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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT
NO. 1
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
JLG INDUSTRIES, INC.
PENNSYLVANIA
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
3531
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
25-1199382
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
1 JLG DRIVE
MCCONNELLSBURG, PA, 17233-9533
(717) 485-5161
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER INCLUDING AREA CODE, OF AGENT
FOR SERVICE)
JAMES H. WOODWARD, JR.
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
JLG INDUSTRIES, INC.
1 JLG DRIVE
MCCONNELLSBURG, PA, 17233-9533
(717) 485-5161
Copies to:
THOMAS D. SINGER, ESQ.
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
JLG INDUSTRIES, INC.
1 JLG DRIVE
MCCONNELLSBURG, PA, 17233-9533
(717) 485-5161
W. ANDREW JACK, ESQ.
COVINGTON & BURLING
1201 PENNSYLVANIA AVENUE, N.W.
WASHINGTON, D.C. 20004
(202) 662-6000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
CALCULATION OF REGISTRATION FEE
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<Table>
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(1) PRICE(1)
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8 1/4% Senior Notes Due 2008.............. $125,000,000 100% $125,000,000
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Note Guarantees(2)........................ (2) (3)
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TITLE OF EACH CLASS OF AMOUNT OF
SECURITIES TO BE REGISTERED REGISTRATION FEE(1)
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8 1/4% Senior Notes Due 2008.............. $10,112.50
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Note Guarantees(2)........................ (3)
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</Table>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933, as amended.
(2) The Company's material domestic subsidiaries, listed on the table below (the
"Note Guarantors") have guaranteed on a senior unsecured basis, jointly and
severally, the payment of principal, premium, and interest on the 8 1/4%
Senior Notes due 2008 being registered hereby (the "Note Guarantees"). The
Note Guarantors are registering the Note Guarantees. Pursuant to Rule 457(n)
under the Securities Act of 1933, as amended, no registration fee is
required in respect of the Note Guarantees.
(3) Not applicable.
TABLE OF ADDITIONAL REGISTRANTS
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<Table>
STATE OR OTHER PRIMARY STANDARD
JURISDICTION INDUSTRIAL
OF INCORPORATION OR CLASSIFICATION I.R.S. EMPLOYER
REGISTRANT ORGANIZATION CODE NUMBER IDENTIFICATION NUMBER
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ACCESS FINANCIAL SOLUTIONS, INC. ..................... MARYLAND 6159 23-2208212
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FULTON INTERNATIONAL, INC. ........................... DELAWARE 6794 25-1589019
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GRADALL INDUSTRIES, INC. ............................. DELAWARE 3531 36-3381606
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JLG EQUIPMENT SERVICES, INC. ......................... PENNSYLVANIA 3531 25-1561946
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JLG MANUFACTURING, LLC................................ PENNSYLVANIA 3531 23-2926129
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THE GRADALL COMPANY................................... OHIO 3531 34-1405233
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JLG OMNIQUIP, INC. ................................... DELAWARE 3531 20-0102339
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</Table>
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PROSPECTUS
JLG INDUSTRIES, INC.
OFFER TO EXCHANGE
$125,000,000
8 1/4% SENIOR NOTES DUE 2008
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR $125,000,000 OUTSTANDING UNREGISTERED 8 1/4% SENIOR NOTES DUE 2008
We are offering to exchange $125,000,000 aggregate principal amount of
registered 8 1/4% senior notes due 2008, which we refer to as the exchange
notes, for $125,000,000 aggregate principal amount of unregistered 8 1/4% senior
notes due 2008, which we refer to as the original notes. The terms of the
exchange notes are identical in all material respects to the terms of the
original notes except that the exchange notes have been registered under the
Securities Act of 1933, as amended (the "Securities Act") and, therefore, the
transfer restrictions and registration rights applicable to the original notes
are not applicable to the exchange notes.
- Our offer to exchange original notes for exchange notes will be open
until 5:00 p.m., New York City time, on September 8, 2003, unless we
extend the offer.
- We will exchange all outstanding original notes that are validly tendered
and not validly withdrawn prior to the expiration date of the exchange
offer. You should carefully review the procedures for tendering the
original notes beginning on page 23 of this prospectus.
- If you fail to tender your original notes, you will continue to hold
unregistered securities and your ability to transfer them could be
adversely affected.
- The exchange of original notes for exchange notes pursuant to the
exchange offer generally will not be a taxable event for U.S. federal
income tax purposes.
- We will not receive any proceeds from the exchange offer.
- No public market currently exists for the exchange notes. We do not
intend to list the exchange notes on any national securities exchange or
Nasdaq, and, therefore, no active public market is anticipated.
- Each broker-dealer that receives exchange notes for its own account
pursuant to the exchange offer must acknowledge that it will deliver a
prospectus in connection with any resale of such exchange notes. The
letter of transmittal to be used in connection with this exchange offer
states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of exchange notes received in exchange for
original notes where such original notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. We have agreed that, for a period of 180 days after the
expiration date, we will make this prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution" starting on page 81 of this prospectus.
INVESTING IN THE EXCHANGE NOTES INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 10 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT
YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN THE EXCHANGE NOTES.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS AUGUST 8, 2003.
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
Certain Definitions......................................... ii
Incorporation of Documents By Reference..................... ii
Where You Can Find More Information......................... ii
Forward-Looking Statements.................................. iii
Summary..................................................... 1
Selected Consolidated Historical Financial Data............. 8
Risk Factors................................................ 10
Recent Developments......................................... 20
Use of Proceeds............................................. 20
Capitalization.............................................. 21
Supplemental Information Regarding Financial Condition...... 22
The Exchange Offer.......................................... 23
Description of Exchange Notes............................... 34
Book-Entry; Delivery and Form............................... 73
Certain United States Federal Tax Considerations............ 77
Plan of Distribution........................................ 81
Legal Matters............................................... 82
Experts..................................................... 82
</Table>
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT OR ADDITIONAL INFORMATION. IF ANYONE PROVIDES YOU WITH DIFFERENT OR
ADDITIONAL INFORMATION, YOU SHOULD NOT RELY ON IT. YOU SHOULD ASSUME THAT THE
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS IS
ACCURATE AS OF THE DATE ON THE FRONT COVER OF THIS PROSPECTUS OR THE DATE OF THE
DOCUMENT INCORPORATED BY REFERENCE. OUR BUSINESS, FINANCIAL CONDITION, RESULTS
OF OPERATIONS AND PROSPECTS MAY HAVE CHANGED SINCE THEN. WE ARE NOT MAKING AN
OFFER TO SELL THE SECURITIES OFFERED BY THIS PROSPECTUS IN ANY JURISDICTION
WHERE THE OFFER OR SALE IS NOT PERMITTED.
THIS PROSPECTUS INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. WE WILL PROVIDE A COPY
OF THE DOCUMENTS WE INCORPORATE BY REFERENCE, AT NO COST, TO ANY PERSON WHO
RECEIVES THIS PROSPECTUS. TO REQUEST A COPY OF ANY OR ALL OF THESE DOCUMENTS,
YOU SHOULD WRITE OR TELEPHONE US AT 1 JLG DRIVE, MCCONNELLSBURG, PA, 17233-9533,
(717) 485-5161, ATTENTION: CORPORATE SECRETARY. IN ORDER TO OBTAIN TIMELY
DELIVERY OF THE DOCUMENTS, YOU MUST REQUEST THE INFORMATION NO LATER THAN FIVE
BUSINESS DAYS BEFORE THE EXPIRATION DATE OF THE EXCHANGE OFFER. THE EXCHANGE
OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON SEPTEMBER 8, 2003. SEE
"INCORPORATION OF DOCUMENTS BY REFERENCE" AND "THE EXCHANGE OFFER" FOR
ADDITIONAL INFORMATION.
i
CERTAIN DEFINITIONS
As used in this prospectus, "exchange notes" refers to the notes issued
pursuant to this prospectus, "original notes" refers to the notes issued by the
Company on May 5, 2003, and "notes" refers to both the exchange notes and the
original notes.
INCORPORATION OF DOCUMENTS BY REFERENCE
Important business and financial information about our Company is
"incorporated by reference" into this prospectus. This means that we are
disclosing important information to you by referring you to certain documents we
have filed with the Securities and Exchange Commission ("SEC") rather than
including the information in this prospectus. The information in the documents
incorporated by reference is considered to be part of this prospectus. We
incorporate by reference the documents listed below and any future filings we
may make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") prior to the termination
or expiration of this exchange offer:
- our annual report on Form 10-K/A for the fiscal year ended July 31, 2002
dated July 30, 2003;
- our quarterly reports on Forms 10-Q/A for the quarters ended October 31,
2002 and January 31, 2003, each dated July 30, 2003, and our quarterly
report on Forms 10-Q for the quarter ended April 30, 2003 dated May 29,
2003;
- our Definitive Proxy Statement dated October 4, 2002;
- our current reports on Form 8-K dated July 8, 2003 and July 28, 2003.
Information contained in this prospectus supplements, modifies or
supersedes, as applicable, the information contained in earlier-dated documents
incorporated by reference. Information in documents that we file with the SEC
after the date of this prospectus will automatically update and supersede
information in this prospectus or in earlier-dated documents incorporated by
reference.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy reports, statements or other
information on file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You can request copies of those documents upon
payment of a duplicating fee to the SEC. You may also review a copy of those
documents at the SEC's regional offices in Chicago, Illinois and New York, New
York. Please call the SEC at 1-800-SEC-0330 for further information on the
operation of the public reference rooms. You can review our SEC filings by
accessing the SEC's Internet site at http://www.sec.gov.
In addition, you may request a copy of any of these filings, at no cost, by
writing or telephoning us at the following address or telephone number: 1 JLG
Drive, McConnellsburg, PA, 17233-9533, (717) 485-5161, Attention: Corporate
Secretary.
This document contains summaries of the terms of certain agreements that we
believe to be accurate in all material respects. However, we refer you to the
actual agreements for complete information relating to those agreements. All
summaries contained in this prospectus are qualified in their entirety by this
reference. We will make copies of those documents available to you upon your
requests to us.
We have filed with the SEC a registration statement on Form S-4 under the
Securities Act with respect to the exchange notes offered by this prospectus.
This prospectus does not include all of the information included in the
registration statement, as permitted by the rules and regulations of the SEC.
ii
FORWARD-LOOKING STATEMENTS
We have made and incorporated by reference in this prospectus
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act which are subject to the safe harbor
created by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include declarations about our and our management's
goals, beliefs, plans, intents or current expectations. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "believes," "expects," "estimates," "projects," "anticipates,"
"plans," "forecasts" and similar expressions. Except as required by law, we are
under no duty to update any of the forward-looking statements after the date of
this prospectus to conform such statements to actual results. Forward-looking
statements are not guarantees of future performance, and involve a number of
risks and uncertainties that could cause actual results to differ materially
from those indicated by the forward-looking statements. In addition to the
specific risk factors described in the Section entitled "Risk Factors,"
important factors that could cause actual results to differ materially from
those suggested by the forward-looking statements include, but are not limited
to:
- general economic and capital market conditions, including political and
economic uncertainty in various areas of the world where we do business;
- varying and seasonal levels of demand for our products and services;
- consolidation within our customer base and the resulting increased
concentration of our sales;
- pricing and product actions taken by competitors;
- credit risks from our financing of customer purchases;
- limitations on customer access to credit for purchases;
- limitations on access to capital markets for short-term debt,
securitizations and other means of monetizing assets, including customer
finance receivables;
- risks associated with financing and integrating acquisitions in the
future;
- customers' perception of our financial condition relative to that of our
competitors;
- potential accounting, regulatory or other changes to rules relating to
securitization transactions and other means of monetizing assets;
- changes in United States or foreign tax laws or regulations;
- reliance upon suppliers and risks of production disruptions and supply
and capacity constraints;
- costs of raw materials and energy;
- risks associated with reconfiguration and relocation of manufacturing
operations;
- the effectiveness of our cost reduction initiatives;
- industry innovation and our own research and development efforts;
- interest and foreign currency exchange rates;
- risks associated with product liability;
- risks associated with use of hazardous materials;
- unforeseen liabilities arising from patent or other litigation; and
- our dependence on key management.
Should one or more of these risks or uncertainties materialize, or should
any of our assumptions prove incorrect, actual results may vary in material
respects from those projected in the forward-looking statements. For a more
detailed discussion of some of the foregoing risks and uncertainties, see "Risk
Factors."
iii
SUMMARY
In this prospectus, the words "we," "us," "our," the "Company," "JLG," and
similar references are to JLG Industries, Inc., the issuer of the notes, and its
subsidiaries except where the context indicates otherwise. This summary
highlights some of the information from this prospectus. It may not contain all
of the information that is important to you. To understand this offering fully
you should read this entire prospectus carefully, including the section entitled
"Risk Factors," the financial statements, and the documents referred to and
incorporated by reference in this prospectus. Unless otherwise noted, all
financial statement and operating data presented in this prospectus are as of
April 30, 2003.
OUR COMPANY
Founded in 1969, we are the world's leading producer of aerial work
platforms and a leading global manufacturer of variable-reach rough-terrain
material handlers ("telehandlers") and telescoping hydraulic excavators. Our
products are marketed under the JLG(R) and Gradall(R) brand names, which are
widely recognized by customers and end-users as symbols of outstanding product
quality and safety, innovative design, reliability, efficiency and life-cycle
cost effectiveness. In addition to designing and manufacturing our products, we
provide our customers with after-sales service and support and financing and
leasing solutions. With 22 sales and service offices on six continents, we
market our products worldwide primarily to equipment rental companies and
distributors who in turn rent and sell our products to a diverse customer base
in the construction, industrial and commercial markets. We operate five
manufacturing facilities in Pennsylvania, Ohio, California and Belgium. Our
common stock is traded on the New York Stock Exchange under the symbol "JLG."
The mailing address and telephone numbers of our principal executive offices is
JLG Industries, Inc., 1 JLG Drive, McConnellsburg, Pennsylvania 17233-9533,
(717) 485-5161.
SUMMARY OF THE TERMS OF THE EXCHANGE OFFER
On May 5, 2003, we completed an offering of $125 million principal amount
of 8 1/4% senior notes due 2008 that was exempt from the registration
requirements of the Securities Act. In connection with that private offering, we
entered into a registration rights agreement with the initial purchasers of the
original notes in which we agreed, among other things, to deliver this
prospectus to you and to use our commercially reasonable efforts to complete
this exchange offer by September 8, 2003.
Exchange Offer................ We are offering to exchange up to $125 million
principal amount of our 8 1/4% senior notes due
2008 which have been registered under the
Securities Act for an equal amount of our
outstanding 8 1/4% senior notes due 2008, to
satisfy our obligations under the registration
rights agreement that we entered into when the
original notes were sold in transactions under
Rule 144A and/or Regulation S under the
Securities Act.
Expiration Date; Tenders...... The exchange offer will expire at 5:00 p.m.,
New York City time, on September 8, 2003,
unless extended.
Withdrawal; Non-Acceptance.... You may withdraw any original notes tendered in
the exchange offer at any time prior to 5:00
p.m., New York City time, on September 8, 2003.
If we decide for any reason not to accept any
original notes tendered for exchange, the
original notes will be returned to the
registered holder at our expense promptly after
the expiration or termination of the exchange
offer. In the case of original notes tendered
by book-entry transfer into the exchange
agent's account at The Depository Trust
Company, any withdrawn or unaccepted original
notes will be credited to the tendering
holder's account at The Depository Trust
Company.
1
For further information regarding the
withdrawal of tendered original notes, see "The
Exchange Offer -- Terms of the Exchange Offer;"
"-- Expiration Date; Extension; Termination;
Amendment" and "-- Withdrawal Rights."
Conditions to the Exchange
Offer......................... The exchange offer is subject to customary
conditions, which we may waive. See the
discussion below under the caption "The
Exchange Offer -- Conditions to the Exchange
Offer" for more information regarding the
conditions to the exchange offer.
Exchange Agent................ The Bank of New York is serving as exchange
agent in connection with this exchange offer.
The Bank of New York also serves as trustee
under the indenture that governs the exchange
notes and the original notes
Procedures for Tendering
Original Notes................ If you wish to participate in the exchange
offer, you must
either:
- complete, sign and date an original or faxed
letter of transmittal in accordance with the
instructions in the letter of transmittal
accompanying this prospectus; or
- arrange for The Depository Trust Company to
transmit required information to the exchange
agent in connection with a book-entry
transfer.
Then you must mail, fax or deliver all required
documentation to The Bank of New York, which is
acting as the exchange agent for the exchange
offer. The exchange agent's address appears on
the letter of transmittal. By tendering your
original notes in either of these manners, you
will represent to and agree with us that:
- you are acquiring the exchange notes in the
ordinary course of your business;
- you are not engaged in, and you do not intend
to engage in, the distribution (within the
meaning of the federal securities laws) of
the exchange notes;
- you have no arrangement or understanding with
anyone to participate in a distribution of
the exchange notes; and
- you are not an "affiliate," as defined in
Rule 405 under the Securities Act, of the
Company.
See "The Exchange Offer -- Procedures for
Tendering Original Notes" and "The Depository
Trust Company Book-Entry Transfer."
Each broker-dealer that receives exchange notes
for its own account in exchange for original
notes, where such original notes were acquired
by such broker-dealer as a result of
market-making activities or other trading
activities, must acknowledge that it will
deliver a prospectus in connection with any
resale of such exchange notes. See "Plan of
Distribution."
Special Procedures for
Beneficial Owners............. If you are a beneficial owner of original notes
that are held by or registered in the name of a
broker, dealer, commercial bank,
2
trust company or other nominee or custodian and
you wish to tender your original notes, you
should contact your intermediary entity
promptly and instruct it to tender the exchange
notes on your behalf.
Guaranteed Delivery
Procedures.................... If you desire to tender original notes in this
exchange offer and:
- the original notes are not immediately
available;
- time will not permit delivery of the original
notes and all required documents to the
exchange agent on or prior to the expiration
date; or
- the procedures for book-entry transfer cannot
be completed on a timely basis,
you may nevertheless tender the original notes,
provided that you comply with all of the
guaranteed delivery procedures set forth in
"The Exchange Offer -- Guaranteed Delivery
Procedures."
Resales of Exchange Notes..... Based on an interpretation by the staff of the
SEC set forth in no-action letters issued to
third parties, we believe that you can resell
and transfer your exchange notes without
compliance with the registration and prospectus
delivery requirements of the Securities Act, if
you can make the representations that appear
above under the heading "-- Procedures for
Tendering Original Notes"
We cannot guarantee that the SEC would make a
similar decision about this exchange offer. If
our belief is wrong, or if you cannot
truthfully make the representations appearing
above, and you transfer any exchange note
without delivering a prospectus meeting the
requirements of the Securities Act or without
an exemption from registration of your exchange
notes from such requirements, you may incur
liability under the Securities Act. We are not
indemnifying you against this liability.
Accrued Interest on the
Exchange Notes and the
Original Notes................ The exchange notes will bear interest from the
most recent date to which interest has been
paid on the original notes. If your original
notes are accepted for exchange, then you will
receive interest on the exchange notes and not
on the original notes.
Certain United States Federal
Tax Considerations............ The exchange of original notes for exchange
notes in the exchange offer will not be a
taxable transaction for United States federal
income tax purposes. See the discussion below
under the caption "Certain United States
Federal Tax Considerations" for more
information regarding the tax consequences to
you of the exchange offer.
Consequences of Failure to
Exchange Original Notes....... All untendered original notes will remain
subject to the restrictions on transfer
provided for in the original notes and in the
indenture. Generally, the original notes that
are not exchanged for exchange notes pursuant
to the exchange offer will remain restricted
securities and may not be offered or sold,
unless registered under the Securities Act,
except pursuant to an exemption from, or in a
transaction not subject to, the Securities Act
and applicable state securities laws. Other
than in connec-
3
tion with the exchange offer, we do not
currently anticipate that we will register the
original notes under the Securities Act.
Because we anticipate that most holders of the
original notes will elect to exchange their
original notes, we expect that the liquidity of
the markets, if any, for any original notes
remaining after the completion of the exchange
offer will be substantially limited.
Use of Proceeds............... We will not receive any proceeds from the
issuance of exchange notes in this exchange
offer. We will pay all registration expenses
incident to the exchange offer.
4
SUMMARY OF THE TERMS OF THE EXCHANGE NOTES
The following is a summary of the terms of the exchange notes. The terms of
the exchange notes are the same in all material respects to the terms of the
original notes, except that the exchange notes will be registered under the
Securities Act and, therefore, the transfer restrictions applicable to the
original notes will not be applicable to the exchange notes and the exchange
notes will not bear any legends restricting their transfer. In addition, the
exchange notes generally will not be entitled to registration under the
Securities Act. The exchange notes will evidence the same debt as the original
notes and both the original notes and the exchange notes are governed by the
same indenture. Both the original notes and the exchange notes will be treated
as a single class of notes should any original notes remain outstanding
following this exchange offer.
Exchange Notes................ $125,000,000 principal amount of 8 1/4% senior
notes due 2008.
Issuer........................ JLG Industries, Inc.
Interest Payments............. Interest will be payable semiannually in
arrears on May 1 and November 1 of each year,
beginning November 1, 2003.
Maturity Date................. May 1, 2008
No Redemption................. We may not redeem any of the notes at our
option prior to the maturity date. The notes
will not be entitled to any mandatory sinking
fund.
Change of Control............. If we experience a change of control as defined
under "Description of Notes," we will be
required to make an offer to repurchase the
notes at a price equal to 101% of their
principal amount, plus accrued and unpaid
interest, if any, to the date of repurchase.
Guarantees.................... The notes will be guaranteed on a senior
unsecured basis by all of our existing and
future material domestic restricted
subsidiaries. Our foreign subsidiaries will not
guarantee the notes.
Ranking....................... The notes and the note guarantees will be our
and the applicable note guarantor's general
unsecured senior debt obligations and:
- will be effectively subordinated to all of
our and such guarantor's existing and future
secured debt and other secured obligations,
if any, to the extent of the value of the
assets securing such debt or other
obligations;
- will rank equally in right of payment with
all of our and such guarantor's existing and
future unsecured senior debt; and
- will rank senior in right of payment to all
of our and such guarantor's existing and
future subordinated indebtedness, including
our 8 3/8% Senior Subordinated Notes due 2012
and the note guarantees thereunder.
In addition, the notes will be effectively
subordinated to the existing and future
liabilities of our subsidiaries that are not
providing guarantees.
5
As of April 30, 2003, after giving effect to
the offering and the use of proceeds thereof:
- we and the note guarantors had consolidated
senior indebtedness of $291.1 million,
including $164.7 million aggregate principal
amount of limited recourse debt from
monetizations;
- we and the note guarantors had consolidated
secured indebtedness of $166.1 million (which
includes $164.7 million aggregate principal
amount of limited recourse debt from
monetizations);
- we and the note guarantors had consolidated
total subordinated indebtedness of $175.0
million, consisting of our 8 3/8% Senior
Subordinated Notes due 2012 and the note
guarantees thereunder; and
- our subsidiaries that are not note guarantors
had total liabilities (including trade
payables but excluding debt owed to JLG or
any note guarantor) of $38.1 million.
Restrictive Covenants......... The terms of the notes place certain
limitations on our and our restricted
subsidiaries' ability, as applicable, to, among
other things:
- incur additional indebtedness (including
specified senior indebtedness);
- pay dividends or make certain other
distributions;
- repurchase or redeem capital stock or
subordinated indebtedness;
- make investments;
- create liens or enter into sale and leaseback
transactions;
- sell assets;
- enter into transactions with affiliates;
- incur restrictions on the ability of our and
their respective subsidiaries to pay
dividends or make other payments to us or our
applicable restricted subsidiary;
- merge or consolidate with or into any other
person or transfer all or substantially all
of our or their assets; and
- transfer or issue shares of capital stock of
restricted subsidiaries.
These limitations are subject to a number of
exceptions and qualifications described under
"Description of Exchange Notes -- Certain
Covenants."
6
RECENT DEVELOPMENTS
On August 4, 2003, we announced the completion of our acquisition of the
OmniQuip business unit of Textron Inc. We purchased the assets of Trak
International, Inc., which include all operations relating to the Sky Trak and
Lull brand telehandler products. The purchase price was $100 million, with $90
million paid in cash at closing and $10 million paid in the form of an unsecured
subordinated promissory note due on the second anniversary of the closing date.
See "Recent Developments."
7
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA
We have derived the following selected consolidated historical financial
data for the years ended July 31, 1998, 1999, 2000, 2001 and 2002 from our
audited consolidated financial statements and the financial data for the
nine-month periods ended April 30, 2002 and 2003 from our unaudited condensed
consolidated financial statements. You should read the historical consolidated
financial statements and the related notes to those financial statements as
filed in our Annual Report on Form 10-K/A and our Quarterly Report on Form 10-Q
filed with the SEC on July 30, 2003 and May 29, 2003, respectively.
<Table>
<Caption>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED JULY 31, APRIL 30,
------------------------------------------------------- --------------------
1998 1999(1) 2000 2001 2002 2002 2003
-------- -------- ---------- -------- --------- --------- --------
(IN THOUSANDS)
INCOME STATEMENT DATA:
Revenues............................ $530,859 $720,224 $1,056,168 $963,872 $ 770,070 $ 521,246 $517,570
Cost of sales....................... 402,702 553,271 825,082 775,078 637,983 432,389 427,711
-------- -------- ---------- -------- --------- --------- --------
Gross profit........................ 128,157 166,953 231,086 188,794 132,087 88,857 89,859
Selling, administrative and product
development expenses.............. 55,388 75,431 109,434 104,585 95,279 65,452 66,300
Goodwill amortization(2)............ -- 750 6,166 6,052 -- -- --
Restructuring charge(3)............. 1,689 -- -- 4,402 6,091 6,091 2,616
-------- -------- ---------- -------- --------- --------- --------
Income from operations.............. 71,080 90,772 115,486 73,755 30,717 17,314 20,943
Interest expense.................... (254) (1,772) (20,589) (22,195) (16,255) (11,710) (18,340)
Other income, net................... (356) 2,016 1,146 2,737 4,759 1,167 7,279
-------- -------- ---------- -------- --------- --------- --------
Income before taxes and cumulative
effect of change in accounting
principle......................... 70,470 91,016 96,043 54,297 19,221 6,771 9,882
Income tax provision................ 23,960 29,745 35,536 20,091 6,343 2,235 3,162
-------- -------- ---------- -------- --------- --------- --------
Income before cumulative effect of
change in accounting principle.... 46,510 61,271 60,507 34,206 12,878 4,536 6,720
Cumulative effect of change in
accounting principle.............. -- -- -- -- (114,470) (114,470) --
-------- -------- ---------- -------- --------- --------- --------
Net income.......................... $ 46,510 $ 61,271 $ 60,507 $ 34,206 $(101,592) $(109,934) $ 6,720
======== ======== ========== ======== ========= ========= ========
</Table>
<Table>
<Caption>
(UNAUDITED)
NINE MONTHS ENDED
YEARS ENDED JULY 31, APRIL 30,
------------------------------------------------------- --------------------
1998 1999(1) 2000 2001 2002 2002 2003
-------- -------- ---------- -------- --------- --------- --------
OTHER FINANCIAL DATA:
Ratio of earnings to fixed
charges(4)........................ 74.8x 37.7x 5.3x 3.2x 2.0x 1.5x 1.5x
</Table>
<Table>
<Caption>
(UNAUDITED)
AS OF JULY 31, AS OF APRIL 30, 2003
---------------------------------------------------- ---------------------------
1998 1999 2000 2001 2002 HISTORICAL AS ADJUSTED(7)
-------- -------- -------- -------- -------- ---------- --------------
(IN THOUSANDS)
SELECTED BALANCE SHEET DATA:
Cash and cash equivalents........... $ 56,793 $ 19,033 $ 25,456 $ 9,254 $ 6,205 $ 16,529 $106,241
Working capital..................... 122,672 176,315 165,923 254,752 231,203 292,498 382,210
Pledged finance receivables(5)...... -- -- -- -- 88,688 167,089 167,089
Property, plant and equipment,
net............................... 57,652 100,534 105,879 98,403 84,370 80,366 80,366
Total assets........................ 307,339 625,817 653,587 825,589 778,241 825,763 920,475
Limited recourse debt............... -- -- -- -- 87,571 164,653 164,653
Total debt(6)....................... 3,708 175,793 98,302 299,187 279,329 377,571 472,283
Shareholders' equity................ 207,768 271,283 324,051 333,441 236,042 245,034 245,034
Total capitalization................ 211,476 447,076 422,353 632,628 515,371 622,605 717,317
</Table>
- ---------------
(1) Amounts subsequent to 1998 reflect the acquisition of Gradall Industries,
Inc. in June 1999 which was accounted for as a purchase.
(2) On August 1, 2001, we elected early adoption of SFAS No. 142, "Goodwill and
Other Intangible Assets." Under SFAS No. 142, goodwill and intangible assets
deemed to have indefinite lives will no longer be amortized but will be
subject to annual impairment tests.
(3) In 1998, we recorded restructuring charges of $1.7 million associated with
closing a smaller, less productive manufacturing facility, ceasing planned
expansion of administrative facilities and other asset impairments. In 2001,
we announced a
8
repositioning plan that involved a one-time pre-tax charge of $15.8 million.
As part of the $15.8 million, we recorded a restructuring charge of $4.4
million associated with the permanent closure of a manufacturing facility
and the reduction of our workforce, and of the remaining $11.4 million, $9.5
million is reflected in cost of sales, $1.0 million in selling,
administrative and product development expenses and $0.9 million in other
income, net. See the Repositioning and Restructuring Costs footnote to our
audited consolidated financial statements incorporated by reference into
this prospectus.
In fiscal 2002, we announced the permanent closure of our facility in
Orrville, Ohio, as part of our ongoing capacity rationalization plan. As
part of the plan, we recorded a restructuring charge of $6.1 million
associated with the closure of the Orrville facility and the reduction of
our workforce. In addition, we expect to incur $1.6 million in costs related
to relocating certain plant assets and start-up costs associated with the
move of the Orrville operations to our McConnellsburg, Pennsylvania
facility. Of the $1.6 million in related costs, $0.6 million was expensed
during final 2002 and $0.2 million was expensed during the nine months ended
April 30, 2003 and is reflected in cost of sales.
During the second quarter of fiscal 2003, we announced further actions
related to our ongoing longer-term strategy to streamline operations and
reduce fixed and variable costs. As part of our capacity rationalization
plan commenced in early 2001, the 130,000-square foot Sunnyside facility in
Bedford, Pennsylvania, which currently produces selected scissor lift
models, has been idled and production has been integrated into our
Shippensburg, Pennsylvania facility. Additionally, we expect reductions in
selling, administrative and product development costs to result from global
organizational and process consolidations. When these changes are fully
implemented, we expect to generate approximately $20 million in annualized
savings at a cost of approximately $9.4 million representing a payback of
approximately six months.
