EXHIBIT 99.1
[VENTURE LOGO]
CONSENT SOLICITATION STATEMENT
VENTURE HOLDINGS COMPANY LLC
SOLICITATION OF CONSENTS TO AMEND THE INDENTURES RELATING TO THE
9.5% SENIOR NOTES DUE 2005 (CUSIP NO. 92326YAD1)
11% SENIOR NOTES DUE 2007 (CUSIP NO. 92326YAF6)
12% SENIOR SUBORDINATED NOTES DUE 2009 (CUSIP NO. 92326YAH2)
Venture Holdings Company LLC and the subsidiary issuers of the 2005
Senior Notes (as defined below) (collectively, the "Company") hereby solicits
consents by the holders of record as of July 10, 2002 of its (i) 9.5% Senior
Notes due 2005 (CUSIP No. 92326YAD1) (the "2005 Senior Notes"), (ii) 11% Senior
Notes due 2007, (CUSIP No. 92326YAF6) (the "2007 Senior Notes") and (iii) 12%
Senior Subordinated Notes due 2009 (CUSIP No. 92326YAH2) (the "Senior
Subordinated Notes" and, together with the 2005 Senior Notes and the 2007 Senior
Notes, the "Notes"), upon the terms and subject to the conditions set forth in
this Consent Solicitation Statement and in the accompanying Consent Form (the
"Consent Form"), to the adoption of certain proposed amendments (the "Proposed
Amendments") to (x) the Indenture dated as of July 1, 1997 governing the 2005
Senior Notes (the "2005 Indenture"), (y) the Indenture dated as of May 27, 1999
governing the 2007 Senior Notes (the "2007 Indenture"), and (z) the Indenture
dated as of May 27, 1999 governing the Senior Subordinated Notes (the "2009
Indenture" and, together with the 2005 and the 2007 Indenture, the
"Indentures").
The Proposed Amendments will amend the Indentures to (i) permit the
German Temporary Administrator's (as defined herein) incurrence of Indebtedness
(as defined in the Indentures) with respect to certain foreign subsidiaries and
granting of liens on certain assets in connection with the German Preliminary
Proceeding (as defined herein) which is permitted to be incurred by the German
Temporary Administrator without the approval of the Company, (ii) allow for the
refinancing of such Indebtedness, including any required consensual restrictions
on dividend payments (iii) provide for an extension of the financial reporting
obligation with respect to the fiscal quarter ended June 30, 2002 because of the
possible inability of the Company to obtain the required financial information
from its German subsidiaries due to the German Preliminary Proceeding, (iv)
provide for an extension of any applicable cure period with respect to the
German Preliminary Proceeding, (v) allow for the assumption of Indebtedness in
connection with any contribution of certain assets or businesses to the Company
by the Company's sole equity holder or affiliates, and (vi) allow for the
incurrence of additional Indebtedness under the Company's Credit Agreement (as
defined in the Indentures) for liquidity.
The Company is requesting consent to the Proposed Amendments to:
- facilitate the termination of the German Preliminary Proceeding
without commencement of a formal insolvency proceeding in Germany;
- enable the payment of the interest payments, initially due July 1,
2002, on the Company's 2005 Senior Notes at the expiration of the
related grace period;
- avoid a near term U.S. bankruptcy risk created by potential
defaults under the Indentures;
- permit the contribution of certain assets or businesses to the
Company by the Company's sole equity holder or affiliates; and
- provide $50 million for liquidity.
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THE CONSENT SOLICITATION WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON THURSDAY, JULY 25, 2002, UNLESS EXTENDED BY THE COMPANY. CONSENTS MAY BE
REVOKED AT ANY TIME UP TO THE CONSENT DATE (THE "CONSENT DATE"), WHICH IS THE
EARLIER OF (A) 5:00 P.M., NEW YORK CITY TIME ON THURSDAY, JULY 25, 2002, AND (B)
THE TIME AND DATE ON WHICH THE COMPANY RECEIVES REQUISITE CONSENTS (AS DEFINED
HEREIN) WITH RESPECT TO THE NOTES. SEE "THE CONSENT SOLICITATION - REVOCATION OF
CONSENTS."
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(cover page continues)
THE SOLICITATION AGENT FOR THE CONSENT SOLICITATION IS:
DEUTSCHE BANK SECURITIES
July 15, 2002
(continued from previous page)
Holders of the Notes (the "Noteholders") should read and consider
carefully the information contained herein prior to delivering a consent to the
Proposed Amendments (a "Consent" and the "Consents"). Consents may be delivered
by completing and executing the accompanying Consent Form and delivering the
executed Consent Form to The Huntington National Bank, the trustee under the
Indentures (the "Trustee"), as promptly as possible and no later than 5:00 pm.,
New York City time, on the Consent Date. If Requisite Consents (as defined
herein) for all of the Notes are received (and not revoked) prior to the Consent
Date and the other conditions set forth herein are satisfied or waived, the
Company will, promptly after the Consent Date, pay to each Noteholder for that
series of Notes who has delivered (and not revoked) a valid Consent on or prior
to the Consent Date a consent fee in the amount of $2.50 for each $1,000
principal amount of Notes in respect of which such Consent has been validly
delivered (the "Consent Fee"). Payment of the Consent Fee is subject to the
approval of the requisite lenders under the Company's Credit Agreement.
The Proposed Amendments will be effected by supplemental indentures
(the "Supplemental Indentures") to the Indentures, which are to be executed by
the Company, the guarantors under the respective Indentures (the "Guarantors")
and the Trustee on the Consent Date. The Supplemental Indentures will become
effective upon execution by the Company, the Guarantors and the Trustee. THE
EXECUTION OF EACH OF THE SUPPLEMENTAL INDENTURES IS CONDITIONED ON THE REQUISITE
CONSENTS BEING VALIDLY DELIVERED (AND NOT REVOKED) PRIOR TO THE CONSENT DATE FOR
ALL SERIES OF NOTES.
HOLDERS WHO DO NOT DELIVER A TIMELY COMPLETED CONSENT FORM ON OR PRIOR
TO THE CONSENT DATE WILL NOT BE ELIGIBLE TO RECEIVE THE CONSENT FEE, BUT WILL BE
BOUND BY THE PROPOSED AMENDMENTS FOR THAT SERIES OF NOTES IF THEY BECOME
EFFECTIVE. SECURITIES SHOULD NOT BE TENDERED OR DELIVERED IN CONNECTION WITH
THIS CONSENT SOLICITATION.
Questions and requests for assistance or additional copies of this
Consent Solicitation Statement and the Consent Form may be directed to the
Information Agent or the Solicitation Agent as set forth on the back cover of
this Consent Solicitation Statement.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
CONSENT SOLICITATION STATEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS CONSENT SOLICITATION STATEMENT IS NOT BEING MADE TO, AND NO
CONSENTS ARE BEING SOLICITED FROM, NOTEHOLDERS IN ANY JURISDICTION IN WHICH IT
IS UNLAWFUL TO MAKE SUCH SOLICITATION OR GRANT SUCH CONSENT. THE DELIVERY OF
THIS CONSENT SOLICITATION STATEMENT AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
CONSENT SOLICITATION STATEMENT.
AVAILABLE INFORMATION
Pursuant to the requirements of the Indentures, the Company is subject
to the informational reporting requirements of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder
(collectively, the "Exchange Act"), and, in accordance therewith, files reports
and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information filed with the Commission can
be inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's Regional Offices at The Woolworth Building, 233 Broadway, New
York, New York 10279, and 175 Jackson Boulevard, Suite 900, Chicago, Illinois
60604. Copies of such material can be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C., 20549,
at prescribed rates. Additionally, the Commission maintains a web site on the
Internet that contains reports, proxy, information statements and other
information regarding registrants that file electronically with the Commission.
The address of such site is http://www.sec.gov.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated by reference into this Consent Solicitation
Statement:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001;
2. The Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2002; and
3. The Company's Current Reports on Form 8-K dated May 28, 2002, June
27, 2002 and July 3, 2002.
All documents filed by the Company pursuant to Section 15(d) of the
Exchange Act subsequent to the date hereof and prior to the Consent Date shall
be deemed to be incorporated by reference into this Consent Solicitation
Statement and to be a part hereof from the date any such document is filed.
Any statement in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Consent Solicitation
Statement to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Consent Solicitation Statement.
The Company will provide without charge to each person to whom a copy
of this Consent Solicitation Statement is delivered, upon written or oral
request of such person, by first class mail or other equally prompt means within
one business day of receipt of such request, a copy of any or all of the
documents that are incorporated by reference herein, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests should be directed to Venture Holdings Company LLC,
33662 James J. Pompo, Fraser, Michigan 48026; attention: James E. Butler,
Executive Vice President (telephone number (586) 294-1500).
FORWARD LOOKING STATEMENTS
Certain of the information contained in this Consent Solicitation Statement,
including the information incorporated by reference into this Consent
Solicitation Statement and the related Consent Form, contains certain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Exchange Act. Such statements are subject to
certain risks and uncertainties. The risks and uncertainties that may affect the
operations, performance, development and results of operations of the Company
include the following: (i) the original equipment manufacturer ("OEM") supplier
industry is highly cyclical and, in large part, impacted by the strength of the
economy generally, by prevailing interest rates and by other factors which may
have an effect on the level of sales of automotive vehicles; (ii) future price
reductions, increased quality standards or additional engineering capabilities
may be required by the OEMs, which are able to exert considerable pressure on
their suppliers; (iii) the OEMs may decide to in-source some of the work
currently performed by the Company; (iv) work stoppages and slowdowns may be
experienced by OEMs and their Tier 1 suppliers, as a result of labor disputes;
(v) there may be a significant decrease in sales of vehicles using the Company's
products or the loss by the Company of the right to supply any of such products
to its major customers; (vi) increased competition could arise in the OEM
supplier industry; (vii) changing federal, state, local and foreign laws,
regulations and ordinances relating to environmental matters could affect the
Company's operations; (viii) there is significant uncertainty and risk related
to the German Preliminary Proceeding (as defined below) including the potential
commencement of formal insolvency proceedings in Germany or a bankruptcy filing
in the United States, which may be significantly increased if Requisite Consents
are not received and (ix) there may be unfavorable currency exchange rates
relative to the U.S. dollar, which could impact the Company's operations. Should
one or more of these risks or uncertainties materialize, actual results may vary
materially from those estimated, anticipated or projected. Although the Company
believes that the expectations reflected by such forward-looking statements were
or are reasonable based on information available to the Company at the time such
statements were made, no assurances can be given that such expectations will
prove to have been correct. Cautionary statements identifying important factors
that could cause actual results to differ materially from the Company's
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expectations are set forth in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001, which is incorporated herein by reference.
All forward-looking statements included in this Consent Solicitation Statement,
including those set forth herein and those incorporated herein by reference, and
all subsequent oral forward-looking statements attributable to the Company or
persons acting on its behalf, are expressly qualified in their entirety by these
cautionary statements.
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TABLE OF CONTENTS
Page
AVAILABLE INFORMATION.................................................................................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.......................................................3
FORWARD LOOKING STATEMENTS............................................................................3
VENTURE HOLDINGS COMPANY LLC..........................................................................6
RECENT DEVELOPMENTS...................................................................................6
THE PROPOSED AMENDMENTS...............................................................................8
Description of and Rationale for Proposed Amendments.........................................8
Proposed Amendments.........................................................................10
SELECTED HISTORICAL FINANCIAL DATA...................................................................12
THE CONSENT SOLICITATION.............................................................................12
Requisite Consents..........................................................................13
Record Date.................................................................................13
Expiration Date; Extensions; Amendment; Termination.........................................14
Consent Procedures..........................................................................14
Revocation of Consents......................................................................15
Conditions of Execution of Supplemental Indentures and Payment of Consent Fee...............16
Certain U.S. Federal Income Tax Considerations..............................................17
Consequences of the Consent Solicitation...........................................17
Backup Withholding.................................................................18
Trustee ...................................................................................18
Solicitation Agent and Information Agent....................................................18
APPENDIX A ..................................................................................A-1
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VENTURE HOLDINGS COMPANY LLC
The following should be read in conjunction with, and is qualified in
its entirety by reference to, the more detailed information, including the
financial information, included in or incorporated by reference in this Consent
Solicitation Statement and the related Consent Form. Descriptions in this
Consent Solicitation Statement of the provisions of the Indentures are summaries
and do not purport to be complete. Where reference is made to particular
provisions of the Indentures, such provisions, including the definitions of
certain terms, are incorporated herein by reference as part of such summaries,
which are qualified in their entirety by such reference. The Indentures have
been previously filed with the Commission. Copies of any information or
document, including the Indentures, incorporated herein by reference will be
provided upon request to the Company as set forth herein under "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
Venture Holdings Company LLC is the successor to Venture Holdings
Trust, which was established in 1987. Venture Holdings Company LLC owns,
directly or indirectly, all of the outstanding capital stock of, or equity
interests in, each of its subsidiaries, except for its 50% owned Spanish and 50%
owned French joint ventures. As used in this Consent Solicitation Statement,
unless otherwise stated, "our," "us," and "we" refer to Venture Holdings Company
LLC and its subsidiaries.
We are an industry leader and a worldwide full-service supplier,
systems integrator and manufacturer of plastic components, modules and systems
and an industry leader in applying new design and engineering technology to
develop innovative products, create new applications and reduce product
development time. We rank among the largest designers, systems integrators and
manufacturers of interior and exterior plastic components and systems to the
North American and European automotive markets. We have the capability to
provide customers state-of-the-art design and advanced engineering services 24
hours a day around the world. Our principal customers include every major North
American original equipment manufacturer, or OEM, eleven of the twelve major
European OEMs, several major Japanese OEMs, and other leading direct suppliers
to the OEM's or "Tier 1" suppliers. We operate 63 facilities in the following 11
countries: the United States, Canada, Germany, Spain, France, Hungary, the Czech
Republic, United Kingdom, Mexico, the Netherlands, and Brazil.
