-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P7kKi4x2rZslJLXF3O2euxjg96iuC4QP9ahQlBfbjMnGZj7KuDBC5pFlG2weUzz2 FTs7ZsMTR/SI49vPnHQRVA== 0000950135-98-003957.txt : 19980624 0000950135-98-003957.hdr.sgml : 19980624 ACCESSION NUMBER: 0000950135-98-003957 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 22 FILED AS OF DATE: 19980623 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HADCO CORP CENTRAL INDEX KEY: 0000729533 STANDARD INDUSTRIAL CLASSIFICATION: PRINTED CIRCUIT BOARDS [3672] IRS NUMBER: 042393279 STATE OF INCORPORATION: MA FISCAL YEAR END: 1030 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-57467 FILM NUMBER: 98652239 BUSINESS ADDRESS: STREET 1: 12A MANOR PKWY CITY: SALEM STATE: NH ZIP: 03079 BUSINESS PHONE: 6038988000 MAIL ADDRESS: STREET 1: 12A MONOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HADCO SANTA CLARA INC CENTRAL INDEX KEY: 0001064240 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-57467-01 FILM NUMBER: 98652240 BUSINESS ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 MAIL ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCIR OF TEXAS CORP CENTRAL INDEX KEY: 0001064241 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-57467-02 FILM NUMBER: 98652241 BUSINESS ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 MAIL ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HADCO PHOENIX INC CENTRAL INDEX KEY: 0001064242 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-57467-03 FILM NUMBER: 98652242 BUSINESS ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 MAIL ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCIR OF CALIFORNIA CORP CENTRAL INDEX KEY: 0001064250 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-57467-04 FILM NUMBER: 98652243 BUSINESS ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 MAIL ADDRESS: STREET 1: C/O HADCO CORPORATION STREET 2: 12A MANOR PARKWAY CITY: SALEM STATE: NH ZIP: 03079 S-4 1 HADCO CORPORATION 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 23, 1998 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ HADCO CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ------------------------ SEE TABLE OF ADDITIONAL REGISTRANTS MASSACHUSETTS 3672 04-2393279 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NO.)
12A MANOR PARKWAY SALEM, NEW HAMPSHIRE 03079 (603) 898-8000 (ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) ------------------------ PATRICIA RANDALL, ESQ. VICE PRESIDENT AND GENERAL COUNSEL HADCO CORPORATION 12A MANOR PARKWAY SALEM, NEW HAMPSHIRE 03079 (603) 898-8000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) COPY TO: STEPHEN A. HURWITZ, ESQ. TESTA, HURWITZ & THIBEAULT, LLP HIGH STREET TOWER 125 HIGH STREET BOSTON, MASSACHUSETTS 02110 (617) 248-7000 ------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE 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
================================================================================================================================= PROPOSED MAXIMUM TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE AMOUNT OF SECURITIES TO BE REGISTERED REGISTERED OFFERING PRICE PER NOTE OFFERING PRICE(1) REGISTRATION FEE - --------------------------------------------------------------------------------------------------------------------------------- 9 1/2% Senior Subordinated Notes due 2008....................... $200,000,000 100% $200,000,000 $59,000 - --------------------------------------------------------------------------------------------------------------------------------- Senior Subordinated Guarantees of 9 1/2% Senior Subordinated Notes due 2008................. $200,000,000 -- -- (2) =================================================================================================================================
(1) Estimated solely for purposes of computing the registration fee pursuant to Rule 457 of the Securities Act of 1933, as amended. (2) Pursuant to Rule 457(n) of the Securities Act of 1933, as amended, no separate registration fee is payable with respect to the Guarantees. ------------------------ THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ================================================================================ 2 TABLE OF ADDITIONAL REGISTRANTS
ADDRESS, INCLUDING ZIP CODE PRIMARY AND TELEPHONE NUMBER, STATE OR OTHER STANDARD INCLUDING AREA CODE, OF JURISDICTION OF INDUSTRIAL NAME OF REGISTRANT AS REGISTRANT'S PRINCIPAL INCORPORATION OR CLASSIFICATION I.R.S. EMPLOYER SPECIFIED IN ITS CHARTER EXECUTIVE OFFICES ORGANIZATION CODE NUMBER IDENTIFICATION NO. - ------------------------ --------------------------- ---------------- -------------- ------------------ Hadco Santa Clara, Inc. c/o Hadco Corporation Delaware 3672 94-2348052 12A Manor Parkway Salem, NH 03079 (603) 898-8000 Hadco Phoenix, Inc. c/o Hadco Corporation Delaware 3672 86-0267198 12A Manor Parkway Salem, NH 03079 (603) 898-8000 CCIR of California Corp. c/o Hadco Corporation California 3672 77-0469690 12A Manor Parkway Salem, NH 03079 (603) 898-8000 CCIR of Texas Corp. c/o Hadco Corporation Texas 3672 74-2821373 12A Manor Parkway Salem, NH 03079 (603) 898-8000
3 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION DATED JUNE 23, 1998 PROSPECTUS , 1998 HADCO CORPORATION OFFER TO EXCHANGE ITS 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008 ------------------------ THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1998, UNLESS EXTENDED. Hadco Corporation, a Massachusetts corporation ("Hadco" or the "Company"), hereby offers (the "Exchange Offer"), upon the terms and subject to the conditions set forth in this Prospectus (the "Prospectus") and the accompanying letter of transmittal (the "Letter of Transmittal"), to exchange its 9 1/2% Senior Subordinated Notes due 2008 (the "Exchange Notes"), which have been registered under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to a Registration Statement (as defined) of which this Prospectus is a part, for an equal principal amount of its outstanding 9 1/2% Senior Subordinated Notes due 2008 (the "Original Notes"), of which $200 million aggregate principal amount is outstanding on the date hereof. The Exchange Notes and the Original Notes are collectively referred to herein as the "Notes." Subject to the terms and conditions set forth in this Prospectus and the Letter of Transmittal, the Company will accept for exchange any and all Original Notes that are validly tendered and not withdrawn on or prior to 5:00 p.m., New York City time, on , 1998, unless the Exchange Offer is extended (the "Expiration Date"). Tenders of Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Notes will be issued and delivered promptly after the Expiration Date. The Exchange Offer is not conditioned upon any minimum principal amount of Original Notes being tendered for exchange. The Exchange Offer is, however, subject to certain customary conditions. See "The Exchange Offer -- Conditions." Original Notes may be tendered only in integral multiples of $1,000. In the event the Company terminates the Exchange Offer and does not accept for exchange any Original Notes, the Company will promptly return all previously tendered Original Notes to the holders thereof. The Company has agreed to pay the expenses of the Exchange Offer. See "The Exchange Offer." The Exchange Notes will be obligations of the Company evidencing the same debt as the Original Notes, and will be entitled to the benefits of the same Indenture, dated as of May 18, 1998 (the "Indenture"), between the Company, the Guarantors (as defined) and State Street Bank and Trust Company, as trustee (the "Trustee"). The form and terms of the Exchange Notes are substantially the same as the form and terms of the Original Notes except that the Exchange Notes have been registered under the Securities Act and therefore will not be subject to certain restrictions on transfer applicable to the Original Notes. See "The Exchange Offer." SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY HOLDERS OF ORIGINAL NOTES WHO TENDER THEIR ORIGINAL NOTES IN THE EXCHANGE OFFER AND PROSPECTIVE INVESTORS IN THE NOTES. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. (cover page continued on next page) 4 Interest on each Exchange Note will accrue from the last date on which interest was paid on the Original Note surrendered in exchange therefor or, if no interest has been paid on the Original Note, from the date of original issuance of such Original Note. No interest will be paid on the Original Notes accepted for exchange, and holders of Original Notes whose Original Notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on the Original Notes accrued up until the date of the issuance of the Exchange Notes. Holders of Original Notes that are not exchanged will receive the accrued interest payable on December 15, 1998 in accordance with the Indenture. See "The Exchange Offer -- Terms of the Exchange Offer." Interest on the Exchange Notes is payable semi-annually in cash on June 15 and December 15 of each year, commencing December 15, 1998. The Exchange Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after June 15, 2003, at 104.75% of their principal amount, plus accrued interest, declining ratably to 100% of their principal amount, plus accrued interest. At any time on or prior to June 15, 2001, up to 35% of the aggregate principal amount of the Exchange Notes may be redeemed, at the option of the Company, with the proceeds of one or more Equity Offerings (as defined) at 109.50% of the principal amount thereof, plus accrued interest; provided, however, that at least 65% of the original aggregate principal amount of the Notes remains outstanding following each such redemption. In addition, at any time prior to June 15, 2003, the Company may redeem the Exchange Notes at its option, in whole or in part, at a price equal to the principal amount thereof, together with accrued interest, plus the Applicable Premium (as defined). Upon a Change of Control (as defined), the Company will be required to make an offer to purchase the Exchange Notes at a price equal to 101% of their principal amount on the date of purchase, plus accrued interest, if any. There can be no assurance that the Company will have sufficient funds available at the time of any Change of Control or will be permitted under its Senior Indebtedness (as defined) to make any such repurchase of the Exchange Notes. See "Description of the Notes." The Exchange Notes will be unsecured, senior subordinated indebtedness of the Company, will be subordinated to all Senior Indebtedness of the Company, will rank pari passu to any senior subordinated indebtedness of the Company and will be senior to any indebtedness of the Company subordinated to the Exchange Notes. The Company's obligations under the Exchange Notes will be fully and unconditionally guaranteed (the "Note Guarantees"), on a senior subordinated basis, jointly and severally, by each of the Company's U.S. Restricted Subsidiaries (the "Guarantors"). The Note Guarantees will be subordinated to all Senior Indebtedness of the Guarantors on the same basis as the Exchange Notes are subordinated to the Senior Indebtedness of the Company, pari passu with any senior subordinated indebtedness of the Guarantors and senior to any indebtedness of the Guarantors subordinated to the Note Guarantees. The Original Notes were originally issued and sold on May 18, 1998 (the "Closing Date") to certain initial purchasers (collectively, the "Initial Purchasers") in a transaction not registered under the Securities Act (the "Original Notes Offering"). The Initial Purchasers subsequently resold the Original Notes to "qualified institutional buyers" in reliance on Rule 144A under the Securities Act and to certain offshore purchasers in reliance on Rule 904 of Regulation S under the Securities Act. Accordingly, the Original Notes may not be offered for resale, resold or otherwise transferred unless registered under the Securities Act or unless an applicable exemption from the registration requirements of the Securities Act is available. The Exchange Notes are being offered hereunder in order to satisfy the obligations of the Company under a Registration Rights Agreement, dated May 13, 1998, by and among the Company, the Guarantors and the Initial Purchasers (the "Registration Rights Agreement"). Based on interpretations by the staff of the Securities and Exchange Commission (the "Commission"), as set forth in no-action letters issued to third parties unrelated to the Company, the Company believes that the Exchange Notes issued pursuant to the Exchange Offer may be offered for resale, resold or otherwise transferred by holders thereof (other than any holder that is (i) a broker-dealer that acquired Original Notes as a result of market-making activities or other trading activities or (ii) an "affiliate" of the Company or any Guarantor within the meaning of Rule 405 under the Securities Act) without compliance with the registration or prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holders' business and such holders have no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of such Exchange Notes. ii 5 Any holder who tenders Original Notes in the Exchange Offer with the intention to participate, or for the purpose of participating, in a distribution of the Exchange Notes or who is an affiliate of the Company or any Guarantor may not rely upon such interpretations by the staff of the Commission and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any secondary resale transaction. Failure to comply with such requirements in such instance may result in such holder incurring liabilities under the Securities Act for which the holder is not indemnified by the Company. The staff of the Commission has not considered the Exchange Offer in the context of a no-action letter, and there can be no assurance that the staff of the Commission would make a similar determination with respect to the Exchange Offer as in such other circumstances. By tendering Original Notes in exchange for Exchange Notes, each holder will represent to the Company, among other things, that: (i) any Exchange Notes to be received by such holder will be acquired in the ordinary course of such holder's business; (ii) such holder has no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the Exchange Notes; and (iii) such holder is not an "affiliate" of the Company or any Guarantor (within the meaning of Rule 405 under the Securities Act), or if such holder is an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. 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. The Letter of Transmittal 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 as a result of market-making or other trading activities; however, this Prospectus may not be used for resales of Notes acquired directly from the Company. The Company has agreed that, for a period ending on the earlier to occur of 180 days after the Expiration Date or the time when all persons subject to the prospectus delivery requirements of the Securities Act have sold all Exchange Notes held by them, it will furnish additional copies of this Prospectus, as amended or supplemented, to any broker-dealer that reasonably requests such documents for use in connection with any such resale. See "Plan of Distribution." Holders of Original Notes not tendered and accepted in the Exchange Offer will continue to hold such Original Notes and will be entitled to all the rights and benefits and will be subject to the limitations applicable thereto under the Indenture and with respect to transfer under the Securities Act. There has not previously been any public market for the Original Notes or the Exchange Notes, and no assurance can be given as to the liquidity of the trading market for the Original Notes or Exchange Notes. The Company does not intend to list the Exchange Notes on any securities exchange or to seek approval for quotation through any automated quotation system. The Company does intend, however, to make an application to list the Notes on the Luxembourg Stock Exchange. There can be no assurance that an active market for the Exchange Notes will develop. See "Risk Factors -- Absence of Public Market." Moreover, to the extent that Original Notes are tendered and accepted in the Exchange Offer, the trading market for untendered and tendered but unaccepted Original Notes could be adversely affected. In addition, the Company will have no further obligation to such holders to provide for the registration under the Securities Act of the Original Notes, pursuant to the Registration Rights Agreement or otherwise. See "Risk Factors -- Consequences of Failure to Exchange." THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION. HOLDERS OF ORIGINAL NOTES ARE URGED TO READ THIS PROSPECTUS AND THE RELATED LETTER OF TRANSMITTAL CAREFULLY BEFORE DECIDING WHETHER TO TENDER THEIR ORIGINAL NOTES PURSUANT TO THE EXCHANGE OFFER. iii 6 The Company was incorporated in Massachusetts in 1966. The principal executive offices of the Company are located at 12A Manor Parkway, Salem, New Hampshire 03079 and its telephone number is (603) 898-8000. ------------------------ Market and industry data used throughout this Prospectus were obtained through Company research, surveys or studies conducted by third parties and industry or general publications. The Company has not independently verified market and industry data provided by third parties or industry or general publications. Similarly, internal Company surveys, while believed by management of the Company to be reliable, have not been verified by any independent sources. ------------------------ Hadco(R), Zycon(TM), ResistAIR(TM), Buried Capacitance(TM) and (LOGO)icroPath(TM) are trademarks of the Company. This Prospectus also includes the trademarks of other companies. FORWARD-LOOKING STATEMENTS THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL STATEMENTS REGARDING THE COMPANY'S EXPECTED FINANCIAL POSITION, BUSINESS AND FINANCING PLANS AND OTHER EXPECTATIONS AS TO THE FUTURE (INCLUDING, WITHOUT LIMITATION, STATEMENTS USING THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "ESTIMATES," "INTENDS," "MAY," "FUTURE," "COULD," "WILL" AND SIMILAR WORDS OR EXPRESSIONS AS WELL AS OTHER WORDS OR EXPRESSIONS REFERENCING FUTURE EVENTS, CONDITIONS OR CIRCUMSTANCES) ARE FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS ("CAUTIONARY STATEMENTS") ARE DISCLOSED IN THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN THIS PROSPECTUS AND UNDER "RISK FACTORS." ALL SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO THE COMPANY, ITS SUBSIDIARIES OR PERSONS ACTING ON THEIR BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS. THE COMPANY EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO RELEASE PUBLICLY ANY UPDATES OR REVISIONS TO ANY FORWARD-LOOKING STATEMENT CONTAINED HEREIN TO REFLECT ANY CHANGE IN THE COMPANY'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED. iv 7 PROSPECTUS SUMMARY This Prospectus contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, without limitation, those set forth under "Risk Factors' and elsewhere in this Prospectus. The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information, including "Risk Factors" and the Company's and Continental's (as defined herein) historical consolidated financial statements and pro forma condensed consolidated financial statements, and the notes thereto, appearing elsewhere in this Prospectus. As used herein, the terms "Company" and "Hadco," unless otherwise indicated or the context otherwise requires, refer to Hadco Corporation and its subsidiaries, including Hadco Phoenix, Inc. ("Hadco Phoenix") (formerly Continental Circuits Corp. ("Continental")) and Hadco Santa Clara, Inc. ("Hadco Santa Clara") (formerly Zycon Corporation ("Zycon")). References herein to a fiscal year end relate to a year ending on the last Saturday in October (for example, fiscal 1997 refers to the Company's fiscal year ended October 25, 1997). On March 20, 1998, the Company acquired all of the outstanding capital stock of Continental (the "Continental Acquisition"), and on January 10, 1997, the Company acquired all of the outstanding capital stock of Zycon (the "Zycon Acquisition"). The Continental Acquisition and the Zycon Acquisition are collectively referred to herein as the "Acquisitions." Unless otherwise indicated or the context otherwise requires, the results of Zycon's operations and other financial information relating to Zycon since January 10, 1997 are included in the Company's historical consolidated financial information presented herein. Similarly, unless otherwise indicated or the context otherwise requires, the results of Continental's operations and other financial information relating to Continental since March 20, 1998 are included in the Company's historical consolidated financial information presented herein. THE COMPANY GENERAL Hadco is the largest manufacturer of advanced electronic interconnect products in North America. The Company offers a wide array of sophisticated manufacturing, engineering and systems integration services to meet its customers' electronic interconnect needs. The Company's principal products are multilayer rigid printed circuits and backplane assemblies. Printed circuits are the basic platforms used to interconnect microprocessors, integrated circuits and other components essential to the functioning of electronic systems. Backplane assemblies are generally larger and thicker printed circuits on which connectors are mounted to receive and interconnect printed circuits, integrated circuits and other electronic components. Hadco's largest customers include many of the leading companies in the electronics industry, such as Cabletron Systems, Compaq Computer, Hewlett-Packard, Lucent Technologies, Northern Telecom, Solectron and Sun Microsystems. Pro forma for the Acquisitions, in fiscal 1997 the Company's total revenues would have been approximately $830 million, and EBITDA (as defined herein) would have been approximately $144 million. Hadco's advanced manufacturing and assembly facilities are designed to meet the accelerated time-to-market and time-to-volume requirements of its customers whose markets are characterized by high growth rates, rapid technological advances and short product life-cycles. During the past five fiscal years, Hadco, Continental and Zycon have invested approximately $342 million in production facilities and new technologies. Hadco provides customers with a broad range of products and services that includes development, design, quick-turn prototype, pre-production, volume production, and backplane assembly. Hadco is one of a small number of printed circuit manufacturers with the technology and advanced production facilities necessary to offer all of these services. The Company believes its combination of a broad product offering and advanced technological capabilities facilitates long-term relationships with existing customers, attracts new customers, and helps customers meet their time-to-market and time-to-volume needs. Hadco's customers are a diverse group of electronics original equipment manufacturers ("OEMs") and contract manufacturers in the computing (mainly workstations, servers, mainframes, storage and notebooks), data communications/telecommunications and industrial automation industries, including process controls, 1 8 automotive, medical and instrumentation. Hadco provided its products and services to a diverse base of approximately 560 customers in fiscal 1997 (approximately 590 customers pro forma for the Continental Acquisition) including approximately 77 customers with purchases in excess of $1 million (approximately 85 customers pro forma for the Continental Acquisition). The Company's ten largest customers accounted for approximately 47% of net sales in fiscal 1997. INDUSTRY OVERVIEW In 1997, the worldwide market for rigid printed circuits was $29.4 billion, and the domestic market for rigid printed circuits was $7.9 billion. In addition, in 1997 the domestic market for backplane assemblies was $1.2 billion. The market for higher layer count multilayer rigid printed circuits (eight layers and above) constituted approximately 40% of the total United States rigid printed circuit market in 1997, and has increased at an annual compounded growth rate of 16% over the last two years, compared to approximately 11% for the overall printed circuit market. The growth of the printed circuit market has been driven by a number of factors, including: (i) new end-user markets in telecommunications and computers, (ii) an increasing number of products containing electronic components, (iii) shorter product life cycles for electronic products, and (iv) advances in the speed and complexity of electronic components and products. In 1997, approximately 93% of the domestic printed circuit market was served by independent manufacturers (compared to approximately 71% in 1992). The need for expanded service offerings, advanced technological capabilities and broader geographic scope has led to consolidation in recent years, reducing the number of printed circuit manufacturers in North America from approximately 950 in 1992 to approximately 550 in 1997. Although the printed circuit market has been experiencing consolidation over the past several years, it remains fragmented. Of the approximately 550 printed circuit manufacturers in the United States in 1997, only seven had revenues in excess of $100 million. RECENT ACQUISITIONS On March 20, 1998, Hadco acquired all of the outstanding capital stock of Continental, a manufacturer of multilayer printed circuits, for approximately $188 million (including acquisition costs). On January 10, 1997, Hadco acquired all of the outstanding capital stock of Zycon, a manufacturer of multilayer printed circuits and backplane assemblies, for approximately $212 million (including acquisition costs). Pro forma for the Acquisitions, Continental and Zycon would have added approximately $396 million to Hadco's fiscal 1997 net sales. The Acquisitions also added approximately 865,000 square feet of manufacturing space (approximately a 129% increase) and substantially expanded Hadco's geographic reach. The Continental Acquisition added facilities for volume production of multilayer printed circuits in Phoenix, Arizona, a quick-turn prototype facility in Austin, Texas, and a flexible printed circuit manufacturing facility and printed circuit engineering and design operation in California. The Zycon Acquisition added facilities for volume production of multilayer printed circuits and backplane assemblies in the Silicon Valley area, a quick-turn prototype and design facility in Haverhill, Massachusetts, and a newly constructed facility for volume production of printed circuits in Malaysia. The Acquisitions have also broadened the Company's customer base, expanded its involvement in many fast growing industry sectors, added new proprietary technologies, and increased the size of its sales force. STRATEGY The Company's strategy is to increase sales and profitability by providing a wide range of electronic interconnect solutions and services to a broad and diversified customer base and by capitalizing on major industry trends as follows: Provide a Broad and Integrated Offering. Hadco develops and maintains long-term customer relationships by providing a full range of integrated services, from development, design, quick-turn prototype and pre-production through volume printed circuit production and backplane assembly. The Company believes its broad range of integrated services provides significant value to its customers by shortening their new product development cycles, helping them to meet their time-to-market and time-to-volume requirements, lowering 2 9 manufacturing costs, and providing technological expertise. By working closely with customers at the design and prototype stage, the Company believes it strengthens long-term relationships with its customers and gains an advantage in securing a preferred vendor status when customers begin volume production. Serve Diversified Customer Base in High Growth Segments. The Company concentrates its marketing efforts on OEMs and contract manufacturers serving OEMs in segments of the electronics market characterized by high growth, rapid technological advances, short product development cycles and accelerated time-to-market and time-to-volume requirements. To more fully support its strategy of developing a large and diversified customer base, the Company intends to offer certain large customers single points of contact to service their needs on a global basis, and the Company is focusing on the further development of its international sales force. Develop Advanced Manufacturing and Process Technologies. The Company is committed to remaining a leader in the development of advanced materials and sophisticated process technologies that enable it to cost-effectively produce reliable and technologically advanced products. The Company believes its manufacturing and process capabilities provide a significant competitive advantage and is committed to continuous improvement to maintain its leadership position. Maintain High Levels of Investment. Hadco believes its significant ongoing investment in production technology allows it to maintain a leadership position in the development of advanced materials and process technologies. The Company has made substantial investments in production facilities and new technologies during the past five fiscal years that have increased capacity and operating efficiencies, improved management control and provided more consistent product quality. As a result, the Company believes it is one of the few interconnect manufacturers capable of satisfying the full range of volume production, time-to-market, time-to-volume and technology requirements of customers in the electronics industry. Expand Backplane Assembly Operations. In recent years, to extend its integrated offering, the Company has expanded its backplane assembly operations, thereby broadening its range of manufacturing services, reducing customer costs and improving product quality. With this backplane assembly expansion, the Company is well-positioned to capture an increasing share of the full range of interconnect requirements of its customers. Pursue Strategic Acquisitions. The Company will consider strategic acquisitions of companies and technologies that enhance its competitive position, build economies of scale and help fulfill its other strategic objectives. In evaluating possible acquisition candidates, the Company considers, among other things, the opportunity for synergistic product offerings, complementarity of client base, new technological capabilities and potential for increased geographic reach. Increase Geographic Reach. Hadco has pursued a strategy of expanding the capacity and geographic scope of its manufacturing facilities to better serve high growth segments of the electronics industry in key geographic markets. Hadco believes it is the only independent North American printed circuit manufacturer with a full service offering of design, quick-turn prototype and volume printed circuit manufacturing and backplane assembly on both the East and West Coasts. In addition, its volume production facility in Malaysia, which commenced operations in fiscal 1997, is intended to provide the Company with access to U.S. customers expanding into Asian markets. The Company also intends to broaden its presence in Europe and other international markets. 3 10 THE ORIGINAL NOTES OFFERING Original Notes................ The Original Notes were sold by the Company on May 18, 1998 to the Initial Purchasers pursuant to a Purchase Agreement (the "Purchase Agreement") dated May 13, 1998 by and among the Company, the Guarantors and the Initial Purchasers. The Initial Purchasers subsequently resold the Original Notes to "qualified institutional buyers" in reliance upon Rule 144A under the Securities Act and to offshore purchasers in reliance on Rule 904 of Regulation S under the Securities Act. Registration Rights Agreement..................... Pursuant to the Purchase Agreement, the Company, the Guarantors and the Initial Purchasers entered into the Registration Rights Agreement, which granted the holders of the Original Notes certain exchange and registration rights. The Exchange Offer is intended to satisfy such rights which terminate upon the consummation of the Exchange Offer. THE EXCHANGE OFFER Securities Offered............ $200,000,000 aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2008. The Exchange Offer............ $1,000 principal amount of Exchange Notes will be issued in exchange for each $1,000 principal amount of Original Notes validly tendered and not withdrawn pursuant to the Exchange Offer. As of the date hereof, $200 million in aggregate principal amount of Original Notes is outstanding. Subject to the terms and conditions set forth in this Prospectus and the Letter of Transmittal, the Company will issue the Exchange Notes to tendering holders of Original Notes promptly after the Expiration Date. See "The Exchange Offer." Resales....................... Based on an interpretation by the staff of the Commission set forth in Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available June 5, 1991) (the "Morgan Stanley Letter"), Exxon Capital Holdings Corporation, SEC No-Action Letter (available May 13, 1988) (the "Exxon Capital Letter") and similar letters, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for Original Notes may be offered for resale, resold and otherwise transferred by any person receiving such Exchange Notes, whether or not such person is the holder (other than any such holder or other person which is (i) a 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 or other trading activities, or (ii) an "affiliate" of the Company or any Guarantor within the meaning of Rule 405 under the Securities Act (collectively, "Restricted Holders")) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that (a) such Exchange Notes are acquired in the ordinary course of business of such holder or other person, (b) neither such holder nor such other person is engaged in or intends to engage in a distribution of such Exchange Notes and (c) neither such holder nor other person has any arrangement or 4 11 understanding with any person to participate in the distribution of such Exchange Notes. If any person were to be participating in the Exchange Offer for the purposes of participating in a distribution of the Exchange Notes in a manner not permitted by the Commission's interpretation, such person (a) could not rely upon the Morgan Stanley Letter, the Exxon Capital Letter or similar letters and (b) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. See Morgan Stanley & Co. Incorporated SEC No-Action Letter (available June 5, 1991) and Exxon Capital Holdings Corporation, SEC No-Action Letter (available May 13, 1988). Each broker or dealer that receives Exchange Notes for its own account in exchange for Original Notes, where such Original Notes were acquired by such broker or dealer as a result of market- making or other trading activities, must acknowledge that it will deliver a Prospectus in connection with any sale of such Exchange Notes. See "Plan of Distribution." Expiration Date............... 5:00 p.m., New York City time, on , 1998, unless the Exchange Offer is extended, in which case the term "Expiration Date" means the latest date and time to which the Exchange Offer is extended. Accrued Interest on the Exchange Notes and Original Notes....................... Interest on each Exchange Note will accrue from the last date on which interest was paid on the Original Note surrendered in exchange therefor or, if no interest has been paid on the Original Note, from the date of original issuance of such Original Note. No interest will be paid on the Original Notes accepted for exchange, and holders of Original Notes whose Original Notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on such Original Notes accrued to the date of issuance of the Exchange Notes. Holders of Original Notes that are not exchanged will receive the accrued interest payable on December 15, 1998 in accordance with the Indenture. See "The Exchange Offer -- Terms of the Exchange Offer." Conditions to the Exchange Offer......................... The Exchange Offer is subject to certain customary conditions. The conditions are limited and relate in general to proceedings which have been instituted or laws which have been adopted that might impair the ability of the Company to proceed with the Exchange Offer. As of the date of this Prospectus, none of these events had occurred, and the Company believes their occurrence to be unlikely. If any such conditions exist prior to the Expiration Date, the Company may (a) refuse to accept any Original Notes and return all previously tended Original Notes, (b) extend the Exchange Offer or (c) waive such conditions. See "The Exchange Offer -- Conditions." Procedures for Tendering Original Notes.............. Each holder of Original Notes wishing to accept the Exchange Offer must complete, sign and date the Letter of Transmittal, or a facsimile thereof, in accordance with the instructions contained herein and therein, and mail or otherwise deliver such Letter of Transmittal, or such facsimile, together with the Original Notes to 5 12 be exchanged and any other required documentation to the Exchange Agent (as defined) at the address set forth herein and therein. Tendered Original Notes, the Letter of Transmittal and accompanying documents must be received by the Exchange Agent by 5:00 p.m., New York City time, on the Expiration Date. See The "Exchange Offer -- Procedures for Tendering." By executing the Letter of Transmittal, each holder will represent to the Company that, among other things, the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the person receiving such Exchange Notes, whether or not such person is the holder, that neither the holder nor any such other person is engaged in or intends to engage in a distribution of the Exchange Notes or has an arrangement or understanding with any person to participate in the distribution of such Exchange Notes, and that neither the holder nor any such other person is an "affiliate," as defined under Rule 405 of the Securities Act, of the Company or any Guarantor or, if such holder or other person is such an affiliate, that such holder will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. In lieu of physical delivery of the certificates representing Original Notes, tendering holders of Original Notes may transfer Original Notes pursuant to the procedure for book-entry transfer as set forth under "The Exchange Offer -- Procedures for Tendering." Untendered Original Notes..... Following the consummation of the Exchange Offer, holders of Original Notes eligible to participate in the Exchange Offer but who do not tender their Original Notes will not have any further exchange or registration rights and such Original Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for such Original Notes could be adversely affected. See "Risk Factors -- Consequences of Failure to Exchange." Consequences of Failure to Exchange...................... The Original Notes that are not exchanged pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Original Notes may be resold only (i) to the Company, (ii) pursuant to Rule 144A or Rule 144 under the Securities Act or pursuant to another exemption under the Securities Act, (iii) outside the United States to a foreign person pursuant to the requirements of Rule 904 under the Securities Act, or (iv) pursuant to an effective registration statement under the Securities Act. See "The Exchange Offer -- Consequences of Failure to Exchange." Shelf Registration Statement..................... In the event that (i) the Company and the Guarantors determine that the Exchange Offer is not available or may not be consummated as soon as practicable after the Expiration Date because it would violate applicable law or the applicable interpretations of the staff of the Commission, (ii) the Exchange Offer is not for any other reason consummated by November 18, 1998 or (iii) the Exchange Offer has been completed and in the opinion of counsel for the Initial Purchasers a registration statement must be filed and 6 13 a prospectus must be delivered by the Initial Purchasers in connection with any offering or sale of Original Notes, each of the Company and the Guarantors have agreed to use its best efforts to register the Original Notes on a shelf registration statement (the "Shelf Registration Statement") and use its best efforts to cause it to be declared effective by the Commission. In the event that the Company is required to file a Shelf Registration Statement, the Company has agreed to maintain the effectiveness of such Shelf Registration Statement for, under certain circumstances, a maximum of two years, to cover resales of the Original Notes. Special Procedures for Beneficial Holders............ Any beneficial holder whose Original Notes are registered in the name of such holder's broker, dealer, commercial bank, trust company or other nominee and who wishes to tender in the Exchange Offer should contact such registered holder promptly and instruct such registered holder to tender on behalf of such beneficial holder. If such beneficial holder wishes to tender on his, her or its own behalf, such beneficial holder must, prior to completing and executing the Letter of Transmittal and delivering Original Notes owned by him, her or it, either make appropriate arrangements to register ownership of the Original Notes in such holder's name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time. See "The Exchange Offer -- Procedures for Tendering." Guaranteed Delivery Procedures.................... Holders of Original Notes who wish to tender their Original Notes and whose Original Notes are not immediately available or who cannot deliver their Original Notes and a properly completed Letter of Transmittal or any other documents required by the Letter of Transmittal to the Exchange Agent prior to the Expiration Date may tender their Original Notes according to the guaranteed delivery procedures set forth in "The Exchange Offer -- Guaranteed Delivery Procedures." Withdrawal Rights............. Tenders may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date. Acceptance of Original Notes and Delivery of Exchange Notes....................... Subject to certain conditions, the Company will accept for exchange any and all Original Notes which are properly tendered in the Exchange Offer and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Notes issued pursuant to the Exchange Offer will be delivered promptly after the Expiration Date. See "The Exchange Offer -- Terms of the Exchange Offer." Certain United States Federal Tax Consequences.............. The exchange of Original Notes for Exchange Notes pursuant to the Exchange Offer should not be a taxable event for United States federal income tax purposes. A holder's holding period for Exchange Notes should include the holding period for Original Notes. See "Certain United States Federal Tax Consequences." Exchange Agent................ State Street Bank and Trust Company is serving as exchange agent (the "Exchange Agent") in connection with the Exchange Offer. 7 14 The mailing address of the Exchange Agent is State Street Bank and Trust Company, Two International Place, 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Division/Kellie Mullen. Deliveries by hand or overnight courier should be addressed to State Street Bank and Trust Company, 61 Broadway, 15th Floor, New York, New York 10006, Attention: Corporate Trust Division/Kellie Mullen. Eligible Institutions (as defined) may fax the Exchange Agent at (617) 664-5290. For information with respect to the Exchange Offer, call the Exchange Agent at (617) 664-5587 or fax it at (617) 664-5290. Use of Proceeds............... The Company will not receive any proceeds from the Exchange Offer. See "Use of Proceeds." The Company has agreed to bear the expenses of the Exchange Offer pursuant to the Registration Rights Agreement. No underwriter is being used in connection with the Exchange Offer. SUMMARY OF TERMS OF THE EXCHANGE NOTES The Exchange Offer constitutes an offer to exchange up to $200 million aggregate principal amount of the Exchange Notes for up to an equal aggregate principal amount of Original Notes. The Exchange Notes will be obligations of the Company evidencing the same indebtedness as the Original Notes, and will be entitled to the benefit of the same Indenture. The form and terms of the Exchange Notes are substantially the same as the form and terms of the Original Notes except that (i) the Exchange Notes have been registered under the Securities Act, (ii) the Exchange Notes do not include provisions providing for an increase in the interest rate in certain circumstances relating to the timing of the consummation of the Exchange Offer and (iii) the holders of Exchange Notes will not be entitled to certain rights under the Registration Rights Agreement, which rights will terminate upon the consummation of the Exchange Offer. See "Description of the Notes." COMPARISON WITH ORIGINAL NOTES Freely Transferable........... The Exchange Notes will be freely transferable under the Securities Act by holders who are not Restricted Holders. Restricted Holders are restricted from transferring the Exchange Notes without compliance with the registration and prospectus delivery requirements of the Securities Act. The Exchange Notes will be identical in all material respects (including interest rate, maturity date and restrictive covenants) to the Original Notes, with the exception that the Exchange Notes will be registered under the Securities Act. See "The Exchange Offer -- Terms of the Exchange Offer." Registration Rights........... The holders of Original Notes currently are entitled to certain registration rights pursuant to the Registration Rights Agreement, dated May 13, 1998 (the "Registration Rights Agreement"), by and among the Company, the Guarantors and Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Robertson Stephens and BT Alex. Brown Incorporated, as the initial purchasers of the Original Notes (collectively, the "Initial Purchasers"), including the right to cause the Company to register the Original Notes under the Securities Act if the Exchange Offer is not consummated prior to the date which is six months after the date the Original Notes were issued, 8 15 and in certain other limited circumstances. See "The Exchange Offer -- Conditions." However, pursuant to the Registration Rights Agreement, such registration rights will expire upon consummation of the Exchange Offer. Accordingly, holders of Original Notes who do not exchange their Original Notes for Exchange Notes in the Exchange Offer will not be able to reoffer, resell or otherwise dispose of their Original Notes unless such Original Notes are subsequently registered under the Securities Act or unless an exemption from the registration requirements of the Securities Act is available. TERMS OF THE EXCHANGE NOTES Securities Offered............ $200 million aggregate principal amount of 9 1/2% Senior Subordinated Notes due 2008. Maturity...................... June 15, 2008. Interest...................... Interest on the Exchange Notes will be payable semi-annually in cash, on June 15 and December 15 of each year, commencing on December 15, 1998. Ranking; Subordination........ The Exchange Notes will be unsecured, senior subordinated indebtedness of the Company, will be subordinated to all Senior Indebtedness of the Company, will rank pari passu to any senior subordinated indebtedness of the Company and will be senior to any indebtedness of the Company subordinated to the Exchange Notes. The Exchange Notes will also be effectively subordinated to all Senior Indebtedness of the Guarantors. In addition, the Exchange Notes will be effectively subordinated to all existing and future liabilities of the Company's subsidiaries that are not Guarantors (the "Non-Guarantor Subsidiaries"). At May 2, 1998, on a pro forma basis after giving effect to the Original Notes Offering and the use of the net proceeds therefrom and the Continental Acquisition, the Company and the Guarantors would have had approximately $170 million of Senior Indebtedness outstanding and approximately $249 million would have been available to the Company under the Credit Facility (as defined), which, if borrowed, would constitute Senior Indebtedness. See "Description of the Notes -- Ranking; Subordination." Optional Redemption........... The Exchange Notes will be redeemable at the option of the Company, in whole or in part, at any time on or after June 15, 2003, at the redemption prices set forth herein, plus accrued interest, if any, to the date of redemption. See "Description of the Notes." In addition, at any time on or prior to June 15, 2001, up to 35% of the aggregate principal amount of Exchange Notes will be redeemable, at the option of the Company, with the proceeds of one or more Equity Offerings at 109.50% of the original principal amount thereof, plus accrued interest; provided, however, that at least 65% of the original aggregate principal amount of the Notes remains outstanding following each such redemption. In addition, the Exchange Notes will be redeemable at the option of the Company, in whole or in part, at any time prior to June 15, 2003, at a redemption price equal to the principal amount thereof, together 9 16 with accrued and unpaid interest to the date of redemption, plus the Applicable Premium. See "Description of the Notes -- Optional Redemption." Note Guarantees............... The Company's obligations under the Exchange Notes will be fully and unconditionally guaranteed, on a senior subordinated basis, jointly and severally, by each of the Guarantors. The Note Guarantees will be subordinated to all Senior Indebtedness of the Guarantors on the same basis as the Exchange Notes are subordinated to the Senior Indebtedness of the Company, pari passu with any senior subordinated indebtedness of the Guarantors and senior to any indebtedness of the Guarantors subordinated to the Note Guarantees. At May 2, 1998, on a pro forma basis after giving effect to the Original Notes Offering and the use of the net proceeds therefrom and the Continental Acquisition, the Guarantors would have had Senior Indebtedness of approximately $18 million (in addition to approximately $151 million representing guarantees of the Company's borrowings under the Credit Facility). In addition, the Note Guarantees will be effectively subordinated to all existing and future liabilities of the Non-Guarantor Subsidiaries. At May 2, 1998, on the same pro forma basis, the Non-Guarantor Subsidiaries would have had approximately $7 million of outstanding liabilities. See "Description of the Notes -- Note Guarantees" and Note 16 of the Notes to the Company's Consolidated Financial Statements. Change of Control............. Upon a Change of Control (as defined herein), the Company will be required to make an offer to purchase the Exchange Notes at a purchase price equal to 101% of their principal amount on the date of purchase, plus accrued interest, if any. There can be no assurance that the Company will have sufficient funds available at the time of any Change of Control or will be permitted under the Credit Facility or other Senior Indebtedness to make any such repurchase of the Exchange Notes. See "Description of the Notes -- Repurchase of Notes upon a Change of Control." Certain Covenants............. The Indenture contains certain covenants that, among other things, will limit the ability of the Company and its Restricted Subsidiaries (as defined) or, in certain cases, the Guarantors, to incur indebtedness, pay dividends, prepay subordinated indebtedness, repurchase capital stock, make investments, create liens, engage in transactions with stockholders and affiliates, sell assets and engage in mergers and consolidations. However, these limitations will be subject to a number of important qualifications and exceptions. See "Description of the Notes -- Covenants." RISK FACTORS Holders of Original Notes exchanging such Original Notes for Exchange Notes in the Exchange Offer and prospective investors in the Notes should carefully consider all the information set forth in this Prospectus and, in particular, should evaluate the specific factors under "Risk Factors." 10 17 SUMMARY CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT RATIOS)
FISCAL YEAR ENDED SIX MONTHS ENDED ---------------------------------------------------------------------- --------------------- OCTOBER 25, OCTOBER 25, 1997 1997 APRIL 26, MAY 2 OCTOBER 28, OCTOBER 26, OCTOBER 25, PRO PRO FORMA AS 1997 1998 1995 1996 1997(1) FORMA(2) ADJUSTED(2)(3) ACTUAL(1) ACTUAL(4) ----------- ----------- ----------- ----------- -------------- --------- --------- STATEMENT OF OPERATIONS DATA: Net sales............ $265,168 $350,685 $648,705 $830,468 $830,468 $292,198 $407,863 Gross profit......... 67,440 90,455 141,392 170,772 170,772 64,840 75,798 Write-off of acquired in-process research and development..... -- -- 78,000 -- -- 78,000 63,050 Restructuring and other non-recurring charges............. -- -- -- -- -- -- 5,947 -------- -------- -------- -------- -------- --------- --------- Income (loss) from operations.......... 33,906 51,532 (1,194) 86,055 86,055 (41,979) (32,509) Interest expense..... (537) (338) (10,923) (27,544) (33,802) (5,251) (6,294) Net income (loss).... 21,374 32,014 (36,493) 36,210 32,502 (59,212) (47,612) STATEMENT OF CASH FLOWS DATA: Cash flows from operating activities.......... $ 36,349 $ 55,629 $ 50,667 $ 13,990 $ 12,595 Cash flows from investing activities.......... (31,104) (47,910) (268,913) (229,871) (236,656) Cash flows from financing activities.......... (3,002) 3,760 197,631 190,201 216,887 Capital expenditures........ 28,865 54,998 69,851 $ 97,341 $ 97,341 29,611 48,186 OTHER DATA: Depreciation and amortization........ $ 15,194 $ 18,843 $ 41,850 $ 57,972 $ 58,597 $ 18,001 $ 30,407 EBITDA(6)............ 49,100 70,375 118,656 144,027 144,027 54,022 64,531 Ratio of earnings to fixed charges(7).... 66.2x 156.3x 0.2x 3.2x 2.6x -- -- Ratio of EBITDA to interest expense.... 91.4x 208.2x 10.9x 5.2x 4.3x 10.3x 10.3x Ratio of total debt to EBITDA........... 0.09x 0.05x 0.97x 2.23x 2.27x 4.51x 5.64x SIX MONTHS ENDED -------------------------- MAY 2, MAY 2, 1998 1998 PRO PRO FORMA AS FORMA(5) ADJUSTED(3)(5) -------- --------------- STATEMENT OF OPERATIONS DATA: Net sales............ $459,814 $459,814 Gross profit......... 77,716 77,716 Write-off of acquired in-process research and development..... -- -- Restructuring and other non-recurring charges............. 5,947 5,947 -------- -------- Income (loss) from operations.......... 25,460 25,460 Interest expense..... (12,083) (15,211) Net income (loss).... 8,880 6,996 STATEMENT OF CASH FLOWS DATA: Cash flows from operating activities.......... Cash flows from investing activities.......... Cash flows from financing activities.......... Capital expenditures........ $ 58,983 $ 58,983 OTHER DATA: Depreciation and amortization........ $ 36,012 $ 36,012 EBITDA(6)............ 67,419 67,419 Ratio of earnings to fixed charges(7).... 2.2x 1.8x Ratio of EBITDA to interest expense.... 5.6x 4.4x Ratio of total debt to EBITDA........... 5.40x 5.40x
MAY 2, 1998 -------------------------- ACTUAL AS ADJUSTED(3) -------- -------------- BALANCE SHEET DATA: Cash, cash equivalents and short-term investments........... $ 4,997 $ 4,997 Working capital............................................. 98,633 98,633 Total assets................................................ 739,441 745,691 Long-term debt, net of current portion...................... 359,037 365,287 Stockholders' investment.................................... 195,569 195,569
- --------------- (1) Net loss for the year ended October 25, 1997 and the six months ended April 26, 1997 includes a non-recurring write-off relating to the Zycon Acquisition for acquired in-process research and development. Before deducting the non-recurring write-off, income from operations was $76.8 million and $36.0 million, net income was $41.5 million and $18.8 million, and the ratio of earnings to fixed charges was 7.3 and 7.0, for the year ended October 25, 1997 and the six months ended April 26, 1997, respectively. (2) Gives effect to the Acquisitions assuming they had occurred on October 27, 1996. See Pro Forma Condensed Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." 11 18 (3) Adjusted to reflect (i) the sale by the Company of the Notes offered hereby, less discounts and commissions and estimated offering expenses payable by the Company, and (ii) the application of the net proceeds therefrom. See "Use of Proceeds." (4) Net loss for the six months ended May 2, 1998 includes a non-recurring write-off of $63 million relating to the Continental Acquisition for acquired in-process research and development, as well as a $3.6 million charge, net of tax, for restructuring and other non-recurring expenses related to the consolidation of the Company's East Coast Tech Center operations. Before deducting such non-recurring write-off, charge for restructuring and other non-recurring expenses, income from operations was $36.5 million, net income was $19.0 million, the ratio of earnings to fixed charges was 5.6 for the six months ended May 2, 1998. (5) Gives effect to the Continental Acquisition assuming it had occurred on October 27, 1996. See Pro Forma Condensed Consolidated Financial Statements. (6) EBITDA represents net income before interest, income taxes, depreciation and amortization, and write-off of acquired in-process research and development. EBITDA pro forma as adjusted does not include the amortization of deferred financing costs related to the Notes of $0.6 million annually. EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered an alternative measure of the Company's net income, operating performance, cash flow or liquidity. It is included herein to provide additional information related to the Company's ability to service debt. The EBITDA measures presented herein may not be comparable to other similarly titled measures of other companies. (7) Computed by dividing the sum of net income (loss), before deducting provisions for income taxes and fixed charges, by total fixed charges. Fixed charges consist of interest on debt and amortization of debt issuance costs and a portion of capital lease costs that is intended to represent interest expense. 12 19 RISK FACTORS This Prospectus contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, without limitation, those set forth in the following risk factors and elsewhere in this Prospectus. In addition to the other information included or incorporated by reference in this Prospectus, the following risk factors should be considered carefully in evaluating the Company and its business before exchanging Original Notes for Exchange Notes offered hereby or making an investment decision to purchase Notes. LEVERAGE The Acquisitions significantly increased the Company's debt service obligations. At May 2, 1998, on a pro forma basis after giving effect to the Original Notes Offering and the use of the net proceeds therefrom and the Continental Acquisition, the Company and its subsidiaries would have had approximately $544 million of total liabilities, and approximately $196 million of stockholders' investment, and the Company and the Guarantors would have had approximately $170 million of outstanding Senior Indebtedness, and the Company would have had approximately $249 million available to it under the Credit Facility, which, if borrowed, would constitute Senior Indebtedness. At May 2, 1998, on the same pro forma basis, the Guarantors would have had Senior Indebtedness of approximately $18 million (in addition to approximately $151 million representing guarantees of the Company's borrowings under the Credit Facility). The Company and its subsidiaries (including the Guarantors) will be permitted to incur substantial additional indebtedness, including Senior Indebtedness, in the future. See "Capitalization" and "Description of the Notes - -- Covenants -- Limitation on Indebtedness." Although the Company's cash flow from operations has been sufficient to meet its debt service obligations in the past, there can be no assurance that the Company's operating results will continue to be sufficient for the Company to meet such obligations. The Company's ability to comply with the terms of the Indenture and the Credit Facility, to make cash payments with respect to the Notes and under the Credit Facility and to satisfy its other debt obligations or to refinance any of such obligations will depend on the future performance of the Company, which in turn is subject to prevailing economic conditions and financial and other factors beyond its control. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources," "Description of the Notes" and "Description of Certain Indebtedness." The degree to which the Company and the Guarantors are leveraged could have important consequences to holders of the Notes, including, but not limited to: (i) adversely affecting their ability to satisfy their obligations with respect to the Notes, (ii) increasing their vulnerability to general adverse economic and industry conditions, (iii) limiting their ability to obtain additional financing to fund potential acquisitions, future working capital, capital expenditures and other general corporate requirements, (iv) requiring the dedication of a substantial portion of their cash flow from operations to the payment of principal of, and interest on, its indebtedness, thereby reducing the availability of such cash flow to fund working capital, capital expenditures or other general corporate purposes, (v) limiting their flexibility in planning for, or reacting to, changes in its business and the industry, (vi) they may be substantially more leveraged than certain of their competitors, which may place them at a relative competitive disadvantage, (vii) a significant portion of their borrowings are and may continue to be at variable rates of interest, which exposes them to the risk of increased interest rates, and (viii) the indebtedness outstanding under the Credit Facility will mature prior to the maturity of the Notes. In addition, the Credit Facility contains financial and other restrictive covenants that will limit the ability of the Company to, among other things, borrow additional funds. See "Description of Certain Indebtedness." SUBORDINATION The Notes are unsecured, senior subordinated indebtedness of the Company, are subordinated to all Senior Indebtedness of the Company, rank pari passu to any senior subordinated indebtedness of the 13 20 Company and are senior to any indebtedness of the Company subordinated to the Notes. The Company's obligations under the Notes are fully and unconditionally guaranteed, on a senior subordinated basis, jointly and severally, by the Guarantors. The Note Guarantees are subordinated to all Senior Indebtedness of the Guarantors on the same basis as the Notes are subordinated to the Senior Indebtedness of the Company, pari passu with any senior subordinated indebtedness of the Guarantors and senior to any indebtedness of the Guarantors subordinated to the Note Guarantees. The Notes are also effectively subordinated to all Senior Indebtedness of the Guarantors. In addition, the Notes and the Note Guarantees are effectively subordinated to all existing and future liabilities of the Non-Guarantor Subsidiaries. Upon any distribution to creditors of the Company or the Guarantors in a liquidation or dissolution or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding, the holders of Senior Indebtedness will be entitled to be paid in full in cash before any payment may be made with respect to the Notes or the Note Guarantees. In addition, the subordination provisions of the Indenture will provide that payments with respect to the Notes and the Note Guarantees will be blocked in the event of a payment default on Senior Indebtedness and may be blocked for up to 179 days each year in the event of certain non-payment defaults on Senior Indebtedness. In the event of a bankruptcy, liquidation or reorganization, the payment of the principal of, or premium, if any, and interest on the Notes and the Note Guarantees is subordinated to the extent provided in the Indenture to the prior payment in full of all Senior Indebtedness. There can be no assurance that the Company or the Guarantors will have sufficient funds remaining after payments to holders of Senior Indebtedness to make payments to the holders of the Notes or the Note Guarantees. By reason of the subordination, in the event of the liquidation or dissolution of the Company or the Guarantors, holders of Senior Indebtedness may receive more, ratably, and holders of the Notes may receive less, ratably, than the other creditors of the Company. In any of the foregoing events, there can be no assurance that there would be sufficient assets to pay amounts due on the Notes or the Note Guarantees. See "Description of the Notes -- Ranking; Subordination." At May 2, 1998, on a pro forma basis after giving effect to the Original Notes Offering and the use of the net proceeds therefrom and the Continental Acquisition, the Company and the Guarantors would have had approximately $170 million of Senior Indebtedness outstanding and approximately $249 million would have been available to the Company under the Credit Facility, which, if borrowed, would constitute Senior Indebtedness. At May 2, 1998, on the same pro forma basis, the Guarantors would have had Senior Indebtedness of approximately $18 million (in addition to approximately $151 million representing guarantees of the Company's borrowings under the Credit Facility). The Company's debt service was approximately $15 million for fiscal 1997. See "Description of Certain Indebtedness." RESTRICTIVE COVENANTS The Credit Facility contains a number of covenants that, among other things, restrict the ability of the Company to incur additional indebtedness, change its capitalization, pay dividends or other distributions, prepay subordinated indebtedness, dispose of certain assets, enter into sale and leaseback transactions, create liens, enter into guarantees, make certain investments, acquisitions or mergers, and that otherwise restrict corporate activities. In addition, under the Credit Facility, the Company is required to maintain specified financial covenants, including minimal levels of consolidated net worth, a maximum ratio of consolidated funded debt to EBITDA, maximum capital expenditures and minimum interest coverage and fixed charge coverage. The ability of the Company to comply with such provisions may be affected by events beyond its control. The breach of any of these covenants could result in a default under the Credit Facility. In the event of any such default, depending on the actions taken by the lenders under the Credit Facility, the Company could be prohibited from making any payments on the Notes. In addition, in the event of any such default such lenders could elect to declare all amounts borrowed under the Credit Facility, together with accrued interest, to be due and payable. No sinking fund is provided for the Notes. In addition, the loan instruments governing the indebtedness of certain of the Company's subsidiaries contain certain restrictive covenants which limit the payment of dividends and distributions to, and the transfer of assets to, the Company and require such subsidiaries to satisfy specific financial covenants. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Liquidity and Capital Resources," "Description of the Notes" and "Description of Certain Indebtedness." 