities Act and applicable state securities laws, and
otherwise as set forth in the offering memorandum distributed in
connection with the private placement offering of the old notes.
In general, you may not offer or sell the old notes unless they
are registered under the Securities Act, or if the offer or sale
is exempt from registration under the Securities Act and
applicable state securities laws. Except as required by the
registration rights agreement related to the old notes, we do
not intend to register resales of the old notes under the
Securities Act. Based on interpretations of the Commission
staff, exchange notes issued pursuant to the exchange offer may
be offered for resale, resold or otherwise transferred by their
holders (other than any such holder that is our or a subsidiary
guarantors affiliate within the meaning of
Rule 405 under the Securities Act) without compliance with
the registration and prospectus delivery provisions of the
Securities Act, provided that the holders acquired the exchange
notes in the ordinary course of the holders business and
the holders have no arrangement or understanding with respect to
the distribution of the exchange notes to be acquired in the
exchange offer. Any holder who tenders in the exchange offer for
the purpose of participating in a distribution of the exchange
notes could not rely on the applicable interpretations of the
Commission and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a
secondary resale transaction.
37
The registration rights agreement requires us to file a
registration statement for a continuous offering under the
Securities Act for your benefit if:
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if we and our subsidiary guarantors determine that any
applicable law, Commission rules or regulations or prevailing
interpretations of such rules or regulations by the staff of the
Commission do not permit us to effect the exchange offer as
contemplated by the registration rights agreement;
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we do not complete the exchange offer within 210 days after
the original issue of the old notes; or
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you are an initial purchaser of the old notes who holds old
notes that have the status of an unsold allotment in an initial
distribution and you request us to do so in writing on or prior
to the 60th day after the consummation of the exchange
offer.
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We do not currently anticipate that we will register under the
Securities Act any old notes that remain outstanding after
completion of the exchange offer.
Accounting
Treatment
We will record the exchange notes in our accounting records at
the same carrying value as the old notes, as reflected in our
accounting records on the date of exchange. Accordingly, we will
not recognize any gain or loss for accounting purposes in
connection with the exchange offer. We will amortize the costs
of the exchange offer and the unamortized expenses related to
the issuance of the exchange notes over the term of the exchange
notes.
Other
Participation in the exchange offer is voluntary, and you should
carefully consider whether to accept. You are urged to consult
your financial and tax advisors in making your own decision on
what action to take.
We may in the future seek to acquire untendered old notes in the
open market or privately negotiated transactions, through
subsequent exchange offers or otherwise. We have no present
plans to acquire any old notes that are not tendered in the
exchange offer or to file a registration statement to permit
resales of any untendered old notes.
38
DESCRIPTION
OF THE NOTES
The old notes were, and the exchange notes will be, issued under
an indenture dated as of August 3, 2010 (the
Indenture) by and among the Company, the Guarantors
and U.S. Bank National Association, as Trustee (the
Trustee). The Guarantors will be the following
Domestic Restricted Subsidiaries of the Company, which will be
all of the Companys Domestic Restricted Subsidiaries as of
the date the notes offered hereby are issued (other than Finance
Subsidiaries, Accounts Receivable Entities and Immaterial
Domestic Restricted Subsidiaries): Tenneco Automotive Operating
Company Inc., The Pullman Company, Clevite Industries Inc.,
Tenneco Global Holdings Inc., TMC Texas Inc. and Tenneco
International Holding Corp. The notes will be the direct senior
obligations of the Company, ranking equal in right of payment
with all other existing and future unsubordinated indebtedness
of the Company and senior in right of payment to all existing
and future subordinated indebtedness of the Company. The notes
will be fully and unconditionally and jointly and severally
guaranteed by the Guarantors as described below under the
captionBrief Description of the Notes and the
GuaranteesThe Guarantees. The Guarantees will be the
direct senior obligations of the respective Guarantors and rank
equal in right of payment with all other unsubordinated
indebtedness of the respective Guarantors and senior in right of
payment to existing and future subordinated indebtedness of the
respective Guarantors. Unlike the Companys and
Guarantors obligations under the Credit Agreement and
other secured indebtedness, which are also direct senior
obligations of the Company and Guarantors, as applicable, the
notes and the Guarantees will not be secured by any assets of
the Company or Guarantors and therefore will be effectively
junior to secured indebtedness of the Company and Guarantors to
the extent of the value of the collateral securing such
indebtedness. For purposes of this section, references to
we, our or the Company
include only Tenneco Inc. and not its Subsidiaries.
On August 3, 2010, we issued $225 million aggregate
principal amount of old notes under the Indenture. The terms of
the exchange notes will be identical in all material respects to
the old notes, except the exchange notes will not contain
transfer restrictions and holders of exchange notes will no
longer have any registration rights or any other rights under
the registration rights agreement. The trustee will authenticate
and deliver exchange notes for original issue only in exchange
for a like principal amount of old notes.
Used in this Description of the Notes, except as the
context otherwise requires, the term notes means all
73/4% senior
notes due 2018 issued by the Company pursuant to the Indenture
(including the notes offered for exchange hereby, the
$225 million of old notes and any additional notes that the
Company may issue from time to time under the Indenture).
The following description is a summary of the material
provisions of the Indenture and does not include all of the
information included in the Indenture and may not include all of
the information that you would consider important. This summary
is qualified by reference to the Trust Indenture Act of
1939, as amended (the TIA), and to all of the
provisions of the Indenture, including the definitions of terms
therein and those terms made a part of the Indenture by
reference to the TIA as in effect on the date of the Indenture.
A copy of the Indenture may be obtained from Tenneco. The
definitions of most of the capitalized terms used in the
following summary are set forth below under Certain
Definitions.
The notes offered hereby will be issued in fully registered form
only, without coupons, in denominations of $2,000 and integral
multiples of $1,000 in excess thereof. Initially, the Trustee
will act as paying agent and registrar for the notes. The notes
may be presented for registration or transfer and exchange at
the offices of the registrar, which initially will be the
Trustees corporate trust office. The Company may change
any paying agent and registrar without notice to holders of the
notes. The Company will pay principal (and premium, if any) on
the notes at the Trustees corporate trust office. Interest
may be paid at the Trustees corporate trust office, by
check mailed to the registered address of the holders or by wire
transfer if instructions therefor are furnished by a holder. Any
old notes that remain outstanding after the completion of the
exchange offer, together with the exchange notes issued in
connection with the exchange offer and any additional notes
subsequently issued under the Indenture, will be treated as a
single class of securities for all purposes under the Indenture,
including, without limitation, waivers, amendments, redemptions
and offers to purchase. The registered holder of a note will be
treated as the owner of it for all purposes. Only registered
holders will have rights under the Indenture.
39
Brief
Description of the Notes and the Guarantees
The
Notes
The old notes are, and the exchange notes will be:
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general senior obligations of the Company, ranking equal in
right of payment with all other existing and future
unsubordinated indebtedness of the Company and senior in right
of payment to all existing and future subordinated indebtedness
of the Company;
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not secured by any assets of the Company, unlike borrowings
under the Credit Agreement and other senior secured indebtedness
and therefore will be effectively junior to secured indebtedness
to the extent of the value of the collateral securing such
indebtedness; and
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fully and unconditionally and jointly and severally guaranteed
by the Guarantors. The Guarantees will be the general senior
obligations of the respective Guarantors and rank equal in right
of payment with all other existing and future unsubordinated
indebtedness of the respective Guarantors and senior in right of
payment to existing and future subordinated indebtedness of the
respective Guarantors. The Guarantees will not be secured by the
assets of any Guarantor, unlike the guarantees of the senior
obligations in respect of the Credit Agreement and other secured
indebtedness and therefore will be effectively junior to secured
indebtedness to the extent of the value of the collateral
securing such indebtedness.
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As of September 30, 2010, on a pro forma basis after
giving effect to the offering of the
67/8% Senior
Notes and the use of the proceeds therefrom, we would have had
$236 million of indebtedness outstanding under our Credit
Agreement, with $614 million of unused capacity under the
revolving credit facility and
tranche B-1
letter of credit/revolving loan facility and approximately
$52 million in outstanding letters of credit under our
revolving credit facility, and $1,061 million principal
amount of other unsubordinated indebtedness outstanding. The
foregoing amounts do not include $500 million of Senior
Subordinated Notes that will be repurchased or redeemed using
the net proceeds of the offering of the
67/8% Senior
Notes, together with cash on hand and available liquidity. In
addition, under the Indenture, we also may incur additional
indebtedness ranking pari passu in right of payment with
the notes and indebtedness secured by liens on our property and
assets as described below under Certain
CovenantsLimitation on Incurrence of Additional
Indebtedness and Certain
CovenantsLimitation on Liens.
The
Guarantees
The old notes are, and the exchange notes will be, fully and
unconditionally and jointly and severally guaranteed by the
following subsidiaries of the Company:
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all Domestic Restricted Subsidiaries that guarantee the Credit
Agreement or the Senior Notes or any other Indebtedness or
Subordinated Indebtedness of the Company; and
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any other subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of the Indenture;
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in each case, subject to the exceptions described below. See
Certain CovenantsIssuance of Subsidiary
Guarantees.
Each Subsidiary Guarantee of the notes will be a general senior
obligation of the applicable Guarantor, ranking equal in right
of payment to all existing and future unsubordinated
indebtedness of that Guarantor and senior in right of payment to
existing and senior in right of payment to all existing and
future subordinated indebtedness of the Guarantor. The
Guarantees will not be secured by the assets of any Guarantor,
unlike the guarantees of the senior obligations in respect of
the Credit Agreement and other secured indebtedness and
therefore will be effectively junior to secured indebtedness to
the extent of the value of the collateral securing such
indebtedness.
As of the date the exchange notes offered hereby are issued, all
of our subsidiaries will be Restricted Subsidiaries.
However, under the circumstances described below under the
subheading Certain
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CovenantsLimitation on Designations of Unrestricted
Subsidiaries, the Company will be permitted to designate
certain of its Subsidiaries as Unrestricted
Subsidiaries. Our Unrestricted Subsidiaries will not be
subject to the restrictive covenants in the Indenture. Our
Unrestricted Subsidiaries will not guarantee the notes.
These Subsidiary Guarantees will be full and unconditional and
joint and several obligations of the Guarantors. The obligations
of each Guarantor under its Subsidiary Guarantee will be limited
as necessary to prevent that Subsidiary Guarantee from
constituting a fraudulent conveyance under applicable law. In a
recent Florida bankruptcy case, a similar provision was found to
be ineffective to protect the guarantees. See Risk
FactorsRisks Relating to our Existing Indebtedness, the
Old Notes and the Exchange NotesBecause each of our
Subsidiary Guarantors liability under its Guarantee may be
reduced to zero, avoided or released under certain
circumstances, you may not receive any payments from some or all
of the Guarantors. Federal and state statutes allow
courts, under specific circumstances, to void a guarantee and
the liens securing such guarantee and require noteholders to
return payments received from the entity providing such
guarantee.
Also, as of the date the exchange notes offered hereby are
issued, none of the Companys Foreign Subsidiaries, Finance
Subsidiaries, Accounts Receivable Entities or Immaterial
Domestic Subsidiaries will guarantee the notes. In the event of
a bankruptcy, liquidation or reorganization of any of these
non-guarantor Subsidiaries, the non-guarantor Subsidiaries will
pay the holders of their debt and their trade creditors before
they will be able to distribute any of their assets to the
Company. As of, and for the nine months ended,
September 30, 2010, and the year ended December 31,
2009, the non-guarantor Subsidiaries represented approximately
75 percent and 77 percent, respectively, of our
consolidated assets, approximately 56 percent and
59 percent, respectively, of our consolidated net sales
(excluding intercompany sales) and approximately 63 percent
and 186 percent, respectively, of our consolidated
operating income.
As of September 30, 2010, after giving pro forma
effect to the issuance of the
67/8% Senior
Notes and the use of proceeds therefrom:
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the Company would have had $1,297 million of unsubordinated
indebtedness outstanding;
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the Company would have had $614 million of unused capacity
under the revolving credit facility and
tranche B-1
letter of credit/revolving loan facility under the Credit
Agreement and $52 million in outstanding letters of credit
under the revolving credit facility under the Credit Agreement,
all of which if drawn would be secured and therefore rank
effectively senior to the notes to the extent of the value of
the collateral securing such indebtedness; and
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the Companys Subsidiaries, other than the Guarantors,
would have had $1,504 million of liabilities outstanding on
their balance sheets.
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The foregoing amounts do not include $500 million of Senior
Subordinated Notes that will be repurchased or redeemed using
the net proceeds of the offering of the
67/8% Senior
Notes, together with cash on hand and available liquidity.
Principal,
Maturity and Interest
Old notes in an aggregate principal amount of $225 million
were issued on August 3, 2010. Exchange notes in a like
principal amount will be issued in exchange for all old notes
properly tendered and not withdrawn in the exchange offer. The
exchange notes will trade as a single class of freely tradeable
notes. The notes will mature on August 15, 2018. Without
the consent of any holders of notes, additional notes in an
unlimited amount may be issued under the Indenture from time to
time, subject to the limitations set forth under
Certain CovenantsLimitation on Incurrence of
Additional Indebtedness.
Interest on the notes will accrue at the rate of
7.75 percent per annum and will be payable semi-annually in
cash in arrears on each February 15 and August 15, commencing on
February 15, 2011, to the persons who are registered
holders at the close of business on the February 1 and August 1
immediately preceding the applicable interest payment date.
Interest on the notes will accrue from and including the most
recent date to which interest has been paid or, if no interest
has been paid, from and including the Issue Date. Interest will
be computed on the basis of a
360-day year
of twelve
30-day
months.
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Each exchange note will bear interest from August 3, 2010.
The holders of old notes that are accepted for exchange will be
deemed to have waived the right to receive payment of accrued
interest on those old notes from August 3, 2010 to the date
of issuance of the exchange notes. Interest on the old notes
accepted for exchange will cease to accrue upon issuance of the
exchange notes. Consequently, if you exchange your old notes for
exchange notes, you will receive the same interest payment on
February 15, 2011 that you would have received if you had
not accepted this exchange offer.
The notes will not be entitled to the benefit of any mandatory
sinking fund.
Redemption
Optional Redemption. The Company may redeem
all or portions of the notes, on and after August 15, 2014
upon not less than 30 nor more than 60 days notice,
at the following redemption prices (expressed as percentages of
the principal amount) if redeemed during the twelve-month period
commencing on August 15 of the year set forth below, plus, in
each case, accrued and unpaid interest, if any, to the date of
redemption (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant
interest payment date):
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Year
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Percentage
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2014
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103.875
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%
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2015
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101.938
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%
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2016 and thereafter
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100.000
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%
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At any time prior to August 15, 2014, the notes may also be
redeemed in whole or in part, at the Companys option, at a
price (the Redemption Price) equal to 100% of
the principal amount thereof plus the Applicable Premium as of,
and accrued but unpaid interest, if any, to, the date of
redemption or purchase (the Redemption Date)
(subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest
payment date).
Applicable Premium means, at any
Redemption Date, the greater of (i) 1.0% of the
principal amount of such note and (ii) the excess of
(A) the present value at such Redemption Date of
(1) the redemption price of such note on August 15,
2014 (such redemption price being that described in the first
paragraph of this Optional Redemption section) plus
(2) all required remaining scheduled interest payments due
on such note through such date, computed using a discount rate
equal to the Treasury Rate plus 50 basis points, over
(B) the principal amount of such note on such
Redemption Date; and, as calculated by the Company or on
behalf of the Company by such Person as the Company shall
designate; provided that such calculation shall not be a
duty or obligation of the Trustee.
Treasury Rate means, with respect to a
Redemption Date, the yield to maturity at the time of
computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H.15(519) that has become publicly
available at least two business days prior to such
Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the period from such
Redemption Date to August 15, 2014; provided,
however, that if the period from the Redemption Date to
such date is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is
given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United Stated Treasury
securities for which such yields are given, except that if the
period from the Redemption Date to such date is less than
one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of
one year shall be used.
Optional Redemption upon Equity Offerings. At
any time, or from time to time, on or prior to August 15,
2013 the Company may, at its option, use all or any portion of
the net cash proceeds of one or more Equity Offerings (as
defined below) to redeem up to 35% of the aggregate principal
amount of the notes issued at a redemption price equal to
107.75 percent of the principal amount thereof plus accrued
and unpaid interest, if
42
any, to the date of redemption (subject to the right of holders
of record on the relevant record date to receive interest due on
the relevant interest payment date); provided that at
least 65% of the aggregate principal amount of notes issued
remains outstanding immediately after any such redemption. In
order to effect the foregoing redemption with the proceeds of
any Equity Offering, the Company shall make such redemption not
more than 180 days after the consummation of any such
Equity Offering.
As used in the preceding paragraph, Equity Offering
means any public or private sale of the common stock of the
Company, other than any public offering with respect to the
Companys common stock registered on
Form S-8
or other issuances upon exercise of options by employees of the
Company or any of its Restricted Subsidiaries.
Mandatory Redemption. The Company is not
required to make scheduled mandatory redemption payments or
sinking fund payments with respect to the notes.
Selection
and Notice of Redemption
In the event that less than all of the notes are to be redeemed
at any time, selection of the notes for redemption will be made
by the Trustee in compliance with the requirements of the
principal national securities exchange, if any, on which the
notes are listed or, if the notes are not then listed on a
national securities exchange, on a pro rata basis, by lot
or by such method as the Trustee shall deem fair and
appropriate; provided, however, that:
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no notes of a principal amount of $2,000 or less shall be
redeemed in part; and
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if a partial redemption is made with the proceeds of an Equity
Offering, selection of the notes or portions thereof for
redemption shall be made by the Trustee only on a pro rata
basis or on as nearly a pro rata basis as is
practicable (subject to DTC procedures), unless such method is
otherwise prohibited.
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Notice of an optional redemption shall be mailed at least 30 but
not more than 60 days before the redemption date to each
holder of notes to be redeemed at its registered address. If any
note is to be redeemed in part only, the notice of redemption
that relates to such note shall state the portion of the
principal amount thereof to be redeemed. A new note in a
principal amount equal to the unredeemed portion thereof will be
issued in the name of the holder thereof upon cancellation of
the original note. On and after the redemption date, interest
will cease to accrue on notes or portions thereof called for
redemption as long as the Company has deposited with the paying
agent funds in satisfaction of the applicable redemption price
pursuant to the Indenture.
Change of
Control
The Indenture provides that upon the occurrence of a Change of
Control, each holder will have the right to require that the
Company purchase all or a portion of such holders notes
pursuant to the offer described below (the Change of
Control Offer), at a purchase price equal to
101 percent of the principal amount thereof plus accrued
and unpaid interest, if any, and liquidated damages, if any,
thereon to the date of purchase. Notwithstanding the occurrence
of a Change of Control, the Company will not be obligated to
repurchase the notes under this covenant if it has exercised its
right to redeem all the notes under the terms of the section
entitled RedemptionOptional Redemption.
Within 30 days following the date upon which the Change of
Control occurs, the Company will send, by first class mail, a
notice to each holder, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control Offer. Such
notice will state, among other things, the purchase date, which
must be no earlier than 30 days nor later than 60 days
from the date such notice is mailed, other than as may be
required by law (the Change of Control Payment
Date). Holders electing to have a note purchased pursuant
to a Change of Control Offer will be required to surrender the
note, with the form entitled Option of Holder to Elect
Purchase on the reverse of the note completed, to the
paying agent at the address specified in the notice prior to the
close of business on the third business day prior to the Change
of Control Payment Date.
43
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change
of Control Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in the Indenture
applicable to a Change of Control Offer made by the Company and
purchases all notes validly tendered and not withdrawn under
such Change of Control Offer.
The Companys ability to pay cash to the holders of notes
upon a Change of Control may be limited by the Companys
then existing financial resources. Further, the agreements
governing the Companys other Indebtedness contain, and
future agreements may contain, prohibitions of certain events,
including events that would constitute a Change of Control, and
restrictions on repayment requirements with respect to specified
events or transactions that constitute a change of control under
the Indenture. If a Change of Control Offer is required to be
made, there can be no assurance that the Company will have
available funds sufficient to pay all Indebtedness under the
Credit Agreement, any other Indebtedness required to be repaid
in connection with such Change of Control and the Change of
Control purchase price for all the notes that might be delivered
by holders seeking to accept the Change of Control Offer. In the
event the Company is required to repay such other Indebtedness
or purchase outstanding notes pursuant to a Change of Control
Offer, the Company expects that it would seek third party
financing to the extent it does not have available funds to meet
its purchase obligations. However, there can be no assurance
that the Company would be able to obtain such financing.
Neither the Board of Directors of the Company nor the Trustee
may waive the covenant relating to a holders right to
require the purchase of notes upon a Change of Control.
Restrictions in the Indenture described herein on the ability of
the Company and the Restricted Subsidiaries to incur additional
Indebtedness, to grant Liens on their property, to make
Restricted Payments and to make Asset Sales may also make more
difficult or discourage a takeover of the Company, whether
favored or opposed by the management of the Company.
Consummation of any such transaction in certain circumstances
may require the purchase of the notes, and there can be no
assurance that the Company or the acquiring party will have
sufficient financial resources to effect such purchase. Such
restrictions and the restrictions on transactions with
Affiliates may, in certain circumstances, make more difficult or
discourage any leveraged buyout of the Company or any of its
Subsidiaries by the management of the Company. While such
restrictions cover a wide variety of arrangements which have
traditionally been used to effect highly leveraged transactions,
the Indenture may not afford the holders protection in all
circumstances from the adverse aspects of a highly leveraged
transaction, reorganization, restructuring, merger or similar
transaction.