Our principal customers include every major North American OEM, eleven
of the twelve major European OEMs, several major Japanese OEMs, and leading Tier
1 suppliers, giving us geographic diversity. We maintain diversity of volume
among the various divisions of the OEMs, and we are further diversified by our
position as a supplier for a number of high volume vehicle platforms
manufactured by those divisions.
On May 28, 1999 we acquired Peguform GmbH, a leading international
designer and manufacturer of complete interior modules, door panels and
dashboards, and of exterior modules and other structural plastic body parts,
including bumper fascias and hatchback doors. We considered the acquisition of
Peguform an attractive opportunity to significantly increase our global presence
to meet our OEM customer's global needs, a key element of our business strategy.
For the year ended December 31, 2001, on a worldwide basis Peguform accounted
for approximately 72% of our total net sales of approximately $1.9 billion.
The approximate percentage of net sales to our principal customers for
the year ending December 31, 2001 is as follows: NORTH AMERICA: General Motors -
12%, Ford -- 6%, DaimlerChrysler -- 6%, Tier 1 Suppliers to OEMs -- 3%, other
automotive -- 2%, EUROPE: Audi AG -- 16%, Volkswagen AG -- 12%, DaimlerChrysler
AG -- 6%, PSA Peugeot Citroen -- 7%, Renault SA -- 4%, other automotive -- 5%,
Skoda Automobilova -- 4%, Bayerische Motoren Werke AG (BMW) -- 5%, Seat, S.A --
4%, Porsche AG -- 3%, Adam Opel AG -- 3%, OTHER: 2%.
RECENT DEVELOPMENTS
On or about May 28, 2002, certain managing directors of our indirectly,
wholly owned subsidiary, Peguform GmbH & Co. KG, its general partner, Venture
Verwaltungs GmbH, its only limited partner, Venture Beteiligungs GmbH, and the
holding company of Venture Verwaltungs and Venture Beteiligungs GmbH, Venture
Germany GmbH (collectively, the "German Subsidiaries") filed for the institution
of preliminary insolvency proceedings under the German Insolvency Act (the
"German Preliminary Proceeding"). The filing was submitted by the German and
European managing directors of our German Subsidiaries without consultation with
or approval by our representatives on the management boards of these
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companies and without notice to our management in the United States. Neither
were the filings approved by Venture Europe Inc. as the sole shareholder of
Venture Germany GmbH. On May 28, 2002, the German Municipal Court Freiburg,
appointed a temporary administrator (the "German Temporary Administrator") to
assess the financial situation of the German Subsidiaries and determine whether
they are really insolvent. The German Temporary Administrator has 90 days (which
may be extended) in which to make his determination. Based on the determination,
the German court will decide whether to institute formal insolvency proceedings.
Venture Germany GmbH and Peguform GmbH & Co. KG have filed objections
to the filing of the petitions, asserting that the managing directors acted
without the necessary authority and that there was no insolvency. At this time,
the only action taken by the German court has been the appointment of the German
Temporary Administrator, and no final decision as to the opening of formal
insolvency proceedings has been made. We have also provided information to the
German Temporary Administrator as to why it would not be appropriate to open
formal insolvency proceedings with respect to our German operations. The German
Temporary Administrator currently controls certain day-to-day operations of our
German Subsidiaries, and has the authority to place certain restrictions on, and
veto significant decisions with respect to, our German Subsidiaries.
The German Temporary Administrator has incurred, or may soon incur,
significant indebtedness to finance the operations of our German Subsidiaries,
secured by liens on the assets of those subsidiaries. We cannot prevent the
incurrence of such indebtedness. The German Temporary Administrator has
negotiated, or is in the process of negotiating, with certain European
automakers for the financing of this indebtedness. While we have endeavored to
obtain a copy of any agreements negotiated with the European automakers, the
German Temporary Administrator has informed us that such agreements are
confidential and that disclosure of the agreements to us requires consent by all
the automakers who are, or may be, a party thereto. As a consequence, we have
not been able to review these agreements and are not aware of the specific
amount, or all of the terms and conditions, of this indebtedness.
On June 27, 2002, we entered into a Sixth Amendment (the "Sixth
Amendment to Credit Agreement") to our Credit Agreement ("Credit Agreement")
dated as of May 27, 1999, as amended, with Bank One, NA, as administrative
agent, and the lenders identified therein. Pursuant to the Sixth Amendment to
Credit Agreement, we voluntarily agreed to not make the July 1, 2002 interest
payment when due on our 2005 Senior Notes until the expiration of the applicable
30-day grace period. The lenders under our Credit Agreement have also provided a
waiver, until September 1, 2002, of certain potential existing defaults under
the Credit Agreement, including any default caused by the German Preliminary
Proceedings or our failure to make the interest payment on our 2005 Senior Notes
prior to the expiration of the grace period, so long as no other default exists
and there is no occurrence of a new default. Pursuant to the Sixth Amendment to
Credit Agreement we did not make the July 1, 2002 interest payment on the 2005
Senior Notes.
The Sixth Amendment to Credit Agreement was one of the initial steps in
implementing our global restructuring plan (the "Global Plan"). The Global Plan
is intended to avoid formal insolvency proceedings in Germany with respect to
the German Subsidiaries by demonstrating, among other items, an exit financing
plan acceptable to the German Temporary Administrator. Through additional
financings contemplated by the Global Plan, we hope to meet the operational
needs of our European subsidiaries. As part of a global restructuring of our
financing needs, the Global Plan anticipates an additional significant
contribution of businesses or assets currently owned by our sole equity holder,
Mr. Larry Winget, outside of the Company under the parameters specified in the
Global Plan. It also requires certain accommodations by our principal North
American and European customers. The Proposed Amendments are an integral part of
the Global Plan.
On June 28, 2002, we met with Robert Stark of Akin, Gump, Strauss,
Hauer & Feld, L.L.P. (212/872-1000) and John Garcia of Chanin Capital Partners
(310/445-4010), in their capacity as advisors to an informal committee of
certain unaffiliated investors who hold a significant portion of each series of
our Notes, to discuss certain matters related to our current financial
situation.
On July 3, 2002, we paid the aggregate $14.375 million interest
payments due on the 2007 Senior Notes and the Senior Subordinated Notes. These
interest payments were allowed by the lenders under our Credit Agreement due to
the pledge of substantial additional collateral by Mr. Winget to secure
borrowings under our Credit Agreement, and were made within the 30 day grace
period allowed by the applicable Indentures. The interest payments initially
came due on June 3, 2002.
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We continue to operate in Europe and North America without any known
disruption to our customers. We are investigating all of our options relating to
these developments and, in accordance with the German court order, we are
working with the German Temporary Administrator to maintain operations and
continuity of production in Germany. Notwithstanding the extraordinary expenses
incurred as a result of the German Preliminary Proceeding and our efforts to
implement the Global Plan, we believe our operations continue to generate a
positive cash flow.
THE PROPOSED AMENDMENTS
The description of the Proposed Amendments set forth below is only a
summary and is qualified in its entirety by reference to (i) the relevant terms
of the Indentures as currently in effect and the terms of the Proposed
Amendments which are set forth in Appendix A to this Consent Solicitation
Statement, and (ii) the form of the Supplemental Indentures containing the
Proposed Amendments. A copy of the form of each of the proposed Supplemental
Indentures containing the Proposed Amendments is available from the Company upon
request. The form of the Supplemental Indentures may be modified or supplemented
prior to the execution thereof in a manner that would not require additional
consents under the Indentures. Noteholders should carefully review the Proposed
Amendments, including the provisions set forth in Appendix A, prior to
delivering Consents. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings given in the Indentures.
DESCRIPTION OF AND RATIONALE FOR PROPOSED AMENDMENTS
The Proposed Amendments will amend the Indentures to (i) permit the
German Temporary Administrator's incurrence of Indebtedness with respect to
certain foreign subsidiaries and granting of liens on certain assets in
connection with the German Preliminary Proceeding which is permitted to be
incurred by the German Temporary Administrator without the approval of the
Company, (ii) allow for the refinancing of such Indebtedness, including any
required consensual restrictions on dividend payments (iii) provide for an
extension of the financial reporting obligation with respect to the fiscal
quarter ended June 30, 2002 because of the possible inability of the Company to
obtain the required financial information from its German Subsidiaries, due to
the German Preliminary Proceeding, (iv) provide for an extension of any
applicable cure period with respect to the German Preliminary Proceeding, (v)
allow for the assumption of Indebtedness in connection with any contribution of
certain assets or businesses to the Company by the Company's sole equity holder
or affiliates, and (vi) allow for the incurrence of additional Indebtedness
under the Company's Credit Agreement for liquidity.
The principal purpose of the Proposed Amendments is to facilitate the
termination of the German Preliminary Proceeding without commencement of a
formal insolvency proceeding in Germany. FURTHER, IF THE REQUISITE CONSENTS ARE
OBTAINED FOR THE PROPOSED AMENDMENTS, WE INTEND TO PAY TO THE HOLDERS OF THE
2005 SENIOR NOTES THE INTEREST ACCRUED THEREON (INCLUDING INTEREST AT THE
DEFAULT RATE FROM JULY 1, 2002 TO THE DATE OF PAYMENT) ON OR PRIOR TO JULY 31,
2002. In the absence of the extension of the cure period with respect to the
German Preliminary Proceeding, the lenders under our Credit Agreement are likely
to take the position that, upon the expiration of the 60 day cure period, there
will be an automatic acceleration of the Indebtedness under the 2005 Indenture
(a position with which we do not necessarily agree). Taking the position that
expiration of the cure period automatically accelerates the 2005 Senior Notes,
arguably 100% of the holders of the 2005 Senior Notes would be required to
rescind the automatic acceleration. Further, because such acceleration would
cause the temporary waiver under the Credit Agreement to expire, the lenders
under our Credit Agreement are likely to take the position that there would be
an automatic acceleration under the Credit Agreement requiring 100% lender
approval to waive. Under this scenario, the lenders could prevent any interest
payment on the 2005 Senior Notes. The acceleration of the 2005 Senior Notes
would further cross-default the 2007 Senior Notes and the Senior Subordinated
Notes.
In the Sixth Amendment to Credit Agreement, the lenders under our
Credit Agreement have already agreed to extend the cure period with respect to
the German Preliminary Proceeding to a date that is one day prior to the
occurrence of any default under the Indentures caused by the failure to obtain a
dismissal of the German Preliminary Proceeding. Thus, the consent of the
Noteholders will provide stability among each of our constituent lending groups
on this issue. Stability will, in turn, allow the advisors to certain of the
Noteholders to evaluate our financial and other information, and allow us to
continue to pursue our Global Plan. It will also signal to our lenders and our
customers that progress is being made to effectuate our Global Plan.
The Proposed Amendments to permit the Indebtedness, related liens and
refinancing of the Indebtedness incurred by the German Temporary Administrator
(including the related liens and dividend restrictions) are critical steps in
seeking to
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avoid a formal insolvency proceeding in Germany. The German Temporary
Administrator presently controls the incurrence of the anticipated Indebtedness
and liens on the assets of the German Preliminary Proceeding Subsidiaries (as
defined in the Proposed Amendments), without the action or consent of our
subsidiaries. However, a key factor in avoiding a formal insolvency proceeding
in Germany will be our ability to refinance such Indebtedness on behalf of the
German Preliminary Proceeding Subsidiaries, rather than on behalf of the
Temporary Administrator. This Indebtedness would be secured and is likely to
include restrictions on the payment of dividends by the German Subsidiaries.
Such exit financing would be a critical component in demonstrating the financial
viability of the entities and to facilitate discharge of the German Preliminary
Proceeding.
If the German Preliminary Proceeding is dismissed and a formal
insolvency proceeding is not commenced, Mr. Winget has committed, as part of the
Global Plan, to contribute to us businesses that he currently owns outside of
our Company with an annual EBITDA of approximately $75 million, subject to $30
million in debt. These would include operating ancillary businesses owned by Mr.
Winget that provide design, engineering and tooling services, and lease
equipment and real estate to us in North America as well as certain foreign
operations that provide critical services to our European operations and other
customers. Certain of these entities have existing Indebtedness and, upon their
contribution to us, the domestic entities would become Guarantors of the Notes.
The Proposed Amendments allow for such contribution, subject to the existing
Indebtedness and liens,
If the Requisite Consents are not obtained and the German Preliminary
Proceeding is not dismissed, however, there is no assurance that Mr. Winget will
contribute these outside businesses. Further, a formal insolvency proceeding in
Germany may result in a sale of the German Preliminary Proceeding Subsidiaries
with little or no residual value returned to us after the proceeds are applied
to satisfy the Indebtedness incurred by the German Temporary Administrator and
other obligations of the German Preliminary Proceeding Subsidiaries. If the
foregoing were to occur, our United States operations would remain burdened with
significant Indebtedness, including that represented by the Notes. Concerns
regarding our ability to pay our obligations when they come due could lead to
bankruptcy proceedings in the United States, in which event we believe the
Noteholders would experience a substantial loss.
The Proposed Amendment for additional Indebtedness not to exceed $50
million from the lenders under our Credit Agreement would permit consummation of
financing initially scheduled for the end of May 2002. As we previously
described in our Report on Form 10-Q for the quarter ended March 31, 2002, we
closed on an additional $50 million of borrowing under our Credit Agreement in
May, 2002 and had anticipated closing an additional $50 million prior to the end
of May 2002. If the German Preliminary Proceeding and related German Preliminary
Proceeding Financing had not occurred, the Company believes it could have
incurred this additional $50 million without consent of the Noteholders under
the terms of the Indentures. However, due to events involving the German
Subsidiaries, the closing did not occur and the Company is now seeking consent
to obtain such additional liquidity.