14 21 DEPENDENCE ON ELECTRONICS INDUSTRY The Company's principal customers are electronics OEMs and contract manufacturers in the computing (mainly workstations, servers, mainframes, storage and notebooks), data communications/telecommunications and industrial automation industries, including process controls, automotive, medical and instrumentation. These industry segments, and the electronics industry as a whole, are characterized by intense competition, relatively short product life-cycles and significant fluctuations in product demand. In addition, the electronics industry is generally subject to rapid technological change and product obsolescence. Discontinuance or modifications of products containing components manufactured by the Company could have a material adverse effect on the Company's business, financial condition and results of operations. Further, the electronics industry is subject to economic cycles and has in the past experienced, and is likely in the future to experience, recessionary periods. A recession or any other event leading to excess capacity or a downturn in the electronics industry would likely result in intensified price competition, reduced gross margins and a decrease in unit volume, all of which would have a material adverse effect on the Company's business, financial condition and results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations -- Recent Developments," "Business -- Industry Overview and Trends" and "-- Markets and Customers." FLUCTUATIONS IN QUARTERLY OPERATING RESULTS The Company's quarterly operating results have varied and may continue to fluctuate significantly from period to period, including on a quarterly basis. At times in the past, the Company's net sales and net income have decreased from the prior quarter. Operating results are affected by a number of factors, including the timing and volume of orders from and shipments to customers relative to the Company's manufacturing capacity, product and price competition, product mix, number of working days in a particular quarter, manufacturing process yields, the timing of expenditures in anticipation of future sales, raw material and component availability, the length of sales cycles, trends in the electronics industry and general economic factors. In recent years, the Company's gross margins have varied primarily as a result of capacity utilization, product mix, lead times, volume levels and complexity of customer orders. There can be no assurance that the Company will be able to manage the utilization of manufacturing capacity or product mix in a manner that will maintain or improve gross margins. The timing and volume of orders placed by the Company's customers vary due to customer attempts to manage inventory, changes in customers' manufacturing strategies and variation in demand for customer products. The Company's expense levels are relatively fixed and are based, in part, on expectations of future revenues. Consequently, if revenue levels are below expectations, this occurrence is likely to materially adversely affect the Company's business, financial condition and results of operations. Fluctuations in quarterly operating results could have a material adverse effect on the price of the Notes and on the cash flow of the Company necessary to pay amounts due on the Notes. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." VARIABILITY OF ORDERS The level and timing of orders placed by the Company's customers vary due to a number of factors, including customer attempts to manage inventory, changes in the customers' manufacturing strategies and variations in demand for customer products due to, among other things, technological changes, new product introductions, product life-cycles, competitive conditions or general economic conditions. Since the Company generally does not obtain long-term purchase orders or commitments from its customers, it must anticipate the future volume of orders based on discussions with its customers. A substantial portion of sales in a given quarter may depend on obtaining orders for products to be manufactured and shipped in the same quarter in which those orders are received. The Company relies on its estimate of anticipated future volumes when making commitments regarding the level of business that it will seek and accept, the mix of products that it intends to manufacture, the timing of production schedules and the levels and utilization of personnel and other resources. A variety of conditions, both specific to the individual customer and generally affecting the customer's industry, may cause customers to cancel, reduce or delay orders that were previously made or anticipated. A significant portion of the Company's released backlog at any time may be subject to 15 22 cancellation or postponement without penalty. The Company cannot assure the timely replacement of canceled, delayed or reduced orders. Significant or numerous cancellations, reductions or delays in orders by a customer or group of customers could materially adversely affect the Company's business, financial condition and results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business -- Released Backlog." ACQUISITIONS On March 20, 1998, the Company acquired all of the outstanding capital stock of Continental for approximately $188 million (including acquisition costs). On January 10, 1997, the Company acquired all of the outstanding capital stock of Zycon for approximately $212 million (including acquisition costs). The Company has limited experience in integrating acquired companies or technologies into its operations. Therefore, there can be no assurance that the Company will operate the acquired businesses profitably in the future. The gross profit margins for Continental and Zycon for their respective fiscal years ended July 31, 1997 and December 31, 1996 were 18.2% and 15.7%, respectively. The gross profit margins for Hadco (not including Continental or Zycon) for its fiscal years ended October 26, 1996 and October 25, 1997 were 25.8% and 21.8%, respectively. As a result of the Acquisitions, the Company expects its gross profit margin will be lower in future fiscal quarters than has historically been the case. Operating expenses associated with the acquired businesses may have a material adverse effect on the Company's business, financial condition and results of operations in the future. In addition, shortly after the Continental Acquisition, one senior member of Continental's management left the Company. There can be no assurance that the Company will be able to retain key personnel at Continental. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business -- General." The Company may from time to time pursue the acquisition of other companies, assets, products or technologies. The Company may incur additional indebtedness and additional charges against earnings in connection with future acquisitions, and such incurrences could have material adverse consequences to holders of Notes. See "-- Leverage." Acquisitions involve a number of operating risks that could materially adversely affect the Company's operating results, including the diversion of management's attention to assimilate the operations, products and personnel of the acquired companies, the amortization of acquired intangible assets, and the potential loss of key employees of the acquired companies. Furthermore, acquisitions may involve businesses in which the Company lacks experience. There can be no assurance that the Company will be able to manage one or more acquisitions successfully, or that the Company will be able to integrate the operations, products or personnel gained through any such acquisitions without a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Strategy." MANAGEMENT OF GROWTH In fiscal 1997 and 1998, the Company has significantly expanded its operations, including geographically, which has placed, and will continue to place, significant demands on the Company's management, operational, technical and financial resources. The Acquisitions have intensified these demands. The Company expects that expansion will require additional management personnel and the development of further expertise by existing management personnel. The Company's ability to manage growth effectively, particularly given the increasing scope of its operations, will require it to continue to implement and improve its operational, financial and management information systems as well as to further develop the management skills of its managers and supervisors and to train, motivate and manage its employees. The Company's failure to effectively manage future growth could have a material adverse effect on the Company's business, financial condition and results of operations. Competition for personnel is intense, and there can be no assurance that the Company will be able to attract, assimilate or retain additional highly qualified employees in the future, especially engineering personnel. The failure to hire and retain such personnel could have a material adverse effect on the Company's business, financial condition and results of operations. See "-- Acquisitions." 16 23 COMPETITION The electronic interconnect industry is highly fragmented and characterized by intense competition. The Company believes its major competitors are the large U.S. and international independent and captive producers that also manufacture multilayer printed circuits and provide backplane and other electronic assemblies. Some of these competitors have significantly greater financial, technical and marketing resources, greater name recognition and a larger installed customer base than the Company. In addition, these competitors may have the ability to respond more quickly to new or emerging technologies, may adapt more quickly to changes in customer requirements and may devote greater resources to the development, promotion and sale of their products than the Company. During periods of recession or economic slowdown in the electronics industry and other periods when excess capacity exists, electronics OEMs become more price sensitive, which could have a material adverse effect on interconnect pricing. In addition, the Company believes that price competition from printed circuit manufacturers in Asia and other locations with lower production costs may play an increasing role in the printed circuit markets in which the Company competes. This price competition from Asian printed circuit manufacturers may intensify as a result of economic turmoil, currency devaluations or financial market instability that many Asian countries are currently experiencing. Moreover the Company's basic interconnect technology is generally not subject to significant proprietary protection, and companies with significant resources or international operations may enter the market. Increased competition could result in price reductions, reduced margins or loss of market share, any of which could materially adversely affect the Company's business, financial condition and results of operations. The demand for printed circuits has continued to be affected by the development of smaller, more powerful electronic components requiring less printed circuit area. Expansion of the Company's existing products or services could expose the Company to new competition. Moreover, new developments in the electronics industry could render existing technology obsolete or less competitive and could potentially introduce new competition into the industry. There can be no assurance that the Company will continue to compete successfully against present and future competitors or that competitive pressures faced by the Company will not have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Industry Overview and Trends" and "-- Competition." MALAYSIAN FACILITY AND ASIAN ECONOMIC TURMOIL Hadco Santa Clara (formerly Zycon) completed construction of a volume manufacturing facility for printed circuits in Malaysia in fiscal 1997. Hadco's management has no experience in operating foreign manufacturing facilities, and there can be no assurance that the Company will operate the new facility on a profitable basis. The Company believes that the Malaysian facility could incur operating losses in the future as a result of various factors, including, without limitation, operating inefficiencies and price competition for the products which the Company intends to produce at the facility. International operations are also subject to a number of risks, including unforeseen changes in regulatory requirements, exchange rates, tariffs and other trade barriers, misappropriation of intellectual property, currency fluctuations, and political and economic instability. Malaysia and other Asian countries have recently experienced economic turmoil and a significant devaluation of their local currencies. There can be no assurance that this period of Asian economic turmoil will not result in increased price competition, reduced sales by the Company's customers in Asia with a concomitant reduction in such customers' orders for the Company's products, restrictions on the transfer of funds overseas, employee turnover, labor unrest, the reversal of current policies encouraging foreign investment and trade, or other domestic Asian economic problems that could materially adversely affect the Company's business, financial condition or results of operations. TECHNOLOGICAL CHANGE, PROCESS DEVELOPMENT AND PROCESS DISRUPTION The market for the Company's products and services is characterized by rapidly changing technology and continuing process development. The future success of the Company's business will depend in large part upon its ability to maintain and enhance its technological capabilities, develop and market products and services 17 24 that meet changing customer needs and successfully anticipate or respond to technological changes, on a cost-effective and timely basis. In addition, the electronic interconnect industry in the future could encounter competition from new technologies that render existing electronic interconnect technology less competitive or obsolete, including technologies that may reduce the number of printed circuits required in electronic components. There can be no assurance that the Company will effectively respond to the technological requirements of the changing market. To the extent the Company determines that new technologies and equipment are required to remain competitive, the development, acquisition and implementation of such technologies and equipment are likely to continue to require significant capital investment by the Company. There can be no assurance that capital will be available for this purpose in the future or that investments in new technologies will result in commercially viable technological processes or that there will be commercial applications for these technologies. Moreover, the Company's business involves highly complex manufacturing processes that have in the past and could in the future be subject to periodic failure or disruption. Process disruptions can result in delays in certain product shipments, and there can be no assurance that failures or disruptions will not occur in the future. In addition, the Company has a large manufacturing facility in Santa Clara, California, an area of the United States that is subject to significant natural disasters, including earthquakes, fires and flooding. The loss of revenue and earnings to the Company from such a technological change, process development or process disruption, as well as any disruption of the Company's operations resulting from a natural disaster such as an earthquake, fire, flood or drought in California or other locations where the Company has facilities, could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Industry Overview and Trends," "-- Strategy" and "-- Products and Services." CUSTOMER CONCENTRATION During the past several years, the Company's sales to a small number of its customers have accounted for a significant percentage of the Company's annual net sales. During fiscal 1995, 1996 and 1997, the Company's ten largest customers accounted for approximately 46%, 48% and 47% of net sales, respectively. In fiscal 1997, Solectron accounted for approximately 15% of the net sales of the Company. The Company generally does not obtain long-term purchase orders or commitments from its customers, and the orders received by the Company generally require delivery within 90 days. Given the Company's strategy of developing long-term purchasing relationships with high growth companies, the Company's dependence on a number of its most significant customers may increase. There can be no assurance that the Company will be able to identify, attract and retain customers with high growth rates or that the customers that it does attract and retain will continue to grow. Although there can be no assurance that the Company's principal customers will continue to purchase products and services from the Company at current levels, the Company expects to continue to depend upon its principal customers for a significant portion of its net sales. The loss of or decrease in orders from one or more major customers could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Markets and Customers" and "-- Variability of Orders." MANUFACTURING CAPACITY The Company believes its long-term competitive position depends in part on its ability to increase manufacturing capacity. The Company may obtain such additional capacity through acquisitions or expansion of its current facilities. Either approach would require substantial additional capital, and there can be no assurance that such capital will be available from cash generated by current operations. Further, there can be no assurance that the Company will be able to acquire sufficient capacity or successfully integrate and manage such additional facilities. Although the Company has historically needed to increase its manufacturing capacity, the Company believes that excess capacity may exist in the printed circuit and electronic assembly industries. In addition, growth rates in the electronics industry as a whole have fluctuated historically. These factors could have a material adverse effect on future orders and pricing. The Company's expansion of its manufacturing capacity has significantly increased and will continue to significantly increase its fixed costs, and the future profitability of the Company will depend on its ability to utilize its manufacturing capacity in an effective manner. The failure to obtain sufficient capacity when needed or to successfully integrate and manage additional manufacturing facilities could adversely impact the Company's relationships with its 18 25 customers and materially adversely affect the Company's business, financial condition and results of operations. See "-- Technological Change, Process Development and Process Disruption" and "Business -- Manufacturing and Facilities." ENVIRONMENTAL MATTERS The Company is subject to a variety of local, state and federal environmental laws and regulations relating to the storage, use, discharge and disposal of chemicals, solid waste and other hazardous materials used during its manufacturing process, as well as air quality regulations and restrictions on water use. When violations of environmental laws occur, the Company can be held liable for damages and the costs of remedial actions and can also be subject to revocation of permits necessary to conduct its business. Any such revocations could require the Company to cease or limit production at one or more of its facilities, which could have a material adverse effect on the Company's business, financial condition and results of operations. Moreover, the Company's failure to comply with present and future regulations could restrict the Company's ability to expand its facilities or could require the Company to acquire costly equipment or to incur other significant expenses to comply with environmental regulations. Environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violation. The Company operates in several environmentally sensitive locations and is subject to potentially conflicting and changing regulatory agendas of political, business and environmental groups. Changes or restrictions on discharge limits, emissions levels, or material storage or handling might require a high level of unplanned capital investment and/or relocation. There can be no assurance that compliance with new or existing regulations will not have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Environmental Matters," "-- Legal Proceedings and Claims" and Note 9 of Notes to the Company's Consolidated Financial Statements. AVAILABILITY OF RAW MATERIALS AND COMPONENTS Although the Company has not entered into any supply agreements and does not have any guaranteed sources of raw materials or components, it routinely purchases raw materials and components from several key material suppliers. Although alternative material suppliers are currently available, a significant unplanned event at a major supplier could have a material adverse effect on the Company's operations. Hadco Santa Clara has experienced shortages of certain types of raw materials in the past. The Company believes that the potential exists for shortages of materials in the printed circuit and electronic assembly industries, which could have a material adverse effect on the Company's manufacturing operations and future unit costs. Product changes and the overall demand for electronic interconnect products could increase the industry's use of new laminate materials, standard laminate materials, multilayer blanks, electronic components and other materials, and therefore such materials may not be readily available to the Company in the future. Electronic components used by the Company in producing backplane assemblies are purchased by the Company and, in certain circumstances, the Company may bear the risk of component price fluctuations. There can be no assurance that shortages of certain types of electronic components will not occur in the future. Component shortages or price fluctuations could have a material adverse effect on the Company's backplane assembly business, thereby materially adversely affecting the Company's business, financial condition and results of operations. To the extent that the Company's backplane assembly business expands as a percentage of the Company's net sales, component shortages and price fluctuations could, to a greater extent, materially adversely affect the Company's business, financial condition and results of operations. See "Business -- Supplier Relationships." DEPENDENCE ON KEY PERSONNEL The Company's future success depends to a large extent upon the continued services of key managerial and technical employees. The only executive officers of the Company bound by employment or non-compete agreements are the President and Chief Executive Officer and a Senior Vice President (formerly President and Chief Executive Officer of Continental). Hadco's President and Chief Executive Officer's non-compete 19 26 agreement expires one year after the termination of his employment with the Company. Most other key employees of the Company do not have employment or non-compete agreements. The loss of the services of any of the Company's key employees could have a material adverse effect on the Company. The Company believes that its future success depends on its continuing ability to attract and retain highly qualified technical, managerial and marketing personnel. Competition for such personnel is intense, especially for engineering personnel, and there can be no assurance that the Company will be able to attract, assimilate or retain such personnel. If the Company is unable to hire and retain key personnel, the Company's business, financial condition and results of operations may be materially adversely affected. See "Management." INTELLECTUAL PROPERTY The Company's success depends in part on its proprietary techniques and manufacturing expertise, particularly in the area of complex multilayer printed circuits. The Company has few patents and relies primarily on trade secret protection of its intellectual property. There can be no assurance that the Company will be able to protect its trade secrets or that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to the Company's trade secrets. In addition, litigation may be necessary to protect the Company's trade secrets, to determine the validity and scope of the proprietary rights of others or to defend against claims of patent infringement. If any infringement claim is asserted against the Company, the Company may seek to obtain a license of the other party's intellectual property rights. There is no assurance that a license would be available on reasonable terms or at all. Litigation with respect to patents or other intellectual property matters could result in substantial costs and diversion of management and other resources and could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Legal Proceedings and Claims" for a description of a notice received by the Company from the Lemelson Medical, Education & Research Foundation Limited Partnership alleging infringement of certain patents. POSSIBLE INABILITY TO FUND A CHANGE OF CONTROL OFFER Upon a Change of Control, the Company will be required to offer to repurchase all outstanding Notes at 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. However, there can be no assurance that sufficient funds will be available at the time of any Change of Control to make any required repurchases of Notes tendered or that restrictions in the Credit Facility or other Senior Indebtedness will allow the Company to make such required repurchases. The Company's repurchase of Notes upon a Change of Control, absent a waiver, would constitute a default under the terms of the Company's Credit Facility. Any future credit agreements or other agreements relating to other indebtedness (including other Senior Indebtedness) to which the Company becomes a party may contain similar restrictions and provisions. In the event a Change of Control occurs at a time when the Company is prohibited from repurchasing Notes, the Company could seek the consent of its lenders to the repurchase of the Notes or could attempt to refinance the borrowings that contain such prohibition. If the Company does not obtain such a consent or repay such borrowings, the Company would remain prohibited from repurchasing Notes. Any failure by the Company to repurchase the Notes when required following a Change of Control would result in an Event of Default under the Indenture whether or not such repurchase is permitted by the subordination provisions of the Indenture. Any such default may, in turn, cause a default under Senior Indebtedness of the Company. Moreover, the occurrence of a Change of Control may cause an event of default under Senior Indebtedness of the Company. As a result, in each case, any repurchase of the Notes would, absent a waiver, be prohibited under the subordination provisions of the Indenture until the Senior Indebtedness is paid in full. Notwithstanding these provisions, the Company could enter into certain transactions, including certain recapitalizations that would not constitute a Change of Control but would increase the amount of debt outstanding at such time. See "Description of the Notes -- Covenants" and "-- Repurchase of Notes upon a Change of Control" and "Description of Certain Indebtedness." 20 27 FRAUDULENT CONVEYANCE In the event of the bankruptcy or insolvency of any of the Guarantors, the incurrence of the Note Guarantee of such Guarantor would be subject to review under relevant federal and state fraudulent conveyance and similar statutes in a bankruptcy or reorganization case or a lawsuit by or on behalf of creditors of such Guarantor. Under those statutes, if a court were to find that the Note Guarantee of such Guarantor was incurred with the intent of hindering, delaying or defrauding creditors or that such Guarantor received less than a reasonably equivalent value or fair consideration therefor and, at the time of its incurrence, such Guarantor either (i) was insolvent or rendered insolvent by reason thereof, (ii) was engaged in a business or transaction for which its remaining unencumbered assets constituted unreasonably small capital or (iii) intended to or believed that it would incur debts beyond its ability to pay as they matured or became due, the court could void those obligations. The measure of insolvency for purposes of a fraudulent conveyance claim will vary depending upon the law of the jurisdiction being applied. Generally, however, a company will be considered insolvent at a particular time if the sum of its debts at that time is greater than the then fair value of its assets or if the fair salable value of its assets at the time is less than the amount that would be required to pay its probable liability on its existing debts as they become absolute and mature. The Company believes that, after giving effect to the Original Notes Offering and the incurrence of the Note Guarantees by the Guarantors, each of the Guarantors will be (i) neither insolvent nor rendered insolvent by the incurrence of its Note Guarantee, (ii) in possession of sufficient capital to run its business effectively and (iii) incurring debts within its ability to pay as the same mature or become due. No assurance can be given, however, that the assumptions and methodologies used by the Company in reaching its conclusions about the solvency of the Company and any Guarantor would be adopted by a court or that a court would concur with those conclusions. In the event the Note Guarantee of a Guarantor was voided as a fraudulent conveyance, holders of the Notes would effectively be subordinated to all indebtedness and other liabilities of such Guarantor. CONSEQUENCES OF FAILURE TO EXCHANGE The Original Notes have not been registered under the Securities Act or any state securities laws and therefore may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act and any other applicable securities laws, or pursuant to an exemption therefrom or in a transaction not subject thereto, and in each case in compliance with certain other conditions and restrictions. Original Notes that are not tendered in exchange for Exchange Notes or are tendered but not accepted will, following the consummation of the Exchange Offer, continue to bear a legend reflecting such restrictions on transfer and will remain restricted securities. Accordingly, such Original Notes may be resold only (i) to the Company, (ii) pursuant to Rule 144A or Rule 144 under the Securities Act or pursuant to another exemption under the Securities Act, (iii) outside the United States to a foreign person pursuant to the requirements of Rule 904 under the Securities Act, or (iv) pursuant to an effective registration statement under the Securities Act. In addition, upon consummation of the Exchange Offer, holders of Original Notes that remain outstanding will not be entitled to any rights to have such Original Notes registered under the Securities Act. See "The Exchange Offer." To the extent that Original Notes are not tendered and accepted in the Exchange Offer, a holder's ability to sell such Original Notes could be adversely affected. ABSENCE OF PUBLIC MARKET The Exchange Notes will be new securities for which there is currently no public market. The Company does not intend to list the Exchange Notes on any national securities exchange or to seek the admission thereof to trading in the National Association of Securities Dealers Automated Quotation System. The Company does, however, intend to file an application to list the Notes on the Luxembourg Stock Exchange, although no assurance can be given that such application will be accepted. The Initial Purchasers have advised the Company that they currently intend to make a market in the Exchange Notes, but they are not obligated to do so and, if commenced, may discontinue such market making at any time. Further, if any of the Notes are traded, they may trade at a discount from the initial offering price, depending on prevailing interest rates, the 21 28 market for similar securities, and other factors including general economic conditions and the financial condition, performance, and prospects of the Company. Accordingly, there can be no assurance as to the development of any market, or the liquidity of any market that may develop, for the Exchange Notes. In addition, to the extent that Original Notes are tendered and accepted in the Exchange Offer, the aggregate principal amount of Original Notes outstanding will decrease, with a resulting decrease in the liquidity of the market therefor. PROCEDURES FOR TENDER OF ORIGINAL NOTES The Exchange Notes will be issued in exchange for Original Notes only after timely receipt by the Exchange Agent of such Original Notes, a properly completed and duly executed Letter of Transmittal and all other required documents. Therefore, holders of Original Notes desiring to tender such Original Notes in exchange for Exchange Notes should allow sufficient time to ensure timely delivery. Neither the Exchange Agent nor the Company is under any duty to give notification of defects or irregularities with respect to tenders of Original Notes for exchange. Any holder of Original Notes who tenders in the Exchange Offer for the purpose of participating in a distribution of the Exchange Notes will be required to comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale transaction. 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 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." FORWARD-LOOKING STATEMENTS A number of the matters and subject areas discussed in this Prospectus that are not historical or current facts deal with potential future circumstances and developments. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may differ materially from the Company's actual future experience involving any one or more of such matters and subject areas. The Company has attempted to identify, in context, certain of the factors that it currently believes may cause actual future experience and results to differ from the Company's current expectations regarding the relevant matter or subject area. The operations and results of the Company's business also may be subject to the effect of other risks and uncertainties in addition to the relevant qualifying factors identified elsewhere in the foregoing "Risk Factors" section, including, but not limited to, other risks and uncertainties described from time to time in the Company's reports filed with the Commission. 22 29 USE OF PROCEEDS The Exchange Offer is intended to satisfy certain obligations of the Company and the Guarantors under the Registration Rights Agreement. The Company will not receive any proceeds from the issuance of the Exchange Notes offered hereby. The Company has agreed to bear the expenses of the Exchange Offer pursuant to the terms of the Registration Rights Agreement. No underwriter is being used in connection with the Exchange Offer. 23 30 CAPITALIZATION The following table sets forth the consolidated cash, cash equivalents and short-term investments and capitalization of the Company as of May 2, 1998, (i) on a historical basis and (ii) as adjusted for the Original Notes Offering and the application of the net proceeds therefrom.