The Company will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations to the extent such laws and regulations are
applicable in connection with a Change of Control Offer. To the
extent that the provisions of any securities laws or regulations
conflict with the Change of Control provisions of
the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have
breached its obligations under the Change of Control
provisions of the Indenture by virtue thereof.
The definition of Change of Control includes, among
other transactions, a disposition of all or substantially
all of the property and assets of the Company. With
respect to the disposition of property or assets, the phrase
all or substantially all as used in the Indenture
varies according to the facts and circumstances of the subject
transactions, has no clearly established meaning under relevant
law and is subject to judicial interpretation. Accordingly, in
certain circumstances, there may be a degree of uncertainty in
ascertaining whether a particular transaction would involve a
disposition of all or substantially all of the
property or assets of a Person, and therefore it may be unclear
whether a Change of Control has occurred and whether the Company
is required to make a Change of Control Offer. In addition,
under a recent Delaware Chancery Court interpretation of a
change of control repurchase requirement with a continuing
director provision, a board of directors may approve a slate of
shareholder nominated directors without endorsing them or while
simultaneously recommending and endorsing its own slate instead.
The foregoing interpretation would permit our board to approve a
slate of directors that included a majority of dissident
directors nominated pursuant to a proxy contest, and the
ultimate election of such dissident slate would not constitute a
Change of Control that would trigger a Holders
right to require us to make an Change of Control Offer as
described above.
44
Certain
Covenants
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional
Indebtedness. The Company will not, and will not
permit any of the Restricted Subsidiaries to, directly or
indirectly, create, incur, issue, assume, guarantee, acquire,
become liable, contingently or otherwise, with respect to, or
otherwise become responsible for payment of (collectively,
incur) any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or
Event of Default shall have occurred and be continuing at the
time of or as a consequence of the incurrence of any such
Indebtedness:
(a) the Company, any Guarantor, any Finance Subsidiary that
is a Domestic Restricted Subsidiary and any Accounts Receivable
Entity that is a Domestic Restricted Subsidiary may incur
Indebtedness (including, without limitation, Acquired
Indebtedness) if on the date of the incurrence of such
Indebtedness, after giving effect to the incurrence thereof, the
Consolidated Fixed Charge Coverage Ratio of the Company would be
greater than 2.0 to 1.0; and
(b) any Restricted Subsidiary that is not a Guarantor (and
is not a Finance Subsidiary or an Accounts Receivable Entity
that is a Domestic Restricted Subsidiary) may incur Indebtedness
(including, without limitation, Acquired Indebtedness) if, on
the date of the incurrence of such Indebtedness, after giving
effect to the incurrence thereof,
(i) the Consolidated Fixed Charge Coverage Ratio of the
Company would be greater than 2.0 to 1.0; and
(ii) if the agreements governing such Indebtedness contain
an encumbrance or restriction on the ability of the applicable
Restricted Subsidiary that is not a Guarantor (and is not a
Finance Subsidiary or an Accounts Receivable Entity that is a
Domestic Restricted Subsidiary) to pay dividends or make
distributions on or in respect of its Capital Stock, the
Combined Fixed Charge Coverage Ratio of the Restricted
Subsidiaries that are not Guarantors would be greater than 2.25
to 1.0.
No Indebtedness incurred pursuant to the Consolidated Fixed
Charge Coverage Ratio test of the preceding paragraph
(including, without limitation, Indebtedness under the Credit
Agreement) shall reduce the amount of Indebtedness which may be
incurred pursuant to any clause of the definition of Permitted
Indebtedness (including without limitation, Indebtedness under
the Credit Agreement pursuant to clause (2) of the
definition of Permitted Indebtedness).
The Company and the Guarantors will not incur or suffer to exist
any Indebtedness that is subordinated in right of payment to any
other Indebtedness of the Company or the Guarantors unless such
Indebtedness is at least equally subordinated in right of
payment to the notes and any Subsidiary Guarantee.
Limitation on Restricted Payments. The Company
will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly:
(a) declare or pay any dividend or make any distribution
(other than dividends or distributions payable in Qualified
Capital Stock of the Company) on or in respect of shares of its
Capital Stock to holders of such Capital Stock (including by
means of a Person (including an Unrestricted Subsidiary) making
such a payment with the proceeds of an Investment made by the
Company or any Restricted Subsidiary);
(b) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company or any warrants, rights
or options to purchase or acquire shares of any class of such
Capital Stock (including by means of a Person (including an
Unrestricted Subsidiary) making such a payment with the proceeds
of an Investment made by the Company or any Restricted
Subsidiary);
(c) make any principal payment on, or purchase, redeem,
defease, retire or otherwise acquire for value, prior to any
scheduled principal payment, sinking fund or maturity, any
Subordinated Indebtedness (other than the principal payment on,
or the purchase, redemption, defeasance, retirement or other
acquisition for value of, Subordinated Indebtedness made in
satisfaction of or anticipation of satisfying a
45
sinking fund obligation, principal installment or final maturity
within one year of the due date of such obligation, installment
or final maturity); or
(d) make any Investment (other than Permitted Investments)
(each of the foregoing actions set forth in clauses (a), (b),
(c) and (d) being referred to as a Restricted
Payment), if at the time of such Restricted Payment or
immediately after giving effect thereto:
(1) a Default or an Event of Default shall have occurred
and be continuing;
(2) the Company is not able to incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in
compliance with the covenant described under
Limitation on Incurrence of Additional
Indebtedness; or
(3) the aggregate amount of Restricted Payments (including
such proposed Restricted Payment) made after March 31, 2003
(the amount expended for such purpose, if other than in cash,
being the Fair Market Value of such property as determined
reasonably and in good faith by the Board of Directors of the
Company) shall exceed the sum of:
(v) 50 percent of the cumulative Consolidated Net
Income (or if cumulative Consolidated Net Income shall be a
loss, minus 100 percent of such loss) of the Company earned
during the period beginning on the first day of the fiscal
quarter commencing on April 1, 2003 and through the end of
the most recent fiscal quarter for which financial statements
are available prior to the date such Restricted Payment occurs
(the Reference Date) (treating such period as a
single accounting period); plus
(w) 100 percent of the Fair Market Value of the net
proceeds received by the Company from any Person (other than a
Subsidiary of the Company) from the issuance and sale subsequent
to March 31, 2003 and on or prior to the Reference Date of
Qualified Capital Stock of the Company or from the issuance of
Indebtedness of the Company that has been converted into or
exchanged for Qualified Capital Stock of the Company subsequent
to the Issue Date and on or prior to the Reference Date;
plus
(x) without duplication of any amounts included in clause
(3)(x) above, 100 percent of the Fair Market Value of the
net proceeds of any contribution to the common equity capital of
the Company received by the Company from a holder of the
Companys Capital Stock subsequent to March 31, 2003;
plus
(y) an amount equal to the lesser of (A) the sum of
the Fair Market Value of the Capital Stock of an Unrestricted
Subsidiary owned by the Company
and/or the
Restricted Subsidiaries and the aggregate amount of all
Indebtedness of such Unrestricted Subsidiary owed to the Company
and each Restricted Subsidiary on the date of Revocation of such
Unrestricted Subsidiary as an Unrestricted Subsidiary in
accordance with the covenant described under
Limitation on Designations of Unrestricted
Subsidiaries or (B) the Designation Amount with
respect to such Unrestricted Subsidiary on the date of the
Designation of such Subsidiary as an Unrestricted Subsidiary in
accordance with the covenant described under
Limitation on Designations of Unrestricted
Subsidiaries; plus
(z) an amount equal to the sum of (1) the net
reduction in the Investments (other than Permitted Investments)
made by the Company or any Restricted Subsidiary in any Person
after the Issue Date resulting from repurchases, repayments or
redemptions of such Investments by such Person, proceeds
realized on the sale of such Investment and proceeds
representing the return of capital, in each case received by the
Company or any Restricted Subsidiary and (2) the amount of
any Guarantee or similar arrangement that has terminated or
expired or by which it has been reduced to the extent that it
was treated as a Restricted Payment after March 31, 2003
that reduced the amount available under this clause (3) or
clause (VIII) of the next paragraph net of any amounts paid
by the Company or a Restricted Subsidiary in respect of such
Guarantee or similar arrangement; provided,
however, that the amounts set forth in clauses (1)
and (2) above shall not exceed, in the case of any such
Person,
46
the amount of Investments (excluding Permitted Investments)
previously made and treated as a Restricted Payment by the
Company or any Restricted Subsidiary after March 31, 2003
that reduced the amount available under this clause (3) or
(VIII) of the next paragraph in such Person or Unrestricted
Subsidiary.
As of June 30, 2010, we would have had approximately
$250 million of available capacity to make Restricted
Payments under the foregoing clause (3). Notwithstanding the
foregoing, the provisions set forth in the immediately preceding
paragraph do not prohibit:
(I) the payment of any dividend within 60 days after
the date of declaration of such dividend if the dividend would
have been permitted on the date of declaration;
(II) the acquisition of any shares of Capital Stock of the
Company, either (A) solely in exchange for shares of
Qualified Capital Stock of the Company or (B) through the
application of net proceeds of a substantially concurrent sale
for cash (other than to a Subsidiary of the Company) of shares
of Qualified Capital Stock of the Company;
(III) so long as no Default or Event of Default shall have
occurred and be continuing, repurchases of Capital Stock (or
rights or options therefor) of the Company from officers,
directors, employees or consultants pursuant to equity ownership
or compensation plans or stockholders agreements not to exceed
$25.0 million in the aggregate subsequent to March 31,
2003;
(IV) dividends and distributions paid on Common Stock of a
Restricted Subsidiary on a pro rata basis;
(V) an Investment with the net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company;
(VI) any purchase or redemption of Indebtedness that ranks
subordinate and junior in right of payment to the notes
utilizing any Net Cash Proceeds remaining after the Company has
complied with the requirements of the covenants described under
Limitation on Asset Sales and Change of
Control;
(VII) any purchase, redemption, defeasance, retirement,
payment or prepayment of principal of Subordinated Indebtedness
either (i) solely in exchange for shares of Qualified
Capital Stock of the Company, (ii) through the application
of net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of shares of
Qualified Capital Stock of the Company or (iii) Refinancing
Indebtedness;
(VIII) other Restricted Payments in an amount not to exceed
$50 million in the aggregate since the Issue Date; and
(IX) Restricted Payments if, at the time of making such
payments, and after giving effect thereto (including, without
limitation, the Incurrence of any Indebtedness to finance such
payment), the Consolidated Total Debt Ratio would not exceed
3.25 to 1.00; provided, however, that at the time of each
such Restricted Payment, no Default shall have occurred and be
continuing (or result therefrom).
In determining the aggregate amount of Restricted Payments made
subsequent to March 31, 2003 in accordance with
clause (3) of the first paragraph of this covenant
Limitation on Restricted Payments, amounts
expended pursuant to clauses (I), (II) and (III), (V),
(VII)(i), (VII)(ii) and (IX) shall be included in such
calculation.
Limitation on Asset Sales. The Company will
not, and will not permit any of the Restricted Subsidiaries to,
consummate an Asset Sale unless:
(1) the Company or the applicable Restricted Subsidiary, as
the case may be, receives consideration at the time of such
Asset Sale at least equal to the Fair Market Value of the assets
sold or otherwise disposed of;
47
(2) at least 75 percent of the consideration received
by the Company or the Restricted Subsidiary, as the case may be,
from such Asset Sale shall be in the form of cash or Cash
Equivalents and is received at the time of such
disposition; and
(3) upon the consummation of an Asset Sale, the Company
shall apply, or cause such Restricted Subsidiary to apply, the
Net Cash Proceeds relating to such Asset Sale within
365 days after receipt thereof either (A) to prepay
any Indebtedness secured by a lien on such asset to the extent
of the net proceeds of such asset and, in the case of any such
Indebtedness under any revolving credit facility, effect a
permanent reduction in the availability under such revolving
credit facility (or effect a permanent reduction in availability
under such revolving credit facility, regardless of the fact
that no prepayment is required), (B) to acquire Replacement
Assets or (C) a combination of prepayment and investment
permitted by the foregoing clauses (3)(A) and (3)(B).
Pending the final application of the Net Cash Proceeds, the
Company and the Restricted Subsidiaries may invest such Net Cash
Proceeds in any manner not prohibited by the Indenture.
On the 366th day after an Asset Sale or such earlier date,
if any, as the Board of Directors of the Company or of such
Restricted Subsidiary determines not to apply the Net Cash
Proceeds relating to such Asset Sale as set forth in clauses
(3)(A), (3)(B) and (3)(C) of the first paragraph under this
Limitation on Asset Sales (each, a Net
Proceeds Offer Trigger Date), such aggregate amount of Net
Cash Proceeds which have not been applied on or before such Net
Proceeds Offer Trigger Date as permitted in clauses (3)(A),
(3)(B) and (3)(C) of the preceding paragraph (each, a Net
Proceeds Offer Amount) shall be applied by the Company to
make an offer to purchase (the Net Proceeds Offer)
on a date (the Net Proceeds Offer Payment Date) not
less than 30 nor more than 60 days following the applicable
Net Proceeds Offer Trigger Date, from all holders on a pro rata
basis, that principal amount of notes equal to the Net Proceeds
Offer Amount at a price equal to 100 percent of the
principal amount of the notes to be purchased, plus accrued and
unpaid interest, if any, thereon to the date of purchase;
provided, however, that if the Company elects (or
is required by the terms of any Indebtedness that ranks pari
passu with the notes), such Net Proceeds Offer may be made
ratably to purchase the notes and such pari passu
Indebtedness.
If at any time any non-cash consideration received by the
Company or any Restricted Subsidiary, as the case may be, in
connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration) or Cash
Equivalents, then such conversion or disposition shall be deemed
to constitute an Asset Sale hereunder and the Net Cash Proceeds
thereof shall be applied in accordance with this covenant.
The Company may defer the Net Proceeds Offer until there is an
aggregate unutilized Net Proceeds Offer Amount equal to or in
excess of $50.0 million resulting from one or more Asset
Sales or deemed Asset Sales (at which time, the entire
unutilized Net Proceeds Offer Amount, and not just the amount in
excess of $50.0 million, shall be applied as required
pursuant to this paragraph). The first such date the aggregate
unutilized Net Proceeds Offer Amount is equal to or in excess of
$50.0 million shall be treated for this purpose as the Net
Proceeds Offer Trigger Date.
In the event of the transfer of substantially all (but not all)
of the property and assets of the Company and the Restricted
Subsidiaries after the Issue Date as an entirety to a Person in
a transaction permitted under Merger, Consolidation
and Sale of Assets, the successor corporation shall be
deemed to have sold the properties and assets of the Company and
the 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. In addition, the Fair Market Value of such properties and
assets of the Company or the Restricted Subsidiaries deemed to
be sold shall be deemed to be Net Cash Proceeds for purposes of
this covenant.
Notice of each Net Proceeds Offer will be mailed to the record
holders as shown on the register of holders within 30 days
following the Net Proceeds Offer Trigger Date, with a copy to
the Trustee, and shall comply with the procedures set forth in
the Indenture. Upon receiving notice of the Net Proceeds Offer,
holders may elect to tender their notes in whole or in part in
denominations of $2,000 and integral multiples of $1,000 in
excess thereof for cash. To the extent holders properly tender
notes in an amount exceeding the
48
Net Proceeds Offer Amount, notes of tendering holders will be
purchased on a pro rata basis (based on amounts
tendered). To the extent that the aggregate amount of the notes
tendered pursuant to a Net Proceeds Offer is less than the Net
Proceeds Offer Amount, the Company may use such excess Net
Proceeds Offer Amount for general corporate purpose or for any
other purposes not prohibited by the Indenture. Upon completion
of any such Net Proceeds Offer, the Net Proceeds Offer Amount
shall be reset to zero. A Net Proceeds Offer shall remain open
for a period of at least 20 business days or such longer period
as may be required by law.
The Company will comply with the requirements of
Rule 14e-1
under the Exchange Act and any other securities laws and
regulations to the extent such laws and regulations are
applicable in connection with the repurchase of notes pursuant
to a Net Proceeds Offer. To the extent that the provisions of
any securities laws or regulations conflict with the Asset
Sale provisions of the Indenture, the Company shall comply
with the applicable securities laws and regulations and shall
not be deemed to have breached its obligations under the
Asset Sale provisions of the Indenture by virtue
thereof.
Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company
will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted
Subsidiary to:
(a) pay dividends or make any other distributions on or in
respect of its Capital Stock (it being understood that the
priority of any preferred stock in receiving dividends or
liquidating distributions prior to dividends or liquidating
distributions being paid on common stock shall not be deemed a
restriction on the ability to make distributions on Capital
Stock);
(b) make loans or advances or to pay any Indebtedness or
other obligation owed to the Company or any other Restricted
Subsidiary; or
(c) transfer any of its property or assets to the Company
or any other Restricted Subsidiary;
except for such encumbrances or restrictions existing under or
by reason of:
(1) applicable law;
(2) the Indenture;
(3) the Credit Agreement
and/or the
documentation for the Credit Agreement;
(4) the Senior Notes and Senior Subordinated Notes
and/or the
documentation for the Senior Notes and Senior Subordinated Notes
and the Senior Secured Notes
and/or
documentation for the Senior Secured Notes, in the case of the
Notes pending redemption of the Senior Secured Notes within
45 days after the Issue Date using the net proceeds of the
offering of the old notes;
(5) customary non-assignment provisions of any contract or
any lease governing a leasehold interest of any Restricted
Subsidiary;
(6) 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 properties or assets of the Person so acquired;
(7) agreements existing on the Issue Date to the extent and
in the manner such agreements are in effect on the Issue Date;
(8) any other agreement entered into after the Issue Date
which contains encumbrances and restrictions which are not
materially more restrictive with respect to any Restricted
Subsidiary than those in effect with respect to such Restricted
Subsidiary pursuant to agreements as in effect on the Issue Date;
(9) any instrument governing Indebtedness of a Foreign
Restricted Subsidiary;
49
(10) customary restrictions on the transfer of any property
or assets arising under a security agreement governing a Lien
permitted under the Indenture;
(11) secured Indebtedness otherwise permitted to be
incurred pursuant to the covenants described under
Limitation on Incurrence of Additional
Indebtedness and Limitation on Liens
that limit the right of the debtor to dispose of the assets
securing such Indebtedness;
(12) any agreement governing Refinancing Indebtedness
incurred to Refinance the Indebtedness issued, assumed or
incurred pursuant to an agreement referred to in clause (2),
(4), (6), (7) or (9) above; provided,
however, that the provisions relating to such encumbrance
or restriction contained in any such Refinancing Indebtedness
are not materially more restrictive than the provisions relating
to such encumbrance or restriction contained in agreements
referred to in such clause (2), (4), (6), (7) or (9);
(13) any agreement governing the sale or disposition of any
Restricted Subsidiary which restricts dividends and
distributions pending such sale or disposition;
(14) any agreement, instrument or Lien placing encumbrances
or restrictions applicable only to a Finance Subsidiary or an
Accounts Receivable Entity; or
(15) any agreement governing Indebtedness permitted to be
incurred pursuant to the Limitation on Incurrence of
Additional Indebtedness covenant; provided that the
provisions relating to such encumbrance or restriction contained
in such Indebtedness, taken as a whole, are not materially more
restrictive than the provisions contained in the Credit
Agreement or in the Indenture as in effect on the Issue Date.
Limitation on Issuances of Capital Stock of Restricted
Subsidiaries. The Company will not permit any of
the Restricted Subsidiaries (other than a Finance Subsidiary or
an Accounts Receivable Entity) to issue any Preferred Stock
(other than to the Company or to a Restricted Subsidiary) or
permit any Person (other than the Company or a Restricted
Subsidiary) to own any Preferred Stock of any Restricted
Subsidiary (other than a Finance Subsidiary or an Accounts
Receivable Entity).
Issuance of Subsidiary Guarantees. If, on or
after the Issue Date, the Company forms or acquires any Domestic
Restricted Subsidiary (other than (w) an Acquired
Subsidiary for so long as it is not a Wholly Owned Domestic
Restricted Subsidiary, (x) a Finance Subsidiary,
(y) an Accounts Receivable Entity or (z) an Immaterial
Domestic Subsidiary) that incurs any Indebtedness (other than
Indebtedness owing to the Company or a Restricted Subsidiary),
or if, on or after the Issue Date, any Restricted Subsidiary
that is not a Guarantor guarantees (a Guarantee) any
Indebtedness of the Company or a Guarantor (other than
Indebtedness owing to the Company or a Restricted Subsidiary)
(Guaranteed Indebtedness), then the Company shall
cause such Domestic Restricted Subsidiary or Restricted
Subsidiary that is not a Guarantor, as the case may be, to:
(1) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee
pursuant to which such Domestic Restricted Subsidiary or
Restricted Subsidiary that is not a Guarantor, as the case may
be, shall unconditionally guarantee (each, a Subsidiary
Guarantee) all of the Companys obligations under the
notes and the Indenture on the terms set forth in the
Indenture; and
(2) execute and deliver to the Trustee an opinion of
counsel (which may contain customary exceptions) that such
supplemental indenture has been duly authorized, executed and
delivered by such Domestic Restricted Subsidiary or Restricted
Subsidiary that is not a Guarantor, as the case may be, and
constitutes a legal, valid, binding and enforceable obligation
of such Domestic Restricted Subsidiary or Restricted Subsidiary
that is not a Guarantor, as the case may be.
Thereafter, such Domestic Restricted Subsidiary or Restricted
Subsidiary that was not a Guarantor, as the case may be, shall
be a Guarantor for all purposes of the Indenture. The Company
may cause any other Restricted Subsidiary of the Company to
issue a Subsidiary Guarantee and become a Guarantor.