The Proposed Amendment to permit a delay in the filing of our quarterly
report on Form 10-Q for the quarter ended June 30, 2002 is requested because of
concerns about our inability to timely access adequate financial information
about our German Subsidiaries, caused by the German Temporary Administrator.
There are many risks and uncertainties that may affect the
implementation of the Global Plan. For example, while we continue to have
numerous meetings, discussions and negotiations with the German Temporary
Administrator in order to avoid a formal insolvency proceeding in Germany, there
can be no assurance that we will be successful in our efforts. A formal
insolvency proceeding in Germany with respect to our German subsidiaries will
severely limit our ability to implement our capital restructuring. In addition,
the Global Plan involves receiving accommodations from a number of our
constituencies, including our customers, our North American bank group, the
Noteholders, and our sole equity holder, Mr. Winget. We have been negotiating
with and continue to negotiate with all of the parties that must provide
accommodations in order for there to be a successful implementation of the
Global Plan. To date, Mr. Winget, our primary customers, and our bank group have
agreed with us to take the initial steps necessary to implement the
restructuring plan. The Consents requested by this Consent Solicitation
Statement represent additional initial steps necessary to initiate the Global
Plan and we expect that additional consents and concessions may be required from
our customers, lenders, equity holder and the Noteholders for full
implementation. Although there are many factors beyond our control that will
impact the Global Plan, if we are successful in implementing the Global Plan, we
believe that the Noteholders will be able to realize far greater value for their
Notes than if the Global Plan is not successful.
9
PROPOSED AMENDMENTS
Set forth below is a summary of the Proposed Amendments relating to the
relevant existing provisions of the Indentures. The complete text of the
Proposed Amendments is set forth in Appendix A to this Consent Solicitation
Statement. Except as set forth below, the text of the Indentures remains
unchanged.
A copy of each of the proposed Supplemental Indentures containing these
amendments is available from the Company on request. Requests should be
addressed to: Venture Holdings Company LLC, 33662 James J. Pompo, Fraser,
Michigan 48026; attention: James E. Butler, Executive Vice President (telephone
number (586) 294-1500).
2005 INDENTURE
1. The following new definitions will be added to Section 1.1 of the 2005
Indenture by the Proposed Amendments:
"German Preliminary Proceeding" means the proceedings and process
pursuant to the petitions filed in Germany requesting that Venture
Germany GmbH, Venture Verwaltungs GmbH, Venture Beteiligungs GmbH, and
Peguform GmbH & Co. KG be placed in preliminary insolvency proceedings
by certain managing directors of certain companies and the related
court order that Attorney at Law Dr. Jobst Wellensiek is appointed as
preliminary receiver in insolvency and stating that the preliminary
receiver in insolvency is commissioned to examine in his capacity as an
expert whether there is good reason to open insolvency proceedings in
Germany; provided that the German Preliminary Proceeding does not
include the conversion of the German Preliminary Proceeding into a
formal insolvency proceeding, but the German Preliminary Proceeding
will include any extension of Dr. Wellensiek's or his successor's
appointment so long as he is not empowered to liquidate and sell
assets.
"German Preliminary Proceeding Financing" means the credit financing
(which may be revolving) of the German Preliminary Proceeding
Subsidiaries by third parties in the German Preliminary Proceeding and
the refinancing, renewal or replacement of the German Preliminary
Proceeding Financing with a credit facility (which may revolve in whole
or in part) in an amount required to have the German Preliminary
Proceeding dismissed and not to exceed 400,000,000 Euros in aggregate
principal amount outstanding at any time.
"German Preliminary Proceeding Subsidiaries" means Venture Germany
GmbH, Venture Verwaltungs GmbH, Peguform GmbH & Co. KG, Venture
Beteiligungs GmbH and any other Foreign Subsidiary that becomes subject
to the German Preliminary Proceeding.
"Preliminary Proceeding Termination Date" means the date on which the
German Preliminary Proceeding is discharged through dismissal,
withdrawal of petitions, a finding of restored solvency, or the
conversion of the proceeding to a formal insolvency proceeding under
which assets are to be liquidated and sold.
2. The definitions of "Permitted Indebtedness" and "Permitted Lien" in
Section 1.1 of the 2005 Indenture will be modified by the Proposed
Amendments as follows:
"Permitted Indebtedness" is modified by adding a new subsection (k),
which shall read as follows: "The German Preliminary Proceeding
Subsidiaries and their Subsidiaries may incur Indebtedness in respect
of the German Preliminary Proceeding Financing," by adding a new
subsection (l) which shall read as follows: "The Issuers or any
Subsidiary may incur (i) Indebtedness of a Person acquired in an
Acquisition if such Person was engaged in a Related Business and was an
Affiliate as of December 31, 2001 and remained an Affiliate as of the
date of the Acquisition of such Person, so long as such Person has a
positive net worth at the time of such Acquisition or (ii) Acquired
Indebtedness related to assets acquired by such Issuer or Subsidiary
from an Affiliate, so long as the acquired assets are used in a Related
Business and the fair market value of such assets is greater than the
related Acquired Indebtedness," and by adding a new subsection (m)
which shall read as follows: "The Issuers and the Guarantors may incur
additional Indebtedness pursuant to the Credit Agreement
(notwithstanding any limitations described in the definition of Credit
Agreement) in an amount not to exceed $50,000,000 in aggregate
principal amount."
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"Permitted Lien" is modified by adding the following to subsection (i)
"and Liens on assets acquired pursuant to subsection (l) of the
definition of Permitted Indebtedness" and adding a new subsection (o)
which shall read as follows: "Liens on assets of the German Preliminary
Proceeding Subsidiaries and their Subsidiaries securing the German
Preliminary Proceeding Financing and/or securing obligations to credit
insurers to the extent required to reinstate the credit insurance for
the payables of the German Preliminary Proceeding Subsidiaries and
their Subsidiaries."
3. Section 4.7, Section 4.11, and Section 6.1(4) of the 2005 Indenture
will be modified by the proposed Amendments as follows:
Section 4.7 will be modified to provide that the following language
shall be added at the end of the first sentence: "provided, that any
such reports for the fiscal quarter ended June 30, 2002 must be filed
not later than October 15, 2002."
Section 4.11 will be modified to add a new subsection (h) which shall
read as follows "in connection with the German Preliminary Proceeding
Financing, consensual restrictions replacing restrictions imposed
during the German Preliminary Proceeding that are not materially less
favorable than those being replaced."
Section 6.1(4) will be modified to add after the reference to "60
consecutive days" or "60 days": "or, in the case of the German
Preliminary Proceeding, for the period ending on the Preliminary
Proceeding Termination Date."
2007 INDENTURE AND 2009 INDENTURE
1. The following new definitions will be added to Section 1.01 of each of
the 2007 and 2009 Indentures by the Proposed Amendments:
"German Preliminary Proceeding" means the proceedings and process
pursuant to the petitions filed in Germany requesting that Venture
Germany GmbH, Venture Verwaltungs GmbH, Venture Beteiligungs GmbH, and
Peguform GmbH & Co. KG be placed in preliminary insolvency proceedings
by certain managing directors of certain companies and the related
court order that Attorney at Law Dr. Jobst Wellensiek is appointed as
preliminary receiver in insolvency and stating that the preliminary
receiver in insolvency is commissioned to examine in his capacity as an
expert whether there is good reason to open insolvency proceedings in
Germany; provided that the German Preliminary Proceeding does not
include the conversion of the German Preliminary Proceeding into a
formal insolvency proceeding, but the German Preliminary Proceeding
will include any extension of Dr. Wellensiek's or his successor's
appointment so long as he is not empowered to liquidate and sell
assets.
"German Preliminary Proceeding Financing" means the credit financing
(which may be revolving) of the German Preliminary Proceeding
Subsidiaries by third parties in the German Preliminary Proceeding and
the refinancing, renewal or replacement of the German Preliminary
Proceeding Financing with a credit facility (which may revolve in whole
or in part) in an amount required to have the German Preliminary
Proceeding dismissed and not to exceed 400,000,000 Euros in aggregate
principal amount outstanding at any time.
"German Preliminary Proceeding Subsidiaries" means Venture Germany
GmbH, Venture Verwaltungs GmbH, Peguform GmbH & Co. KG, Venture
Beteiligungs GmbH and any other foreign Subsidiary that becomes subject
to the German Preliminary Proceeding.
"Preliminary Proceeding Termination Date" means the date on which the
German Preliminary Proceeding is discharged through dismissal,
withdrawal of petitions, a finding of restored solvency, or the
conversion of the proceeding to a formal insolvency proceeding under
which assets are to be liquidated and sold.
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2. The definition of "Permitted Liens" in Section 1.01 of each of the 2007
and 2009 Indentures will be modified by the Proposed Amendments as
follows:
"Permitted Liens" is modified by modifying subsection (3) to
incorporate the defined term "Acquisition" in place of merger or
consolidation, and adding a new subsection (20) which shall read as
follows: "Liens on assets of the German Preliminary Proceeding
Subsidiaries and their Subsidiaries securing the German Preliminary
Proceeding Financing and/or securing obligations to credit insurers to
the extent required to reinstate the credit insurance for the payables
of the German Preliminary Proceeding Subsidiaries and their
Subsidiaries."
3. Section 4.03(a), Section 4.08, Section 4.09, Section 4.10, and Section
6.01(i) of each of the 2007 and 2009 Indentures will be modified by the
proposed Amendments as follows:
Section 4.03(a) will be modified to add the following language at the
end of the first sentence: "provided, that any such reports for the
fiscal quarter ended June 30, 2002 must be furnished not later than
October 15, 2002."
Section 4.08 will be modified to add a new subsection (15), which shall
read as follows "The German Preliminary Proceeding Financing, so long
as any consensual restrictions thereunder are not materially less
favorable than the restrictions imposed during the German Preliminary
Proceeding."
Section 4.09 will be modified to add a new subsection (17) which will
read as follows: "the incurrence by the Trust or any of its Restricted
Subsidiaries of (i) Indebtedness of a Person acquired in an Acquisition
if such Person was engaged in a Permitted Business and was an Affiliate
of the Trust as of December 31, 2001 and remained an Affiliate of the
Trust as of the date of the Acquisition of such Person, so long as such
Person has a positive net worth at the time of such Acquisition or (ii)
Acquired Debt related to assets acquired by the Trust or any of its
Restricted Subsidiaries from an Affiliate of the Trust, so long as the
acquired assets are used in a Permitted Business and the fair market
value of such assets is greater than the related Acquired Debt" and to
add subsection (18) which will read as follows: "the incurrence by the
Trust or any of its Restricted Subsidiaries of additional Indebtedness
pursuant to the Credit Agreement (notwithstanding any limitations
described in the definition of Credit Agreement) in an amount not to
exceed $50,000,000 in aggregate principal amount."
The introductory paragraph of Section 4.10 will be modified to read as
follows: "The Trust shall not permit any Restricted Subsidiary of the
Trust that is not a Guarantor to, directly or indirectly, incur any
Indebtedness (including Acquired Indebtedness) other than (x) Permitted
Debt or (y) the German Preliminary Proceeding Financing by the German
Preliminary Proceeding Subsidiaries and their Subsidiaries, unless:"
Section 6.01(i) will be modified to add after the reference to "60
consecutive days": "or, in the case of the German Preliminary
Proceeding, for the period ending on the Preliminary Proceeding
Termination Date."
SELECTED HISTORICAL FINANCIAL DATA
This Consent Solicitation Statement should be read in conjunction with
the consolidated financial statements, related notes and other financial
information (including Management's Discussion and Analysis of Financial
Condition and Results of Operations) appearing in the documents incorporated by
reference herein. See "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
THE CONSENT SOLICITATION
The Company is soliciting Consents from Noteholders of record as of the
close of business on the Record Date (as defined below), upon the terms and
subject to the conditions set forth in this Consent Solicitation Statement, in
the
12
accompanying Consent Form, and, except as expressly set forth herein and
therein, the Indentures (the "Consent Solicitation").
Consents may not be revoked at any time after the earlier of (i) 5:00
pm., New York City time, Thursday, July 25, 2002, and (ii) the time and date on
which the Company receives Requisite Consents for the Notes even if the Consent
Solicitation is extended beyond that time. If Requisite Consents for the Notes
are received (and not revoked) prior to the Consent Date and the other
conditions set forth herein are satisfied or waived, the Company will, promptly
after the Consent Date, pay to each Noteholder as of the Record Date who has
delivered (and not revoked) a valid Consent on or prior to the Consent Date
$2.50 for each $1,000 principal amount of the Notes in respect of which the
Consent has been timely delivered. No accrued interest will be paid on the
Consent Fee.
The Proposed Amendments will be effected by the Supplemental
Indentures, which are to be executed by the Company, the Guarantors and the
Trustee on the Consent Date. The Supplemental Indentures will become effective
upon execution by the Company, the Guarantors and the Trustee.
After the Proposed Amendments become effective, all current
Noteholders, including non-consenting Noteholders, and all subsequent
Noteholders, will be bound by the Proposed Amendments. If the Consent
Solicitation is terminated for any reason on or before the Consent Date, any
Consents received by the Trustee will be voided, the Supplemental Indentures
will not be executed and the Consent Fee will not be paid to any Noteholders.
Notwithstanding any subsequent transfer of the Notes, any Noteholders
as of the Record Date whose properly executed Consent Form has been received
(and not revoked) prior to the Consent Date will be eligible to receive any
Consent Fee payable in respect of the Notes. Noteholders as of the Record Date
who do not deliver Consents or deliver Consents after the Consent Date will not
be entitled to receive the Consent Fee.