MAY 2, 1998 ----------------------- ACTUAL AS ADJUSTED -------- ----------- (IN THOUSANDS) Cash, cash equivalents and short-term investments........... $ 4,997 $ 4,997 ======== ======== Short-term debt and current portion of long-term debt....... $ 4,837 $ 4,837 ======== ======== Long-term debt: Credit Facility........................................... $345,000 $151,930 Notes offered hereby (net of original issue discount of $680,000).............................................. -- 199,320 Other long-term debt, net of current portion.............. 14,037 14,037 -------- -------- Total long-term debt................................... 359,037 365,287 -------- -------- Stockholders' investment: Common stock, $0.05 par value, 50,000,000 shares authorized; 13,212,452 shares issued(1)................ 662 662 Paid-in capital........................................... 171,466 171,466 Deferred compensation..................................... (75) (75) Retained earnings......................................... 23,516 23,516 -------- -------- Total stockholders' investment......................... 195,569 195,569 -------- -------- Total capitalization.............................. $554,606 $560,856 ======== ========
- --------------- (1) Excludes options outstanding as of May 2, 1998 to acquire 1,426,395 shares of Common Stock at a weighted average exercise price of $30.21 per share and an additional 1,011,410 shares of Common Stock reserved for issuance under the Company's stock option plans, employee stock purchase plan and outside directors' compensation plan. See Note 10 of Notes to the Company's Consolidated Financial Statements. 24 31 PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated financial information is based upon historical consolidated financial statements and gives effect to the Acquisitions and the Original Notes Offering and the use of the net proceeds therefrom. In January 1997, the Company acquired all of the outstanding capital stock of Zycon for approximately $212 million (including acquisition costs). The Zycon Acquisition was accounted for as a purchase. A significant portion of the purchase price was identified in an appraisal as intangible assets, including approximately $78 million of acquired in-process research and development. See Note 2 of Notes to the Company's Consolidated Financial Statements. In March 1998, the Company acquired all of the outstanding capital stock of Continental for approximately $188 million (including acquisition costs). The Continental Acquisition has been accounted for as a purchase. A significant portion of the purchase price was identified in an appraisal as intangible assets, including approximately $63 million of acquired in-process research and development. See Note 2 of Notes to the Company's Consolidated Financial Statements. The Pro Forma Condensed Consolidated Statement of Operations for the year ended October 25, 1997 assumes the Acquisitions had occurred on October 27, 1996 and includes the actual results of operations of Hadco for its fiscal year ended October 25, 1997 (including Zycon's actual results of operations from January 10, 1997 through October 25, 1997), Zycon's actual results of operations for the three months ended December 31, 1996 and Continental's actual results of operations for its fiscal year ended July 31, 1997. The Pro Forma Condensed Consolidated Statement of Operations for the six months ended May 2, 1998 assumes the Continental Acquisition had occurred on October 25, 1997 and reflects Hadco's actual results of operations for the six months ended May 2, 1998 and Continental's actual results of operations beginning November 2, 1997, and ending on the date of acquisition, March 19, 1998. The Pro Forma Condensed Consolidated Statements of Operations do not include the effect of any non-recurring write-offs directly attributable to the Acquisitions and are not necessarily indicative of the actual results that would have been achieved had the Acquisitions occurred at the beginning of the respective periods, nor do they purport to indicate the results of future operations of the Company. The accompanying Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with the Company's and Continental's historical financial statements and related notes thereto appearing elsewhere in this Prospectus. 25 32 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(1) FOR THE YEAR ENDED OCTOBER 25, 1997 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL PRO FORMA ---------------------------------------------------- COMBINED HADCO ZYCON CONTINENTAL ZYCON CONTINENTAL AS ADJUSTED YEAR ENDED QUARTER ENDED YEAR ENDED PRO FORMA PRO FORMA FOR THE OCTOBER 25, 1997 DECEMBER 31, 1996 JULY 31, 1997 ADJUSTMENTS ADJUSTMENTS ACQUISITIONS ---------------- ----------------- ------------- ----------- ----------- ------------- Net sales............... $648,705 $61,011 $120,752 $ -- $ -- $830,468 Cost of sales........... 507,313 52,650 98,698 -- 1,035(2) 659,696 -------- ------- -------- -------- -------- -------- Gross profit............ 141,392 8,361 22,054 -- (1,035) 170,772 Operating expenses...... 64,586 4,753 8,487 1,188(3) 5,703(4) 84,717 Write-off of acquired in-process research and development....... 78,000 -- -- (78,000)(5) -- -- -------- ------- -------- -------- -------- -------- Income (loss) from operations............ (1,194) 3,608 13,567 76,812 (6,738) 86,055 Other expense........... -- (6,019) (365) 6,019(6) -- (365) Interest and other income................ 3,296 167 -- (496)(7) -- 2,967 Interest expense........ (10,923) (1,033) (354) (2,703)(8) (12,531)(9) (27,544) -------- ------- -------- -------- -------- -------- Income (loss) before provision for income taxes................. (8,821) (3,277) 12,848 79,632 (19,269) 61,113 Provision for income taxes................. 27,672 1,247 4,826 (1,953)(12) (6,889)(12) 24,903 -------- ------- -------- -------- -------- -------- Net income (loss)....... $(36,493) $(4,524) $ 8,022 $ 81,585 $(12,380) $ 36,210 ======== ======= ======== ======== ======== ======== Net income (loss) per share Basic................. $ (3.18) $ 3.16 Diluted............... $ (3.18) $ 3.03 Weighted average shares outstanding Basic................. 11,458 11,458 Diluted............... 11,458 11,942 PRO FORMA COMBINED PRO FORMA AS ADJUSTED EFFECTS OF FOR THE THE ORIGINAL ORIGINAL NOTES NOTES OFFERING OFFERING -------------- -------------- Net sales............... $ -- $830,468 Cost of sales........... -- 659,696 ------- -------- Gross profit............ -- 170,772 Operating expenses...... -- 84,717 Write-off of acquired in-process research and development....... -- -- ------- -------- Income (loss) from operations............ -- 86,055 Other expense........... -- (365) Interest and other income................ -- 2,967 Interest expense........ (6,258)(10)(11) (33,802) ------- -------- Income (loss) before provision for income taxes................. (6,258) 54,855 Provision for income taxes................. (2,550)(12) 22,353 ------- -------- Net income (loss)....... $(3,708) $ 32,502 ======= ======== Net income (loss) per share Basic................. $ 2.84 Diluted............... $ 2.72 Weighted average shares outstanding Basic................. 11,458 Diluted............... 11,942
- --------------- (1) For purposes of the Pro Forma Condensed Consolidated Statement of Operations, acquired in-process research and development of approximately $63 million related to the Continental Acquisition was assumed to have been written off prior to the period presented herein, so that the Pro Forma Condensed Consolidated Statement of Operations includes only recurring costs. (2) Gives effect to conforming Continental's accounting policy of capitalizing certain inventory and spare parts costs to Hadco's policy of expensing these inventory and spare parts costs. (3) Gives effect to amortization for three months of acquired intangible assets totaling $106.4 million recognized in the Zycon Acquisition over lives ranging from 12 to 30 years. (4) Gives effect to the amortization of intangible assets totaling $97.3 million recognized in the Continental Acquisition over lives ranging from 12 to 20 years. (5) Gives effect to the elimination of a non-recurring write-off of acquired in-process research and development related to the Zycon Acquisition. (6) Gives effect to the elimination of non-recurring acquisition costs incurred by Zycon in connection with the Zycon Acquisition. (7) Gives effect to a reduction in interest income as a result of utilizing cash for the Zycon Acquisition. (8) Gives effect to interest expense related to $212 million of net additional bank debt to finance the Zycon Acquisition at an assumed 7.5% weighted average interest rate. (9) Gives effect to the interest expense related to the $187.9 million of bank debt to finance the Continental Acquisition at an assumed 7% weighted average interest rate. (10) Reflects additional interest expense related to the issuance of the Original Notes over the interest expense related to indebtedness, with an assumed interest rate of 6.7%, which indebtedness is being refinanced with the net proceeds from the sale of the Original Notes. (11) Gives effect to $0.6 million of amortization expense on deferred financing costs totaling $6.3 million related to the Original Notes Offering. (12) Gives effect to an adjustment in the tax provision as a result of the combination and pro forma adjustments. 26 33 PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS(1) FOR THE SIX MONTHS ENDED MAY 2, 1998 (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA)
HISTORICAL ----------------------------- HADCO CONTINENTAL PRO FORMA SIX MONTHS PERIOD FROM EFFECTS OF PRO FORMA ENDED NOV. 2, 1997 TO PRO FORMA PRO FORMA THE ORIGINAL COMBINED MAY 2, 1998 MARCH 19, 1998 ADJUSTMENTS COMBINED NOTES OFFERING AS ADJUSTED ----------- --------------- ----------- --------- -------------- ----------- Net sales................... $407,863 $ 51,951 $ -- $459,814 $ -- $459,814 Cost of sales............... 332,065 52,601 (2,568)(2) 382,098 -- 382,098 -------- -------- -------- -------- ------- -------- Gross profit................ 75,798 (650) 2,568 77,716 -- 77,716 Operating expenses.......... 39,310 7,715 (716)(3,8) 46,309 -- 46,309 Restructuring and other non- recurring charges......... 5,947 5,947 5,947 Write-off of acquired in-process research and development............... 63,050 4,300 (67,350)(1) -- -- -------- -------- -------- -------- ------- -------- Income from operations...... (32,509) (12,665) 70,634 25,460 -- 25,460 Interest and other income (expense)................. 1,377 (906) 891(8) 1,362 -- 1,362 Interest expense............ (6,294) (969) (4,820)(4) (12,083) (3,128)(5)(6) (15,211) -------- -------- -------- -------- ------- -------- Income before provision for income taxes.............. (37,426) (14,540) 66,705 14,739 (3,128) 11,611 Provision for income taxes..................... 10,186 (4,133) (194)(7) 5,859 (1,243)(7) 4,616 -------- -------- -------- -------- ------- -------- Net Income.................. $(47,612) $(10,407) $ 66,899 $ 8,880 $(1,885) $ 6,995 ======== ======== ======== ======== ======= ======== Net Income per share Basic..................... $ (3.63) $ 0.68 $ 0.53 Diluted................... $ (3.63) $ 0.66 $ 0.52 Weighted Average Shares Outstanding Basic..................... 13,130 13,130 13,130 Diluted................... 13,130 13,532 13,532
- --------------- (1) Gives effect to the elimination of the write-off of acquired in-process research and development related to the Continental Acquisition, so that the Pro Forma Condensed Consolidated Statement of Operations includes only recurring costs. (2) Gives effect to conforming Continental's accounting policy of capitalizing certain inventory and spare parts costs to Hadco's policy of expensing these inventory and spare parts costs. (3) Gives effect to the amortization of acquired intangible assets totaling $97.3 million recognized in the Continental Acquisition over lives ranging from 12 to 20 years. (4) Gives effect to interest expense related to $187.9 million in bank debt to finance the Continental Acquisition at an assumed 7% interest rate. (5) Reflects additional interest expense related to the issuance of the Original Notes over the interest expense related to indebtedness, with an assumed interest rate of 6.7%, which indebtedness is being refinanced with the net proceeds from the sale of the Original Notes. (6) Gives effect to $0.2 million of amortization expense on deferred financing costs totaling $6.3 million related to the Original Notes Offering. (7) Gives effect to an adjustment in the tax provision as a result of the combination and pro forma adjustments. (8) Gives effect to the elimination of certain acquisition related costs including investment banking fees and legal fees incurred by Continental during the period ended March 19, 1998. 27 34 SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA The following table presents selected historical consolidated financial data for the Company. The selected historical consolidated financial data for each of the years ended October 30, 1993, October 29, 1994, October 28, 1995, October 26, 1996 and October 25, 1997 have been derived from the Company's Consolidated Financial Statements, which have been audited by Arthur Andersen LLP, independent public accountants. The selected consolidated financial data for the six months ended April 26, 1997 and May 2, 1998 have been derived from the Company's unaudited consolidated financial statements, which reflect in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for such periods. The results for the six months ended May 2, 1998 are not necessarily indicative of results for any future period. The selected historical consolidated financial data should be read in conjunction with each of the Company's and Continental's consolidated financial statements and the Pro Forma Condensed Consolidated Financial Statements, and the notes thereto, appearing elsewhere in this Prospectus and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
SIX MONTHS FISCAL YEAR ENDED, ENDED, ---------------------------------------------------- ------------------- OCT. 30, OCT. 29, OCT. 28, OCT. 26, OCT. 25, APR. 26, MAY 2, 1993 1994 1995 1996 1997(1) 1997(1) 1998(2) -------- -------- -------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT RATIOS AND PER SHARE DATA) STATEMENT OF OPERATIONS DATA: Net sales.......................... $189,494 $221,570 $265,168 $350,685 $648,705 $292,198 $407,863 Cost of sales...................... 152,849 176,052 197,728 260,230 507,313 227,358 332,065 -------- -------- -------- -------- -------- -------- -------- Gross profit....................... 36,645 45,518 67,440 90,455 141,392 64,840 75,798 Operating expenses................. 22,935 29,036 33,534 38,923 64,586 28,819 39,310 Write-off of acquired in-process research and development......... -- -- -- -- 78,000 78,000 63,050 Restructuring and other non-recurring charges............ 5,947 -------- -------- -------- -------- -------- -------- -------- Income (loss) from operations...... 13,710 16,482 33,906 51,532 (1,194) (41,979) (32,509) Interest and other income.......... 633 843 1,669 1,287 3,296 806 1,377 Interest expense................... (1,402) (891) (537) (338) (10,923) (5,251) (6,294) -------- -------- -------- -------- -------- -------- -------- Income (loss) before provision for income taxes..................... 12,941 16,434 35,038 52,481 (8,821) (46,424) (37,426) Provision for income taxes......... 4,714 6,491 13,664 20,467 27,672 12,788 10,186 -------- -------- -------- -------- -------- -------- -------- Net income (loss).................. $ 8,227 $ 9,943 $ 21,374 $ 32,014 $(36,493) $(59,212) $(47,612) ======== ======== ======== ======== ======== ======== ======== Net income (loss) per share Basic(3)......................... $ 0.85 $ 1.01 $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63) Diluted(3)....................... $ 0.76 $ 0.93 $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63) STATEMENT OF CASH FLOWS DATA: Cash flows from operating activities....................... $ 18,341 $ 29,284 $ 36,349 $ 55,629 $ 50,667 $ 13,990 $ 12,595 Cash flows from investing activities....................... (11,237) (23,428) (31,104) (47,910) (268,913) (229,871) (236,656) Cash flows from financing activities....................... (5,923) (5,833) (3,002) 3,760 197,631 190,201 216,887 Capital expenditures............... 14,270 19,510 28,865 54,998 69,851 29,611 48,186 OTHER DATA: Depreciation and amortization...... $ 13,730 $ 14,611 $ 15,194 $ 18,843 $ 41,850 18,001 30,407 EBITDA(4).......................... 27,440 31,093 49,100 70,375 118,656 54,022 64,531 Ratio of earnings to fixed charges(5)....................... 10.2x 19.4x 66.2x 156.3x 0.2x -- -- Ratio of EBITDA to interest expense.......................... 19.6x 34.9x 91.4x 208.2x 10.9x 10.3x 10.3x(6) Ratio of total debt to EBITDA...... 0.34x 0.15x 0.09x 0.05x 0.97x 4.51x 5.64x BALANCE SHEET DATA (AT END OF PERIOD): Cash, cash equivalents and short-term investments........... $ 27,445 $ 31,563 $ 36,474 $ 42,187 $ 13,733 $ 7,106 $ 4,997 Working capital.................... 30,593 31,829 41,043 43,561 53,693 34,766 98,633 Total assets.............. 110,782 126,326 162,991 219,501 502,517 466,277 739,441 Long-term debt, net of current portion.......................... 9,382 4,526 2,387 1,515 109,716 236,730 359,037 Stockholders' investment........... 68,431 77,440 100,774 138,841 239,912 81,515 195,569
28 35 - --------------- (1) Net loss for the six months ended April 26, 1997 and the fiscal year ended October 25, 1997 includes a non-recurring write-off relating to the Zycon Acquisition for acquired in-process research and development. Before deducting the non-recurring write-off, income from operations was $76.8 million and $36.0 million, net income was $41.5 million and $18.8 million, the ratio of earnings to fixed charges was 7.3 and 7.0 and diluted net income per share was $3.48 and $1.71 for the year ended October 25, 1997 and the six months ended April 26, 1997, respectively. (2) Net loss for the six months ended May 2, 1998 includes a non-recurring write-off of $63 million relating to the Continental Acquisition for acquired in-process research and development, as well as a $3.6 million charge, net of tax, for restructuring and other non-recurring expenses related to the consolidation of the Company's East Coast Tech Center operations. Before deducting such non-recurring write-off, charge for restructuring and other non-recurring expenses, income from operations was $36.5 million, net income was $19.0 million, the ratio of earnings to fixed charges was 5.6 and diluted net income per share was $1.41 for the six months ended May 2, 1998. (3) See Note 1 of Notes to the Company's Consolidated Financial Statements for an explanation of the basis used to calculate net income (loss) per share. (4) EBITDA represents net income before interest, income taxes, depreciation and amortization, and write-off of acquired in-process research and development. EBITDA is not a measurement of financial performance under generally accepted accounting principles and should not be considered an alternative measure of the Company's net income, operating performance, cash flow or liquidity. It is included herein to provide additional information related to the Company's ability to service debt. The EBITDA measures presented herein may not be comparable to other similarly titled measures of other companies. (5) Computed by dividing the sum of net income (loss), before deducting provisions for income taxes and fixed charges, by total fixed charges. Fixed charges consist of interest on debt and amortization of debt issuance costs and a portion of capital lease costs that is intended to represent interest expense. (6) After giving pro forma effect to the Continental Acquisition and the Original Notes Offering as if they had occurred at the beginning of the period presented, the ratio of EBITDA to interest expense would have been 4.4 based on an effective interest rate of 9.551% on the Notes. 29 36 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, without limitation, those set forth under "Risk Factors" and elsewhere in this Prospectus. On March 20, 1998, the Company acquired all of the outstanding capital stock of Continental, and on January 10, 1997, the Company acquired all of the outstanding capital stock of Zycon. Unless otherwise indicated or the context otherwise requires, the results of Zycon's operations and other financial information relating to Zycon since January 10, 1997 are included in the Company's historical consolidated financial information presented herein. Similarly, unless otherwise indicated or the context otherwise requires, the results of Continental's operations and other financial information relating to Continental since March 20, 1998 are included in the Company's historical consolidated financial information presented herein. OVERVIEW Hadco is the largest manufacturer of advanced electronic interconnect products in North America. The Company offers a wide array of sophisticated manufacturing, engineering and systems integration services to meet its customers' electronic interconnect needs. The Company's principal products are multilayer rigid printed circuits and backplane assemblies. Hadco's customers are a diverse group of electronics OEMs and contract manufacturers in the computing (mainly workstations, servers, mainframes, storage and notebooks), data communications/telecommunications and industrial automation industries, including process controls, automotive, medical and instrumentation. The Company believes that its financial performance is driven primarily by the same factors that affect the electronic interconnect market. The market for higher count multilayer rigid printed circuits (eight layers and above) constituted approximately 40% of the total United States rigid printed circuit market in 1997, and has increased at an annual compounded growth rate of 16% over the last two years, compared to approximately 11% for the overall printed circuit market. This growth has been driven, in part, by (i) new end-user markets in telecommunications and computers, (ii) an increasing number of products containing electronic components, (iii) shorter product life-cycles for electronic products, and (iv) advances in the speed and complexity of electronic components and products. In addition, the continuing trend by OEMs of outsourcing manufacturing of both printed circuits and backplanes has contributed to the Company's growth over time. Lastly, the ongoing consolidation of the fragmented printed circuit market has created opportunities for larger companies, such as Hadco, that have broad product offerings, volume manufacturing capabilities and advanced process technologies. Since fiscal 1993, net sales of the Company have grown from $189.5 million to $648.7 million for fiscal 1997. Pro forma for the Acquisitions, net sales for fiscal 1997 would have been $830.5 million. ZYCON ACQUISITION On January 10, 1997, the Company acquired all of the outstanding capital stock of Zycon. The acquisition added facilities for volume production of multilayer printed circuits and backplane assemblies in the Silicon Valley area, a quick-turn prototype and design facility in Massachusetts, and a newly constructed facility for volume production of printed circuits in Malaysia. Hadco acquired Zycon for approximately $212 million (including acquisition costs) and recorded the acquisition under the purchase method of accounting. As a result, a purchase price premium of approximately $187 million was recorded on the transaction. Approximately $78 million of the premium was written off as acquired in-process research and development with no alternative future use as a non-recurring write-off to net income for the fiscal year ended October 25, 1997. The remaining premium of approximately $109 million was allocated to identifiable intangibles and goodwill, and will be written off over 12 to 30 years, with an average amortization period of 17 years. The acquisition was financed with borrowings under a $250 million senior revolving credit facility, plus existing cash, cash equivalents and short-term investments. 30 37 CONTINENTAL ACQUISITION On March 20, 1998, the Company acquired all of the outstanding capital stock of Continental, further broadening Hadco's product and service capabilities. The acquisition added facilities for volume production of multilayer printed circuits in Phoenix, Arizona, a quick-turn prototype facility in Austin, Texas, and a flexible printed circuit manufacturing facility and printed circuit engineering and design operation in California. Hadco acquired Continental for approximately $188 million (including acquisition costs) and recorded the acquisition under the purchase method of accounting. As a result, a purchase price premium of $160.3 million was recorded on the transaction. Approximately $63 million of the premium was written off as acquired in-process research and development with no alternative future use as a non-recurring write-off to net income for the fiscal quarter ended May 2, 1998. The remaining premium of $97.3 million was allocated to identifiable intangibles and goodwill, and will be written off over 12 to 20 years, with an average amortization period of 16 years. The acquisition was financed from borrowings under the Credit Facility. The gross profit margins for Continental and Zycon for their respective fiscal years ended July 31, 1997 and December 31, 1996 were 18.2% and 15.7%, respectively. The gross profit margins for Hadco (not including Continental or Zycon) for its fiscal years ended October 26, 1996 and October 25, 1997 were 25.8% and 21.8%, respectively. As a result of the Acquisitions, the Company expects its gross profit margin will be lower in future fiscal quarters than has historically been the case for Hadco. RESULTS OF OPERATIONS The following table sets forth certain Consolidated Statements of Operations data and other data as a percentage of net sales. The table and the discussion below should be read in conjunction with the Company's and Continental's consolidated financial statements and the Pro Forma Condensed Consolidated Financial Statements, and notes thereto, that appear elsewhere in this Prospectus.
FISCAL YEAR ENDED, SIX MONTHS ENDED, ------------------------------------------------ ----------------------------------- OCT. 25, MAY 2, OCT. 28, OCT. 26, OCT. 25, 1997 APR. 26, MAY 2, 1998 1995 1996 1997(1) PRO FORMA(3) 1997(1) 1998(2) PRO FORMA(4) -------- -------- -------- ------------ -------- ------- ------------ CONSOLIDATED STATEMENTS OF OPERATIONS: Net sales..................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of sales................. 74.6 74.2 78.2 79.4 77.8 81.4 83.1 ----- ----- ----- ----- ----- ----- ----- Gross profit.................. 25.4 25.8 21.8 20.6 22.2 18.6 16.9 Operating expenses............ 12.6 11.1 9.2 8.7 9.3 8.7 9.5 Write-off of acquired in-process research and development................. -- -- 12.0 -- 26.7 15.5 -- Restructuring and other non- recurring charges........... 1.4 1.3 Amortization of acquired intangible assets........... -- -- 0.8 1.5 0.6 0.9 0.6 ----- ----- ----- ----- ----- ----- ----- Income (loss) from operations.................. 12.8 14.7 (0.2) 10.4 (14.4) (7.9) 5.5 Interest expense.............. (0.2) (0.1) (1.7) (3.3) (1.8) (1.6) (2.6) Interest income (expense) and other, net.................. 0.6 0.4 0.5 0.3 0.3 0.3 0.3 ----- ----- ----- ----- ----- ----- ----- Income (loss) before provision for income taxes............ 13.2 15.0 (1.4) 7.4 (15.9) (9.2) 3.2 Provision for income taxes.... 5.1 5.9 4.2 3.0 4.4 2.5 1.3 ----- ----- ----- ----- ----- ----- ----- Net income (loss)............. 8.1% 9.1% (5.6)% 4.4% 20.3% 11.7% 1.9% ===== ===== ===== ===== ===== ===== ===== OTHER DATA: Capital expenditures.......... 10.9% 15.7% 10.6% 10.7% 10.1% 11.8% 12.8%
31 38 - --------------- (1) Net loss for the six months ended April 26, 1997 and the fiscal year ended October 25, 1997 includes a non-recurring write-off relating to the Zycon Acquisition for acquired in-process research and development. As a percentage of net sales for the fiscal year ended October 25, 1997, income from operations was 11.8%, income before provision for income taxes was 10.7%, and net income was 6.4%, all before deducting the non-recurring write-off. (2) Net loss for the six months ended May 2, 1998 includes a non-recurring write-off relating to the Continental Acquisition for acquired in-process research and development and for restructuring and other non-recurring expenses related to the consolidation of the Company's East Coast Tech Center operations. As a percentage of net sales for the six months ended May 2, 1998, income from operations was 8.9%, income before provision for income taxes was 7.7%, and net income was 4.7%, all before deducting such non-recurring write-off, charge for restructuring and other non-recurring expenses. (3) Gives effect to the Acquisitions assuming they had occurred on October 27, 1996. See Pro Forma Condensed Consolidated Financial Statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations." (4) Gives effect to the Continental Acquisition assuming it had occurred on October 27, 1996. See Pro Forma Condensed Consolidated Financial Statements. SIX MONTHS ENDED MAY 2, 1998 AND APRIL 26, 1997 Net sales for the six months ended May 2, 1998 increased 39.6% over net sales for the six months ended April 26, 1997. The increase resulted from several factors including the acquisitions of Zycon and Continental, which added $80.2 million to printed circuit net sales in the six month period, and an increase in both backplane assembly and printed circuit net sales (excluding these Acquisitions). Backplane assembly net sales increased due to higher production volume and shipments. Printed circuit net sales increased due to higher production volume and shipments and a shift towards products with more layers and greater densities. In addition, average pricing for printed circuits decreased 3.4% for the first six months of fiscal 1998 over the same period in fiscal 1997. Net sales from backplane assemblies increased to 14.2% of net sales from 11.7% in the first six months of fiscal 1997. The gross profit margin decreased to 18.6% in the six months ended May 2, 1998 from 22.2% in the comparable period in fiscal 1997. The decrease resulted from lower capacity utilization from printed circuit facilities, and lower overall gross margins from the Hadco Santa Clara and Hadco Phoenix operations. Operating expenses, as a percent of net sales, decreased to 9.6% in the six months ended May 2, 1998 from 9.9% in the comparable period in fiscal 1997, due to increased net sales and the fixed nature of the Company's operating expenses. The decrease was partially offset by goodwill and purchased intangibles amortization. Income from operations for the six months ended May 2, 1998 and April 26, 1997, was reduced by $63 million and $78 million, respectively, over the comparable respective preceding periods, due to non-recurring write-offs of acquired in-process research and development recorded in connection with the Continental and Zycon acquisitions. The remaining goodwill and purchased intangibles will be amortized over 12 to 30 years, with an average amortization period of 17 years, which will reduce income from operations by approximately $3.1 million per fiscal quarter. In addition, income from operations for the six months ended May 2, 1998, was reduced by approximately $5.9 million for restructuring and other non-recurring charges related to the consolidation of the Company's East Coast Tech Center operations. Excluding the non-recurring write-off and restructuring charges, income from operations, as a percent of net sales, decreased to 8.9% for the six months ended May 2, 1998 from 12.3% in the comparable period in fiscal 1997, primarily as a result of the same factors affecting gross profit margins, and of goodwill and purchased intangibles amortization from the acquisitions. Interest income increased in the six months ended May 2, 1998 as compared to the six months ended April 26, 1997, due to higher daily average cash balances available for investing. Interest expense increased in 32 39 the six months ended May 2, 1998 as compared to the six months ended April 26, 1997, due to an increase in outstanding debt as a result of the acquisitions. The Company includes in operating expenses charges for actual expenditures and accruals, based on estimates, for environmental matters. To the extent and in amounts Hadco believes circumstances warrant, it will continue to accrue and charge to operating expenses cost estimates relating to known environmental matters. The Company believes the ultimate disposition of known environmental matters will not have a material adverse effect upon the liquidity, capital resources, business or consolidated financial position of the Company. However, one or more of such environmental matters could have a significant negative impact on the Company's consolidated financial results for a particular reporting period. See "Business -- Environmental Matters," "-- Legal Proceedings and Claims" and Note 9 of Notes to the Company's Consolidated Financial Statements. The Company believes that excess capacity may exist in the printed circuit and electronic assembly industries, as well as fluctuating growth rates in the electronics industry as a whole. Both factors could have a material adverse effect on future orders and pricing. However, the Company has historically needed to increase its own manufacturing capacity to maintain and expand its market position, although the Company's manufacturing capacity needs could change at any time or times in the future. The Company also believes that the potential exists for a shortage of materials in the printed circuit and electronic assembly industries which could have a material adverse effect on future unit costs. In response to such concerns, the Company engages in the normal industry practices of maintaining primary and secondary vendors and diversifying its customer base. There can be no assurances, however, that such measures will be sufficient to protect the Company against any shortages of materials. See "Risk Factors -- Manufacturing Capacity" and "-- Availability of Raw Materials and Components." In accordance with generally accepted accounting principles, the Company provides for income taxes on an interim basis, using its effective annual income tax rate. Although the Company has recorded a loss before income taxes in 1998 and 1997, the Company anticipates an effective annual income tax rate for fiscal 1998 of 39.75%, which is slightly less than the combined federal and state statutory rates. The effective rate was increased by amortization of goodwill which is not tax deductible, and was offset by the tax benefit of the Company's foreign sales corporation and various state investment tax credits. The effective tax rate for fiscal 1998 is based on current tax laws. FISCAL YEARS ENDED OCTOBER 25, 1997 AND OCTOBER 26, 1996 Net sales during 1997 increased approximately 85% over 1996. The increase resulted from several factors including the Zycon Acquisition, which added $216.1 million in printed circuit net sales after January 10, 1997, and an increase in both backplane assembly and non-Zycon printed circuit net sales. Backplane assembly net sales increased due to higher product volume and shipments. Printed circuit net sales increased due to higher production volume and shipments and a shift towards products with more layers and greater densities. In addition, average pricing for printed circuits decreased 0.6% for 1997 over 1996. Net sales from backplane assemblies decreased to 16.2% of total net sales excluding Zycon, from 16.9% in 1996. The gross profit margin decreased to 21.8% in 1997 from 25.8% for 1996. The decrease resulted from increased investment in new capacity and technologies at certain facilities and lower overall gross margins from the Zycon operations (including ongoing start-up expenses associated with the volume production facility in Malaysia). Operating expenses, as a percent of net sales, decreased to 10.0% in 1997 from 11.1% in 1996, due to increased net sales and the fixed nature of the Company's operating expenses. The decrease was partially offset by goodwill and purchased intangibles amortization of $5.2 million. Income from operations for 1997 was reduced by approximately $78 million due to a non-recurring write-off relating to acquired in-process research and development recorded in connection with the Zycon Acquisition. The remaining goodwill and purchased intangibles will be amortized over 12 to 30 years, with an 33 40 average amortization period of 17 years, which will reduce income from operations by approximately $1.6 million per fiscal quarter. Excluding the non-recurring write-off of approximately $78 million for acquired in-process research and development, operating margins decreased to 11.8% for 1997 from 14.7% in 1996, primarily as a result of the same factors affecting gross profit margins and from the goodwill amortization related to the Zycon Acquisition. Interest income decreased in 1997 as compared to 1996 due to lower daily average cash balances available for investing. Interest expense increased in 1997 as compared to 1996 due to an increase in outstanding debt as a result of the Zycon Acquisition. In accordance with generally accepted accounting principles, the Company provides for income taxes on an interim basis, using its effective annual income tax rate. Although the Company incurred a loss before income taxes during 1997, the Company recorded an income tax provision because the write-off of acquired in-process research and development is not deductible for income tax purposes. Without taking into consideration the write-off of acquired in-process research and development, the Company's effective annual income tax rate for 1997 was 40.0%, which is approximately equal to the combined federal and state statutory rates. The effective rate was increased by amortization of goodwill and acquired intangibles which is not tax deductible, and this item was offset by the tax benefit of the Company's foreign sales corporation and various state investment tax credits. The effective tax rate for 1997 was based on then current tax laws. FISCAL YEARS ENDED OCTOBER 26, 1996 AND OCTOBER 28, 1995 Net sales during 1996 increased 32.3% over 1995. The change was due to a 15.1% increase in the volume of production and shipments and a shift in product mix to higher layer, higher density products, as compared to 1995. Average pricing per unit increased 6.1% compared to 1995. Sales of backplane and other electronic assemblies increased to approximately 17% of the Company's net sales in 1996, versus approximately 7% for 1995. The gross profit margin increased to 25.8% in 1996 from 25.4% in 1995. The increase was a direct result of a higher volume of shipments, an increase in the technology level of product mix, and improved pricing. These increases were partially offset by increased costs relating to the implementation of new production lines and materials and the shift in mix to a higher level of value-added products. Operating expenses, as a percent of net sales, decreased to 11.1% during 1996 from 12.6% during 1995, due to increased revenue. Operating expenses increased to $38.9 million in 1996 from $33.5 million in 1995, primarily as a result of increased variable costs directly attributable to increased net sales. Included in operating expenses are charges for actual expenditures and accruals, based on estimates, for environmental matters. During 1996 and 1995, the Company made, and charged to operating expenses, actual payments of approximately $680,000 and $1.1 million, respectively, for environmental matters. In 1996 and 1995, the Company also accrued and charged to operating expenses $1.8 million and $2.7 million, respectively, as cost estimates relating to known environmental matters. In 1996, interest income decreased as a result of lower cash balances available for investment. Interest expense decreased in 1996 from 1995 due to decreased average debt balances during the year. The annual effective tax rate for 1996 and 1995 was 39.0%, which was less than the then current combined federal and state statutory rates. This difference was caused primarily by tax advantaged investments and the tax benefits of a foreign sales corporation. QUARTERLY RESULTS The following table presents certain unaudited consolidated financial information for each of the Company's nine fiscal quarters for the period ended May 2, 1998, as well as certain of such information expressed as a percentage of net sales for the same period. Information for the three months ended April 26, 1997 includes the results of operations for Hadco Santa Clara (formerly Zycon) from January 10, 1997, the 34 41 date of the Zycon Acquisition. Information for the three months ended May 2, 1998 includes the results of operations for Continental Circuits Corp. from March 20, 1998, the date of the Continental Acquisition. In the opinion of management, this information has been prepared on the same basis as the audited Consolidated Financial Statements of the Company appearing elsewhere in this Prospectus and includes all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the quarterly results when read in conjunction with the Company's Consolidated Financial Statements. The Company's operating results have been subject to fluctuations, and thus results for any quarter are not necessarily indicative of results for any future period.