We will be reducing a total of 189 people globally and transferring 99
production jobs from the Bedford Sunnyside operation to the Shippensburg
facility. Production of scissor lifts, which are now assembled at the
Sunnyside facility, will be integrated into our newer and more flexible
300,000-square foot facility in Shippensburg by fiscal year end. As a
result, we anticipate incurring a pre-tax charge of $5.9 million, consisting
of $3.5 million in restructuring costs associated with personnel reductions
and relocation and lease and contract terminations and $2.4 million in
charges related to relocating certain plant assets and start-up costs
associated with the move of the Bedford operations to the Shippensburg
facility and costs related to our process consolidations. In addition, we
will spend approximately $3.5 million on capital requirements. Almost all of
these expenses will be cash charges, which will be recorded over the next
three quarters following the quarter ended January 31, 2003.
During the second and third quarters of fiscal 2003, we incurred
approximately $3.0 million of the pre-tax charge discussed above, consisting
of an accrual for termination benefit costs, which were reported as
restructuring costs. During the second and third quarters of fiscal 2003, we
paid and charged $0.8 million of termination benefits against the accrued
liability.
(4) For the purposes of determining the ratio of earnings to fixed charges,
earnings consist of income before income taxes plus fixed charges. Fixed
charges consist of interest expense, amortization of debt issuance costs,
and the estimated interest portion of rental expense.
(5) Of the finance receivables balances at April 30, 2003 and July 31, 2002,
$167.1 million and $88.7 million, respectively, are pledged finance
receivables resulting from the sale of finance receivables through limited
recourse and non-recourse monetization transactions during fiscal 2002 and
the first nine months of fiscal 2003. In compliance with SFAS No. 140,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities," these transactions are accounted for as debt
on our Condensed Consolidated Balance Sheets. The maximum loss exposure
associated with these limited recourse agreements is $18.9 million as of
April 30, 2003. As of April 30, 2003, our reserve related to these limited
recourse arrangements was approximately $2.7 million.
(6) Our total debt is calculated as follows:
<Table>
<Caption>
(UNAUDITED)
AS OF JULY 31, AS OF APRIL 30, 2003
------------------------------------------------- ---------------------------
1998 1999 2000 2001 2002 HISTORICAL AS ADJUSTED(7)
------ -------- ------- -------- -------- ---------- --------------
(IN THOUSANDS)
Overdraft credit
facility............... $ -- $ 2,656 $ 8,521 $ 21,685 $ 13,934 $ -- $ --
Revolving credit
facility............... -- 169,912 87,000 275,000 -- 30,288 --
Senior notes offered
hereby................. -- -- -- -- -- -- 125,000
Limited recourse
debt(a)................ -- -- -- -- 87,571 164,653 164,653
8 3/8% senior
subordinated notes..... -- -- -- -- 175,000 175,000 175,000
Other.................... 3,708 3,225 2,781 2,502 2,824 7,630 7,630
------ -------- ------- -------- -------- -------- --------
Total debt............. $3,708 $175,793 $98,302 $299,187 $279,329 $377,571 $472,283
====== ======== ======= ======== ======== ======== ========
</Table>
----------------------
(a) Refers to indebtedness related to the monetization of finance
receivables, for which our maximum loss exposure was $18.9 million as
of April 30, 2003.
(7) Adjusted to reflect consummation of the offering as of April 30, 2003 and
the application of a portion of the estimated net proceeds from the offering
of the notes to repay outstanding indebtedness under our $250 million
revolving credit facility and the reduction of the commitment thereunder as
described under "Use of Proceeds."
9
RISK FACTORS
You should consider the following risk factors, in addition to the other
information presented in this prospectus and the documents incorporated by
reference into this prospectus, in evaluating us, our business and an investment
in the exchange notes. Any of the following risks, as well as other risks and
uncertainties, could harm the value of the exchange notes directly, or our
business and financial results and thus indirectly cause the value of the
exchange notes to decline, which in turn could cause you to lose all or part of
your investment. The risks below are not the only ones facing the exchange notes
or our Company. Additional risks not currently known to us or that we currently
deem immaterial also may impair our business.
RISKS RELATED TO OUR INDEBTEDNESS
OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND
OUR ABILITY TO FULFILL OUR OBLIGATIONS UNDER THE NOTES.
We have, and after the offering we will have, a significant amount of
outstanding indebtedness. As of April 30, 2003, after application of the net
proceeds from the original notes offering as described under "Use of Proceeds",
our total indebtedness including our limited recourse debt from monetizations
was approximately $472.3 million, excluding unused commitments under our credit
facilities.
Our level of indebtedness increases the possibility that we may be unable
to generate cash sufficient to pay when due the principal of, interest on or
other amounts due in respect of the notes and our other indebtedness. Our
leverage could have significant consequences for you. For example, it could:
- make it more difficult for us to satisfy our other obligations with
respect to the notes, including our repurchase obligation upon the
occurrence of specified change of control events;
- increase our vulnerability to general adverse economic and industry
conditions;
- limit our ability to obtain additional financing;
- require us to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness, reducing the amount of our
cash flow available for other general corporate purposes, including
capital expenditures, research and development efforts and working
capital;
- require us to sell other securities or to sell some of our core assets,
possibly on unfavorable terms, to meet payment obligations;
- restrict us from making strategic acquisitions, investing in new products
or capital assets or taking advantage of business opportunities;
- limit our flexibility in planning for, or reacting to, changes in our
business and the industry in which we operate; and
- place us at a possible competitive disadvantage compared to our
competitors which have less debt.
DESPITE CURRENT INDEBTEDNESS LEVELS, WE AND OUR SUBSIDIARIES MAY STILL BE ABLE
TO INCUR SUBSTANTIALLY MORE DEBT, WHICH COULD INTENSIFY THE RISKS DESCRIBED
ABOVE.
We and our subsidiaries may be able to incur substantial additional
indebtedness in the future. Although the indenture governing the notes, the
indenture governing our senior subordinated notes, and our credit facilities
contain restrictions on the incurrence of additional indebtedness, these
restrictions are subject to a number of qualifications and exceptions, and the
indebtedness incurred in compliance with these restrictions could be
substantial. As of April 30, 2003, after application of a portion of the net
proceeds from the offering of the original notes to repay indebtedness under our
$250 million revolving credit facility and the reduction of the commitments
thereunder as described in "Use of Proceeds," we had $144.7 million of
additional permitted borrowings under our credit facilities. If new debt is
added to our
10
and our subsidiaries' current debt levels, the substantial leverage risks that
we now face could increase. Also, these restrictions do not prevent us from
incurring obligations that do not constitute indebtedness. See "Capitalization"
and "Description of Exchange Notes."
TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH. OUR
ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL.
Our ability to make payments on and to refinance our indebtedness,
including the notes, and to fund operations will depend on our ability to
generate cash in the future. This, to a certain extent, is subject to general
economic, financial, competitive, business and other factors that are beyond our
control.
Our historical financial results have been, and we anticipate that our
future financial results will be, subject to fluctuation. We cannot assure you
that our business will generate sufficient cash flow from operations, that
currently anticipated cost savings and operating improvements will be realized
on schedule or that future borrowings will be available to us under our credit
facilities or otherwise in amounts sufficient to enable us to pay our
indebtedness, including the notes, or to fund our other liquidity needs. If we
are unable to meet our debt obligations or fund our other liquidity needs, we
may need to restructure or refinance all or a portion of our indebtedness,
including the notes, on or before maturity. We cannot assure you that we will be
able to restructure or refinance any of our indebtedness on satisfactory terms,
if at all, which could cause us to default on our obligations and impair our
liquidity. Our ability to restructure or refinance our debt will depend on the
condition of the capital markets and our financial condition at such time. Any
refinancing of our debt could be at higher interest rates and may require us to
comply with more onerous covenants, which could further restrict our business
operations.
RESTRICTIVE COVENANTS IN THE NOTES AND OUR OTHER INDEBTEDNESS COULD ADVERSELY
AFFECT OUR BUSINESS BY LIMITING OUR OPERATING AND STRATEGIC FLEXIBILITY.
The indenture relating to the notes, the indenture relating to our senior
subordinated notes, and our credit facilities, as these facilities are amended
from time to time, contain, as applicable, restrictive covenants, subject to
certain exceptions, that limit our ability to, among other things:
- incur additional indebtedness (including specified senior indebtedness);
- pay dividends or make certain other distributions;
- repurchase or redeem capital stock or subordinated indebtedness;
- make investments;
- create liens or enter into sale and leaseback transactions;
- sell assets;
- enter into transactions with affiliates;
- incur restrictions on the ability of our respective subsidiaries to pay
dividends or make other payments to us;
- merge or consolidate with or into any other person or transfer all or
substantially all of our assets; and
- transfer or issue shares of capital stock of restricted subsidiaries.
As a result of these covenants, our ability to respond to changing business
and economic conditions and to secure additional financing may be significantly
restricted, and we may be prevented from engaging in transactions, including
acquisitions, that might be considered important to our growth strategy or
otherwise beneficial to us. Any breach of these covenants could cause a default
under our other debt and the notes. As a result, a substantial portion of our
debt then may become immediately due and payable. We are not certain whether we
would have, or would be able to obtain, sufficient funds to be able to make
11
these accelerated payments on our other debt and the notes. Such covenants may
also limit our ability to finance future operations and capital needs.
FAILURE TO MEET OBLIGATIONS UNDER OUR CREDIT FACILITIES COULD AFFECT OUR ABILITY
TO REPAY OUR INDEBTEDNESS.
Our existing credit facilities also require us to maintain specified
financial ratios, including various leverage ratios and interest coverage
ratios. Our ability to meet these financial ratios can be affected by events
beyond our control, and we cannot assure you that we will meet those ratios. A
breach of any of these covenants or restrictions or our inability to comply with
the required financial ratios could result in an event of default under our
credit facilities. In the event of any default under our credit facilities, the
lenders thereunder will not be required to lend any additional amounts to us and
could elect to declare all outstanding borrowings, together with accrued
interest, to be due and payable. The acceleration of outstanding loans under our
credit facilities in excess of $20.0 million or the failure to pay any principal
amount of, or interest on, any such loans would constitute an event of default
with respect to the notes and the senior subordinated notes. If the lenders
under our credit facilities accelerate the payment of that indebtedness, we
cannot assure you that our assets would be sufficient to repay in full that
indebtedness and any other debt, including the notes, that may also be
accelerated following the acceleration of our credit facilities. In the recent
past we have had to obtain waivers from our lenders under each of our credit
facilities to waive compliance with certain financial ratios and other covenants
stipulated under those facilities. See "Description of Exchange Notes."
ALTHOUGH THE NOTES ARE REFERRED TO AS "SENIOR NOTES," THEY WILL BE EFFECTIVELY
SUBORDINATED TO ANY SECURED INDEBTEDNESS OF JLG AND THE SUBSIDIARY GUARANTORS
AND ALL OBLIGATIONS OF THE NON-GUARANTOR SUBSIDIARIES.
The notes will be unsecured obligations of JLG and will be guaranteed by
substantially all of our existing and future material domestic subsidiaries. The
notes will not be guaranteed by our other subsidiaries (including all of our
foreign subsidiaries). Our credit facilities are currently secured by a security
interest in certain of the assets of the Company and certain of its
subsidiaries, including certain accounts and finance receivables, domestic
inventory, equipment and chattel paper, as well as pledges of stock of certain
of the Company's subsidiaries. The indenture for the notes will allow us to
secure indebtedness incurred under our credit facilities, or any debt incurred
to refinance such facilities up to an aggregate amount of $275 million, with
additional or different collateral and to secure certain other indebtedness
incurred to finance acquisitions with assets so acquired. The indenture for the
notes also allows us to secure limited recourse debt that we are otherwise
allowed to incur under the indenture by pledged finance receivables. As a result
of this structure, the notes will be effectively subordinated to any existing
and future secured indebtedness of JLG and the subsidiary guarantors, to the
extent of the value of the collateral, and all indebtedness and other
obligations, including trade payables, of our non-guarantor subsidiaries. The
effect of this subordination is that, in the event of a bankruptcy, liquidation,
dissolution, reorganization or similar proceeding involving us or a subsidiary,
the assets of the affected entity could not be used to pay you until after:
- all secured claims against the affected entity have been fully paid; and
- if the affected entity is a non-guarantor subsidiary, all other claims
against that subsidiary, including trade payables, have been fully paid.
In addition, holders of minority equity interests in non-guarantor
subsidiaries may receive distributions prior to or pro rata with us depending on
the terms of the equity interests. Our non-guarantor subsidiaries generated
approximately 13% and 17% of our total revenues during the 2002 fiscal year and
the nine-month period ended April 30, 2003, respectively, and had approximately
18% of our total assets as of April 30, 2003. As of the same date, our
non-guarantor subsidiaries had approximately $38.1 million of consolidated total
liabilities (including trade payables but excluding debt owed to the Company or
any guarantor subsidiary) outstanding.
12
FEDERAL AND STATE STATUTES ALLOW COURTS, UNDER SPECIFIC CIRCUMSTANCES, TO VOID
GUARANTEES AND REQUIRE NOTE HOLDERS TO RETURN PAYMENTS RECEIVED FROM GUARANTORS.
AS A RESULT, THE GUARANTEES FROM OUR SUBSIDIARIES MAY NOT BE ENFORCEABLE.
All of our existing and future material domestic subsidiaries will
guarantee the notes. If, however, any subsidiary guarantor becomes a debtor in a
case under the United States Bankruptcy Code or encounters other financial
difficulty, under federal or state fraudulent transfer laws, its obligations
under the guarantee of the notes could be voided (that is the guarantee could be
canceled) or claims in respect of its guarantee could be subordinated to all
other debts of that guarantor. A court might cancel a guarantee if it found that
when the subsidiary entered into its guarantee, or in some states, when payments
become due under the guarantee, it:
- received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee; and
- either (1) was insolvent or rendered insolvent by reason of such
incurrence, (2) was left with inadequate capital to conduct its business,
or (3) believed or reasonably should have believed that it would incur
debts beyond its ability to pay.
The court might also avoid a subsidiary's guarantee without regard to those
factors, if it found that the subsidiary entered into its guarantee with actual
intent to hinder, delay or defraud its creditors.
A court would likely find that a guarantor did not receive reasonably
equivalent value or fair consideration for its guarantee if the guarantor did
not substantially benefit directly or indirectly from the issuance of the notes.
If a court voided a guarantee, you would no longer have a claim against the
guarantor. Sufficient funds to repay the notes may not be available from other
sources, including the remaining guarantors, if any. In addition, the court
might direct you to repay any amounts that you already received from the
subsidiary guarantor.
The test for determining solvency in these circumstances will depend on the
law of the jurisdiction that is being applied. In general, a court would
consider the subsidiary insolvent either if the sum of its existing debts
exceeds the fair value of all its property, or if its assets' present fair value
is less than the amount required to pay the probable liability on its existing
debts as they become due. For this analysis, "debts" includes contingent and
unliquidated debts.
Each subsidiary guarantee will contain a provision intended to limit the
guarantor's liability to the maximum amount that it could incur without causing
the incurrence of obligations under its subsidiary to be a fraudulent transfer.
This provision may not be effective to protect the subsidiary guarantees from
attack under fraudulent transfer law. Even if this provision is effective, the
amount that the subsidiary guarantor is found to have guaranteed might be so low
that there will not be sufficient funds to pay the notes in full.
WE MAY NOT BE ABLE TO REPURCHASE THE NOTES UPON A CHANGE OF CONTROL.
If we experience a change of control, we will be required to make an offer
to purchase all outstanding notes at 101% of their principal amount plus accrued
and unpaid interest, if any, to the date of repurchase. However, we may be
unable to do so because:
- we might not have enough available funds, particularly since a change of
control could cause part or all of our other indebtedness to become due;
and
- the agreements governing our credit facilities would prohibit us from
repurchasing the notes so long as any loans under these facilities are
outstanding and the commitments under these facilities have not
terminated, unless we were able to obtain a waiver or refinance such
indebtedness, which we may not be able to do.
13
RISKS RELATED TO OUR BUSINESS
OUR BUSINESS IS HIGHLY CYCLICAL AND SEASONAL.
Historically, sales of our products have been subject to cyclical
variations caused by changes in general economic conditions. The demand for our
products reflects the capital investment decisions of our customers, which
depend upon the general economic conditions of the markets that our customers
serve, including, particularly, the construction and industrial sectors of the
North American and European economies. During periods of expansion in
construction and industrial activity, we generally have benefited from increased
demand for our products. Conversely, downward economic cycles in construction
and industrial activities result in reductions in sales and pricing of our
products, which may reduce our profits and cash flow. During economic downturns,
customers also tend to delay purchases of new products.
The U.S. and European construction industries, particularly the
non-residential construction industries, are currently experiencing a downturn,
which is adversely affecting suppliers to the construction industry, including
our company and the equipment rental companies that purchase our products. For
example, the recent downturn has adversely affected our business and results of
operations as revenues from our customers declined by 20% in fiscal 2002, from
approximately $963.9 million in fiscal 2001 to approximately $770.1 million in
fiscal 2002, and our income from operations declined by 58%, from approximately
$73.7 million in fiscal 2001 to approximately $30.7 million in fiscal 2002. If
the current downturn continues or if there is further degradation in the general
economy or in the industries our customers serve, our business, results of
operations and financial condition could be adversely affected.
In addition, our business is highly seasonal with the majority of our sales
occurring in the spring and summer months which constitute the traditional
construction season. The cyclical and seasonal nature of our business could at
times also adversely affect our liquidity and ability to borrow under our credit
facilities.
OUR CUSTOMER BASE IS CONSOLIDATED AND A RELATIVELY SMALL NUMBER OF CUSTOMERS
ACCOUNT FOR A MAJORITY OF OUR SALES.
Our principal customers are equipment rental companies that purchase our
equipment and rent it to end-users. In recent years, there has been substantial
consolidation among rental companies, particularly in North America, which is
our largest market. A limited number of these companies accounts for a
substantial majority of our sales. United Rentals, Inc., the largest equipment
rental company in North America, accounted for approximately 20% and 21% of our
revenues for fiscal years 2001 and 2002, respectively. Some of these large
customers, including United Rentals, are burdened by substantial debt and have
limited liquidity, which has recently constrained their ability to purchase
additional equipment and has contributed to their decision to significantly
reduce capital spending. Purchasing patterns by some of these large customers
also can be erratic with large volume purchases during one period followed by
periods of limited purchasing activity. Any substantial change in purchasing
decisions by one or more of our major customers, whether due to actions by our
competitors, customer financial constraints or otherwise, could have an adverse
effect on our business. In addition, the reduction of the number of customers
has increased competition, in particular on the basis of pricing.
IF THE CAPITAL GOODS MARKET WORSENS, THE COST SAVING EFFORTS WE HAVE IMPLEMENTED
MAY NOT BE SUFFICIENT TO ACHIEVE THE BENEFITS WE EXPECT.
In fiscal 2003, we announced certain actions to streamline operations and
reduce costs, which included the temporary idling of our 130,000-square foot
Sunnyside facility in Bedford, Pennsylvania, and other global organizational and
process consolidations. As a result of these actions, we expect to record
charges to operations of approximately $5.9 million and to spend an additional
$3.5 million in capital improvements, but we expect to realize $20 million in
annualized cost savings. If the economy continues to worsen, or the capital
goods market does not improve, our revenues could continue to decline. If
revenues are lower than our expectations, the efforts we have implemented may
not achieve the benefits we expect.
14
We may be forced to take additional cost savings steps that could result in
additional charges and materially affect our ability to compete or implement our
business strategies.
OUR CUSTOMERS NEED FINANCING TO PURCHASE OUR PRODUCTS, WHICH EXPOSES US TO
ADDITIONAL CREDIT RISK.
Availability and cost of financing are significant factors that affect
demand for our products. Many of our customers can purchase equipment only when
financing is available to them at a reasonable cost. Some of our customers are
unable to obtain all of the financing needed to fully fund their entire demand
of our equipment from banks or other third-party credit providers. We offer a
variety of financing programs and terms to our customers. These include open
account sales, installment sales, finance leases, and guarantees or other credit
enhancements of financing provided to our customers by third parties. Our
financing transactions expose us to credit risk, including the risk of default
by customers and any disparity between the cost and maturity of our funding
sources and the yield and maturity of financing that we provide to our
customers. We believe that our customers are most likely to seek financing from
us during economic downturns, which increases our risk in providing this
financing.
WE MAY NOT REALIZE CASH FLOW FROM OUR FINANCIAL SERVICES OPERATIONS.
Our Access Financial Solutions segment, which includes leases, loans and
guarantees, is new and has grown rapidly. Although we recognize revenues from
sales in which we provide financing, providing financing to our customers
requires us to use cash from operations or borrowings. If we are unable to
monetize the finance receivables that we originate, we may not realize positive
cash flow from these activities, which could adversely affect our results of
operations and liquidity.
WE MAY NOT BE ABLE TO SATISFY ALL CREDIT REQUESTS BY OUR CUSTOMERS.
Due to restrictions contained in our credit facilities and our otherwise
limited capital, we may not be able to fund or otherwise satisfy all credit
requests by our customers, which could adversely affect our future sales. Our
ability to continue to meet customer credit needs depends largely on our ability
to generate funds by syndicating or securitizing finance receivables, either by
selling them to a third party or by getting a loan from a third party secured by
such finance receivables, or our ability through credit enhancements or
otherwise to induce third parties to extend credit to our customers. Factors
that may affect our prospects for completing such monetization transactions
include the credit quality and customer concentration of our existing and future
portfolios of finance receivables, market availability for such transactions,
and current and potential changes in accounting rules that may impact the
accounting treatment of monetization transactions. As with financing provided by
third parties in which we offer credit enhancement, in some securitizations and
sales of finance receivables, we expect the third party to have limited recourse
to us. If we are unable to generate funds through these or other types of
monetization transactions, or otherwise induce third parties to satisfy customer
credit demands, we may be unable to sustain our future business plan.
WE MAY EXPERIENCE CREDIT LOSSES IN EXCESS OF OUR ALLOWANCES AND RESERVES FOR
DOUBTFUL ACCOUNTS.
We evaluate the collectibility of open accounts and finance receivables
based on a combination of factors and establish reserves based on our estimates
of potential losses. In circumstances where we are aware of a specific
customer's inability to meet its financial obligations, a specific reserve is
recorded against amounts due to reduce the net recognized receivable to the
amount reasonably expected to be collected. Additional reserves are established
based upon our perception of the quality of the current receivables, the current
financial position of our customers and past experience of collectibility. Our
receivables portfolio has grown rapidly and our historical loss experience is
limited and therefore may not necessarily be indicative of future loss
experience. If the financial condition of our customers were to deteriorate
resulting in an impairment of their ability to make payments, additional
allowances would be required.
15
WE MAY FACE LIMITATIONS ON OUR ABILITY TO FINANCE FUTURE ACQUISITIONS AND
INTEGRATE ACQUIRED BUSINESSES.
As with our recently announced acquisition of the OmniQuip business unit of
Textron Inc., we intend to continue our strategy of identifying and acquiring
businesses with complementary products and services, which we believe will
enhance our operations and profitability. We may pay for future acquisitions
from internally generated funds, bank borrowings, public or private securities
offerings, or some combination of these methods. However, we may not be able to
find suitable businesses to purchase or may be unable to acquire desired
businesses or assets on economically acceptable terms. In addition, we may not
be able to raise the money necessary to complete future acquisitions. In the
event we are unable to complete future strategic acquisitions, we may not grow
in accordance with our expectations.
In addition, we cannot guarantee that we will be able to successfully
integrate the OmniQuip business or any other business we purchase into our
existing business or that any acquired businesses will be profitable. The
successful integration of new businesses depends on our ability to manage these
new businesses and cut excess costs. The successful integration of future
acquisitions may also require substantial attention from our senior management
and the management of the acquired companies, which could decrease the time that
they have to service and attract customers and develop new products and
services. In addition, because we may pursue acquisitions both in the United
States and abroad and may actively pursue a number of opportunities
simultaneously, we may encounter unforeseen expenses, complications and delays,
including difficulties in employing sufficient staff and maintaining operational
and management oversight. Our inability to complete the integration of new
businesses in a timely and orderly manner could have a materially adverse effect
on our results of operations and financial condition.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY.
We compete in a highly competitive industry. To compete successfully, our
products must excel in terms of quality, price, breadth of product line,
efficiency of use and maintenance costs, safety and comfort, and we must also
provide excellent customer service. The greater financial resources of certain
of our competitors and their ability to provide additional customer financing or
pricing discounts may put us at a competitive disadvantage. In addition, the
greater financial resources or the lower amount of debt of certain of our
competitors may enable them to commit larger amounts of capital in response to
changing market conditions. Certain competitors also may have the ability to
develop product or service innovations that could put us at a disadvantage. If
we are unable to compete successfully against other manufacturers of access
equipment, we could lose customers and our revenues may decline. There can also
be no assurance that customers will continue to regard our products favorably,
that we will be able to develop new products that appeal to customers, that we
will be able to improve or maintain our profit margins on sales to our customers
or that we will be able to continue to compete successfully in the access
equipment segment.
OUR PRODUCTS INVOLVE RISKS OF PERSONAL INJURY AND PROPERTY DAMAGE, WHICH EXPOSES
US TO POTENTIAL LIABILITY.
Our business exposes us to possible claims for personal injury or death and
property damage resulting from the use of equipment that we rent or sell. We
maintain insurance through a combination of self-insurance retentions and excess
insurance coverage. We monitor claims and potential claims of which we become
aware and establish accrued liability reserves for the self-insurance amounts
based on our liability estimates for such claims. We cannot give any assurance
that existing or future claims will not exceed our estimates for self-insurance
or the amount of our excess insurance coverage. In addition, we cannot give any
assurance that insurance will continue to be available to us on economically
reasonable terms or that our insurers would not require us to increase our
self-insurance amounts.
OUR MANUFACTURING OPERATIONS ARE DEPENDENT UPON THIRD-PARTY SUPPLIERS, MAKING US
VULNERABLE TO SUPPLY SHORTAGES AND PRICE INCREASES.
In the manufacture of our products, we use large amounts of raw materials
and processed inputs including steel, engine components, copper and electronic
controls. We obtain raw materials and certain
16
manufactured components from third-party suppliers. To reduce material costs and
inventories, we rely on supplier arrangements with preferred vendors as a sole
source for "just-in-time" delivery of many raw materials and manufactured
components. Because we maintain limited raw material inventories, even brief
unanticipated delays in delivery by suppliers, including those due to capacity
constraints, labor disputes, impaired financial condition of suppliers, weather
emergencies or other natural disasters, may adversely affect our ability to
satisfy our customers on a timely basis and thereby affect our financial
performance. This risk increases as we continue to change our manufacturing
model to more closely align production with customer orders. In addition,
recently, market prices of some of the raw materials we use (such as steel) have
increased significantly. If we are not able to pass raw material or component
price increases on to our customers, our margins could be adversely affected.
WE FACE RISKS WITH RESPECT TO OUR INTRODUCTION OF NEW PRODUCTS AND SERVICES.
Our business strategy includes the introduction of new products and
services. Some of these products or services may be introduced to compete with
existing offerings of competing businesses, while others may target new and
unproven markets. We must make substantial expenditures in order to introduce
new products and services or to enter new markets. We cannot give any assurance
that our introduction of new products or services or entry into new markets will
be profitable or otherwise generate sufficient incremental revenues to recover
the expenditures necessary to launch such initiatives. Such initiatives also may
expose us to other types of regulation or liabilities than those to which our
business is currently exposed.
WE ARE SUBJECT TO CURRENCY FLUCTUATIONS FROM OUR INTERNATIONAL SALES.
Our products are sold in many countries around the world. Thus, a portion
of our revenues is generated in foreign currencies, including principally the
euro, the British pound sterling and the Australian dollar, while costs incurred
to generate those revenues are only partly incurred in the same currencies.
Since our financial statements are denominated in U.S. dollars, changes in
currency exchange rates between the U.S. dollar and other currencies have had,
and will continue to have, an impact on our earnings. To reduce this currency
exchange risk, we may buy protecting or offsetting positions (known as "hedges")
in certain currencies to reduce the risk of an adverse currency exchange
movement. Currency fluctuations may impact our financial performance in the
future.
OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO A VARIETY OF POTENTIAL RISKS.
International operations represent a significant portion of our business.
For fiscal 2002, approximately 28% of our revenues was derived from sales
outside the United States. We expect net revenues from foreign markets to
continue to represent a significant portion of our total net revenues. Outside
the United States, we operate a manufacturing facility in Belgium and 20 sales
and service facilities elsewhere. We also sell domestically manufactured
products to foreign customers.
Our international operations are subject to a number of potential risks in
addition to the risks of our domestic operations. Such risks include, among
others:
- currency exchange controls;
- labor unrest;
- differing, and in many cases more stringent, labor regulations;
- differing protection of intellectual property;
- regional economic uncertainty;
- political instability;
- restrictions on the transfer of funds into or out of a country;
- export duties and quotas;
17
- domestic and foreign customs and tariffs;
- current and changing regulatory environments;
- difficulty in obtaining distribution support;
- difficulty in staffing and managing widespread operations;
- differences in the availability and terms of financing; and
- potentially adverse tax consequences.
These factors may have an adverse effect on our international operations,
or on the ability of our international operations to repatriate earnings to us,
in the future.
Part of our strategy to expand our worldwide market share and decrease
costs is strengthening our international distribution capabilities and sourcing
basic components in foreign countries, in particular in Europe. Implementation
of this strategy may increase the impact of the risks described above and we
cannot assure you that such risks will not have an adverse effect on our
business, results of operations or financial condition.
COMPLIANCE WITH ENVIRONMENTAL AND OTHER GOVERNMENTAL REGULATIONS COULD BE COSTLY
AND REQUIRE US TO MAKE SIGNIFICANT EXPENDITURES.
We generate hazardous and non-hazardous wastes in the normal course of our
manufacturing and service operations. As a result, we are subject to a wide
range of federal, state, local and foreign environmental laws and regulations.
These laws and regulations govern actions that may have adverse environmental
effects and also require compliance with certain practices when handling and
disposing of hazardous and non-hazardous wastes. These laws and regulations also
impose liability for the cost of, and damages resulting from, cleaning up sites,
past spills, disposals and other releases of, or exposure to, hazardous
substances. In addition, our operations are subject to other laws and
regulations relating to the protection of the environment and human health and
safety, including those governing air emissions and water and waste water
discharges. Compliance with these environmental laws and regulations requires us
to make expenditures.
Despite our compliance efforts, risk of environmental liability is part of
the nature of our business. We cannot give any assurance that environmental
liabilities, including compliance and remediation costs, will not have a
material adverse effect on us in the future. In addition, acquisitions or other
future events may lead to additional compliance or other costs that could have a
material adverse effect on our business.
WE RELY ON KEY MANAGEMENT AND OUR ABILITY TO ATTRACT SUCCESSOR MANAGEMENT
PERSONNEL.
We rely on the management and leadership skills of our senior management
team led by William M. Lasky, Chairman of the Board, President and Chief
Executive Officer. Generally, these employees (including Mr. Lasky) are not
bound by employment or non-competition agreements. The loss of the services of
Mr. Lasky or of other key personnel could have a significant, negative impact on
our business. Similarly, any difficulty in attracting, assimilating and
retaining other key management employees in the future could adversely affect
our business.