REQUISITE CONSENTS
The 2005 Senior Noteholders of record as of the Record Date must
validly deliver (and not revoke) Consents in respect of a majority in aggregate
principal amount of the outstanding 2005 Senior Notes in order to approve the
Proposed Amendments for that series of Notes. The 2007 Senior Noteholders of
record as of the Record Date must validly deliver (and not revoke) Consents in
respect of a majority in aggregate principal amount of the outstanding 2007
Senior Notes in order to approve the Proposed Amendments for that series of
Notes. The Senior Subordinated Noteholders of record as of the Record Date must
validly deliver (and not revoke) Consents in respect of a majority in aggregate
principal amount of the outstanding Senior Subordinated Notes in order to
approve the Proposed Amendments for that series of Notes. The majority in
aggregate principal amount of any such series of Notes is referred to as the
"Requisite Consents". As of the date hereof, $205 million principal amount of
2005 Senior Notes were issued and outstanding, $125 million principal amount of
2007 Senior Notes were issued and outstanding, and $125 million principal amount
of Senior Subordinated Notes were issued and outstanding.
If the Requisite Consents for all series of Notes are delivered to the
Trustee, the Company, the Guarantors, and the Trustee may, but are not required
to, execute and deliver the Supplemental Indenture for each series of Notes,
subject to the terms and conditions set forth herein, as soon as is practicable
after the receipt of the Requisite Consents for each series of Notes. However,
the Company reserves the right to delay execution and delivery of the
Supplemental Indentures until such time following the receipt of the Requisite
Consents as it deems appropriate. Although not required to do so, the Company
may terminate the Consent Solicitation if it does not receive the Requisite
Consents for all series of Notes.
The failure of a holder of Notes to deliver a Consent will have the
same effect as if such holder had voted "Against" the Proposed Amendments.
RECORD DATE
This Consent Solicitation Statement and the Consent Forms are being
sent to all persons who were holders of record of Notes as of July 10, 2002 (the
"Record Date"), for the determination of Noteholders entitled to give Consents
pursuant to this Consent Solicitation Statement.
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EXPIRATION DATE; EXTENSIONS; AMENDMENT; TERMINATION
The Consent Solicitation will expire at 5:00 pm., New York City time,
on Thursday, July 25, 2002, unless extended by the Company. Consents may be
revoked at any time up to the Consent Date, but may not be revoked thereafter.
See "--Revocation of Consents" below.
The Company reserves the right to extend the Consent Solicitation at
any time and from time to time by giving oral or written notice to the Trustee;
provided that if the Requisite Consents relating to the Notes shall have been
obtained on any date prior to the Consent Date, the Supplemental Indentures
affecting the Proposed Amendments may be executed and delivered at such prior
date. For purposes of the Consent Solicitation, a notice given before 9:00 a.m.,
New York City time, on any day shall be deemed to have been made on the
preceding day. Any such extension will be followed as promptly as practicable by
notice thereof by press release or other public announcement (or by written
notice to the Noteholders of record as of the Record Date). Such announcement or
notice may state that the Company is extending the Consent Solicitation for a
specified period of time or on a daily basis.
The Company expressly reserves the right for any reason to abandon,
terminate or amend the Consent Solicitation at any time on or prior to the
Consent Date by giving oral or written notice of such action to the Trustee. If
the Company abandons or terminates the Consent Solicitation, or if the
conditions to the execution of the Supplemental Indentures are not satisfied or
waived, no Consent Fee will be paid to any Noteholder. Any such action by the
Company will be followed as promptly as practicable by notice thereof by press
release or other public announcement (or by written notice to the Noteholders as
of the Record Date). Although not required to do so, the Company may abandon or
terminate the Consent Solicitation if it does not receive the Requisite Consents
for all series of Notes.
CONSENT PROCEDURES
Only those persons who are Noteholders of record as of the Record Date
may execute and deliver a Consent Form. A beneficial owner of Notes who is not
the Noteholder of record as of the Record Date (i.e., a beneficial holder whose
Notes are registered in the name of a nominee such as a bank or a brokerage
firm) must arrange for the registered Noteholder either to (i) execute a Consent
Form and deliver it either to the Trustee on such beneficial owner's behalf or
to such beneficial owner for forwarding to the Trustee by such beneficial owner,
or (ii) forward a duly executed proxy from the registered Noteholder authorizing
the beneficial holder to execute and deliver a Consent Form with respect to the
Notes on behalf of such registered Noteholder.
Any beneficial owner of notes held of record on the Record Date by The
Depository Trust Company ("DTC") or its nominee, through authority granted by
DTC, may direct the participant in DTC (a "DTC Participant") through which such
beneficial owner's Notes are held in DTC on the Record Date to execute, on such
beneficial owner's behalf, or may obtain a proxy from such DTC Participant and
execute directly as if such beneficial owner were a registered Noteholder, a
Consent Form with respect to Notes beneficially owned by such beneficial owner
on the date of execution. Accordingly, such beneficial owners are urged to
contact the person responsible for their account to obtain a valid proxy or to
direct a Consent to be signed on their behalf with respect to their Notes. For
purposes of this Consent Solicitation Statement, the term "record holder" or
"registered Noteholder" shall be deemed to include DTC Participants.
Regardless of the outcome of this Consent Solicitation, or whether the
Proposed Amendments become effective, the Notes will continue to be outstanding
in accordance with all other terms of the applicable Indenture. The changes
sought to be affected by the Proposed Amendments will not alter the Company's
obligations to pay interest and principal with respect to the Notes or alter the
stated interest rate or redemption provisions of the Notes.
Delivering a Consent will not affect a Noteholder's right to sell or
transfer the Notes. All Consents received (and not revoked) on or prior to the
Consent Date will be effective notwithstanding a record transfer of such Notes
subsequent to the Record Date, unless, with respect to the 2005 Senior Notes,
the registered Noteholder as of the Record Date, and with respect to the 2007
Senior Notes or the Senior Subordinated Notes, the registered Noteholder as of
the date of revocation, revokes such Consent prior to the Consent Date by
following the procedures set forth under "--Revocation of Consents" below.
14
HOLDERS OF NOTES AS OF THE RECORD DATE WHO WISH TO CONSENT SHOULD HAND
DELIVER, SEND BY OVERNIGHT COURIER OR FACSIMILE (CONFIRMED BY PHYSICAL DELIVERY)
COMPLETED, DATED AND SIGNED CONSENTS TO THE TRUSTEE AT THE ADDRESS SET FORTH ON
THE BACK COVER PAGE HEREOF AND IN THE CONSENT FORM IN ACCORDANCE WITH THE
INSTRUCTIONS SET FORTH HEREIN AND THEREIN. CONSENT FORMS SHOULD BE DELIVERED TO
THE TRUSTEE, AND NOT TO THE COMPANY, THE SOLICITATION AGENT OR THE INFORMATION
AGENT. HOWEVER, THE COMPANY RESERVES THE RIGHT TO ACCEPT ANY CONSENT RECEIVED BY
THE COMPANY, THE SOLICITATION AGENT OR THE INFORMATION AGENT.
IN NO EVENT SHOULD A NOTEHOLDER TENDER OR DELIVER CERTIFICATES
EVIDENCING NOTES.
Any Consent Form that is properly completed, signed and delivered to
the Trustee, and not revoked, prior to the Consent Date, will be given effect in
accordance with the provisions hereof. Noteholders who desire to consent to the
Proposed Amendments should complete, sign and date the Consent Form included
herewith and deliver or send by overnight courier or facsimile (confirmed by
physical delivery) the signed Consent Form to the Trustee at the address listed
on the back cover page of this Consent Solicitation Statement and on the Consent
Form. IF THE CONSENT FORM IS PROPERLY COMPLETED AND SIGNED, THE NOTEHOLDER WILL
BE DEEMED TO HAVE CONSENTED TO THE PROPOSED AMENDMENTS. Delivery of Consent
Forms should be made promptly in order to assure that the Trustee receives the
Consent Form prior to 5:00 p.m., New York City time, on the Consent Date since
no Consent Fees will be paid in respect of the Consents received thereafter.
Consent Forms must be executed in exactly the same manner as the
registered Noteholder(s) name(s) appear on the Notes. If Notes to which a
Consent relates are held of record by two or more joint holders, all such
Noteholders must sign the Consent Form. If a Consent Form is signed by a
trustee, partner, executor, administrator, guardian, attorney-in-fact, officer
of a company or other person acting in a fiduciary or representative capacity
such person must so indicate when signing and must submit with the Consent
appropriate evidence of authority to execute the Consent Form. In addition, if a
Consent relates to less than the aggregate principal amount of Notes registered
in the name of such Noteholders, the Noteholder must list the serial numbers and
principal amount of Notes registered in the name of such Noteholder to which the
Consent relates. If Notes are registered in different names, separate Consent
Forms must be executed covering each form of registration. If a Consent Form is
executed by a person other than the registered Noteholder on the Record Date, it
must be accompanied by the proxy set forth on the Consent Form duly executed by
such registered Noteholder.
The record ownership of Notes as of the Record Date shall be proven by
The Huntington National Bank, as registrar of the Notes under the Indentures.
All questions as to the validity, form and eligibility (including time of
receipt) regarding the Consent procedures will be determined by the Company in
its sole discretion, which determination will be conclusive and binding on all
parties. The Company reserves the right to reject any or all Consents that are
not in proper form or the acceptance of which could in the opinion of the
Company or its counsel be unlawful. The Company also reserves the right to waive
any defects or irregularities in connection with deliveries of particular
Consent Forms. Unless waived, any defects or irregularities in connection with
deliveries of Consents must be cured within such time as the Company determines.
Neither the Company nor any of its affiliates, the Solicitation Agent, the
Trustee or any other person shall be under any duty to give any notification of
any such defects or irregularities or waiver, nor shall any of them incur any
liability for failure to give such notification. Deliveries of Consent Forms
will not be deemed to have been made until any irregularities or defects therein
have been cured or waived. The Company's interpretations of the terms and
conditions of the Consent Solicitation shall be conclusive and binding.
REVOCATION OF CONSENTS
Each properly completed and executed Consent Form will be counted,
notwithstanding any transfer of the Notes to which such Consent relates, unless
the procedure for revocation of Consents described below has been followed.
Prior to the Consent Date, any Noteholder may revoke any Consent given
as to its Notes or any portion of such Notes (in multiples of $1,000).
A 2005 Senior Noteholder desiring to revoke a Consent must provide a
notice that must (i) contain the name of the person who delivered the Consent
and the description of the Notes to which it relates, the serial number or
numbers of such Notes and the aggregate principal amount represented by such
Notes, (ii) be signed by the record Noteholder in the same manner as the
original signature on the Consent Form (including the required signature
guarantee(s)), (iii) if the Consent Form was executed by a person other than the
record Noteholder, be accompanied by a valid proxy, signed by such record
15
Noteholder and authorizing the revocation of such Consent, and (iv) be received
by the Trustee at one of its addresses set forth herein prior to the Consent
Date.
A 2007 Senior Noteholder or a Senior Subordinated Noteholder desiring
to revoke a Consent must provide a notice that must (i) contain the name of the
person who delivered the Consent and the description of the Notes to which it
relates, the serial number or numbers of such Notes and the aggregate principal
amount represented by such Notes, (ii) be signed by the registered Noteholder
(including the required signature guarantee(s)) or be accompanied by evidence
satisfactory to the Company that the Noteholder revoking the Consent has
succeeded to beneficial ownership of the Notes, (iii) if the Consent Form was
executed by a person other than the registered Noteholder, be accompanied by a
valid proxy, signed by such registered Noteholder and authorizing the revocation
of such Consent, and (iii) be received by the Trustee at one of its addresses
set forth herein prior to the Consent Date.
A purported notice of revocation that lacks any of the required
information or is dispatched to any other address will not be effective to
revoke a Consent previously given. No Noteholder may revoke a Consent after the
Consent Date.
ASSUMING IT RECEIVES THE REQUISITE CONSENTS FOR ALL SERIES OF NOTES,
THE COMPANY INTENDS TO EXECUTE SUPPLEMENTAL INDENTURES TO THE INDENTURES
GOVERNING THE NOTES PROVIDING FOR THE PROPOSED AMENDMENTS, WHICH WILL BE BINDING
UPON EACH NOTEHOLDER WHETHER OR NOT SUCH NOTEHOLDER GIVES A CONSENT WITH RESPECT
THERETO.
The Company reserves the right to contest the validity of any
revocation and all questions as to validity (including the time of receipt) of
any revocation will be determined by the Company in its sole discretion, which
determination will be conclusive and binding on all parties. Neither the Company
nor any of its affiliates, the Solicitation Agent, the Trustee or any other
person will be under any duty to give notification of any defects or
irregularities with respect to any revocation nor shall any of them incur any
liability for failure to give such notification.
CONDITIONS OF EXECUTION OF SUPPLEMENTAL INDENTURES AND PAYMENT OF CONSENT FEE
The execution of the each of the Supplemental Indentures is conditioned
on (i) the Requisite Consents being validly delivered (and not revoked) prior to
the Consent Date for all series of Notes, (ii) receipt by the Trustee of such
resolutions, certificates and opinions regarding the Consents and the
Supplemental Indentures as the Trustee may reasonably request pursuant to the
Indenture , and (iii) the absence of any law or regulation which would, and the
absence of any injunction or action or other proceeding (pending or threatened)
which (in the case of any action or proceeding, if adversely determined) would,
make unlawful or invalid or enjoin the implementation of the applicable Proposed
Amendments, the entering into of the applicable Supplemental Indentures or the
payment of any Consent Fee or question the legality or validity thereof.
The Proposed Amendments will be effected by the Supplemental
Indentures, which are to be executed by the Company, the Guarantors and the
Trustee on the Consent Date. The Supplemental Indentures will become effective
upon execution by the Company, the Guarantors and the Trustee.