THREE MONTHS ENDED, -------------------------------------------------------------------------------------------------- APRIL 27, JULY 27, OCT. 26, JAN. 25, APRIL 26, JULY 26, OCT. 25, JAN. 31, MAY 2 1996 1996 1996 1997(1) 1997 1997 1997 1998 1998(2) --------- -------- -------- -------- --------- -------- -------- -------- -------- (IN THOUSANDS, EXCEPT PERCENTAGES AND PER SHARE DATA) CONSOLIDATED STATEMENTS OF OPERATIONS: Net sales............ $88,096 $88,225 $97,883 $111,536 $180,662 $183,274 $173,233 $198,276 $209,587 Gross profit......... 22,951 22,419 24,623 26,377 38,463 39,254 37,298 39,068 36,730 Income (loss) from operations......... 12,703 12,910 14,385 (62,443) 20,464 21,352 19,855 21,284 (53,793) Net income (loss).... 7,895 7,994 8,934 (69,161) 9,953 11,369 11,346 12,127 (59,739) Diluted net income (loss) per share... $ 0.71 $ 0.72 $ 0.81 $ (6.64) $ 0.91 $ 0.93 $ 0.84 $ 0.90 $ (4.54) AS A PERCENTAGE OF NET SALES: Gross profit......... 26.1% 25.4% 25.2% 23.6% 21.3% 21.4% 21.5% 19.7% 17.5% Income (loss) from operations......... 14.4 14.6 14.7 (56.0) 11.3 11.7 11.5 10.7 (25.7) Net income (loss).... 9.0 9.1 9.1 (62.0) 5.5 6.2 6.6 6.1 (28.5)
- --------------- (1) Net loss for the three months ended January 25, 1997 includes a non-recurring write-off relating to the Zycon Acquisition for acquired in-process research and development. Income from operations was $15,557,000, net income was $8,839,000, net income per share was $0.81 (based on weighted average shares outstanding of approximately 10,944,000), and, as a percentage of net sales, income from operations was 13.9% and net income was 7.9%, all before deducting the non-recurring write-off. (2) Net loss for the three months ended May 2, 1998 includes a non-recurring write-off relating to the Continental Acquisition for acquired in-process research and development, and for restructuring and other non-recurring expenses related to the consolidation of the Company's East Coast Tech Center operations. Income from operations was $15,204,000, net income was $6,894,000, net income per share was $0.51 (based on weighted average shares outstanding of approximately 13,545,000), and as a percentage of net sales, income from operations was 7.3% and net income was 3.3%, all before deducting such non-recurring write-off, charge for restructuring and other non-recurring expenses. The Company's results of operations have fluctuated and may continue to fluctuate from period to period, including on a quarterly basis. Variations in quick-turn prototype and volume production orders, in the average number of layers per printed circuit, and in the mix of products sold by the Company have significantly affected both net sales and gross profit. Gross profit declined to 17.5% in the three months ended May 2, 1998 from 21.3% in the three months ended April 26, 1997 primarily as a result of (i) costs related to increases in manufacturing capacity and the development of new technologies, and (ii) factors related to the Zycon and Continental Acquisitions. Operating results generally are also affected by other factors, including the timing and volume of orders from and shipments to customers relative to the Company's manufacturing capacity, product and price competition, product mix, the number of working days in a particular quarter, manufacturing process yields, the timing of expenditures in anticipation of future sales, raw material availability, the length of sales cycles, trends in the electronics industry and general economic factors. Many of these factors are outside the control of the Company. 35 42 The Company generally does not obtain long-term purchase orders or commitments from its customers, and a substantial portion of sales in a given quarter may depend on obtaining orders for products to be manufactured and shipped in the same quarter in which those orders are received. Sales for future quarters may not be predictable. The Company relies on its estimate of anticipated future volumes when making commitments regarding the level of business that it will seek and accept, the mix of products that it intends to manufacture, the timing of production schedules and the levels and utilization of personnel and other resources. A variety of conditions, both specific to the individual customer and generally affecting the customer's industry, may cause customers to cancel, reduce or delay orders that were previously made or anticipated. A significant portion of the Company's released backlog at any time may be subject to cancellation or postponement without penalty. The Company cannot assure the timely replacement of canceled, delayed or reduced orders. Significant or numerous cancellations, reductions or delays in orders by a customer or group of customers could materially adversely affect the Company's business, financial condition and results of operations. The Company's expense levels are relatively fixed and are based, in part, on expectations of future revenues. Consequently, if revenue levels are below expectations, the Company's business, financial condition and results of operations are likely to be materially adversely affected. Fluctuations in quarterly operating results could have a material adverse effect on the price of the Notes and on the cash flow of the Company necessary to pay amounts due on the Notes. See "Risk Factors -- Fluctuations in Quarterly Operating Results." LIQUIDITY AND CAPITAL RESOURCES In fiscal 1997, the Company's financing requirements were satisfied principally from cash flows from operations, bank borrowings and the sale of the Company's Common Stock. Cash provided by operating activities was $50.7 million, net bank borrowings were $60.2 million, and the proceeds from the sale of Common Stock were $131.1 million. These funds were used to meet increased working capital needs and to acquire Zycon for approximately $212 million (including acquisition costs), as well as for capital expenditures of $69.0 million. Net cash provided by (used in) operating activities for fiscal 1995, 1996 and 1997 was $36.3 million, $55.6 million and $50.7 million, respectively. In fiscal 1996 and 1997, cash from operating activities increased primarily due to increases in net income and depreciation. In fiscal 1997, cash used in operating activities consisted of the effects of a write-off of acquired in-process research and development, offset by increases in accounts receivable and inventories, both of which were affected by the Zycon Acquisition. Net cash used in investing activities was $(31.1) million, $(47.9) million and $(268.9) million in fiscal 1995, 1996 and 1997, respectively. In fiscal 1995 and 1996, investing activities consisted primarily of capital expenditures. In fiscal 1997, investing activities consisted primarily of the $209.7 million purchase (net of cash balance) of Zycon, and additional capital expenditures. Net cash provided by (used in) financing activities was $(3.0) million, $3.8 million and $197.6 million in fiscal 1995, 1996 and 1997, respectively. In fiscal 1995, cash used in financing activities was affected by principal payments of long-term debt and capital leases. In fiscal 1996, cash provided by financing activities was affected by a tax benefit from the exercise of options, partially offset by payments of capital leases. In fiscal 1997, cash provided by financing activities consisted primarily of borrowings under the Company's revolving credit facility and the cash proceeds from the sale of Common Stock which was used for the Zycon Acquisition. At May 2, 1998, the Company had working capital of $98.6 million and a current ratio of 1.80, compared to working capital of $53.7 million and a current ratio of 1.48 at October 25, 1997. Cash, cash equivalents and short-term investments at May 2, 1998 were $5.0 million, a decrease of $8.7 million from $13.7 million at October 25, 1997. The Company currently anticipates that its capital expenditures for fiscal 1998 will be in excess of $90 million, of which $17.8 million represents commitments to purchase manufacturing equipment and leasehold improvements. The majority of these capital expenditures is expected to be completed by the end of fiscal 1998. The amount of these anticipated capital expenditures will frequently change based on future changes in business plans and conditions of the Company and changes in economic conditions. 36 43 In December 1997, the Company negotiated the Credit Facility with various banks, which amended and restated an existing credit facility. Interest on loans outstanding under the Credit Facility is, at the Company's option, payable at either (1) the Base Rate (as defined in the Credit Facility), or (2) the Eurodollar Rate, plus the Applicable Eurodollar Rate Margin (both as defined in the Credit Facility). At May 2, 1998, $345 million was outstanding under the Credit Facility. As of May 2, 1998, the weighted average interest rate on loans outstanding under the Credit Facility was 6.56%. The Credit Facility expires and all outstanding loans thereunder mature on January 8, 2002. The Company used the $193.82 million in net proceeds from the sale of the Notes on May 18, 1998 to repay outstanding indebtedness under the Credit Facility. See "Use of Proceeds," "Description of Certain Indebtedness," and Note 7 of Notes to the Company's Consolidated Financial Statements. The Company believes its existing working capital and borrowing capacity, coupled with the funds generated from the Company's operations, and the net proceeds from the sale of the Original Notes, will be sufficient to fund its anticipated working capital, capital expenditure and debt payment requirements through fiscal 1998. Because the Company's capital requirements cannot be predicted with certainty, however, there is no assurance that the Company will not require additional financing during this period. There is no assurance that any additional financing will be available on terms satisfactory to the Company or not disadvantageous to the Company's security holders, including the holders of the Notes. YEAR 2000 COMPLIANCE The Company is reviewing the areas within its business and operations which could be adversely affected by Year 2000 issues and evaluating the costs associated with modifying and testing its systems for the Year 2000. Although the Company is not yet able to estimate its incremental cost for Year 2000 issues, based on its preliminary review to date, the Company does not believe Year 2000 issues will have a material adverse effect on the Company's business, financial condition or results of operations. The Company is also working with suppliers to ensure their systems are Year 2000 compliant as well. All costs associated with supplier compliance will be borne by the suppliers. NEW ACCOUNTING STANDARDS In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income. This Statement established standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. This Statement is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods provided for comparative purposes is required. This Statement, requiring only additional informational disclosures, is effective for the Company's fiscal year ending October 30, 1999. In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. This Statement established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that enterprises report selected information about operating segments in interim financial reports issued to stockholders. This Statement is effective for fiscal years beginning after December 15, 1997. In the initial year of application, comparative information for earlier years is to be restated. This Statement, requiring only additional informational disclosures, is effective for the Company's fiscal year ending October 30, 1999. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5 Reporting on the Costs of Start-Up Activities (SOP 98-5). SOP 98-5 provides guidance on the financial reporting of start-up activities and organization costs to be expensed as incurred. SOP 98-5 will not have a material impact on the Company's financial statements. 37 44 BUSINESS The following Business section contains forward-looking statements which involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, without limitation, those set forth under "Risk Factors" and elsewhere in this Prospectus. GENERAL Hadco is the largest manufacturer of advanced electronic interconnect products in North America. The Company offers a wide array of sophisticated manufacturing, engineering and systems integration services to meet its customers' electronic interconnect needs. The Company's principal products are multilayer rigid printed circuits and backplane assemblies. Printed circuits are the basic platforms used to interconnect microprocessors, integrated circuits and other components essential to the functioning of electronic systems. By working closely with customers at the design and prototype stage, the Company believes it strengthens long-term relationships with its customers and gains an advantage in securing a preferred vendor status when customers begin volume production. Hadco's largest customers include many of the leading companies in the electronics industry, such as Cabletron Systems, Compaq Computer, Hewlett-Packard, Lucent Technologies, Northern Telecom, Solectron and Sun Microsystems. Pro forma for the Acquisitions, in fiscal 1997 the Company's total revenues would have been approximately $830 million, and EBITDA would have been approximately $144 million. Hadco's advanced manufacturing and assembly facilities are designed to meet the accelerated time-to-market and time-to-volume requirements of its customers whose markets are characterized by high growth rates, rapid technological advances and short product life-cycles. During the past five fiscal years, Hadco, Continental and Zycon have invested approximately $342 million in production facilities and new technologies. Hadco provides customers with a broad range of products and services that includes development, design, quick-turn prototype, pre-production, volume production, and backplane assembly. Hadco is one of a small number of printed circuit manufacturers with the technology and advanced production facilities necessary to offer all of these services. The Company believes its combination of a broad product offering and advanced technological capabilities facilitates long-term relationships with existing customers, attracts new customers and helps customers meet their time-to-market and time-to-volume needs. Hadco's customers are a diverse group of electronics OEMs and contract manufacturers in the computing (mainly workstations, servers, mainframes, storage and notebooks), data communications/telecommunications and industrial automation industries, including process controls, automotive, medical and instrumentation. Hadco provided its products and services to a diverse base of approximately 560 customers in fiscal 1997 (approximately 590 customers pro forma for the Continental Acquisition), including approximately 77 customers with purchases in excess of $1 million (approximately 85 customers pro forma for the Continental Acquisition). The Company's ten largest customers accounted for approximately 47% of net sales in fiscal 1997. On March 20, 1998, Hadco acquired all of the outstanding capital stock of Continental, a manufacturer of multilayer printed circuits, for approximately $188 million (including acquisition costs). On January 10, 1997, Hadco acquired all of the outstanding capital stock of Zycon, a manufacturer of multilayer printed circuits and backplane assemblies, for approximately $212 million (including acquisition costs). Pro forma for the Acquisitions, Continental and Zycon would have added approximately $396 million to Hadco's fiscal 1997 net sales. The Acquisitions also added approximately 865,000 square feet of manufacturing space (approximately a 129% increase) and substantially expanded Hadco's geographic reach. The Continental Acquisition added facilities for volume production of multilayer printed circuits in Phoenix, Arizona, a quick-turn prototype facility in Austin, Texas, and a flexible printed circuit manufacturing facility and printed circuit engineering and design operation in California. The Zycon Acquisition added facilities for volume production of multilayer printed circuits and backplane assemblies in the Silicon Valley area, a quick-turn prototype and design facility in Haverhill, Massachusetts, and a newly constructed facility for volume production of printed circuits in Malaysia. The Acquisitions have also broadened the Company's customer base, expanded its 38 45 involvement in many fast growing industry sectors, added new proprietary technologies, and increased the size of its sales force. INDUSTRY OVERVIEW AND TRENDS Printed circuits are the basic platforms used to interconnect microprocessors, integrated circuits and other components essential to the functioning of electronic products. Printed circuits consist of a pattern of electrical traces etched from copper laminated on an insulated base that is typically composed of rigid fiberglass or thin flexible circuits. To meet the increasing requirements of OEMs and contract manufacturers, printed circuit manufacturers have developed more complex multilayer designs with surface mount and other attachment technologies, narrower widths and separations of copper traces, advanced materials, and smaller diameters of vias and through-holes to connect internal circuitry. Backplane assemblies are generally larger and thicker printed circuits on which connectors are mounted to receive and interconnect printed circuits, integrated circuits and other electronic components. Electronic interconnect products are customized for specific electronic applications and are sold to OEMs and contract manufacturers in volumes that range from several units for prototypes and small quantities for pre-production to large quantities for volume production. In the 1980s, the electronic interconnect market was largely comprised of military and computer applications, and was characterized by periods of cyclicality. However, the proliferation of electronics and the emergence of new technologies have significantly broadened this market and reduced the amplitude of interconnect industry cycles in the 1990s. Electronic interconnects such as rigid printed circuits, flexible circuits and backplane assemblies are now used in a wide variety of industries and products, including data communications/telecommunications, workstations, servers, personal computers, peripherals, industrial automation, instrumentation, medical, transportation and defense. As electronic products have become smaller and more complex, the manufacture of interconnect products has required increasingly sophisticated engineering and manufacturing expertise and substantial capital investment. These advanced manufacturing process and technology requirements have caused OEMs to rely more heavily on independent manufacturers and to reduce dependence on their internal captive facilities. Industry sources estimate that approximately 93% of the domestic printed circuit market was served by independent manufacturers in 1997 (compared to approximately 71% in 1992). Captive manufacturing facilities serve the remaining approximately 7% of the market. Historically, electronics OEMs used independent printed circuit manufacturers as offload capacity for their captive facilities. During economic downturns, independent facilities lost production orders as captives produced a greater percentage of demand internally. However, as a result of outsourcing of OEM printed circuit production, the Company believes independents are less affected by unused captive capacity during market downturns than was previously the case. In 1997, the worldwide market for rigid printed circuits was $29.4 billion, and the domestic market for rigid printed circuits was $7.9 billion. In addition, higher layer count rigid printed circuits (eight layers and above) constituted approximately 40% of the total United States market in 1997, and has increased at an annual compounded growth rate of 16% over the past two years, compared to approximately 11% for the overall printed circuit market. The need for expanded service offerings, advanced technological capabilities and broader geographic scope has led to consolidation in recent years, reducing the number of printed circuit manufacturers in North America from approximately 950 in 1992 to approximately 550 in 1997. Although the printed circuit market has been experiencing consolidation over the past several years, it remains fragmented. Of the approximately 550 rigid printed circuit manufacturers in the United States in 1997, only seven had revenues in excess of $100 million. According to industry sources, the domestic market for backplane assemblies was approximately $1.2 billion in 1997. As in the printed circuit market, OEMs have increasingly come to rely on independent producers of backplane assemblies, allowing OEMs to reduce their capital investments, improve inventory management and purchasing power and take advantage of the process technology expertise of manufacturing specialists. 39 46 The Company considers the following trends important in understanding the electronic interconnect industry: Industry Consolidation. The Company believes the industry will continue to consolidate as a result of the substantial capital investment for advanced production facilities, engineering and manufacturing expertise and technology required to make increasingly sophisticated electronic interconnect products. The increased investment requirement for state-of-the-art production facilities has accelerated consolidation in the electronic interconnect industry and the exit of smaller companies. In addition, OEMs and contract manufacturers increasingly recognize that only a few suppliers of interconnect products can consistently provide timely delivery of required volumes of highly sophisticated electronic interconnect products. As a result, Hadco believes that companies with lesser financial and technical resources are likely to exit the industry and larger interconnect companies with sufficient resources will continue to gain market share. Increasing Demand for Single Sourcing. To avoid delays and costs during the product life-cycle, OEMs are increasingly turning to suppliers capable of producing electronic interconnect products from development, design, quick-turn prototype and pre-production through volume production, and backplane assembly. The accelerated time-to-market and time-to-volume needs of OEMs have resulted in increased collaboration with qualified suppliers capable of providing a broad and integrated offering. To meet their rapidly changing electronic interconnect requirements, many OEMs have moved to limit their vendor base to a smaller number of technically qualified suppliers capable of providing both quick-turn prototype and pre-production quantities as well as cost-competitive volume production quantities. New and Emerging Markets. The markets for electronic products are growing as a result of new product introductions, technological change, demands for a wider variety of electronic product features, and increasingly powerful and less expensive electronic components. New markets have emerged in computing, data communications/telecommunications and multimedia. Moreover, existing industries have significantly expanded applications in areas such as computer networking and peripherals, digital and mobile communications, video-on-demand, the Internet/World Wide Web, instrumentation and industrial controls. The Company believes these new and emerging electronic product markets and applications have also contributed to the reduction in the amplitude of the electronic interconnect industry cycles. Greater Demand for Complex Electronic Products. Advanced communication equipment, as well as next-generation computer chips and microprocessors, require interconnect systems that operate at greater speeds and higher frequencies with minimal signal loss and distortion. Further, electronics OEMs are designing more compact and portable high performance products. The complexity of these new products requires higher performance, smaller size, greater circuit and component density, and increased reliability. These requirements necessitate greater sophistication in printed circuit manufacturing and process technologies, including advanced materials, more layers, narrower line widths and spacing, smaller vias to connect internal circuitry, and more precise positioning of traces and pads to accommodate a greater density of surface mount components. These products require increasingly advanced packaging technologies, such as Multichip Module (MCM), Tape Automated Bonding (TAB), Direct Chip Attach (DCA), High Density Interposers (HDI), Ball Grid Array (BGA), and high frequency materials. The trend toward increasingly sophisticated products also requires greater engineering support and investment in manufacturing and process technology for suppliers to produce high-quality electronic interconnect products on-time, in volume, and at acceptable cost. Shorter Product Life-Cycles for Electronic Products. Rapid changes in technology have significantly shortened the life-cycle of complex electronic products and placed increased pressure on OEMs to develop new products as quickly as possible. The time-to-market considerations of OEMs have increased emphasis on the engineering and quick-turn production of small unit volumes of electronic interconnects in the prototype development stage. In addition, the success of first-to-market products has heightened the emphasis on volume manufacturing expertise and technologically advanced manufacturing infrastructure. 40 47 STRATEGY The Company's strategy is to increase sales and profitability by providing a wide range of electronic interconnect solutions and services to a broad and diversified customer base and by capitalizing on major industry trends as follows: Provide a Broad and Integrated Offering. Hadco develops and maintains long-term customer relationships by providing a full range of integrated services, from development, design, quick-turn prototype and pre-production through volume printed circuit production and backplane assembly. The Company believes its broad range of integrated services provides significant value to its customers by shortening their new product development cycles, helping them to meet their time-to-market and time-to-volume requirements, lowering manufacturing costs, and providing technological expertise. By working closely with customers at the design and prototype stage, the Company believes it strengthens long-term relationships with its customers and gains an advantage in securing a preferred vendor status when customers begin volume production. Serve Diversified Customer Base in High Growth Segments. The Company concentrates its marketing efforts on OEMs and contract manufacturers serving OEMs in segments of the electronics market characterized by high growth, rapid technological advances, short product development cycles and accelerated time-to-market and time-to-volume requirements. To more fully support its strategy of developing a large and diversified customer base, the Company intends to offer certain large customers single points of contact to service their needs on a global basis, and the Company is focusing on the further development of its international sales force. Develop Advanced Manufacturing and Process Technologies. The Company is committed to remaining a leader in the development of advanced materials and sophisticated process technologies that enable it to cost-effectively produce reliable and technologically advanced products. The Company believes its manufacturing and process capabilities provide a significant competitive advantage and is committed to continuous improvement to maintain its leadership position. Maintain High Levels of Investment. Hadco believes its significant ongoing investment in production technology allows it to maintain a leadership position in the development of advanced material and process technologies. The Company has made substantial investments in production facilities and new technologies during the past five fiscal years that have increased capacity and operating efficiencies, improved management control and provided more consistent product quality. As a result, the Company believes it is one of the few interconnect manufacturers capable of satisfying the full range of volume production, time-to-market, time-to-volume and technology requirements of customers in the electronics industry. Expand Backplane Assembly Operations. In recent years, to extend its integrated offering, the Company has expanded its backplane assembly operations, thereby broadening its range of manufacturing services, reducing customer costs and improving product quality. With this backplane assembly expansion, the Company is well positioned to capture an increasing share of the full range of interconnect requirements of its customers. Pursue Strategic Acquisitions. The Company will consider strategic acquisitions of companies and technologies that enhance its competitive position, build economies of scale and help fulfill its other strategic objectives. In evaluating possible acquisition candidates, the Company considers, among other things, the opportunity for synergistic product offerings, complementarity of client base, new technological capabilities and potential for increased geographic reach. Increase Geographic Reach. Hadco has pursued a strategy of expanding the capacity and geographic scope of its manufacturing facilities to better serve high growth segments of the electronics industry in key geographic markets. Hadco believes it is the only independent North American printed circuit manufacturer with a full service offering of design, quick-turn prototype and volume printed circuit manufacturing and backplane assembly on both the East and West Coasts. In addition, its volume production facility in Malaysia, which commenced operations in fiscal 1997, is intended to provide the Company with access to U.S. customers expanding into Asian markets. The Company also intends to broaden its presence in Europe and other international markets. 41 48 PRODUCTS AND SERVICES The Company's products and services are designed to meet its customers' electronic interconnect needs for complex multilayer printed circuits and backplane assemblies. Hadco offers complementary processes and capabilities that begin with product conception and continue through delivery of volume products. The Company's products and services include the following: Development. Through development groups located at various facilities, Hadco identifies, develops and markets new technologies that benefit its customers. These development groups work closely with customers during all stages of product life-cycles. For instance, process design changes and refinements required for volume production are identified and implemented prior to production. The development groups also focus on the special requirements of the Company's customers, including increasing printed circuit densities, electronic packaging and advanced materials and products. When appropriate, the development groups have coordinated the acquisition of technology licenses, filed patent disclosures and applications, and registered trademarks on behalf of the Company. Design. The Company provides design and engineering assistance in the early stages of product development which assures both mechanical and electrical considerations are integrated to achieve a high quality and cost effective product. The Company also evaluates customer designs for manufacturability and, when appropriate, recommends design changes to reduce manufacturing costs or lead times or to increase manufacturing yields or the quality of finished printed circuits. The Company believes that this long-term view of manufacturing and customer relationships distinguishes the Company from many manufacturers which compete primarily in the quick-turn market. By working closely with its customers, the Company also gains a better understanding of the future requirements of OEMs. This cooperative process shortens the time in transition from the development of the prototype design to volume manufacturing and facilitates the delivery of high quality products to customer premises in a timely fashion. The Company's recent acquisition of Continental added Continental's PCA Design division, which provides circuit design and engineering services. Quick-Turn Prototype. Prototypes typically require lead times of three to seven days, and as short as 24 hours. The Company provides quick-turn prototype services to the product development groups of customers that require small test quantities. Hadco offers these services through its Tech Centers in New Hampshire, California, Massachusetts and Texas. Prototype development at these Centers has included multilayer printed circuits of up to 48 layers, embedded discrete components, Multichip Modules (MCM), Single Chip Carriers (SCC), planar magnetics, advanced surface finishes, and various high performance substrates for the high frequency microwave market. The Tech Centers also support advanced attachment technologies such as Tape Automated Bonding (TAB), Direct Chip Attach (DCA) and High Density Interposers (HDI). In combining the design of a printed circuit with the manufacture of the prototype, Hadco can reduce the length of the design/manufacture cycle. By working closely with customers at the design and prototype stage, the Company believes it strengthens long-term relationships with its customers and gains an advantage in securing a preferred vendor status when customers begin volume production. Pre-Production. Pre-production is the manufacture of limited quantities of electronic interconnects during the transition period from prototype to volume production. Pre-production generally requires quick-turn delivery to accommodate time-to-volume pressures or as a temporary solution for unforeseen customer demands. Pre-production is done in the Tech Centers and in volume production facilities. Volume Production. Volume production is characterized by longer lead times and increased emphasis on lower cost as the product moves to full-scale commercial production. As customers increasingly demand a quick transition from prototype to volume production, few independent manufacturers can provide complex printed circuits of 18 or more layers in the volume provided by Hadco's larger facilities. During 1996, the Tech Centers transitioned chip attachment technologies such as Ball Grid Array (BGA), Tape Automated Bonding (TAB), Direct Chip Attach (DCA), High Density Interposers (HDI), and other technologies including Multichip Module (MCM) and Single Chip Carriers (SCC) to volume production. The Company operates six facilities located in Arizona, California, New York, New Hampshire and Malaysia for medium and high-volume printed circuit production. 42 49 Backplane Assembly. Backplane assemblies are generally larger and thicker printed circuits on which connectors are mounted to interconnect printed circuits, integrated circuits and other electronic components. Hadco incorporates its own printed circuits in backplane assemblies to provide customers with a high level of printed circuit technology on a quick-turn and volume basis. Net sales of backplane assemblies accounted for approximately 7%, 17% and 11% of total Company net sales during fiscal 1995, 1996 and 1997, respectively, and for approximately 8% on a pro forma basis including Continental during fiscal 1997. With its backplane assembly operations, Hadco is one of a few companies that provides its customers with the advantage of an integrated offering to meet their needs from development and design through volume production and backplane assembly. The Company's advanced process capabilities enhance each of the above services and include: Manufacture of High Performance Printed Circuits. The Company produces technologically advanced printed circuits primarily for the high performance market at the Tech Centers and its volume production facilities. These printed circuits, used principally in the data communications and telecommunications industries, are designed to function in high temperature environments and at higher frequencies. Materials used by the Company for these products include Teflon(R), cyanate ester, GETEK(R), liquid crystal polymers, polymides, and bismaleimide triazine epoxies. Development of Emerging Technologies. The Company undertakes projects to develop advanced or improved processes, materials and product lines. Buried Capacitance(TM) and buried resistance are advanced materials being developed by the Company to provide improved electrical performance and greater interconnect densities. Sales of Buried Capacitance(TM) products by the Company in fiscal 1997 totaled $31.7 million. In addition, the Company is developing the microPath(TM) family of micro via processes, which include liquid imaging, dry film imaging, plasma etching, and laser drilling. Micro vias provide a significant increase in printed circuit density. The Continental Acquisition also added PCA Design's micro via design methodology. During fiscal 1996, the Company also began to produce rigid flex printed circuit products utilizing licensed HVRFlex(TM) technology. These products enable customers to fold a printed circuit and reduce the need for cable connectors in the portable computer and telecommunications markets. See "--Manufacturing and Facilities." MARKETS AND CUSTOMERS Hadco's customers are a diverse group of OEMs and contract manufacturers in the computing (mainly workstations, servers, mainframes, storage and notebooks), data communications/telecommunications and industrial automation industries, including process controls, automotive, medical and instrumentation. The following table shows, for the periods indicated, the Company's net sales and percentage of its net sales to the principal end-user markets it serves. The pro forma information in the table includes Continental.