If the Guaranteed Indebtedness is pari passu with the
notes, then the Guarantee of such Guaranteed Indebtedness shall
be pari passu with the Subsidiary Guarantee. If the
Guaranteed Indebtedness is
50
subordinated to the notes, then the Guarantee of such Guaranteed
Indebtedness shall be subordinated to the Subsidiary Guarantee
at least to the extent that the Guaranteed Indebtedness is
subordinated to the notes.
Notwithstanding the foregoing, a Subsidiary Guarantee of the
notes provided by a Guarantor will be released without any
action required on the part of the Trustee or any holder of the
notes:
(1) if the guarantee of the Credit Agreement and of the
Senior Notes made by such Guarantor is released, unless such
Guarantor has any Indebtedness outstanding or remains a
guarantor of Indebtedness of the Company or another Guarantor;
(2) if (a) all of the Capital Stock of, or all or
substantially all of the assets of, such Guarantor is sold or
otherwise disposed of (including by way of merger or
consolidation) to a Person other than us or any of our Domestic
Restricted Subsidiaries or (b) such Guarantor ceases to be
a Restricted Subsidiary, and we otherwise comply, to the extent
applicable, with the covenant described under the caption
Limitation on Asset Sales;
(3) if we designate such Guarantor as an Unrestricted
Subsidiary in accordance with the covenant described below under
the caption Limitation on Designations of
Unrestricted Subsidiaries; or
(4) upon our request if the Fair Market Value of the assets
of the applicable Guarantor (as determined in good faith by the
Board of Directors of the Company), together with the Fair
Market Value of the assets of other Guarantors whose Subsidiary
Guarantee was released in the same calendar year in reliance on
this paragraph (4), do not exceed $5.0 million (subject to
cumulative carryover for amounts not used in any prior calendar
year).
At our request, the Trustee will execute and deliver any
instrument evidencing such release. A Guarantor may also be
released from its obligation under its Subsidiary Guarantee in
connection with a permitted amendment. See
Modification of the Indenture.
Limitation on Liens. The Company will not, and
will not cause or permit any of the Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any
property or assets of the Company or any of the Restricted
Subsidiaries, whether now owned or hereafter acquired, or any
proceeds therefrom, or assign or otherwise convey any right to
receive income or profits therefrom unless:
(1) in the case of Liens securing Indebtedness that is
expressly subordinate or junior in right of payment to the notes
or a Subsidiary Guarantee, the notes or such Subsidiary
Guarantee is secured by a Lien on such property, assets or
proceeds that is senior in priority to such Liens; and
(2) in all other cases, the notes are equally and ratably
secured,
except for:
(A) Liens existing as of the Issue Date to the extent and
in the manner such Liens are in effect on the Issue Date;
(B) Liens securing Indebtedness permitted to be incurred
pursuant to clause (2) or (11) of the definition of
Permitted Indebtedness and all other Obligations
relating thereto;
(C) Liens securing the notes or any Subsidiary Guarantee;
(D) Liens in favor of the Company or any Guarantor;
(E) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness (including, without
limitation, Acquired Indebtedness) which has been secured by a
Lien permitted under the Indenture and which has been incurred
in accordance with the provisions of the Indenture;
provided, however, that such Liens:
(I) are no less favorable to holders of the notes and are
not more favorable to the lienholders with respect to such Liens
than the Liens in respect of the Indebtedness being
Refinanced; and
51
(II) do not extend to or cover any property or assets of
the Company or any of its Restricted Subsidiaries not securing
the Indebtedness so Refinanced; and
(F) Permitted Liens.
Merger, Consolidation and Sale of
Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or
merge with or into any Person, or sell, assign, transfer, lease,
convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to sell, assign, transfer, lease, convey
or otherwise dispose of) all or substantially all of the
Companys assets (determined on a consolidated basis for
the Company and the Restricted Subsidiaries) whether as an
entirety or substantially as an entirety to any Person unless:
(1) either (A) the Company shall be the surviving or
continuing corporation or (B) the Person (if other than the
Company) formed by such consolidation or into which the Company
is merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or other disposition the properties
and assets of the Company and the Restricted Subsidiaries
substantially as an entirety (the Surviving Entity)
(y) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the
District of Columbia and (z) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to
the Trustee), executed and delivered to the Trustee, the due and
punctual payment of the principal of, and premium, if any, and
interest on all of the notes and the performance of every
covenant of the notes, the Indenture and the Registration Rights
Agreement on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction on
a pro forma basis and the assumption contemplated by
clause (1)(B)(y) above (including giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated
to be incurred in connection with or in respect of such
transaction), the Company or such Surviving Entity, as the case
may be, shall be able to incur at least $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the
covenant described under Limitation on Incurrence of
Additional Indebtedness; provided, however,
that this clause shall not be effective during any Suspension
Period as described under Covenant Suspension;
(3) immediately before and immediately after giving effect
to such transaction and the assumption contemplated by clause
(1)(B)(y) above (including, without limitation, giving effect to
any Indebtedness and Acquired Indebtedness incurred or
anticipated to be incurred and any Lien granted or to be
released in connection with or in respect of the transaction),
no Default or Event of Default shall have occurred and be
continuing; and
(4) the Company or the Surviving Entity shall have
delivered to the Trustee an officers certificate and an
opinion of counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture
comply with the applicable provisions of the Indenture and that
all conditions precedent in the Indenture relating to such
transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series
of transactions) of all or substantially all of the properties
or assets of one or more Restricted Subsidiaries, the Capital
Stock of which constitutes all or substantially all of the
properties and assets of the Company, shall be deemed to be the
transfer of all or substantially all of the properties and
assets of the Company.
The Indenture provides that upon any consolidation, combination
or merger or any transfer of all or substantially all of the
assets of the Company in accordance with the foregoing in which
the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is
merged or to which such conveyance, lease or transfer is made
shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under the Indenture and the
notes with the same effect as if such surviving entity had been
named as such.
52
No Guarantor (other than any Guarantor whose Subsidiary
Guarantee is to be released in accordance with the terms of the
Subsidiary Guarantee and Indenture in connection with any
transaction complying with the provisions of the covenant
described under Limitation on Asset Sales)
will, and the Company will not cause or permit any Guarantor to,
consolidate with or merge with or into any Person other than the
Company or any other Guarantor unless:
(1) the entity formed by or surviving any such
consolidation or merger (if other than the Guarantor) is a
corporation organized and existing under the laws of the United
States or any State thereof or the District of Columbia;
(2) such entity shall expressly assume by supplemental
indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the performance of every
covenant of the notes, the Indenture and the Registration Rights
Agreement on the part of such Guarantor to be performed or
observed;
(3) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be
continuing;
(4) immediately after giving effect to such transaction and
the use of any net proceeds therefrom on a pro forma
basis, the Company could satisfy the provisions of
clause (2) of the first paragraph of this covenant;
provided, however, that this clause shall not be
effective during any Suspension Period as described under
Covenant Suspension; and
(5) the Company shall have delivered to the Trustee an
officers certificate and opinion of counsel, each stating
that such consolidation or merger and, if a supplemental
indenture is required in connection with such transaction, such
supplemental indenture comply with the applicable provisions of
the Indenture and that all conditions precedent in the Indenture
relating to such transaction have been satisfied.
Limitation on Transactions with
Affiliates. (a) The Company will not, and
will not permit any of the Restricted Subsidiaries to, directly
or indirectly, enter into or permit to exist any transaction or
series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the
rendering of any service) with, or for the benefit of, any of
its Affiliates (each an Affiliate Transaction),
other than:
(x) Affiliate Transactions permitted under paragraph
(b) below; and
(y) Affiliate Transactions on terms that are not materially
less favorable than those that would have reasonably been
expected in a comparable transaction at such time on an
arms-length basis from a Person that is not an Affiliate
of the Company or such Restricted Subsidiary.
All Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a Fair
Market Value in excess of $10.0 million shall be approved
by the Board of Directors of the Company or such Restricted
Subsidiary, as the case may be, such approval to be evidenced by
a Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing
provisions. If the Company or any Restricted Subsidiary enters
into an Affiliate Transaction (or series of related Affiliate
Transactions related to a common plan) on or after the Issue
Date that involves an aggregate Fair Market Value of more than
$50.0 million, the Company or such Restricted Subsidiary,
as the case may be, shall, prior to the consummation thereof,
obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or
the relevant Restricted Subsidiary, as the case may be, from a
financial point of view, from an Independent Financial Advisor
and file the same with the Trustee.
The restrictions set forth in paragraph (a) shall not apply
to:
(1) employment, consulting and compensation arrangements
and agreements of the Company or any Restricted Subsidiary
consistent with past practice or approved by a majority of the
disinterested members of the Board of Directors (or a committee
comprised of disinterested directors);
53
(2) reasonable fees and compensation paid to, and indemnity
provided on behalf of, officers, directors, employees,
consultants or agents of the Company or any Restricted
Subsidiary as determined in good faith by the Companys
Board of Directors or senior management;
(3) transactions exclusively between or among the Company
and any of the Restricted Subsidiaries or exclusively between or
among such Restricted Subsidiaries; provided that such
transactions are not otherwise prohibited by the
Indenture; and
(4) Restricted Payments, Permitted Investments or Permitted
Liens permitted by the Indenture.
Payments for Consent. The Company will not,
and will not cause or 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 any notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the
Indenture, the notes or the Subsidiary Guarantees unless such
consideration is offered to be paid to all holders who so
consent, waive or agree to amend in the time frame set forth in
solicitation documents relating to such consent, waiver or
amendment.
Limitation on Designations of Unrestricted
Subsidiaries. The Company may, on or after the
Issue Date, designate any Subsidiary of the Company (other than
a Subsidiary of the Company which owns Capital Stock of a
Restricted Subsidiary or is a Guarantor) as an
Unrestricted Subsidiary under the Indenture (a
Designation) only if:
(1) no Default or Event of Default shall have occurred and
be continuing at the time of or after giving effect to such
Designation;
(2) the Company would be permitted under the Indenture to
make an Investment at the time of Designation (assuming the
effectiveness of such Designation) in an amount (the
Designation Amount) equal to the sum of (A) the
Fair Market Value of the Capital Stock of such Subsidiary owned
by the Company
and/or any
of the Restricted Subsidiaries on such date and (B) the
aggregate amount of Indebtedness of such Subsidiary owed to the
Company and the Restricted Subsidiaries on such date; and
(3) the Company would be permitted to incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness)
pursuant to the covenant described under Limitation
on Incurrence of Additional Indebtedness at the time of
Designation (assuming the effectiveness of such Designation).
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted
Payment in the Designation Amount pursuant to the covenant
described under Limitation on Restricted
Payments for all purposes of the Indenture.
The Indenture further provides that the Company shall not, and
shall not permit any Restricted Subsidiary to, at any time:
(x) provide direct or indirect credit support for or a
guarantee of any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing
such Indebtedness);
(y) be directly or indirectly liable for any Indebtedness
of any Unrestricted Subsidiary; or
(z) be directly or indirectly liable for any 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 Indebtedness of any Unrestricted Subsidiary (including
any right to take enforcement action against such Unrestricted
Subsidiary), except, in the case of clause (x) or (y), to
the extent permitted under the covenant described under
Limitation on Restricted Payments.
The Indenture further provides that the Company may revoke any
Designation of a Subsidiary as an Unrestricted Subsidiary
(Revocation), whereupon such Subsidiary shall then
constitute a Restricted Subsidiary, if
54
(1) no Default or Event of Default shall have occurred and
be continuing at the time and after giving effect to such
Revocation;
(2) all Liens and Indebtedness of such Unrestricted
Subsidiaries outstanding immediately following such Revocation
would, if incurred at such time, have been permitted to be
incurred for all purposes of the Indenture; and
(3) such Subsidiary shall for purposes of the covenant
described above under Issuance of Subsidiary
Guarantees be treated as having then been acquired by the
Company.
All Designations and Revocations must be evidenced by an
officers certificate of the Company delivered to the
Trustee certifying compliance with the foregoing provisions.
Reports to Holders. Notwithstanding that the
Company may not be subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, to the extent
permitted by the Exchange Act, the Company will file with the
SEC, and provide to the Trustee and the holders of the notes,
the annual reports and the information, documents and other
reports (or copies of such portions of any of the foregoing as
the Commission may by rules and regulations prescribe) that are
specified in Sections 13 and 15(d) of the Exchange Act
within the time periods required; provided,
however, that availability of the foregoing materials on
the SECs EDGAR service shall be deemed to satisfy the
Companys delivery obligations under this provision. In the
event that the Company is not permitted to file such reports,
documents and information with the Commission pursuant to the
Exchange Act, the Company will nevertheless provide such
Exchange Act information to the Trustee and the holders of the
notes as if the Company were subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act
within the time periods required by law.
If the Company has designated any of its Subsidiaries as an
Unrestricted Subsidiary, 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 to the financial
statements, and in Managements Discussion and
Analysis of Financial Condition and Results of Operations,
of the financial condition and results of operations of the
Company and the Restricted Subsidiaries.
In addition, the Company has agreed that, for so long as any
notes remain outstanding, it will furnish to the holders and to
securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act.
Notwithstanding anything herein to the contrary, the Company
will not be deemed to have failed to comply with any of its
obligations hereunder for purposes of clause (3) under
Events of Default and Remedies until
90 days after the date any report hereunder is due.
Covenant
Suspension
Beginning on the date (the Suspension Date) that
(i) the notes have Investment Grade Ratings from both
Rating Agencies and (ii) no Default or Event of Default has
occurred and is continuing under the Indenture, and ending on
the date (the Reversion Date) that either Rating
Agency (or both Rating Agencies) withdraws its Investment Grade
Rating on the notes or downgrades the rating assigned by it to
the notes below an Investment Grade Rating or a Default or Event
of Default has occurred and is continuing (such period of time
from and including the Suspension Date to but excluding the
Reversion Date, the Suspension Period), the Company
and its Restricted Subsidiaries will not be subject to the
provisions of the Indenture described above under the following
headings under the caption Certain Covenants:
Limitation on Incurrence of Additional
Indebtedness,
Limitation on Restricted Payments,
Limitation on Asset Sales,
Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries,
Limitation on Transactions with
Affiliates, and
55
Clause (2) of the first paragraph and clause (4) of
the second paragraph under the caption Merger,
Consolidation and Sale of Assets
(collectively, the Suspended Covenants);
provided, however, that the Company and its
Restricted Subsidiaries will remain subject to the provisions of
the Indenture described above under the caption Change of
Control and under the following headings under the caption
Certain Covenants:
Issuance of Subsidiary Guarantees,
Limitation on Issuances of Capital Stock of
Restricted Subsidiaries,
Limitation on Liens,
Merger, Consolidation and Sale of Assets
(except to the extent set forth in this paragraph),
Payments for Consent,
Limitation on Designations of Unrestricted
Subsidiaries, and
Reports to Holders.
During any Suspension Period, the Companys Board of
Directors may not designate any of the Companys
Subsidiaries as Unrestricted Subsidiaries.
On the Reversion Date, all Indebtedness incurred and
Disqualified Stock and Preferred Stock issued during the
Suspension Period will be classified as having been incurred or
issued pursuant to the Consolidated Fixed Charge Coverage Ratio
test set forth in the first paragraph of the covenant described
under Certain CovenantsLimitation on
Incurrence of Additional Indebtedness above or one of the
clauses set forth in the definition of Permitted Indebtedness
(to the extent such Indebtedness would be permitted to be
incurred or issued thereunder as of the Reversion Date and after
giving effect to Indebtedness incurred issued prior to the
Suspension Period and outstanding on the Reversion Date). To the
extent any such Indebtedness would not be so permitted to be
incurred or issued pursuant to the Consolidated Fixed Charge
Coverage Ratio or the definition of Permitted Indebtedness, such
Indebtedness will be deemed to have been outstanding on the
Issue Date, so that it is classified as permitted under
clause (3) of the definition of Permitted Indebtedness.
Calculations made after the Reversion Date of the amount
available to be made as Restricted Payments under
Certain CovenantsLimitation on Restricted
Payments will be made as though the covenant described
under Certain CovenantsLimitation on
Restricted Payments had been in effect since the Issue
Date and throughout the Suspension Period. Accordingly,
Restricted Payments made during the Suspension Period will
reduce the amount available to be made as Restricted Payments
under the first paragraph of Certain
CovenantsLimitation on Restricted Payments.
For purposes of the covenant described under
Limitation on Asset Sales, on the Suspension
Date, the Net Cash Proceeds amount will be reset to zero.
Notwithstanding the reinstatement of the Suspended Covenants on
the Reversion Date, neither (a) the continued existence, on
and after the Reversion Date, of facts and circumstances or
obligations that occurred, were incurred or otherwise came into
existence during a Suspension Period nor (b) the
performance thereof, shall constitute a breach of any Suspended
Covenant set forth in the Indenture or cause a Default or Event
of Default thereunder; provided, however, that
(i) the Company and the Restricted Subsidiaries did not
incur or otherwise cause such facts and circumstances or
obligations to exist in anticipation of a withdrawal or
downgrade by either Rating Agency (or both Rating Agencies) of
its Investment Grade Rating on the notes and (ii) the
Company reasonably believed that such incurrence or actions
would not result in such withdrawal or downgrade.
There can be no assurance that the notes will ever achieve or
maintain Investment Grade Ratings.
56
Events of
Default
The following events are defined in the Indenture as
Events of Default:
(1) the failure to pay interest on any notes when
the same becomes due and payable and the default continues for a
period of 30 days;
(2) the failure to pay the principal on any notes when such
principal becomes due and payable, at maturity, upon redemption
or otherwise (including the failure to make a payment to
purchase notes tendered pursuant to a Change of Control Offer or
a Net Proceeds Offer);
(3) a default by the Company or any Restricted Subsidiary
in the observance or performance of any other covenant or
agreement contained in the Indenture which default continues for
a period of 30 days after the Company receives written
notice specifying the default from the Trustee or the holders of
at least 25 percent of the outstanding principal amount of
the notes (except in the case of a default with respect to the
covenant described under Certain
CovenantsMerger, Consolidation and Sale of Assets,
which will constitute an Event of Default with such notice
requirement but without such passage of time requirement);
(4) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured
or evidenced any Indebtedness of the Company or of any
Restricted Subsidiary (or the payment of which is guaranteed by
the Company or any Restricted Subsidiary), whether such
Indebtedness now exists or is created after the Issue Date,
which default (A) is caused by a failure to pay principal
of such Indebtedness after any applicable grace period provided
in such Indebtedness on the date of such default (a
payment default) or (B) results in the
acceleration of such Indebtedness prior to its express maturity
(and such acceleration is not rescinded, or such Indebtedness is
not repaid, within 30 days) and, in each case, the
principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which
there has been a payment default or the maturity of which has
been so accelerated, exceeds $75.0 million or more at any
time;
(5) one or more judgments in an aggregate amount in excess
of $75.0 million not covered by adequate insurance (other
than self-insurance) shall have been rendered against the
Company or any of the Restricted Subsidiaries and such judgments
remain undischarged, unpaid or unstayed for a period of
60 days after such judgment or judgments become final and
nonappealable;
(6) certain events of bankruptcy affecting the Company or
any of its Significant Subsidiaries; or
(7) any Subsidiary Guarantee of a Significant Subsidiary of
the Company ceases to be in full force and effect or any
Subsidiary Guarantee of such a Significant Subsidiary is
declared to be null and void and unenforceable or any Subsidiary
Guarantee of such a Significant Subsidiary is found to be
invalid or any Guarantor which is such a Significant Subsidiary
denies its liability under its Subsidiary Guarantee (other than
by reason of release of such Guarantor in accordance with the
terms of the Indenture).
If an Event of Default (other than an Event of Default specified
in clause (6) above) shall occur and be continuing, the
Trustee or the holders of at least 25 percent in principal
amount of outstanding notes may declare the principal of,
premium, if any, and accrued interest on all the notes to be due
and payable by notice in writing to the Company (and to the
Trustee if given by the holders) specifying the respective Event
of Default and that it is a notice of acceleration,
and the same shall become immediately due and payable. If an
Event of Default specified in clause (6) above occurs and
is continuing, then all unpaid principal of, premium, if any,
and accrued and unpaid interest on all of the outstanding notes
shall ipso facto become and be immediately due and
payable without any declaration or other act on the part of the
Trustee or any holder.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the notes as described in the
preceding paragraph, the holders of a majority in principal
amount of the then outstanding notes may rescind and cancel such
declaration and its consequences:
(1) if the rescission would not conflict with any judgment
or decree;
57
(2) if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has
become due solely because of the acceleration;
(3) to the extent the payment of such interest is lawful,
if interest on overdue installments of interest and overdue
principal, which has become due otherwise than by such
declaration of acceleration, has been paid;
(4) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its reasonable
expenses, disbursements and advances; and
(5) in the event of the cure or waiver of an Event of
Default of the type described in clause (6) of the
description above of Events of Default, the Trustee shall have
received an officers certificate and an opinion of counsel
that such Event of Default has been cured or waived.
No such rescission shall affect any subsequent Default or Event
of Default or impair any right consequent thereto.
The holders of a majority in principal amount of the then
outstanding notes may waive any existing Default or Event of
Default under the Indenture, and its consequences, except a
default in the payment of the principal of or premium, if any,
or interest on any notes.
Holders of the notes may not enforce the Indenture or the notes
except as provided in the Indenture and under the TIA. Subject
to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee is under no obligation to exercise any of
its rights or powers under the Indenture at the request, order
or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable indemnity. Subject to all
provisions of the Indenture and applicable law, the Holders of a
majority in aggregate principal amount of the then outstanding
notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the
Trustee.
Under the Indenture, the Company will be required to provide an
officers certificate to the Trustee promptly upon the
Company obtaining knowledge of any Default or Event of Default
(provided that the Company shall provide such
certification at least annually whether or not it knows of any
Default or Event of Default) that has occurred and, if
applicable, describe such Default or Event of Default and the
status thereof.