In the event that (i) the Requisite Consents for all series of Notes
are validly delivered, (ii) the Supplemental Indentures affecting the Proposed
Amendments are executed by the Company, the Guarantors and the Trustee, (iii)
the Company receives the approval of the requisite lenders under its Credit
Agreement, and (iv) all conditions have been satisfied or waived, the Company
will, promptly after the Consent Date, pay the Consent Fee to each Noteholder of
that series of Notes as of the Record Date who has delivered (and not revoked) a
valid Consent on or prior to the Consent Date.
The Consent Solicitation may be abandoned or terminated by the Company
at any time on or prior to the Consent Date, for any reason, or for no reason,
in which case Consents with respect to the Notes will be voided and no Consent
Fee will be paid. Each of the conditions to the Consent Solicitation and the
payment of the Consent Fee set forth in this Consent Solicitation Statement are
for the sole benefit of the Company and may be waived by the Company at any
time.
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CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the material U.S. federal income tax
consequences of the Consent Solicitation. This summary is based upon current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
regulations of the Treasury Department, administrative rulings and
pronouncements of the Internal Revenue Service (the "IRS") and judicial
decisions currently in effect, all of which are subject to change, possibly with
retroactive effect. The discussion does not deal with all aspects of U.S.
federal income taxation that may be relevant to particular Noteholders in light
of their personal investment circumstances (for example, to persons holding the
Notes as part of a conversion transaction or as part of a hedge or hedging
transaction, or as a position in a straddle for tax purposes), nor does it
discuss U.S. federal income tax considerations applicable to certain types of
investors subject to special treatment under the U.S. federal tax laws (for
example, banks, insurance companies, tax-exempt organizations, financial
institutions or broker-dealers). In addition, the discussion does not consider
the effect of any foreign, state, local, gift, estate or other tax laws that may
be applicable to a particular investor. The discussion assumes that investors
hold the Notes as capital assets within the meaning of Section 1221 of the Code.
For purposes of this discussion, a "U.S. Holder" is any beneficial owner of a
Note that is (i) a citizen or resident (as defined in Section 7701(b)(1) of the
Code) of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized under the laws of the United States or any
State thereof (including the District of Columbia), (iii) an estate or trust
described in Section 7701(a)(30) of the Code, or (iv) a person whose worldwide
income or gain is otherwise subject to U.S. income taxation on a net income
basis, and a "Non-U.S. Holder" is any beneficial owner of a Note that is not a
U.S. Holder.
NOTEHOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING
FEDERAL, STATE AND FOREIGN TAX CONSEQUENCES TO THEM FOR THE RECEIPT OF THE
CONSENT FEE AND CONSENT SOLICITATION.
Consequences of the Consent Solicitation. Although the matter is not
entirely free from doubt, the Consent Fee should be treated for federal income
tax purposes as a fee paid to Noteholders who Consent to the Proposed Amendments
("Consenting Holders") in exchange for their Consent and the Company intends to
treat the Consent Fee in such manner. If such treatment is respected, a
Consenting Holder will recognize ordinary income equal to the amount of cash
received. The Company or a paying agent may be required to provide information
to Consenting Holders and to the IRS reporting the payment of the Consent Fee.
The Company believes that the Proposed Amendments and the payment of
the Consent Fee should not result in a taxable exchange of Notes for new notes
("New Notes") by any Noteholder (a "Deemed Exchange"), regardless of whether
such Noteholder is a Consenting Holder. If the IRS were to successfully assert
that the Proposed Amendments and the payment of the Consent Fee resulted in a
Deemed Exchange for a Noteholder, then the transaction would be a deemed
exchange of securities, and thus should be treated as a tax-free
recapitalization for U.S. federal income tax purposes. In such case, the
Noteholder would not recognize taxable gain or loss, except as provided below in
the discussion of the Consent Fee. If the Deemed Exchange were not a tax-free
recapitalization, however, a Noteholder would recognize taxable gain or loss on
the Deemed Exchange in an amount equal to the difference between the issue price
of the New Notes (generally their fair market value on the date of the Deemed
Exchange) (plus, as described below, possibly the amount of the Consent Fee) and
such Noteholder's adjusted tax basis in the Notes.
If in the alternative the IRS were to treat the Consent Fee as a
payment on the Notes, then, in the absence of a Deemed Exchange, the Consent Fee
would constitute a return of capital (not currently taxable) to the extent of
the Noteholder's tax basis in the Notes, and capital gain to the extent of any
excess of the Consent Fee over such Noteholder's tax basis in the Notes. If the
IRS were to treat the Consent Fee as a payment on the Notes and to treat the
transaction as a Deemed Exchange, then (i) in the case of a Deemed Exchange that
is a recapitalization, a Consenting Holder generally would recognize capital
gain in an amount equal to the Consent Fee, but not in excess of the differences
between such Noteholder's adjusted tax basis in the Notes and the issue price of
the New Notes, and (ii) in the case of a Deemed Exchange that is not a
recapitalization, the Consent Fee would be treated as an additional amount
realized with respect to the Deemed Exchange, which would increase the
Consenting Holder's taxable gain or decrease such Noteholder's taxable loss, as
the case may be, with respect to the Deemed Exchange.
Noteholders should note that no ruling has been nor will be requested
from the IRS regarding the tax consequences of the Proposed Amendments and the
payment of the Consent Fee, and no assurance can be given that the position
intended to be taken by the Company described above will be accepted by the IRS.
17
Backup Withholding. A Consenting Holder that is not a corporation may
be subject to backup withholding at the rate of 30%, with respect to the Consent
Fee received by such Noteholder in exchange for its Consent if such Noteholder
fails to comply with certain certification and identification requirements.
Accordingly, in order for a Consenting Holder to avoid backup withholding, such
Noteholder must (i) in the case of U.S. Holders that are not otherwise exempt
from backup withholding, either (i) complete the substitute Form W-9, certifying
(under penalties of perjury) that the taxpayer identification number provided is
correct (or that such Noteholder is awaiting assignment of a taxpayer
identification number) and providing certain other information or, in the
alternative, or (ii) provide an adequate basis for an exemption from backup
withholding, and (ii) in the case of Non-U.S. Holders that are individuals,
complete and provide an IRS Form W-8. Any amount withheld under the backup
withholding rules will be creditable against a Noteholder's U.S. federal income
tax liability. Information concerning backup withholding and a substitute Form
W-9 are included in the Consent Form.
TRUSTEE
The Huntington National Bank is the trustee, registrar, transfer agent
and paying agent under the Indentures. Assuming the Requisite Consents are
obtained on or prior to the Consent Date and the Supplemental Indentures are
executed, the Trustee, will, on behalf of the Company, pay the Consent Fee to
the Noteholders who have validly consented by the Consent Date.
SOLICITATION AGENT AND INFORMATION AGENT
The Company has retained Deutsche Bank Securities Inc. as Solicitation
Agent in connection with the Consent Solicitation (the "Solicitation Agent").
The Solicitation Agent will solicit Consents and will be paid a fee and will be
reimbursed for reasonable out-of-pocket expenses in addition to fees and
reimbursements generally paid to securities brokers and dealers for which it may
be eligible. The Company has agreed to indemnify the Solicitation Agent against
certain liabilities and expenses, including liabilities under the securities
laws in connection with the Consent Solicitation.
The Company has retained MacKenzie Partners, Inc. to act as Information
Agent (the "Information Agent"). Requests for assistance in completing and
delivering Consents or for additional copies of this Consent Solicitation
Statement or the Consent Form may be directed to the Information Agent at its
address and telephone numbers set forth on the back cover of this Consent
Solicitation Statement.
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18
APPENDIX A
This Appendix sets forth each of the new definitions to be added to the
Indentures, the complete text of those existing definitions to be modified in
the Indentures, and the complete text of those Sections in the Indentures to be
modified. Proposed additions to the original text are italicized. Proposed
deletions are indicated by a [strikethrough] of the deleted text. The
non-italicized type is the original text of each of the Indentures.
2005 Indenture
SECTION 1.1 DEFINITIONS.
* * * * *
"GERMAN PRELIMINARY PROCEEDING" MEANS THE PROCEEDINGS AND PROCESS
PURSUANT TO THE PETITION, FILED IN GERMANY REQUESTING THAT VENTURE
GERMANY GMBH, VENTURE VERWALTUNGS GMBH, VENTURE BETEILIGUNGS GMBH, AND
PEGUFORM GMBH & CO. KG BE PLACED IN PRELIMINARY INSOLVENCY PROCEEDINGS
BY CERTAIN MANAGING DIRECTORS OF CERTAIN COMPANIES AND THE RELATED
COURT ORDER THAT ATTORNEY AT LAW DR. JOBST WELLENSIEK IS APPOINTED AS
PRELIMINARY RECEIVER IN INSOLVENCY AND STATING THAT THE PRELIMINARY
RECEIVER IN INSOLVENCY IS COMMISSIONED TO EXAMINE IN HIS CAPACITY AS AN
EXPERT WHETHER THERE IS GOOD REASON TO OPEN INSOLVENCY PROCEEDINGS IN
GERMANY; PROVIDED THAT THE GERMAN PRELIMINARY PROCEEDING DOES NOT
INCLUDE THE CONVERSION OF THE GERMAN PRELIMINARY PROCEEDING INTO A
FORMAL INSOLVENCY PROCEEDING, BUT THE GERMAN PRELIMINARY PROCEEDING
WILL INCLUDE ANY EXTENSION OF DR. WELLENSIEK'S OR HIS SUCCESSOR'S
APPOINTMENT SO LONG AS HE IS NOT EMPOWERED TO LIQUIDATE AND SELL
ASSETS.
"GERMAN PRELIMINARY PROCEEDING FINANCING" MEANS THE CREDIT FINANCING
(WHICH MAY BE REVOLVING) OF THE GERMAN PRELIMINARY PROCEEDING
SUBSIDIARIES BY THIRD PARTIES IN THE GERMAN PRELIMINARY PROCEEDING AND
THE REFINANCING, RENEWAL OR REPLACEMENT OF THE GERMAN PRELIMINARY
PROCEEDING FINANCING WITH A CREDIT FACILITY (WHICH MAY REVOLVE IN WHOLE
OR IN PART) IN AN AMOUNT REQUIRED TO HAVE THE GERMAN PRELIMINARY
PROCEEDING DISMISSED AND NOT TO EXCEED 400,000,000 EUROS IN AGGREGATE
PRINCIPAL AMOUNT OUTSTANDING AT ANY TIME.
"GERMAN PRELIMINARY PROCEEDING SUBSIDIARIES" MEANS VENTURE GERMANY
GMBH, VENTURE VERWALTUNGS GMBH, PEGUFORM GMBH & CO. KG, VENTURE
BETEILIGUNGS GMBH AND ANY OTHER FOREIGN SUBSIDIARY THAT BECOMES SUBJECT
TO THE GERMAN PRELIMINARY PROCEEDING.
"PRELIMINARY PROCEEDING TERMINATION DATE" MEANS THE DATE ON WHICH THE
GERMAN PRELIMINARY PROCEEDING IS DISCHARGED THROUGH DISMISSAL,
WITHDRAWAL OF PETITIONS, A FINDING OF RESTORED SOLVENCY, OR THE
CONVERSION OF THE PROCEEDING TO A FORMAL INSOLVENCY PROCEEDING UNDER
WHICH ASSETS ARE TO BE LIQUIDATED AND SOLD.
* * * * *
"Permitted Indebtedness" means any of the following:
(a) the Issuers and the Guarantors may incur Indebtedness evidenced by
the Notes and represented by the Indenture up to the amounts specified
therein as of the date thereof;
(b) the Issuers and the Guarantors may incur Indebtedness pursuant to
the Credit Agreement;
A-1
(c) the Issuers or any Guarantor may guarantee any Indebtedness of any
other Issuer or any Guarantor that was permitted to be incurred under
the Debt Incurrence Ratio test of Section 4.10 or under any other
clause of this definition or Indebtedness existing on the Issue Date;
(d) the Issuers or any Subsidiary may incur Indebtedness under Interest
Swap and Hedging Obligations (provided (i) that such Interest Swap and
Hedging Obligations are designed to protect the Issuers and their
Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with the Indenture (and are used for bona fide
hedging, and not speculative, purposes), and (ii) the notional
principal amount of such Interest Swap and Hedging Obligations does not
exceed the principal amount of the Indebtedness to which such Interest
Swap and Hedging Obligations relate;
(e) the Issuers or any Subsidiary may incur Indebtedness represented by
letters of credit for the account of the Issuers or such Subsidiary, as
the case may be, in order to provide security for workers' compensation
claims and payment obligations in connection with self-insurance, that,
taken together do not in the aggregate exceed $5 million at any time
outstanding.