TERRORISTS' ACTIONS, MILITARY ACTION IN IRAQ, AND OTHER WORLD EVENTS HAVE AND
COULD NEGATIVELY IMPACT THE U.S. ECONOMY AND THE OTHER MARKETS IN WHICH WE
OPERATE.
Terrorist attacks, like those that occurred on September 11, 2001, and the
military action in Iraq have contributed to economic instability in the United
States and elsewhere, and further acts of terrorism, violence or war could
further affect the markets in which we operate, our business, financial results
and our expectations. There can be no assurance that terrorist attacks, or
responses to such attacks from the United States, will not lead to further acts
of terrorism and civil disturbances in the United States or elsewhere or to
armed hostilities, which may further contribute to economic instability in the
United
18
States. These attacks or armed conflicts may directly impact our physical
facilities or those of our suppliers or customers and could impact our domestic
or international revenues, our supply chain, our production capability and our
ability to deliver our products and services to our customers.
RISKS RELATED TO THIS EXCHANGE OFFER
IF YOU DO NOT PROPERLY TENDER YOUR ORIGINAL NOTES FOR EXCHANGE NOTES, YOU WILL
CONTINUE TO HOLD UNREGISTERED NOTES WHICH ARE SUBJECT TO TRANSFER RESTRICTIONS.
We will only issue exchange notes in exchange for original notes that are
timely received by the exchange agent together with all required documents.
Therefore, you should allow sufficient time to ensure timely delivery of the
original notes and you should carefully follow the instructions on how to tender
your original notes set forth under "The Exchange Offer -- Procedures for
Tendering Original Notes" and in the letter of transmittal that you will receive
with this prospectus. Neither we nor the exchange agent are required to tell you
of any defects or irregularities with respect to your tender of the original
notes.
If you do not tender your original notes or if we do not accept your
original notes because you did not tender your original notes properly, then you
will continue to hold original notes that are subject to the existing transfer
restrictions. In addition, if you tender your original notes for the purpose of
participating in a distribution of the exchange notes, you will be required to
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale of the exchange notes. If you
continue to hold any original notes after the exchange offer is completed, you
may have difficulty selling them because of the restrictions on transfer and
because there will be fewer original notes outstanding. In addition, if a large
amount of original notes are not tendered or are tendered improperly, the
limited amount of exchange notes that would be issued and outstanding after we
complete the exchange offer could lower the market price of the exchange notes.
IF AN ACTIVE TRADING MARKET DOES NOT DEVELOP FOR THE EXCHANGE NOTES, YOU MAY BE
UNABLE TO SELL THE EXCHANGE NOTES OR TO SELL THEM AT A PRICE YOU DEEM
SUFFICIENT.
The exchange notes will be new securities for which there is no established
trading market. We do not intend to list the exchange notes on any national
securities exchange or Nasdaq. We cannot give you any assurance as to:
- the liquidity of any trading market that may develop;
- the ability of holders to sell their exchange notes; or
- the price at which holders would be able to sell their exchange notes.
Even if a trading market develops, the exchange notes may trade at higher
or lower prices than their principal amount or purchase price, depending on many
factors, including:
- prevailing interest rates;
- the number of holders of the exchange notes;
- the interest of securities dealers in making a market for the exchange
notes;
- the market for similar exchange notes; and
- our operating performance and financial condition.
Moreover, the market for non-investment grade debt has historically been
subject to disruptions that have caused volatility in prices. It is possible
that the market for the notes will be subject to disruptions. A disruption may
have a negative effect on you as a holder of the notes, regardless of our
prospects or performance.
19
Finally, if a large number of holders of original notes do not tender
original notes or tender original notes improperly, the limited amount of
exchange notes that would be issued and outstanding after we complete the
exchange offer could adversely affect the development of a market for the
exchange notes.
RECENT DEVELOPMENTS
On August 4, 2003, we announced the completion of our acquisition of the
OmniQuip business unit of Textron Inc. We purchased the assets of Trak
International, Inc., which include all operations relating to the Sky Trak and
Lull brand telehandler products. The purchase price was $100 million, with $90
million paid in cash at closing and $10 million paid in the form of an unsecured
subordinated promissory note due on the second anniversary of the closing date.
On July 9, 2003, Moody's Investor Service placed our ratings on review for
possible downgrade in response to our planned acquisition of OmniQuip. On July
11, 2003, Standard & Poor's Rating Service placed its "BB" corporate credit and
senior unsecured debt ratings on CreditWatch with negative implications.
USE OF PROCEEDS
We will not receive any proceeds from the exchange offer. In consideration
for issuing the exchange notes as contemplated in this prospectus, we will
receive outstanding original notes in like principal amount. We will cancel all
original notes surrendered in exchange for exchange notes in the exchange offer.
We used the net proceeds from the sale of the original notes, which were
approximately $120 million, to pay all outstanding loans under our $250 million
revolving credit facility. The balance of the net proceeds will be used for
general corporate purposes, including acquisitions, the repurchase (subject to
market conditions) of outstanding debt and working capital.
We closed the offering concurrently with the amendment of our credit
facilities. In conjunction with the amendment of our $250 million revolving
credit facility, we reduced the aggregate commitments under that facility to
$150 million. Proceeds will not be used to reduce borrowings under our overdraft
credit facility.
20
CAPITALIZATION
The following table shows our actual historical consolidated cash and cash
equivalents and capitalization as of April 30, 2003, and as adjusted to reflect
the sale of the original notes and the application of the estimated net proceeds
therefrom, as if we had completed the offering of original notes on April 30,
2003. See "Use of Proceeds."
You should read the capitalization table below in conjunction with our
consolidated financial statements and the related notes to those financial
statements included in our quarterly report filed on Form 10-Q filed on May 29,
2003.
<Table>
<Caption>
AS OF APRIL 30, 2003
------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
Cash and cash equivalents................................... $ 16,529 $106,241
======== ========
Short-term debt:
Overdraft credit facility(1).............................. -- --
Current portion of long-term debt......................... 912 912
Current portion of limited recourse debt(2)............... 50,980 50,980
-------- --------
51,892 51,892
-------- --------
Long-term debt:
Revolving credit facility due 2004(1)..................... 30,288 --
Senior notes offered hereby............................... -- 125,000
Limited recourse debt(2).................................. 113,673 113,673
8 3/8% Senior subordinated notes.......................... 175,000 175,000
Other..................................................... 6,718 6,718
-------- --------
325,679 420,391
-------- --------
Total debt............................................. 377,571 472,283
======== ========
Total shareholders' equity.................................. 245,034 245,034
======== ========
Total capitalization........................................ $622,605 $717,317
======== ========
</Table>
- ---------------
(1) As of April 30, 2003, the weighted-average interest rate on the revolving
credit facility was 4.53%. By amendments dated July 8, 2003, the maturity of
the overdraft credit facility and the revolving credit facility was changed
to December 31, 2003.
(2) Refers to indebtedness related to the monetization of finance receivables,
for which our maximum loss exposure was $18.9 million as of April 30, 2003.
21
SUPPLEMENTAL INFORMATION REGARDING FINANCIAL CONDITION
The following information is intended to supplement the information that
appears under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Financial Condition" contained in our
Quarterly Report on Form 10-Q for the third fiscal quarter ended April 30, 2003
that is incorporated by reference into this prospectus.
Our principle sources of liquidity are cash generated from operations,
unallocated proceeds from our May 2003 sale of $125 million principal amount of
our 8 1/4% senior unsecured notes due 2008, borrowings under our $175 million of
existing credit facilities, and monetizations of finance receivables.
Availability of funds under our credit facilities depends upon our continued
compliance with certain covenants, including certain financial ratios, with
which we are currently in compliance. Availability of monetizations of finance
receivables depends upon the credit quality of our customers, the degree of
credit enhancement that we are able to offer, and market demand among third
party financial institutions for our finance receivables. We believe our current
credit facilities and monetization arrangements provide sufficient liquidity for
our near-term requirements.
In addition, we are in the process of replacing and supplementing our
existing credit facilities and expanding our sources of third-party funding for
customer financing to meet anticipated changes in our operations. Assuming
timely closing of these transactions and continued compliance with applicable
covenants, we believe these replacement and supplemental facilities, combined
with cash expected to be generated from operations, will continue to meet our
expected liquidity requirements through at least the end of fiscal year 2004.
On July 8, 2003 we entered into amendments to our $150 million revolving
credit facility to change the administrative agent bank from Wachovia Bank to
SunTrust Bank, to authorize the OmniQuip transaction and certain debt and liens
that would be incurred thereby, to modify certain financial covenants to give us
greater operating flexibility, and to change the termination date of the
facility from June 18, 2004 to December 31, 2003. Simultaneously, we entered
into parallel amendments to our $25 million overdraft facility.
On July 30, 2003, we received a financing commitment, subject to customary
conditions, from SunTrust Bank to enter into a new three-year $175 million
senior secured revolving credit facility that would replace our current $150
million revolving credit facility. We expect the financial covenants and other
terms of the new SunTrust facility to afford us financing flexibility consistent
with our operating plans, including following consummation of the OmniQuip
transaction. In addition to requiring compliance with financial and other
covenants, the availability of credit under the new facility will be limited by
a borrowing base determined by reference to certain percentages of our eligible
inventory and accounts receivable. We expect to close the new SunTrust facility
during our first quarter of fiscal 2004.
On August 4, 2003, we announced the completion of our acquisition of the
OmniQuip business unit of Textron Inc. which includes all operations relating to
the Sky Trak and Lull brand telehandler products. See "Recent Developments." The
purchase price was $100 million, with $90 million paid in cash at closing and
$10 million paid in the form of an unsecured subordinated promissory note due on
the second anniversary of the closing date. We funded the cash portion of the
purchase price and anticipate funding transaction and integration expenses with
remaining unallocated proceeds from the sale of our $125 million senior
unsecured notes and borrowings under our existing or future credit facilities.
22
THE EXCHANGE OFFER
GENERAL
We are offering to exchange up to $125,000,000 in aggregate principal
amount of exchange notes for the same aggregate principal amount of original
notes, properly tendered before the expiration date and not withdrawn. We are
making the exchange offer for all of the original notes. Your participation in
the exchange offer is voluntary, and you should carefully consider whether to
accept this offer.
On the date of this prospectus, $125,000,000 in aggregate principal amount
of the original notes due 2008 are outstanding. Our obligations to accept
original notes for exchange notes pursuant to the exchange offer are limited by
the conditions listed below under "-- Conditions to the Exchange Offer."
We currently expect that each of the conditions will be satisfied and that
no waivers will be necessary.
PURPOSE OF THE EXCHANGE OFFER
We issued and sold $125,000,000 in aggregate principal amount of the
original notes on May 5, 2003 in a transaction exempt from the registration
requirements of the Securities Act. The initial purchasers of the notes
subsequently resold the original notes to qualified institutional buyers in
reliance on Rule 144A and under Regulation S under the Securities Act.
Because the transaction was exempt from registration under the Securities
Act, a holder may reoffer, resell or otherwise transfer the original notes only
if registered under the Securities Act or if an applicable exemption from the
registration and prospectus delivery requirements of the Securities Act is
available.
In connection with the issuance and sale of the original notes, we entered
into the registration rights agreement, which requires us to (1) file a
registration statement under the Securities Act with respect to the exchange
notes on or before August 4, 2003, which is 90 days after May 5, 2003, the date
of the closing of the offering of the original notes, (2) use commercially
reasonable efforts to cause the registration statement to become effective under
the Securities Act by December 1, 2003, which is 210 days after the closing of
the offering of the original notes, and (3) to complete this exchange within 20
business days after the registration statement has been declared effective to
avoid incurring additional interest on the original notes.
If there is a change in SEC policy that in the reasonable opinion of our
counsel raises a substantial question as to whether the exchange offer is
permitted by applicable federal law, we will seek a favorable decision from the
SEC allowing us to consummate the exchange offer. In addition, there are
circumstances under which we are required to file a shelf registration statement
with respect to resales of the original notes. We have filed a copy of the
registration rights agreement as an exhibit to the registration statement on
Form S-4 with respect to the exchange notes offered by this prospectus.
We are making the exchange offer to satisfy our obligations under the
registration rights agreement. Otherwise, we are not required to file any
registration statement to register any original notes. Holders of original notes
that do not tender their original notes or whose original notes are tendered but
not accepted will have to rely on exemptions to registration requirements under
the securities laws, including the Securities Act, if they wish to sell their
original notes.
Each broker-dealer that receives exchange notes for its own account in
exchange for original notes, where such original notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. See "Plan of Distribution."
RESALE OF EXCHANGE NOTES
We have not requested, and do not intend to request, an interpretation by
the staff of the SEC as to whether the exchange notes issued pursuant to the
exchange offer in exchange for the original notes may be offered for sale,
resold or otherwise transferred by any holder without compliance with the
registration
23
and prospectus delivery provisions of the Securities Act. Instead, based on an
interpretation by the staff in a series of no-action letters issued to third
parties, we believe that exchange notes issued pursuant to the exchange offer in
exchange for original notes may be offered for sale, resold and otherwise
transferred by any holder of exchange notes if:
- the holder is not our affiliate within the meaning of Rule 405 under the
Securities Act;
- the holder is not a broker-dealer who purchases such exchange notes
directly from us to resell pursuant to Rule 144A or any other available
exception under the Securities Act;
- the exchange notes are acquired in the ordinary course of the holder's
business; and
- the holder does not intend to participate in a distribution of the
exchange notes.
Any holder who exchanges original notes in the exchange offer with the
intention of participating in any manner in a distribution of the exchange notes
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction.
Because the SEC has not considered our exchange offer in the context of a
no-action letter, we cannot assure you that the staff would make a similar
determination with respect to the exchange offer. Any holder that is an
affiliate of ours or that tenders in the exchange offer for the purpose of
participating in a distribution of the exchange notes may be deemed to have
received restricted securities and will not be allowed to rely on this
interpretation by the staff and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with any resale
transaction.
If you participate in the exchange offer, you must acknowledge, among other
things, that you are not participating in, and do not intend to participate in,
a distribution of exchange notes. If you are a broker-dealer that receives
exchange notes for your own account in exchange for original notes, and you
acquired your original notes as a result of your market-making activities or
other trading activities, you must acknowledge that you will deliver a
prospectus in connection with any resale of the exchange notes. Please refer to
the section in this prospectus entitled "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, we will accept for exchange any original notes
properly tendered and not withdrawn before expiration of the exchange offer. The
date of acceptance for exchange of the original notes and completion of the
exchange offer, is the exchange date, which will be the first business day
following the expiration date unless we extend the date as described in this
prospectus. We will issue $1,000 principal amount of exchange notes in exchange
for each $1,000 principal amount of original notes surrendered under the
exchange offer. The original notes may be tendered only in integral multiples of
$1,000. The exchange notes will be delivered on the earliest practicable date
following the exchange date.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the original notes, except the exchange notes:
- will be registered under the Securities Act; and
- will not bear legends restricting their transfer.
The exchange notes will evidence the same debt as the original notes. The
exchange notes will be issued under and entitled to the benefits of the same
indenture that authorized the issuance of the original notes.
The exchange offer is not conditioned upon any minimum aggregate principal
amount of original notes being tendered for exchange.
As of the date of this prospectus, $125,000,000 aggregate principal amount
of the original notes are outstanding. This prospectus and the letter of
transmittal are being sent to all registered holders of original
24
notes. There will be no fixed record date for determining registered holders of
original notes entitled to participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations of the SEC. Original notes that are not exchanged in the exchange
offer will remain outstanding and continue to accrue interest and will be
entitled to the rights and benefits their holders have under the indenture
relating to the original notes and the exchange notes. Holders of original notes
do not have any appraisal or dissenters rights under the indenture or otherwise
in connection with the exchange offer.
We will be deemed to have accepted for exchange properly tendered original
notes when we have given oral or written notice of the acceptance to the
exchange agent. The exchange agent will act as agent for the holders of original
notes who surrender them in the exchange offer for the purposes of receiving the
exchange notes from us and delivering the exchange notes to their holders. The
exchange agent will make the exchange as promptly as practicable on or after the
date of acceptance for exchange of the original notes. We expressly reserve the
right to amend or terminate the exchange offer, and not to accept for exchange
any original notes not previously accepted for exchange, upon the occurrence of
any of the conditions specified below under "-- Conditions to the Exchange
Offer."
Holders who tender original notes in the exchange offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the letter of transmittal, transfer taxes with respect to the exchange of
original notes. We will pay all charges and expenses, other than applicable
taxes described below, in connection with the exchange offer. It is important
that you read "-- Solicitation of Tenders; Fees and Expenses" and "-- Transfer
Taxes" below for more details regarding fees and expenses incurred in the
exchange offer.
EXPIRATION DATE; EXTENSION; TERMINATION; AMENDMENT
The exchange offer will expire at 5:00 p.m., New York City time, on
September 8, 2003, unless we have extended the period of time that the exchange
offer is open. The expiration date will be at least 20 business days after the
beginning of the exchange offer as required by Rule 14e-1(a) under the Exchange
Act.
We reserve the right to extend the period of time that the exchange offer
is open, and delay acceptance for exchange of any original notes, by giving oral
or written notice to the exchange agent and by timely public announcement no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date. During any extension, all original notes
previously tendered will remain subject to the exchange offer unless properly
withdrawn.
We also reserve the right to:
- end or amend the exchange offer and not to accept for exchange any
original notes not previously accepted for exchange upon the occurrence
of any of the events specified below under "-- Conditions to the Exchange
Offer" that have not been waived by us; and
- amend the terms of the exchange offer in any manner that, in our good
faith judgment, is advantageous to you, whether before or after any
tender of the original notes.
If any termination or amendment occurs, we will notify the exchange agent
and will either issue a press release or give oral or written notice to you as
promptly as practicable.
PROCEDURES FOR TENDERING ORIGINAL NOTES
We have forwarded to you, along with this prospectus, a letter of
transmittal relating to this exchange offer. Because all of the original notes
are held in book-entry accounts maintained by the exchange agent at The
Depository Trust Company, Euroclear or Clearstream, a holder need not submit a
letter of transmittal if the holder tenders original notes in accordance with
the procedures mandated by The Depository Trust Company's Automated Tender Offer
Program ("ATOP") or by Euroclear or
25
Clearstream, as the case may be. To tender original notes without submitting a
letter of transmittal, the electronic instructions sent to The Depository Trust
Company, Euroclear or Clearstream and transmitted to the exchange agent must
contain your acknowledgment of receipt of and your agreement to be bound by and
to make all of the representations contained in the letter of transmittal. In
all other cases, a letter of transmittal must be manually executed and delivered
as described in this prospectus.
Only a holder of record of original notes may tender original notes in the
exchange offer. To tender in the exchange offer, a holder must comply with the
procedures of The Depository Trust Company, Euroclear or Clearstream, as
applicable, and either:
- complete, sign and date the letter of transmittal, or a facsimile of the
letter of transmittal, have the signature on the letter of transmittal
guaranteed if the letter of transmittal so requires and deliver the
letter of transmittal or facsimile to the exchange agent prior to the
expiration date; or in lieu of delivering a letter of transmittal,
instruct The Depository Trust Company, Euroclear or Clearstream, as the
case may be, to transmit on behalf of the holder a computer-generated
message to the exchange agent in which the holder of the original notes
acknowledges and agrees to be bound by the terms of the letter of
transmittal, which computer-generated message shall be received by the
exchange agent prior to 5:00 p.m., New York City time, on the expiration
date.
In addition, either:
- with respect to the original notes, the exchange agent must receive,
before expiration of the exchange offer, timely confirmation of
book-entry transfer of the original notes into the exchange agent's
account at The Depository Trust Company, according to the procedure for
book-entry transfer described below;
- with respect to the original notes, the exchange agent must receive,
before the expiration date, timely confirmation from Euroclear or
Clearstream that the securities account to which the original notes are
credited has been blocked from and including the day on which the
confirmation is delivered to the exchange agent and that no transfers
will be effected in relation to such original notes at any time after
such date; or
- the holder must comply with the guaranteed delivery procedures described
below.
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at the
address set forth below under "-- Exchange Agent" before expiration of the
exchange offer. To receive confirmation of valid tender of original notes, a
holder should contact the exchange agent at the telephone number listed under
"-- Exchange Agent."
The tender by a holder that is not withdrawn before expiration of the
exchange offer will constitute an agreement between that holder and us in
accordance with the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal. Only a registered holder of
original notes may tender the original notes in the exchange offer. If a holder
completing a letter of transmittal tenders less than all of the original notes
held by this holder, this tendering holder should fill in the applicable box of
the letter transmittal. The amount of original notes delivered to the exchange
agent will be deemed to have been tendered unless otherwise indicated.
If original notes, the letter of transmittal or any other required
documents are physically delivered to the exchange agent, the method of delivery
is at the holder's election and risk. Rather than mail these items, we recommend
that holders use an overnight or hand delivery service. In all cases, holders
should allow sufficient time to assure delivery to the exchange agent before
expiration of the exchange offer. Holders should not send the letter of
transmittal or original notes to us. Holders may request their respective
brokers, dealers, commercial banks, trust companies or other nominees to effect
the above transactions for them.
Any beneficial owner whose original notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct it to
tender on the owner's behalf. If the beneficial owner wishes to tender on its
26
own behalf, it must, prior to completing and executing the letter of transmittal
and delivering its original notes, either:
- make appropriate arrangements to register ownership of the original notes
in the owner's name; or
- obtain a properly completed bond power from the registered holder of
original notes.
The transfer of registered ownership may take considerable time and may not
be completed prior to the expiration date.
If the applicable letter of transmittal is signed by the record holder(s)
of the original notes tendered, the signature must correspond with the name(s)
written on the face of the original note without alteration, enlargement or any
change whatsoever. If the applicable letter of transmittal is signed by a
participant in The Depository Trust Company, or Euroclear or Clearstream, as
applicable, the signature must correspond with the name as it appears on the
security position listing as the holder of the original notes.
A signature on a letter of transmittal or a notice of withdrawal must be
guaranteed by an eligible guarantor institution. Eligible guarantor institutions
include banks, brokers, dealers, municipal securities dealers, municipal
securities brokers, government securities dealers, government securities
brokers, credit unions, national securities exchanges, registered securities
associations, clearing agencies and savings associations. The signature need not
be guaranteed by an eligible guarantor institution if the original notes are
tendered:
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal; or
- for the account of an eligible institution.
If the letter of transmittal is signed by a person other than the
registered holder of any original notes, the original notes must be endorsed or
accompanied by a properly completed bond power. The bond power must be signed by
the registered holder as the registered holder's name appears on the original
notes and an eligible institution must guarantee the signature on the bond
power.
If the letter of transmittal or any original notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, these persons should so indicate when signing. Unless we waive this
requirement, they should also submit evidence satisfactory to us of their
authority to deliver the letter of transmittal.
We will determine in our sole discretion all questions as to the validity,
form, eligibility, including time of receipt, acceptance and withdrawal of
tendered original notes. Our determination will be final and binding. We reserve
the absolute right to reject any original notes not properly tendered or any
original notes the acceptance of which would, in the opinion of our counsel, be
unlawful. We also reserve the right to waive any defects, irregularities or
conditions of tender as to particular original notes. Our interpretation of the
terms and conditions of the exchange offer, including the instructions in the
letter of transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
original notes must be cured within the time that we determine. Although we
intend to notify holders of defects or irregularities with respect to tenders of
original notes, neither we, the exchange agent nor any other person will incur
any liability for failure to give notification. Tenders of original notes will
not be deemed made until those defects or irregularities have been cured or
waived. Any original notes received by the exchange agent that are not properly
tendered and as to which the defects or irregularities have not been cured or
waived will be returned by the exchange agent without cost to the tendering
holder, unless otherwise provided in the letter of transmittal, as soon as
practicable following the expiration date.
27
In all cases, we will issue exchange notes for original notes that we have
accepted for exchange under the exchange offer only after the exchange agent
timely receives:
- original notes or a timely book-entry confirmation that original notes
have been transferred into the exchange agent's account at The Depository
Trust Company; and
- a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message.
Holders should receive copies of the letter of transmittal with the
prospectus. A holder may obtain additional copies of the applicable letter of
transmittal for the original notes from the exchange agent at its offices listed
under "-- Exchange Agent." By signing the letter of transmittal, or causing The
Depository Trust Company, Euroclear or Clearstream, as applicable, to transmit
an agent's message to the exchange agent, each tendering holder of original
notes will represent to us that, among other things:
- any exchange notes that the holder receives will be acquired in the
ordinary course of its business;
- the holder has no arrangement or understanding with any person or entity
to participate in the distribution of the exchange notes;
- if the holder is not a broker-dealer, that it is not engaged in and does
not intend to engage in the distribution of the exchange notes;
- if the holder is a broker-dealer that will receive exchange notes for its
own account in exchange for original notes that were acquired as a result
of market-making activities or other trading activities, that it will
deliver a prospectus, as required by law, in connection with any resale
of those exchange notes (see "Plan of Distribution"); and
- the holder is not an "affiliate," as defined in Rule 405 of the
Securities Act, of us or, if the holder is an affiliate, it will comply
with any applicable registration and prospectus delivery requirements of
the Securities Act.
THE DEPOSITORY TRUST COMPANY BOOK-ENTRY TRANSFER
The exchange agent has established an account with respect to the original
notes at The Depository Trust Company for purposes of the exchange offer.
With respect to the original notes, the exchange agent and The Depository
Trust Company have confirmed that any financial institution that is a
participant in The Depository Trust Company may utilize The Depository Trust
Company ATOP procedures to tender original notes.
With respect to the original notes, any participant in The Depository Trust
Company may make book-entry delivery of original notes by causing The Depository
Trust Company to transfer the original notes into the exchange agent's account
in accordance with The Depository Trust Company's ATOP procedures for transfer.
However, the exchange for the original notes so tendered will be made only
after a book-entry confirmation of such book-entry transfer of original notes
into the exchange agent's account, and timely receipt by the exchange agent of
an agent's message and any other documents required by the letter of
transmittal. The term "agent's message" means a message, transmitted by The
Depository Trust Company and received by the exchange agent and forming part of
a book-entry confirmation, which states that The Depository Trust Company has
received an express acknowledgment from a participant tendering original notes
that are the subject of the book-entry confirmation that the participant has
received and agrees to be bound by the terms of the letter of transmittal, and
that we may enforce that agreement against the participant.
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EUROCLEAR AND CLEARSTREAM PROCEDURES FOR BLOCKING INSTRUCTIONS
The registered holder of the original notes on the records of Euroclear or
Clearstream must instruct Euroclear or Clearstream to block the securities in
the account in Euroclear or Clearstream to which such original notes are
credited. In order for the exchange offer to be accepted, the exchange agent
must have received, prior to the expiration date, a confirmation from Euroclear
or Clearstream that the securities account of original notes tendered has been
blocked from and including the day on which the confirmation is delivered to the
exchange agent and that no transfers will be effected in relation to the
original notes at any time after such date. Original notes should be blocked in
accordance with the procedures of Euroclear or Clearstream, as the case may be.
The exchange of the original notes so tendered will be made only after a timely
receipt by the exchange agent of an agent's message and any other documents
required by the letter of transmittal. The term "agent's message" means a
message, transmitted by Euroclear or Clearstream and received by the exchange
agent that states that Euroclear or Clearstream has received an express
acknowledgment from a participant tendering original notes that the participant
has received and agrees to be bound by the terms of the letter of transmittal,
and that we may enforce that agreement against the participant.
GUARANTEED DELIVERY PROCEDURES
Holders wishing to tender their original notes but whose original notes are
not immediately available or who cannot deliver their original notes, the letter
of transmittal or any other required documents to the exchange agent or cannot
comply with the applicable procedures described above before expiration of the
exchange offer may tender if:
- the tender is made through an eligible guarantor institution;
- before expiration of the exchange offer, the exchange agent receives from
the eligible guarantor institution either a properly completed and duly
executed notice of guaranteed delivery, by facsimile transmission, mail
or hand delivery, or a properly transmitted agent's message and notice of
guaranteed delivery:
- setting forth the name and address of the holder and the registered
number(s) and the principal amount of original notes tendered;
- stating that the tender is being made by guaranteed delivery; and
- guaranteeing that, within three New York Stock Exchange trading days
after expiration of the exchange offer, the letter of transmittal, or
facsimile thereof, together with the original notes or a book-entry
transfer confirmation, and any other documents required by the letter of
transmittal will be deposited by the eligible guarantor institution with
the exchange agent; and
- the exchange agent receives the properly completed and executed letter of
transmittal, or facsimile thereof, as well as all tendered original notes
in proper form for transfer or a book-entry transfer confirmation, and
all other documents required by the letter of transmittal, within three
New York Stock Exchange trading days after expiration of the exchange
offer.
Upon request to the exchange agent, a notice of guaranteed delivery will be
sent to holders who wish to tender their original notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL RIGHTS
You may withdraw your tender of original notes at any time before 5:00
p.m., New York City time, on the expiration date.
For a withdrawal to be effective, the exchange agent must receive a
computer generated notice of withdrawal, transmitted by The Depository Trust
Company, Euroclear or Clearstream on behalf of the holder in accordance with the
standard operating procedure of The Depository Trust Company, or
29
Euroclear or Clearstream, or a written notice of withdrawal, sent by facsimile
transmission, receipt confirmed by telephone, or letter, before the expiration
date.
Any notice of withdrawal must:
- specify the name of the person that tendered the original notes to be
withdrawn;
- identify the original notes to be withdrawn, including the certificate
number or numbers and principal amount of such original notes;
- specify the principal amount of original notes to be withdrawn;
- include a statement that the holder is withdrawing its election to have
the original notes exchanged;
- be signed by the holder in the same manner as the original signature on
the letter of transmittal by which the original notes were tendered or as
otherwise described above, including any required signature guarantees,
or be accompanied by documents of transfer sufficient to have the trustee
under the indenture register the transfer of the original notes into the
name of the person withdrawing the tender; and
- specify the name in which any of the original notes are to be registered,
if different from that of the person that tendered the original notes.
The exchange agent will return the properly withdrawn original notes
promptly following receipt of notice of withdrawal. If original notes have been
tendered pursuant to the procedure for book-entry transfer, any notice of
withdrawal must specify the name and number of the account at The Depository
Trust Company, Euroclear or Clearstream, as applicable, to be credited with the
withdrawn original notes or otherwise comply with The Depository Trust Company's
procedures.
Any original notes withdrawn will not have been validly tendered for
exchange for purposes of the exchange offer. Any original notes that have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder without cost to the holder as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. In the
case of original notes tendered by book-entry transfer into the exchange agent's
account at The Depository Trust Company pursuant to its book-entry transfer
procedures, the original notes will be credited to an account with The
Depository Trust Company specified by the holder, as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. Properly
withdrawn original notes may be retendered by following one of the procedures
described under "-- Procedures for Tendering Original Notes" above at any time
on or before the expiration date.
ACCEPTANCE OF ORIGINAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the exchange date, all original notes properly
tendered and will issue the exchange notes promptly after the acceptance. Please
refer to the section in this prospectus entitled "-- Conditions to the Exchange
Offer" below. For purposes of the exchange offer, we will be deemed to have
accepted properly tendered original notes for exchange when we give notice of
acceptance to the exchange agent.