Legal
Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have
its obligations and the obligations of any Guarantors discharged
with respect to the outstanding notes (Legal
Defeasance). Such Legal Defeasance means that the Company
shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding notes, except for:
(1) the rights of holders to receive payments in respect of
the principal of, premium, if any, and interest on the notes
when such payments are due;
(2) the Companys obligations with respect to the
notes concerning issuing temporary notes, registration of notes,
mutilated, destroyed, lost or stolen notes and the maintenance
of an office or agency for payments;
(3) the rights, powers, trust, duties and immunities of the
Trustee and the Companys obligations in connection
therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company released with
respect to certain covenants that are described in the Indenture
(Covenant Defeasance) and thereafter any omission or
failure to comply with such obligations shall not constitute a
Default or Event of Default with respect to the notes. In the
event Covenant Defeasance occurs, certain events (not including
nonpayment, bankruptcy, receivership, reorganization and
insolvency events) described under Events of
Default will no longer constitute an Event of Default with
respect to the notes.
58
In order to exercise Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the holders cash in
U.S. dollars, non-callable U.S. government
obligations, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants selected by the Company, to pay
the principal of, premium, if any, and interest on the notes on
the stated date of payment thereof or on the applicable
redemption date, as the case may be;
(2) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United
States reasonably acceptable to the Trustee confirming that
(A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(B) since the date of the Indenture, there has been a
change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel
shall confirm that, the holders will not recognize income, gain
or loss for federal income tax purposes as a result of such
Legal Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not
occurred;
(3) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee an opinion of counsel in the
United States reasonably acceptable to the Trustee confirming
that the holders will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit or insofar as Events
of Default from bankruptcy or insolvency events are concerned,
at any time in the period ending on the 91st day after the
date of deposit;
(5) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of or constitute a default under
the Indenture or any other material agreement or instrument to
which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an
officers certificate stating that the deposit was not made
by the Company with the intent of preferring the holders over
any other creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors
of the Company or others;
(7) the Company shall have delivered to the Trustee an
officers certificate and an opinion of counsel, each
stating that all conditions precedent provided for or relating
to the Legal Defeasance or the Covenant Defeasance have been
complied with;
(8) the Company shall have delivered to the Trustee an
opinion of counsel to the effect that after the 91st day
following the deposit, the trust funds will not be subject to
the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights
generally; and
(9) certain other customary conditions precedent are
satisfied.
Satisfaction
and Discharge
The Indenture will be discharged and will cease to be of further
effect (except as to surviving rights and registration of
transfer or exchange of the notes and subordination provisions,
as expressly provided for in the Indenture) as to all
outstanding notes when:
(1) either (a) all the notes theretofore authenticated
and delivered (except lost, stolen or destroyed notes which have
been replaced or paid and notes for whose payment money has
theretofore been deposited in trust or segregated and held in
trust by the Company and thereafter repaid to the Company or
discharged from such trust) have been delivered to the Trustee
for cancellation or (b) all notes not theretofore delivered
to the Trustee for cancellation have (i) become due and
payable, (ii) will become
59
due and payable at their stated maturity within one year or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee, and the Company has
irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire
Indebtedness on the notes not theretofore delivered to the
Trustee for cancellation, for principal of, premium, if any, and
interest on the notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee
to apply such funds to the payment thereof at maturity or
redemption, as the case may be;
(2) the Company
and/or the
Guarantors have paid all other sums payable under the Indenture,
including amounts owing to the Trustee;
(3) the Company has delivered to the Trustee an
officers certificate and an opinion of counsel stating
that all conditions precedent under the Indenture relating to
the satisfaction and discharge of the Indenture have been
complied with; and
(4) there exists no Default or Event of Default under the
Indenture.
Modification
of the Indenture
From time to time, the Company, any Guarantor and the Trustee,
without the consent of the holders, may amend the Indenture for
certain specified purposes, including:
(1) curing ambiguities, defects or inconsistencies, so long
as such change does not, in the opinion of the Trustee,
adversely affect the rights of any of the holders of the notes
in any material respect;
(2) providing for the assumption by a successor Person of
the obligations of the Company or any Guarantor under the
Indenture in accordance with the covenant described under
Certain CovenantsMerger, Consolidation and
Sale of Assets; and
(3) adding any Guarantor.
In formulating its opinion on such matters, the Trustee will be
entitled to rely on such evidence as it deems appropriate,
including, without limitation, solely on an opinion of counsel.
Other modifications and amendments of the Indenture may be made
with the consent of the holders of a majority in principal
amount of the then outstanding notes issued under the Indenture,
except that, without the consent of each holder affected
thereby, no amendment may:
(1) reduce the amount of notes whose holders must consent
to an amendment;
(2) reduce the rate of or change or have the effect of
changing the time for payment of interest, including defaulted
interest, on any notes;
(3) reduce the principal of or change or have the effect of
changing the fixed maturity of any notes; or change the date on
which any notes may be subject to redemption or reduce the
redemption price therefor;
(4) make any notes payable in money other than that stated
in the notes;
(5) make any change in provisions of the Indenture
protecting the right of each holder to receive payment of
principal of, premium, if any, and interest on such notes on or
after the stated due date thereof or to bring suit to enforce
such payment, or permitting holders of a majority in principal
amount of the then outstanding notes to waive Defaults or Events
of Default;
(6) amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of
Control Offer after the occurrence of a Change of Control or
make and consummate a Net Proceeds Offer with respect to any
Asset Sale that has been consummated or modify any of the
provisions or definitions with respect thereto;
(7) modify or change any provision of the Indenture or the
related definitions affecting the ranking of the notes or any
Subsidiary Guarantee in a manner which adversely affects the
holders;
60
(8) modify the provisions of Certain
CovenantsPayments for Consent in any manner adverse
to a holder of notes; or
(9) release any Guarantor from any of its obligations under
its Subsidiary Guarantee or the Indenture otherwise than in
accordance with the terms of the Indenture.
Governing
Law
The Indenture provides that it, the notes and any Subsidiary
Guarantees will be governed by, and construed in accordance
with, the laws of the State of New York but without giving
effect to applicable principles of conflicts of law to the
extent that the application of the law of another jurisdiction
would be required thereby.
The
Trustee
The Indenture provides that, except during the continuance of an
Event of Default known to the Trustee, the Trustee will perform
only such duties as are specifically set forth in the Indenture.
During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it by the Indenture,
and use the same degree of care and skill in its exercise, as a
prudent Person would exercise or use under the circumstances in
the conduct of its own affairs.
The Indenture and the provisions of the TIA contain certain
limitations on the rights of the Trustee, should it become a
creditor of the Company, to obtain payments of claims in certain
cases or to realize on certain property received in respect of
any such claim as security or otherwise. Subject to the TIA, the
Trustee will be permitted to engage in other transactions;
provided that if the Trustee acquires any conflicting
interest as described in the TIA, it must eliminate such
conflict or resign.
Certain
Definitions
Set forth below is a summary of certain of the defined terms
used in the Indenture. Reference is made to the Indenture for
the full definition of all such terms, as well as any other
terms used herein for which no definition is provided.
Accounts Receivable Entity means a Person,
including, without limitation, a Subsidiary of the Company,
whose operations consist solely of owning
and/or
selling accounts receivable of the Company and its Subsidiaries
and engaging in other activities in connection with transactions
that are Permitted Receivables Financings.
Acquired Indebtedness means Indebtedness of a
Person or any of its Subsidiaries existing at the time such
Person becomes a Restricted Subsidiary or at the time it merges
or consolidates with the Company or any of the Restricted
Subsidiaries or assumed by the Company or any Restricted
Subsidiary in connection with the acquisition of assets from
such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary or such acquisition,
merger or consolidation.
Acquired Subsidiary means a Person which
becomes a Restricted Subsidiary after the Issue Date;
provided that such Person has outstanding voting Capital
Stock prior to becoming a Subsidiary of the Company and a
majority of such voting Capital Stock was owned by Persons other
than the Company and its Restricted Subsidiaries.
Affiliate means, with respect to any
specified Person, any other Person who directly or indirectly
through one or more intermediaries controls, or is controlled
by, or is under common control with, such specified Person. The
term control means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and
the terms controlling and controlled
have meanings correlative of the foregoing.
61
Affiliate Transaction has the meaning set
forth under Certain CovenantsLimitation on
Transactions with Affiliates.
Asset Acquisition means (1) an
Investment by the Company or any Restricted Subsidiary in any
other Person pursuant to which such Person shall become a
Restricted Subsidiary, or shall be merged with or into the
Company or any Restricted Subsidiary, or (2) the
acquisition by the Company or any Restricted Subsidiary of the
assets of any Person (other than a Restricted Subsidiary) 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, lease (other than operating leases entered
into in the ordinary course of business), assignment or other
transfer (other than the granting of a Lien in accordance with
the Indenture) for value by the Company or any of the Restricted
Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary of
(a) any Capital Stock of any Restricted Subsidiary; or
(b) any other property or assets of the Company or any
Restricted Subsidiary other than in the ordinary course of
business; provided, however, that Asset Sales shall not
include:
(1) a transaction or series of related transactions for
which the Company or the Restricted Subsidiaries receive
aggregate consideration of less than $15 million;
(2) the sale, lease, conveyance, disposition or other
transfer of all or substantially all of the assets of the
Company as permitted by the covenant described under
Certain CovenantsMerger, Consolidation and
Sale of Assets;
(3) any Restricted Payment made in accordance with the
covenant described under Certain
CovenantsLimitation on Restricted Payments;
(4) sales or contributions of accounts receivable and
related assets pursuant to a Permitted Receivables Financing
made in accordance with the covenant described under
Certain CovenantsLimitation on Incurrence of
Additional Indebtedness; or
(5) sales of (i) obsolete and not practically useable
or (ii) worn-out equipment.
Board of Directors means, as to any Person,
the board of directors of such Person or any duly authorized
committee thereof.
Board Resolution means, with respect to any
Person, a copy of a resolution certified by the Secretary or an
Assistant Secretary of such Person to have been duly adopted by
the Board of Directors of such Person and to be in full force
and effect on the date of such certification, and delivered to
the Trustee.
Capital Stock means (1) with respect to
any Person that is a corporation, any and all shares, interests,
participations or other equivalents (however designated and
whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person, and
(2) with respect to any Person that is not a corporation,
any and all partnership or other equity interests of such Person.
Capitalized Lease Obligations means, as to
any Person, the obligations of such Person under a lease that
are required to be classified and accounted for as capital lease
obligations under GAAP and, for purposes of this definition, the
amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, 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 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
62
of acquisition thereof and, at the time of acquisition, having
one of the two highest ratings obtainable from either
Standard & Poors Rating Services
(S&P) or Moodys Investors Service, Inc.
(Moodys);
(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-2 from
S&P or at least
P-2 from
Moodys;
(4) demand and time deposit accounts, 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 million;
(5) repurchase obligations with a term of not more than
seven 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;
(6) investments in money market funds which invest
substantially all their assets in securities of the types
described in clauses (1) through (5) above;
(7) investments in money market funds subject to the risk
limiting conditions of
Rule 2a-7
or any successor rule of the Commission under the Investment
Company Act of 1940, as amended; and
(8) solely in respect of the ordinary course cash
management activities of the Foreign Subsidiaries, equivalents
of the investments described in clause (1) above to the
extent guaranteed by any member state of the European Union or
the country in which the Foreign Subsidiary operates and
equivalents of the investments described in clause (4)
above issued, accepted or offered by any commercial bank
organized under the laws of a member state of the European Union
or the jurisdiction of organization of the applicable Foreign
Subsidiary having at the date of acquisition thereof combined
capital and surplus of not less than $250 million.
Cash Management Obligations means, with
respect to any Person, all obligations of such Person in respect
of overdrafts and related liabilities owed to any other Person
that arise from treasury, depositary or cash management
services, including in connection with any automated clearing
house transfers of funds, or any similar transactions.
Change of Control means the occurrence of one
or more of the following events:
(1) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company to any Person or
group of related Persons for purposes of Section 13(d) of
the Exchange Act (a Group), together with any
Affiliates thereof (whether or not otherwise in compliance with
the provisions of the Indenture);
(2) the approval by the holders of Capital Stock of the
Company of any plan or proposal for the liquidation or
dissolution of the Company (whether or not otherwise in
compliance with the provisions of the Indenture);
(3) any Person or Group shall become the beneficial owner,
directly or indirectly, of shares representing more than
35 percent of the aggregate ordinary voting power
represented by the issued and outstanding Capital Stock of the
Company; or
(4) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for
election by the stockholders of the Company was approved
pursuant to a vote of a majority of the directors then still in
office who were either directors at the beginning of such period
or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office.
Change of Control Offer has the meaning set
forth under Change of Control.
Change of Control Payment Date has the
meaning set forth under Change of Control.
63
Combined EBITDA means, with respect to the
Restricted Subsidiaries that are not Guarantors (and are not a
Finance Subsidiary or an Accounts Receivable Entity that is a
Domestic Restricted Subsidiary) (the Combined
Subsidiaries), for any period, the sum (without
duplication) of:
(1) Combined Net Income; and
(2) to the extent Combined Net Income has been reduced
thereby:
(A) all income taxes of the Combined Subsidiaries paid or
accrued in accordance with GAAP for such period;
(B) Combined Interest Expense; and
(C) Combined Non-cash Charges,
less any non-cash items increasing Combined Net Income for such
period, all as determined on a combined basis for the Combined
Subsidiaries in accordance with GAAP.
Combined Fixed Charge Coverage Ratio means,
with respect to the Restricted Subsidiaries that are not
Guarantors (and are not a Finance Subsidiary or an Accounts
Receivable Entity that is a Domestic Restricted Subsidiary), the
ratio of Combined EBITDA 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
Combined Fixed Charge Coverage Ratio (the Transaction
Date) to Combined Fixed Charges for the Four Quarter
Period. In addition to and without limitation of the foregoing,
for purposes of this definition, Combined EBITDA and
Combined 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 any
of the Restricted Subsidiaries that are not Guarantors (and are
not a Finance Subsidiary or an Accounts Receivable Entity that
is a Domestic 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 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 the Transaction Date,
as if such incurrence or 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 Sales or other dispositions or Asset
Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as
a result of one of the Restricted Subsidiaries that are not
Guarantors (and are not a Finance Subsidiary or an Accounts
Receivable Entity that is a Domestic Restricted Subsidiary)
(including any Person who becomes such a Restricted Subsidiary
as a result of the Asset Acquisition) incurring, assuming or
otherwise being liable for Acquired Indebtedness and also
including any Combined EBITDA (provided that such
Combined EBITDA shall be included only to the extent includable
pursuant to the definition of Combined Net Income)
attributable to the assets which are the subject of the Asset
Acquisition or Asset Sale or other disposition 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 or other disposition (including the
incurrence, assumption or liability for any such Acquired
Indebtedness) occurred on the first day of the Four Quarter
Period.
If any of the Restricted Subsidiaries that are not Guarantors
(and are not a Finance Subsidiary or Accounts Receivable Entity
that is a Domestic Restricted Subsidiary) directly or indirectly
guarantee Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed
Indebtedness as if the Restricted Subsidiary had directly
incurred or otherwise assumed such guaranteed
64
Indebtedness. Furthermore, in calculating Combined Fixed
Charges for purposes of determining the denominator (but
not the numerator) of this Combined 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 agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum in
effect on the Transaction Date resulting after giving effect to
the operation of such agreements on such date.
Combined Fixed Charges means, with respect to
the Restricted Subsidiaries that are not Guarantors (and are not
a Finance Subsidiary or an Accounts Receivable Entity that is a
Domestic Restricted Subsidiary) for any period, the sum, without
duplication, of:
(1) Combined Interest Expense, plus
(2) the product of (x) the amount of all dividend
payments on any series of Preferred Stock of the Restricted
Subsidiaries that are not Guarantors (other than Finance
Subsidiaries and Accounts Receivable Entities that are Domestic
Restricted Subsidiaries) paid, accrued
and/or
scheduled to be paid or accrued during such period multiplied by
(y) 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 income tax rate of the
Company, expressed as a decimal.
Combined Interest Expense means, with respect
to the Restricted Subsidiaries that are not Guarantors (and are
not a Finance Subsidiary or Accounts Receivable Entity that is a
Domestic Restricted Subsidiary) for any period, the sum of,
without duplication:
(1) the aggregate of the interest expense of the Restricted
Subsidiaries that are not Guarantors (and are not a Finance
Subsidiary or Accounts Receivable Entity that is a Domestic
Restricted Subsidiary) for such period determined on a combined
basis in accordance with GAAP, including without limitation,
(A) any amortization of debt discount,
(B) the net costs under Interest Swap Obligations,
(C) all capitalized interest, and
(D) the interest portion of any deferred payment obligation;
(2) the interest component of Capitalized Lease Obligations
accrued by the Restricted Subsidiaries that are not Guarantors
(and are not a Finance Subsidiary or Accounts Receivable Entity
that is a Domestic Restricted Subsidiary) during such period as
determined on a consolidated basis in accordance with
GAAP; and
(3) net losses relating to sales of accounts receivable
pursuant to Permitted Receivable Financings during such period
as determined on a combined basis in accordance with GAAP;
provided that Combined Interest Expense shall not include
any of the foregoing to the extent owing to the Company or any
Restricted Subsidiary or to the extent owed by a Finance
Subsidiary or an Accounts Receivable Entity that is a Domestic
Restricted Subsidiary.
Combined Net Income means, with respect to
the Restricted Subsidiaries that are not Guarantors (and are not
Finance Subsidiaries or Accounts Receivable Entities that are
Domestic Restricted Subsidiaries), for any period, the aggregate
net income (or loss) of the Restricted Subsidiaries that are not
Guarantors (and are
65
not Finance Subsidiaries or Accounts Receivable Entities that
are Domestic Restricted Subsidiaries) for such period as
determined on a combined basis in accordance with GAAP;
provided that there shall be excluded therefrom:
(1) after-tax gains and losses from Asset Sales or
abandonments or reserves relating thereto;
(2) extraordinary or non-recurring gains or losses
(determined on an after-tax basis);
(3) any non-cash compensation expense incurred for grants
and issuances of stock appreciation or similar rights, stock
options, restricted shares or other rights to officers,
directors and employees of the Company and its Subsidiaries
(including any such grant or issuance to a 401(k) plan or other
retirement benefit plan);
(4) the net income of any Person, other than a Restricted
Subsidiary, except to the extent of cash dividends or
distributions paid to the Restricted Subsidiaries that are not
Guarantors (and are not Finance Subsidiaries or Accounts
Receivable Entities that are Domestic Restricted Subsidiaries)
by such Person;
(5) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made
out of Combined Net Income accrued at any time following
March 31, 2003;
(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) from and after the date that such operation is
classified as discontinued;
(7) write-downs resulting from the impairment of intangible
assets;
(8) the amount of amortization or write-off of deferred
financing costs and debt issuance costs of the Company and its
Restricted Subsidiaries during such period and any premium or
penalty paid in connection with redeeming or retiring
Indebtedness of the Company and its Restricted Subsidiaries
prior to the stated maturity thereof pursuant to the agreements
governing such Indebtedness; and
(9) any restructuring charges incurred and disclosed in the
Companys audited financial statements prepared in
accordance with GAAP, together with any related provision for
taxes, in an aggregate amount since the Issue Date not to exceed
$80.0 million.
Combined Non-cash Charges means, with respect
to the Restricted Subsidiaries that are not Guarantors (and are
not Finance Subsidiaries or Accounts Receivable Entities that
are Domestic Restricted Subsidiaries), for any period, the
aggregate depreciation, amortization and other non-cash expenses
of the Restricted Subsidiaries that are not Guarantors (and are
not Finance Subsidiaries or Accounts Receivable Entities that
are Domestic Restricted Subsidiaries) reducing Combined Net
Income for such period, determined on a combined basis in
accordance with GAAP (excluding any such charge which requires
an accrual of or a reserve for cash charges for any future
period).
Commission means the Securities and Exchange
Commission, as from time to time constituted, or if at any time
after the execution of the Indenture such Commission is not
existing and performing the applicable duties now assigned to
it, then the body or bodies performing such duties at such time.
Commodity Agreement means any commodity
futures contract, commodity option or other similar agreement or
arrangement entered into by the Company or any Restricted
Subsidiary of the Company designed to protect the Company or any
of its Restricted Subsidiaries against fluctuations in the price
of the commodities at the time used in the ordinary course of
business of the Company or any of its Restricted Subsidiaries
and not for speculative purposes.
Common Stock of any Person means any and all
shares, interests or other participations in, and other
equivalents (however designated and whether voting or
non-voting) of, such Persons common stock, whether
outstanding on the Issue Date or issued after the Issue Date,
and includes, without limitation, all series and classes of such
common stock.
66
Consolidated EBITDA means, with respect to
the Company, for any period, the sum (without duplication) of:
(1) Consolidated Net Income; and
(2) to the extent Consolidated Net Income has been reduced
thereby:
(A) all income taxes of the Company and the Restricted
Subsidiaries expensed or accrued in accordance with GAAP for
such period;
(B) Consolidated Interest Expense; and
(C) Consolidated Non-cash Charges,
less any non-cash items increasing Consolidated Net
Income for such period, all as determined on a consolidated
basis for the Company and the Restricted Subsidiaries in
accordance with GAAP.