(f) the Issuers or any Subsidiary may incur Indebtedness arising from
agreements providing for indemnification, adjustment of purchase price
or similar obligations, in each case, incurred in connection with the
disposition of any business, assets or Subsidiary, other than
guarantees of Indebtedness incurred by any person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of
financing such acquisition; provided that the maximum aggregate
liability in respect of all such Indebtedness shall at no time exceed
the gross proceeds actually received by the Issuers and the Subsidiary
in connection with such dispositions;
(g) the Issuers and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or
Disqualified Capital Stock, as applicable, described in clause (a) of
this definition, incurred under the Debt Incurrence Ratio test of
Section 4.10 or which is outstanding on the Issue Date so long as such
Refinancing Indebtedness is secured only by the assets that secured the
Indebtedness so refinanced or assets acquired after the Issue Date or
the Notes are equally and ratably secured;
(h) the Issuers and the Guarantors may incur Indebtedness in an
aggregate amount outstanding at any time (including any Indebtedness
issued to refinance, replace, or refund such Indebtedness) of up to $5
million, minus the amount of any such Indebtedness retired with Net
Cash Proceeds from any Asset Sale or assumed by a transferee in an
Asset Sale;
(i) the Issuers and the Subsidiaries may incur Indebtedness solely in
respect of bankers acceptances and performance bonds (to the extent
that such incurrence does not result in the incurrence of any
obligation to repay any obligation relating to borrowed money of
others), all in the ordinary course of business in accordance with
customary industry practices, in amounts and for the purposes customary
in the Issuers' industry; provided that the aggregate principal amount
outstanding of such Indebtedness (including any Indebtedness issued to
refinance, refund or replace such Indebtedness) shall at no time exceed
$1 million;
(j) the Issuers may incur Indebtedness to each other or to any wholly
owned Subsidiary, and any wholly owned Subsidiary may incur
Indebtedness to any other wholly owned Subsidiary or to any Issuer;
provided that, in the case of Indebtedness of an Issuer, such
obligations shall be unsecured and subordinated in all respects to such
Issuer's obligations pursuant to the Notes and the date of any event
that causes a Subsidiary to no longer be a wholly owned Subsidiary
shall be an Incurrence Date,
(K) THE GERMAN PRELIMINARY PROCEEDING SUBSIDIARIES AND THEIR
SUBSIDIARIES MAY INCUR INDEBTEDNESS IN RESPECT OF THE GERMAN
PRELIMINARY PROCEEDING FINANCING,
A-2
(L) THE ISSUERS OR ANY SUBSIDIARY MAY INCUR (I) INDEBTEDNESS OF A
PERSON ACQUIRED IN AN ACQUISITION IF SUCH PERSON WAS ENGAGED IN A
RELATED BUSINESS AND WAS AN AFFILIATE AS OF DECEMBER 31, 2001 AND
REMAINED AN AFFILIATE AS OF THE DATE OF THE ACQUISITION OF SUCH PERSON,
SO LONG AS SUCH PERSON HAS A POSITIVE NET WORTH AT THE TIME OF SUCH
ACQUISITION OR (II) ACQUIRED INDEBTEDNESS RELATED TO ASSETS ACQUIRED BY
SUCH ISSUER OR SUBSIDIARY FROM AN AFFILIATE, SO LONG AS THE ACQUIRED
ASSETS ARE USED IN A RELATED BUSINESS AND THE FAIR MARKET VALUE OF SUCH
ASSETS IS GREATER THAN THE RELATED ACQUIRED INDEBTEDNESS, AND
(M) THE ISSUERS AND THE GUARANTORS MAY INCUR ADDITIONAL INDEBTEDNESS
PURSUANT TO THE CREDIT AGREEMENT (NOTWITHSTANDING ANY LIMITATIONS
DESCRIBED IN THE DEFINITION OF CREDIT AGREEMENT) IN AN AMOUNT NOT TO
EXCEED $50,000,000 IN AGGREGATE PRINCIPAL AMOUNT.
"Permitted Lien" means (a) Liens incurred in connection with the Credit
Agreement; (b) Liens existing on the Issue Date; (c) Liens imposed by
governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and
by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of the company in accordance with GAAP; (d)
statutory liens of carriers, warehousemen, mechanics, materialmen,
landlords, repairmen or other like Liens arising by operation of law in
the ordinary course of business provided that (i) the underlying
obligations are not overdue for a period of more than 60 days, or (ii)
such Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained
on the books of the Trust in accordance with GAAP; (e) Liens securing
the performance of bids, trade contracts (other than borrowed money),
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business; (f) easements, rights-of-way, zoning, similar
restrictions and other similar encumbrances or title defects which,
singly or in the aggregate, do not in any case materially detract from
the value of the property subject thereto (as such property is used by
the Trust or any of its Subsidiaries) or interfere with the ordinary
conduct of the business of the Trust or any of its Subsidiaries; (g)
Liens arising by operation of law in connection with judgments, only to
the extent, for an amount and for a period not resulting in an Event of
Default with respect thereto; (h) pledges or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security legislation;
(i) Liens securing the Notes; (j) Liens securing Indebtedness of a
person existing at the time such person becomes a Subsidiary or is
merged with or into the Trust or a Subsidiary AND LIENS ON ASSETS
ACQUIRED PURSUANT TO SUBSECTION (L) OF THE DEFINITION OF PERMITTED
INDEBTEDNESS, provided that such Liens were in existence prior to the
date of such acquisition, merger or consolidation, were not incurred in
anticipation thereof, and do not extend to any other assets; (k) leases
or subleases granted to other persons in the ordinary course of
business not materially interfering with the conduct of the business of
the Trust or any of its Subsidiaries or materially detracting from the
value of the relative assets of the Trust or any Subsidiary; (l) Liens
arising from precautionary Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Trust or any of
its Subsidiaries in the ordinary course of business; (m) Liens to
secure payment of a portion of the purchase price of any tangible fixed
asset acquired by any Issuer or any Guarantor if the outstanding
principal amount of the Indebtedness is secured by any such Lien does
not at any time exceed the purchase price paid for such fixed asset,
provided that such Lien does not encumber any other asset at any time
owned by any Issuer or any Guarantor, and provided, further, that not
more than one such Lien shall encumber such fixed asset at any one
time; [and] (n) Liens securing Refinancing Indebtedness incurred to
refinance any Indebtedness that was previously so secured in a manner
no more adverse to the Holders of the Notes than the terms of the Liens
securing such refinanced Indebtedness, provided that the Indebtedness
secured is not increased and the lien is not extended to any additional
assets or property unless the Notes are equally and ratably secured by
such additional assets or the additional assets were acquired after the
Issue Date, AND (O) LIENS ON ASSETS OF THE GERMAN PRELIMINARY
PROCEEDING SUBSIDIARIES AND THEIR SUBSIDIARIES SECURING THE GERMAN
PRELIMINARY PROCEEDING FINANCING AND/OR SECURING OBLIGATIONS TO CREDIT
INSURERS TO THE EXTENT REQUIRED TO REINSTATE THE CREDIT INSURANCE FOR
THE PAYABLES OF THE GERMAN PRELIMINARY PROCEEDING SUBSIDIARIES AND
THEIR SUBSIDIARIES.
A-3
SECTION 4.7 REPORTS.
Whether or not the Trust is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Trust shall deliver to the
Trustee and to each Holder within 15 days after it is or would have
been (if it were subject to such reporting obligations) required to
file such with the Commission, annual and quarterly financial
statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if the Trust
were subject to the requirements of Section 13 or 15(d) of the Exchange
Act, including, with respect to annual information only, a report
thereon by the Trust's certified independent public accountants as such
would be required in such reports to the Commission, and, in each case,
a management's discussion and analysis of financial condition and
results of operations which would be so required PROVIDED, THAT ANY
SUCH REPORTS FOR THE FISCAL QUARTER ENDED JUNE 30, 2002 MUST BE FILED
NOT LATER THAN OCTOBER 15, 2002. In addition, the Issuers have agreed
that, for so long as any Notes remain outstanding, from and after the
time the Trust files a registration statement with the Commission with
respect to the Notes, they will file such reports with the Commission,
provided that the Commission will accept such filing. Delivery of such
reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or
determinable from information contained therein, including the Issuers'
compliance with any of their covenants hereunder (as to which the
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 4.11 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Issuers and the Guarantors will not, and will not permit any of
their Subsidiaries to, directly or indirectly, create, assume or suffer
to exist any consensual restriction on the ability of any Subsidiary of
the Trust to pay dividends or make other distributions to or on behalf
of, or to pay any obligation to or on behalf of, or otherwise to
transfer assets or property to or on behalf of, or make or pay loans or
advances to or on behalf of, the Trust or any Subsidiary of the Trust,
except (a) restrictions imposed by the Notes or the Indenture, (b)
restrictions imposed by applicable law, (c) existing restrictions under
Indebtedness outstanding on the Issue Date specified on Schedule I to
the Indenture, (d) restrictions under any Acquired Indebtedness not
incurred in violation of the Indenture or any agreement relating to any
property, asset, or business acquired by the Trust or any of its
Subsidiaries, which restrictions in each case existed at the time of
Acquisition, were not put in place in connection with or in
anticipation of such Acquisition and are not applicable to any person,
other than the person acquired, or to any property, asset or business,
other than the property, assets and business so acquired, (e) any such
restriction or requirement imposed by Indebtedness incurred under
paragraph (b) of the definition of "Permitted Indebtedness" provided
such restriction or requirement is not materially less favorable than
that imposed by the Credit Agreement as of the Issue Date, (f)
restrictions with respect solely to a Subsidiary of the Trust imposed
pursuant to a binding agreement which has been entered into for the
sale or disposition of all or substantially all of the Equity Interests
or assets of such Subsidiary, provided such restrictions apply solely
to the Equity Interests or assets of such Subsidiary which are being
sold, [and] (g) in connection with and pursuant to permitted
Refinancing Indebtedness, replacements of restrictions imposed pursuant
to clauses (a), (c) or (d) of this paragraph that are not materially
less favorable than those being replaced and do not apply to any other
person or assets than those that would have been covered by the
restrictions in the Indebtedness so refinanced, AND (H) IN CONNECTION
WITH THE GERMAN PRELIMINARY PROCEEDING FINANCING, CONSENSUAL
RESTRICTIONS REPLACING RESTRICTIONS IMPOSED DURING THE GERMAN
PRELIMINARY PROCEEDING THAT ARE NOT MATERIALLY LESS FAVORABLE THAN
THOSE BEING REPLACED. Notwithstanding the foregoing, neither (a)
customary provisions restricting subletting or assignment of any lease
entered into in the ordinary course of business, consistent with
industry practice, nor (b) Liens permitted under the terms of the
Indenture on assets securing the Indebtedness under the Credit
Agreement incurred in accordance with Section 4.10 shall in and of
themselves be considered a restriction on the ability of the applicable
Subsidiary to transfer such agreement or assets, as the case may be.
A-4
SECTION 6.1 EVENTS OF DEFAULT.
"Event of Default," wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and
whether it shall be caused voluntarily or involuntarily or effected,
without limitation, by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) the failure by the Issuers to pay any installment of
interest or Liquidated Damages, if any, on the Notes as and when the
same becomes due and payable and the continuance of any such failure
for 30 days,
(2) the failure by the Issuers to pay all or any part of the
principal, or premium, if any, on the Notes when and as the same
becomes due and payable at maturity, redemption, by acceleration or
otherwise, including, without limitation, payment of the Change of
Control Purchase Price or the Asset Sale Offer Price, or otherwise,
(3) the failure by any Issuer, Guarantor or Subsidiary to
observe or perform any other covenant or agreement contained in the
Notes or the Indenture or by Larry J. Winget to observe and perform any
covenant or agreement contained in the Corporate Opportunity Agreement
and the continuance of such failure for a period of 30 days after
written notice is given to the Trust by the Trustee or to the Trust and
the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes outstanding,
(4) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating any or all of the
Issuers or any of their Material Subsidiaries as bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization of any
of the Issuers or any of their Material Subsidiaries under any
bankruptcy or similar law, and such decree or order shall have
continued undischarged and unstayed for (I) a period of 60 consecutive
days, OR (II) IN THE CASE OF THE GERMAN PRELIMINARY PROCEEDING, FOR THE
PERIOD ENDING ON THE PRELIMINARY PROCEEDING TERMINATION DATE; or a
decree or order of a court of competent jurisdiction, judgment
appointing a receiver, liquidator, trustee, or assignee in bankruptcy
or insolvency for any of the Issuers, any of their Material
Subsidiaries, or any substantial part of the property of any such
person, or for the winding up or liquidation of the affairs of any such
person, shall have been entered, and such decree, judgment, or order
shall have remained in force undischarged and unstayed for (I) a period
of 60 days, OR (II) IN THE CASE OF THE GERMAN PRELIMINARY PROCEEDING,
FOR THE PERIOD ENDING ON THE GERMAN PRELIMINARY PROCEEDING TERMINATION
DATE;
(5) any of the Issuers or any of their Material Subsidiaries
shall institute proceedings to be adjudicated a voluntary bankrupt, or
shall consent to the filing of a bankruptcy proceeding against it, or
shall file a petition or answer or consent seeking reorganization under
any bankruptcy or similar law or similar statute, or shall consent to
the filing of any such petition, or shall consent to the appointment of
a Custodian, receiver, liquidator, trustee, or assignee in bankruptcy
or insolvency of it or any substantial part of its assets or property,
or shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts as they become
due;
(6) a default in Indebtedness of any Issuer, Guarantor or any
of their Subsidiaries with an aggregate principal amount in excess of
$5 million which is either a default in payment of principal or as a
result of which the maturity of such Indebtedness has been accelerated
prior to its stated maturity,
(7) final unsatisfied judgments not covered by insurance
aggregating in excess of $5 million, at any one time rendered against
any Issuer, Guarantor or any of their Subsidiaries and not stayed,
bonded or discharged within 60 days, and
A-5
(8) any Guarantee shall for any reason cease to be, or be
asserted in writing by any Material Subsidiary or any Issuer not to be,
in full force and effect, enforceable in accordance with its terms,
except to the extent contemplated by the Indenture.
2007 Indenture and 2009 Indenture
SECTION 1.01. DEFINITIONS.