For each original note accepted for exchange, the holder of the original
note will receive an exchange note having a principal amount at maturity equal
to that of the surrendered original note.
In all cases, we will issue exchange notes for original notes that are
accepted for exchange pursuant to the exchange offer only after the exchange
agent timely receives certificates for the original notes or a book-entry
confirmation of the original notes into the exchange agent's account at The
Depository Trust Company, a properly completed and duly executed letter of
transmittal and all other required documents.
30
CONDITIONS TO THE EXCHANGE OFFER
We will not be required to accept for exchange, or to issue exchange notes
in exchange for, any original notes and may terminate or amend the exchange
offer, by notice to the exchange agent or by a timely press release, at any time
before accepting any of the original notes for exchange, if, in our reasonable
judgment:
- the exchange notes to be received will not be tradeable by the holder
without restriction under the Securities Act, the Exchange Act and
without material restrictions under the blue sky or securities laws of
substantially all of the states of the United States;
- the exchange offer, or the making of any exchange by a holder of
outstanding notes, would violate applicable law or any applicable
interpretation of the staff of the SEC;
- any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency or regulatory authority with
respect to the exchange offer that, in our judgment, would reasonably be
expected to impair our ability to proceed with the exchange offer.
In addition, we will not be obligated to accept for exchange the original
notes of any holder that has not made to us:
- the representations described under "-- Resale of Exchange Notes,"
"-- Procedures for Tendering Original Notes" and "Plan of Distribution";
and
- such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available an
appropriate form for registration of the exchange notes under the
Securities Act.
We expressly reserve the right, at any time or at various times, to extend
the period of time during which the exchange offer is open. Consequently, we may
delay acceptance of any original notes by giving oral or written notice of such
extension to their holders. During any such extensions, all original notes
previously tendered will remain subject to the exchange offer, and we may accept
them for exchange. We will return any original notes that we do not accept for
exchange for any reason without expense to their tendering holders as promptly
as practicable after the expiration or termination of the exchange offer.
In addition, we expressly reserve the right to amend or terminate the
exchange offer and to reject for exchange any original notes not previously
accepted for exchange, upon the occurrence of any of the conditions of the
exchange offer specified above. We will give oral or written notice of any
extension, amendment, nonacceptance or termination to the holders of the
original notes as promptly as practicable. In the case of any extension, such
notice will be issued no later than 9:00 a.m., New York City time, on the
business day after the previously scheduled expiration date.
These conditions are for our sole benefit, and we may assert them
regardless of the circumstances that may give rise to them or waive them in
whole or in part at any or at various times in our sole discretion. If we fail
at any time to exercise any of the foregoing rights, this failure will not
constitute a waiver of such right. Each such right will be deemed an ongoing
right that we may assert at any time or at various times.
In addition, we will not accept for exchange any original notes tendered,
and will not issue exchange notes in exchange for any such original notes, if at
such time any stop order will be threatened or in effect with respect to the
registration statement of which this prospectus constitutes a part or the
qualification of the indenture under the Trust Indenture Act of 1939.
The exchange offer is not conditioned upon any minimum principal amount of
original notes being tendered for exchange.
31
EXCHANGE AGENT
We have appointed The Bank of New York as the exchange agent for the
exchange offer. You should direct questions and requests for assistance,
requests for additional copies of this prospectus or of the letter for
transmittal and requests for the notice of guaranteed delivery, as well as all
executed letters of transmittal to the exchange agent at the addresses listed
below:
By Hand or Overnight Delivery:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street-Lobby Window
New York, New York 10286
Attention: Mr. Bernard Arsenec
By Registered or Certified Mail:
The Bank of New York
Corporate Trust Operations
Reorganization Unit
101 Barclay Street, 7E
New York, New York 10286
Attention: Mr. Bernard Arsenec
By Facsimile Transmission:
(Eligible Institutions Only)
(212) 298-1915
To Confirm by Telephone or for Information:
(212) 815-5098
DELIVERY TO AN ADDRESS OTHER THAN AS LISTED ABOVE, OR TRANSMISSIONS OF
INSTRUCTIONS TO A FACSIMILE NUMBER OTHER THAN AS LISTED ABOVE, WILL NOT
CONSTITUTE A VALID DELIVERY.
The Bank of New York is the trustee under the indenture governing the
notes.
SOLICITATION OF TENDERS; FEES AND EXPENSES
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. However, we will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses in connection with the exchange offer.
We will pay the estimated cash expenses to be incurred in connection with
the exchange offer, including the following:
- fees and expenses of the exchange agent and trustee;
- SEC registration fees;
- accounting and legal fees, including fees of one counsel for the holders
of the original notes; and
- printing and mailing expenses.
32
TRANSFER TAXES
We will pay all transfer taxes, if any, applicable to the exchange of
original notes under the exchange offer. The tendering holder, however, will be
required to pay any transfer taxes, whether imposed on the registered holder or
any other person, if:
- certificates representing original notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered holder of
original notes tendered;
- exchange notes are to be delivered to, or issued in the name of, any
person other than the registered holder of the original notes;
- tendered original notes are registered in the name of any person other
than the person signing the letter of transmittal; or
- a transfer tax is imposed for any reason other than the exchange of
original notes under the exchange offer.
If satisfactory evidence of payment of transfer taxes is not submitted with
the letter of transmittal, the amount of any transfer taxes will be billed to
the tendering holder.
ACCOUNTING TREATMENT
We will record the exchange notes at the same carrying value of the
original notes reflected in our accounting records on the date the exchange
offer is completed. Accordingly, we will not recognize any gain or loss for
accounting purposes upon the exchange of exchange notes for original notes. We
will amortize the expenses incurred in connection with the issuance of the
exchange notes over the term of the exchange notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your original notes for exchange notes pursuant to
the exchange offer, you will continue to be subject to the restrictions on
transfer of the original notes as described in the legend on the notes. In
general, the original notes may be offered or sold only if registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. We do not
currently anticipate that we will register the original notes under the
Securities Act.
Your participation in the exchange offer is voluntary, and you should
carefully consider whether to participate. We urge you to consult your financial
and tax advisors in making a decision whether or not to tender your original
notes. Please refer to the section in this prospectus entitled "Certain United
States Federal Tax Considerations."
As a result of the making of, and upon acceptance for exchange of all
validly tendered original notes pursuant to the terms of, this exchange offer,
we will have fulfilled a covenant contained in the registration rights
agreement. If you do not tender your original notes in the exchange offer, you
will be entitled to all the rights and limitations applicable to the original
notes under the indenture, except for any rights under the registration rights
agreement that by their terms end or cease to have further effectiveness as a
result of the making of this exchange offer. To the extent that original notes
are tendered and accepted in the exchange offer, the trading market for
untendered, or tendered but unaccepted, original notes could be adversely
affected. Please refer to the section in this prospectus entitled "Risk
Factors -- Risks Related to this Exchange Offer -- If you do not properly tender
your original notes for exchange notes, you will continue to hold unregistered
notes which are subject to transfer restrictions."
We may in the future seek to acquire untendered original notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. However, we have no present plans to
33
acquire any original notes that are not tendered in the exchange offer or to
file a registration statement to permit resales of any untendered original
notes.
Holders of the original notes and exchange notes which remain outstanding
after consummation of the exchange offer will vote together as a single class
for purposes of determining whether holders of the requisite percentage thereof
have taken certain actions or exercised certain rights under the indenture.
DESCRIPTION OF EXCHANGE NOTES
The terms of the exchange notes and the original notes are identical in all
material respects, except that transfer restrictions and registration rights and
related additional interest provisions applicable to the original notes do not
apply to the exchange notes. The original notes were and the exchange notes will
be issued under an indenture (the "Indenture") dated as of the May 5, 2003,
among us, the Note Guarantors and The Bank of New York, as Trustee (the
"Trustee"). The terms of the Notes include those stated in the Indenture and
those made a part of the Indenture by reference to the Trust Indenture Act of
1939 (the "TIA").
We summarize below certain provisions of the Indenture, but do not restate
the Indenture in its entirety. We urge you to read the Indenture because it, and
not this description, defines your rights. You can obtain a copy of the
Indenture in the manner described under "Where You Can Find More Information."
Whenever particular provisions of the Indenture or terms defined therein are
referred to, those provisions or definitions are incorporated by reference
herein and such descriptions are qualified in their entirety by such reference.
You can find the definition of capitalized terms used in this section under
"-- Certain Definitions." When we refer to:
- the Company in this section, we mean JLG Industries, Inc. and not its
subsidiaries;
- Notes in this section, we mean the Notes originally issued on the Issue
Date, Exchange Notes issued therefor (see "The Exchange Offer") and
Additional Notes actually issued;
- "premium," we mean "premium, if any;"
- "include," "includes" and "including," we mean "include, without
limitation," "includes, without limitation" and "including, without
limitation;"
- "will," we mean for this word to have the same meaning and effect as the
word "shall;" and
- Person, we mean to include such Person's successors and assigns, unless
the context otherwise requires.
GENERAL
The Notes will:
- be general unsecured senior obligations of the Company and will rank pari
passu in right of payment with all other senior indebtedness of the
Company,
- rank senior in right of payment to any subordinated indebtedness of the
Company, including the 8 3/8% Notes,
- be guaranteed on a senior unsecured basis by all of the Company's
existing and future Material Domestic Subsidiaries, and
- be limited in aggregate principal amount to $225,000,000, of which
$125,000,000 principal amount will be issued on the Issue Date.
34
Secured debt and other secured obligations of the Company (including
obligations with respect to the Bank Credit Facilities) will be effectively
senior to the Notes to the extent of the value of the assets securing such debt
or other obligations.
As of April 30, 2003, after giving effect to the offering of the original
notes as described under "Use of Proceeds" and "Capitalization":
- the Company and the Note Guarantors had consolidated total senior
indebtedness of $291.1 million, including $164.7 million aggregate
principal amount of limited recourse debt from monetizations,
- the Company and the Note Guarantors had consolidated secured indebtedness
of $166.1 million (which includes $164.7 million aggregate principal
amount of limited recourse debt from monetizations),
- the Company and the Note Guarantors had consolidated total subordinated
indebtedness of $175.0 million, and
- the Company's Subsidiaries that are not Note Guarantors had consolidated
total liabilities (including trade payables, but excluding debt owed to
the Company or any Note Guarantor) of $38.1 million.
ADDITIONAL NOTES
Subject to the limitations set forth under "Certain Covenants -- Limitation
on Incurrence of Additional Indebtedness," the Company may incur additional
Indebtedness. At the Company's option, this additional Indebtedness may consist
of additional Notes ("Additional Notes") of up to an amount equal to the
difference between $225,000,000 and the aggregate principal amount of Notes
previously issued hereunder, issued in one or more transactions, which have
identical terms (other than issue date) as Notes previously issued and related
Exchange Notes. Holders of Additional Notes will have the right to vote together
with Holders of Notes previously issued and related Exchange Notes as one class.
PRINCIPAL, MATURITY AND INTEREST
The Company will issue Notes in denominations of $1,000 and integral
multiples of $1,000. The Notes will mature on May 1, 2008.
Interest on the Notes will accrue at the rate of 8 1/4% per annum and will
be payable semi-annually in arrears on each May 1 and November 1, commencing on
November 1, 2003. Payments will be made to the persons who are registered
Holders at the close of business on April 15 and October 15, respectively,
immediately preceding the applicable interest payment date.
Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from and including the
Issue Date. Interest will be computed on the basis of a 360-day year comprised
of twelve 30-day months. All references in the Indenture, in any context, to any
interest or other amount payable on or with respect to the Notes shall be deemed
to include any additional interest that may be payable in certain circumstances
as described under "The Exchange Offer."
Initially, the Trustee will act as Paying Agent and Registrar for the
Notes. The Company may change the Paying Agent and Registrar without notice to
Holders. If a Holder has given wire transfer instructions to the Company, the
Company will make all principal, premium and interest payments on those Notes in
accordance with those instructions. All other payments on the Notes will be made
at the office or agency of the Paying Agent and Registrar in New York City
unless the Company elects to make interest payments by check mailed to the
registered Holders at their registered addresses.
NOTE GUARANTEES
Each Note Guarantor will guarantee, on a senior unsecured basis, the
performance of all obligations of the Company under the Indenture, the Notes and
the Registration Rights Agreement. The Obligations
35
of each Note Guarantor in respect of its Note Guarantee will be limited to the
maximum amount as will result in the Obligations not constituting a fraudulent
conveyance or fraudulent transfer under U.S. federal or state law. See "Risk
Factors -- Risks Related to this Offering -- Federal and state statutes allow
courts, under specific circumstances, to void guarantees and require note
holders to return payments received from guarantors. As a result, the guarantees
from our subsidiaries may not be enforceable."
If a Note Guarantee were rendered voidable, it could be subordinated by a
court to all other indebtedness (including guarantees and other contingent
liabilities) of the applicable Note Guarantor, and, depending on the amount of
such indebtedness, a Note Guarantor's liability on its Note Guarantee could be
reduced to zero. See "Risk Factors -- Risks Related to this Offering -- Federal
and state statutes allow courts, under specific circumstances, to void
guarantees and require note holders to return payments received from guarantors.
As a result, the guarantees from our subsidiaries may not be enforceable."
A Note Guarantor will be released and relieved of its obligations under its
Note Guarantee in the event:
(1) there is a Legal Defeasance of the Notes as described under "-- Legal
Defeasance and Covenant Defeasance;"
(2) there is a sale or other disposition of Capital Stock of such Note
Guarantor following which such Note Guarantor is no longer a direct or
indirect Subsidiary of the Company;
(3) there is any sale or other disposition of all or substantially all of
the assets of such Note Guarantor to a third party, other than the
Company or an Affiliate of the Company (including by way of merger or
consolidation), if the Company applies the Net Cash Proceeds of that
sale or other disposition in accordance with the applicable provisions
of the Indenture and such Note Guarantor is no longer a Material
Domestic Subsidiary after giving effect thereto;
(4) there is a merger or dissolution of such Note Guarantor into the
Company or another Note Guarantor; or
(5) such Note Guarantor is designated as an Unrestricted Subsidiary in
accordance with "-- Certain Covenants -- Limitation on Designation of
Unrestricted Subsidiaries;"
provided, that the transaction pursuant to which a Note Guarantor is released
and relieved of its obligations under its Note Guarantee is carried out pursuant
to and in accordance with any other applicable provisions of the Indenture.
The Note Guarantors are the Company's existing and future Material Domestic
Subsidiaries. If any Person becomes a Material Domestic Subsidiary (including
upon a Revocation of the Designation of a Subsidiary as an Unrestricted
Subsidiary), the Company will cause that Material Domestic Subsidiary
concurrently to become a Note Guarantor by executing a supplemental indenture.
Under the circumstances described under "-- Certain Covenants -- Limitation
on Designation of Unrestricted Subsidiaries," we will be permitted to designate
certain of our Subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to the restrictive covenants in the Indenture
and will not guarantee the Notes.
Not all of our "Restricted Subsidiaries" will guarantee the Notes. In the
event of a bankruptcy, liquidation or reorganization of any non-guarantor
Subsidiaries, the non-guarantor Subsidiaries will pay the holders of their debt
and preferred stock and their trade creditors before they will be able to
distribute any of their assets to us. In addition, holders of minority equity
interests in Subsidiaries that are not Note Guarantors may receive distributions
prior to or pro rata with the Company depending on the terms of the equity
interests. See "Risk Factors -- Risks Related to this Offering -- Although the
notes are referred to as "senior notes," they will be effectively subordinated
to any secured indebtedness of JLG and the subsidiary guarantors and all
obligations of the non-guarantor subsidiaries." At April 30, 2003, the total
consolidated liabilities (including trade payables, but excluding debt owed to
the Company or any Note Guarantor) of the Company's Subsidiaries that are not
Note Guarantors were approximately
36
$38.1 million. Although the Indenture limits the incurrence of Indebtedness and
preferred stock of certain of the Company's Subsidiaries, such limitation is
subject to a number of significant qualifications. Moreover, the Indenture does
not impose any limitation on the incurrence by such Subsidiaries of liabilities
that are not considered Indebtedness under the Indenture. See "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness."
REDEMPTIONS; OFFERS TO PURCHASE; OPEN MARKET PURCHASES
The Notes will not be entitled to the benefit of any mandatory sinking fund
and will not be subject to redemption at the option of the Company. However,
under certain circumstances, the Company may be required to offer to purchase
Notes as described under "-- Change of Control" and "-- Certain
Covenants -- Limitation on Asset Sales." Subject to any restrictions contained
in any other financing arrangements of the Company, the Company or any of its
Subsidiaries may at any time and from time to time purchase Notes in the open
market or otherwise.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder will have the right
to require that the Company purchase all or a portion (in integral multiples of
$1,000) of the Holder's Notes at a purchase price equal to 101% of the principal
amount thereof, plus accrued and unpaid interest thereon to, but excluding, the
date of purchase (the "Change of Control Payment").
Within 20 days following the date upon which the Change of Control
occurred, the Company must send, by first-class mail, a notice to each Holder,
with a copy to the Trustee, offering to purchase the Notes as described above (a
"Change of Control Offer"). The Change of Control Offer shall state, among other
things, the purchase date, which must be no earlier than 30 days nor later than
60 days from the date the notice is mailed, other than as may be required by law
(the "Change of Control Payment Date").
On the Change of Control Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered and
not withdrawn pursuant to the Change of Control Offer;
(2) deposit with the Paying Agent funds in an amount equal to the Change of
Control Payment in respect of all Notes or portions thereof so
tendered; and
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company.
If only a portion of a Note is purchased pursuant to a Change of Control Offer,
a new Note in a principal amount equal to the portion thereof not purchased will
be issued in the name of the Holder thereof upon cancellation of the original
Note (or appropriate adjustments to the amount and beneficial interests in
Global Notes will be made, as appropriate). Notes (or portions thereof)
purchased pursuant to a Change of Control Offer will be cancelled and cannot be
reissued.
The Bank Credit Facilities and the 8 3/8% Notes contain, and other
Indebtedness of the Company may contain, prohibitions on the occurrence of
events that would constitute a Change of Control or require that Indebtedness to
be repurchased upon a Change of Control. Moreover, the exercise by the Holders
of their right to require the Company to repurchase the Notes upon a Change of
Control would cause a default under the Bank Credit Facilities and could cause a
default under other Indebtedness even if the Change of Control itself does not.
If a Change of Control Offer occurs, there can be no assurance that the
Company will have available funds sufficient to make the Change of Control
Payment for all the Notes that might be delivered by Holders seeking to accept
the Change of Control Offer. In the event the Company is required to purchase
outstanding Notes pursuant to a Change of Control Offer, the Company expects
that it would seek third-party financing to the extent it does not have
available funds to meet its purchase obligations and any
37
other obligations in respect of Senior Indebtedness. However, there can be no
assurance that the Company would be able to obtain necessary financing. See
"Risk Factors -- Risks Related to this Offering -- We may not be able to
repurchase the notes upon a change of control."
The Change of Control purchase feature of the Notes may in certain
circumstances make more difficult or discourage a sale or takeover of the
Company and, thus, the removal of incumbent management. The Company has no
present intention to engage in a transaction involving a Change of Control,
although it is possible that the Company could decide to do so in the future.
Subject to the limitations discussed below, the Company could, in the future,
enter into certain transactions, including acquisitions, Refinancings or other
recapitalizations, that would not constitute a Change of Control under the
Indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect the Company's capital structure or credit ratings.
Restrictions on the Company's ability to Incur additional Indebtedness are
contained in "-- Certain Covenants -- Limitation on Indebtedness,"
"-- Limitation on Liens" and "-- Limitation on Sale and Leaseback Transactions."
Such restrictions can only be waived with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding. Except for the
limitations contained in such covenants, however, the Indenture will not contain
any covenants or provisions that may afford Holders of the Notes protection in
the event of a highly leveraged transaction.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other applicable securities laws and regulations in
connection with the purchase of Notes in connection with a Change of Control
Offer. To the extent that the provisions of any securities laws or regulations
conflict with the "Change of Control" provisions of the Indenture, the Company
will comply with the applicable securities laws and regulations and will not be
deemed to have breached its obligations under the Indenture by doing so.
The provisions under the Indenture relative to the Company's obligation to
make a Change of Control Offer may, prior to the occurrence of a Change of
Control, be waived or modified with the consent of the Holders of at least a
majority in principal amount of the then outstanding Notes issued under the
Indenture. Following the occurrence of a Change of Control, any change,
amendment or modification in any material respect of the obligation of the
Company to make and consummate a Change of Control Offer may only be effected
with the consent of each Holder affected thereby.
CERTAIN COVENANTS
The Indenture will contain, among others, the following covenants:
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS
(1) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, Incur any
Indebtedness, including Acquired Indebtedness, or permit any Restricted
Subsidiary to Incur Preferred Stock, other than Permitted Indebtedness,
except that:
(a) the Company and any Note Guarantor may Incur Indebtedness, including
Acquired Indebtedness, and
(b) any Restricted Subsidiary may Incur Acquired Indebtedness not
Incurred in connection with, or in anticipation or contemplation of,
the relevant acquisition, merger or consolidation,
in each case, if, at the time of and immediately after giving pro forma
effect to the Incurrence thereof and the application of the proceeds
therefrom, the (i) Consolidated Fixed Charge Coverage Ratio of the
Company and its consolidated Subsidiaries is greater than 2.25 to 1.0
and (ii) if the Indebtedness to be Incurred is Senior Indebtedness, the
Consolidated Senior Debt Ratio is less than 3.5 to 1.0.
(2) Notwithstanding clause (1), the Company and its Restricted Subsidiaries
may Incur Permitted Indebtedness as provided in the definition thereof.
38
(3) Notwithstanding the foregoing, neither the Company nor any Note
Guarantor will Incur any Indebtedness pursuant to the foregoing clause
(2) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Indebtedness of the Company or any Note
Guarantor unless such Indebtedness shall be subordinated to the Notes
or the applicable Note Guarantee to at least the same extent as such
Subordinated Indebtedness.
(4) For purposes of determining compliance with, and the outstanding
principal amount of, any particular Indebtedness Incurred pursuant to
and in compliance with this covenant, the amount of Indebtedness issued
at a price that is less than the principal amount thereof will be equal
to the amount of the liability in respect thereof determined in
accordance with GAAP. Accrual of interest, accretion of original issue
discount, payment of regularly scheduled interest in the form of
additional Indebtedness of the same instrument or payment of regularly
scheduled dividends on Disqualified Stock or Preferred Stock in the
form of additional Disqualified Stock or Preferred Stock of the same
series will not be deemed to be an Incurrence of Indebtedness or
Preferred Stock for purposes of this covenant. For purposes of
determining compliance with this covenant, in the event that an item of
Indebtedness meets more than one of the types of Permitted
Indebtedness, the Company, in its sole discretion, shall classify such
item of Indebtedness and only be required to classify the amount and
type of such Indebtedness under one type of Permitted Indebtedness and
may allocate portions of such Indebtedness to more than one type of
Permitted Indebtedness to the extent applicable.
LIMITATION ON RESTRICTED PAYMENTS
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, take any of the following actions
(each, a "Restricted Payment"):
(a) declare or pay any dividend or return of capital or make any
distribution on or in respect of shares of Capital Stock of the Company
or any Restricted Subsidiary to holders of such Capital Stock, other
than:
- dividends or distributions payable in Qualified Capital Stock of the
Company,
- dividends or distributions payable to the Company and/or a Restricted
Subsidiary, or
- pro rata dividends or distributions to the Company and/or a Restricted
Subsidiary and minority holders of Capital Stock of a Restricted
Subsidiary;
(b) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of the Company or any Restricted Subsidiary, or any direct or
indirect parent of the Company, other than Capital Stock held by the
Company or another Restricted Subsidiary;
(c) make any principal payment on, purchase, defease, redeem, prepay,
decrease or otherwise acquire or retire for value, prior to any
scheduled final maturity, scheduled repayment or scheduled sinking fund
payment, as the case may be, any Subordinated Indebtedness of the
Company or any Note Guarantor; or
(d) make any Investment (other than Permitted Investments);
if at the time of the Restricted Payment immediately after giving effect
thereto:
(1) a Default or an Event of Default shall have occurred and be continuing;
(2) the Company is not able to Incur at least $1.00 of additional
Indebtedness pursuant to clause (1) of "-- Limitation on Incurrence of
Additional Indebtedness;" or
(3) the aggregate amount (the amount expended for these purposes, if other
than in cash, being the Fair Market Value of the relevant property) of
the proposed Restricted Payment and Restricted Payments, including
Restricted Payments made pursuant to clauses (1), (4), (5), (6), (7)
and
39
(8) of the second paragraph of this covenant, made subsequent to the
Issue Date up to the date thereof, less any Investment Return
calculated as of the date thereof, shall exceed the sum of:
(A) 50% of cumulative Consolidated Net Income or, if cumulative
Consolidated Net Income is a loss, minus 100% of the loss, accrued
during the period, treated as one accounting period, beginning on
the first full fiscal quarter after the Issue Date to the end of the
most recent fiscal quarter ended prior to the date on which such
Restricted Payment is made for which consolidated financial
information of the Company is available;
plus
(B) 100% of the aggregate net cash proceeds received by the Company from
any Person from any:
- (i) contribution to the equity capital of the Company not
representing an interest in Disqualified Capital Stock or (ii)
issuance and sale of Qualified Capital Stock of the Company, in
each case, subsequent to the Issue Date, or
- issuance and sale subsequent to the Issue Date (and, in the case of
Indebtedness of a Restricted Subsidiary, at such time as it was a
Restricted Subsidiary) of any Indebtedness for borrowed money of
the Company or any Restricted Subsidiary that has been converted
into or exchanged for Qualified Capital Stock of the Company,
excluding, in each case, any net cash proceeds:
(w) received from a Subsidiary of the Company,
(x) used to acquire assets or Capital Stock from an Affiliate of
the Company, or
(y) applied in accordance with clauses (2) and (3) of the second
paragraph of this covenant below;
plus
(C) $15 million (less the amount of Restricted Payments made pursuant to
clause (8) of the second paragraph of this covenant).
Notwithstanding the preceding paragraph, this covenant does not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted
pursuant to the preceding paragraph on the date of declaration;
(2) if no Default or Event of Default shall have occurred and be
continuing, the acquisition of any shares of Capital Stock of the
Company,
(a) in exchange for Qualified Capital Stock of the Company or
(b) through the application of the net cash proceeds received by the
Company from a substantially concurrent sale of Qualified Capital
Stock of the Company or a contribution to the equity capital of the
Company not representing an interest in Disqualified Capital Stock,
in each case not received from a Subsidiary of the Company;
provided, that the value of any such Qualified Capital Stock issued in
exchange for such acquired Capital Stock and any such net cash proceeds
shall be excluded from clause (3)(B) of the first paragraph of this
covenant; and
(3) if no Default or Event of Default shall have occurred and be
continuing, the voluntary prepayment, purchase, defeasance, redemption
or other acquisition or retirement for value of any
40
Subordinated Indebtedness solely in exchange for, or through the
application of net cash proceeds of a substantially concurrent sale,
other than to a Subsidiary of the Company, of:
(a) Qualified Capital Stock of the Company or
(b) Refinancing Indebtedness of such Person which is Incurred in
accordance with "-- Limitation on Incurrence of Additional
Indebtedness" for such Subordinated Indebtedness;
provided, that the value of any Qualified Capital Stock issued in
exchange for Subordinated Indebtedness and any net cash proceeds
referred to above shall be excluded from clause (3)(B) of the first
paragraph of this covenant;
(4) if no Default or Event of Default shall have occurred and be
continuing, repurchases by the Company of Common Stock of the Company
or options, warrants or other securities exercisable or convertible
into Common Stock of the Company from employees or directors of the
Company or any of its Subsidiaries or their authorized representatives
upon the death, disability or termination of employment or directorship
of the employees or directors, in an amount not to exceed $2.5 million
in the aggregate (excluding any amount reimbursed to the Company
pursuant to insurance policies or other third party payments);
(5) if no Default or Event of Default shall have occurred and be
continuing, the voluntary purchase or other acquisition for value by
the Company of any of its 8 3/8% Notes; provided that the aggregate
amount of all Restricted Payments made pursuant to this clause (5) will
not exceed $35 million;
(6) if no Default or Event of Default shall have occurred and be continuing
(or would result therefrom), upon the occurrence of a Change of Control
and within 60 days after the completion of a Change of Control Offer
pursuant to the covenant described under "-- Change of Control"
(including the purchase of the Notes tendered), any purchase or
redemption of Subordinated Indebtedness of the Company or any
Restricted Subsidiary required pursuant to the terms thereof as a
result of such Change of Control at a purchase or redemption price not
to exceed 101% of the outstanding principal amount thereof, plus
accrued and unpaid interest (if any);
(7) if no Default or Event of Default shall have occurred and be continuing
(or would result therefrom), upon the occurrence of an Asset Sale and
within 60 days after the completion of an Asset Sale Offer to
repurchase the Notes pursuant to the covenant described under
"-- Certain Covenants -- Limitation on Asset Sales" (including the
purchase of the Notes tendered), any purchase or redemption of
Subordinated Indebtedness of the Company or any Restricted Subsidiary
required pursuant to the terms thereof as a result of such Asset Sale
at a purchase or redemption price not to exceed 100% of the outstanding
principal amount thereof, plus accrued and unpaid interest (if any);
and
(8) Restricted Payments of up to $200,000 in the aggregate.
In determining the aggregate amount of Restricted Payments made subsequent to
the Issue Date, amounts expended pursuant to clauses (1) (without duplication
for the declaration of the relevant dividend), (4), (5), (6), (7) and (8) of
this paragraph shall be included in such calculation and amounts expended
pursuant to clauses (2) and (3) of this paragraph shall not be included in such
calculation.
LIMITATION ON ASSET SALES
The Company will not, and will not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless:
(a) the Company or the applicable Restricted Subsidiary, as the case may
be, receives consideration at the time of the Asset Sale at least equal
to the Fair Market Value of the assets sold or otherwise disposed of,
and
41
(b) at least 75% of the consideration received for the assets sold by the
Company or the Restricted Subsidiary, as the case may be, in the Asset
Sale shall be in the form of cash or Cash Equivalents received at the
time of such Asset Sale.
The Company or such Restricted Subsidiary, as the case may be, may apply
the Net Cash Proceeds of any such Asset Sale within 365 days thereof to:
(a) repay any Senior Indebtedness of the Company or any Note Guarantor or
Indebtedness of any Restricted Subsidiary that is not a Note Guarantor,
in each case for borrowed money or constituting a Capitalized Lease
Obligation, and permanently reduce the commitments with respect thereto
without Refinancing, or
(b) purchase:
(1) assets (other than current assets as determined in accordance with
GAAP) to be used by the Company or any Restricted Subsidiary in
connection with its ongoing business operations,
(2) Capital Stock of a Person engaged solely in a Permitted Business
that will become, upon purchase, a Restricted Subsidiary from a
Person other than the Company and its Restricted Subsidiaries.