Consolidated Fixed Charge Coverage Ratio
means, with respect to the Company, the ratio of Consolidated
EBITDA of the Company during the Four Quarter Period ending on
or prior to the Transaction Date to Consolidated Fixed Charges
of the Company for the Four Quarter Period. In addition to and
without limitation of the foregoing, for purposes of this
definition, Consolidated 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 the
Company or any of the Restricted Subsidiaries (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 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 the Transaction Date,
as if such incurrence or 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 Sales or other dispositions or Asset
Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as
a result of the Company or one of the 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 Consolidated EBITDA (provided that such
Consolidated EBITDA shall be included only to the extent
includable pursuant to the definition of Consolidated Net
Income) attributable to the assets which are the subject
of the Asset Acquisition or Asset Sale or other disposition
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 or other disposition
(including the incurrence, assumption or liability for any such
Acquired Indebtedness) occurred on the first day of the Four
Quarter Period.
If the Company or any of the 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 the Company or any Restricted
Subsidiary 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
67
(3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements relating to Interest Swap
Obligations, shall be deemed to accrue at the rate per annum in
effect on the Transaction Date resulting after giving effect to
the operation of such agreements on such date.
Consolidated Fixed Charges means, with
respect to the Company for any period, the sum, without
duplication, of:
(1) Consolidated Interest Expense, plus
(2) the product of (x) the amount of all dividend
payments on any series of Preferred Stock of the Company (other
than dividends paid in Qualified Capital Stock) or any
Restricted Subsidiary paid, accrued
and/or
scheduled to be paid or accrued during such period multiplied by
(y) 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 income tax rate of the
Company, expressed as a decimal.
Consolidated Interest Expense means, with
respect to the Company for any period, the sum of, without
duplication:
(1) the aggregate of the interest expense of the Company
and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including, without
limitation,
(A) any amortization of debt discount,
(B) the net costs under Interest Swap Obligations,
(C) all capitalized interest, and
(D) the interest portion of any deferred payment obligation;
(2) the interest component of Capitalized Lease Obligations
accrued by the Company and the Restricted Subsidiaries during
such period as determined on a consolidated basis in accordance
with GAAP; and
(3) to the extent not included in clause (1) above,
net losses relating to sales of accounts receivable pursuant to
Permitted Receivables Financings during such period as
determined on a consolidated basis in accordance with GAAP.
Consolidated Net Income means, with respect
to the Company, for any period, the aggregate net income (or
loss) of the Company and the Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded therefrom:
(1) after-tax gains and losses from Asset Sales or
abandonments or reserves relating thereto;
(2) extraordinary or non-recurring gains or losses
(determined on an after-tax basis);
(3) any non-cash compensation expense incurred for grants
and issuances of stock appreciation or similar rights, stock
options, restricted shares or other rights to officers,
directors and employees of the Company and its Subsidiaries
(including any such grant or issuance to a 401(k) plan or other
retirement benefit plan);
(4) the net income (but not loss) of any Restricted
Subsidiary to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that
income is restricted by a contract, operation of law or
otherwise;
(5) the net income of any Person, other than a Restricted
Subsidiary, except to the extent of cash dividends or
distributions paid to the Company or to a Restricted Subsidiary
by such Person;
(6) any restoration to income of any contingency reserve,
except to the extent that provision for such reserve was made
out of Consolidated Net Income accrued at any time following
March 31, 2003;
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(7) 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) from and after the date that such operation is
classified as discontinued;
(8) in the case of a successor to the Company by
consolidation or merger or as a transferee of the Companys
assets, any earnings of the successor corporation prior to such
consolidation, merger or transfer of assets;
(9) write-downs resulting from the impairment of intangible
assets;
(10) the amount of amortization or write-off of deferred
financing costs and debt issuance costs of the Company and its
Restricted Subsidiaries during such period and any premium or
penalty paid in connection with redeeming or retiring
Indebtedness of the Company and its Restricted Subsidiaries
prior to the stated maturity thereof pursuant to the agreements
governing such Indebtedness; and
(11) any restructuring charges incurred and disclosed in
the Companys audited financial statements prepared in
accordance with GAAP, together with any related provision for
taxes, in an aggregate amount since the Issue Date not to exceed
$80.0 million.
Consolidated Net Tangible Assets means, as of
any date of determination, the total assets, less goodwill and
other intangibles (other than patents, trademarks, copyrights,
licenses and other intellectual property), shown on the balance
sheet of the Company and its Restricted Subsidiaries for the
most recently ended fiscal quarter for which financial
statements are available, determined on a consolidated basis in
accordance with GAAP.
Consolidated Non-cash Charges means, with
respect to the Company, for any period, the aggregate
depreciation, amortization and other non-cash expenses of the
Company and the Restricted Subsidiaries reducing Consolidated
Net Income of the Company for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such
charge which requires an accrual of or a reserve for cash
payments for any future period).
Consolidated Secured Debt Ratio means, as of
any date of determination, the ratio of (a) Consolidated
Total Indebtedness of the Company and the Restricted
Subsidiaries that is secured by Liens as of the end of the Four
Quarter Period ending on or prior to the Transaction Date to
(b) the aggregate amount of Consolidated EBITDA of the
Company during the Four Quarter Period ending on or prior to the
Transaction Date, in each case with such pro forma adjustments
to Consolidated Total Indebtedness and Consolidated EBITDA as
are appropriate and consistent with the pro forma adjustment
provisions set forth in the definition of Consolidated Fixed
Charge Coverage Ratio.
Consolidated Total Debt Ratio means, as of
any date of determination, the ratio of (a) Consolidated
Total Indebtedness of the Company and the Restricted
Subsidiaries as of the end of the Four Quarter Period ending on
or prior to the Transaction Date to (b) the aggregate
amount of Consolidated EBITDA of the Company during the Four
Quarter Period ending on or prior to the Transaction Date, in
each case with such pro forma adjustments to Consolidated Total
Indebtedness and Consolidated EBITDA as are appropriate and
consistent with the pro forma adjustment provisions set forth in
the definition of Consolidated Fixed Charge Coverage Ratio.
Consolidated Total Indebtedness means, as at
any date of determination, an amount equal to the sum of
(1) the aggregate amount of all outstanding Indebtedness of
the Company and the Restricted Subsidiaries on a consolidated
basis consisting of Indebtedness for borrowed money, Obligations
in respect of Capitalized Lease Obligations and debt obligations
evidenced by bonds, notes, debentures or similar instruments or
letters of credit or bankers acceptances (and excluding
(x) any undrawn letters of credit and (y) all
obligations relating to Permitted Receivables Financings) and
(2) the aggregate amount of all outstanding Disqualified
Capital Stock of the Company and all Disqualified Capital Stock
and Preferred Stock of the Restricted Subsidiaries (excluding
items eliminated in consolidation), with the amount of such
Disqualified Capital Stock and Preferred Stock equal to the
greater of their respective voluntary or involuntary liquidation
preferences and
69
Maximum Fixed Repurchase Prices, in each case determined on a
consolidated basis in accordance with GAAP.
For purposes hereof, the Maximum Fixed Repurchase
Price of any Disqualified Capital Stock or Preferred Stock
that does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock
or Preferred Stock as if such Disqualified Capital Stock or
Preferred Stock were purchased on the applicable date on which
Consolidated Total Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified
Capital Stock or Preferred Stock, such fair market value shall
be determined reasonably and in good faith by the Company.
Covenant Defeasance has the meaning set forth
under Legal Defeasance and Covenant Defeasance.
Credit Agreement means the Second Amended and
Restated Credit Agreement, dated as of March 16, 2007
(amending and restating the Amended and Restated Credit
Agreement dated as of December 12, 2003 (amending and
restating the Credit Agreement dated as of September 30,
1999)) (as amended and waived by the Amendment and Waiver dated
as of July 23, 2007, the Second Amendment dated as of
November 26, 2007, the Third Amendment dated as of
December 23, 2008, the Fourth Amendment dated as of
February 19, 2009 and the Fifth Amendment dated as of
June 3, 2010), among the Company, the Guarantors, the
lenders party thereto in their capacities as lenders thereunder
and JPMorgan Chase Bank, N.A., a national banking association,
as administrative agent, together with the documents related
thereto (including, without limitation, any guarantee agreements
and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time in
accordance with their terms (the Existing Credit
Agreement), including any agreement (a Replacement
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 the covenant
described under Certain CovenantsLimitation on
Incurrence of Additional Indebtedness (including the
definition of Permitted Indebtedness)) or adding Subsidiaries 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 agent, lender or group of lenders.
Credit Facilities means one or more debt
facilities (including the Credit Agreement) or commercial paper
facilities providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables
to lenders or to special purpose entities formed to borrow from
lenders against such receivables) or letters of credit, or any
debt securities or other form of debt financing (including
convertible or exchangeable debt instruments), in each case, as
amended, supplemented, modified, extended, renewed, restated or
refunded in whole or in part from time to time.
Currency Agreement means any foreign exchange
contract, currency swap agreement or other similar agreement or
arrangement designed to protect the Company or any Restricted
Subsidiary against fluctuations in currency values.
Default means an event or condition the
occurrence of which is, or with the lapse of time or the giving
of notice of both would be, an Event of Default.
Designation has the meaning set forth under
Certain CovenantsLimitation on
Designations of Unrestricted Subsidiaries.
Designation Amount has the meaning set forth
under Certain CovenantsLimitation on
Designations of Unrestricted Subsidiaries.
Disqualified Capital Stock means that portion
of any Capital Stock which, by its terms (or by the terms of any
security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is mandatorily exchangeable for Indebtedness, or
is redeemable or exchangeable for Indebtedness, at the sole
option of the holder thereof on or prior to the final maturity
date of the notes.
70
Domestic Restricted Subsidiary means a
Restricted Subsidiary incorporated or otherwise organized under
the laws of the United States or any State thereof or the
District of Columbia.
DTC means The Depository Trust Company
or any successor thereto.
Equity Offering has the meaning set forth
under RedemptionOptional Redemption upon
Equity Offerings. Exchange Act means
the Securities Exchange Act of 1934, as amended, or any
successor statute or statutes thereto, 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
arms-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 Company acting reasonably and in good faith and shall be
evidenced by a Board Resolution of the Board of Directors of the
Company.
Finance Subsidiary means a Restricted
Subsidiary that is organized solely for the purpose of owning
Indebtedness of the Company
and/or other
Restricted Subsidiaries and issuing securities the proceeds of
which are utilized by the Company
and/or other
Restricted Subsidiaries, and which engages only in such
activities and activities incident thereto.
Foreign Restricted Subsidiary means any
Restricted Subsidiary that is organized and existing under the
laws of a jurisdiction other than the United States, any State
thereof or the District of Columbia.
Foreign Subsidiary means any Subsidiary that
is organized and existing under the laws of a jurisdiction other
than the United States, any State thereof or the District of
Columbia.
GAAP means generally accepted accounting
principles set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements
of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession of the United
States, which are in effect as of the Issue Date.
Guarantee has the meaning set forth under
Certain CovenantsIssuance of Subsidiary
Guarantees.
Guarantor means (1) each Wholly Owned
Domestic Restricted Subsidiary of the Company (other than any
Immaterial Domestic Subsidiaries, Accounts Receivable Entities
and Finance Subsidiaries) as of the Issue Date and (2) each
other Restricted Subsidiary that in the future is required to or
executes a Subsidiary Guarantee pursuant to the covenant
described under Certain CovenantsIssuance of
Subsidiary Guarantees or otherwise; provided that
any Person constituting a Guarantor as described above shall
cease to constitute a Guarantor when its Subsidiary Guarantee is
released in accordance with the terms of the Indenture.
Hedging Obligations means, with respect to
any Person, the obligations of such Person in respect of
(a) interest rate or currency swap agreements, interest
rate or currency cap agreements, interest rate or currency
collar agreements or (b) other agreements or arrangements
designed to protect such Person against fluctuations in interest
rates and/or
currency exchange rates.
Immaterial Domestic Subsidiaries means, at
any time, any Domestic Restricted Subsidiary of the Company
having total assets (as determined in accordance with GAAP) in
an amount of less than 1 percent of the consolidated total
assets of the Company and its Domestic Restricted Subsidiaries
(as determined in accordance with GAAP); provided,
however, that the total assets (as so determined) of all
Immaterial Domestic Subsidiaries shall not exceed 5 percent
of consolidated total assets of the Company and its Domestic
Subsidiaries (as so determined). In the event that the total
assets of all Immaterial Domestic Subsidiaries exceed
5 percent of consolidated total assets of the Company and
its Domestic Restricted Subsidiaries, the Company will designate
Domestic Restricted Subsidiaries that would otherwise be
Immaterial Domestic Subsidiaries to be excluded as Immaterial
Domestic Subsidiaries until such 5 percent threshold is
met. Notwithstanding the foregoing, no Domestic Restricted
Subsidiary that guarantees the Credit Agreement or any
obligation thereunder shall be deemed an Immaterial Domestic
Subsidiary.
71
incur has the meaning set forth under
Certain CovenantsLimitation on Incurrence on
Additional Indebtedness.
Indebtedness means, with respect to any
Person, without duplication:
(1) all Obligations of such Person for borrowed money;
(2) all Obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all Obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale
obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other
accrued liabilities arising in the ordinary course of business
that are not overdue by 90 days or more or are being
contested in good faith by appropriate proceedings promptly
instituted and diligently conducted);
(5) all Obligations for the reimbursement of any obligor on
any letter of credit, bankers acceptance or similar credit
transaction;
(6) guarantees and other contingent obligations in respect
of Indebtedness of any other Person referred to in
clauses (1) through (5) above and clauses (8) and
(10) below;
(7) all Obligations of any other Person of the type
referred to in clauses (1) through (6) above which are
secured by any Lien on any property or asset of such Person, the
amount of such Obligation being deemed to be the lesser of the
Fair Market Value of such property or asset or the amount of the
Obligation so secured;
(8) all Obligations under currency agreements and interest
swap agreements of such Person;
(9) all Disqualified Capital Stock of the Company and all
Preferred Stock of a Restricted Subsidiary with the amount of
Indebtedness represented by such Disqualified Capital Stock or
Preferred Stock being equal to the greater of its voluntary or
involuntary liquidation preference and its maximum fixed
repurchase price, but excluding accrued and unpaid dividends, if
any; and
(10) all Outstanding Permitted Receivables Financings.
For purposes hereof, the maximum fixed repurchase
price of any Disqualified Capital Stock or Preferred Stock
which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock
or Preferred Stock as if such Disqualified Capital Stock or
Preferred Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the Indenture,
and if such price is based upon, or measured by, the Fair Market
Value of such Disqualified Capital Stock or Preferred Stock,
such Fair Market Value shall be determined reasonably and in
good faith by the Board of Directors of the issuer of such
Disqualified Capital Stock or Preferred Stock.
Independent Financial Advisor means a firm
(1) which does not, and whose directors, officers and
employees and Affiliates do not, have a direct or indirect
material financial interest in the Company and (2) which,
in the judgment of the Board of Directors of the Company, is
otherwise independent and qualified to perform the task for
which it is to be engaged.
Initial Purchasers means (i) with
respect to the notes issued on the Issue Date, the initial
purchasers identified on the cover hereof and (ii) with
respect to each issuance of additional notes, if any, the
Persons purchasing securities from the Company pursuant to the
related Purchase Agreement.
Insolvency or Liquidation Proceeding means,
with respect to any Person, (a) any voluntary or
involuntary case or proceeding under any Bankruptcy Law,
(b) any other voluntary or involuntary insolvency,
reorganization or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case
or proceeding with respect to such Person or with respect to any
of its assets, (c) any liquidation, dissolution,
reorganization or winding up of such Person whether voluntary or
involuntary and whether or not
72
involving insolvency or bankruptcy or (d) any assignment
for the benefit of creditors or any other marshaling of assets
and liabilities of such Person.
Interest Swap Obligations means the
obligations of the Company and the Restricted Subsidiaries
pursuant to any arrangement with any other Person, whereby,
directly or indirectly, the Company or any Restricted Subsidiary
is entitled to receive from time to time periodic payments
calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic
payments made by such other Person calculated by applying a
fixed or a floating rate of interest on the same notional amount
and shall include, without limitation, interest rate lock
obligations, interest rate swaps, caps, floors, collars and
similar agreements.
Investment means, with respect to any Person,
any direct or indirect loan or other extension of credit
(including, without limitation, a guarantee) or capital
contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition by
such Person of any Capital Stock, bonds, notes, debentures or
other securities or evidences of Indebtedness issued by, any
other Person. Investment shall exclude extensions of
trade credit by the Company and the Restricted Subsidiaries on
commercially reasonable terms in accordance with normal trade
practices of the Company or such Restricted Subsidiaries, as the
case may be. If the Company or any Restricted Subsidiary sells
or otherwise disposes of any Capital Stock of any Restricted
Subsidiary (the Referent Subsidiary) such that after
giving effect to any such sale or disposition, the Referent
Subsidiary shall cease to be a Restricted Subsidiary, the
Company shall be deemed to have made an Investment on the date
of any such sale or disposition equal to the Fair Market Value
of the Capital Stock of the Referent Subsidiary not sold or
disposed of.
Investment Grade Rating means a rating equal
to or higher than Baa3 (or the equivalent) by Moodys and
BBB− (or the equivalent) by S&P (or the equivalent
rating by any Successor Rating Agency).
Issue Date means August 3, 2010, the
date of initial issuance of the notes.
Legal Defeasance has the meaning set forth
under Legal Defeasance and Covenant Defeasance.
Lien means any lien, mortgage, deed of trust,
deed to secure debt, pledge, security interest, charge or
encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and
any agreement to give any security interest).
Moodys means Moodys Investors
Service, Inc. or any successor to its rating agency business.
Net Cash Proceeds means, with respect to any
Asset Sale, the proceeds in the form of cash or Cash
Equivalents, including payments in respect of deferred payment
obligations when received in the form of cash or Cash
Equivalents (other than the portion of any such deferred payment
constituting interest), received by the Company or any of the
Restricted Subsidiaries from such Asset Sale net of:
(1) reasonable
out-of-pocket
expenses and fees relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking
fees, sales commissions and relocation expenses);
(2) taxes paid or payable after taking into account any
reduction in consolidated tax liability due to available tax
credits or deductions and any tax sharing arrangements;
(3) repayments of Indebtedness secured by the property or
assets subject to such Asset Sale that is required to be repaid
in connection with such Asset Sale; and
(4) appropriate amounts to be determined by the Company or
any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with
such Asset Sale and retained by the Company or any Restricted
Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment
benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations
associated with such Asset Sale.
Net Proceeds Offer has the meaning set forth
under Certain CovenantsLimitation on Asset
Sales.
73
Net Proceeds Offer Amount has the meaning set
forth under Certain CovenantsLimitation on
Asset Sales.
Net Proceeds Offer Payment Date had the
meaning set forth under Certain
CovenantsLimitation on Asset Sales.
Net Proceeds Offer Trigger Date has the
meaning set forth under Certain
CovenantsLimitation on Asset Sales.
Obligations means any and all obligations
with respect to the payment of (a) any principal of or
interest (including interest accruing on or after the
commencement of any Insolvency or Liquidation Proceedings,
whether or not a claim for post-filing interest is allowed in
such proceeding) or premium on any Indebtedness, including any
reimbursement obligation in respect of any letter of credit,
(b) any fees, indemnification obligations, damages, expense
reimbursement obligations or other liabilities payable under the
documentation governing any Indebtedness, (c) any
obligation to post cash collateral in respect of letters of
credit and any other obligations and (d) any Cash
Management Obligations or Hedging Obligations.
Outstanding Permitted Receivables Financings
means the aggregate amount of the receivables sold, contributed
or financed pursuant to a Permitted Receivables Financing that
remain uncollected at any one time. For the avoidance of doubt,
regardless of the accounting treatment under GAAP, it is
understood that the amount financed pursuant to a Permitted
Receivables Financing is the aggregate amount of capital funded
by the purchasers (other than an Account Receivables Entity)
thereunder and outstanding at the time of determination.