FISCAL YEAR ENDED, ----------------------------------------------------------------- OCTOBER 25, OCTOBER 28, OCTOBER 26, OCTOBER 25, 1997 MARKETS 1995 1996 1997 PRO FORMA ------- ------------- ------------- ------------- -------------- (DOLLARS IN MILLIONS) Computing............................. $ 84.9 32% $119.2 34% $205.0 32% $291.6 35% Contract Assembly..................... 69.0 26 112.2 32 289.2 44 339.7 41 Data Communications/ Telecommunications.................. 90.2 34 94.7 27 119.1 18 139.5 17 Industrial Automation................. 15.9 6 17.5 5 24.8 4 44.0 5 Other................................. 5.2 2 7.1 2 10.5 2 15.7 2 ------ --- ------ --- ------ --- ------ --- Total Net Sales.............. $265.2 100% $350.7 100% $648.6 100% $830.5 100% ====== === ====== === ====== === ====== ===
The Company supplied its products and services to a diverse base of approximately 560 customers in fiscal 1997 (approximately 590 customers pro forma for the Continental Acquisition), including approximately 77 customers with purchases in excess of $1 million (approximately 85 customers pro forma for the Continental Acquisition). The Company attempts to market its products to customers who currently have, or 43 50 have the potential to achieve, significant market share in their respective industries. The following lists the Company's largest customers during fiscal 1997: Cabletron Systems Celestica Cisco Systems Compaq Computer Hewlett-Packard Jabil Circuits Lucent Technologies Northern Telecom RSP Manufacturing SCI Systems Solectron Sun Microsystems During fiscal 1995, 1996 and 1997, no customer accounted for more than approximately 7%, 15% and 15%, respectively, of Hadco's net sales. In fiscal 1997, one customer, Solectron, accounted for approximately 15% of the net sales of the Company (approximately 13% pro forma for the Continental Acquisition). The Company's ten largest customers together accounted for approximately 46%, 48% and 47%, respectively, during the same periods. The Company generally does not obtain long-term purchase orders or commitments from its customers, and the orders received by the Company generally require delivery within 90 days. However, many of the Company's customers have maintained long-term purchasing relationships with the Company. See "Risk Factors -- Variability of Orders." Pro forma for the Acquisitions, approximately 17% of the Company's net sales in fiscal 1997 were attributable to sales outside of the United States, principally in Canada and Europe. The Company currently intends to expand its sales efforts outside of the United States. SALES AND MARKETING The Company markets its products through its own sales and marketing organization and independent manufacturers' representatives. As of May 2, 1998, the Company employed 166 sales and marketing employees, of which 85 are direct sales representatives. The Company is also represented by 12 independent manufacturers' representatives in North America, Europe, Mexico, Asia, Australia and the Middle East. Regional direct sales offices are located in Arizona, California, Colorado, Georgia, Minnesota, New Hampshire, North Carolina, Oregon, Pennsylvania, Texas and Canada. The Company's sales organization is divided into four territories, and each direct sales representative and each manufacturer's representative works within one of the four territories. Each territory also has a support staff of sales engineers and technical service personnel responsible for technical liaison and problem solving, development of product and market opportunities, market research and marketing communications. The Company focuses on developing close relationships with customers beginning at the earliest development and design phases and continuing throughout all stages of product production. The Company's Advanced Packaging Development Group identifies, develops and markets new technologies that benefit its customers and is intended to position the Company as an important source for these solutions. This group also assists marketing efforts by hosting the Regional Technology Symposiums at which the Company's technical capabilities are presented to, and industry technical trends are discussed with, customers of the Company. MANUFACTURING AND FACILITIES The need for high volume production of dense multilayer printed circuits has transformed the electronic interconnect industry into one that increasingly requires complex manufacturing processes and necessitates high levels of investment in facilities, advanced materials, production processes and product design capabilities. The Company has invested in production technology to manufacture large volumes of dense multilayer printed circuits utilizing advanced attachment strategies such as Surface Mount Technology (SMT), Tape Automated Bonding (TAB), High Density Interposers (HDI) and Ball Grid Array (BGA). The Company employs numerous advanced manufacturing techniques and systems, including Computer Aided Manufacturing (CAM) systems, Computer Integrated Manufacturing (CIM) systems, computer controlled drilling and routing, dry-film imaging, multi-purpose metals plating, high-volume surface coating, dual-access electrical 44 51 testing, automated optical inspection, high-volume photoimageable solder mask processing, and computer controlled high-volume lamination systems. These techniques enable the Company to manufacture complex printed circuits of consistent quality, in high-volume and on a timely basis. All of the Company's North American production facilities are ISO9002 certified. See "--Products and Services." Hadco has pursued a strategy of expanding the capacity and geographic scope of its manufacturing facilities to better serve high growth segments of the electronics industry in key geographic markets. With the acquisition of Continental in March 1998, the Company added a volume manufacturing facility totaling 229,000 square feet in Arizona, a 30,000 square foot quick-turn prototype facility in Texas, and a 16,000 square foot flexible printed circuit manufacturing facility in California. With the acquisition of Zycon in January 1997, the Company added a 310,000 square foot volume production facility in California, a 180,000 square foot volume production facility in Malaysia, a 71,000 square foot quick-turn prototype facility in Massachusetts and a 29,000 square foot backplane assembly facility in California. In total, the Company currently leases or owns approximately 1.5 million square feet of manufacturing space. The Company's facilities are as follows:
FUNCTION LOCATION SQUARE FEET -------- ---------------------------- ----------- Volume Production.................................. Santa Clara and San Jose, CA 310,000* Owego, NY 292,000 Phoenix, AZ 229,000 Derry, NH 200,000 Kuching, Malaysia 180,000 Hudson, NH 54,000 Quick-Turn Prototype............................... Haverhill, MA 71,000 Watsonville, CA 35,000 Austin, TX 30,000 Salem, NH 27,000** Backplane Assembly................................. Salem, NH 60,000 Santa Clara, CA 29,000 Administrative..................................... Salem, NH 35,000*** Santa Clara, CA 29,000 Phoenix, AZ 21,000
- --------------- * Does not include the 16,000 square foot flexible printed circuit facility in San Jose, CA. ** A consolidation of this facility with the Haverhill, MA facility is underway and is currently expected to be completed during the second half of fiscal 1998. *** Under renovation. The Company owns its volume production facilities in Owego, New York, Derry, New Hampshire, Hudson, New Hampshire and Phoenix, Arizona. The Company leases its volume production and backplane assembly facilities in Santa Clara and San Jose, California, which are located in four adjacent buildings; the leases for these four buildings expire in March 2009, and contain options to extend for up to two additional periods of five years each. Construction of the volume production facility in Kuching, Malaysia was completed in calendar 1996; the Company leases the land on which this facility is located for a period of 60 years, expiring in November 2055. The Hudson, New Hampshire operations are located in two separate buildings, one of which, containing 41,300 square feet, is owned by the Company, and the second of which, containing 12,700 square feet, is leased with the lease expiring in December 2000, with options to extend through December 2009. Leases for the Company's quick-turn prototype facility in Haverhill, Massachusetts expire in December 2003, with options on two of the leases to extend for an additional five years and options on the third lease to extend for an additional ten years. The lease for the Watsonville, California quick-turn prototype facility expires in December 1999, with options to extend until December 2011. The lease for the quick-turn prototype facility in Salem, New Hampshire expires in May 1999, with an option to extend until May 2004. The lease 45 52 for the quick-turn prototype facility in Austin, Texas expires in March 2004, with options to extend until March 2014. The lease for the backplane assembly facility in Salem, New Hampshire expires in May 2005, with options to extend until May 2011. The leases for the Santa Clara, California buildings include the 29,000 square feet of backplane assembly operations. As a result of the Continental Acquisition, the Company also leases a flexible printed circuit manufacturing facility in San Jose, California and a circuit design and engineering services facility in Saratoga, California. The San Jose lease expires in December 2000, and the Saratoga lease expires in November 2001, with an option to extend until November 2006. The administrative and corporate offices in Salem, New Hampshire are located in three separate buildings, one of which is covered by a lease expiring in May 2003 with options to extend until May 2008, the second of which is covered by a lease expiring in May 2008, and the third of which is a sublease expiring in July 2003, with options to extend until July 2009. The leases for the Santa Clara, California buildings include the 29,000 square feet of administrative space. The Phoenix, Arizona facilities include 21,000 square feet of administrative and office space. Additionally, the Company owns approximately six acres of land in Salem, New Hampshire, approximately five acres of land in Derry, New Hampshire, approximately 29 acres of land in Owego, New York, and approximately four acres of land in Phoenix, Arizona. In fiscal 1997, the Company's capital expenditures relating to its environmental control facilities and equipment totaled approximately $841,000. The Company estimates that it will make capital expenditures with respect to its environmental control facilities and equipment of approximately $6.6 million and $6.5 million in fiscal 1998 and 1999, respectively. SUPPLIER RELATIONSHIPS Historically, the majority of raw materials used in the Company's manufacture of printed circuits and components used in backplane assemblies have been readily available. However, product changes and the overall demand for electronic interconnect products could increase the industry's use of new laminate materials, standard laminate materials, multilayer blanks, electronic components and other materials, and therefore such materials may not be readily available to the Company in the future. Zycon has experienced shortages of certain types of raw materials in the past. The Company believes that the potential exists for a shortage of materials in the printed circuit and electronic assembly industries which could have a material adverse effect on future unit costs. In response to such concerns, the Company engages in the normal industry practices of maintaining primary and secondary vendors and diversifying its customer base. There can be no assurances, however, that such measures will be sufficient to protect the Company against any shortages of materials. Further, there can be no assurances that shortages of certain types of raw materials or components will not occur in the future. To date, material shortages or price fluctuations have not had a materially adverse effect on the Company, but there can be no assurance that material shortages or price fluctuations will not have a material adverse effect on the Company in the future. See "Risk Factors -- Availability of Raw Materials and Components." The Company works with its suppliers to develop just-in-time supply systems which reduce inventory carrying costs. The Company also maintains a Supplier Certification Program which evaluates potential vendors on the basis of such factors as quality, on-time delivery, cost, technical capability, and potential technical advancement. Certification is based on both actual performance and audits of vendors' manufacturing sites. Key suppliers are reviewed quarterly to preserve strong relationships with these suppliers and maintain regular dialogue on quality, cost and technical advancement issues. Many suppliers attend the Company's Supplier Symposium, where the Company's goals and objectives are discussed with vendors. See "Management's Discussion and Analysis of Financial Condition and Results of Operations." 46 53 COMPETITION The electronic interconnect industry is highly fragmented and characterized by intense competition. The Company believes that its major competitors are the large U.S. and international independent and captive producers that also manufacture multilayer printed circuits and provide backplane and other electronic assemblies. Some of these competitors have significantly greater financial, technical and marketing resources, greater name recognition and a larger installed customer base than the Company. In addition, these competitors may have the ability to respond more quickly to new or emerging technologies, may adapt more quickly to changes in customer requirements and may devote greater resources to the development, promotion and sale of their products than the Company. During periods of recession or economic slowdown in the electronics industry and other periods when excess capacity exists, electronics OEMs become more price sensitive, which could have a material adverse effect on interconnect pricing. In addition, the Company believes that price competition from printed circuit manufacturers in Asia and other locations with lower production costs may play an increasing role in the printed circuit markets in which the Company competes. This price competition from Asian printed circuit manufacturers may intensify as a result of economic turmoil, currency devaluations or financial market instability that many Asian countries are currently experiencing. The Company's basic interconnect technology is generally not subject to significant proprietary protection, and companies with significant resources or international operations may enter the market. Increased competition could result in price reductions, reduced margins or loss of market share, any of which could materially adversely affect the Company's business, financial condition and results of operations. The demand for printed circuits has continued to be affected by the development of smaller, more powerful electronic components requiring less printed circuit area. Expansion of the Company's existing products or services could expose the Company to new competition. Moreover, new developments in the electronics industry could render existing technology obsolete or less competitive and could potentially introduce new competition into the industry. There can be no assurance that the Company will continue to compete successfully against present and future competitors or that competitive pressures faced by the Company will not have a material adverse effect on the Company's business, financial condition and results of operations. Hadco competes on the basis of product quality, timeliness of delivery, price, customer technical support and its integrated offering, from development and design through volume production and backplane assembly. PRODUCT PROTECTION The Company has obtained eleven United States and 21 foreign patents. Although Hadco seeks to protect certain proprietary technology and other intangible assets through patents and trademark filings, it has relatively few patents and relies primarily on trade secret protection. There can be no assurance that the Company will be able to protect its trade secrets or that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to the Company's trade secrets. The future success of the Company will depend on the continued development of processes and capabilities. The Company believes that its accumulated experience with respect to materials and process technology is also important to its operations. See "Business -- Legal Proceedings and Claims." RELEASED BACKLOG The Company's released backlog as of May 2, 1998 was $125.6 million, compared with $144.4 million as of April 26, 1997. The Company anticipates delivering approximately 82% of this released backlog during its third quarter of fiscal 1998. Released backlog consists of orders for which artwork has been received, a delivery date has been scheduled and the Company anticipates it will manufacture and deliver the order. Cancellation and postponement charges, to the extent they exist with respect to released backlog, generally vary depending upon the time of cancellation or postponement, and a significant portion of the Company's released backlog at any time may be subject to cancellation or postponement without penalty. Variations in the size, timing and delivery schedules of purchase orders received by the Company, as well as changes in customers' delivery 47 54 requirements, may result in substantial fluctuations in released backlog from period to period. Accordingly, the Company believes that released backlog is not a meaningful indicator of future quarterly or annual financial results. EMPLOYEES As of May 2, 1998, the Company had 7,951 employees, compared to 5,611 employees as of April 26, 1997. The employees are not represented by a union, and the Company has never experienced any labor problems resulting in a work stoppage. ENVIRONMENTAL MATTERS The Company is required to comply with all federal, state, county and municipal regulations regarding protection of the environment. There can be no assurance that more stringent environmental laws will not be adopted in the future and, if adopted, the costs of compliance with more stringent environmental laws could be substantial. Waste treatment and disposal are major considerations for printed circuit manufacturers. The Company uses chemicals in the manufacture of its products that are classified by the Environmental Protection Agency (EPA) as hazardous substances. The Company is aware of certain chemicals that exist in the ground at certain of its facilities. The Company has notified various governmental agencies and continues to work with them to monitor and resolve these matters. During March 1995, the Company received a Record Of Decision (ROD) from the New York State Department of Environmental Conservation (NYSDEC), regarding soil and groundwater contamination at its Owego, New York facility. Based on a Remedial Investigation and Feasibility Study (RIFS) for apparent on-site contamination at that facility and a Focused Feasibility Study (FFS), each prepared by environmental consultants of the Company, the NYSDEC has approved a remediation program of groundwater withdrawal and treatment and iterative soil flushing. The Company has executed a Modification of the Order on Consent to implement the approved ROD. The cost, based upon the FFS, to implement this remediation is estimated to be $4.6 million, and is expected to be expended as follows: $260,000 for capital equipment and $4.3 million for operation and maintenance costs which will be incurred and expended over the estimated life of the program of 30 years. NYSDEC has notified the Company that it will take additional samples from a wetland area near the Company's Owego facility. Analytical reports of earlier sediment samples indicated the presence of certain inorganics. There can be no assurance that the Company and/or other third parties will not be required to conduct additional investigations and remediation at that location, the costs of which are currently indeterminable due to the numerous variables described in the fifth paragraph of this "-- Environmental Matters" section. From 1974 to 1980, the Company operated a printed circuit manufacturing facility in Florida as a lessee of property that is now the subject of a pending lawsuit (the "Florida Lawsuit") and investigation by the Florida Department of Environmental Protection (FDEP). Hadco and others are participating in alternative dispute resolution regarding the site with an independent mediator. In connection with the mediation, in February 1992 the FDEP presented computer-generated estimates of remedial costs, for activities expected to be spread over a number of years, that ranged from approximately $3.3 million to $9.7 million. Mediation sessions were conducted in March 1992 but were then suspended during ongoing assessment and feasibility activities. On June 9, 1992, the Company entered into a Cooperating Parties Agreement in which it and Gould, Inc., another prior lessee of the site, agreed to fund certain assessment and feasibility study activities at the site. The cost of such activities is not expected to be material to the Company. Management believes it is likely that it will participate in implementing a continuing remedial program for the site, the costs of which are currently unknown. In June 1995, Hadco was named a third-party defendant in the Florida Lawsuit. See "-- Legal Proceedings and Claims." The Company has commenced the operation of a groundwater extraction system at its Derry, New Hampshire facility to address certain groundwater contamination and groundwater migration control issues. Further investigation is underway to determine the areal extent of the groundwater contaminant plume. Because of the uncertainty regarding both the quantity of contaminants beneath the building at the site and the long-term effectiveness of the groundwater migration control system the Company has installed, it is not possible to make a reliable estimate of the length of time remedial activity will have to be performed. 48 55 However, it is anticipated that the groundwater extraction system will be operated for at least 30 years. There can be no assurance that the Company will not be required to conduct additional investigations and remediation relating to the Derry facility. The total costs of such groundwater extraction system and of conducting any additional investigations and remediation relating to the Derry facility are not fully determinable due to the numerous variables described in the fifth paragraph of this "-- Environmental Matters" section. The City of Santa Clara adopted an ordinance that, as of April 1, 1997, reduced the amount of waste, including copper and nickel, that companies such as the Company may discharge into the city sanitary sewer. The ordinance provides for substantial penalties for intentional or negligent violations. These penalties include fines ranging from $10,000 to $50,000 per day, revocation of required business permits, the issuance of a cease and desist order and, under certain circumstances, up to nine months' imprisonment. Under the ordinance, the Company is subject to stringent requirements on the amount of water it can discharge. The concentration limit for Hadco's copper discharge was reduced from 2.70 milligrams per liter to 1.02 milligrams per liter, and the concentration limit for Hadco's nickel discharge was reduced from 2.60 milligrams per liter to 0.15 milligrams per liter. The Company believes it is currently in compliance with the new discharge limits. The Company accrues estimated costs associated with known environmental matters, when such costs can be reasonably estimated. The cost estimates relating to future environmental clean-up are subject to numerous variables, the effects of which can be difficult to measure, including the stage of the environmental investigations, the nature of potential remedies, possible joint and several liability, the magnitude of possible contamination, the difficulty of determining future liability, the time over which remediation might occur, and the possible effects of changing laws and regulations. Management believes the ultimate disposition of above known environmental matters described in this "-- Environmental Matters" section will not have a material adverse effect upon the liquidity, capital resources, business or consolidated financial position of the Company. However, one or more of such environmental matters could have a significant negative impact on the Company's consolidated financial results for a particular reporting period. See "Management's Discussion and Analysis of Results of Operations and Financial Condition" and Note 9 of Notes to the Company's Consolidated Financial Statements. The Company plans additional capital expenditures during fiscal 1998 to further reduce air emissions and reduce waste generation. See discussion under "-- Manufacturing and Facilities" concerning the Company's capital expenditures relating to environmental control facilities and equipment, and under "-- Legal Proceedings and Claims" relating to lawsuits regarding environmental matters. LEGAL PROCEEDINGS AND CLAIMS The Company is one of 33 entities which have been named as potentially responsible parties in a lawsuit pending in the federal district court of New Hampshire concerning environmental conditions at the Auburn Road, Londonderry, New Hampshire landfill site. Local, state and federal entities and certain other parties to the litigation seek contribution for past costs, totaling approximately $20 million, allegedly incurred to assess and remediate the Auburn Road site. In December 1996, following publication and comment period, the EPA amended the ROD to change the remedy at the Auburn Road site from active groundwater remediation to future monitoring. Other parties to the lawsuit also allege that future monitoring will be required. The Company is contesting liability, but is participating in mediation with 27 other parties in an effort to resolve the lawsuit. In connection with the Florida Lawsuit pending in the Circuit Court for Broward County, Florida (described above under "-- Environmental Matters"), each of Hadco and Gould, Inc., another prior lessee of the site of the printed circuit manufacturing facility in Florida, was served with a third-party complaint in June 1995, as third-party defendants in such pending Florida Lawsuit by a party who had previously been named as a defendant when the Florida Lawsuit was commenced in 1993 by the FDEP. The Florida Lawsuit seeks damages relating to environmental pollution and FDEP costs and expenses, civil penalties, and declaratory and injunctive relief to require the parties to complete assessment and remediation of soil and 49 56 groundwater contamination. The other parties include alleged owners of the property and Fleet Credit Corporation, a secured lender to a prior lessee of the property. "See Business -- Environmental Matters." In March 1993, the EPA notified Hadco Santa Clara (formerly Zycon) of its potential liability for maintenance and remediation costs in connection with a hazardous waste disposal facility operated by Casmalia Resources, a California Limited Partnership, in Santa Barbara County, California. The EPA identified Hadco Santa Clara as one of the 65 generators which had disposed the greatest amounts of materials at the site. Based on the total tonnage contributed by all generators, Hadco Santa Clara's share is estimated at approximately 0.2% of the total weight. The Casmalia site was regulated by the EPA during the period when the material was accepted. There is no allegation that Hadco Santa Clara violated any law in the disposal of material at the site, rather the EPA's actions stemmed from the fact that Casmalia Resources may not have the financial means to implement a closure plan for the site and because of Hadco Santa Clara's status as a generator of hazardous waste. In June 1997, the United States District Court in Los Angeles, California approved and entered a Consent Decree among the EPA and 49 entities (including Hadco Santa Clara) acting through the Casmalia Steering Committee (CSC). The Consent Decree sets forth the terms and conditions under which the CSC will carry out work aimed at final closure of the site. Certain closure activities will be performed by the CSC. Later work will be performed by the CSC, if funded by other parties. Under the Consent Decree, the settling parties will work with the EPA to pursue the non-settling parties to ensure they participate in contributing to the closure and long-term operation and maintenance of the facility. The EPA will continue as the lead regulatory agency during the final closure work. Because long-term maintenance plans for the site will not be determined for a number of years, it has not yet been decided which regulatory agency will oversee this phase of the work plan or how the long-term costs will be funded. However, the agreement provides a mechanism for ensuring that an appropriate federal, state or local agency will assume regulatory responsibility for long-term maintenance. The future costs in connection with the lawsuits described in the preceding paragraphs are currently indeterminable due to such factors as the unknown timing and extent of any future remedial actions which may be required, the extent of any liability of the Company and of other potentially responsible parties, and the financial resources of the other potentially responsible parties. See Note 9 of Notes to the Company's Consolidated Financial Statements. On March 27, 1998, the Company received a written notice from legal counsel for the Lemelson Medical, Education & Research Foundation Limited Partnership (the "Lemelson Partnership"), alleging that the Company is infringing certain patents held by the Lemelson Partnership and offering to license such patents to the Company. The ultimate outcome of this matter is not currently determinable, and there can be no assurance that the outcome of this matter will not have a material adverse effect upon the Company's business, financial condition and results of operations. Litigation with respect to patents and other intellectual property matters can result in substantial damages, require the cessation of the manufacture, use and sale of infringing products and the use of certain processes, or require the infringing party to obtain a license to the relevant intellectual property. On January 12, 1998, Hadco Santa Clara (formerly Zycon) received notice of the filing of a lawsuit, before the Superior Court (County of Santa Clara, California), against it by Jackie Riley, Keith Riley and Richard Riley for damages (including punitive damages) for alleged injuries suffered, including Richard Riley's cancer, as a result of the alleged emission at a Zycon facility of effluent from allegedly toxic and hazardous chemical substances. Because this matter is at an early stage, the Company believes it cannot assess the potential range of damages that might be awarded should the plaintiffs prevail. 50 57 MANAGEMENT EXECUTIVE OFFICERS AND DIRECTORS The executive officers and directors of the Company are as follows:
NAME AGE POSITION - ---- --- -------- Horace H. Irvine II(1).................... 61 Chairman of the Board of Directors President, Chief Executive Officer and Andrew E. Lietz........................... 59 Director Senior Vice President, Chief Financial Timothy P. Losik.......................... 39 Officer and Treasurer John D. Caruso, Jr........................ 49 Senior Vice President Christopher T. Mastrogiacomo.............. 40 Senior Vice President Frederick G. McNamee, III................. 41 Senior Vice President Michael K. Sheehy......................... 50 Senior Vice President Robert E. Snyder.......................... 58 Senior Vice President James C. Hamilton......................... 60 Clerk Oliver O. Ward(2)......................... 63 Director Patrick Sweeney........................... 62 Director Lawrence Coolidge(1)...................... 62 Director John F. Smith(1)(2)(3).................... 62 Director John E. Pomeroy(3)........................ 56 Director James C. Taylor(2)(3)..................... 60 Director Mauro J. Walker........................... 62 Director
- --------------- (1) Member of Nominating Committee. (2) Member of Audit Committee. (3) Member of Compensation Committee. Mr. Irvine is a founder of the Company and has been its Chairman of the Board since the Company was incorporated in 1966, and its Chief Executive Officer from 1966 until 1986. He was President of the Company from 1966 until 1980 and Treasurer of the Company from 1966 until 1984. He is Chairman of the Executive and Long-Term Planning and Strategy Committees of the Board of Directors. Mr. Lietz joined the Company in 1984 and has been President and Chief Executive Officer of the Company since October 1995. From July 1991 to October 1995 Mr. Lietz was the Chief Operating Officer and a Vice President of the Company. He has been a director of the Company since February 1993. Prior to joining the Company, Mr. Lietz spent 20 years employed by IBM where he held various sales, marketing and management positions. Mr. Lietz is also a director of Energy North Natural Gas, Inc. and Wyman-Gordon Company. Mr. Losik joined the Company in 1986 and has been Senior Vice President in charge of Eastern Operations since June 1998, a Senior Vice President since September 1997 and the Chief Financial Officer and Treasurer of the Company since March 1994. He currently serves as Senior Vice President, Chief Financial Officer and Treasurer of the Company. He was a Vice President from March 1994 to September 1997, Controller of the Company from June 1992 to March 1994 and a Corporate Accounting Manager from March 1988 to June 1992. Mr. Losik is a certified public accountant. From 1979 to 1986, Mr. Losik held various positions, including partner, in public accounting firms. Mr. Caruso joined the Company in September 1997 as a Senior Vice President in charge of Eastern Operations. In June 1998, Mr. Caruso was appointed Senior Vice President in charge of Corporate Services and Chief Information Officer. Prior to joining Hadco, Mr. Caruso was the Managing Director of Worldwide Manufacturing at Cabletron Systems, a computer company, from 1990 to September 1997. 