To the extent all or a portion of the Net Cash Proceeds of any Asset Sale
are not applied within 365 days of the Asset Sale as described in clause (a) or
(b) of the immediately preceding paragraph, the Company will make an offer to
purchase Notes (the "Asset Sale Offer"), at a purchase price equal to 100% of
the principal amount of the Notes to be purchased, plus accrued and unpaid
interest thereon, to, but excluding, the date of purchase (the "Asset Sale Offer
Amount"). Pursuant to an Asset Sale Offer, the Company shall purchase from all
tendering Holders on a pro rata basis, and, at the Company's option, on a pro
rata basis with the holders of any other Senior Indebtedness with similar
provisions requiring the Company to offer to purchase the other Senior
Indebtedness with the proceeds of Asset Sales, that principal amount (or
accreted value in the case of Indebtedness issued with original issue discount)
of Notes and the other Senior Indebtedness to be purchased equal to such
unapplied Net Cash Proceeds.
The purchase of Notes pursuant to an Asset Sale Offer shall occur not less
than 20 business days following the date thereof, or any longer period as may be
required by law, nor more than 45 days following the 365th day following the
Asset Sale. The Company may, however, defer an Asset Sale Offer until there is
an aggregate amount of unapplied Net Cash Proceeds from one or more Asset Sales
equal to or in excess of $5 million. At that time, the entire amount of
unapplied Net Cash Proceeds, and not just the amount in excess of $5 million,
shall be applied as required pursuant to this covenant. Pending application in
accordance with this covenant, Net Cash Proceeds shall be applied to temporarily
reduce revolving credit borrowings which can be reborrowed or invested in Cash
Equivalents.
Each notice of an Asset Sale Offer will be mailed first class, postage
prepaid, to the record Holders as shown on the register of Holders within 20
days following such 365th day, with a copy to the Trustee offering to purchase
the Notes as described above. Each notice of an Asset Sale Offer shall state,
among other things, the purchase date, which must be no earlier than 30 days nor
later than 60 days from the date the notice is mailed, other than as may be
required by law (the "Asset Sale Offer Payment Date"). Upon receiving notice of
an Asset Sale Offer, Holders may elect to tender their Notes in whole or in part
in integral multiples of $1,000 in exchange for cash.
On the Asset Sale Offer Payment Date, the Company will, to the extent
lawful:
(1) accept for payment all Notes or portions thereof properly tendered
pursuant to the Asset Sale Offer;
(2) deposit with the Paying Agent funds in an amount equal to the Asset
Sale Offer Amount in respect of all Notes or portions thereof so
tendered; and
42
(3) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by the Company.
To the extent Holders of Notes and holders of other Senior Indebtedness, if
any, which are the subject of an Asset Sale Offer properly tender and do not
withdraw Notes or the other Senior Indebtedness in an aggregate amount exceeding
the amount of unapplied Net Cash Proceeds, the Company will purchase the Notes
and the other Senior Indebtedness on a pro rata basis (based on amounts so
tendered). If only a portion of a Note is purchased pursuant to an Asset Sale
Offer, a new Note in a principal amount equal to the portion thereof not
purchased will be issued in the name of the Holder thereof upon cancellation of
the original Note (or appropriate adjustments to the amount and beneficial
interests in a Global Note will be made, as appropriate). Notes (or portions
thereof) purchased pursuant to an Asset Sale Offer will be cancelled and cannot
be reissued.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other applicable securities laws in connection with the
purchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any applicable securities laws or regulations conflict with the
"Asset Sale" provisions of the Indenture, the Company shall comply with these
laws and regulations and shall not be deemed to have breached its obligations
under the "Asset Sale" provisions of the Indenture by doing so.
Upon completion of an Asset Sale Offer, the amount of Net Cash Proceeds
will be reset at zero. Accordingly, to the extent that the aggregate amount of
Notes and other Senior Indebtedness tendered pursuant to an Asset Sale Offer is
less than the aggregate amount of unapplied Net Cash Proceeds, the Company may
use any remaining Net Cash Proceeds for general corporate purposes of the
Company and its Restricted Subsidiaries, subject to any restrictions or
obligations imposed by the terms of any Subordinated Indebtedness of the Company
or its Restricted Subsidiaries.
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "-- Limitation on Merger,
Consolidation and Sale of Assets," the Successor Entity shall be deemed to have
sold the properties and assets of the Company and its Restricted Subsidiaries
not so transferred for purposes of this covenant, and shall comply with the
provisions of this covenant with respect to the deemed sale as if it were an
Asset Sale. In addition, the Fair Market Value of properties and assets of the
Company or its Restricted Subsidiaries so deemed to be sold shall be deemed to
be Net Cash Proceeds for purposes of this covenant.
If at any time any non-cash consideration received by the Company or any
Restricted Subsidiary, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash (other than interest
received with respect to any non-cash consideration), the conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this covenant within
365 days of conversion or disposition.
LIMITATION ON OWNERSHIP AND SALE OF CAPITAL STOCK OF RESTRICTED
SUBSIDIARIES
The Company will not permit any Person other than the Company or another
Restricted Subsidiary to, directly or indirectly, own or control any Capital
Stock of any Restricted Subsidiary, except for:
(1) in the case of a Restricted Subsidiary not organized in the United
States, directors' qualifying shares or an immaterial number of shares
required to be owned by other Persons pursuant to applicable law;
(2) the sale of 100% of the shares of the Capital Stock of any Restricted
Subsidiary held by the Company and its Restricted Subsidiaries to any
Person other than the Company or another Restricted Subsidiary effected
in accordance with, as applicable, "-- Limitation on Asset Sales" and
"-- Limitation on Merger, Consolidation and Sale of Assets;" and
43
(3) in the case of a Restricted Subsidiary other than a Wholly Owned
Restricted Subsidiary, the issuance by that Restricted Subsidiary of
Capital Stock on a pro rata basis to the Company and its Restricted
Subsidiaries, on the one hand, and minority shareholders of the
Restricted Subsidiary, on the other hand, (or on less than a pro rata
basis to any minority shareholder if the minority shareholder does not
acquire its pro rata amount).
LIMITATION ON DESIGNATION OF UNRESTRICTED SUBSIDIARIES
The Company may designate after the Issue Date any Subsidiary of the
Company as an "Unrestricted Subsidiary" under the Indenture (a "Designation")
only if:
(1) no Default or Event of Default shall have occurred and be continuing at
the time of or after giving effect to such Designation and any
transactions between the Company or any of its Restricted Subsidiaries
and such Unrestricted Subsidiary are in compliance with "-- Limitation
on Transactions with Affiliates;"
(2) at the time of and after giving effect to such Designation, the Company
could Incur $1.00 of additional Indebtedness pursuant to clause (1) of
"-- Limitation on Incurrence of Additional Indebtedness;" and
(3) the Company would be permitted to make an Investment at the time of
Designation (assuming the effectiveness of such Designation and
treating such Designation as an Investment at the time of Designation)
pursuant to the first paragraph of "-- Limitation on Restricted
Payments" (other than a Permitted Investment) in an amount (the
"Designation Amount") equal to the amount of the Company's Investment
in such Subsidiary on such date.
Neither the Company nor any Restricted Subsidiary will at any time be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary, except (1) for any non-recourse
guarantee given solely to support the pledge by the Company or any Restricted
Subsidiary of the Capital Stock of any Unrestricted Subsidiary or (2) to the
extent that the ability to declare a default or accelerate the payment is
limited to a default or acceleration on the obligation or instrument of the
Company or a Restricted Subsidiary treated as a Restricted Payment and
Incurrence of Indebtedness incurred in accordance with "-- Limitation on
Incurrence of Additional Indebtedness" and "-- Limitation on Restricted
Payments."
The Company may revoke any Designation of a Subsidiary (other than a
Receivables Subsidiary) as an Unrestricted Subsidiary (a "Revocation") only if:
(1) No Default or Event of Default shall have occurred and be continuing at
the time of and after giving effect to such Revocation; and
(2) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding
immediately following such Revocation would, if Incurred at such time,
have been permitted to be Incurred for all purposes of the Indenture.
The Designation of a Subsidiary of the Company as an Unrestricted
Subsidiary shall be deemed to include the Designation of all of the Subsidiaries
of such Subsidiary. All Designations and Revocations must be evidenced by a
Board Resolution delivered to the Trustee certifying compliance with the
preceding provisions.
LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
(a) Except as provided in paragraph (b) below, the Company will not, and
will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, create or otherwise cause or permit to
44
exist or become effective any encumbrance or restriction on the ability
of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on or in respect of
its Capital Stock to the Company or any other Restricted Subsidiary
or pay any Indebtedness owed to the Company or any other Restricted
Subsidiary;
(2) make loans or advances to, or Guarantee any Indebtedness or other
obligations of, or make any Investment in, the Company or any other
Restricted Subsidiary; or
(3) transfer any of its property or assets to the Company or any other
Restricted Subsidiary.
(b) Paragraph (a) above will not apply to encumbrances or restrictions
existing under or by reason of:
(1) applicable law;
(2) the Indenture;
(3) the indenture governing the 8 3/8% Notes as in effect on the Issue
Date, and any amendments or restatements thereof; provided, that any
amendment or restatement is not materially more restrictive with
respect to such encumbrances or restrictions than those in existence
on the Issue Date;
(4) the Bank Credit Facilities as in effect on the Issue Date, and any
amendments, restatements, renewals, replacements or refinancings
thereof; provided, that any amendment, restatement, renewal,
replacement or refinancing is not materially more restrictive with
respect to such encumbrances or restrictions than those in existence
on the Issue Date;
(5) customary non-assignment provisions of any contract and customary
provisions restricting assignment or subletting in any lease
governing a leasehold interest of any Restricted Subsidiary, or any
customary restriction on the ability of a Restricted Subsidiary to
dividend, distribute or otherwise transfer any asset which secures
Indebtedness secured by a Lien, in each case permitted to be
Incurred under the Indenture;
(6) any instrument governing Acquired Indebtedness not Incurred in
connection with, or in anticipation or contemplation of, the
relevant acquisition, merger or consolidation, which encumbrance or
restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or
assets of the Person so acquired;
(7) restrictions with respect to a Restricted Subsidiary of the Company
imposed pursuant to a binding agreement which has been entered into
for the sale or disposition of Capital Stock or assets of such
Restricted Subsidiary; provided, that such restrictions apply solely
to the Capital Stock or assets of such Restricted Subsidiary being
sold;
(8) customary restrictions imposed on the transfer of copyrighted or
patented materials or other intellectual property; or
(9) an agreement governing Indebtedness Incurred to Refinance the
Indebtedness issued, assumed or Incurred pursuant to an agreement
referred to in clauses (3), (4) or (6) of this paragraph (b);
provided, that such Refinancing agreement is not materially more
restrictive with respect to such encumbrances or restrictions than
those contained in the agreement referred to in such clauses (3),
(4) or (6).
LIMITATION ON LIENS
The Company will not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, Incur or permit to exist any Liens of
any kind (except for Permitted Liens) against or upon any of their respective
properties or assets (including Capital Stock of a Restricted Subsidiary),
whether owned
45
on the Issue Date or acquired after the Issue Date, or any proceeds therefrom,
to secure any Indebtedness or trade payables unless contemporaneously therewith
effective provision is made:
(1) in the case of the Company or any Restricted Subsidiary other than a
Note Guarantor, to secure the Notes and all other amounts due under the
Indenture; and
(2) in the case of a Note Guarantor, to secure such Note Guarantor's Note
Guarantee of the Notes and all other amounts due under the Indenture;
in each case, equally and ratably with such Indebtedness or trade payables (or,
in the event that such Indebtedness is subordinated in right of payment to the
Notes or such Note Guarantee, as the case may be, prior to such Indebtedness)
with a Lien on the same properties and assets securing such Indebtedness for so
long as such Indebtedness is secured by such Lien.
LIMITATION ON SALE AND LEASEBACK TRANSACTIONS
The Company will not, and will not cause or permit any Restricted
Subsidiary to, enter into any Sale and Leaseback Transaction with respect to any
property unless:
(1) the Company or such Restricted Subsidiary would be entitled to (A)
Incur Indebtedness in an amount equal to the Attributable Debt with
respect to such Sale and Leaseback Transaction in accordance with
"-- Limitation on Incurrence of Additional Indebtedness" and (B) create
a Lien on such property securing such Attributable Debt without
securing the Notes in accordance with "-- Limitation on Liens;"
(2) the consideration received by the Company or any Restricted Subsidiary
with respect to such Sale and Leaseback Transaction is at least equal
to the Fair Market Value of the property that is the subject of such
Sale and Leaseback Transaction; and
(3) the Company applies the proceeds of such transaction in compliance with
the covenant described under "-- Limitation on Asset Sales."
LIMITATION ON MERGER, CONSOLIDATION AND SALE OF ASSETS
The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person (whether or not the
Company is the surviving or continuing Person), or sell, assign, transfer,
lease, convey or otherwise dispose of (or cause or permit any Restricted
Subsidiary to sell, assign, transfer, lease, convey or otherwise dispose of) all
or substantially all of the Company's properties and assets (determined on a
consolidated basis for the Company and its Restricted Subsidiaries), to any
Person unless:
(1) either:
(a) the Company shall be the surviving or continuing corporation, or
(b) the Person (if other than the Company) formed by such consolidation
or into which the Company is merged or the Person which acquires by
sale, assignment, transfer, lease, conveyance or other disposition
the properties and assets of the Company and of the Company's
Restricted Subsidiaries substantially as an entirety (the "Successor
Entity"):
(x) shall be a corporation organized and validly existing under the
laws of the United States or any State thereof or the District of
Columbia and
(y) shall expressly assume, by supplemental indenture (in form and
substance satisfactory to the Trustee), executed and delivered to
the Trustee, the due and punctual payment of the principal of,
and premium and interest on all of the Notes and the performance
and observance of every covenant of the Notes, the Indenture and
the Registration Rights Agreement on the part of the Company to
be performed or observed;
46
(2) immediately after giving effect to such transaction and the assumption
contemplated by clause (1)(b)(y) above (including giving effect on a
pro forma basis to any Indebtedness, including any Acquired
Indebtedness, Incurred or anticipated to be Incurred in connection with
or in respect of such transaction), the Company or such Successor
Entity, as the case may be:
(a) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such
transaction, and
(b) shall be able to Incur at least $1.00 of additional Indebtedness
pursuant to clause (1) of "-- Limitation on Incurrence of Additional
Indebtedness;"
(3) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (1)(b)(y) above
(including giving effect on a pro forma basis to any Indebtedness,
including any Acquired Indebtedness, Incurred or anticipated to be
Incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing;
(4) each Note Guarantor (including Persons that become Note Guarantors as a
result of the transaction) shall have confirmed by supplemental
indenture that its Note Guarantee shall apply to the Obligations of the
Successor Entity in respect of the Indenture and the Notes; and
(5) the Company or the Successor Entity shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
the consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition and, if required in connection with
such transaction, the supplemental indenture, comply with the
applicable provisions of the Indenture and that all conditions
precedent in the Indenture relating to the transaction have been
satisfied.
For purposes of this covenant, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries (other than, for the avoidance of doubt, in connection with
Receivables Transactions) of the Company, the Capital Stock of which constitutes
all or substantially all of the properties and assets of the Company and its
Restricted Subsidiaries, taken as a whole, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.
Clause (2)(b) above shall not apply to:
(1) any transfer of the properties or assets of a Restricted Subsidiary to
the Company or to a Note Guarantor;
(2) any merger of a Restricted Subsidiary into the Company or a Note
Guarantor;
(3) any merger of the Company into a Wholly Owned Restricted Subsidiary
created for the purpose of holding the Capital Stock of the Company;
(4) a merger between the Company and a newly-created Affiliate incorporated
solely for the purpose of reincorporating the Company in another State
of the United States,
so long as, in each case the Indebtedness of the Company and its Restricted
Subsidiaries is not increased thereby.
Upon any consolidation, combination or merger or any transfer of all or
substantially all of the properties and assets of the Company and its Restricted
Subsidiaries in accordance with this covenant, in which the Company is not the
continuing corporation, the Successor Entity formed by such consolidation or
into which the Company is merged or to which such conveyance, lease or transfer
is made shall succeed to, and be substituted for, and may exercise every right
and power of, the Company under the Indenture and the Notes with the same effect
as if such Successor Entity had been named as such. For the avoidance of doubt,
compliance with this covenant shall not affect the obligations of the Company
(including a Successor Entity, if applicable) under "-- Change of Control," if
applicable.
47
Each Note Guarantor will not, and the Company will not cause or permit any
Note Guarantor to, consolidate with or merge into, or sell or dispose of all or
substantially all of its assets to, any Person (other than the Company) that is
not a Note Guarantor unless:
(1) such Person (if such Person is the surviving entity) assumes all of the
obligations of such Note Guarantor in respect of its Note Guarantee by
executing a supplemental indenture and providing the Trustee with an
Officers' Certificate and Opinion of Counsel, and such transaction is
otherwise in compliance with the Indenture;
(2) such Note Guarantee is to be released as provided under "-- Note
Guarantees;" or
(3) such sale or other disposition of substantially all of such Note
Guarantor's assets is made in accordance with "-- Limitation on Asset
Sales" or is a "disposition" that is not deemed to be an Asset Sale
pursuant to the definition of Asset Sale.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
(1) The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into any transaction or
series of related transactions (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with, or for
the benefit of, any of its Affiliates (each an "Affiliate
Transaction"), unless:
(a) the terms of such Affiliate Transaction are no less favorable than
those that could reasonably be expected to be obtained in a
comparable transaction at such time on an arm's-length basis from a
Person that is not an Affiliate of the Company;
(b) in the event that such Affiliate Transaction involves aggregate
payments, or transfers of property or services with a Fair Market
Value, in excess of $2 million, the terms of such Affiliate
Transaction shall be approved by a majority of the members of the
Board of Directors of the Company (including a majority of the
disinterested members thereof), the approval to be evidenced by a
Board Resolution stating that the Board of Directors has determined
that such transaction complies with the preceding provisions; and
(c) in the event that such Affiliate Transaction involves aggregate
payments, or transfers of property or services with a Fair Market
Value, in excess of $10 million, the Company shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness
of such Affiliate Transaction to the Company and the relevant
Restricted Subsidiary (if any) from a financial point of view from
an Independent Financial Advisor and file the same with the Trustee.
(2) Clause (1) above shall not apply to:
(a) transactions with or among the Company and any Restricted Subsidiary
or between or among Restricted Subsidiaries;
(b) reasonable fees and compensation paid to, and any indemnity provided
on behalf of, officers, directors, employees, consultants or agents
of the Company or any Restricted Subsidiary as determined in good
faith by the Company's Board of Directors;
(c) any transactions undertaken pursuant to any contractual obligations
or rights in existence on the Issue Date as in effect on the Issue
Date;
(d) any Restricted Payments made in accordance with "-- Limitation on
Restricted Payments;"
(e) loans and advances to officers, directors and employees of the
Company or any Restricted Subsidiary for travel, entertainment,
moving and other relocation expenses, in each case made in the
ordinary course of business and not exceeding $1 million outstanding
at any one time;
48
(f) any Qualified Receivables Transaction or any Investment in a
Receivables Subsidiary permitted under the Indenture in connection
with a Receivables Transaction;
(g) transactions with Ri-Rent Europe B.V. and Canlift Co. Ltd. in
connection with the ordinary operations of those businesses and
which are not material to the Company and its Restricted
Subsidiaries, taken as a whole; and
(h) the issuance of Capital Stock of the Company (other than
Disqualified Capital Stock).
CONDUCT OF BUSINESS
The Company and its Restricted Subsidiaries will not engage in any
businesses other than a Permitted Business.
REPORTS TO HOLDERS
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, so long as any Notes
remain outstanding, the Company will:
(1) provide the Trustee and the Holders with the annual reports and
information, documents and other reports as are specified in Sections
13 and 15(d) of the Exchange Act and applicable to a U.S. corporation
subject to such Sections within 15 days after the times specified for
the filing of the information, documents and reports under such
Sections; and
(2) file with the Commission, to the extent permitted, the information,
documents and reports referred to in clause (1) above within the
periods specified for such filings under the Exchange Act (whether or
not applicable to the Company).
In addition, at any time when the Company is not subject to or is not
current in its reporting obligations under clause (2) of the preceding
paragraph, the Company will make available, upon request, to any holder and any
prospective purchaser of Notes the information required pursuant to Rule
144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT
The following are "Events of Default":
(1) default in the payment when due of the principal of or premium on any
Notes, including the failure to make a required payment to purchase
Notes tendered pursuant to a Change of Control Offer or an Asset Sale
Offer;
(2) default for 30 days or more in the payment when due of interest on any
Notes (including additional interest payable under the Registration
Rights Agreement);
(3) the failure to perform or comply with any of the provisions described
under "-- Limitation on Asset Sales" or "-- Limitation on Merger,
Consolidation and Sale of Assets;"
(4) the failure by the Company or any Restricted Subsidiary to comply with
any other covenant or agreement contained in the Indenture or in the
Notes for 30 days or more after written notice to the Company from the
Trustee or the Holders of at least 25% in aggregate principal amount of
the outstanding Notes;
(5) default by the Company or any Restricted Subsidiary under any
Indebtedness (which, in the case of a Limited Recourse Receivables
Transaction, shall be the recourse obligations of the Company and its
Restricted Subsidiaries thereunder) which:
(a) is caused by a failure to pay principal of or premium or interest on
such Indebtedness prior to the expiration of any applicable grace
period provided in such Indebtedness on the date of such default; or
49
(b) results in the acceleration of such Indebtedness prior to its stated
maturity;
and the principal or accreted amount of Indebtedness covered by (a) or (b) at
the relevant time, aggregates $20 million or more.
(6) failure by the Company or any of its Restricted Subsidiaries to pay one
or more final judgments against any of them which are not covered by
adequate insurance by a solvent insurer of national or international
reputation which has acknowledged its obligations in writing,
aggregating $20 million or more, which judgment(s) are not paid,
discharged or stayed for a period of 60 days or more;
(7) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries or group of Restricted Subsidiaries that,
taken together, would constitute a Significant Subsidiary; or
(8) except as permitted by the Indenture, any Note Guarantee is held to be
unenforceable or invalid in a judicial proceeding or ceases for any
reason to be in full force and effect or any Note Guarantor, or any
Person acting on behalf of any Note Guarantor, denies or disaffirms
such Note Guarantor's obligations under its Note Guarantee.
If an Event of Default (other than an Event of Default specified in clause
(7) above with respect to the Company) shall occur and be continuing, the
Trustee or the Holders of at least 25% in principal amount of outstanding Notes
may declare the unpaid principal of (and premium) and accrued and unpaid
interest on all the Notes to be immediately due and payable by notice in writing
to the Company and the Trustee specifying the Event of Default and that it is a
"notice of acceleration." If an Event of Default specified in clause (7) above
occurs with respect to the Company, then the unpaid principal of (and premium)
and accrued and unpaid interest on all the Notes will become immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
At any time after a declaration of acceleration with respect to the Notes
as described in the preceding paragraph, the Holders of a majority in principal
amount of the Notes may rescind and cancel such declaration and its
consequences:
(a) if the rescission would not conflict with any judgment or decree;
(b) if all existing Events of Default have been cured or waived, except
nonpayment of principal or interest that has become due solely because
of the acceleration;
(c) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been
paid; and
(d) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its reasonable expenses, disbursements and
advances.
No rescission shall affect any subsequent Default or impair any rights relating
thereto.
The Holders of a majority in principal amount of the Notes may waive any
existing Default or Event of Default under the Indenture, and its consequences,
except a default in the payment of the principal of, premium or interest on any
Notes.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee is under no obligation to exercise any of its rights or
powers under the Indenture at the request, order or direction of any of the
Holders, unless such Holders have offered to the Trustee reasonable indemnity.
Subject to all provisions of the Indenture and applicable law, the Holders of a
majority in aggregate principal amount of the then outstanding Notes have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee.
50
No Holder of any Notes will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless:
(a) such Holder gives to the Trustee written notice of a continuing Event
of Default;
(b) Holders of at least 25% in principal amount of the then outstanding
Notes make a written request to pursue the remedy;
(c) such Holders of the Notes provide to the Trustee satisfactory
indemnity;
(d) the Trustee does not comply within 60 days; and
(e) during such 60-day period the Holders of a majority in principal amount
of the outstanding Notes do not give the Trustee a written direction
which, in the opinion of the Trustee, is inconsistent with the request;
provided, that a Holder of a Note may institute suit for enforcement of payment
of the principal of and premium or interest on such Note on or after the
respective due dates expressed in such Note.
The Company is required to deliver to the Trustee written notice of any
event which would constitute certain Defaults, their status and what action the
Company is taking or proposes to take in respect thereof. In addition, the
Company is required to deliver to the Trustee, within 105 days after the end of
each fiscal year, an Officers' Certificate indicating whether the signers
thereof know of any Default or Event of Default that occurred during the
previous fiscal year; the status of any Default or Event of Default described
and what actions the Company is taking or proposes to take upon respect thereto.
The Indenture provides that if a Default or Event of Default occurs, is
continuing and is actually known to the Trustee, the Trustee must mail to each
Holder notice of the Default or Event of Default within 90 days after the
occurrence thereof. Except in the case of a Default or Event of Default in the
payment of principal of, premium or interest on any Note, the Trustee may
withhold notice if and so long as a committee of its trust officers in good
faith determines that withholding notice is in the interests of the Holders.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations discharged with respect to the outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Notes on the 91st day after the deposit specified in clause (1) of the second
following paragraph, except for:
(1) the rights of Holders to receive payments in respect of the principal
of, premium and interest on the Notes when such payments are due;
(2) the Company's obligations with respect to the Notes concerning
registration of Notes, mutilated, destroyed, lost or stolen Notes and
the maintenance of an office or agency for payments;
(3) the rights, powers, trust, duties and immunities of the Trustee and the
Company's obligations in connection therewith; and
(4) the Legal Defeasance provisions of the Indenture.
In addition, the Company may, at its option and at any time, elect to have
its obligations released with respect to certain covenants that are described in
the Indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, reorganization and insolvency
events) described under "Events of Default" will no longer constitute an Event
of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders cash in U.S. dollars, certain direct
non-callable obligations of, or guaranteed by, the United
51
States, or a combination thereof, in such amounts as will be sufficient
without reinvestment, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium and
interest on the Notes on the stated date for payment thereof;
(2) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee and independent of the Company to the effect
that:
(a) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling; or
(b) since the Issue Date, there has been a change in the applicable U.S.
federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall state that, the Holders will
not recognize income, gain or loss for U.S. federal income tax
purposes as a result of such Legal Defeasance and will be subject to
U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal
Defeasance had not occurred;
(3) in the case of Covenant Defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel in the United States reasonably
acceptable to the Trustee and independent of the Company to the effect
that the Holders will not recognize income, gain or loss for U.S.
federal income tax purposes as a result of such Covenant Defeasance and
will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be continuing on
the date of the deposit pursuant to clause (1) of this paragraph
(except any Default or Event of Default resulting from the failure to
comply with "Certain Covenants -- Limitation on Incurrence of
Additional Indebtedness" as a result of the borrowing of the funds
required to effect such deposit) and, insofar as Events of Default from
bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit, and the
Trustee shall have received Officers' Certificates to such effect on
the date of such deposit and, in the case of Legal Defeasance, on such
91st day;
(5) the Trustee shall have received an Officers' Certificate stating that
such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under the Indenture or
any other material agreement or instrument to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(6) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with
the intent of preferring the Holders over any other creditors of the
Company or any Subsidiary of the Company or with the intent of
defeating, hindering, delaying or defrauding any other creditors of the
Company or others;
(7) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel reasonably acceptable to the
Trustee, each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have been
complied with;
(8) the Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee to the effect that after the 91st
day following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally; and
(9) the Company shall have delivered to the Trustee an Opinion of Counsel
that is not an employee of the Company to the effect that the trust
resulting from the deposit either does not constitute, or is qualified
as, a regulated investment company under the Investment Company Act of
1940.
52
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when:
(1) either:
(a) all the Notes theretofore authenticated and delivered (except lost,
stolen or destroyed Notes which have been replaced or paid and Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust) have been delivered to
the Trustee for cancellation; or
(b) all Notes not theretofore delivered to the Trustee for cancellation
have become due and payable, and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds or
certain direct, non-callable obligations of, or guaranteed by, the
United States sufficient without reinvestment to pay and discharge
the entire Indebtedness on the Notes not theretofore delivered to
the Trustee for cancellation, for principal of, premium and interest
on the Notes to the date of deposit, together with irrevocable
instructions from the Company directing the Trustee to apply such
funds to the payment;
(2) the Company has paid all other sums payable under the Indenture and the
Notes by it; and
(3) the Company has delivered to the Trustee an Officers' Certificate
stating that all conditions precedent under the Indenture relating to
the satisfaction and discharge of the Indenture have been complied
with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, the Note Guarantors and the Trustee,
without the consent of the Holders, may amend the Indenture or the Notes for
certain specified purposes, including curing ambiguities, defects or
inconsistencies, adding Note Guarantees or covenants, issuing Additional Notes
or Exchange Notes, and making other changes which do not, in the opinion of the
Trustee, adversely affect the rights of any of the Holders in any material
respect. In formulating its opinion on such matters, the Trustee will be
entitled to rely on such evidence as it deems appropriate, including solely on
an Opinion of Counsel and Officers' Certificate. Other modifications and
amendments of the Indenture or the Notes may be made with the consent of the
Holders of at least a majority in principal amount of the then outstanding Notes
issued under the Indenture, except that, without the consent of each Holder
affected thereby, no amendment may:
(1) reduce the amount of Notes whose Holders must consent to an amendment
or waiver;
(2) reduce the rate of or change or have the effect of changing the time
for payment of interest, including defaulted interest, on any Notes;
(3) reduce the principal of or change or have the effect of changing the
fixed maturity of any Notes or provide for the redemption of any Notes
prior to their fixed maturity;
(4) make any Notes payable in money other than that stated in the Notes;
(5) make any change in provisions of the Indenture entitling each Holder to
receive payment of principal of, premium and interest on such Note on
or after the due date thereof or to bring suit to enforce such payment,
or permitting Holders of a majority in principal amount of Notes to
waive Defaults or Events of Default;
(6) amend, change or modify in any material respect the obligation of the
Company to make and consummate a Change of Control Offer in respect of
a Change of Control that has occurred or
53
make and consummate an Asset Sale Offer with respect to any Asset Sale
that has been consummated;
(7) make any change in the ranking of any Note that adversely affects the
rights of any Holder;
(8) eliminate or modify in any manner a Note Guarantor's obligations with
respect to its Note Guarantee which adversely affects Holders in any
material respect, except as contemplated in the Indenture; or
(9) make any change in the amendment provisions which require the consent
of each Holder or in the waiver provisions which require the consent of
each Holder.
GOVERNING LAW
The Indenture will provide that the Indenture and the Notes will be
governed by, and construed in accordance with, the law of the State of New York.