Permitted Indebtedness means, without
duplication, each of the following:
(1) Indebtedness under the notes, the Indenture and any
Subsidiary Guarantees outstanding on the Issue Date;
(2) Indebtedness incurred pursuant to the Credit Agreement
(or, in the case of clause (2)(x) below, pursuant to a Credit
Facility) in an aggregate principal amount at any time
outstanding not to exceed the greater of:
(x) the sum of (i) $1,100 million (reduced by any
required permanent repayments with the proceeds of Asset Sales
(which are accompanied by a corresponding permanent commitment
reduction) thereunder) and (ii) the aggregate dollar amount
permitted to be but not then outstanding under the Outstanding
Permitted Receivables Financings referred to in clause (14)
below; and
(y) the sum of (A) 85 percent of the net book
value of the accounts receivable of the Company and the
Restricted Subsidiaries and (B) 50 percent of the net
book value of the inventory of the Company and the Restricted
Subsidiaries;
(3) other Indebtedness of the Company and the Restricted
Subsidiaries outstanding on the Issue Date reduced by the amount
of any scheduled amortization payments or mandatory prepayments
when actually paid or permanent reductions are made thereon;
(4) Interest Swap Obligations of the Company covering
Indebtedness of the Company or any Guarantor and Interest Swap
Obligations of any Restricted Subsidiary covering Indebtedness
of such Restricted Subsidiary; provided, however, that
such Interest Swap Obligations are entered into to protect the
Company and the Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with the
Indenture to the extent the notional principal amount of such
Interest Swap Obligations does not exceed the principal amount
of the Indebtedness to which such Interest Swap Obligations
relate;
(5) Indebtedness under Currency Agreements and Commodity
Agreements; provided that in the case of Currency
Agreements which relate to Indebtedness, such Currency
Agreements do not increase the Indebtedness of the Company and
the 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;
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(6) Indebtedness of a Restricted Subsidiary of the Company
to the Company or to a Restricted Subsidiary of the Company for
so long as such Indebtedness is held by the Company, a
Restricted Subsidiary of the Company or the lenders or
collateral agent under any agreement governing secured
Indebtedness permitted to be incurred under
Limitation on Incurrence of Additional
Indebtedness and Limitation on Liens, in
each case subject to no Lien held by a Person other than the
Company, a Restricted Subsidiary of the Company or the lenders
or collateral agent under any agreement governing secured
Indebtedness permitted to be incurred under
Limitation on Incurrence of Additional
Indebtedness and Limitation on Liens;
provided that if as of any date any Person other than the
Company, a Restricted Subsidiary of the Company or the lenders
or collateral agent any agreement governing secured Indebtedness
permitted to be incurred under Limitation on
Incurrence of Additional Indebtedness and
Limitation on Liens, owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness under this clause (6)
by the issuer of such Indebtedness;
(7) Indebtedness of the Company to a Restricted Subsidiary
of the Company for so long as such Indebtedness is held by a
Restricted Subsidiary of the Company or the lenders or the
collateral agent under any agreement governing secured
Indebtedness permitted to be incurred under
Limitation on Incurrence of Additional
Indebtedness and Limitation on Liens and
is subject to no Lien other than a Lien in favor of the lenders
or collateral agent, any agreement governing secured
Indebtedness permitted to be incurred under
Limitation on Incurrence of Additional
Indebtedness and Limitation on Liens;
provided that (a) any Indebtedness of the Company to
any Restricted Subsidiary of the Company is unsecured and,
except in the case of Indebtedness owed to Foreign Subsidiaries,
subordinated, pursuant to a written agreement, to the
Companys obligations under the Indenture and the notes and
(b) if as of any date any Person other than a Restricted
Subsidiary of the Company owns or holds any such Indebtedness or
any Person holds a Lien other than a Lien in favor of the
lenders or collateral agent under any agreement governing
secured Indebtedness permitted to be incurred under
Limitation on Incurrence of Additional
Indebtedness and Limitation on Liens,
such date shall be deemed the incurrence of Indebtedness not
constituting Permitted Indebtedness under this clause (7)
by the Company;
(8) Indebtedness 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, however, that such
Indebtedness is extinguished within five business days after
incurrence;
(9) Indebtedness of the Company or any of the Restricted
Subsidiaries represented by letters of credit for the account of
the Company or any such Restricted Subsidiary, as the case may
be, in order to provide security for workers compensation
claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business;
(10) Refinancing Indebtedness;
(11) additional Indebtedness of the Company and the
Restricted Subsidiaries in an aggregate principal amount not to
exceed $200.0 million at any one time outstanding;
(12) additional Indebtedness of Foreign Subsidiaries of the
Company under working capital facilities in an aggregate
principal amount not to exceed 125.0 million Euros at any
one time outstanding;
(13) Purchase Money Indebtedness and Capitalized Lease
Obligations (and any Indebtedness incurred to Refinance such
Purchase Money Indebtedness or Capitalized Lease Obligations)
not to exceed 7.5 percent of Consolidated Net Tangible
Assets at any one time outstanding;
(14) Outstanding Permitted Receivables Financings not to
exceed $250.0 million at any one time outstanding less
any amount of Indebtedness then outstanding and incurred
pursuant to clause (2)(x)(ii) above; and
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(15) any Guarantee by the Company or a Guarantor of any
Indebtedness of the Company or a Restricted Subsidiary that was
permitted to be incurred by the Company or such Restricted
Subsidiary under the terms of the Indenture at the time so
incurred.
If any Indebtedness incurred by the Company or any Restricted
Subsidiary would qualify in more than one of the categories of
Permitted Indebtedness as set forth in clauses (1) through
(14) of this definition, the Company may designate under
which category such incurrence shall be deemed to have been made.
Permitted Investments means:
(1) Investments by the Company or any Restricted Subsidiary
in any Person that is or will become immediately after such
Investment a Restricted Subsidiary or that will merge or
consolidate into the Company or a Restricted Subsidiary;
(2) Investments in the Company by any Restricted
Subsidiary; provided that any Indebtedness evidencing
such Investment is unsecured;
(3) Investments in cash and Cash Equivalents;
(4) loans and advances to employees, officers and directors
of the Company and the Restricted Subsidiaries in the ordinary
course of business for bona fide business purposes not in excess
of an aggregate of $25.0 million at any one time
outstanding;
(5) Commodity Agreements, Currency Agreements and Interest
Swap Obligations entered into in the ordinary course of the
Companys or a Restricted Subsidiarys businesses and
otherwise in compliance with the Indenture;
(6) 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 or in settlement of delinquent
accounts;
(7) Investments made by the Company or the Restricted
Subsidiaries as a result of consideration received in connection
with an Asset Sale made in compliance with the covenant
described under Certain CovenantsLimitation on
Asset Sales;
(8) Investments in Persons, including, without limitation,
Unrestricted Subsidiaries and joint ventures, engaged in a
business similar or related to or logical extensions of the
businesses in which the Company and the Restricted Subsidiaries
are engaged on the Issue Date, not to exceed 7.5 percent of
Consolidated Net Tangible Assets at any one time
outstanding; and
(9) Investments in an Accounts Receivable Entity.
Permitted Liens means the following types of
Liens:
(1) Liens for taxes, assessments or governmental charges or
claims either (A) not delinquent or (B) contested in
good faith by appropriate proceedings and, in each case, as to
which the Company or any Restricted Subsidiary shall have set
aside on its books such reserves as may be required pursuant to
GAAP;
(2) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and
other Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good
faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect
thereof;
(3) Liens on property or shares of Capital Stock of another
Person at the time such other Person becomes a Subsidiary of
such Person and not incurred in connection with or in
contemplation thereof; provided, however, that the
Liens may not extend to any other property owned by such Person
or any of its Restricted Subsidiaries (and assets and property
affixed or appurtenant thereto);
(4) Liens on property at the time such Person or any of its
Subsidiaries acquires the property and not incurred in
connection with or in contemplation thereof, including any
acquisition by means of a
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merger or consolidation with or into such Person or a Subsidiary
of such Person; provided, however, that the Liens
may not extend to any other property owned by such Person or any
of its Restricted Subsidiaries (and assets and property affixed
or appurtenant thereto);
(5) leases or subleases granted in the ordinary course of
business;
(6) any interest or title of a lessor under any lease;
(7) Liens arising out of consignments or similar
arrangements for the sale of goods in the ordinary course of
business;
(8) Liens incurred or deposits made in the ordinary course
of business in connection with workers compensation,
unemployment insurance and other types of social security,
including any Lien securing letters of credit issued in the
ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases,
contracts, performance and
return-of-money
bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(9) judgment Liens not giving rise to an Event of Default
so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the
review of such judgment shall not have been finally terminated
or the period within which such proceedings may be initiated
shall not have expired;
(10) easements,
rights-of-way,
zoning restrictions and other similar charges or encumbrances in
respect of real property not impairing in any material respect
the ordinary conduct of the business of the Company or any of
the Restricted Subsidiaries;
(11) any interest or title of a lessor under any
Capitalized Lease Obligation; provided that such Liens do
not extend to any property or asset which is not leased property
subject to such Capitalized Lease Obligation;
(12) purchase money Liens securing Indebtedness incurred to
finance property or assets of the Company or any Restricted
Subsidiary acquired in the ordinary course of business, and
Liens securing Indebtedness which Refinances any such
Indebtedness; provided, however, that (A) the
related Purchase Money Indebtedness (or Refinancing
Indebtedness) shall not exceed the cost of such property or
assets and shall not be secured by any property or assets of the
Company or any Restricted Subsidiary other than the property and
assets so acquired (and assets affixed or appurtenant thereto)
and (B) the Lien securing the Purchase Money Indebtedness
shall be created within 180 days after such acquisition;
(13) Liens upon specific items of inventory or other goods
and proceeds of any Person securing such Persons
obligations in respect of bankers acceptances issued or
created for the account of such Person to facilitate the
purchase, shipment or storage of such inventory or other goods;
(14) Liens securing reimbursement obligations with respect
to commercial letters of credit which encumber documents and
other property relating to such letters of credit and products
and proceeds thereof;
(15) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty
requirements of the Company or any of the Restricted
Subsidiaries, including rights of offset and set-off;
(16) Liens securing Interest Swap Obligations which
Interest Swap Obligations relate to Indebtedness that is
otherwise permitted under the Indenture;
(17) Liens securing Indebtedness and other Obligations
under Commodity Agreements, Currency Agreements and Cash
Management Obligations, in each case permitted under the
Indenture;
(18) Liens securing Acquired Indebtedness (and any
Indebtedness which Refinances such Acquired Indebtedness)
incurred in accordance with the covenant described under
Certain CovenantsLimitation on Incurrence of
Additional Indebtedness; provided that
(A) such Liens secured the Acquired
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Indebtedness at the time of and prior to the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary
and were not granted in connection with, or in anticipation of,
the incurrence of such Acquired Indebtedness by the Company or a
Restricted Subsidiary and (B) such Liens do not extend to
or cover any property or assets of the Company or of any of the
Restricted Subsidiaries other than the property or assets that
secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or a
Restricted Subsidiary;
(19) Liens securing Indebtedness of Foreign Restricted
Subsidiaries incurred in accordance with the Indenture;
provided that such Liens do not extend to any property or
assets other than property or assets of Foreign Restricted
Subsidiaries;
(20) Liens incurred in connection with a Permitted
Receivables Financing; and
(21) Liens incurred to secure Obligations in respect of any
Indebtedness permitted to be incurred pursuant to the covenant
described under Certain CovenantsLimitation on
Incurrence of Additional Indebtedness; provided
that, at the time of incurrence and after giving pro
forma effect thereto, the Consolidated Secured Debt Ratio
would be no greater than 2.50:1.00.
Permitted Receivables Financing means any
sale or contribution by the Company or a Restricted Subsidiary
of accounts receivable and related assets intended to be (and
which shall be treated for purposes of the Indenture as) a true
sale transaction with customary limited recourse based upon the
collectibility of the receivables and related assets sold and
the corresponding sale or pledge of such accounts receivable and
related assets (or an interest therein), in each case without
any guarantee (excluding guarantees of obligations (other than
of collectibility of receivables transferred or of Indebtedness)
pursuant to representations, warranties, covenants and
indemnities customary for such transactions), by the Company or
any Restricted Subsidiary other than an Accounts Receivable
Entity.
Person means an individual, partnership,
corporation, unincorporated organization, trust or joint
venture, or a governmental agency or political subdivision
thereof.
Preferred Stock of any Person means any
Capital Stock of such Person that has preferential rights to any
other Capital Stock of such Person with respect to dividends or
redemptions or upon liquidation.
Purchase Agreement means (i) with
respect to the notes issued on the Issue Date, the Purchase
Agreement, dated as of July 29, 2010, by and among the
Company, the Guarantors and the Initial Purchasers, and
(ii) with respect to each issuance of additional notes, if
any, the purchase agreement or underwriting agreement among the
Company, the Guarantors and the Initial Purchasers.
Purchase Money Indebtedness means
Indebtedness of the Company or any Restricted Subsidiary
incurred for the purpose of financing all or any part of the
purchase price or the cost of an Asset Acquisition or
construction or improvement of any property; provided
that the aggregate principal amount of such Indebtedness
does not exceed such purchase price or cost.
Qualified Capital Stock means any Capital
Stock that is not Disqualified Capital Stock.
Rating Agencies means Moodys and
S&P; provided that if S&P, Moodys or any
Successor Rating Agency (as defined below) shall cease to be in
the business of providing rating services for debt securities
generally, the Company shall be entitled to replace any such
Rating Agency or Successor Rating Agency, as the case may be,
which has ceased to be in the business of providing rating
services for debt securities generally with a security rating
agency which is in the business of providing rating services for
debt securities generally and which is nationally recognized in
the United States (such rating agency, a Successor
Rating Agency)
Reference Date has the meaning set forth
under Certain CovenantsLimitation on
Restricted Payments.
Refinance means in respect of any security or
Indebtedness, to refinance, extend, renew, refund, repay,
prepay, redeem, defease or retire, or to issue a security or
Indebtedness in exchange or replacement for, such security or
Indebtedness in whole or in part.
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Refinanced and Refinancing
shall have correlative meanings.
Refinancing Indebtedness means any
Refinancing by the Company or any Restricted Subsidiary of
Indebtedness incurred in accordance with the covenant described
under Certain CovenantsLimitation on
Incurrence of Additional Indebtedness (other than pursuant
to clause (2), (4), (5), (6), (7), (8), (9), (11), (12),
(13) or (14) of the definition of Permitted
Indebtedness), in each case that does not:
(1) result in an increase in the aggregate principal amount
of any Indebtedness of such Person as of the date of the
completion of all components of such proposed Refinancing
(provided such completion occurs within 60 days of the
initial incurrence of Indebtedness in connection with such
Refinancing) (plus the amount of any premium reasonably
necessary to Refinance such Indebtedness and plus the amount of
reasonable expenses incurred by the Company in connection with
such Refinancing); or
(2) create Indebtedness with (A) a Weighted Average
Life to Maturity that is less than the Weighted Average Life to
Maturity of the Indebtedness being Refinanced or (B) a
final maturity earlier than the final maturity of the
Indebtedness being Refinanced;
provided that (x) if such Indebtedness being
Refinanced is Indebtedness of the Company
and/or a
Guarantor, then such Refinancing Indebtedness shall be
Indebtedness solely of the Company
and/or such
Guarantor and (y) if such Indebtedness being Refinanced is
subordinate or junior to the notes or any Guarantee, then such
Refinancing Indebtedness shall be subordinate to the notes or
such Guarantee, as the case may be, at least to the same extent
and in the same manner as the Indebtedness being Refinanced.
Registration Rights Agreement means
(i) with respect to the notes issued on the Issue Date, the
Registration Rights Agreement dated the Issue Date among the
Company, the Guarantors and the Initial Purchasers and
(ii) with respect to any issuance of additional notes, the
registration rights agreement relating to such issuance of
additional notes issued in a transaction exempt from the
registration requirements of the Securities Act, the
registration rights agreement, if any, among the Company, the
Guarantors and the Initial Purchasers under the related Purchase
Agreement.
Replacement Assets means assets and property
that will be used in the business of the Company
and/or its
Restricted Subsidiaries as existing on the Issue Date or in a
business the same, similar or reasonably related thereto
(including Capital Stock of a Person which becomes a Restricted
Subsidiary).
Restricted Payment has the meaning set forth
under Certain CovenantsLimitation on
Restricted Payments.
Restricted Subsidiary means any Subsidiary of
the Company that has not been designated by the Board of
Directors of the Company, by a Board Resolution delivered to the
Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with the covenant described under Certain
CovenantsLimitation on Designations of Unrestricted
Subsidiaries. Any such Designation may be revoked by a
Board Resolution of the Company delivered to the Trustee,
subject to the provisions of such covenant.
Revocation has the meaning set forth under
Certain CovenantsLimitation on Designations of
Unrestricted Subsidiaries.
S&P means Standard &
Poors Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor to its rating agency business.
Sale and Leaseback Transaction means any
direct or indirect arrangement with any Person or to which any
such Person is a party, providing for the leasing to the Company
or a Restricted Subsidiary of any property, whether owned by the
Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such Person or to any
other Person from whom funds have been or are to be advanced on
the security of such property.
Securities Act means the Securities Act of
1933, as amended, or any successor statute or statutes thereto,
and the rules and regulations of the Commission promulgated
thereunder.
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Senior Notes means the Companys
81/8%
Senior Notes due 2015 issued from time to time under that
certain indenture dated as of November 20, 2007 with
Wachovia Bank, National Association, as trustee.
Senior Secured Notes means the Companys
101/4%
Senior Secured Notes due 2013 issued under that certain
indenture dated as of June 19, 2003 with U.S. Bank
National Association (as successor to Wachovia Bank, National
Association), as trustee.
Senior Subordinated Notes means the
Companys
85/8% Senior
Subordinated Notes due 2014 issued under that certain indenture
dated as of October 19, 2004 with The Bank of New York, as
trustee.
Significant Subsidiary means, with respect to
any Person, any Restricted Subsidiary of such Person that
satisfies the criteria for a significant subsidiary
set forth in Rule 1.02(w) of
Regulation S-X
under the Securities Act.
Subordinated Indebtedness means Indebtedness
as to which the payment of principal (and premium, if any) and
interest and other payment obligations is subordinate or junior
in right of payment by its terms to the notes or the Subsidiary
Guarantees of the Company or a Guarantor, as applicable,
including, without limitation, the Senior Subordinated Notes.
Subsidiary, with respect to any Person, means
(1) any corporation of which the outstanding Capital Stock
having at least a majority of the votes entitled to be cast in
the election of directors under ordinary circumstances shall at
the time be owned, directly or indirectly, by such Person or
(2) any other Person of which at least a majority of the
voting interest under ordinary circumstances is at the time,
directly or indirectly, owned by such Person.
Subsidiary Guarantee has the meaning set
forth under Certain CovenantsIssuance of
Subsidiary Guarantees.
Surviving Entity has the meaning set forth
under Certain CovenantsMerger, Consolidation
and Sale of Assets.
Transaction Date has the meaning set forth in
the definition of Combined Fixed Charge Coverage Ratio.
Unrestricted Subsidiary means any Subsidiary
of the Company designated as such pursuant to and in compliance
with the covenant described under Certain
CovenantsLimitation on Designations of Unrestricted
Subsidiaries. Any such designation may be revoked by a
Board Resolution of the Company delivered to the Trustee,
subject to the provisions of such covenant.
Weighted Average Life to Maturity means, when
applied to any Indebtedness at any date, the number of years
obtained by dividing (A) the then outstanding aggregate
principal amount of such Indebtedness into (B) the sum of
the total of the products obtained by multiplying (I) 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 (II) the
number of years (calculated to the nearest one-twelfth) which
will elapse between such date and the making of such payment.
Wholly Owned Domestic Restricted Subsidiary
means a Wholly Owned Restricted Subsidiary that is also a
Domestic Restricted Subsidiary.
Wholly Owned Restricted Subsidiary of the
Company means any Restricted Subsidiary of which all the
outstanding voting securities (other than in the case of a
Foreign Restricted Subsidiary, directors qualifying shares
or an immaterial amount of shares required to be owned by other
Persons pursuant to applicable law) are owned by the Company or
any other Wholly Owned Restricted Subsidiary.
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REGISTRATION
RIGHTS
We and our subsidiary guarantors entered into a registration
rights agreement with the initial purchasers of the old notes on
August 3, 2010. In that agreement, we agreed for the
benefit of the holders of the old notes that we would use our
commercially reasonable efforts to file with the Commission and
cause to become effective a registration statement relating to
an offer to exchange the old notes for an issue of
Commission-registered notes with terms identical to those notes
(except that the exchange notes will not be subject to
restrictions on transfer or to any increase in annual interest
rate as described below).
When the Commission declares the exchange offer registration
statement effective, we will offer the exchange notes in return
for the old notes. The exchange offer will remain open for at
least 20 business days after the date we mail notice of the
exchange offer to noteholders. For each note surrendered to us
under the exchange offer, the noteholder will receive an
exchange note of equal principal amount. Interest on each
exchange note will accrue from the last interest payment date on
which interest was paid on the notes or, if no interest has been
paid on the notes, from the issue date.
If applicable interpretations of the staff of the Commission do
not permit us to effect the exchange offer, we will use our
commercially reasonable efforts to cause to become effective a
shelf registration statement relating to resales of the notes
offered hereby and to keep that shelf registration statement
effective until the expiration of the time period referred to in
Rule 144(k) under the Securities Act, or such shorter
period that will terminate when all notes covered by the shelf
registration statement have been sold. Upon the request of any
initial purchaser, we will also use our commercially reasonable
efforts to cause a shelf registration statement to become and
remain effective for a specified period as to notes offered
hereby held by the initial purchaser that have the status of an
unsold allotment in the initial distribution of those notes. We
will, in the event of a shelf registration, provide to each
noteholder whose notes are covered thereby copies of the
prospectus that is a part of the shelf registration statement,
notify each such noteholder when the shelf registration
statement has become effective and take certain other actions to
permit resales of the notes. A noteholder that sells notes under
the shelf registration statement generally will be required to
be named as a selling security holder in the related prospectus
and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities
Act in connection with those sales and will be bound by the
provisions of the registration rights agreement that are
applicable to such a noteholder (including certain
indemnification obligations).
If (i) the exchange offer is not completed (or, if the
exchange offer is not permitted, the shelf registration
statement is not declared effective) on or before the date that
is 210 days after the closing date (the Target
Registration Date) or (ii) a shelf registration
statement requested by an initial purchaser as described above
is not declared effective within 60 days after the request
(also a Target Registration Date), the annual
interest rate borne by the notes offered hereby will be
increased 0.25 percent per annum with respect to the first
90 days after the applicable Target Registration Date, and,
if the exchange offer is not completed (or, if required, the
shelf registration statement is not declared effective) prior to
the end of such
90-day
period, by an additional 0.25 percent per annum (together
with the increase described in the preceding clause, as
applicable, the Additional Stated Interest), in each
case until the exchange offer is completed or the shelf
registration statement is declared effective. Notwithstanding
the foregoing, in no event will the Additional Stated Interest
exceed 1.0 percent per annum in the aggregate.
If we effect the exchange offer, we will be entitled to close
the exchange offer 20 business days after its commencement,
provided that we have accepted all notes validly
surrendered in accordance with the terms of the exchange offer.
Notes not tendered in the exchange offer shall bear interest at
the rate set forth on the cover page of this prospectus and be
subject to all the terms and conditions specified in the
indenture, including transfer restrictions.
This summary of the provisions of the registration rights
agreement does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, all the provisions
of the registration rights agreement, a copy of which is
available from us upon request.