* * * * *
"GERMAN PRELIMINARY PROCEEDING" MEANS THE PROCEEDINGS AND PROCESS
PURSUANT TO THE PETITIONS FILED IN GERMANY REQUESTING THAT VENTURE
GERMANY GMBH, VENTURE VERWALTUNGS GMBH, VENTURE BETEILIGUNGS GMBH, AND
PEGUFORM GMBH & CO. KG BE PLACED IN PRELIMINARY INSOLVENCY PROCEEDINGS
BY CERTAIN MANAGING DIRECTORS OF CERTAIN COMPANIES AND THE RELATED
COURT ORDER THAT ATTORNEY AT LAW DR. JOBST WELLENSIEK IS APPOINTED AS
PRELIMINARY RECEIVER IN INSOLVENCY AND STATING THAT THE PRELIMINARY
RECEIVER IN INSOLVENCY IS COMMISSIONED TO EXAMINE IN HIS CAPACITY AS AN
EXPERT WHETHER THERE IS GOOD REASON TO OPEN INSOLVENCY PROCEEDINGS IN
GERMANY; PROVIDED THAT THE GERMAN PRELIMINARY PROCEEDING DOES NOT
INCLUDE THE CONVERSION OF THE GERMAN PRELIMINARY PROCEEDING INTO A
FORMAL INSOLVENCY PROCEEDING, BUT THE GERMAN PRELIMINARY PROCEEDING
WILL INCLUDE ANY EXTENSION OF DR. WELLENSIEK'S OR HIS SUCCESSOR'S
APPOINTMENT SO LONG AS HE IS NOT EMPOWERED TO LIQUIDATE AND SELL
ASSETS.
"GERMAN PRELIMINARY PROCEEDING FINANCING" MEANS THE CREDIT FINANCING
(WHICH MAY BE REVOLVING) OF THE GERMAN PRELIMINARY PROCEEDING
SUBSIDIARIES BY THIRD PARTIES IN THE GERMAN PRELIMINARY PROCEEDING AND
THE REFINANCING, RENEWAL OR REPLACEMENT OF THE GERMAN PRELIMINARY
PROCEEDING FINANCING WITH A CREDIT FACILITY (WHICH MAY REVOLVE IN WHOLE
OR IN PART) IN AN AMOUNT REQUIRED TO HAVE THE GERMAN PRELIMINARY
PROCEEDING DISMISSED AND NOT TO EXCEED 400,000,000 EUROS IN AGGREGATE
PRINCIPAL AMOUNT OUTSTANDING AT ANY TIME.
"GERMAN PRELIMINARY PROCEEDING SUBSIDIARIES" MEANS VENTURE GERMANY
GMBH, VENTURE VERWALTUNGS GMBH, PEGUFORM GMBH & CO. KG, VENTURE
BETEILIGUNGS GMBH AND ANY OTHER FOREIGN SUBSIDIARY THAT BECOMES SUBJECT
TO THE GERMAN PRELIMINARY PROCEEDING.
"PRELIMINARY PROCEEDING TERMINATION DATE" MEANS THE DATE ON WHICH THE
GERMAN PRELIMINARY PROCEEDING IS DISCHARGED THROUGH DISMISSAL,
WITHDRAWAL OF PETITIONS, A FINDING OF RESTORED SOLVENCY, OR THE
CONVERSION OF THE PROCEEDING TO A FORMAL INSOLVENCY PROCEEDING UNDER
WHICH ASSETS ARE TO BE LIQUIDATED AND SOLD.
"Permitted Liens" means:
(1) Liens of the Trust and any Guarantor securing Indebtedness and
other Obligations under Credit Facilities that are not expressly
subordinated by their terms to any other Indebtedness of the Trust or
such Guarantor that was permitted by the terms of this Indenture to be
incurred;
(2) Liens in favor of the Trust or the Guarantors;
(3) Liens on property of a Person existing at the time OF ACQUISITION
of such Person [is merged with or into or consolidated with] BY the
Trust or any Restricted Subsidiary of the Trust; provided that such
Liens were not incurred in contemplation of such merger or
consolidation and do not extend to any assets other than those of the
Person merged into or consolidated with the Trust or the Restricted
Subsidiary;
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(4) Liens on property existing at the time of acquisition thereof by
the Trust or any Restricted Subsidiary of the Trust, provided that such
Liens were not incurred in contemplation of such acquisition;
(5) Liens to secure the performance of bids, trade contracts (other
than advanced money), leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (5) of the second paragraph of Section 4.09 hereof
covering only the assets acquired with such Indebtedness;
(7) Liens existing on the Issue Date;
(8) Liens for taxes, assessments or governmental charges or claims that
are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(9) statutory liens of carriers, warehousemen, mechanics, materialmen,
landlords, repairmen or other like Liens arising by operation of law in
the ordinary course of business, provided that (i) the underlying
obligations are not overdue for a period of more than 60 days, or (ii)
such Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained
on the books of the Trust in accordance with GAAP;
(10) easements, rights-of-way, zoning, similar restrictions and other
similar encumbrances or title defects which, singly or in the
aggregate, do not in any case materially detract from the value of the
property subject thereto (as such property is used by the Trust or any
of its Restricted Subsidiaries) or interfere with the ordinary conduct
of the business of the Trust or any of its Restricted Subsidiaries;
(11) Liens arising by operation of law in connection with court orders
and judgments, only to the extent, for an amount and for a period not
resulting in an Event of Default with respect thereto;
(12) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
types of social security legislation;
(13) Liens securing the Notes;
(14) leases or subleases granted to other Persons in the ordinary
course of business not materially interfering with the conduct of the
business of the Trust or any of its Restricted Subsidiaries or
materially detracting from the value of the relative assets of the
Trust or any Restricted Subsidiary;
(15) Liens arising from precautionary Uniform Commercial Code financing
statement filings regarding operating leases entered into by the Trust
or any of its Subsidiaries in the ordinary course of business;
(16) Liens securing Refinancing Indebtedness incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse
to the Holders of the Notes than the terms of the Liens securing such
refinanced Indebtedness, provided that the Indebtedness secured is not
increased and the lien is not extended to any additional assets or
property unless the Notes are equally and ratably secured by such
additional assets or the additional assets were acquired after the
Issue Date;
(17) additional Liens incurred in the ordinary course of business of
the Trust or any Subsidiary of the Trust with respect to obligations
that do not exceed $5.0 million at any one time outstanding;
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(18) Liens on assets of a Restricted Subsidiary that is not a Guarantor
securing Indebtedness of such Restricted Subsidiary that was permitted
to be incurred under clause (14) of the second paragraph of Section
4.09 hereof; [and]
(19) Liens on assets of a Receivables Subsidiary incurred in connection
with a Qualified Receivables Transaction, AND
(20) LIENS ON ASSETS OF THE GERMAN PRELIMINARY PROCEEDING SUBSIDIARIES
AND THEIR SUBSIDIARIES SECURING THE GERMAN PRELIMINARY PROCEEDING
FINANCING AND/OR SECURING OBLIGATIONS TO CREDIT INSURERS TO THE EXTENT
REQUIRED TO REINSTATE THE CREDIT INSURANCE FOR THE PAYABLES OF THE
GERMAN PRELIMINARY PROCEEDING SUBSIDIARIES AND THEIR SUBSIDIARIES.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC, so
long as any Notes are outstanding, the Trust shall furnish to the
Holders of Notes, within fifteen days after the time periods specified
in the SEC's rule and regulations:
(1) all quarterly and annual financial information that would
be required to be contained in a filing with the SEC on Forms 10-Q and
10-K if the Trust were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information
only, a report thereon by the Trust's certified independent
accountants, PROVIDED, THAT ANY SUCH REPORTS FOR THE FISCAL QUARTER
ENDED JUNE 30, 2002 MUST BE FURNISHED NOT LATER THAN OCTOBER 15, 2002;
and
(2) all current reports that would be required to be filed
with the SEC on Form 8-K if the Trust were required to file such
reports. In addition, following consummation of the Exchange Offer,
whether or not required by the rules and regulations of the SEC, the
Trust shall file a copy of all such information and reports with the
SEC for public availability within the time periods specified in the
SEC's rules and regulations (unless the SEC shall not accept such a
filing) and make such information available to securities analysts and
prospective investors upon request. The Trust shall at all times comply
with TIA Section 314(a).
(b) For so long as any Notes remain outstanding, the Trust and the
Guarantors shall 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.
If the Trust has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information
required by the preceding paragraph shall include a reasonably detailed
presentation, either on the face of the financial statements or in the
footnotes thereto, and in Management's Discussion and Analysis of
Financial Condition and Results of Operations, of the financial
condition and results of operations of the Trust and its Restricted
Subsidiaries separate from the financial condition and results of
operations of the Unrestricted Subsidiaries of the Trust.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Trust shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or permit to exist or
become effective any consensual encumbrance or restriction on the
ability of any Restricted Subsidiary to:
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(1) pay dividends or make any other distributions on its
Capital Stock to the Trust or any of its Restricted Subsidiaries, or
with respect to any other interest or participation in, or measured by,
its profits, or pay any Indebtedness owed to the Trust or any of its
Restricted Subsidiaries;
(2) make loans or advances to the Trust or any of its
Restricted Subsidiaries; or
(3) transfer any of its properties or assets to the Trust or
any of its Restricted Subsidiaries.
However, the preceding restrictions shall not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the Issue Date and
any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings are no more
restrictive, taken as a whole, with respect to such dividend and other
payment restrictions than those contained in such Existing
Indebtedness, as in effect on the Issue Date;
(2) Credit Facilities, provided that such Credit Facilities
are no more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in the
Credit Agreement as in effect on the Issue Date;
(3) this Indenture, the Notes and the Subsidiary Guarantees;
(4) applicable law;
(5) any instrument governing Indebtedness or Capital Stock of
a Person acquired by the Trust or any of its Restricted Subsidiaries as
in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of
such acquisition), which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred;
(6) customary non-assignment provisions in leases entered into
in the ordinary course of business and consistent with past practices;
(7) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions on the property so
acquired of the nature described in clause (3) of the preceding
paragraph;
(8) any agreement for the sale or other disposition of a
Restricted Subsidiary that restricts distributions by that Restricted
Subsidiary pending its sale or other disposition;
(9) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive, taken as a whole,
than those contained in the agreements governing the Indebtedness being
refinanced;
(10) Liens securing Indebtedness that limit the right of the
debtor to dispose of the assets subject to such Lien;
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(11) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements, assets
sale agreements, stock sale agreements and other similar agreements
entered into in the ordinary course of business;
(12) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary
course of business; [and]
(13) Indebtedness or other contractual requirements of a
Receivables Subsidiary in connection with a Qualified Receivables
Transaction, provided that such restrictions apply only to such
Receivables Subsidiary; [and]
(14) Indebtedness incurred by a Restricted Subsidiary that is
not a Guarantor in compliance with Section 4.10 hereof; AND
(15), THE GERMAN PRELIMINARY PROCEEDING FINANCING, SO LONG AS
ANY CONSENSUAL RESTRICTIONS THEREUNDER ARE NOT MATERIALLY LESS
FAVORABLE THAN THE RESTRICTIONS IMPOSED DURING THE GERMAN PRELIMINARY
PROCEEDING.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
The Trust shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt), and the Trust shall not issue
any Disqualified Stock and shall not permit any of its Restricted
Subsidiaries to issue any shares of Preferred Stock; provided, however,
that the Trust may incur Indebtedness (including Acquired Debt) and
issue Disqualified Stock, and the Trust and the Guarantors may incur
Indebtedness and issue Preferred Stock and any other Restricted
Subsidiary may incur Acquired Debt, if the Fixed Charge Coverage Ratio
for the Trust's most recently ended four full fiscal quarters for which
financial statements are publicly available immediately preceding the
date on which such additional Indebtedness is incurred or such
Disqualified Stock or Preferred Stock is issued would have been at
least 2.0 to 1, determined on a Pro Forma Basis (including a pro forma
application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred or the Preferred Stock or Disqualified
Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The first paragraph of this covenant shall not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted
Debt"):
(1) the incurrence by the Trust and/or one or more Restricted
Subsidiaries of additional Indebtedness and letters of credit under
Credit Facilities in an aggregate principal amount at any one time
outstanding under this clause (1) (with letters of credit being deemed
to have a principal amount equal to the maximum potential liability of
the Trust and the Restricted Subsidiaries, without duplication,
thereunder) not to exceed $625.0 million less (x) the aggregate
principal amount of Receivables Debt outstanding under clause (2) below
and (y) the aggregate amount of all Net Proceeds of Asset Sales applied
by the Trust or any of its Restricted Subsidiaries to repay any
Indebtedness under a Credit Facility or Receivables Debt under
Receivables Facilities and effect a corresponding commitment reduction
thereunder pursuant to Section 4.11 hereof; provided, that Restricted
Subsidiaries that are not Guarantors shall not directly or indirectly
incur Indebtedness and letters of credit in an aggregate principal
amount outstanding under this clause (1) in excess of $50.0 million;
provided, further, that the aggregate principal amount of Indebtedness,
letters of credit and Receivables Debt under Receivables Facilities
which may be incurred under this clause (1) and clause (2) below shall
not be reduced below $100.0 million in the aggregate at any one time
outstanding by reason of subclause (y) above and subclause (y) of
clause (2) below;
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(2) the incurrence by Receivables Subsidiaries of Receivables
Debt under Receivables Facilities in an aggregate principal amount at
any time outstanding pursuant to this clause (2) not to exceed $625
million less (x) the aggregate principal amount of Indebtedness and
letters of credit (determined as described in clause (1) above)
outstanding under clause (1) above and (y) the aggregate amount of all
Net Proceeds of Asset Sales applied to reduce commitments with respect
to Receivables Debt or Indebtedness under a Credit Facility pursuant to
the covenant described in Section 4.11 hereof; provided, that the
aggregate principal amount of Indebtedness, letters of credit and
Receivable Debt under Receivables Facilities which may be incurred
pursuant to this clause (2) and clause (1) above shall not be reduced
below $100.0 million in the aggregate at any one time outstanding by
reason of subclause (y) above and subclause (y) of clause (1) above;
(3) the incurrence by the Trust and its Restricted
Subsidiaries of the Existing Indebtedness;
(4) the incurrence by the Trust and the Guarantors of