THE TRUSTEE
The Indenture will provide that, except during the continuance of an Event
of Default, the Trustee will perform only such duties as are specifically set
forth in the Indenture. During the existence of an Event of Default, the Trustee
will exercise such rights and powers vested in it by the Indenture, and use the
same degree of care and skill in its exercise as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, to obtain
payments of claims in certain cases or to realize on certain property received
in respect of any such claim as security or otherwise. Subject to the TIA, the
Trustee will be permitted to engage in other transactions; provided, that if the
Trustee acquires any conflicting interest as described in the TIA, it must
eliminate such conflict or resign.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture.
NO PERSONAL LIABILITY
The Indenture provides that an incorporator, director, officer, employee,
stockholder or controlling person, as such, of the Company or any Note Guarantor
shall not have any liability for any obligations of the Company or such Note
Guarantor under the Notes (including the Note Guarantees) or the Indenture or
for any claims based on, in respect of or by reason of such obligations or their
creation. By accepting a Note, each Holder waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes. Such waiver and release may not be effective to waive liabilities
under the U.S. federal securities laws, and it is the view of the Commission
that such waiver is against public policy.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for a full definition of all such
terms, as well as any other terms used herein for which no definition is
provided. The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any
pronoun shall include the corresponding masculine, feminine and neuter forms.
54
"8 3/8% Notes" means the $175,000,000 aggregate principal amount of 8 3/8%
Senior Subordinated Notes due 2012 issued by the Company under the indenture
dated as of June 17, 2002, among the Company as issuer, certain of its
Subsidiaries, as guarantors and The Bank of New York, as trustee, as well as any
additional notes issued under that indenture.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with the Company or any of its Restricted
Subsidiaries or is assumed in connection with the acquisition of assets from
such Person. Such Indebtedness shall be deemed to have been Incurred at the time
such Person becomes a Restricted Subsidiary or at the time it merges or
consolidates with the Company or a Restricted Subsidiary or at the time such
Indebtedness is assumed in connection with the acquisition of assets from such
Person, whether or not such Indebtedness was incurred in connection with, as a
result of, or in contemplation of, such Acquired Person becoming a Restricted
Subsidiary (or being merged into or consolidated with the Company or any
Restricted Subsidiary) or such acquisition of assets.
"Additional Notes" has the meaning set forth under "Additional Notes"
above.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; provided,
that beneficial ownership of 10% or more of the Voting Stock of a Person shall
be deemed to be control. For purposes of this definition, the terms
"controlling," "controlled by" and "under common control with" have correlative
meanings.
"Affiliate Transaction" has the meaning set forth under "-- Certain
Covenants -- Limitation on Transactions with Affiliates."
"Asset Acquisition" means:
(1) an Investment by the Company or any Restricted Subsidiary in any other
Person pursuant to which such Person shall become a Restricted
Subsidiary, or shall be merged with or into the Company or any
Restricted Subsidiary;
(2) the acquisition by the Company or any Restricted Subsidiary of the
assets of any Person (other than a Subsidiary of the Company) which
constitute all or substantially all of the assets of such Person or
comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course
of business; or
(3) any Revocation with respect to an Unrestricted Subsidiary.
"Asset Sale" means any direct or indirect sale, disposition, issuance,
conveyance, transfer, lease, assignment or other transfer, including a Sale and
Leaseback Transaction (each, a "disposition") by the Company or any Restricted
Subsidiary of:
(a) any Capital Stock (other than Capital Stock of the Company); or
(b) any property or assets (other than cash or Cash Equivalents) of the
Company or any Restricted Subsidiary.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) the disposition of all or substantially all of the assets of the
Company and its Restricted Subsidiaries as permitted under "-- Certain
Covenants -- Limitation on Merger, Consolidation and Sale of Assets;"
(2) the disposition of inventory or obsolete or worn-out assets, including
the leasing of inventory by the Company and its Restricted Subsidiaries
to its customers (whether or not the leased inventory remains (for tax
or accounting purposes) an asset of the Company or a Restricted
Subsidiary), in each case in the ordinary course of business;
55
(3) dispositions of assets in any fiscal year with a Fair Market Value not
to exceed $5 million in the aggregate;
(4) for purposes of "-- Certain Covenants -- Limitation on Asset Sales"
only, the making of a Restricted Payment permitted under "-- Certain
Covenants -- Limitation on Restricted Payments;"
(5) a disposition to the Company or a Restricted Subsidiary, including a
Person that is or will become a Restricted Subsidiary immediately after
the disposition;
(6) any disposition of Receivables Assets pursuant to a Limited Recourse
Receivables Transaction which constitutes an Incurrence of Indebtedness
by the Company or any Restricted Subsidiary made in accordance with
"-- Certain Covenants -- Limitation on Incurrence of Additional
Indebtedness;"
(7) any disposition of Receivables Assets pursuant to a Qualified
Receivables Transaction for fair market value thereof; provided that at
least 75% of the consideration therefor consists of cash or Cash
Equivalents received by the Company or any Restricted Subsidiary at the
time thereof; and
(8) any disposition constituting a Lien (other than a Sale and Leaseback
Transaction) permitted under "-- Certain Covenants -- Limitation on
Liens."
"Asset Sale Offer" has the meaning set forth under "-- Certain
Covenants -- Limitation on Asset Sales."
"Asset Sale Transaction" means any Asset Sale and, whether or not
constituting an Asset Sale, (1) any sale or other disposition of Capital Stock,
(2) any Designation with respect to an Unrestricted Subsidiary and (3) any sale
or other disposition of property or assets excluded from the definition of Asset
Sale by clause (3) of that definition.
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate borne by the Notes, compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the lease included in
such Sale and Leaseback Transaction (including any period for which such lease
has been extended); provided that if such Sale and Leaseback Transaction results
in Capitalized Lease Obligations, the amount of Indebtedness represented thereby
will be determined in accordance with the definition of "Capitalized Lease
Obligations."
"Bank Credit Facilities" means (i) the Amended and Restated Credit
Agreement dated June 17, 2002, by and among the Company, its Subsidiaries listed
on Schedule 1 thereto, the lenders listed on Schedule 2 thereto, Wachovia Bank,
National Association and Bank One, Michigan, as amended by Amendment No. 1 to
Amended and Restated Credit Agreement dated August 30, 2002, Amendment No. 2 and
Waiver Under Amended and Restated Credit Agreement dated February 21, 2003 and
Amendment No. 3 Under Amended and Restated Credit Agreement dated April 28, 2003
and (ii) the Second Amended and Restated Financing Agreement, dated June 17,
2002, by and among the Company, its subsidiaries party thereto and Manufacturers
and Traders Trust Company (formerly known as Allfirst Bank), as amended by
Amendment No. 1 to Second Amended and Restated Financing Agreement dated August
30, 2002, Amendment No. 2 and Waiver Under Second Amended and Restated Financing
Agreement dated February 21, 2003 and Amendment No. 3 Under Amended and Restated
Financing Agreement dated April 28, 2003, in each case, together with the
related documents thereto (including any Guarantee agreements and security
documents), as such agreements may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreement adding Subsidiaries of the Company as additional
borrowers or guarantors thereunder or extending the maturity of, refinancing,
replacing or otherwise restructuring all or any portion of the Indebtedness or
commitments under such agreement(s) or any successor or replacement agreement(s)
and whether by the same or any other agent, lender or group of lenders, in each
case in the bank credit market.
56
"Board of Directors" means, as to any Person, the board of directors,
management committee or similar governing body of such Person or any duly
authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Capitalized Lease Obligations" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP. For purposes of this definition, the
amount of such obligations at any date shall be the capitalized amount of such
obligations at such date, determined in accordance with GAAP.
"Capital Stock" means:
(1) with respect to any Person that is a corporation, any and all shares,
interests, participations or other equivalents (however designated and
whether or not voting) of corporate stock, including each class of
Common Stock and Preferred Stock of such Person;
(2) with respect to any Person that is not a corporation, any and all
partnership or other equity or ownership interests of such Person; and
(3) any warrants, rights or options to purchase any of the instruments or
interests referred to in clause (1) or (2) above.
"Cash Equivalents" means:
(1) marketable direct obligations issued by, or unconditionally guaranteed
by, the United States government or issued by any agency thereof and
backed by the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(2) marketable direct obligations issued by any state of the United States
of America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having one of the
two highest ratings obtainable from either Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's") or
any successors thereto;
(3) commercial paper maturing no more than one year from the date of
acquisition thereof and, at the time of acquisition, having a rating of
at least A-1 from S&P or P-1 from Moody's;
(4) certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any bank organized
under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a non-U.S. bank having
at the date of acquisition thereof combined capital and surplus of not
less than $500 million;
(5) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (1) above
entered into with any bank meeting the qualifications specified in
clause (4) above; and
(6) investments in money market funds which invest substantially all of
their assets in securities of the types described in clauses (1)
through (5) above.
"Change of Control" means the occurrence of one or more of the following
events:
(1) any Person or Group is or becomes the "beneficial owner," directly or
indirectly, in the aggregate of more than 35% of the total voting power
of the Voting Stock of the Company (including a Successor Entity, if
applicable), whether by virtue of the issuance, sale or other
disposition of Capital Stock of the Company by the Company or by a
direct or indirect holder of Capital Stock of the Company, a merger or
consolidation involving the Company, its direct or indirect
shareholders or such Person or Group, a sale of assets by the Company,
its direct or indirect
57
shareholders, any voting trust agreement or other agreement to which
the Company, its direct or indirect shareholders or any such Person or
Group is a party or is subject, or otherwise; or
(2) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the
Company, together with any new directors whose election by such Board
of Directors or whose nomination for election by the shareholders of
the Company was approved by a vote of a majority of the directors of
the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election
was previously so approved, cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or
(3) the approval by the holders of Capital Stock of the Company of any plan
or proposal for the liquidation or dissolution of the Company, whether
or not otherwise in compliance with the provisions of the Indenture.
For purposes of this definition:
(a) "beneficial owner" shall have the meaning specified in Rules 13d-3 and
13d-5 under the Exchange Act, except that any Person or Group shall be
deemed to have "beneficial ownership" of all securities that such
Person or Group has the right to acquire, whether such right is
exercisable immediately, only after the passage of time or upon the
occurrence of a subsequent condition.
(b) "Person" and "Group" shall have the meanings for "person" and "group"
as used in Sections 13(d) and 14(d) of the Exchange Act; and
(c) any other Person or Group shall be deemed to beneficially own any
Voting Stock of a corporation held by any other corporation (the
"parent corporation") so long as such Person or Group, beneficially
owns, directly or indirectly, in the aggregate at least 35% of the
voting power of the Voting Stock of the parent corporation and no other
Person or Group beneficially owns an equal or greater amount of the
Voting Stock of the parent corporation.
"Change of Control Payment" has the meaning set forth under "-- Change of
Control."
"Change of Control Payment Date" has the meaning set forth under "-- Change
of Control."
"Commission" means the Securities and Exchange Commission, or any successor
agency thereto with respect to the regulation or registration of securities.
"Commodity Derivative Agreement" means, in respect of any Person, any
commodity swap agreement (including caps, collars, swaptions, forward agreements
and other similar instruments or agreements) and/or other types of agreements
and instruments designed to hedge commodity risk of such Person.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common equity interests, whether outstanding on
the Issue Date or issued after the Issue Date, and includes all series and
classes of such common equity interests.
"Consolidated EBITDA" means, for any period, Consolidated Net Income for
such period, plus or minus the following to the extent deducted or added in
calculating such Consolidated Net Income:
(1) Consolidated Income Tax Expense for such period;
(2) Consolidated Interest Expense for such period;
(3) Consolidated Non-cash Charges for such period;
(4) net after-tax losses from Asset Sale Transactions or abandonments or
reserves relating thereto for such period;
(5) the cash portion of the Orrville Restructuring Charge taken for such
period; less
58
(6) (x) all non-cash credits and gains for such period and (y) all cash
payments during such period relating to non-cash charges that were
added back in determining Consolidated EBITDA in any prior period.
Notwithstanding the foregoing, the items specified in clauses (1), (3) and (4)
for any Restricted Subsidiary shall be added to Consolidated Net Income in
calculating Consolidated EBITDA only:
(a) in proportion to the percentage of the total Capital Stock of such
Restricted Subsidiary held directly or indirectly by the Company, and
(b) to the extent that a corresponding amount would be permitted at the
date of determination to be distributed to the Company by such
Restriction Subsidiary pursuant to its charter and bylaws and each law,
regulation, agreement or judgment applicable to such distribution.
"Consolidated Fixed Charge Coverage Ratio" means, as of any date of
determination, the ratio of the aggregate amount of Consolidated EBITDA for the
four most recent full fiscal quarters for which financial statements are
available ending prior to the date of such determination (the "Four Quarter
Period") to Consolidated Fixed Charges for such Four Quarter Period. For
purposes of this definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis in
accordance with Regulation S-X under the Securities Act for the period of such
calculation to:
(1) the Incurrence or repayment (excluding revolving credit borrowings
Incurred or repaid in the ordinary course of business for working
capital purposes) or redemption of any Indebtedness or Preferred Stock
of the Company or any of its Restricted Subsidiaries (and the
application of the proceeds thereof), including the Incurrence of any
Indebtedness or Preferred Stock (and the application of the proceeds
thereof) giving rise to the need to make such determination, occurring
during such Four Quarter Period or at any time subsequent to the last
day of such Four Quarter Period and on or prior to such date of
determination, as if such Incurrence or repayment, as the case may be
(and the application of the proceeds thereof), occurred on the first
day of such Four Quarter Period; and
(2) any Asset Sale Transaction or Asset Acquisition (including any Asset
Acquisition giving rise to the need to make such determination as a
result of the Company or one of its Restricted Subsidiaries (including
any Person who becomes a Restricted Subsidiary as a result of the Asset
Acquisition) Incurring Acquired Indebtedness and including by giving
pro forma effect to any Consolidated EBITDA (provided, that such pro
forma Consolidated EBITDA shall be calculated in a manner consistent
with the exclusions in the definition of Consolidated Net Income)
attributable to the assets which are the subject of the Asset Sale
Transaction or Asset Acquisition during the Four Quarter Period)
occurring during the Four Quarter Period or at any time subsequent to
the last day of the Four Quarter Period and on or prior to such date of
determination, as if such Asset Sale Transaction or Asset Acquisition
(including the Incurrence of any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio,"
(a) interest on outstanding Indebtedness determined on a fluctuating basis
as of the date of determination and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate
per annum equal to the rate of interest on such Indebtedness in effect
on such date of determination;
(b) if interest on any Indebtedness actually Incurred on such date of
determination may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a euro currency interbank
offered rate, or other rates, then the interest rate in effect on such
date of determination will be deemed to have been in effect during the
Four Quarter Period; and
59
(c) notwithstanding clause (a) above, interest on Indebtedness determined
on a fluctuating basis, to the extent such interest is covered by
Hedging Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, for any period, the sum, without
duplication, of:
(1) Consolidated Interest Expense, plus
(2) the product of:
(a) the amount of all cash and non-cash dividend payments on any series
of Preferred Stock or Disqualified Capital Stock of the Company or
any Restricted Subsidiary (other than dividends paid in Qualified
Capital Stock) or any Restricted Subsidiaries paid, accrued or
scheduled to be paid or accrued during such period times
(b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current effective consolidated U.S.
federal, state and local tax rate of the Company, expressed as a
decimal.
"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the provision for U.S. federal, state, local and non-U.S. income
taxes payable by the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the sum of, without
duplication determined on a consolidated basis in accordance with GAAP:
(1) the aggregate of cash and non-cash interest expense of the Company and
its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including (whether or not
interest expense in accordance with GAAP):
(a) any amortization or accretion of debt discount or any interest paid
on Indebtedness of the Company in the form of additional
Indebtedness,
(b) any amortization of deferred financing costs,
(c) the net costs under Hedging Obligations (including amortization of
fees),
(d) all capitalized interest,
(e) the interest portion of any deferred payment obligation,
(f) commissions, discounts and other fees and charges Incurred in
respect of letters of credit or bankers' acceptances, and
(g) any interest expense on Indebtedness of another Person that is (i)
Guaranteed by the Company or one of its Restricted Subsidiaries
(excluding interest expense (other than interest expense of the
Company and its Restricted Subsidiaries determined on a consolidated
basis in accordance with GAAP, which is not reimbursed to the
Company and its Restricted Subsidiaries) on Indebtedness of
customers of the Company or its Restricted Subsidiaries used to
finance the purchase of inventory and related services from the
Company or any of its Restricted Subsidiaries if the Company or a
Restricted Subsidiary has an enforceable right to sell such
inventory to satisfy the Guaranteed Indebtedness or its
reimbursement for payment thereof or similar rights related thereto)
or (ii) secured by a Lien on the assets of the Company or one of its
Restricted Subsidiaries; in each case whether or not such Guarantee
or Lien is called upon; and
(2) the interest component of Capitalized Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period.
60
"Consolidated Net Income" means, with respect to the Company for any
period, the aggregate net income (or loss) of the Company and its Subsidiaries
for such period on a consolidated basis, determined in accordance with GAAP;
provided, that there shall be excluded therefrom:
(1) net after-tax gains from Asset Sale Transactions or abandonments or
reserves relating thereto;
(2) net after-tax items classified as extraordinary gains or losses;
(3) for purposes of calculating Consolidated Net Income pursuant to clause
(3) of the first paragraph of "-- Certain Covenants -- Limitation on
Restricted Payments" only, the net income (or loss) of:
(A) any Person acquired in a "pooling of interests" transaction accrued
prior to the date it becomes a Restricted Subsidiary or is merged or
consolidated with the Company or any Restricted Subsidiary; or
(B) a Successor Entity prior to assuming the Company's obligations under
the Indenture and the Notes pursuant to "-- Certain
Covenants -- Limitation on Merger, Consolidation and Sale of
Assets."
(4) the net income (but not loss) of any Restricted Subsidiary to the
extent that a corresponding amount could not be distributed to the
Company at the date of determination as a result of any restriction
pursuant to such Restricted Subsidiary's charter or bylaws or any law,
regulation, agreement or judgment applicable to any such distribution;
(5) the net income (but not loss) of any Person other than the Company or a
Restricted Subsidiary;
(6) any increase (but not decrease) in net income attributable to minority
interests in any Restricted Subsidiary;
(7) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of Consolidated Net
Income accrued at any time following the Issue Date; and
(8) the cumulative effect of changes in accounting principles.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash expenses or losses of the Company
and its Restricted Subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP (excluding any such charge which constitutes an
accrual of or a reserve for cash charges for any future period or the
amortization of a prepaid cash expense paid in a prior period).
"Consolidated Senior Debt Ratio" means, as of any date of determination,
the ratio of (x)(A) the total consolidated Indebtedness of the Company and its
Restricted Subsidiaries that is Senior Indebtedness minus (B) the total
consolidated cash and Cash Equivalents of the Company and its Restricted
Subsidiaries, in each case as of the end of the most recent full fiscal quarter
for which financial statements are available ending prior to the date of such
determination to (y) the aggregate amount of Consolidated EBITDA for the then
Four Quarter Period, in each case with such pro forma adjustments to the amounts
of consolidated Indebtedness, consolidated cash and Cash Equivalent and
Consolidated EBITDA as are appropriate and consistent with the pro forma
adjustment provisions set forth in the definition of Consolidated Fixed Charge
Coverage Ratio.
"Covenant Defeasance" has the meaning set forth under "-- Legal Defeasance
and Covenant Defeasance."
61
"Credit Derivative Agreement" means, in respect of any Person, any credit
derivative or other similar derivative instrument and/or agreement designed to
hedge credit risk of such Person.
"Currency Derivative Agreement" means, in respect of any Person, any
foreign exchange contract or currency swap agreement (including any forward
agreement, swaption and other similar agreement) or other agreements and
instruments designed to hedge foreign currency risk of such Person.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
"Designation" and "Designation Amount" have the meanings set forth under
"-- Certain Covenants -- Limitation on Designation of Unrestricted Subsidiaries"
above.
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the sole option of the
holder thereof, in any case, on or prior to the 91st day after the final
maturity date of the Notes.
"Domestic Restricted Subsidiary" means any direct or indirect Restricted
Subsidiary (other than a Receivables Subsidiary) that is organized under the
laws of the United States, any state or possession thereof or the District of
Columbia.
"Event of Default" has the meaning set forth in "-- Events of Default."
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"Exchange Notes" means the 8 1/4% senior notes due 2008 being offered
pursuant to this prospectus.
"Fair Market Value" means, with respect to any asset, the price (after
taking into account any liabilities relating to such assets) which could be
negotiated in an arm's-length free market transaction, for cash, between a
willing seller and a willing and able buyer, neither of which is under any
compulsion to complete the transaction; provided, that the Fair Market Value of
any such asset or assets shall be determined conclusively by the Board of
Directors of the Company acting in good faith, and shall be evidenced by a Board
Resolution.
"Four Quarter Period" has the meaning set forth in the definition of
Consolidated Fixed Charge Coverage Ratio above.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession of the United States that are in effect as of the Issue Date.
"Global Notes" has the meaning set forth under "Book Entry; Delivery and
Form."
"Guarantee" means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person:
(1) to purchase or pay, or advance or supply funds for the purchase or
payment of, such Indebtedness of such other Person, whether arising by
virtue of partnership arrangements, or by a binding agreement to
keep-well that is by its terms enforceable by one or more Persons, to
purchase assets, goods, securities or services, to take-or-pay, or to
maintain financial statement conditions or otherwise, or
(2) entered into for purposes of assuring in any other manner the obligee
of such Indebtedness of the payment thereof or to protect such obligee
against loss in respect thereof, in whole or in part,
62
provided, that "Guarantee" shall not include (i) endorsements for collection or
deposit in the ordinary course of business, (ii) obligations, contingent or
otherwise, pursuant to Standard Undertakings, or (iii) recourse in Limited
Recourse Receivables Transactions. "Guarantee" used as a verb has a
corresponding meaning.
"Hedging Obligations" means the obligations of any Person pursuant to any
Interest Rate Derivative Agreement, Currency Derivative Agreement, Credit
Derivative Agreement or Commodity Derivative Agreement.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, Guarantee or otherwise become liable in respect of such
Indebtedness or other obligation on the balance sheet of such Person (and
"Incurrence," "Incurred" and "Incurring" shall have meanings correlative to the
preceding).
"Indebtedness" means with respect to any Person, without duplication:
(1) the principal amount (or, if less, the accreted value) of all
obligations of such Person for borrowed money;
(2) the principal amount (or, if less, the accreted value) of all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(3) all Capitalized Lease Obligations of such Person;
(4) all obligations of such Person issued or assumed as the deferred
purchase price of property, all conditional sale obligations and all
obligations under any title retention agreement (but excluding trade
accounts payable and other accrued liabilities arising in the ordinary
course of business that are not overdue by 90 days or more or are
being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted);
(5) all letters of credit, bankers' acceptances or similar credit
transactions, including reimbursement obligations of such Person in
respect thereof;
(6) Guarantees and other contingent obligations of such Person in respect
of Indebtedness referred to in clauses (1) through (5) above and
clauses (8) through (10) below;
(7) all Indebtedness of any other Person of the type referred to in
clauses (1) through (6) which is secured by any Lien on any property
or asset of such Person, the amount of such Indebtedness being deemed
to be the lesser of the Fair Market Value of such property or asset or
the amount of the Indebtedness so secured;
(8) all obligations under Hedging Obligations of such Person;
(9) all obligations reflected as debt on the balance sheet of such Person
in accordance with GAAP in connection with the sale, conveyance,
securitization or other transfer of, or the creation of a security
interest in, Receivables Assets; and
(10) all Disqualified Capital Stock issued by such Person with the amount
of Indebtedness represented by such Disqualified Capital Stock being
equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any; provided, that:
(a) if the Disqualified Capital Stock does not have a fixed repurchase
price, such maximum fixed repurchase price shall be calculated in
accordance with the terms of the Disqualified Capital Stock as if
the Disqualified Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the
Indenture, and
63
(b) if the maximum fixed repurchase price is based upon, or measured by,
the fair market value of the Disqualified Capital Stock, the fair
market value shall be the Fair Market Value thereof.
"Independent Financial Advisor" means an accounting firm, appraisal firm,
investment banking firm or consultant of nationally recognized standing that is,
in the judgment of the Company's Board of Directors, qualified to perform the
task for which it has been engaged and which is independent in connection with
the relevant transaction.
"Interest Rate Derivative Agreement" of any Person means any interest rate
swap agreement (including interest rate swaps, caps, floors, collars, swaptions,
forward agreements or forward rate instruments and other similar agreements)
and/or other types of agreements and instruments designed to hedge interest rate
risk of such Person.
"Investment" means, with respect to any Person, any:
(1) direct or indirect loan or other extension of credit (including a
Guarantee) to any other Person,
(2) capital contribution (by means of any transfer of cash or other
property to others or any payment for property or services for the
account or use of others) to any other Person, or
(3) any purchase or acquisition by such Person of any Capital Stock, bonds,
notes, debentures or other securities or evidences of Indebtedness
issued by, any other Person.
"Investment" shall exclude accounts receivable or deposits arising in the
ordinary course of business. "Invest," "Investing" and
"Invested" shall have corresponding meanings.
For purposes of the "-- Limitation on Restricted Payments" covenant, the
Company shall be deemed to have made an "Investment" in an Unrestricted
Subsidiary at the time of its Designation, which shall be valued at the Fair
Market Value of the sum of the net assets of such Unrestricted Subsidiary at the
time of its Designation and the amount of any Indebtedness of such Unrestricted
Subsidiary Guaranteed by the Company or any Restricted Subsidiary or owed to the
Company or any Restricted Subsidiary immediately following such Designation. Any
property transferred to or from an Unrestricted Subsidiary will be valued at its
Fair Market Value at the time of such transfer. If the Company or any Restricted
Subsidiary sells or otherwise disposes of any Common Stock of a Restricted
Subsidiary (including any issuance and sale of Capital Stock by a Restricted
Subsidiary) such that, after giving effect to any such sale or disposition, such
Restricted Subsidiary would cease to be a Subsidiary of the Company, the Company
shall be deemed to have made an Investment on the date of any such sale or
disposition equal to sum of the Fair Market Value of the Capital Stock of such
former Restricted Subsidiary held by the Company or any Restricted Subsidiary
immediately following such sale or other disposition and the amount of any
Indebtedness of such former Restricted Subsidiary Guaranteed by the Company or
any Restricted Subsidiary or owed to the Company or any other Restricted
Subsidiary immediately following such sale or other disposition.
"Investment Return" means, in respect of any Investment (other than a
Permitted Investment) made after the Issue Date by the Company or any Restricted
Subsidiary:
(1) the cash proceeds received by the Company upon the sale, liquidation or
repayment of, or the payment of interest on, such Investment or, in the
case of a Guarantee, the amount of the Guarantee upon the unconditional
release of the Company and its Restricted Subsidiaries in full, less
any payments previously made by the Company or any Restricted
Subsidiary in respect of such Guarantee;
64
(2) in the case of the Revocation of the Designation of an Unrestricted
Subsidiary, an amount equal to the lesser of:
(a) the Company's Investment in such Unrestricted Subsidiary at the time
of such Revocation;
(b) that portion of the Fair Market Value of the net assets of such
Unrestricted Subsidiary at the time of Revocation that is
proportionate to the Company's equity interest in such Unrestricted
Subsidiary at the time of Revocation; and
(c) the Designation Amount with respect to such Unrestricted Subsidiary
upon its Designation which was treated as a Restricted Payment; and
(3) in the event the Company or any Restricted Subsidiary makes any
Investment in a Person that, as a result of or in connection with such
Investment, becomes a Restricted Subsidiary, an amount equal to the
Company's or any Restricted Subsidiary's existing Investment in such
Person,
in the case of each of clauses (1), (2) and (3), up to the amount of such
Investment that was treated as a Restricted Payment pursuant to clause (3) of
"-- Certain Covenants -- Limitation on Restricted Payments" less the amount of
any previous Investment Return in respect of such Investment.
"Issue Date" means the first date of issuance of Notes under the Indenture.
"Legal Defeasance" has the meaning set forth under "-- Legal Defeasance and
Covenant Defeasance."
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest); provided that, the lessee in respect of a Capitalized
Lease Obligation shall be deemed to have Incurred a Lien on the property leased
thereunder.
"Limited Recourse Receivables Transaction" means a sale, conveyance,
assignment or other transfer or securitization of, or creation of a security
interest in, Receivables Assets by the Company and its Restricted Subsidiaries
on a limited recourse basis which constitutes an Incurrence of Indebtedness
specified in clause (9) of the definition of "Indebtedness."
"Material Domestic Subsidiary" means any Domestic Restricted Subsidiary
which either: (i) comprised five percent (5%) or more of the assets of Company
and its Restricted Subsidiaries on a consolidated basis as of the most recent
date for which a balance sheet has been delivered (or is required to have been
delivered under "-- Reports to Holders"), or (ii) was responsible for five
percent (5%) or more of Consolidated EBITDA for the most recent four fiscal
quarters of the Company completed on or before such date without giving effect
to clause (b) of the definition thereof.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
received by the Company or any of its Restricted Subsidiaries from such Asset
Sale, net of:
(1) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including legal, accounting and investment banking fees and sales
commissions);
(2) taxes paid or payable in respect of such Asset Sale after taking into
account any reduction in consolidated tax liability due to available
tax credits or deductions and any tax sharing arrangements;
(3) repayment of Indebtedness secured by a Lien permitted under the
Indenture that is required to be repaid in connection with such Asset
Sale; and
(4) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP,
against any liabilities associated with such Asset
65
Sale and retained by the Company or any Restricted Subsidiary, as the
case may be, after such Asset Sale, including pension and other
post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale, but excluding any reserves
with respect to Indebtedness.
"Note Guarantee" means any guarantee of the Company's Obligations under the
Notes and the Indenture provided by a Restricted Subsidiary pursuant to the
Indenture.
"Note Guarantor" means any Restricted Subsidiary which provides a Note
Guarantee pursuant to the Indenture until such time as such Restricted
Subsidiary is released and relieved of its obligations under its Note Guarantee
in accordance with the Indenture.
"Obligations" means, with respect to any Indebtedness, any principal,
interest (including Post-Petition Interest), penalties, fees, indemnifications,
reimbursements, damages, and other liabilities payable under the documentation
governing such Indebtedness, including in the case of the Notes and the Note
Guarantees, the Indenture and the Registration Rights Agreement.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary of the Company
or any Assistant Secretary of the Company.
"Officer's Certificate" means a certificate signed by two Officers.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company and who shall be reasonably acceptable to
the Trustee.
"Orrville Restructuring Charge" means the restructuring charge (the cash
portion not to exceed $3,400,000) incurred in connection with the closing of the
Company's facility in Orrville, Ohio.
"Permitted Business" means the business or businesses conducted by the
Company and its Restricted Subsidiaries as of the Issue Date and any business
ancillary or complementary thereto, it being understood, for the avoidance of
doubt, that any business that permits the Company and its Restricted
Subsidiaries to vertically integrate its business or businesses conducted as of
the Issue Date shall be considered to be ancillary or complementary thereto.