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BOOK-ENTRY;
DELIVERY AND FORM
The
Global Notes
The exchange notes will be issued in the form of one or more
registered notes in global form, without interest coupons, which
are called global notes. The old notes, to the extent validly
tendered and accepted and directed by their holders in the
letters of transmittal, will be exchanged through book-entry
electronic transfer for the global note(s). Upon issuance, the
global notes will be deposited with the Trustee as custodian for
The Depository Trust Company, or DTC, and registered in the
name of Cede & Co., as nominee of DTC.
Ownership of beneficial interests in each global note will be
limited to persons who have accounts with DTC, which are called
DTC participants, or persons who hold interests through DTC
participants. We expect that under procedures established by DTC:
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upon deposit of each global note with DTCs custodian, DTC
will credit portions of the principal amount of the global note
to the accounts of the DTC participants designated with an
interest in the global notes; and
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ownership of beneficial interests in each global note will be
shown on, and transfer of ownership of those interests will be
effected only through, records maintained by DTC (with respect
to interests of DTC participants) and the records of DTC
participants (with respect to other owners of beneficial
interests in the global note).
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Beneficial interests in the global notes may not be exchanged
for notes in physical, certificated form except in the limited
circumstances described below. Beneficial interests in one
global note may generally be exchanged for interests in another
global note.
Book-Entry
Procedures for the Global Notes
All interests in the global notes will be subject to the
operations and procedures of DTC, Euroclear and Clearstream. We
provide the following summaries of those operations and
procedures solely for the convenience of investors. The
operations and procedures of each settlement system are
controlled by that settlement system and may be changed at any
time. Neither we nor the initial purchasers are responsible for
those operations or procedures.
DTC has advised us that it is:
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a limited purpose trust company organized under the laws of the
State of New York;
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a banking organization within the meaning of the New
York State Banking Law;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the
Uniform Commercial Code; and
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a clearing agency registered under Section 17A
of the Securities Exchange Act of 1934.
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DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities
transactions between its participants through electronic
book-entry changes to the accounts of its participants.
DTCs participants include securities brokers and dealers,
including the initial purchasers; banks and trust companies;
clearing corporations and other organizations. Indirect access
to DTCs system is also available to others such as banks,
brokers, dealers and trust companies; these indirect
participants clear through or maintain a custodial relationship
with a DTC participant, either directly or indirectly. Investors
who are not DTC participants may beneficially own securities
held by or on behalf of DTC only through DTC participants or
indirect participants in DTC.
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So long as DTCs nominee is the registered owner of a
global note, that nominee will be considered the sole owner or
holder of the notes represented by that global note for all
purposes under the indenture. Except as provided below, owners
of beneficial interests in a global note:
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will not be entitled to have notes represented by the global
note registered in their names;
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will not receive or be entitled to receive physical,
certificated notes; and
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will not be considered the owners or holders of the notes under
the indenture for any purpose, including with respect to the
giving of any direction, instruction or approval to the Trustee
under the indenture.
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As a result, each investor who owns a beneficial interest in a
global note must rely on the procedures of DTC to exercise any
rights of a holder of notes under the indenture (and, if the
investor is not a participant or an indirect participant in DTC,
on the procedures of the DTC participant through which the
investor owns its interest).
Payments of principal, premium (if any) and interest with
respect to the notes represented by a global note will be made
by the Trustee to DTCs nominee as the registered holder of
the global note. Neither we nor the Trustee will have any
responsibility or liability for the payment of amounts to owners
of beneficial interests in a global note, for any aspect of the
records relating to or payments made on account of those
interests by DTC, or for maintaining, supervising or reviewing
any records of DTC relating to those interests.
Payments by participants and indirect participants in DTC to the
owners of beneficial interests in a global note will be governed
by standing instructions and customary industry practice and
will be the responsibility of those participants or indirect
participants and DTC.
Transfers between participants in DTC will be effected under
DTCs procedures and will be settled in
same-day
funds. Neither we nor the Trustee will have any responsibility
for the performance by DTC or its direct or indirect
participants of their obligations under the rules and procedures
governing their operations.
Certificated
Notes
Notes in physical, certificated form will be issued and
delivered to each person that DTC identifies as a beneficial
owner of the related notes only if:
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DTC notifies us at any time that it is unwilling or unable to
continue as depositary for the global notes and a successor
depositary is not appointed within 90 days;
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DTC ceases to be registered as a clearing agency under the
Securities Exchange Act of 1934 and a successor depositary is
not appointed within 90 days; or
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certain other events provided in the indenture should occur.
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MATERIAL
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a summary of material U.S. federal income
tax consequences of the acquisition, ownership and disposition
of an exchange note acquired pursuant to the exchange offer. For
purposes of this discussion, a U.S. Holder
means a beneficial owner of an exchange note that for
U.S. federal income tax purposes is:
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a citizen or resident alien individual of the United States;
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a corporation (including for this purpose any other entity
treated as a corporation for U.S. federal income tax
purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
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an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or
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a trust (i) that is subject to the primary supervision of a
court within the United States and under the control of one or
more United States persons, or (ii) that has a valid
election in effect under applicable U.S. Treasury
regulations to be treated as a United States person.
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A
non-U.S. Holder
means a beneficial owner of an exchange note, that, for
U.S. federal income tax purposes, is a nonresident alien
individual or a corporation (including for this purpose any
other entity treated as a corporation for U.S. federal
income tax purposes), trust or estate that is not a
U.S. Holder.
If an entity, either foreign or domestic, treated as a
partnership for U.S. federal income tax purposes holds the
exchange notes, the tax treatment of a partner as a beneficial
owner of an exchange note generally will depend upon the status
of the partner and the activities of the partnership. Each
partner of a partnership should consult its tax advisor as to
the tax consequences of the partnership purchasing, owning and
disposing of the exchange notes. Foreign partnerships also
generally are subject to special tax documentation requirements.
This summary is based on provisions of the Internal Revenue Code
of 1986, as amended (the Code), Treasury regulations
issued thereunder, and administrative and judicial
interpretations thereof, all as of the date of this prospectus
and all of which are subject to change (perhaps retroactively),
and is for general purposes only. This summary addresses only
holders who hold the exchange notes as capital assets within the
meaning of Section 1221 of the Code and does not represent
a detailed description of the U.S. federal income tax
consequences to holders in light of their particular
circumstances. In addition, it does not address the
U.S. federal income tax consequences applicable to holders
that are subject to special treatment under the
U.S. federal income tax laws, such as taxpayers subject to
the alternative minimum tax, expatriates, financial
institutions, partnerships or other pass-through entities or
investors in such entities, individual retirement and other tax
deferred accounts, dealers in securities or currencies, life
insurance companies, tax-exempt organizations, persons holding
exchange notes as part of a straddle, hedge, conversion
transaction or other integrated investment, controlled foreign
corporations, passive foreign investment companies, and
U.S. Holders whose functional currency is other than the
U.S. dollar. Moreover, neither the effect of any applicable
state, local or foreign tax laws nor the possible application of
federal estate and gift taxation is discussed. We cannot assure
you that a change in law will not alter significantly the tax
considerations that we describe in this summary.
We have not and will not seek any rulings or opinions from the
Internal Revenue Service (IRS), or opinions from
counsel, regarding the matters discussed below. There can be no
assurance that the IRS will not take positions concerning the
tax consequences of the acquisition, ownership or disposition of
the exchange notes that are different from those discussed below.
You should consult your own tax advisor concerning the
particular U.S. federal income tax and other
U.S. federal tax (such as estate and gift) consequences to
you resulting from your ownership and disposition of the
exchange notes, as well as the consequences to you arising under
the laws of any other taxing jurisdiction.
84
The
Exchange Offer
The exchange of your old notes for exchange notes pursuant to
the terms of the exchange offer should not be a taxable event
for U.S. federal income tax purposes. Consequently, your
initial tax basis in an exchange note should be equal to your
adjusted tax basis in the old note at the time of the exchange
of such old note for the exchange note. In addition, your
holding period for an exchange note should include your holding
period for the old note exchanged for such exchange note.
Contingent
Payments
In certain circumstances, we may be obligated to pay you amounts
in excess of the stated interest and principal payable on the
exchange notes. The obligation to make such payments, including
liquidated damages and redemption premiums payable in certain
circumstances, may implicate the provisions of Treasury
regulations relating to contingent payment debt
instruments. Under applicable Treasury regulations, the
possibility of such amounts being paid will not cause the
exchange notes to be treated as contingent debt payment
instruments if there is only a remote chance that these
contingencies will occur or if such contingencies are considered
to be incidental. Although the matter is not free from doubt, we
intend to take the position that the likelihood that such
payments will be made is remote or incidental and therefore the
exchange notes are not subject to the rules governing contingent
payment debt instruments. This determination will be binding on
a holder unless such holder explicitly discloses on a statement
attached to such holders timely filed U.S. federal
income tax return for the taxable year that includes the
acquisition date of the exchange note that such holders
determination is different. It is possible, however, that the
IRS may take a contrary position from that described above, in
which case the tax consequences to a holder could differ
materially and adversely from those described below. For
example, if the exchange notes were deemed to be contingent
payment debt instruments, holders might, among other things, be
required to treat any gain recognized on the sale or other
disposition of an exchange note as ordinary income rather than
as capital gain, and the timing and amount of income inclusion
may be different from the consequences discussed herein. The
remainder of this disclosure assumes that the exchange notes
will not be treated as contingent payment debt instruments.
U.S.
Holders
Interest. The old notes were not issued with
original issue discount (OID) for U.S. federal
income tax purposes. Accordingly, a U.S. Holder will have
ordinary interest income equal to the amount of interest paid or
accrued on an exchange note, includable in accordance with the
holders regular method of tax accounting for
U.S. federal income tax purposes.
Dispositions. Generally, a sale, exchange,
redemption, retirement or other taxable disposition of an
exchange note will result in capital gain or loss equal to the
difference, if any, between the amount realized on the
disposition (excluding amounts attributable to accrued and
unpaid interest, which, as described above, will be taxed as
ordinary income to the extent not previously included in gross
income by the U.S. Holder) and the U.S. Holders
adjusted tax basis in the exchange note. A
U.S. Holders adjusted tax basis for determining gain
or loss on the disposition of an exchange note generally will
equal the purchase price of the old note exchanged for such
exchange note, reduced by amortizable bond premium to reduce
interest on the old note. Any capital gain or loss generally
will be long-term capital gain or loss if the exchange note is
held for more than one year. The deductibility of capital losses
is subject to limitations. Net long-term capital gain recognized
by a non-corporate U.S. Holder generally is eligible for a
reduced rate of U.S. federal income taxation. You should
consult your tax advisor regarding the treatment of capital
gains and losses.
Non-U.S.
Holders
Interest. The United States generally imposes
a 30 percent withholding tax on payments of interest to
non-U.S. persons.
Such U.S. federal withholding tax will not apply to a
non-U.S. Holder
in respect of any
85
payment of interest on the exchange notes that is not
effectively connected with the conduct of a U.S. trade or
business provided that such holder:
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does not actually (or constructively) own ten percent or more of
the total combined voting power of all classes of our voting
stock within the meaning of the Code and Treasury regulations;
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is not a controlled foreign corporation that is related to us
actually or constructively through stock ownership;
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is not a bank whose receipt of interest on the exchange notes is
described in section 881(c)(3)(A) of the Code; and
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(a) provides identifying information (i.e., name and
address) to us or our paying agent on IRS
Form W-8
BEN (or successor form), and certifies, under penalty of
perjury, that such holder is not a U.S. person, or
(b) a financial institution holding the exchange notes on
behalf of such holder certifies, under penalty of perjury, that
it has received the applicable IRS
Form W-8
BEN (or successor form) from the beneficial owner and provides
us with a copy.
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If a
non-U.S. Holder
cannot satisfy the requirements described above, payments of
interest made to such holder will be subject to the
30 percent U.S. federal withholding tax, unless such
holder provides us with a properly executed (i) IRS
Form W-8
BEN (or successor form) claiming an exemption from or reduction
in withholding under the benefit of an applicable income tax
treaty or (ii) IRS
Form W-8ECI
(or successor form) stating that interest paid on the exchange
note is not subject to withholding tax because it is effectively
connected with such holders conduct of a trade or business
in the United States.
If a
non-U.S. Holder
is engaged in a trade or business in the United States and
interest on the exchange notes is effectively connected with the
conduct of that trade or business (and, if required by an
applicable income tax treaty, is attributable to a permanent
establishment in the United States maintained by such holder)
such holder generally will be subject to U.S. federal
income tax on that interest on a net income basis in the same
manner as if such holder were a United States person as defined
under the Code. In addition, if a
non-U.S. Holder
is a foreign corporation, it may be subject to a branch profits
tax equal to 30 percent (or lower applicable treaty rate)
of its earnings and profits for the taxable year, subject to
adjustments, that are effectively connected with the conduct by
it of a trade or business in the United States. For this
purpose, effectively connected interest on exchange notes will
be included in earnings and profits.
Dispositions. Subject to the discussion of
backup withholding, any gain realized on the sale, exchange,
redemption, retirement or other disposition of an exchange note
by a
non-U.S. Holder
generally will not be subject to U.S. federal income or
withholding tax unless (i) that gain is effectively
connected with the conduct of a trade or business in the United
States by such holder or (ii) such holder is an individual
who is present in the United States for 183 days or more in
the taxable year of that disposition and certain other
conditions are met.
If a
non-U.S. Holders
gain is effectively connected with such holders
U.S. trade or business (and, if required by an applicable
income tax treaty, is attributable to a permanent establishment
in the United States maintained by such holder), such holder
generally will be required to pay U.S. federal income tax
on the net gain derived from the sale in the same manner as if
it were a United States person. If such a
non-U.S. Holder
is a corporation, such holder may also, under certain
circumstances, be subject to a branch profits tax at a 30% rate
(or lower applicable treaty rate) on its effectively connected
earnings and profits. If a
non-U.S. Holder
is subject to the
183-day rule
described above, such holder generally will be subject to
U.S. federal income tax at a rate of 30% (or a reduced rate
under an applicable treaty) on the amount by which capital gains
allocable to U.S. sources (including gains from the sale,
exchange, retirement or other disposition of the exchange note)
exceed capital losses allocable to U.S. sources.
Information
Reporting and Backup Withholding
In general, information reporting requirements apply to interest
paid to, and to the proceeds of a sale or other disposition of
an exchange note (including a retirement or redemption) by,
certain U.S. Holders. In
86
addition, backup withholding (currently at a rate of 28%) may
apply to a U.S. Holder unless such holder provides a
correct taxpayer identification number and otherwise complies
with applicable requirements of the backup withholding rules.
Backup withholding generally does not apply to payments made to
certain exempt U.S. persons.
In general, a
non-U.S. Holder
will not be subject to backup withholding and information
reporting with respect to interest payments that we make to such
holder provided that we have received from such holder the
statement described above under
Non-U.S. HoldersInterest and
neither we nor our paying agent has actual knowledge or reason
to know that such holder is a U.S. Holder.
Payments of the proceeds of a sale, exchange or other
disposition (including a retirement or redemption) of the
exchange notes made to or through a foreign office of foreign,
non-U.S. related
financial intermediaries will not be subject to information
reporting or backup withholding. A
non-U.S. Holder
will not be subject to backup withholding or information
reporting with respect to the proceeds of the sale or other
disposition of an exchange note within the United States or
conducted through certain U.S. related financial
intermediaries, if the payor receives the statement described
above under
Non-U.S. HoldersInterest or such
holder otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or credit against a holders
U.S. federal income tax liability provided the required
information is timely furnished by such holder to the IRS.
Recently
Enacted United State Legislation
Recently enacted United States legislation generally imposes a
tax of 3.8% on the net investment income of certain
individuals, trusts and estates for taxable years beginning
after December 31, 2012. Among other items, net investment
income generally includes gross income from interest and net
gain attributable to the disposition of certain property, less
certain deductions. Prospective investors should consult their
own tax advisors regarding the possible implications of this
legislation in their particular circumstances.
87
PLAN OF
DISTRIBUTION
Until 90 days after the date of this prospectus, all
dealers effecting 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 obligation of
dealers to deliver a prospectus when acting as underwriters and
with respect to their unsold allotments or subscriptions.
Each broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it
will deliver a prospectus in connection with any resale of such
exchange notes. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer
in connection with resales of exchange notes received in
exchange for old notes only where such old notes were acquired
as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days
from the date on which the exchange offer is consummated, we
will make this prospectus, as amended or supplemented, available
to any broker-dealer for use in connection with any such resale.
We will not receive any proceeds from any sale of exchange notes
by broker-dealers. Exchange notes received by broker-dealers for
their own account pursuant to the exchange offer may be sold
from time to time in one or more transactions in the
over-the-counter
market, in negotiated transactions, through the writing of
options on the exchange notes or a combination of such methods
of resale, at prices related to such prevailing market prices or
at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any
such broker-dealer or the purchasers of any exchange notes. Any
broker-dealer that resells exchange notes that were received by
it for its own account pursuant to the exchange offer and any
broker or dealer that participates in a distribution of such
exchange notes may be deemed to be an underwriter
within the meaning of the Securities Act and any profit on any
such resale of exchange notes and any commissions or concessions
received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by
delivering a prospectus, a
broker-dealer
will not be deemed to admit that it is an
underwriter within the meaning of the Securities Act.
The exchange notes are a new issue of securities, and there is
currently no established trading market for the notes. We do not
intend to apply for the exchange notes to be listed on any
securities exchange or to arrange for the exchange notes to be
quoted on any quotation system. We cannot assure you that a
liquid trading market will develop for the exchange notes, that
you will be able to sell your exchange notes at a particular
time or that the prices that you receive when you sell will be
favorable.
LEGAL
MATTERS
Legal matters regarding the notes offered hereby will be passed
upon for us by Mayer Brown LLP. Mayer Brown LLP has in the past
represented and continues to represent us in various matters.
EXPERTS
The consolidated financial statements as of December 31,
2009 and 2008 and for each of the three years in the period
ended December 31, 2009 and the related consolidated
financial statement schedule and the effectiveness of Tenneco
Inc.s internal control over financial reporting as of
December 31, 2009 incorporated by reference in this
prospectus from our Annual Report on
Form 10-K
for the year ended December 31, 2009, have been audited by
Deloitte & Touche LLP, an independent registered
public accounting firm, as stated in their reports incorporated
by reference herein (which reports (1) express an
unqualified opinion on the financial statements and financial
statement schedule and includes an explanatory paragraph
referring to the Companys adoption of the new measurement
date provisions for defined pension and other postretirement
plans and (2) express an unqualified opinion on the
effectiveness of internal control over financial reporting).
Such financial statements and financial statement schedule have
been so incorporated in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
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With respect to the unaudited interim consolidated financial
information of Tenneco Inc. for the periods ended March 31,
2009, June 30, 2009 and September 30, 2009, which is
incorporated herein by reference, Deloitte & Touche LLP, an
independent registered public accounting firm, have applied
limited procedures in accordance with the standards of the
Public Company Accounting Oversight Board (United States) for a
review of such information. However, as stated in their reports
included in Tenneco Inc.s Quarterly Reports on
Form 10-Q
for the quarterly periods ended March 31, 2010,
June 30, 2010 and September 30, 2010 and incorporated
by reference herein, they did not audit and they do not express
an opinion on that interim consolidated financial information.
Accordingly, the degree of reliance on their reports on such
information should be restricted in light of the limited nature
of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of
the Securities Act of 1933 for their reports on the unaudited
interim financial information because those reports are not
reports or a part of the registration
statement prepared or certified by an accountant within the
meaning of Sections 7 and 11 of the Act.
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
With respect to the unaudited financial information of Tenneco
Inc. for the three-month and nine-month periods ended
September 30, 2010, the three-month and six-month periods
ended June 30, 2010 and the three-month period ended
March 31, 2010, PricewaterhouseCoopers LLP reported that
they have applied limited procedures in accordance with
professional standards for a review of such information. The
separate report of PricewaterhouseCoopers LLP states that they
did not audit and do not express an opinion on that unaudited
financial information. Accordingly, the degree of reliance on
the report of PricewaterhouseCoopers LLP on such information
should be restricted in light of the limited nature of the
review procedures applied and because that report is not subject
to the liability provisions of Section 11 of the Securities
Act of 1933 as such report is not a report or a
part of the registration statement prepared or
certified by an accountant within the meaning of Sections 7
and 11 of the Securities Act of 1933.
WHERE YOU
CAN FIND MORE INFORMATION
We are required to file annual and quarterly reports and other
information with the Commission. You may read and copy any
reports, statements and other information we file at the
Commissions public reference room at
100 F Street N.E., Washington, D.C.
20549. You may request copies of the documents, upon
payment of a duplicating fee, by writing the Public Reference
Section of the Commission. Please call
1-800-SEC-0330
for further information on the public reference rooms. Our
filings will also be available to the public from commercial
document retrieval services and at the web site maintained by
the Commission at
http://www.sec.gov.
We have filed a registration statement on
Form S-4
to register with the Commission the exchange notes offered
hereby to be issued in exchange for the old notes. This
prospectus is part of that registration statement. As allowed by
the Commissions rules, this prospectus does not contain
all of the information you can find in the registration
statement or the exhibits to the registration statement. You
should note that where we summarize in this prospectus the
material terms of any contract, agreement or other document
filed as an exhibit to the registration statement, the summary
information provided in the prospectus is less complete than the
actual contract, agreement or document. You should refer to the
exhibits filed to the registration statement for copies of the
actual contract, agreement or document.