Indebtedness represented by the Notes to be issued on the Issue Date
and the related Subsidiary Guarantees and the New Notes (as defined in
the Registration Rights Agreement) to be issued pursuant to the
Registration Rights Agreement and the related Subsidiary Guarantees;
(5) the incurrence by the Trust or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case,
incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property, plant or
equipment used in the business of the Trust or such Subsidiary, in an
aggregate principal amount, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (5), not to exceed $50.0 million at
any time outstanding;
(6) (a) the incurrence by the Trust or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace
Indebtedness (other than intercompany Indebtedness) that was permitted
by this Indenture to be incurred under the first paragraph of this
covenant or clauses (3), (4), (5), (6), or (14) of this paragraph and
(b) the incurrence by the Trust or any of its Restricted Subsidiaries
of Permitted Preferred Stock in exchange for, or the net proceeds of
which are used to refund, refinance or replace Preferred Stock (other
than intercompany Preferred Stock) that was permitted by this Indenture
to be incurred under the first paragraph of this covenant;
(7) the incurrence by the Trust or any of its Restricted
Subsidiaries of intercompany Indebtedness or Preferred Stock between or
among the Trust and any of its Restricted Subsidiaries; provided,
however, that:
(a) if the Trust or any Guarantor is the obligor on
such Indebtedness, such Indebtedness must be expressly subordinated to
the prior payment in full in cash of all Obligations with respect to
the Notes, in the case of the Trust, or the Subsidiary Guarantee, in
the case of a Guarantor; and
(b) (i) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness or Preferred Stock
being held by a Person other than the Trust or a Restricted Subsidiary
thereof and (ii) any sale or other transfer of any such Indebtedness or
Preferred Stock to a Person that is not either the Trust or a
Restricted Subsidiary thereof; shall be deemed, in each case, to
constitute an incurrence of such Indebtedness or Preferred Stock by the
Trust or such Restricted Subsidiary, as the case may be, that was not
permitted by this clause (7);
(8) the incurrence by the Trust or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred solely for the
purpose of (a) fixing or hedging interest rate risk with respect to any
Indebtedness that is permitted by the terms of this Indenture to be
outstanding or (b) hedging currency or
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commodity risks of the Trust and its Restricted Subsidiaries incurred
by the Trust or such Restricted Subsidiaries in the ordinary course of
their business;
(9) the guarantee by the Trust or any of the Guarantors of
Indebtedness of the Trust or a Guarantor that was permitted to be
incurred by another provision of this covenant;
(10) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in
the form of additional Indebtedness with the same terms, and the
payment of dividends on Disqualified Stock in the form of additional
shares of the same class of Disqualified Stock shall not be deemed to
be an incurrence of Indebtedness or an issuance of Disqualified Stock
for purposes of this covenant; provided, in each such case, that the
amount thereof is included in Fixed Charges of the Trust as accrued;
(11) Indebtedness of the Trust or any Restricted Subsidiary
represented by performance bonds and letters of credit for the account
of the Trust or such Restricted Subsidiary, as the case may be, in
order to provide security for workers' compensation claims and payment
obligations in connection with self-insurance, in each case, that are
incurred in the ordinary course of business in accordance with
customary industry practice in amounts, and for the purposes, customary
in the Trust's industry;
(12) Indebtedness of the Trust or any Restricted Subsidiary
arising from agreements providing for indemnification, adjustment of
purchase price or similar obligations, in each case, incurred in
connection with the disposition of any business, assets or Subsidiary,
other than guarantees of Indebtedness incurred by any Person acquiring
all or any portion of such business, assets or Restricted Subsidiary
for the purpose of financing such acquisition; provided that the
maximum aggregate liability in respect of all such Indebtedness shall
at no time exceed the gross proceeds actually received or to be
received by the Trust and the Restricted Subsidiary in connection with
such dispositions;
(13) Indebtedness of the Trust or any Restricted Subsidiary
solely in respect of bankers acceptances, and appeal bonds (to the
extent that any such incurrence does not result in the incurrence of
any obligation to repay any obligation relating to borrowed money of
others), all in the ordinary course of business in accordance with
customary industry practices, in amounts and for the purposes customary
in the Trust's industry; provided that the aggregate principal amount
outstanding of such Indebtedness (including any Indebtedness issued to
refinance, refund or replace such Indebtedness) shall at no time exceed
$5.0 million;
(14) the incurrence by any Restricted Subsidiary that is not a
Guarantor of Indebtedness in accordance with Section 4.10 hereof;
(15) the guarantee by any Restricted Subsidiary that is not a
Guarantor of Indebtedness of a Restricted Subsidiary that is not a
Guarantor that was permitted to be incurred under this Indenture; [and]
(16) the incurrence by the Trust or any of the Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (16), not to exceed $35.0
million,
(17) THE INCURRENCE BY THE TRUST OR ANY OF ITS RESTRICTED
SUBSIDIARIES OF (I) INDEBTEDNESS OF A PERSON ACQUIRED IN AN ACQUISITION
IF SUCH PERSON WAS ENGAGED IN A PERMITTED BUSINESS AND WAS AN AFFILIATE
OF THE TRUST AS OF DECEMBER 31, 2001 AND REMAINED AN AFFILIATE OF THE
TRUST AS OF THE DATE OF THE ACQUISITION OF SUCH PERSON, SO LONG AS SUCH
PERSON HAS A POSITIVE NET WORTH AT THE TIME OF SUCH ACQUISITION OR (II)
ACQUIRED DEBT RELATED TO ASSETS ACQUIRED BY THE TRUST OR ANY OF ITS
RESTRICTED SUBSIDIARIES FROM AN AFFILIATE
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OF THE TRUST, SO LONG AS THE ACQUIRED ASSETS ARE USED IN A PERMITTED
BUSINESS AND THE FAIR MARKET VALUE OF SUCH ASSETS IS GREATER THAN THE
RELATED ACQUIRED DEBT; AND
(18) THE INCURRENCE BY THE TRUST OR ANY RESTRICTED SUBSIDIARY
OF ADDITIONAL INDEBTEDNESS PURSUANT TO THE CREDIT AGREEMENT
(NOTWITHSTANDING ANY LIMITATIONS DESCRIBED IN THE DEFINITION OF CREDIT
AGREEMENT) IN AN AMOUNT NOT TO EXCEED $50,000,000 IN AGGREGATE
PRINCIPAL AMOUNT.
The Trust shall not, and shall not permit any of its Restricted
Subsidiaries to, incur any Indebtedness (including Permitted Debt) that
is contractually subordinated in right of payment to any other
Indebtedness of the Trust or such Restricted Subsidiaries unless such
Indebtedness is also contractually subordinated in right of payment to
the Notes on substantially identical terms; provided, however, that no
Indebtedness of the Trust or its Restricted Subsidiaries shall be
deemed to be contractually subordinated in right of payment to any
other Indebtedness of the Trust or its Restricted Subsidiaries solely
by virtue of being unsecured.
For purposes of determining compliance with Section 4.09 hereof, in the
event that an item of proposed Indebtedness meets the criteria of more
than one of the categories of Permitted Debt described in clauses (1)
through (16) above, or is entitled to be incurred pursuant to the first
paragraph of this covenant, the Trust shall be permitted to classify
such item of Indebtedness on the date of its incurrence in any manner
that complies with this covenant. Indebtedness under Credit Facilities
outstanding on the date on which Notes are first issued and
authenticated under this Indenture shall be deemed to have been
incurred on such date in reliance on the exception provided by clause
(1) of the definition of Permitted Debt.
SECTION 4.10 LIMITATION ON FOREIGN INDEBTEDNESS
The Trust shall not permit any Restricted Subsidiary of the Trust that
is not a Guarantor to, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness) other than (X) Permitted Debt OR (Y)
THE GERMAN PRELIMINARY PROCEEDING FINANCING BY THE GERMAN PRELIMINARY
PROCEEDING SUBSIDIARIES AND THEIR SUBSIDIARIES, unless:
(1) after giving effect to the incurrence of such Indebtedness
and the receipt of the application of the proceeds thereof:
(a) if, as a result of the incurrence of such
Indebtedness such Restricted Subsidiary shall become subject to any
restriction or limitation on the payment of dividends or the making of
other distributions,
(i) the Fixed Charge Coverage Ratio of Restricted
Subsidiaries that are not Guarantors (determined on a Pro Forma Basis
for the last four fiscal quarters for which financial statements are
available at the date of determination) is greater than 2.75 to 1; and
(ii) the Trust's Fixed Charge Coverage Ratio
(determined on a pro forma basis for the last four fiscal quarters of
the Trust for which financial statements are available at the date of
determination) is greater than 2.0 to 1; or
(b) in any other case, the Trust's Fixed Charge
Coverage Ratio (determined on a Pro Forma Basis for the last four
fiscal quarters of the Trust for which financial statements are
available at the date of determination) is greater than 2.0 to 1; and
(2) no Default or Event of Default shall have occurred and be
continuing a the time or as a consequence of the incurrence of such
Indebtedness.
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In the event that any Indebtedness incurred pursuant to clause (1)(b)
of the foregoing paragraph is proposed to be amended, modified or
otherwise supplemented such that the payment of dividends or the making
of other distributions becomes subject in any manner to any restriction
or limitation, the Trust shall not permit the Restricted Subsidiary to
so amend, modify or supplement such Indebtedness unless such
Indebtedness could be incurred pursuant to the terms of clause (1)(a)
of the foregoing paragraph.
In calculating the Fixed Charge Coverage Ratio of the Restricted
Subsidiaries that are not Guarantors, Fixed Charges with respect to
Indebtedness that is solely owed to and held by the Trust or a
Restricted Subsidiary shall be excluded.
All calculations required under the prior two paragraphs hereof shall
be made in a manner consistent with the calculations required under
Section 4.09 hereof.
SECTION 6.01 EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Trust defaults in the payment when due of interest on,
or Liquidated Damages with respect to, the Notes and such default
continues for a period of 30 days;
(b) the Trust defaults in the payment when due of principal of
or premium, if any, on the Notes when the same becomes due and payable
at maturity, upon redemption (including in connection with an offer to
purchase) or otherwise;
(c) the Trust or any Restricted Subsidiary fails to comply
with any of the provisions of Section 4.11 or 4.16 hereof;
(d) the Trust or any Restricted Subsidiary fails to observe or
perform any other covenant, representation, warranty or other agreement
in this Indenture or the Notes for 60 days after notice to the Trust by
the Trustee or the Holders of at least 25% in aggregate principal
amount of the Notes, including Additional Notes, if any, then
outstanding voting as a single class or Larry J. Winget fails to
observe and perform any covenant or agreement contained in the
Corporate Opportunity Agreement;
(e) a default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness in an aggregate principal amount
of $15.0 million for money borrowed by the Trust or any of its
Restricted Subsidiaries (or the payment of which is guaranteed by the
Trust or any of its Restricted Subsidiaries), whether such Indebtedness
or guarantee now exists, or is created after the date of this
Indenture, which default (1) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the
date of such default or (2) results in the acceleration of such
Indebtedness prior to its express maturity and, in each case, the
principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a
payment default or the maturity of which has been so accelerated,
aggregates $15.0 million or more;
(f) a final judgment or final judgments for the payment of
money are entered by a court or courts of competent jurisdiction
against the Trust or any of its Restricted Subsidiaries and such
judgment or judgments are not covered by insurance and remain
undischarged for a period (during which execution shall not be
effectively stayed or bonded) of 60 days, provided that the aggregate
of all such undischarged judgments exceeds $10.0 million;
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(g) any Subsidiary Guarantee is terminated for any reason not
permitted by this Indenture, or any Guarantor or any Person acting on
behalf of any Guarantor denies such Guarantor's obligations under its
respective Subsidiary Guarantee;
(h) the Trust, any Guarantors or any of its Significant
Subsidiaries or group of Subsidiaries that, taken together, would
constitute a Significant Subsidiary, pursuant to or within the meaning
of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of
it or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of
its creditors, or
(v) generally is not paying its debts as they become
due; or
(i) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(i) is for relief against the Trust, any Guarantor or
any Significant Subsidiary in an involuntary case;
(ii) appoints a custodian of the Trust, any Guarantor
or any Significant Subsidiary or for all or substantially all of the
property of the Trust or any of its Subsidiaries; or
(iii) orders the liquidation of the Trust, any
Guarantor or any Significant Subsidiary;
and the order or decree remains unstayed and in effect for (I) 60
consecutive days, OR (II) IN THE CASE OF THE GERMAN PRELIMINARY
PROCEEDING, FOR THE PERIOD ENDING ON THE PRELIMINARY PROCEEDING
TERMINATION DATE.
A-15
Manually signed facsimile copies of the Consent Form will be accepted.
The Consent Form and any other required documents should be sent or delivered by
each holder of the Notes or such holder's broker, dealer, commercial bank, trust
company or other nominee to the Trustee at its address set forth below:
THE HUNTINGTON NATIONAL BANK
By Mail, Overnight Courier or Hand Delivery:
The Huntington National Bank
7 Easton Oval -- EA4E63
Columbus, Ohio 43219
Attention: Ruth Sowers, Corporate Trust
By Facsimile:
The Huntington National Bank
Attention Ruth Sowers, Corporate Trust
(614) 331-5862
Telephone Number
(614) 331-9559
Questions and requests for assistance or for additional copies of this
Consent Solicitation Statement and the accompanying Consent Form may be directed
to the Information Agent or the Solicitation Agent at their respective telephone
numbers and locations listed below. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Consent Solicitation.
The Information Agent for the Consent Solicitation is:
[MACKENZIE PARTNERS, INC. LOGO]
105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
(800) 322-2885 (Toll Free)
The Solicitation Agent for the Consent Solicitation is:
DEUTSCHE BANK SECURITIES
31 West 52nd Street
New York, New York 10019
(212) 469-7466