"Permitted Indebtedness" means, without duplication, each of the following:
(1) Indebtedness of $125 million in respect of the Notes (other than
Additional Notes);
(2) Guarantees by any Note Guarantor of Indebtedness of the Company or any
other Note Guarantor permitted under the Indenture; provided, that if
any such Guarantee is of Subordinated Indebtedness, then the Note
Guarantee of such Note Guarantor shall be senior to such Note
Guarantor's Guarantee of such Subordinated Indebtedness;
(3) Indebtedness Incurred by the Company and any Note Guarantor pursuant
to the Bank Credit Facilities in an aggregate principal amount at any
time outstanding not to exceed $275 million, less the amount of any
prepayments or permanent reductions of commitments in respect of such
Indebtedness made with the Net Cash Proceeds of an Asset Sale in order
to comply with "-- Certain Covenants -- Limitation on Asset Sales" and
it being understood that amounts outstanding under the Bank Credit
Facilities on the Issue Date are deemed to be Incurred under this
clause (3);
(4) other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the Issue Date other than Indebtedness under the Bank
Credit Facilities or otherwise specified under any of the other
clauses of this definition of Permitted Indebtedness;
(5) Hedging Obligations entered into in the ordinary course of business
and not for speculative purposes;
66
(6) intercompany Indebtedness between the Company and any of its
Restricted Subsidiaries and between or among the Restricted
Subsidiaries; provided, that:
(a) if the Company or any Note Guarantor is the obligor on such
Indebtedness, such Indebtedness must be expressly subordinated to
the prior payment in full of all obligations under the Notes and the
Indenture, in the case of the Company, or such Note Guarantor's Note
Guarantee, in the case of any such Note Guarantor, and
(b) in the event that at any time any such Indebtedness ceases to be
held by the Company or a Restricted Subsidiary, such Indebtedness
shall be deemed to be Incurred and not permitted by this clause (6)
at the time such event occurs;
(7) Indebtedness of the Company or any of its Restricted Subsidiaries
arising from the honoring by a bank or other financial institution of
a check, draft or similar instrument inadvertently (including in the
case of daylight overdrafts so long as such overdrafts are paid in
full by close of business on the day such overdraft was incurred)
drawn against insufficient funds in the ordinary course of business;
provided, that such Indebtedness is extinguished within two business
days of Incurrence;
(8) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or any
Restricted Subsidiary, as the case may be, in order to provide security
for workers' compensation claims, payment obligations in connection
with self-insurance or similar requirements in the ordinary course of
business;
(9) Refinancing Indebtedness in respect of:
(a) Indebtedness (other than Indebtedness owed to the Company or any
Subsidiary) Incurred pursuant to clause (1) of "-- Certain
Covenants -- Limitation on Incurrence of Indebtedness" (it being
understood that no Indebtedness outstanding on the Issue Date is
Incurred pursuant to such clause (1)), or
(b) Indebtedness Incurred pursuant to clause (1) or (4) of this
definition;
(10) Indebtedness of the Company or any Restricted Subsidiary in respect of
any Limited Recourse Receivables Transaction, so long as the aggregate
Indebtedness reflected on the balance sheet of the Company and its
Restricted Subsidiaries in respect of all Indebtedness Incurred under
this clause (10) does not exceed $100 million at any time;
(11) Guarantees of, or other contingent liabilities relating to, loans or
other obligations Incurred by customers of the Company and its
Restricted Subsidiaries to finance the purchase of inventory or
services from the Company and its Restricted Subsidiaries; provided
that the amount of such loans or other obligations does not exceed in
the aggregate at any one time outstanding (including as outstanding
amounts paid by the Company or any of its Restricted Subsidiaries in
respect of such loans or other obligations that are not subsequently
reimbursed to the Company or any of its Restricted Subsidiaries unless
the Company and its consolidated Subsidiaries could Incur $1.00 of
additional Indebtedness pursuant to clause (1) of "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness" at
the time of such payment) $100 million (including such loans or other
obligations outstanding on the Issue Date);
(12) Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount not to exceed $25 million at any one time
outstanding (which amount may, but need not, be Incurred in whole or
in part under the Bank Credit Facilities).
"Permitted Investment" means:
(1) Investments by the Company or any Restricted Subsidiary in any Person
that is, or that result in any Person becoming, immediately after such
Investment, a Restricted Subsidiary or constituting a merger or
consolidation of such Person into the Company or with or into a
67
Restricted Subsidiary, except for a Guarantee of Indebtedness of a
Restricted Subsidiary that is not a Note Guarantor;
(2) Investments by any Restricted Subsidiary in the Company;
(3) Investments in cash and Cash Equivalents;
(4) any extension, modification or renewal of any Investments existing as
of the Issue Date (but not Investments involving additional advances,
contributions or other investments of cash or property or other
increases thereof, other than as a result of the accrual or accretion
of interest or original issue discount or payment-in-kind pursuant to
the terms of such Investment as of the Issue Date);
(5) Investments permitted pursuant to clause (2)(b) or (e) of "-- Certain
Covenants -- Limitation on Transactions with Affiliates;"
(6) Investments received as a result of the bankruptcy or reorganization
of any Person or taken in settlement of or other resolution of claims
or disputes, and, in each case, extensions, modifications and renewals
thereof;
(7) Investments made by the Company or its Restricted Subsidiaries (a) in
the form of non-cash consideration permitted to be received in
connection with an Asset Sale made in compliance with the covenant
described under "-- Certain Covenants -- Limitation on Asset Sales" or
(b) in a Receivables Subsidiary in connection with a Receivables
Transaction so long as (i) any such Investment is made substantially
concurrently with a disposition of the Receivables Assets in such
Receivables Transaction and (ii) the Company and its Restricted
Subsidiaries receive cash consideration for such disposition at the
time thereof such that the total Investment of the Company and its
Restricted Subsidiaries in such Receivables Subsidiary in connection
with such Receivables Transaction after receipt of such cash
consideration does not exceed 25% of the Fair Market Value of such
Receivables Assets;
(8) Investments made solely in the form of common equity of the Company
constituting Qualified Capital Stock;
(9) Guarantees or other contingent obligations which are Incurred under
clause (11) of Permitted Indebtedness; and
(10) other Investments not to exceed $15 million at any one time
outstanding.
"Permitted Liens" means any of the following:
(1) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by
law (including Liens for taxes, assessments and other governmental
charges) incurred in the ordinary course of business for sums not yet
delinquent or as to which the period of grace, if any, related thereto
has not expired or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall
have been made in respect thereof;
(2) Liens Incurred or deposits or pledges made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security or similar legislation or
obligations under customer servicer contracts, including any Lien
securing letters of credit issued in the ordinary course of business
consistent with past practice in connection therewith, or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, leases, government performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of
borrowed money);
(3) Liens securing a Capitalized Lease Obligation; provided, that such
Liens do not extend to any property which is not leased property
subject to such Capitalized Lease Obligation and property related
thereto;
68
(4) purchase money Liens securing Purchase Money Indebtedness Incurred to
finance the acquisition of property of the Company or a Restricted
Subsidiary used in a Permitted Business; provided, that:
(a) the related Purchase Money Indebtedness shall not exceed the cost of
such property and shall not be secured by any property of the
Company or any Restricted Subsidiary other than the property so
acquired, and
(b) the Lien securing such Indebtedness shall be created within 90 days
of such acquisition;
(5) Liens upon specific items of inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers'
acceptances issued or created for the account of such Person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
(6) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating
to such letters of credit and products and proceeds thereof;
(7) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the
Company or a Restricted Subsidiary, including rights of offset and
set-off;
(8) Liens existing on the Issue Date and Liens to secure any Refinancing
Indebtedness which is Incurred to Refinance any Indebtedness which has
been secured by a Lien permitted under the covenant described under
"-- Certain Covenants -- Limitation on Liens" and which Indebtedness
has been Incurred in accordance with "-- Certain
Covenants -- Limitation on Incurrence of Additional Indebtedness";
provided, that such new Liens:
(a) are not materially less favorable to the Holders of Notes and are
not materially more favorable to the lienholders with respect to
such Liens than the Liens in respect of the Indebtedness being
Refinanced, and
(b) do not extend to any property or assets other than the property or
assets securing the Indebtedness Refinanced by such Refinancing
Indebtedness;
(9) Liens securing Acquired Indebtedness Incurred in accordance with
"-- Certain Covenants -- Limitation on Incurrence of Additional
Indebtedness" not Incurred in connection with, or in anticipation or
contemplation of, the relevant acquisition, merger or consolidation;
provided, that:
(a) such Liens secured such Acquired Indebtedness at the time of and
prior to the Incurrence of such Acquired Indebtedness by the Company
or a Restricted Subsidiary and were not granted in connection with,
or in anticipation of the Incurrence of such Acquired Indebtedness
by the Company or a Restricted Subsidiary,
(b) such Liens do not extend to or cover any property of the Company or
any Restricted Subsidiary other than the property that secured the
Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of the Company or a Restricted Subsidiary and
are no more favorable to the lienholders than the Liens securing the
Acquired Indebtedness prior to the Incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary;
(10) Liens on Receivables Assets or Capital Stock of a Receivables
Subsidiary, in each case granted in connection with a Receivables
Transaction;
(11) Any interest of a lessor in property subject to any operating lease;
and
(12) Liens to secure Indebtedness Incurred pursuant to clause (3) of the
definition of "Permitted Indebtedness."
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"Person" means an individual, partnership, corporation, company, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Post-Petition Interest" means all interest accrued or accruing after the
commencement of any insolvency or liquidation proceeding (and interest that
would accrue but for the commencement of any insolvency or liquidation
proceeding) in accordance with and at the contract rate (including any rate
applicable upon default) specified in the agreement or instrument creating,
evidencing or governing any Indebtedness, whether or not, pursuant to applicable
law or otherwise, the claim for such interest is allowed as a claim in such
insolvency or liquidation proceeding.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights over any other Capital Stock of such Person with respect
to dividends, distributions or redemptions or upon liquidation.
"Purchase Money Indebtedness" means Indebtedness of the Company or any
Restricted Subsidiary Incurred for the purpose of financing all or any part of
the purchase price, or other cost of construction or improvement of any
property; provided, that the aggregate principal amount of such Indebtedness
does not exceed the lesser of the Fair Market Value of such property or such
purchase price or cost, including any Refinancing of such Indebtedness that does
not increase the aggregate principal amount (or accreted amount, if less)
thereof as of the date of Refinancing.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock and any warrants, rights or options to purchase or acquire Capital
Stock that is not Disqualified Capital Stock that are not convertible into or
exchangeable into Disqualified Capital Stock.
"Qualified Receivables Transaction" means any transaction or series of
transactions that may be entered into by the Company or any Restricted
Subsidiary pursuant to which the Company or any Restricted Subsidiary may sell,
convey, assign or otherwise transfer to a Receivables Entity any Receivables
Assets:
(1) for which no term of any portion of the Indebtedness or any other
obligations (contingent or otherwise) or securities Incurred or issued
by any Person in connection therewith:
(a) directly or indirectly provides for recourse to, or any obligation
of, the Company or any Restricted Subsidiary in any way, whether
pursuant to a Guarantee or otherwise, except for Standard
Undertakings,
(b) directly or indirectly subjects any property or asset of the Company
or any Restricted Subsidiary (other than Capital Stock of a
Receivables Subsidiary) to the satisfaction thereof, except for
Standard Undertakings, or
(c) results in such Indebtedness, other obligations or securities
constituting Indebtedness of the Company or a Restricted Subsidiary,
including following a default thereunder,
(2) for which the terms of any Affiliate Transaction between the Company or
any Restricted Subsidiary, on the one hand, and any Receivables Entity,
on the other, other than Standard Undertakings and Permitted
Investments, are no less favorable than those that could reasonably be
expected to be obtained in a comparable transaction at such time on an
arm's length basis from a Person that is not an Affiliate of the
Company, and
(3) in connection with which, neither the Company nor any Restricted
Subsidiary has any obligation to maintain or preserve a Receivables
Entity's financial condition, cause a Receivables Entity to achieve
certain levels of operating results, fund losses of a Receivables
Entity or except in connection with Standard Undertakings, purchase
assets of a Receivables Entity.
"Receivables Assets" means (i) accounts receivable, leases, conditional
sale agreements instruments, chattel paper, installment sale contracts,
obligations, general intangibles, and other similar assets, in each case
relating to inventory or services of the Company and its Subsidiaries, (ii)
equipment and equipment
70
residuals relating to any of the foregoing, (iii) related contractual rights,
guarantees, letters of credit, security interests, liens, insurance proceeds,
collections and other related assets and (iv) proceeds of all of the foregoing.
"Receivables Entity" means a Receivables Subsidiary or any Person not an
Affiliate of the Company that engages in a Receivables Transaction or issues
securities or other interests in connection with a Receivables Transaction.
"Receivables Subsidiary" means an Unrestricted Subsidiary of the Company
that engages in no activities other than Receivables Transactions and activities
related thereto and that is designated by the Board of Directors of the Company
as a Receivables Subsidiary. Any such designation by the Board of Directors
shall be evidenced to the Trustee by filing with the Trustee a certified copy of
the Board Resolution giving effect to such designation and an Officer's
Certificate.
"Receivables Transaction" means a Limited Recourse Receivables Transaction
or a Qualified Receivables Transaction.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary, to the extent that such Refinancing does not:
(1) result in an increase in the Indebtedness of such Person which exceeds
an amount equal to the aggregate principal amount of the Indebtedness
of such Person as of the date of such proposed Refinancing (plus the
amount of any premium required to be paid under the terms of the
instrument governing such Indebtedness and plus the amount of
reasonable expenses incurred by the Company in connection with such
Refinancing); or
(2) create Indebtedness with:
(a) a Weighted Average Life to Maturity that is less than the Weighted
Average Life to Maturity of the Indebtedness being Refinanced or
(b) a final maturity earlier than the final maturity of the Indebtedness
being Refinanced; provided, that:
- if such Indebtedness being Refinanced is Indebtedness of the
Company, then such Refinancing Indebtedness shall be Indebtedness
of the Company,
- if such Indebtedness being Refinanced is Indebtedness of a Note
Guarantor, then such Indebtedness shall be Indebtedness of the
Company and/or such Note Guarantor, and
- if such Indebtedness being Refinanced is Subordinated Indebtedness,
then such Refinancing Indebtedness shall be subordinate to the
Notes or the relevant Note Guarantee, if applicable, at least to
the same extent and in the same manner as the Indebtedness being
Refinanced.
"Restricted Payment" has the meaning set forth under "-- Certain
Covenants -- Limitation on Restricted Payments."
"Restricted Subsidiary" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary.
"Revocation" has the meaning set forth under "-- Certain
Covenants -- Limitation on Designation of Unrestricted Subsidiaries" above.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party providing for the leasing
to the Company or a Restricted Subsidiary of
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any property, whether owned by the Company or any Restricted Subsidiary at the
Issue Date or later acquired, which has been or is to be sold or transferred by
the Company or such Restricted Subsidiary to such Person or to any other Person
by whom funds have been or are to be advanced on the security of such Property.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means, at any date, with respect to the Company, any
Note Guarantor or, for purposes of item (ii) of clause (1) of the "Limitation on
Incurrence of Additional Indebtedness" covenant and the definition of
"Consolidated Senior Debt Ratio," any Restricted Subsidiary, as the case may be:
(1) all Obligations of the Company, such Note Guarantor or such Restricted
Subsidiary, as the case may be, under the Bank Credit Facilities,
including all Hedging Obligations with respect thereto;
(2) all Obligations in respect of Indebtedness of the Company, such Note
Guarantor or such Restricted Subsidiary, as the case may be, for
borrowed money (including the Notes and the Note Guarantees and
Obligations in respect of Sale and Leaseback Transactions and
Capitalized Lease Obligations) and all Indebtedness (whether or not for
borrowed money) specified in clause (9) of the definition of
"Indebtedness;" and
(3) all Obligations pursuant to Standard Undertakings unless, in the case
of clauses (1), (2) and (3), in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided
that such Indebtedness or other Obligations are subordinate in right of
payment to the Notes or the Note Guarantee of such Note Guarantor, as
the case may be.
Notwithstanding the preceding, Senior Indebtedness shall not include any
liability or Obligation of the Company, such Note Guarantor or such Restricted
Subsidiary, as the case may be, in respect of the following:
(1) U.S. federal, state, local, non-U.S. or other taxes;
(2) any Indebtedness among or between the Company and any Subsidiary or
Affiliate of the Company;
(3) any trade payables;
(4) that portion of any Indebtedness that is Incurred in violation of the
Indenture;
(5) any Disqualified Capital Stock;
(6) any Indebtedness that, when Incurred and without respect to any
election under Section 1111(b) of Title 11, United States Code, is
without recourse to the Company, such Note Guarantor or such Restricted
Subsidiary, as the case may be; or
(7) any Indebtedness or other Obligation that is subordinate or junior in
right of payment to any other Indebtedness or other Obligation of the
Company or such Note Guarantor, as the case may be.
Notwithstanding anything to the contrary herein, for purposes of item (ii) of
clause (1) of the "Limitation on Incurrence of Additional Indebtedness" covenant
and as used in the definition of "Consolidated Senior Debt Ratio", the term
"Senior Indebtedness" shall exclude all Indebtedness (whether or not for
borrowed money) specified in clause (9) of the definition of "Indebtedness" and
all Obligations pursuant to Standard Undertakings.
"Significant Subsidiary" shall mean a Subsidiary of the Company
constituting a "Significant Subsidiary" in accordance with Rule 1-02(w) of
Regulation S-X under the Securities Act in effect on the date hereof, except
that all references to 10% in Rule 1-02(w) are replaced with 5%.
"Standard Undertakings" means representations, warranties, covenants and
indemnities and similar obligations entered into by the Company or any
Subsidiary of the Company in connection with a Receivables Transaction and
which, in the case of a Qualified Receivables Transaction, are customary in
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similar receivables securitization transactions and do not cause the
Indebtedness Incurred in connection therewith to constitute Indebtedness of the
Company or any Restricted Subsidiary, including following a default thereunder.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
such security is due and payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the repurchase of such
security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Indebtedness" means, with respect to the Company or any Note
Guarantor, any Indebtedness of the Company or such Note Guarantor, as the case
may be which is expressly subordinated in right of payment to the Notes or the
relevant Note Guarantee, as the case may be, which shall include the 8 3/8%
Notes and any other Indebtedness that ranks pari passu with the 8 3/8% Notes.
"Subsidiary," with respect to any Person, means any other Person of which
such Person owns, directly or indirectly, more than 50% of the voting power of
the other Person's outstanding Voting Stock.
"Successor Entity" has the meaning set forth under "-- Certain
Covenants -- Limitation on Merger, Consolidation and Sale of Assets."
"Unrestricted Subsidiary" means Fulton Funding Corporation, each
Receivables Subsidiary and any Subsidiary of the Company Designated as such
pursuant to "-- Certain Covenants -- Limitation on Designation of Unrestricted
Subsidiaries." Any such Designation may be revoked by a Board Resolution of the
Company, subject to the provisions of such covenant.
"Voting Stock" with respect to any Person, means securities of any class of
Capital Stock of such Person entitling the holders thereof (whether at all times
or only so long as no senior class of stock has voting power by reason of any
contingency) to vote in the election of members of the Board of Directors of
such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years (calculated to the nearest one-twelfth)
obtained by dividing:
(1) the then outstanding aggregate principal amount or liquidation
preference, as the case may be, of such Indebtedness into
(2) the sum of the products obtained by multiplying:
(a) the amount of each then remaining installment, sinking fund, serial
maturity or other required payment of principal or liquidation
preference, as the case may be, including payment at final maturity,
in respect thereof, by
(b) the number of years (calculated to the nearest one-twelfth) which
will elapse between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of the Company means any Restricted
Subsidiary of which all the outstanding Capital Stock (other than, in the case
of a Restricted Subsidiary not organized in the United States, directors'
qualifying shares or an immaterial amount of shares required to be owned by
other Persons pursuant to applicable law) are owned by the Company or any other
Person that satisfies this definition of Wholly Owned Restricted Subsidiary.
BOOK-ENTRY, DELIVERY AND FORM
We will initially issue the exchange notes in the form of one or more
global notes (the "Exchange Global Note"). The Exchange Global Note will be
deposited with, or on behalf of, The Depository Trust Company and registered in
the name of The Depository Trust Company or its nominee. Except as set forth
below, the Exchange Global Note may be transferred, in whole and not in part,
only to The Depository Trust Company or another nominee of The Depository Trust
Company. You may hold your
73
beneficial interests in the Exchange Global Note directly through The Depository
Trust Company if you have an account with The Depository Trust Company or
indirectly through organizations that have accounts with The Depository Trust
Company, including Euroclear and Clearstream. Except as set forth below, notes
will be issued in registered, global form in minimum denominations of $1,000 and
integral multiples of $1,000 in excess of $1,000.
Except as set forth below, the Exchange Global Notes may be transferred, in
whole and not in part, only to another nominee of The Depository Trust Company
or to a successor of The Depository Trust Company or its nominee. Beneficial
interests in the Exchange Global Notes may not be exchanged for notes in
certificated form except in the limited circumstances described below. See
"-- Exchange of Exchange Global Notes for Certificated Notes." Except in the
limited circumstances described below, owners of beneficial interests in the
Exchange Global Notes will not be entitled to receive physical delivery of notes
in certificated form.
Transfers of beneficial interests in the Exchange Global Notes will be
subject to the applicable rules and procedures of The Depository Trust Company
and its direct or indirect participants (including, if applicable, those of
Euroclear and Clearstream), which may change from time to time.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of The
Depository Trust Company, Euroclear and Clearstream are provided solely as a
matter of convenience. These operations and procedures are solely within the
control of the respective settlement systems and are subject to changes by them.
We take no responsibility for these operations and procedures and urge investors
to contact the system or their participants directly to discuss these matters.
The Depository Trust Company has advised us that it is a limited-purpose
trust company created to hold securities for its participating organizations
(collectively, the "Participants") and to facilitate the clearance and
settlement of transactions in those securities between Participants through
electronic book-entry changes in accounts of its Participants. The Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Access to The Depository Trust
Company's system is also available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (collectively,
the "Indirect Participants"). Persons who are not Participants may beneficially
own securities held by or on behalf of The Depository Trust Company only through
the Participants or the Indirect Participants. The ownership interests in, and
transfers of ownership interests in, each security held by or on behalf of The
Depository Trust Company are recorded on the records of the Participants and
Indirect Participants.
The Depository Trust Company has also advised us that, pursuant to
procedures established by it:
(1) upon deposit of the Exchange Global Notes, The Depository Trust Company
will credit the accounts of Participants with portions of the principal
amount of the Exchange Global Notes; and
(2) ownership of these interests in the Exchange Global Notes will be shown
on, and the transfer of ownership of these interests will be effected
only through, records maintained by The Depository Trust Company (with
respect to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial interest in
the Exchange Global Notes).
Investors in the Exchange Global Notes who are Participants in The
Depository Trust Company's system may hold their interests therein directly
through The Depository Trust Company. Investors in the Exchange Global Notes who
are not Participants may hold their interests therein indirectly through
organizations (including Euroclear and Clearstream) that are Participants in
such system. All interests in an Exchange Global Note, including those held
through Euroclear or Clearstream, may be subject to the procedures and
requirements of The Depository Trust Company. Those interests held through
Euroclear or Clearstream may also be subject to the procedures and requirements
of such systems. The laws of some
74
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in an Exchange Global Note to such persons will be limited to that
extent. Because The Depository Trust Company can act only on behalf of
Participants, which in turn act on behalf of Indirect Participants, the ability
of a person having beneficial interests in an Exchange Global Note to pledge
such interests to persons that do not participate in The Depository Trust
Company system, or otherwise take actions in respect of such interests, may be
affected by the lack of a physical certificate evidencing such interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTEREST IN THE EXCHANGE GLOBAL NOTES WILL
NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium, if any,
on an Exchange Global Note registered in the name of The Depository Trust
Company or its nominee will be payable to The Depository Trust Company in its
capacity as the registered Holder under the indenture. Under the terms of the
indenture, we and the trustee will treat the Persons in whose names the notes,
including the Exchange Global Notes, are registered as the owners of the notes
for the purpose of receiving payments and for all other purposes. Consequently,
neither we, the trustee nor any agent of us or the trustee has or will have any
responsibility or liability for:
(1) any aspect of The Depository Trust Company's records or any
Participant's or Indirect Participant's records relating to or payments
made on account of beneficial ownership interest in the Exchange Global
Notes or for maintaining, supervising or reviewing any of The
Depository Trust Company's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in
the Exchange Global Notes; or
(2) any other matter relating to the actions and practices of The
Depository Trust Company or any of its Participants or Indirect
Participants.
The Depository Trust Company has advised us that its current practice, upon
receipt of any payment in respect of securities such as the notes (including
principal and interest), is to credit the accounts of the relevant Participants
with the payment on the payment date unless The Depository Trust Company has
reason to believe it will not receive payment on such payment date. Each
relevant Participant is credited with an amount proportionate to its beneficial
ownership of an interest in the principal amount of the relevant security as
shown on the records of The Depository Trust Company. Payments by the
Participants and the Indirect Participants to the beneficial owners of notes
will be governed by standing instructions and customary practices and will be
the responsibility of the Participants or the Indirect Participants and will not
be the responsibility of The Depository Trust Company, the trustee or us.
Neither we nor the trustee will be liable for any delay by The Depository Trust
Company or any of its Participants in identifying the beneficial owners of the
notes, and we and the trustee may conclusively rely on and will be protected in
relying on instructions from The Depository Trust Company or its nominee for all
purposes.
Transfers between Participants in The Depository Trust Company will be
effected in accordance with The Depository Trust Company's procedures, and will
be settled in same-day funds, and transfers between participants in Euroclear
and Clearstream will be effected in accordance with their respective rules and
operating procedures.
Crossmarket transfers between the Participants in The Depository Trust
Company, on the one hand, and Euroclear or Clearstream participants, on the
other hand, will be effected through The Depository Trust Company in accordance
with The Depository Trust Company's rules on behalf of Euroclear or Clearstream,
as the case may be, by its respective depositary; however, such cross-market
transactions will require delivery of instructions to Euroclear or Clearstream,
as the case may be, by the counterparty in such system in accordance with the
rules and procedures and within the established deadlines (Brussels time) of
such system. Euroclear or Clearstream, as the case may be, will, if the
transaction meets its
75
settlement requirements, deliver instructions to its respective depositary to
take action to effect final settlement on its behalf by delivering or receiving
interests in the relevant Exchange Global Note in The Depository Trust Company,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to The Depository Trust Company. Euroclear
participants and Clearstream participants may not deliver instructions directly
to the depositories for Euroclear or Clearstream.
The Depository Trust Company has advised us that it will take any action
permitted to be taken by a holder of notes only at the direction of one or more
Participants to whose account The Depository Trust Company has credited the
interests in the Exchange Global Notes and only in respect of such portion of
the aggregate principal amount of the notes as to which such Participant or
Participants has or have given such direction. However, if there is an Event of
Default under the notes, The Depository Trust Company reserves the right to
exchange the Exchange Global Notes for legended notes in certificated form, and
to distribute such notes to its Participants.
Although The Depository Trust Company, Euroclear and Clearstream have
agreed to the foregoing procedures to facilitate transfers of interests in the
Exchange Global Notes among participants in The Depository Trust Company,
Euroclear and Clearstream, they are under no obligation to perform or to
continue to perform such procedures, and may discontinue such procedures at any
time. Neither we nor the trustee nor any of our respective agents will have any
responsibility for the performance by The Depository Trust Company, Euroclear or
Clearstream or their respective participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
EXCHANGE OF EXCHANGE GLOBAL NOTES FOR CERTIFICATED NOTES
An Exchange Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated Notes") if:
(1) The Depository Trust Company (a) notifies us that it is unwilling or
unable to continue as depositary for the Exchange Global Notes, and we
fail to appoint a successor depositary or (b) has ceased to be a
clearing agency registered under the Exchange Act;
(2) at our option, we notify the trustee in writing that we elect to cause
the issuance of the Certificated Notes; or
(3) there has occurred and is continuing a Default or Event of Default with
respect to the notes.
In addition, beneficial interests in an Exchange Global Note may be
exchanged for Certificated Notes upon prior written notice given to the trustee
by or on behalf of The Depository Trust Company in accordance with the
indenture. In all cases, Certificated Notes delivered in exchange for any
Exchange Global Note or beneficial interests in Exchange Global Notes will be
registered in the names, and issued in any approved denominations, requested by
or on behalf of the depositary (in accordance with its customary procedures).
SAME-DAY SETTLEMENT AND PAYMENT
We will make payments in respect of the notes represented by the Exchange
Global Notes (including principal, premium, if any, interest and liquidated
damages, if any) by wire transfer of immediately available funds to the accounts
specified by the Exchange Global Note holder. We will make all payments of
principal, interest and premium and liquidated damages, if any, with respect to
Certificated Notes by wire transfer of immediately available funds to the
accounts specified by the holders of the Certificated Notes or, if no such
account is specified, by mailing a check to each such holder's registered
address. The notes represented by the Exchange Global Notes are expected to
trade in The Depository Trust Company's Same-Day Funds Settlement System, and
any permitted secondary market trading activity in such notes will, therefore,
be required by The Depository Trust Company to be settled in immediately
available funds. We expect that secondary trading in any Certificated Notes will
also be settled in immediately available funds.
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Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in an Exchange Global Note from a
Participant in The Depository Trust Company will be credited, and any such
crediting will be reported to the relevant Euroclear or Clearstream participant,
during the securities settlement processing day (which must be a business day
for Euroclear and Clearstream) immediately following the settlement date of The
Depository Trust Company. The Depository Trust Company has advised us that cash
received in Euroclear or Clearstream as a result of sales of interests in an
Exchange Global Note by or through a Euroclear or Clearstream participant to a
Participant in The Depository Trust Company will be received with value on the
settlement date of The Depository Trust Company, but will be available in the
relevant Euroclear or Clearstream cash account only as of the business day for
Euroclear or Clearstream following The Depository Trust Company's settlement
date.
CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
The following is a summary of certain United States federal tax
considerations relating to the exchange as well as the ownership and disposition
of the notes. As used herein, "U.S. Holders" are any beneficial owners of the
notes that are, for U.S. federal income tax purposes, (1) citizens or residents
of the United States, (2) corporations created or organized in, or under the
laws of, the United States, any state thereof or the District of Columbia, (3)
estates, the income of which is subject to U.S. federal income taxation
regardless of its source, or (4) trusts if (A) a court within the United States
is able to exercise primary supervision over the administration of the trust and
(B) one or more United States persons have the authority to control all
substantial decisions of the trust. In addition, certain trusts in existence on
August 20, 1996, and treated as a U.S. Holder prior to such date may also be
treated as a U.S. Holder. As used herein, "Non-U.S. Holders" are beneficial
owners of the notes, other than partnerships, that are not U.S. Holders for U.S.
federal income tax purposes. If a partnership (including for this purpose any
entity treated as a partnership for U.S. federal tax purposes) is a beneficial
owner of the notes, the tax treatment of a partner in the partnership will
generally depend upon the status of the partner and upon the activities of the
partnership. Partnerships and partners in such partnerships should consult their
tax advisors about the U.S. federal tax consequences of owning and disposing of
the notes.