We have agreed that, whether or not we are required to do so by
the rules and regulations of the Commission, for so long as any
of the notes offered hereby remains outstanding, we will furnish
to the trustee and the holders of the notes and, upon written
request, to securities analysts and prospective investors, and
file with the Commission (unless the Commission will not accept
such a filing) (i) all quarterly and annual financial
information that would be required to be contained in a filing
with the Commission on
Forms 10-Q
and 10-K if
we were required to file such reports, including a
Managements Discussion and Analysis of Financial
Condition and Results of Operations and, with respect to
the annual information only, a report thereon by our certified
independent accountants and (ii) all reports that would be
required to be filed with the Commission on
Form 8-K
if we were required to file such reports, in each case within
the time period
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specified in the rules and regulations of the Commission. In
addition, for so long as any of the notes remain outstanding, we
have agreed to make available to any holder of the notes or
prospective purchaser of the notes, at their request, the
information required by Rule 144A(d)(4) under the
Securities Act.
We have not authorized anyone to give you any information or to
make any representations about us or the transactions we discuss
in this prospectus other than those contained in this
prospectus. If you are given any information or representations
about these matters that is not discussed in this prospectus,
you must not rely on that information. This prospectus is not an
offer to sell or a solicitation of an offer to buy securities
anywhere or to anyone where or to whom we are not permitted to
offer or sell securities under applicable law.
INCORPORATION
BY REFERENCE
We are incorporating by reference certain information that we
have filed with the Commission under the informational
requirements of the Securities Exchange Act of 1934. The
information contained in the documents we are incorporating by
reference is considered to be part of this prospectus. We are
incorporating by reference:
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our Annual Report on
Form 10-K,
as amended by Amendment No. 1 on Form
10-K/A, for
the fiscal year ended December 31, 2009;
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our Quarterly Reports on
Form 10-Q
for the quarterly periods ended March 31, 2010,
June 30, 2010 and September 30, 2010;
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information that is considered to be filed with the Commission
pursuant to our Current Reports on
Form 8-K
or 8-K/A
submitted to the Commission on February 4, 2010 (excluding
Items 2.02 and 9.01 and Exhibit 99.1), March 3,
2010, March 15, 2010, March 31, 2010, May 14,
2010, May 17, 2010, June 9, 2010, July 15, 2010,
July 30, 2010, August 3, 2010, October 14, 2010,
November 22, 2010, November 30, 2010 and
December 13, 2010; and
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items filed by us with the Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 on or
subsequent to the date of this prospectus and before termination
of this offering.
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Any information incorporated by reference is considered to be
part of this prospectus, and any information that we file with
the Commission subsequent to the filing of the incorporated
material or the date of this prospectus will automatically
update and, if applicable, supersede the incorporated
information and this prospectus.
90
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 20.
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Indemnification
of Directors and Officers.
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The restated certificate of incorporation of Tenneco Inc.
(Tenneco) provides that a director of Tenneco will
not be liable to Tenneco or its stockholders for monetary
damages for breach of fiduciary duty as a director, except to
the extent that an exemption from liability or limitation of
liability is not permitted under the Delaware General
Corporation law (DGCL). Based on the DGCL as
presently in effect, a director of Tenneco will not be
personally liable to Tenneco or its stockholders for monetary
damages for breach of fiduciary duty as a director, except:
(1) for any breach of the directors duty of loyalty
to Tenneco or its stockholders;(2) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (3) under Section 174 of the DGCL;
which concerns unlawful payments of dividends, stock purchases
or redemptions; or (4) for any transactions from which the
director derived an improper personal benefit.
While these provisions give directors protection from awards for
monetary damages for breaches of their duty of care, they do not
eliminate the duty. Accordingly, Tennecos certificate of
incorporation will have no effect on the availability of
equitable remedies such as injunction or rescission based on a
directors breach of his or her duty of care. The
provisions of Tennecos certificate of incorporation
described above apply to an officer of Tenneco only if he or she
is a director of Tenneco and is acting in his or her capacity as
director. They do not apply to officers of Tenneco who are not
directors.
Tennecos by-laws include the following provisions:
Section 14.
(1) The corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently
exists or may hereafter be amended, any person (an
Indemnitee) who was or is made or is threatened to
be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative, including appeals (a proceeding), by
reason of the fact that he, or a person for whom he is the legal
representative, is or was a director or officer of the
corporation or, while a director of officer of the corporation
is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust, enterprise or nonprofit
entity, including service with respect to employee benefit
plans, against all liability and loss suffered and expenses
(including attorneys fees) reasonably incurred by such
Indemnitee. Notwithstanding the preceding sentence, except as
otherwise provided in paragraph (3) of this
Section 14, the corporation shall be required to indemnify
an Indemnitee in connection with a proceeding (or part thereof)
commenced by such Indemnitee only if the commencement of such
proceeding (or part thereof) by the Indemnitee was authorized by
the Board.
(2) The corporation shall pay the expenses (including
attorneys fees) incurred by an Indemnitee in defending any
proceeding in advance of its final disposition, provided,
however, that, to the extent required by law, such payment of
expenses in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the
Indemnitee to repay all amounts advanced if it should be
ultimately determined that the Indemnitee is not entitled to be
indemnified under this Section 14 or otherwise.
(3) If a claim for indemnification (following the final
disposition of such action, suit or proceeding) or payment of
expenses under this Section 14 is not paid in full within
thirty days after a written claim therefor by the Indemnitee has
been received by the corporation, the Indemnitee may file suit
to recover the unpaid amount of such claim and, if successful in
whole or in part, shall be entitled to be paid the expense of
prosecuting such claim. In any such action the corporation shall
have the burden of proving that the Indemnitee is not entitled
to the requested indemnification or payment of expenses under
applicable law.
II-1
(4) The rights conferred on any Indemnitee by this
Section 14 shall not be exclusive of any other rights which
such Indemnitee may have or hereafter acquire under any statute,
provision of the Restated Certificate of Incorporation, these
By-Laws, agreement, vote of stockholders or disinterested
directors or otherwise.
(5) The corporations obligation, if any, to indemnify
or to advance expenses to any Indemnitee who was or is serving
at its request as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust,
enterprise or nonprofit entity shall be reduced by an amount
such Indemnitee may collect as indemnification or advancement of
expenses from such other corporation, partnership, joint
venture, trust, enterprise or nonprofit enterprise.
(6) Any repeal or modification of the foregoing provisions
of this Section 14 shall not adversely affect any right or
protection hereunder of any Indemnitee in respect of any act or
omission occurring prior to the time of such repeal or
modification.
(7) This Section 14 shall not limit the right of the
corporation, to the extent and in the manner permitted by law,
to indemnify and to advance expenses to persons other than
Indemnitees when and as authorized by appropriate corporate
action.
In addition, several of Tennecos directors have entered
into separate contractual indemnity arrangements with Tenneco.
These arrangements provide for indemnification and the
advancement of expenses to these directors in circumstances and
subject to limitations substantially similar to those described
above.
Tenneco has purchased insurance which purports to insure Tenneco
against some of the costs of indemnification which may be
incurred under the by-law section discussed above. The insurance
also purports to insure the officers and directors of Tenneco
and its subsidiaries against some liabilities incurred by them
in the discharge of their duties as officers and directors,
except for liabilities resulting from their own malfeasance.
Section 145 of the DGCL authorizes a court to award, or a
corporations board of directors to grant, indemnity to
directors, officers, employees and agents of the corporation
under certain circumstances and subject to certain limitations.
The by-laws of Tenneco Automotive Operating Company Inc.
(TAOC), Clevite Industries Inc.
(Clevite), Tenneco Global Holdings Inc.
(Global), Tenneco International Holding Corp.
(TIHC) and TMC Texas Inc. (TMC) provide
that TAOC, Clevite, Global, TIHC and TMC Texas shall indemnify
their directors and officers to the maximum extent permitted
from time to time by the DGCL. The by-laws of The Pullman
Company (Pullman) provide that Pullman shall
indemnify its directors and officers if they acted in good faith
and in a manner reasonably believed to be in or not opposed to
the best interests of Pullman, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe that
their conduct was unlawful. Such indemnification includes
expenses and attorneys fees incurred in connection with
any claim. Expenses (including attorneys fees) are to be
paid by Pullman in advance of the final disposition of any
action upon receipt of an undertaking by or on behalf of any
director or officer to repay the advanced amount if it is
determined that such officer or director is not entitled to be
indemnified. The certificates of incorporation of Clevite,
Pullman & TIHC have provisions limiting the personal
liability of their directors to the corporation similar to that
discussed above for Tenneco.
|
|
Item 21.
|
Exhibits
and Financial Statement Schedules.
|
A list of exhibits filed with this registration statement is
contained in the index to exhibits, which is incorporated by
reference.
II-2
Each of the undersigned co-registrants hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
Calculation of Registration Fee table in the
effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability under
the Securities Act of 1933, each filing of the Registrants
annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining liability under the
Securities Act of 1933 to any purchaser, each prospectus filed
pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements
relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and
included in the registration statement as of the date it is
first used after effectiveness. Provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or
prospectus that was part of the registration statement or made
in any such document immediately prior to such date of first use.
(6) To respond to requests for information that is
incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business
day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means.
This includes information contained in documents filed
subsequent to the effective date of the registration statement
through the date of responding to the request.
(7) 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-3
(8) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers, and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of Illinois on the
22nd day of December, 2010.
TENNECO INC.
|
|
|
|
By:
|
/s/ Gregg
M. Sherrill
|
Gregg M. Sherrill
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the 22nd day of
December, 2010.
|
|
|
|
|
Signature
|
|
Position
|
|
|
|
|
/s/ Gregg
M. Sherrill
Gregg
M. Sherrill
|
|
Chairman and Chief Executive Officer
(Principal Executive Officer)
|
|
|
|
/s/ Kenneth
R. Trammell
Kenneth
R. Trammell
|
|
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
|
|
|
|
/s/ Paul
D. Novas
Paul
D. Novas
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
*
Charles
W. Cramb
|
|
Director
|
|
|
|
*
Dennis
J. Letham
|
|
Director
|
|
|
|
/s/ Hari
N. Nair
Hari
N. Nair
|
|
Director
|
|
|
|
*
Roger
B. Porter
|
|
Director
|
|
|
|
*
David
B. Price, Jr.
|
|
Director
|
|
|
|
*
Paul
T. Stecko
|
|
Director
|
|
|
|
*
Mitsunobu
Takeuchi
|
|
Director
|
|
|
|
*
Jane
L. Warner
|
|
Director
|
|
|
|
|
|
*By:
|
|
/s/ James
D. Harrington
James
D. Harrington
Attorney-in-Fact
|
|
|
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of Illinois on the
22nd day of December, 2010.
TENNECO AUTOMOTIVE OPERATING COMPANY INC.
|
|
|
|
By:
|
/s/ Gregg
M. Sherrill
|
Gregg M. Sherrill
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the 22nd day of
December, 2010.
|
|
|
|
|
Signature
|
|
Position
|
|
|
|
|
/s/ Gregg
M. Sherrill
Gregg
M. Sherrill
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
/s/ Kenneth
R. Trammell
Kenneth
R. Trammell
|
|
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
|
|
/s/ Paul
D. Novas
Paul
D. Novas
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ James
D. Harrington
James
D. Harrington
|
|
Director
|
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of Illinois on the
22nd day of December, 2010.
CLEVITE INDUSTRIES INC.
|
|
|
|
By:
|
/s/ Gregg
M. Sherrill
|
Gregg M. Sherrill
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the 22nd day of
December, 2010.
|
|
|
|
|
Signature
|
|
Position
|
|
|
|
|
/s/ Gregg
M. Sherrill
Gregg
M. Sherrill
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
/s/ Kenneth
R. Trammell
Kenneth
R. Trammell
|
|
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
|
|
/s/ Paul
D. Novas
Paul
D. Novas
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ James
D. Harrington
James
D. Harrington
|
|
Director
|
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of Illinois on the
22nd day of December, 2010.
THE PULLMAN COMPANY
|
|
|
|
By:
|
/s/ Gregg
M. Sherrill
|
Gregg M. Sherrill
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the 22nd day of
December, 2010.
|
|
|
|
|
Signature
|
|
Position
|
|
|
|
|
/s/ Gregg
M. Sherrill
Gregg
M. Sherrill
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
/s/ Kenneth
R. Trammell
Kenneth
R. Trammell
|
|
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
|
|
/s/ Paul
D. Novas
Paul
D. Novas
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ James
D. Harrington
James
D. Harrington
|
|
Director
|
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of Illinois on the
22nd day of December, 2010.
TENNECO GLOBAL HOLDINGS INC.
|
|
|
|
By:
|
/s/ Gregg
M. Sherrill
|
Gregg M. Sherrill
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the 22nd day of
December, 2010.
|
|
|
|
|
Signature
|
|
Position
|
|
|
|
|
/s/ Gregg
M. Sherrill
Gregg
M. Sherrill
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
/s/ Kenneth
R. Trammell
Kenneth
R. Trammell
|
|
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
|
|
/s/ Paul
D. Novas
Paul
D. Novas
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ James
D. Harrington
James
D. Harrington
|
|
Director
|
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of Illinois on the
22nd day of December, 2010.
TENNECO INTERNATIONAL HOLDING CORP.
|
|
|
|
By:
|
/s/ Gregg
M. Sherrill
|
Gregg M. Sherrill
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the 22nd day of
December, 2010.
|
|
|
|
|
Signature
|
|
Position
|
|
|
|
|
/s/ Gregg
M. Sherrill
Gregg
M. Sherrill
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
/s/ Kenneth
R. Trammell
Kenneth
R. Trammell
|
|
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
|
|
/s/ Paul
D. Novas
Paul
D. Novas
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ James
D. Harrington
James
D. Harrington
|
|
Director
|
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Lake Forest, State of Illinois on the
22nd day of December, 2010.
TMC TEXAS INC.
|
|
|
|
By:
|
/s/ Gregg
M. Sherrill
|
Gregg M. Sherrill
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities indicated and on the 22nd day of
December, 2010.
|
|
|
|
|
Signature
|
|
Position
|
|
|
|
|
/s/ Gregg
M. Sherrill
Gregg
M. Sherrill
|
|
Chief Executive Officer and Director
(Principal Executive Officer)
|
|
|
|
/s/ Kenneth
R. Trammell
Kenneth
R. Trammell
|
|
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
|
|
|
|
/s/ Paul
D. Novas
Paul
D. Novas
|
|
Vice President and Controller
(Principal Accounting Officer)
|
|
|
|
/s/ James
D. Harrington
James
D. Harrington
|
|
Director
|
II-11
INDEX TO
EXHIBITS
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.1(a)
|
|
Restated Certificate of Incorporation of Tenneco Automotive
Inc., dated December 11, 1996 (incorporated herein by
reference from Exhibit 3.1(a) of Tenneco Automotive
Inc.s Annual Report on
Form 10-K
for the year ended December 31, 1997, File
No. 1-12387).
|
|
3
|
.1(b)
|
|
Certificate of Amendment, dated December 11, 1996
(incorporated herein by reference from Exhibit 3.1(c) of
Tenneco Automotive Inc.s Annual Report on
Form 10-K
for the year ended December 31, 1997, File
No. 1-12387).
|
|
3
|
.1(c)
|
|
Certificate of Ownership and Merger, dated July 8, 1997
(incorporated herein by reference from Exhibit 3.1(d) of
Tenneco Automotive Inc.s Annual Report on
Form 10-K
for the year ended December 31, 1997, File
No. 1-12387).
|
|
3
|
.1(d)
|
|
Certificate of Designation of Series B Junior Participating
Preferred Stock dated September 9, 1998 (incorporated
herein by reference from Exhibit 3.1(d) of Tenneco
Automotive Inc.s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1998, File
No. 1-12387).
|
|
3
|
.1(e)
|
|
Certificate of Elimination of the Series A Participating
Junior Preferred Stock of Tenneco Automotive Inc. dated
September 11, 1998 (incorporated herein by reference from
Exhibit 3.1(e) of Tenneco Automotive Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended September 30, 1998,
File No. 1-12387).
|
|
3
|
.1(f)
|
|
Certificate of Amendment to Restated Certificate of
Incorporation of Tenneco Automotive Inc., dated November 5,
1999 (incorporated herein by reference from Exhibit 3.1(f)
of Tenneco Automotive Inc.s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1999, File
No. 1-12387).
|
|
3
|
.1(g)
|
|
Certificate of Amendment to Restated Certificate of
Incorporation of Tenneco Automotive Inc., dated November 5,
1999 (incorporated herein by reference from Exhibit 3.1(g)
of Tenneco Automotive Inc.s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1999, File
No. 1-12387).
|
|
3
|
.1(h)
|
|
Certificate of Ownership and Merger merging Tenneco Automotive
Merger Sub Inc. with and into Tenneco Automotive Inc., dated
November 5, 1999 (incorporated herein by reference from
Exhibit 3.1(h) of Tenneco Automotive Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended September 30, 1999, File
No. 1-12387).
|
|
3
|
.1(i)
|
|
Certificate of Amendment to Restated Certificate of
Incorporation of Tenneco Automotive Inc. dated May 9, 2000
(incorporated herein by reference from Exhibit 3.1(i) of
Tenneco Automotive Inc.s Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2000, File
No. 1-12387).
|
|
3
|
.1(j)
|
|
Certificate of Ownership and Merger merging Tenneco Inc. with
and into the registrant, dated October 27, 2005
(incorporated herein by reference from Exhibit 99.1 of
Tenneco Inc.s Current Report on
Form 8-K
dated October 28, 2005, File
No. 1-12387).
|
|
3
|
.2
|
|
By-laws of Tenneco Inc., as amended March 4, 2008
(incorporated herein by reference from Exhibit 99.1 of
Tenneco Inc.s Current Report on
Form 8-K
dated March 10, 2008, File
No. 1-12387).
|
|
3
|
.3
|
|
Certificate of Incorporation of Tenneco Global Holdings Inc.
(Global), as amended (incorporated herein by
reference to Exhibit 3.3 to Tenneco Automotive Inc.s
Registration Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.4
|
|
By-laws of Global (incorporated herein by reference to
Exhibit 3.4 to Tenneco Automotive Inc.s Registration
Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.5
|
|
Certificate of Incorporation of TMC Texas Inc. (TMC)
(incorporated herein by reference to Exhibit 3.5 to Tenneco
Automotive Inc.s Registration Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.6
|
|
By-laws of TMC (incorporated herein by reference to
Exhibit 3.6 to Tenneco Automotive Inc.s Registration
Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.7
|
|
Amended and Restate Certificate of Incorporation of Tenneco
International Holding Corp. (TIHC) (incorporated
herein by reference to Exhibit 3.1 to Tenneco Automotive
Inc.s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2010, File
No. 1-12387).
|
|
3
|
.8
|
|
Amended and Restated By-laws of TIHC (incorporated herein by
reference to Exhibit 3.8 to Tenneco Automotive Inc.s
Registration Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
|
|
|
|
Exhibit
|
|
|
Number
|
|
Description
|
|
|
3
|
.9
|
|
Certificate of Incorporation of Clevite Industries Inc.
(Clevite), as amended (incorporated herein by
reference to Exhibit 3.9 to Tenneco Automotive Inc.s
Registration Statement on
Form S-4,
Reg. No. 333-93757).
|
|
3
|
.10
|
|
By-laws of Clevite (incorporated herein by reference to
Exhibit 3.10 to Tenneco Automotive Inc.s Registration
Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.11
|
|
Amended and Restated Certificate of Incorporation of the Pullman
Company (Pullman) (incorporated herein by reference
to Exhibit 3.11 to Tenneco Automotive Inc.s
Registration Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.12
|
|
By-laws of Pullman (incorporated herein by reference to
Exhibit 3.12 to Tenneco Automotive Inc.s Registration
Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.13
|
|
Certificate of Incorporation of Tenneco Automotive Operating
Company Inc. (TAOC) incorporated herein by reference
to Exhibit 3.13 to Tenneco Automotive Inc.s
Registration Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
3
|
.14
|
|
By-laws of TAOC (incorporated herein by reference to
Exhibit 3.14 to Tenneco Automotive Inc.s Registration
Statement on
Form S-4,
Reg.
No. 333-93757).
|
|
4
|
.1
|
|
Indenture, dated as of August 3, 2010, among Tenneco Inc.,
the guarantors party thereto and U.S. Bank National Association,
as trustee, including as exhibits thereto, the forms of
73/4% Senior Notes due 2018 (incorporated herein by
reference to Exhibit 4.1 Tenneco Inc.s Current Report
on
Form 8-K
filed on August 3, 2010, File
No. 1-12387).
|
|
4
|
.2
|
|
Registration Rights Agreement, dated as of August 3, 2010,
among Tenneco Inc., the guarantors party thereto and the initial
purchasers party thereto (incorporated herein by reference to
Exhibit 4.2 Tenneco Inc.s Current Report on
Form 8-K
filed on August 3, 2010, File
No. 1-12387).
|
|
4
|
.3
|
|
Form of Exchange Note (included in Exhibit 4.1).
|
|
*5
|
.1
|
|
Opinion of Mayer Brown LLP.
|
|
12
|
.1
|
|
Statement of Computation of Ratio of Earnings to Fixed Charges
(incorporated herein by reference to Exhibit 12 to Tenneco
Inc.s Annual Report on Form
10-K for the
year ended December 31, 2009, File No. 1-12387 and
Exhibit 12 to Tenneco Inc.s Quarterly Report on Form
10-Q for the
quarter ended September 30, 2010, File
No. 1-12387).
|
|
*15
|
.1
|
|
Deloitte & Touche LLP Letter re: Unaudited Interim
Financial Information.
|
|
*15
|
.2
|
|
PricewaterhouseCoopers LLP Letter re: Unaudited Interim
Financial Information.
|
|
*23
|
.1
|
|
Consent of Mayer Brown LLP (included in Exhibit 5.1).
|
|
*23
|
.2
|
|
Consent of Deloitte & Touche LLP.
|
|
*24
|
.1
|
|
Powers of Attorney.
|
|
*25
|
.1
|
|
Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939 of U.S. Bank National
Association.
|
|
*99
|
.1
|
|
Form of Letter of Transmittal.
|