This summary does not deal with special classes of Holders such as banks,
thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, or tax-exempt
investors and does not discuss notes held as part of a hedge, straddle,
"synthetic security," or other integrated transaction. This summary also does
not address the tax consequences to (i) persons that have a functional currency
other than the U.S. dollar, (ii) certain U.S. expatriates or (iii) shareholders,
partners, or beneficiaries of a Holder of notes. Further, it does not include
any description of any alternative minimum tax consequences or the tax laws of
any state or local government or of any foreign government that may be
applicable to the notes. This summary is based on the Internal Revenue Code of
1986, as amended, the Treasury Regulations promulgated thereunder, and
administrative and judicial interpretations thereof, all as of the date hereof,
and all of which are subject to change, possibly on a retroactive basis.
THIS DISCUSSION IS A GENERAL SUMMARY ONLY; IT IS NOT A SUBSTITUTE FOR TAX
ADVICE. YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR REGARDING THE FEDERAL,
STATE, LOCAL, AND FOREIGN INCOME, FRANCHISE, PERSONAL PROPERTY, AND ANY OTHER
TAX CONSEQUENCES OF THE EXCHANGING AND OWNERSHIP AND DISPOSITION OF THE NOTES.
TAX CONSEQUENCES TO U.S. HOLDERS
INTEREST INCOME
We anticipate that the notes will be issued with no more than a de minimis
amount of original issue discount. In such case, interest paid on the notes will
be taxable to a U.S. Holder as ordinary income at
77
the time it accrues or is received in accordance with such U.S. Holder's regular
method of accounting for U.S. federal income tax purposes.
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of original notes for the publicly tradable exchange notes
pursuant to the exchange offer will not be a taxable event for U.S. federal
income tax purposes. As a result, there will be no U.S. federal income tax
consequences to the U.S. Holders exchanging the original notes for publicly
tradable exchange notes pursuant to the exchange offer, and a U.S. Holder will
have the same tax basis and holding period in the publicly tradable exchange
notes as such Holder had in the original notes.
SALE OR EXCHANGE OF THE NOTES
Upon the sale, exchange, or other disposition of a note, a U.S. Holder will
recognize interest income to the extent attributable to accrued interest and
taxable gain or loss equal to the difference between the amount realized (after
deducting accrued interest) on the sale, exchange, or other disposition and such
Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax basis in a
note will generally equal the Holder's purchase price of the original note that
the Holder exchanged for the publicly tradable exchange note less any principal
payments received by the Holder. Gain or loss realized on the sale, exchange, or
retirement of a note generally will constitute capital gain or loss. Capital
gains of non-corporate Holders derived with respect to notes held for more than
one year may be eligible for reduced rates of taxation. The deductibility of
capital losses is subject to certain limitations. Prospective investors should
consult their tax advisors regarding the treatment of capital gains and losses.
MARKET DISCOUNT
A U.S. Holder will be considered to have purchased a note at "market
discount" if the holder's adjusted basis in the note is less than its stated
redemption price at maturity immediately after its acquisition, unless such
market discount is a de minimis amount (generally up to 1/4 of 1 percent of the
stated redemption price on the purchase date multiplied by the number of
complete years to maturity remaining as of such date). In general, any partial
payment of principal on, or gain recognized on the maturity or disposition of, a
note will be treated as ordinary income to the extent that such gain does not
exceed the accrued market discount on the note. Alternatively, a holder of a
note may elect to include market discount in income currently over the life of
the note. Such an election applies to all notes with market discount acquired by
the electing holder on or after the first day of the first taxable year to which
the election applies and may not be revoked without the consent of the Internal
Revenue Service. Market discount accrues on a straight-line basis unless the
holder elects to accrue such discount on a constant yield to maturity basis.
Such an election is applicable only to the note with respect to which it is made
and is irrevocable. A holder of a note that does not elect to include market
discount in income currently generally will be required to defer deductions for
interest on borrowings allocable to such note in an amount not exceeding the
accrued market discount on such note until the maturity or disposition of such
note.
AMORTIZABLE BOND PREMIUM
A U.S. Holder will be considered to have purchased a note at a premium if
the holder's adjusted basis in the note immediately after the purchase is
greater than the amount payable on maturity of the note. A holder may elect to
treat such premium as "amortizable bond premium," in which case the amount of
interest required to be included in the holder's income each year with respect
to the interest on the note will be reduced by the amount of the amortizable
bond premium allocable (based on the note's yield to maturity) to such year. Any
election to amortize bond premium is applicable to all debt instruments (other
than debt instruments the interest on which is excludable from gross income)
held by the holder at the beginning of the first taxable year to which the
election applies or thereafter acquired by the holder, and may not be revoked
without the consent of the Internal Revenue Service.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to payments of
principal, interest, and premium, if any, on the notes and payments of the
proceeds of the sale of the notes. A backup withholding tax (currently 25%) may
apply to such payments if the U.S. Holder fails to comply with certain reporting
and certification requirements. Information reporting requirements and U.S.
backup withholding tax will not apply to payments to a U.S. Holder that is a
corporation. Pursuant to the Economic Growth and Tax Reconciliation Act of 2001
and the Jobs and Growth Tax Relief Reconciliation Act of 2003, the backup
withholding rate may increase after 2010. Any amounts withheld under the backup
withholding rules from a payment to a U.S. Holder will be allowed as a credit
against such Holder's U.S. federal income tax and may entitle such Holder to a
refund, provided that the required information is furnished to the Internal
Revenue Service.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
The rules governing U.S. federal income taxation of a Non-U.S. Holder of
notes are complex, and no attempt is made herein to provide more than a summary
of such rules. Non-U.S. Holders should consult their own tax advisors to
determine the effect of federal, state, local, and foreign income tax laws, as
well as treaties, with regard to an investment in the notes, including any
reporting requirements.
INTEREST INCOME
Generally in the case of a Non-U.S. Holder, interest income that is not
effectively connected with a U.S. trade or business of the Non-U.S. Holder will
be subject to a withholding tax at a 30% rate (or, if applicable, a lower tax
rate specified by a treaty). However, interest income on a note held by a
Non-U.S. Holder will qualify for the "portfolio interest" exemption and
therefore will not be subject to U.S. federal income tax or withholding tax,
provided that such interest income is not effectively connected with a U.S.
trade or business of the Non-U.S. Holder and provided further that (1) the
Non-U.S. Holder does not actually or constructively own 10% or more of the total
combined voting power of all classes of the Company's stock entitled to vote;
(2) the Non-U.S. Holder is not a controlled foreign corporation that is related
to the issuers through stock ownership; and (3) (A) the Non-U.S. Holder
certifies to the payor or the payor's agent, under penalties of perjury, that it
is not a U.S. person and provides its name, address, and certain other
information on a properly executed Internal Revenue Service Form W-8BEN or a
suitable substitute form, or (B) a securities clearing organization, bank, or
other financial institution that holds customer securities in the ordinary
course of its trade or business and holds the notes in such capacity certifies
to the payor or the payor's agent, under penalties of perjury, that such a
statement has been received from the beneficial owner of the notes by it or by a
financial institution between it and the beneficial owner and furnishes the
payor or the payor's agent with a copy thereof. The applicable United States
Treasury Regulations also provide alternative methods for satisfying the
certification requirements of clause (3), above. If a Non-U.S. Holder holds the
note through certain foreign intermediaries or partnerships, such Holder and the
foreign intermediary or partnership may be required to satisfy certification
requirements under applicable United States Treasury Regulations.
If a Non-U.S. Holder cannot satisfy the requirements for the portfolio
interest exemption as described above, payments of interest will be subject to
the 30% U.S. federal withholding tax, unless such Holder provides the payor or
the payor's agent with a properly executed (1) Internal Revenue Service Form
W-8BEN (or a suitable substitute form) claiming an exemption from or reduction
in withholding under the benefit of an applicable tax treaty or (2) Internal
Revenue Service Form W-8ECI (or a suitable substitute form) stating that
interest paid on a note is not subject to withholding tax because it is
effectively connected with a U.S. trade or business as discussed below.
If a Non-U.S. Holder of a note is engaged in a trade or business in the
United States and if interest on the note (or gain realized on its sale,
exchange, or other disposition) is effectively connected with the conduct of
such trade or business, the Non-U.S. Holder generally will be taxed on such
effectively connected income in the same manner as if it were a U.S. Holder.
Such Holder will be required to
79
provide the payor or the payor's agent with a properly executed Internal Revenue
Service Form W-8ECI to claim an exemption from withholding tax. If that Non-U.S.
Holder is a corporation, it may be subject to an additional 30% branch profits
tax (unless reduced or eliminated by an applicable treaty) on its effectively
connected earnings and profits from the taxable year.
TAX CONSEQUENCES OF THE EXCHANGE OFFER
The exchange of the original notes for the publicly tradable exchange notes
pursuant to the exchange offer will not be a taxable event for U.S. federal
income tax purposes. As a result, there will be no U.S. federal income tax
consequences to the Non-U.S. Holders exchanging the original notes for publicly
tradable exchange notes pursuant to the exchange offer, and a Non-U.S. Holder
will have the same tax basis and holding period in the publicly tradable
exchange notes as such Holder had in the original notes.
SALE OR EXCHANGE OF THE NOTES
A Non-U.S. Holder generally will not be subject to U.S. federal income tax
on gain (including any accrued interest if the portfolio interest exemption
applies) recognized on a sale, exchange, or other disposition of a note unless
(i) the gain is effectively connected with the U.S. trade or business of the
Non-U.S. Holder or (ii) in the case of a Non-U.S. Holder who is an individual,
such Holder is present in the United States for 183 or more days in the taxable
year of disposition and certain other requirements are met.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In the case of a Non-U.S. Holder, U.S. backup withholding tax may apply to
payments of principal, interest, and premium, if any, on the notes and to
payments of the proceeds of the sale of the notes. Information reporting
requirements may apply with respect to interest payments on the notes, in which
event the amount of interest paid and tax withheld (if any) with respect to each
Non-U.S. Holder will be reported annually to the Internal Revenue Service.
Information reporting requirements and U.S. backup withholding tax will not
apply to payments to a Non-U.S. Holder that is a corporation (as defined under
U.S. law). In addition, U.S. backup withholding tax will not apply to such
payments to a Non-U.S. Holder if the certification described in clause (3) of
"Interest Income," above, is duly provided by such Holder, provided that the
payor does not have actual knowledge that the Holder is a United States person.
Information reporting requirements and backup withholding tax will not apply to
any payment of the proceeds of the sale of notes effected outside the United
States by a foreign office of a "broker" as defined in applicable United States
Treasury Regulations (absent actual knowledge that the payee is a U.S. person),
unless such broker (1) is a U.S. person as defined in the Internal Revenue Code,
(2) is a foreign person that derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United States, (3) is a
controlled foreign corporation for U.S. federal income tax purposes, or (4) is a
foreign partnership with certain U.S. connections. Payment of the proceeds of
any such sale effected outside the United States by a foreign office of any
broker that is described in the preceding sentence may be subject to backup
withholding tax and information reporting requirements, unless such broker has
documentary evidence in its records that the beneficial owner of the notes is a
Non-U.S. Holder and certain other conditions are met, or the beneficial owner
otherwise establishes an exemption. Payment of the proceeds of any such sale to
or through the U.S. office of a broker is subject to information reporting and
backup withholding requirements unless the beneficial owner provides the
certification described in clause (3) of "Interest Income," above, or otherwise
establishes an exemption.
THE U.S. FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A HOLDER'S PARTICULAR
SITUATION. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE EXCHANGE, OWNERSHIP, AND DISPOSITION OF THE NOTES,
INCLUDING THE TAX CONSEQUENCES UNDER U.S. FEDERAL, STATE, LOCAL, FOREIGN, AND
OTHER TAX LAWS, AS
80
WELL AS TREATIES, AND THE POSSIBLE EFFECTS OF CHANGES IN U.S. FEDERAL OR OTHER
TAX LAWS OR TREATIES.
Except as the securities laws may otherwise require, any confidentiality
restrictions with respect to this prospectus do not extend to the U.S. federal
income tax treatment and tax structure of the exchange offer.
PLAN OF DISTRIBUTION
Based on interpretations by the SEC set forth in no-action letters issued
to third parties, we believe that a holder, other than a person that is an
affiliate of ours within the meaning of Rule 405 under the Securities Act or a
broker-dealer registered under the Exchange Act that purchases notes from us to
resell pursuant to Rule 144A under the Securities Act or any other exemption,
that exchanges original notes for exchange notes in the ordinary course of
business and that is not participating, does not intend to participate, and has
no arrangement or understanding with any person to participate, in the
distribution of the exchange notes will be allowed to resell the exchange notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the exchange notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires exchange notes in the exchange offer for the purpose of distributing or
participating in a distribution of the exchange notes, such holder cannot rely
on the position of the staff enunciated in Exxon Capital Holdings Corporation or
similar no-action or interpretive letters and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction, and such secondary resale transaction must be
covered by an effective registration statement containing the selling security
holder information required by Item 507 or 508, as applicable, of Regulation S-K
if the resales are of exchange notes obtained by such holder in exchange for
original notes acquired by such holder directly from us or an affiliate thereof,
unless an exemption from registration is otherwise available.
As contemplated by the above no-action letters and the registration rights
agreement, each holder accepting the exchange offer is required to represent to
us in the letter of transmittal that they:
- are not an affiliate of ours;
- are not participating in, and do not intend to participate in, and have
no arrangement or understanding with any person to participate in, a
distribution of the original notes or the exchange notes;
- are acquiring the exchange notes in the ordinary course of business; and
- if they are a broker-dealer, they will receive the exchange notes for
their own account in exchange for the original notes that were acquired
as a result of market-making activities or other trading activities. Each
broker-dealer must acknowledge that it will deliver a prospectus in
connection with any resale of such exchange notes. Each broker-dealer
that receives exchange notes for its own account pursuant to the exchange
offer must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer
in connection with resales of exchange notes received in exchange for
original notes where such original notes were acquired as a result of
market-making activities or other trading activities. We have agreed
that, for a period of 180 days after the expiration date, we will make
this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition,
until February 4, 2004, all dealers effecting transactions in the
exchange notes may be required to deliver a prospectus.
We will not receive any proceeds from any sale of exchange notes by
broker-dealers. Exchange notes received by broker-dealers for their own account
pursuant to the exchange offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the exchange notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any
81
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer or the purchasers of any such exchange notes. Any
broker-dealer that resells exchange notes that were received by it for its own
account pursuant to the exchange offer and any broker or dealer that
participates in a distribution of such exchange notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of exchange notes and any commission or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the expiration date, we will promptly send
additional copies of this prospectus and any amendment or supplement to this
prospectus to any broker-dealer that requests such documents in the letter of
transmittal. We have agreed to pay all expenses incident to the exchange offer
(including the expenses of one counsel for the holders of the original notes)
other than commissions or concessions of any brokers or dealers and will
indemnify the holders of the original notes (including any broker-dealers)
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The legality of the exchange notes we are offering will be passed upon for
us by Covington & Burling. A copy of the legal opinion rendered by Covington &
Burling is filed as an exhibit to the registration statement with respect to the
exchange notes offered by this prospectus.
EXPERTS
The consolidated financial statements of the Company as of July 31, 2002
and 2001 and for each of the three years in the period ended July 31, 2002,
which are incorporated by reference in this registration statement, have been
audited by Ernst & Young LLP, independent auditors, as stated in their report
with respect thereto, and are incorporated by reference herein in reliance upon
the authority of said firm as experts in accounting and auditing.
With respect to the unaudited condensed consolidated interim financial
information for the nine-month periods ended April 30, 2003 and April 30, 2002,
which are incorporated by reference in this registration statement, Ernst &
Young LLP have reported that they have applied limited procedures in accordance
with professional standards for a review of such information. However, their
separate report, included in JLG Industries, Inc.'s Quarterly Report on Form
10-Q for the quarter ended April 30, 2003 which is incorporated herein by
reference, states that they did not audit and they do not express an opinion on
the interim financial information contained in that report. Accordingly, the
degree of reliance on their report on such information should be restricted
considering the limited nature of the review procedures applied. The independent
auditors are not subject to the liability provision of Section 11 of the
Securities Act for their report on the unaudited interim financial information
because that reports is not a "report" or a "part" of the registration statement
prepared or certified by the auditors within the meanings of Section 7 and 11 of
the Securities Act.
82
JLG INDUSTRIES, INC.
OFFER TO EXCHANGE
$125,000,000
8 1/4% SENIOR NOTES DUE 2008
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
FOR $125,000,000 OUTSTANDING UNREGISTERED 8 1/4% SENIOR NOTES DUE 2008
PROSPECTUS
AUGUST 8, 2003
UNTIL FEBRUARY 4, 2004, ALL DEALERS THAT EFFECT TRANSACTIONS IN THESE
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE DEALERS' OBLIGATION TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 1741 of the Associations Code of the Commonwealth of Pennsylvania
(the "Associations Code") provides that the Company may indemnify a director or
officer against his or her expenses and, other than in an action by or in the
right of the Company, judgments, fines and amounts paid in settlement in
connection with any action or proceeding involving such person by reason of the
fact that such person is or was a director or officer, concerning actions taken
in good faith and in a manner reasonably believed to be in, or not opposed to,
the best interests of the Company, and, with respect to any criminal action or
proceeding, such person had no reason to believe his or her conduct was
unlawful.
Section 1742 of the Associations Code provides that in a derivative action,
no indemnification shall be made with respect to any claim, issue or matter as
to which such director or officer shall have been adjudged to be liable to the
Company unless and only to the extent that the appropriate court of the
Commonwealth of Pennsylvania shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, such
director or officer is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper. Additionally, the Company is
required, pursuant to Associations Code Section 1743, to indemnify its directors
and officers against expenses to the extent that such directors or officers have
been successful on the merits or otherwise in any third party or derivative
action or proceedings or in the defense of any claim, issue or matter therein.
Furthermore, Section 1747 of the Associations Code declares that a corporation's
purchase of indemnification insurance for officers or directors is consistent
with the public policy of the Commonwealth of Pennsylvania.
The Company's By-Laws and Articles of Incorporation relating to the
limitation of the personal liability of the Company's directors and officers for
monetary damages and to the indemnification of the Company's directors and
officers (1) limit the personal liability of a director or officer for monetary
damages for any act or omission unless the director or officer has breached or
failed to perform the duties of his office as required under Pennsylvania law
and the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness, and (2) require the Company to indemnify directors,
officers and employees for liability or expenses incurred in such capacity,
except if the person's conduct was determined to constitute self-dealing,
willful misconduct or recklessness.
Pursuant to policies of directors' and officers' liability and corporation
reimbursement insurance, the Company's officers and directors are insured,
subject to the limits, deductibles, exceptions and other items and conditions of
such policies, against liability for an actual or alleged breach of duty,
neglect, error, misstatement, misleading statement, omission, or other act done
or wrongfully attempted while acting in their capacities as directors or
officers of the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following documents are filed herewith or incorporated herein by
reference.
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
1 Purchase Agreement, dated April 30, 2003, among JLG
Industries, Inc., the Note Guarantors (as defined therein),
the Initial Purchasers (as defined therein) and The Bank of
New York, as Trustee.*
2 Purchase and Sale Agreement, dated as of July 7, 2003, by
and among TRAK International, Inc., Textron Inc., JLG
Acquisition Corporation, and JLG Industries, Inc.*
</Table>
II-1
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
3.1(a) Articles of Incorporation of JLG Industries, Inc., which
appears as Exhibit 3 to the Company's Form 10-Q (File No.
1-12123 -- filed December 13, 1996), is hereby incorporated
by reference.
3.1(b) Articles of Incorporation of Access Financial Solutions,
Inc., which appears as Exhibit 3.1(b) to the Company's Form
S-4 (File No. 333-99217 -- filed September 6, 2002), is
hereby incorporated by reference.
3.1(c) Articles of Incorporation of JLG Equipment Services, Inc.,
which appears as Exhibit 3.1(c) to the Company's Form S-4
(File No. 333-99217 -- filed September 6, 2002), is hereby
incorporated by reference.
3.1(d) Articles of Incorporation of The Gradall Company, which
appears as Exhibit 3.1(d) to the Company's Form S-4 (File
No. 333-99217 -- filed September 6, 2002), is hereby
incorporated by reference.
3.1(e) Articles of Incorporation of JLG Manufacturing, LLC., which
appears as Exhibit 3.1(e) to the Company's Form S-4 (File
No. 333-99217 -- filed September 6, 2002), is hereby
incorporated by reference.
3.1(f) Articles of Incorporation of Fulton International, Inc.,
which appears as Exhibit 3.1(f) to the Company's Form S-4
(File No. 333-99217 -- filed September 6, 2002), is hereby
incorporated by reference.
3.1(g) Articles of Incorporation of Gradall Industries, Inc., which
appears as Exhibit 3.1(g) to the Company's Form S-4 (File
No. 333-99217 -- filed September 6, 2002), is hereby
incorporated by reference.
3.1(h) Articles of Incorporation of JLG OmniQuip, Inc.
3.2(a) By-laws of JLG Industries, Inc., which appears as Exhibit 3
to the Company's Form 10-Q (File No. 1-12123 -- filed March
4, 2003), is hereby incorporated by reference.
3.2(b) By-laws of Access Financial Solutions, Inc., which appears
as Exhibit 3.2(b) to the Company's Form S-4/A (File No.
333-99217 -- filed September 18, 2002), is hereby
incorporated by reference.
3.2(c) By-laws of JLG Equipment Services, Inc., which appears as
Exhibit 3.2(c) to the Company's Form S-4/A (File No.
333-99217 -- filed September 18, 2002), is hereby
incorporated by reference.
3.2(d) Code of Regulations of The Gradall Company, which appears as
Exhibit 3.2(d) to the Company's Form S-4/A (File No.
333-99217 -- filed September 18, 2002), is hereby
incorporated by reference.
3.2(e) Operating Agreement of JLG Manufacturing, LLC., which
appears as Exhibit 3.2(e) to the Company's Form S-4/A (File
No. 333-99217 -- filed September 18, 2002), is hereby
incorporated by reference.
3.2(f) By-laws of Fulton International, Inc., which appears as
Exhibit 3.2(f) to the Company's Form S-4/A (File No.
333-99217 -- filed September 18, 2002), is hereby
incorporated by reference.
3.2(g) By-laws of Gradall Industries, Inc., which appears as
Exhibit 3.2(g) to the Company's Form S-4/A (File No.
333-99217 -- filed September 18, 2002), is hereby
incorporated by reference.
3.2(h) Amended and Restated Bylaws of JLG OmniQuip, Inc.
4.1 Indenture dated as of May 5, 2003, by and among JLG
Industries, Inc., the Note Guarantors party thereto, and The
Bank of New York, as Trustee, which appears as Exhibit 4 to
the Company's Form 10-Q (File No. 1-12123 -- filed May 29,
2003), is hereby incorporated by reference.
</Table>
II-2
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ------- -----------------------
4.2 Registration Rights Agreement, dated May 5, 2003, by and
among JLG Industries, Inc., the Note Guarantors, and Credit
Suisse First Boston LLC, Deutsche Bank Securities, Inc.,
Banc One Capital Markets, Inc., BMO Nesbitt Burns Corp.,
Credit Lyonnais Securities (USA) Inc., NatCity Investments,
Inc. and SunTrust Capital Markets, Inc., as Initial
Purchasers.*
4.3 Form of 8 1/4% Senior Exchange Note due 2008 (included in
Exhibit 4.1).
4.4 Indenture dated June 17, 2002, by and among JLG Industries,
Inc., the Note Guarantors, and the Bank of New York, as
Trustee, which appears as Exhibit 4.1 to the Company's Form
S-4 (File No. 333-99217 -- filed September 6, 2002), is
hereby incorporated by reference.
4.5 Supplemental Indenture, dated as of August 1, 2003, among
JLG OmniQuip, Inc., JLG Industries, Inc., and the Bank of
New York as Trustee under the Indenture dated as of June 17,
2002.
4.6 Supplemental Indenture, dated as of August 1, 2003, among
JLG OmniQuip, Inc., JLG Industries, Inc., and the Bank of
New York as Trustee under the Indenture dated as of May 5,
2003.
5.1 Opinion of Covington & Burling, dated August 8, 2003.
5.2 Opinion of Thomas D. Singer, Senior Vice President and
General Counsel of the Company, dated August 8, 2003.
10 Amendment No. 4 and Waiver under Amended and Restated Credit
Agreement, dated July 8, 2003, by and among JLG Industries,
Inc., JLG Equipment Services, Inc., JLG Manufacturing, LLC,
Fulton International, Inc., Gradall Industries, Inc., The
Gradall Company, Access Financial Solutions, Inc., JLG
Europe BV, JLG Manufacturing Europe BVBA as Borrowers, the
Lenders (as defined therein), Wachovia Bank, National
Association, as Administrative Agent and Documentation
Agent, and Bank One, Michigan, as Syndication Agent.*
12 Statement Regarding Computation of Ratios, which appears as
Exhibit 12 to the Company's Form 10-Q (File No.
1-12123 -- filed May 29, 2003), is hereby incorporated by
reference.
15 Letter Regarding Unaudited Financial Information.*
21 Subsidiaries of the Registrant.
23.1 Consent of Independent Auditors.*
23.2 Consent of Covington & Burling (included in Exhibit 5.1).
23.3 Consent of Thomas D. Singer (included in Exhibit 5.2).
24.1 Powers of Attorney for directors of JLG Industries, Inc.
(included on signature pages hereto).*
24.2 Powers of Attorney for directors of Co-Registrants.*
25 Form T-1 Statement of Eligibility of the Bank of New York,
as trustee, with respect to the issuance of the Company's
8 1/4% Senior Notes due 2008.
99.1 Form of Letter of Transmittal.*
99.2 Form of Notice of Guaranteed Delivery.*
99.3 Form of Letter to Registered Holders and/or DTC
Participants.
</Table>
- ---------------
<Table>
* Previously filed
</Table>
II-3
ITEM 22. UNDERTAKINGS
The undersigned registrants hereby undertake:
That, for purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant, JLG
Industries, Inc., has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
JLG INDUSTRIES, INC.
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Senior Vice President
and General Counsel
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on August 8, 2003.
<Table>
<Caption>
SIGNATURE TITLE
- --------- -----
* President and Chief Executive Officer;
- ------------------------------------------ Chairman of the Board of Directors
WILLIAM M. LASKY
* Executive Vice President and Chief Financial Officer
- ------------------------------------------
JAMES H. WOODWARD, JR.
* Director
- ------------------------------------------
ROY V. ARMES
* Director
- ------------------------------------------
GEORGE R. KEMPTON
* Director
- ------------------------------------------
JAMES A. MEZERA
* Director
- ------------------------------------------
STEPHEN RABINOWITZ
* Director
- ------------------------------------------
RAYMOND C. STARK
* Director
- ------------------------------------------
THOMAS C. WAJNERT
* Director
- ------------------------------------------
CHARLES O. WOOD, III
</Table>
* By attorney-in-fact.
II-5
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Access Financial Solutions, Inc. has duly caused this Amendment No. 1 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
ACCESS FINANCIAL SOLUTIONS, INC.
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Vice President, Secretary
and Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on August 8, 2003.
<Table>
<Caption>
SIGNATURE TITLE
- --------- -----
* President and Director
- ------------------------------------------
JAMES H. WOODWARD, JR.
* Vice President, Secretary, Treasurer and Director
- ------------------------------------------
THOMAS D. SINGER
* Director
- ------------------------------------------
WILLIAM M. LASKY
</Table>
* By attorney-in-fact.
II-6
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Fulton International, Inc. has duly caused this Amendment No. 1 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
FULTON INTERNATIONAL, INC.
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on August 8, 2003.
<Table>
<Caption>
SIGNATURE TITLE
- --------- -----
* President and Director
- ------------------------------------------
JAMES H. WOODWARD, JR.
* Treasurer, Controller, and Director
- ------------------------------------------
JOHN W. COOK
* Director
- ------------------------------------------
JAMES WHALEN
</Table>
* By attorney-in-fact.
II-7
Pursuant to the requirements of the Securities Act of 1933, the registrant,
Gradall Industries, Inc. has duly caused this Amendment No. 1 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
GRADALL INDUSTRIES, INC.
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on August 8, 2003.
<Table>
<Caption>
SIGNATURE TITLE
- --------- -----
* President, Chief Executive Officer and Director
- ------------------------------------------
WILLIAM M. LASKY
* Director
- ------------------------------------------
JAMES H. WOODWARD, JR.
* Director
- ------------------------------------------
THOMAS D. SINGER
</Table>
* By attorney-in-fact.
II-8
Pursuant to the requirements of the Securities Act of 1933, the registrant, JLG
Equipment Services, Inc., has duly caused this Amendment No. 1 to the
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
JLG EQUIPMENT SERVICES, INC.
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on August 8, 2003.
<Table>
<Caption>
SIGNATURE TITLE
- --------- -----
* President and Chairman of the Board of Directors
- ------------------------------------------
WILLIAM M. LASKY
* Secretary, Treasurer, and Director
- ------------------------------------------
JAMES H. WOODWARD, JR.
* Director
- ------------------------------------------
THOMAS D. SINGER
</Table>
* By attorney-in-fact.
II-9
Pursuant to the requirements of the Securities Act of 1933, the registrant, JLG
Manufacturing LLC, has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
JLG MANUFACTURING LLC
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Authorized Officer of JLG
Industries, Inc.,
Authorized Member
II-10
Pursuant to the requirements of the Securities Act of 1933, the registrant, The
Gradall Company, has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
THE GRADALL COMPANY
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Authorized Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on August 8, 2003.
<Table>
<Caption>
SIGNATURE TITLE
- --------- -----
* President, Chief Executive Officer and Director
- ------------------------------------------
WILLIAM M. LASKY
* Director
- ------------------------------------------
JAMES H. WOODWARD, JR.
* Director
- ------------------------------------------
THOMAS D. SINGER
</Table>
* By attorney-in-fact.
II-11
Pursuant to the requirements of the Securities Act of 1933, the registrant, JLG
OmniQuip, Inc. has duly caused this Amendment No. 1 to the registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of McConnellsburg, Commonwealth of Pennsylvania, on
August 8, 2003.
JLG OMNIQUIP, INC.
(Registrant)
By: /s/ THOMAS D. SINGER
--------------------------------------
Name: Thomas D. Singer
Title: Authorized Person
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the registration statement has been signed by the following persons in
the capacities indicated on August 8, 2003.
<Table>
<Caption>
SIGNATURE TITLE
- --------- -----
/s/ WILLIAM M. LASKY President and Chairman of the Board
- ------------------------------------------
WILLIAM M. LASKY
/s/ JAMES H. WOODWARD, JR. Vice President, Secretary, Treasurer and Director
- ------------------------------------------
JAMES H. WOODWARD, JR.
/s/ THOMAS D. SINGER Vice President, Assistant Secretary and Director
- ------------------------------------------
THOMAS D. SINGER
</Table>
II-12