51 58 Mr. Mastrogiacomo joined the Company in March 1988 and has been the Senior Vice President in charge of the Santa Clara volume operations as well as all North American value added manufacturing operations (backplane assembly) since September 1997. He was a Vice President from January 1997 to September 1997, and the Business Unit Manager in charge of the Derry volume printed circuit business unit from January 1994 to January 1997. From March 1988 to January 1994, Mr. Mastrogiacomo was Manufacturing Manager at the Company's Owego, New York facility. Mr. McNamee joined the Company in March 1998 as Senior Vice President in charge of Hadco Phoenix. Prior to joining the Company, Mr. McNamee was Chairman, President and Chief Executive Officer of Continental from December 1994 to March 1998. Mr. McNamee joined Continental as President and Chief Executive Officer in September 1994, and was elected a director of Continental in November 1994. Prior to joining Continental, Mr. McNamee worked for 15 years at IBM in Austin, Texas, in a variety of circuit board manufacturing positions, including as manager of the IBM circuit board facility in Austin from November 1992 to September 1994. Mr. Sheehy joined the Company in 1994 and has been the Senior Vice President of worldwide sales and marketing since September 1997. He was the Vice President in charge of the value added manufacturing business unit (backplane assembly) from March 1995 to September 1997. Prior to joining the Company, Mr. Sheehy was the Vice President of Logistic Operations and then Operations at Kendall Square Research Corp. from January 1991 to November 1994. Prior to that, Mr. Sheehy held various management positions at Wang Computer from 1981 to 1991. Mr. Snyder joined the Company in January 1997 and has been a Senior Vice President since September 1997. Prior to joining the Company, Mr. Snyder was Managing Director of Asian Operations of Zycon from January 1996 to January 1997. He was a vice president of Zycon from February 1990 to January 1996. Mr. Hamilton has been the Clerk of the Company since 1966. He is a partner in the law firm of Hamilton & Dahmen, LLP, general counsel to the Company. Mr. Ward has been a director of the Company since 1987. He is Chairman of the Audit and Finance Committees of the Board of Directors. He was a founder and has served as chairman of the board, chief executive officer and president of Germanium Power Devices Corp., a manufacturer and marketer of germanium semiconductors, since 1973. Mr. Sweeney has been a director of the Company since 1991. He was President and Chief Executive Officer of the Company from 1991 until October 1995, and Chief Operating Officer from July 1990 to July 1991. He is currently a private business consultant. Mr. Coolidge has been a director of the Company since 1995. He has been the president and a private trustee of Loring, Wolcott & Coolidge Office, a fiduciary services provider, since 1962. In August 1994, Mr. Coolidge became an associate of Loring, Wolcott & Coolidge Fiduciary Advisors, a registered investment advisor. Mr. Smith has been a director of the Company since 1995. He is Chairman of the Nominating Committee of the Board of Directors. He has been the president of MYCOS International, Inc., a property development corporation, since April 1993, and president of PerSeptive Biosystems, Inc., a biotechnology company, July 1996 to January 1998 and currently serves as a consultant. In April 1993, Mr. Smith retired as Senior Vice President and Chief Operating Officer of Digital Equipment Corporation, a computer company, in which capacities he had served since 1991. He began his career at Digital Equipment Corporation in 1958 and served in various other senior management positions from 1976 to 1991. Mr. Smith is also a director of Ansys Corporation, Instron Corporation, and Sequoia Systems, Inc. Mr. Pomeroy has been a director of the Company since September 1996. He has been president and chief executive officer of Dover Technologies, a group of manufacturing companies and a subsidiary of Dover Corporation, since 1987. Mr. Pomeroy is also a director of Adept Technologies, Inc. 52 59 Mr. Taylor has been a director of the Company since December 1996. He is Chairman of the Compensation Committee of the Board of Directors. He has been an advisory director at Downer and Company, an investment banking firm, since 1995. He was a managing director of Burns Fry Limited, an investment banking firm, from 1988 to 1994. Mr. Walker has been a director of the Company since June 1998. Mr. Walker is the former Senior Vice President and Motorola Director of Manufacturing for Motorola Corporation, a position he held from 1989 to 1997. Mr. Walker is a past chair of the Motorola Corporate Advanced Manufacturing Technology Council and served as a member of Motorola's Science Advisory Board. Mr. Walker is an ex-officio member and past Industry Chairman of the National Electronics Manufacturing Initiative, an electronics manufacturing industry organization. Directors are elected annually and hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified, or until their earlier removal or resignation. Executive officers are elected to serve at the pleasure of the Board of Directors. There are no family relationships among any of the directors and executive officers of the Company. DESCRIPTION OF CERTAIN INDEBTEDNESS The following is a summary of certain material terms of certain indebtedness of the Company. The summary is qualified in its entirety by reference to the Credit Facility and other agreements to which such summary relates, copies of which are available upon request to the Company. CREDIT FACILITY In December 1997, the Company negotiated a $400 million unsecured senior revolving credit facility with a group of banks that amended and restated the Company's then existing credit facility. Approximately $220 million of loans were incurred under the Credit Facility to finance the Continental Acquisition in March 1998 to repay outstanding indebtedness of Continental and to pay certain costs relating to the Continental Acquisition. The Credit Facility was amended in March 1998 to add certain representations, warranties, conditions and covenants in connection with the Continental Acquisition. The Credit Facility was further amended in May 1998 to add certain conditions and covenants with respect to the Original Notes Offering. As of May 2, 1998, the amount outstanding under the Credit Facility was $345 million. At May 2, 1998, after giving effect to the Original Notes Offering and the use of the net proceeds therefrom, the amount outstanding under the Credit Facility would have been approximately $151 million. The Company is required to pay a quarterly commitment fee ranging from 0.2% to 0.375% per annum, based on the Company's ratio of Consolidated Funded Debt to EBITDA (as defined in the Credit Facility), of the unused commitment under the Credit Facility. The Credit Facility expires on January 8, 2002 (the "Credit Facility Maturity Date"). Borrowings under the Credit Facility are guaranteed by Continental, Zycon and certain other subsidiaries of the Company. The net proceeds of the Original Notes Offering will be used to repay borrowings under the Credit Facility incurred in connection with the Acquisitions. Subject to the satisfaction of customary conditions, the Company may obtain loans or letters of credit under the Credit Facility at any time prior to the Credit Facility Maturity Date. Such loans may be used for acquisitions permitted under the Credit Facility, working capital and general corporate purposes. Such letters of credit may be used solely for general corporate purposes. At the Company's election, loans under the Credit Facility bear interest at either (i) the Base Rate or (ii) the Eurodollar Rate plus the Applicable Eurodollar Rate Margin. The "Base Rate" is equal to the higher of (a) the annual rate of interest announced from time to time by BankBoston, N.A. as its base rate, and (b) one-half of one percent (0.5%) above the Federal Funds Effective Rate, in each case as in effect from time to time (the Federal Funds Effective Rate being, for any day, either the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, or if such rate is not published, the average of the quotations for such day on such transactions received by BankBoston, N.A. from three funds brokers selected by it). For any 53 60 applicable interest period, the "Eurodollar Rate" is equal to (i) the arithmetic average of the annual rates (rounded upwards to the nearest 1/16 of 1%) of the rate at which BankBoston, N.A. is offered dollar deposits in the interbank eurodollar market, divided by (ii) a number equal to 1.00 minus the maximum rate at which reserves may be required to be maintained under Regulation D of the Board of Governors of the Federal Reserve System. The Applicable Eurodollar Rate Margin in effect at any time ranges from 0.5% to 1.375%, based on the Company's ratio of Consolidated Funded Debt to EBITDA (as defined in the Credit Facility). Interest on loans which bear interest based upon the Base Rate is payable quarterly in arrears and on the Credit Facility Maturity Date, and interest on loans which bear interest based upon the Eurodollar Rate is payable on the last day of each relevant interest period (or if such period exceeds three months, on each three month anniversary of the first day of such interest period) and on the Credit Facility Maturity Date. As of May 2, 1998, the weighted average interest rate on loans outstanding under the Credit Facility was 6.56%. The Credit Facility provides for certain mandatory repayments (of up to $150 million of loans outstanding under the Credit Facility) in the event the Company incurs certain specified indebtedness. The Credit Facility contains customary representations and warranties. The Credit Facility also contains extensive affirmative and negative covenants, including, among others, certain limits on the ability of the Company to incur indebtedness, create liens, make investments, pay dividends or other distributions, engage in mergers, consolidations, acquisitions or dispositions, enter into sale and leaseback transactions, enter into guarantees, prepay subordinated indebtedness, make capital expenditures or create any new series of capital stock or amend the terms of existing capital stock. The Credit Facility also requires the Company to maintain certain financial covenants, including maximum ratio of Consolidated Funded Debt to EBITDA, minimum interest coverage, minimum consolidated net worth and minimum fixed charge coverage. The Credit Facility also contains customary events of default, including upon a change in control. MALAYSIAN CREDIT FACILITY The Company has a line of credit arrangement with a Malaysian bank denominated in Malaysian ringgits and U.S. dollars for aggregate borrowings of $3.4 million for the purpose of acquiring land, facilities and equipment for the Company's Malaysian subsidiary. The arrangement is renewable annually. At May 2, 1998, there were no amounts outstanding under this arrangement. OTHER INDEBTEDNESS As of May 2, 1998, the Company had approximately $18.1 million in outstanding capitalized leases and lease line of credit obligations, and a $0.8 million industrial development bond. 54 61 THE EXCHANGE OFFER TERMS OF THE EXCHANGE OFFER General In connection with the sale of Original Notes to the Initial Purchasers pursuant to the Placement Agreement, dated May 13, 1998 (the "Placement Agreement"), among the Company, the Guarantors and Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Robertson Stephens and BT Alex. Brown Incorporated, the holders of the Original Notes became entitled to the benefits of the Registration Rights Agreement. Under the Registration Rights Agreement, the Company became obligated to file a registration statement in connection with a registered exchange offer and consummate such exchange offer within six months of the date the Original Notes were issued (the "Issue Date"). The Exchange Offer being made hereby, if consummated within the required time period, will satisfy the Company's obligations under the Registration Rights Agreement. The Company understands that there are approximately beneficial owners of such Original Notes. This Prospectus, together with the Letter of Transmittal, is being sent to all such beneficial holders known to the Company. Upon the terms and subject to the conditions set forth in this Prospectus and in the accompanying Letter of Transmittal, the Company will accept all Original Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. Subject to the terms and conditions set forth in this Prospectus and the Letter of Transmittal, the Company will issue $1,000 principal amount of Exchange Notes in exchange for each $1,000 principal amount of outstanding Original Notes accepted in the Exchange Offer. Holders may tender some or all of their Original Notes pursuant to the Exchange Offer. Based on an interpretation by the staff of the Commission set forth in the Morgan Stanley Letter, the Exxon Capital Letter and similar letters, the Company believes that Exchange Notes issued pursuant to the Exchange Offer in exchange for Original Notes may be offered for resale, resold and otherwise transferred by any person who received such Exchange Notes, whether or not such person is the holder (other than Restricted Holders) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of such holder's or other person's business, neither such holder nor such other person is engaged in or intends to engage in any distribution of the Exchange Notes and such holders or other persons have no arrangement or understanding with any person to participate in the distribution of such Exchange Notes. See Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available June 5, 1991) and Exxon Capital Holdings Corporation, SEC No-Action Letter (available May 13, 1988). If any person were to be participating in the Exchange Offer for the purposes of participating in a distribution of the Exchange Notes in a manner not permitted by the Commission's interpretation, such person (a) could not rely on the Morgan Stanley Letter, the Exxon Capital Letter or similar letters and (b) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction. 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 or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and 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 result of market-making or other trading activities; however, this Prospectus may not be used for resales of Notes acquired directly from the Company. The Company has agreed that, for a period ending on the earlier to occur of 180 days after the Expiration Date or the time when all persons subject to the prospectus delivery requirements of the Securities Act have sold all Exchange Notes 55 62 held by them, it will make this Prospectus, as it may be amended or supplemented from time to time, available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." The Company will not receive any proceeds from the Exchange Offer. See "Use of Proceeds." The Company has agreed to bear the expenses of the Exchange Offer pursuant to the Registration Rights Agreement. No underwriter is being used in connection with the Exchange Offer. The Company shall be deemed to have accepted validly tendered Original Notes when, as and if the Company has given oral or written notice thereof to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders of Original Notes for the purposes of receiving the Exchange Notes from the Company and delivering Exchange Notes to such holders. If any tendered Original Notes are not accepted for exchange because of an invalid tender or the occurrence of certain conditions set forth herein under "-- Conditions" without waiver by the Company, certificates for any such unaccepted Original Notes will be returned, without expense, to the tendering holder thereof as promptly as practicable after the Expiration Date. Holders of Original Notes who tender 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 pursuant to the Exchange Offer. The Company will pay all charges and expenses, other than certain applicable taxes in connection with the Exchange Offer. See "-- Fees and Expenses." In the event the Exchange Offer is consummated, the Company will not be required to register the Original Notes. The Original Notes that are not exchanged pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Original Notes may be resold only (i) to the Company, (ii) pursuant to Rule 144A or Rule 144 under the Securities Act or pursuant to another exemption under the Securities Act, (iii) outside the United States to a foreign person pursuant to the requirements of Rule 904 under the Securities Act, or (iv) pursuant to an effective registration statement under the Securities Act. See "Risk Factors -- Consequences of Failure to Exchange." Expiration Date; Extensions; Amendment The term "Expiration Date" shall mean the expiration date set forth on the cover page of this Prospectus, unless the Company, in its sole discretion, extends the Exchange Offer, in which case the term "Expiration Date" shall mean the latest date to which the Exchange Offer is extended. In order to extend the Expiration Date, the Company will notify the Exchange Agent of any extension by oral or written notice and will mail to the record holders of Original Notes an announcement thereof, each prior to 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Such announcement may state that the Company is extending the Exchange Offer for a specified period of time. The Company reserves the right (a) to delay accepting any Original Notes, to extend the Exchange Offer or to terminate the Exchange Offer and not accept Original Notes not previously accepted if any of the conditions set forth herein under "-- Conditions" shall have occurred and shall not have been waived by the Company (if permitted to be waived by the Company), by giving oral or written notice of such delay, extension or termination to the Exchange Agent, or (b) to amend the terms of the Exchange Offer in any manner deemed by it to be advantageous to the holders of the Original Notes. Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by oral or written notice thereof. If the Exchange Offer is amended in a manner determined by the Company to constitute a material change, the Company will promptly disclose such amendment in a manner reasonably calculated to inform the holders of the Original Notes of such amendment and the Company may extend the Exchange Offer for a period of up to ten business days, depending upon the significance of the amendment and the manner of disclosure to holders of the Original Notes, if the Exchange Offer would otherwise expire during such extension period. 56 63 Without limiting the manner in which the Company may choose to make public announcements of any extension, amendment or termination of the Exchange Offer, the Company shall have no obligation to publish, advertise, or otherwise communicate any such public announcement, other than by making a timely release to the Dow Jones News Service. INTEREST ON THE EXCHANGE NOTES Interest on each Exchange Note will accrue from the last date on which interest was paid on the Original Note surrendered in exchange therefor or, if no interest has been paid on the Original Note, from the date of original issuance of such Original Note. Interest on the Exchange Notes will be payable semiannually on June 15 and December 15 of each year, commencing December 15, 1998, at the rate of 9 1/2% per annum. Holders of Original Notes whose Original Notes are accepted for exchange will be deemed to have waived the right to receive any payment in respect of interest on the Original Notes accrued up until the date of the issuance of the Exchange Notes. No interest will be paid on the Original Notes accepted for exchange. Holders of Original Notes that are not exchanged will receive the accrued interest payable on December 15, 1998 in accordance with the Indenture. PROCEDURES FOR TENDERING To tender in the Exchange Offer, a holder must complete, sign and date the Letter of Transmittal, or a facsimile thereof, have the signatures thereon guaranteed if required by instruction 3 of the Letter of Transmittal, and mail or otherwise deliver such Letter of Transmittal or such facsimile, together with the Original Notes and any other required documents. To be validly tendered, such documents must reach the Exchange Agent on or before 5:00 p.m., New York City time, on the Expiration Date. Timely confirmation of a book-entry transfer of any Original Note, if such procedure is available, into the Exchange Agent's account at The Depository Trust Company ("DTC" or the "Depository") pursuant to the procedure for book-entry transfer described in the following paragraphs, which confirmation is received by the Exchange Agent prior to the Expiration Date, shall satisfy the requirement of delivery of such Original Note to the Exchange Agent. Any financial institution that is a participant in the Depository's Book-Entry Transfer Facility system may make book-entry delivery of the Original Notes by causing the Depository to transfer such Original Notes into the Exchange Agent's account at the Depository in accordance with the Depository's procedure for such transfer. Although delivery of Original Notes may be effected through book-entry transfer into the Exchange Agent's account at the Depository, the Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received or confirmed by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date, in accordance with the guaranteed delivery procedures described in this Prospectus. The Exchange Agent and the Depository have confirmed that any financial institution that is a participant in the Depository's system may utilize the Depository's Automated Tender Offer Program to tender Original Notes. The tender by a holder of Original Notes will constitute an agreement between such holder and the Company in accordance with the terms and subject to the conditions set forth herein and in the Letter of Transmittal. Delivery of all documents must be made to the Exchange Agent at its address set forth below. Holders may also request their respective brokers, dealers, commercial banks, trust companies or nominees to effect such tender for such holders. THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDERS. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY TO THE EX- 57 64 CHANGE AGENT ON OR BEFORE 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR ORIGINAL NOTES SHOULD BE SENT TO THE COMPANY. Only a holder of Original Notes may tender such Original Notes in the Exchange Offer. The term "holder" with respect to the Exchange Offer means any person in whose name Original Notes are registered on the books of the Company or any other person who has obtained a properly completed bond power from the registered holder. Any beneficial holder whose Original Notes are registered in the name of his broker, dealer, commercial bank, trust company or other nominee and who wishes to tender should contact such registered holder promptly and instruct such registered holder to tender on his behalf. If such beneficial holder wishes to tender on his own behalf, such registered holder must, prior to completing and executing the Letter of Transmittal and delivering his Original Notes, either make appropriate arrangements to register ownership of the Original Notes in such holder's name or obtain a properly completed bond power from the registered holder. The transfer of record ownership may take considerable time. Signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States (an "Eligible Institution") unless the Original Notes tendered pursuant thereto are tendered (a) by a registered holder who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or (b) for the account of an Eligible Institution. In the event that signatures on a Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by an Eligible Institution. If the Letter of Transmittal is signed by a person other than the registered holder of any Original Notes listed therein (which term includes any participants in DTC whose name appears on a security position listing as the owner of the Original Notes), such Original Notes must be endorsed or accompanied by appropriate bond powers and a proxy which authorizes such person to tender the Original Notes on behalf of the registered holder, in each case signed as the name of the registered holder or holders appears on the Original Notes. 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, such persons should so indicate when signing, and unless waived by the Company, evidence satisfactory to the Company of their authority so to act must be submitted with the Letter of Transmittal. All questions as to the validity, form, eligibility (including time of receipt), and withdrawal of the tendered Original Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Original Notes. The Company's 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 such time as the Company shall determine. Neither the Company, the Exchange Agent nor any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Original Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Original Notes will not be deemed to have been made until such 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 without cost to such holder by the Exchange Agent to the tendering holders of Original Notes, unless otherwise provided in the Letter of Transmittal, as soon as practicable following the Expiration Date. 58 65 In addition, the Company reserves the right in its sole discretion to (a) purchase or make offers for any Original Notes that remain outstanding subsequent to the Expiration Date or, as set forth under "-- Conditions," to terminate the Exchange Offer in accordance with the terms of the Registration Rights Agreement and (b) to the extent permitted by applicable law, purchase Original Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers will differ from the terms of the Exchange Offer. By tendering, each holder will represent to the Company that, among other things, (a) the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of such holder or other person, (b) neither such holder no such other person is engaged in or intends to engage in a distribution of the Exchange Notes, (c) neither such holder nor other person has any arrangement or understanding with any person to participate in the distribution of such Exchange Notes, and (d) such holder or other person is not an "affiliate," as defined under Rule 405 of the Securities Act, of the Company or any Guarantor or, if such holder or other person is such an affiliate, will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable. Each broker-dealer that receives Exchange Notes for its own account exchange for Original Notes, where such Original Notes were acquired by such broker-dealer as a result of market-making or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. The Letter of Transmittal states that by so acknowledging and 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 or other trading activities; however, this Prospectus may not be used for resales of Notes acquired directly from the Company. The Company has agreed that, for a period ending on the earlier to occur of 180 days after the Expiration Date or the time when all persons subject to the prospectus delivery requirements of the Securities Act have sold all Exchange Notes held by them, it will make this Prospectus, as it may be amended or supplemented from time to time, available to any broker-dealer for use in connection with any such resale. See "Plan of Distribution." The Company will not receive any proceeds from the Exchange Offer. See "Use of Proceeds." The Company has agreed to bear the expenses of the Exchange Offer pursuant to the Registration Rights Agreement. No underwriter is being used in connection with the Exchange Offer. The Original Notes were issued on May 18, 1998 and there is no public market for them at present. To the extent Original Notes are tendered and accepted in the Exchange Offer, the principal amount of outstanding Original Notes will decrease with a resulting decrease in the liquidity in the market therefor. Following the consummation of the Exchange Offer, holders of Original Notes will continue to be subject to certain restrictions on transfer. Accordingly, the liquidity of the market for the Original Notes could be adversely affected. BOOK-ENTRY TRANSFER The Exchange Agent will make a request to establish an account with respect to the Original Notes at the Depository for purposes of the Exchange Offer within two business days after the date of this Prospectus, and any financial institution that is a participant in the Depository's system may make book-entry delivery of Original Notes by causing the Depository to transfer such Original Notes into the Exchange Agent's account at the Depository in accordance with the Depository's procedure for such transfer. Although delivery of Original Notes may be effected through book-entry transfer into the Exchange Agent's account at the Depository, the Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, must, in any case, be transmitted to and received or confirmed by the Exchange Agent at its addresses set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date, in accordance with the guaranteed delivery procedures described in this Prospectus. Where Original Notes were tendered by book-entry transfer and such Original Notes are to be returned to the holder thereof for any reason, such Original Notes will be credited to the account of such holder 59 66 maintained at the Depository, and such procedure shall satisfy the Company's obligation to return Original Notes in the event such return is required by the terms described herein. GUARANTEED DELIVERY PROCEDURES Holders who wish to tender their Original Notes and (a) whose Original Notes are not immediately available or (b) who cannot deliver their Original Notes (or complete the procedures for book-entry transfer), the Letter of Transmittal or any other required documents to the Exchange Agent prior to the Expiration Date, may effect a tender if: (i) the tender is made through an Eligible Institution; (ii) prior to the Expiration Date, the Exchange Agent receives from such Eligible Institution a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) setting forth the name and address of the holder of the Original Notes, the certificate number or numbers of such Original Notes and the principal amount of Original Notes tendered, stating that the tender is being made thereby, and guaranteeing that, within three business days after the Expiration Date, the Letter of Transmittal (or facsimile thereof) together with the certificate(s) representing the Original Notes to be tendered in proper form for transfer (or a confirmation of a book-entry transfer into the Exchange Agent's account at the Depository of Original Notes delivered electronically) and any other documents required by the Letter of Transmittal will be deposited by the Eligible Institution with the Exchange Agent; and (iii) such properly completed and executed Letter of Transmittal (or facsimile thereof) together with the certificate(s) representing all tendered Original Notes in proper form for transfer (or a confirmation of a book-entry transfer into the Exchange Agent's account at the Depository of Original Notes delivered electronically) and all other documents required by the Letter of Transmittal are received by the Exchange Agent within three business days after the Expiration Date. WITHDRAWAL OF TENDERS Except as otherwise provided herein, tenders of Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, unless previously accepted for exchange. To withdraw a tender of Original Notes in the Exchange Offer, a written or facsimile transmission notice of withdrawal must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date. Any such notice of withdrawal must (a) specify the name of the person having deposited the Original Notes to be withdrawn (the "Depositor"), (b) identify the Original Notes to be withdrawn (including the certificate number or numbers and principal amount of such Original Notes), (c) be signed by the Depositor in the same manner as the original signature on the Letter of Transmittal by which such Original Notes were tendered (including any required signature guarantees) or be accompanied by documents of transfer sufficient to have the Trustee with respect to the Original Notes register the transfer of such Original Notes into the name of the Depositor withdrawing the tender and (d) specify the name in which any such Original Notes are to be registered, if different from that of the Depositor. If Original Notes have been tendered pursuant to the procedures for book-entry transfer, the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of the Original Notes. All questions as to the validity, form and eligibility (including time of receipt) of such withdrawal notices will be determined by the Company, whose determination shall be final and binding on all parties. Any Original Notes so withdrawn will be deemed not to have been validly tendered for purposes of the Exchange Offer and no Exchange Notes will be issued with respect thereto unless the Original Notes so withdrawn are validly retendered. Any Original Notes which have been tendered but which are not accepted for exchange will be returned to the holder thereof without cost to such 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 above under "-- Procedures for Tendering" at any time prior to the Expiration Date. 60 67 Where Original Notes were tendered by book-entry transfer and such Original Notes are to be returned to the holder thereof for any reason, such Original Notes will be credited to the account of such holder maintained at the Depository, and such procedure shall satisfy the Company's obligation to return Original Notes in the event such return is required by the terms described herein. CONDITIONS Notwithstanding any other term of the Exchange Offer, the Company will not be required to accept for exchange, or exchange Exchange Notes for, any Original Notes not theretofore accepted for exchange, and may terminate or amend the Exchange Offer as provided herein before the acceptance of such Original Notes, if the Company determines in good faith that any of the following conditions exist: the Exchange Offer would, or would reasonably be likely to, violate applicable law or applicable interpretations of the staff of the Commission or a stop order, injunction or similar Commission or court order or ruling has been instituted against the Exchange Offer. If the Company determines in good faith that any of these conditions are not satisfied, the Company may (i) refuse to accept any Original Notes and return all tendered Original Notes to the tendering holder, (ii) extend the Exchange Offer and retain all Original Notes tendered prior to the expiration of the Exchange Offer, subject, however, to the rights of holders to withdraw such Original Notes (see "-- Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with respect to the Exchange Offer and accept all properly tendered Original Notes which have not been withdrawn. If such waiver constitutes a material change to the Exchange Offer, the Company will promptly disclose such waiver by means of a prospectus supplement that will be distributed to the registered holders of the Original Notes, and the Company will extend the Exchange Offer for a period of ten business days, depending upon the significance of the waiver and the manner of disclosure to the registered holders, if the Exchange Offer would otherwise expire during such ten business day period. Holders may have certain rights and remedies against the Company under the Registration Rights Agreement should the Company fail to consummate the Exchange Offer, notwithstanding a failure of the conditions stated above. Such conditions are not intended to modify those rights or remedies in any respect. The foregoing conditions are for the sole benefit of the Company and may be asserted by the Company regardless of the circumstances giving rise to such condition or may be waived by the Company in whole or in part at any time and from time to time in the Company's discretion. The failure by the Company at any time to exercise the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Pursuant to the Registration Rights Agreement, in the event that (i) the Company and the Guarantors determine that the Exchange Offer is not available or may not be consummated as soon as practicable after the Expiration Date because it would violate applicable law or the applicable interpretations of the Staff of the Commission, (ii) the Exchange Offer is not for any other reason consummated by November 18, 1998, or (iii) the Exchange Offer has been completed and in the opinion of counsel for the Initial Purchasers a registration statement must be filed and a prospectus must be delivered by the Initial Purchasers in connection with any offering or sale of Original Notes, each of the Company and the Guarantors have agreed to use its best efforts to cause to be filed as soon as practicable after such determination, date or notice of such opinion of counsel is given to the Company and the Guarantors, as the case may be, a shelf registration statement (the "Shelf Registration Statement") with respect to the Original Notes and to use its best efforts to have such Shelf Registration Statement declared effective by the Commission. EXCHANGE AGENT State Street Bank and Trust Company has been appointed as Exchange Agent for the Exchange Offer. Questions and requests for assistance and requests for additional copies of this Prospectus or of the Letter of 61 68 Transmittal and deliveries of completed Letters of Transmittal with tendered Original Notes should be directed to the Exchange Agent addressed as follows:
By Mail By Hand/ Overnight Delivery By Facsimile ------- --------------------------- ------------ State Street Bank and Trust Company State Street Bank and Trust Company (Eligible Institutions only) Two International Place, 4th Floor 61 Broadway, 15th Floor (617) 664-5290 Boston, MA 02110 New York, New York 10006 Attention: Corporate Trust Attention: Corporate Trust Division/ Kellie Mullen Division/ Kellie Mullen Tel. (617) 664-5587
The Company will indemnify the Exchange Agent and its agents for any loss, liability or expense incurred by them, including reasonable costs and expenses of their defense, except for any such loss, liability or expense caused by negligence, misconduct or bad faith. FEES AND EXPENSES The expenses of soliciting tenders pursuant to the Exchange Offer will be borne by the Company. The principal solicitation for tenders pursuant to the Exchange Offer is being made by mail. Additional solicitations may be made by officers and regular employees of the Company and its affiliates in person, by telephone or facsimile. The Company will not make any payments to brokers, dealers, or other persons soliciting acceptances of the Exchange Offer. The Company, however, will pay the Exchange Agent reasonable and customary fees for its services and will reimburse the Exchange Agent for its reasonable out-of-pocket expenses in connection therewith. The Company may also pay brokerage houses and other custodians, nominees and fiduciaries the reasonable out-of-pocket expenses incurred by them in forwarding copies of this Prospectus, Letters of Transmittal and related documents to the beneficial owners of the Original Notes, and in handling or forwarding tenders for exchange. The expenses to be incurred in connection with the Exchange Offer, including fees and expenses of the Exchange Agent and Trustee and accounting and legal fees and expenses and printing costs, will be paid by the Company and are estimated in the aggregate to be approximately $275,000. The Company will pay all transfer taxes, if any, applicable to the exchange of Original Notes pursuant to the Exchange Offer. If, however, certificates representing Exchange Notes (or Original Notes for principal amounts not tendered or accepted for exchange) are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Original Notes tendered, or if tendered Original Notes are registered in the name of any person other than the person signing the Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Original Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with the Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder. ACCOUNTING TREATMENT The Company will not recognize any gain or loss for accounting purposes upon the consummation of the Exchange Offer. The expense of the Exchange Offer will be amortized by the Company over the term of the Exchange Notes under generally accepted accounting principles. CONSEQUENCE OF FAILURE TO EXCHANGE Participation in the Exchange Offer is voluntary. Holders of the Original Notes are urged to consult their financial and tax advisors in making their own decisions on what action to take. The Original Notes which are not exchanged for the Exchange Notes pursuant to the Exchange Offer will remain restricted securities. Accordingly, such Original Notes may be resold only (i) to a person whom the seller reasonably believes is a 62 69 "qualified institutional buyer" (as defined in Rule 144A under the Securities Act) in a transaction meeting the requirements of Rule 144A, (ii) in a transaction meeting the requirements of Rule 144 under the Securities Act, (iii) outside the United States to a foreign person in a transaction meeting the requirements of Rule 904 under the Securities Act, (iv) in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Company so requests), (v) to the Company or (vi) pursuant to an effective registration statement and, in each case, in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction. See "Risk Factors -- Consequences of Failure to Exchange." 63 70 DESCRIPTION OF THE NOTES The Original Notes were, and the Exchange Notes will be, issued under the Indenture dated as of May 18, 1998, among the Company, as issuer, all of the Company's Restricted Subsidiaries other than Foreign Subsidiaries, as guarantors (collectively, the "Guarantors") and State Street Bank and Trust Company, as trustee (the "Trustee"). The form of the Exchange Notes and the Original Notes will be identical in all material respects except that the Exchange Notes will have been registered under the Securities Act and therefore will not bear legends restricting their transfer. In the event the Notes are listed on the Luxembourg Stock Exchange, the proposed Luxembourg paying agent and transfer agent (the "Luxembourg Paying Agent" and the "Luxembourg Transfer Agent") will be appointed in accordance with the Indenture. Information concerning the Luxembourg Paying Agent and the Luxembourg Transfer Agent is set forth in the Indenture. A copy of the Indenture is available upon request from the Company. The following summary of certain provisions of the Indenture does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Indenture, including the definitions of certain terms therein and those terms made a part thereof by the Trust Indenture Act of 1939, as amended. Whenever particular defined terms of the Indenture not otherwise defined herein are referred to, such defined terms are incorporated herein by reference. For definitions of certain capitalized terms used in the following summary, see "--Certain Definitions." As used in this "Description of the Notes," the term "Company," unless otherwise indicated or the context otherwise requires, refers only to Hadco Corporation and does not include any of its subsidiaries, including Zycon or Continental. For the purposes of the following description, the Exchange Notes and the Original Notes are at times collectively referred to as the "Notes." The Exchange Notes and any Original Notes that remain outstanding after consummation of the Exchange Offer will be treated as a single class of securities under the Indenture. The term "Holders" shall refer, collectively, to holders of Notes. GENERAL The Notes are unsecured senior subordinated obligations of the Company, initially limited to $200 million aggregate principal amount, and will mature on June 15, 2008. Each Note initially bears interest at 9 1/2% per annum from the date of original issuance or from the most recent Interest Payment Date to which interest has been paid or provided for, payable semiannually (to Holders of record at the close of business on the June 1 or December 1 immediately preceding the Interest Payment Date) on June 15 and December 15 of each year, commencing December 15, 1998. If by the date that is six months after the Closing Date, the Company and the Guarantors have not consummated a registered exchange offer for the Original Notes or caused a shelf registration statement with respect to resales of the Original Notes to be declared effective (a "Registration Default"), the annual interest rate on the Notes will increase by .5%, effective until the consummation of a registered exchange offer or the effectiveness of a shelf registration statement and such additional interest shall be payable to Holders of the Notes on the Interest Payment Dates, commencing with the first such date occurring after any such increased interest commences to accrue. After the date on which such Registration Default is cured, the interest rate on the Notes will revert to the interest rate originally borne by the Notes (as shown on the cover of this Prospectus). See "-- Registration Rights." Interest is computed on the basis of a 360 day year comprised of twelve 30 day months. Principal of, premium, if any, and interest on the Notes will be payable, and the Notes may be exchanged or transferred, at the office or agency of the Company in Boston, Massachusetts (which initially will be the corporate trust office of the Trustee at Two International Place, Boston, Massachusetts 02110 and, to the extent applicable, the offices of the Luxembourg Paying Agent and the Luxembourg Transfer Agent, respectively); provided that, at the option of the Company, payment of interest may be made by check mailed to the Holders at their addresses as they appear in the Security Register. In the event the Notes are listed on the Luxembourg Stock Exchange, for so long as the Notes are so listed and the rules of such stock exchange so require, the Company will maintain a paying agent and transfer agent in Luxembourg. 64 71 The Notes are issued only in fully registered form, without coupons, in denominations of $1,000 of principal amount and any integral multiple thereof. See "-- Book-Entry; Delivery and Form." No service charge will be made for any registration of transfer or exchange of Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or other similar governmental charge payable in connection therewith. Subject to the covenants described below under "Covenants" and applicable law, the Company may issue additional Notes under the Indenture. The Notes, the Exchange Notes offered hereby and any additional Notes subsequently issued would be treated as a single class for all purposes under the Indenture. NOTE GUARANTEES The Company's obligations under the Notes are fully and unconditionally guaranteed (the "Note Guarantees"), on a senior subordinated basis, jointly and severally, by the Guarantors; provided that no Note Guarantee shall be enforceable against any Guarantor in an amount that would cause such Note Guarantee to be a fraudulent conveyance under applicable law. See "Risk Factors -- Fraudulent Conveyance." The Note Guarantees are subordinated to all Senior Indebtedness of the Guarantors on the same basis as the Notes are subordinated to the Senior Indebtedness of the Company, pari passu with any senior subordinated indebtedness of the Guarantors and senior to any indebtedness of the Guarantors subordinated to the Note Guarantees. The Foreign Subsidiaries and the Company's Subsidiaries which are not Restricted Subsidiaries will not guarantee the Notes. Therefore, the Notes and the Note Guarantees are effectively subordinated to all existing and future liabilities of such Non-Guarantor Subsidiaries. Each Guarantor may consolidate with or merge into or sell its assets to the Company or another Guarantor without limitation, or with other Persons upon the terms and conditions set forth in the Indenture. See "Certain Covenants -- Consolidation, Merger and Sale of Assets." In the event all or substantially all of the assets or the Capital Stock of a Guarantor is sold by the Company or one of its Subsidiaries and the sale complies with the provisions set forth in "Certain Covenants -- Limitation on Asset Sales," the Guarantor's Note Guarantee will be automatically discharged and released. The Company will cause any Person (other than a Foreign Subsidiary) that becomes a Restricted Subsidiary on or after the Closing Date to execute the Indenture as a Guarantor. OPTIONAL REDEMPTION The Notes will be redeemable, at the Company's option, in whole or in part, at any time or from time to time, on or after June 15, 2003 and prior to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by first class mail to each Holder's last address as it appears in the Security Register, at the following Redemption Prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date that is on or prior to the Redemption Date to receive interest due on an Interest Payment Date), if redeemed during the 12-month period commencing June 15, of the years set forth below:
YEAR REDEMPTION PRICE - ---- ---------------- 2003......................................... 104.750% 2004......................................... 103.167 2005......................................... 101.583 2006 and thereafter.......................... 100.000
In addition, at any time and from time to time prior to June 15, 2001, the Company may redeem up to 35% of the aggregate principal amount of the Notes with the proceeds of one or more Equity Offerings, at a Redemption Price of 109.50%, plus accrued and unpaid interest to the Redemption Date (subject to the rights of Holders of record on the relevant Regular Record Date that is prior to the Redemption Date to receive interest due on an Interest Payment Date); provided that (i) Notes representing 65% of the principal amount 65 72 of Notes initially issued remain outstanding after each such redemption and (ii) notice of such redemption is mailed within 60 days of the related Equity Offering. Prior to June 15, 2003, the Notes will be redeemable at the Company's option, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' prior notice mailed by first class mail to each Holder's registered address, at a redemption price (expressed as a percentage of principal amount) equal to the sum of the principal amount of such Notes plus the Applicable Premium thereon at the time of redemption (an "Early Redemption Date") (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date). The following definitions are used to determine the redemption price: "Applicable Premium" means, with respect to a Note at any Early Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at June 15, 2003 (such redemption price being set forth on the table above) plus (2) all semiannual payments of interest through, June 15, 2003 computed using a discount rate equal to the Treasury Rate plus 50 basis points over (B) the principal amount of such Note. "Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) which has become publicly available at least two business days prior to the date fixed for repayment (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the then remaining Average Life to Stated Maturity of the Notes, provided, however, that if the average life to Stated Maturity of the Notes is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given. In the case of any partial redemption, selection of the Notes for redemption will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not listed on a national securities exchange, by lot, pro rata or by such other method as the Trustee in its sole discretion shall deem to be fair and appropriate; provided that no Note of $1,000 in principal amount or less shall be redeemed in part. If any Note is to be redeemed in part only, the notice of redemption relating to such Note shall state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Note. SINKING FUND There will be no sinking fund payments for the Notes. REGISTRATION RIGHTS The Exchange Offer is intended to satisfy certain of the obligations of the Company and the Guarantors under the Registration Rights Agreement, as described in this "-- Registration Rights" section. The Company and the Guarantors have agreed with the Initial Purchasers, for the benefit of the Holders, that they will use their best efforts, at their cost, to file and cause to become effective a registration statement with respect to a registered offer (the "Exchange Offer") to exchange the Original Notes for an issue of senior subordinated notes of the Company being offered hereby (the "Exchange Notes") with terms identical to the Original Notes and the Note Guarantees (except that the Exchange Notes will not bear legends restricting the transfer thereof). Upon such registration statement being declared effective, the Company and the Guarantors shall offer the Exchange Notes in return for surrender of the Original Notes. Such offer shall remain open for not less than 20 business days after the date notice of the Exchange Offer is mailed to Holders. For each Original Note surrendered to the Company under the Exchange Offer, the Holder will receive an Exchange Note of equal principal amount. Interest on each Exchange Note shall accrue from the last Interest Payment Date on which interest was paid on the Original Notes so surrendered or, if no interest has been paid on such 66 73 Original Notes, from the Closing Date. In the event that applicable interpretations of the staff of the Securities and Exchange Commission (the "Commission") do not permit the Company to effect the Exchange Offer, or under certain other circumstances, the Company and the Guarantors shall, at their cost, use their best efforts to cause to become effective a shelf registration statement (the "Shelf Registration Statement") with respect to resales of the Notes and to keep such Shelf Registration Statement effective until the expiration of the time period referred to in Rule 144(k) under the Securities Act after the Closing Date, or such shorter period that will terminate when all Original Notes covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or are eligible for resale under Rule 144(k) or any similar provision then in force under the Securities Act. The Company shall, in the event of such a shelf registration, provide to each Holder copies of the prospectus, notify each Holder when the Shelf Registration Statement for the Original Notes has become effective and take certain other actions as are required to permit resales of the Notes. A Holder that sells its Original Notes pursuant to the Shelf Registration Statement generally will be required to be named as a selling security holder in the related prospectus and to deliver a prospectus to purchasers, will be subject to certain of the civil liability provisions under the Securities Act in connection with such sales and will be bound by the provisions of the Registration Rights Agreement that are applicable to such a Holder (including certain indemnification obligations). In the event of a registration default, the annual interest rate borne by the Original Notes will be increased by .5%, effective until the Exchange Offer or the Shelf Registration Statement is declared effective and such additional interest shall be payable to Holders of the Original Notes on each Interest Payment Date, commencing with the first such date occurring after any such increased interest commences to accrue. After the date on which such registration default is cured, the interest rate on the Notes will revert to the interest rate originally borne by the Notes (as shown on the cover of this Prospectus). If the Company and the Guarantors effect the Exchange Offer, they will be entitled to close the Exchange Offer 20 business days after the commencement thereof, provided that they have accepted all Original Notes theretofore validly surrendered in accordance with the terms of the Exchange Offer. Original Notes not tendered in the Exchange Offer shall bear interest at the rate set forth on the cover page of this Prospectus and be subject to all of the terms and conditions specified in the Indenture and to the transfer restrictions described in "Transfer Restrictions." This summary of certain provisions of the Registration Rights Agreement does not purport to be complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the Registration Rights Agreement, a copy of which is available from the Company upon request. RANKING; SUBORDINATION The Notes are unsecured senior subordinated Indebtedness of the Company and the Guarantors. The payment of the Senior Subordinated Obligations is, to the extent set forth in the Indenture, subordinated in right of payment to the prior payment in full, in cash or cash equivalents, of all Senior Indebtedness. At May 2, 1998, pro forma for the Original Notes Offering and the use of the proceeds therefrom and the Continental Acquisition, the Company and the Guarantors would have had approximately $170 million of Senior Indebtedness outstanding and approximately $249 million would have been available to the Company under the Credit Facility, which, if borrowed, would constitute Senior Indebtedness. At May 2, 1998, on the same pro forma basis, the Guarantors would have had Senior Indebtedness of approximately $18 million (in addition to approximately $151 million representing guarantees of the Company's borrowings under the Credit Facility). Although the Indenture contains limitations on the amount of additional indebtedness that the Company or any of its Restricted Subsidiaries may incur, under certain circumstances the amount of such indebtedness could be substantial and, in any case, such indebtedness may be Senior Indebtedness. See "-- Covenants -- Limitation on Indebtedness." Notwithstanding the foregoing, payment from the money or the proceeds of Government Securities held in any defeasance trust described under "-- Defeasance" below, will not be contractually subordinated in right of payment to any Senior Indebtedness or subject to the restrictions described herein, provided such defeasance trust is established pursuant to the terms of the Indenture on the Closing Date and not in violation of the terms of any Senior Indebtedness. 67 74 Except with respect to the money and/or Government Securities held under any defeasance trust, established pursuant to the terms of the Indenture on the Closing Date and not in violation of the terms of any Senior Indebtedness, upon any payment or distribution of assets or securities of the Company or any Guarantor of any kind or character, whether in cash, property or securities, upon any dissolution or winding up or total or partial liquidation or reorganization of the Company or any Guarantor, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings, all amounts due or to become due upon all Senior Indebtedness shall first be paid in full, in cash or cash equivalents, before the Holders of the Notes or the Trustee on behalf of the Holders of the Notes shall be entitled to receive any payment by the Company or such Guarantor on account of Senior Subordinated Obligations or any payment to acquire any of the Notes for cash, property or securities, or any distribution with respect to the Notes of any cash, property or securities (other than a payment or distribution in the form of Permitted Junior Securities). Before any payment may be made by, or on behalf of, the Company or such Guarantor on any Senior Subordinated Obligations (other than with the money and/or Government Securities held under any defeasance trust established pursuant to the terms of the Indenture on the Closing Date and not in violation of the terms of any Senior Indebtedness), upon any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets or securities of the Company or such Guarantor of any kind or character, whether in cash, property or securities (other than a payment or distribution in the form of Permitted Junior Securities), to which the Holders of the Notes or the Trustee on behalf of the Holders of the Notes would be entitled, but for the subordination provisions of the Indenture, shall be made by the Company or such Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution or by the Holders of the Notes or the Trustee if received by them or it, directly to the holders of the Senior Indebtedness or their representatives or to any trustee or trustees under any indenture pursuant to which any such Senior Indebtedness may have been issued, as their respective interests appear, to the extent necessary to pay all such Senior Indebtedness in full, in cash or cash equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Indebtedness. If a payment or distribution is made to Holders of the Notes that, due to the subordination provisions, should not have been made to them, such Holders shall be required to hold such payment(s) or distribution(s) in trust for the holders of Senior Indebtedness and pay it over to them as their respective interests may appear. No direct or indirect payment (other than a payment or distribution in the form of Permitted Junior Securities) by or on behalf of the Company or any Guarantor of Senior Subordinated Obligations (other than with the money and/or Government Securities held under any defeasance trust established pursuant to the terms of the Indenture on the Closing Date and not in violation of the terms of any Senior Indebtedness), whether pursuant to the terms of the Notes or the Note Guarantees or upon acceleration or otherwise shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of the obligations on any Senior Indebtedness of the Company or such Guarantor and such default shall not have been cured or waived or the benefits of this sentence waived by or on behalf of the holders of such Senior Indebtedness. In addition, during the continuance of any other event of default with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated, upon receipt by the Trustee of written notice from the trustee or other representative for the holders of such Designated Senior Indebtedness (or the holders of at least a majority in principal amount of such Designated Senior Indebtedness then outstanding), no payment (other than a payment or distribution in the form of Permitted Junior Securities) of Senior Subordinated Obligations (other than with the money and/or Government Securities held under any defeasance trust established pursuant to the terms of the Indenture on the Closing Date and not in violation of the terms of any Senior Indebtedness) may be made by or on behalf of the Company or such Guarantor upon or in respect of the Notes or the Note Guarantees for a period (a "Payment Blockage Period") commencing on the date of receipt of such notice and ending 179 days thereafter (unless, in each case, such Payment Blockage Period shall be terminated by written notice to the Trustee from such trustee of, or other representatives for, such holders or by payment in full in cash or cash equivalents of such Designated Senior Indebtedness or at such time as such defaults cease to exist or have been cured or waived). Not more than one Payment Blockage Period may be commenced with respect to the Notes (with respect to the Company or any particular Guarantor) during any period of 360 consecutive days. Notwithstanding anything in the Indenture to the contrary, (with respect to the Company and each Guarantor) there must be 68 75 180 consecutive days in any 360-day period in which no Payment Blockage Period is in effect. No event of default that existed or was continuing (it being acknowledged that any subsequent action that would give rise to an event of default pursuant to any provision under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose) on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or shall be made, the basis for the commencement of a second Payment Blockage Period by the representative for, or the holders of, such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 60 consecutive days. To the extent any payment of Senior Indebtedness (whether by or on behalf of the Company or any Guarantor, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person, the Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent the obligation to repay any Senior Indebtedness is declared to be fraudulent, invalid, or otherwise set aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then the obligation so declared fraudulent, invalid or otherwise set aside (and all other amounts that would come due with respect thereto had such obligation not been so affected) shall be deemed to be reinstated and outstanding as Senior Indebtedness for all purposes hereof as if such declaration, invalidity or setting aside had not occurred. If the Company and the Guarantors fail to make any payment on the Notes when due or within any applicable grace period, whether or not on account of payment blockage provisions, such failure would constitute an Event of Default under the Indenture and would enable the holders of the Notes to accelerate the maturity thereof; provided, however, that so long as the Credit Facility is in effect, such declaration shall not become effective until the earlier of (A) five Business Days after delivery of such notice to the representative of the Credit Facility and (B) the acceleration of any Indebtedness under the Credit Facility. See "-- Events of Default." By reason of the subordination provisions described above, in the event of the Company's or any Guarantor's liquidation or dissolution, holders of Senior Indebtedness may receive more, ratably, and holders of the Notes may receive less, ratably, than the other creditors of the Company or any Guarantor. CERTAIN DEFINITIONS Set forth below is a summary of certain of the defined terms used in the covenants and other provisions of the Indenture. Reference is made to the Indenture for the full definition of all terms as well as any other capitalized term used herein for which no definition is provided. "Acquired Indebtedness" means Indebtedness of a Person existing at the time such Person (including an Unrestricted Subsidiary) becomes a Restricted Subsidiary or assumed in connection with an Asset Acquisition by a Restricted Subsidiary and not Incurred in connection with such Person becoming a Restricted Subsidiary or such Asset Acquisition; provided that Indebtedness of such Person which is redeemed, defeased, retired or otherwise repaid at the time of or immediately upon consummation of the transactions by which such Person becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired Indebtedness. "Adjusted Consolidated Net Income" means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period determined in conformity with GAAP; provided that the following items shall be excluded in computing Adjusted Consolidated Net Income (without duplication): (i) the net income of any Person that is not a Restricted Subsidiary, except to the extent of the amount of dividends or other distributions actually paid to the Company or any of its Restricted Subsidiaries by such Person during such period; (ii) solely for the purposes of calculating the amount of Restricted Payments that may be made pursuant to clause (C) of the first paragraph of the "Limitation on Restricted Payments' covenant described below (and in such case, except to the extent includable pursuant to clause (i) above), the 69 76 net income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any of its Restricted Subsidiaries or all or substantially all of the property and assets of such Person are acquired by the Company or any of its Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis) attributable to Asset Sales; (v) except for purposes of calculating the amount of Restricted Payments that may be made pursuant to clause (C) of the first paragraph of the "Limitation on Restricted Payments" covenant described below, any amount paid or accrued as dividends on Preferred Stock of the Company or any Restricted Subsidiary owned by Persons other than the Company and any of its Restricted Subsidiaries; (vi) all extraordinary gains and extraordinary losses; (vii) gains or losses on the repurchase or redemption of any securities (including in connection with the retirement or defeasance of any Indebtedness); and (viii) non-cash expenses arising from the write-off of goodwill, in-process research and development costs and inventory and fixed asset charges, in each case associated with Asset Acquisitions. "Adjusted Consolidated Net Tangible Assets" means, as of any date of determination, the total amount of assets of the Company and its Restricted Subsidiaries (less applicable depreciation, amortization and other valuation reserves), except to the extent resulting from write-ups of capital assets (excluding write-ups in connection with accounting for acquisitions in conformity with GAAP and excluding the effects of foreign currency exchange adjustments under Financial Accounting Standards Board Statement of Financial Accounting Standards No. 52), after deducting therefrom (i) all current liabilities of the Company and its Restricted Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense, deferred financing costs and other like intangibles, all as set forth on the most recent quarterly or annual consolidated balance sheet of the Company and its Restricted Subsidiaries, prepared in conformity with GAAP and filed with the Commission or provided to the Trustee pursuant to the "Commission Reports and Reports to Holders" covenant. "Affiliate" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Asset Acquisition" means (i) an investment by the Company or any of its Restricted Subsidiaries in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be merged into or consolidated with the Company or any of its Restricted Subsidiaries or (ii) an acquisition by the Company or any of its Restricted Subsidiaries of the property and assets of any Person other than the Company or any of its Restricted Subsidiaries that constitute substantially all of a division or line of business of such Person. "Asset Disposition" means the sale or other disposition by the Company or any of its Restricted Subsidiaries (other than to the Company or another Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of any Restricted Subsidiary or (ii) all or substantially all of the assets that constitute a division or line of business of the Company or any of its Restricted Subsidiaries. "Asset Sale" means any sale, transfer or other disposition (including by way of merger, consolidation or sale-leaseback transaction) in one transaction or a series of related transactions by the Company or any of its Restricted Subsidiaries to any Person other than the Company or any of its Restricted Subsidiaries of (i) all or any of the Capital Stock of any Restricted Subsidiary, (ii) all or substantially all of the property and assets of an operating unit or business of the Company or any of its Restricted Subsidiaries or (iii) any other property and assets (other than the Capital Stock or other Investment in an Unrestricted Subsidiary) of the Company or any of its Restricted Subsidiaries outside the ordinary course of business of the Company or such Restricted Subsidiary and, in each case, that is not governed by the provisions of the Indenture applicable to mergers, consolidations and sales of assets of the Company; provided that "Asset Sale" shall not include (a) sales or 70 77 other dispositions of inventory, receivables and other current assets (including, without limitation, Temporary Cash Investments), (b) sales, transfers or other dispositions of assets constituting a Restricted Payment permitted to be made under the "Limitation on Restricted Payments" covenant, (c) sales or other dispositions of assets for consideration at least equal to the fair market value of the assets sold or disposed of, to the extent that the consideration received would satisfy clause (B) of the "Limitation on Asset Sales" covenant, (d) dispositions of equipment that is no longer useful in the conduct of the business of the Company or any of its Restricted Subsidiaries, and (e) sales, leases, conveyances, transfers, or other dispositions to the Company or to a Restricted Subsidiary or to any other Person if after giving effect to such sale, lease, conveyance, transfer or other disposition such other Person is or becomes a Restricted Subsidiary. "Average Life" means, at any date of determination with respect to any debt security, the quotient obtained by dividing (i) the sum of the products of (a) the number of years from such date of determination to the dates of each successive scheduled principal payment of such debt security and (b) the amount of such principal payment by (ii) the sum of all such principal payments. "Capital Stock" means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Closing Date or issued thereafter including, without limitation, all Common Stock and Preferred Stock. "Capitalized Lease Obligations" means indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such indebtedness shall be the capitalized amount of such obligations determined in accordance with GAAP. "Change of Control" means such time as (i) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of the Company on a fully diluted basis; or (ii) individuals who on the Closing Date constitute the Board of Directors (together with any new directors whose election by the Board of Directors or whose nomination by the Board of Directors for election by the Company's stockholders was approved by a vote of at least a majority of the members (A) of the Board of Directors then in office who either were members of the Board of Directors on the Closing Date or whose election or nomination for election was previously so approved or (B) the nominating committee of the Board of Directors whose members were elected pursuant to the foregoing clause (A)) cease for any reason to constitute a majority of the members of the Board of Directors then in office. "Closing Date" means the date on which the Original Notes were originally issued under the Indenture. "Consolidated EBITDA" means, for any period, Adjusted Consolidated Net Income for such period plus the following (to the extent deducted in calculating such Adjusted Consolidated Net Income), (i) Consolidated Interest Expense, (ii) income taxes (other than income taxes (either positive or negative) attributable to extraordinary and non-recurring gains or losses or sales of assets), (iii) depreciation expense, (iv) amortization expense and (v) all other non-cash items, including, without limitation, any non-cash charge reflecting compensation expense relating to employee stock option or similar plans, reducing Adjusted Consolidated Net Income (other than items that will require cash payments and for which an accrual or reserve is, or is required by GAAP to be, made), less all non-cash items increasing Adjusted Consolidated Net Income, all as determined on a consolidated basis for the Company and its Restricted Subsidiaries in conformity with GAAP; provided that, if any Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount of the Adjusted Consolidated Net Income attributable to such Restricted Subsidiary multiplied by (B) the percentage ownership interest in the income of such Restricted Subsidiary not owned on the last day of such period by the Company or any of its Restricted Subsidiaries. "Consolidated Interest Expense" means, without duplication, for any period, the aggregate amount of interest which, in conformity with GAAP, would be set forth opposite the caption "interest expense" or any 71 78 like caption on a statement of operations (including, without limitation, amortization of debt discount and debt issuance cost; the interest portion of any deferred payment obligation; all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; the net costs associated with Interest Rate Agreements; amortization of other financing fees and expenses; interest on Indebtedness that is Guaranteed or secured by the Company or any of its Restricted Subsidiaries; capitalized interest and accrued interest; dividends in respect of all Disqualified Stock of the Company and all Preferred Stock of Subsidiaries; and all other non-cash interest expense) and all but the principal component of rentals in respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be accrued by the Company and its Restricted Subsidiaries during such period; excluding, however, (i) any amount of such interest of any Restricted Subsidiary if the net income of such Restricted Subsidiary is excluded in the calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the definition thereof (but only in the same proportion as the net income of such Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the definition thereof) and (ii) any premiums, fees and expenses (and any amortization thereof) payable in connection with the offering of the Notes, all as determined on a consolidated basis (without taking into account Unrestricted Subsidiaries) in conformity with GAAP. "Credit Facility" means the Amended and Restated Revolving Credit Agreement dated as of December 8, 1997 among the Company, the lending institutions listed on Schedule 1 thereto, and BankBoston, N.A., as Agent, as guaranteed by the Guarantors, as amended, as such agreement, facility or credit, in whole or in part, may be amended, renewed, extended, substituted, refinanced, restructured, replaced, supplemented or otherwise modified from time to time and whether by the same or another agent, lender or group of lenders (including, without limitation, any successive renewals, extensions, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing) for the Company or any Restricted Subsidiary. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement. "Default" means any event that is, or after notice or passage of time or both would be, an Event of Default. "Designated Senior Indebtedness" means Indebtedness under the Credit Facility and any Indebtedness constituting Senior Indebtedness that, at the date of determination, has an aggregate principal amount outstanding of at least $25 million owed by the Company or the Guarantors and that is specifically designated by the Company or any Guarantor, in the instrument creating or evidencing such Senior Indebtedness as "Designated Senior Indebtedness." "Disqualified Stock" means any class or series of Capital Stock of any Person that by its terms or otherwise is (i) required to be redeemed prior to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of such class or series of Capital Stock at any time prior to the Stated Maturity of the Notes or (iii) convertible into or exchangeable for Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled maturity prior to the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the Stated Maturity of the Notes shall not constitute Disqualified Stock if the "asset sale" or "change of control' provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained in "Limitation on Asset Sales" and "Repurchase of Notes upon a Change of Control" covenants described below and such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company's repurchase of such Notes as are required to be repurchased pursuant to the "Limitation on Asset Sales" and "Repurchase of Notes upon a Change of Control" covenants described below. "Equity Offering" means (i) a public offering by the Company of its Capital Stock (other than Disqualified Stock) or (ii) the issuance and sale of Capital Stock of the Company to a person engaged 72 79 primarily in a business that is related, ancillary or complementary to the businesses of the Company and its Restricted Subsidiaries on the date of such issuance or sale, provided that such person has a market capitalization of at least $50 million. "fair market value" means the price that would be paid in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors, whose determination shall be conclusive if evidenced by a Board Resolution. "Foreign Subsidiary" means any Subsidiary of the Company organized under laws other than the laws of the United States of America or any jurisdiction thereof. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Closing Date, including, without limitation, those 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 approved by a significant segment of the accounting profession. All ratios and computations contained or referred to in the Indenture shall be computed in conformity with GAAP applied on a consistent basis, except that calculations made for purposes of determining compliance with the terms of the covenants and with other provisions of the Indenture shall be made without giving effect to (i) the amortization of any expenses incurred in connection with the offering of the Notes and (ii) except as otherwise provided, the amortization or write-off of any amounts required or permitted (as of the Closing Date) by Accounting Principles Board Opinion Nos. 16 and 17. "Government Securities" means direct obligations of, obligations fully guaranteed by, or participations in pools consisting solely of obligations of or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the option of the issuer thereof. "Guarantee" means an obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) 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 agreements to keep-well, to purchase assets, goods, securities or services (unless such purchase arrangements are on arm's-length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) 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); provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Incur" means, with respect to any Indebtedness or other obligation of any Person, to incur, create, issue, assume, Guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of any such Indebtedness or other obligation on the balance sheet of such Person, including an "Incurrence" of Acquired Indebtedness; provided that neither the accrual of interest nor the accretion of original issue discount shall be considered an Incurrence of Indebtedness. "Indebtedness" means, with respect to any Person at any date of determination (without duplication), (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto, but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations (other than obligations described in (i) or (ii) above or (v), (vi) or (vii) below) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn upon, to the extent such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand 73 80 for reimbursement), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, except Trade Payables, (v) all Capitalized Lease Obligations, (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such Person and (viii) to the extent not otherwise included in this definition, obligations under Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided (A) that the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at the time of its issuance as determined in conformity with GAAP, (B) that money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to prefund the payment of the interest on such Indebtedness shall not be deemed to be "Indebtedness" and (C) that Indebtedness shall not include (i) any liability for federal, state, local or other taxes; (ii) any Trade Payables and other accrued liabilities arising in the ordinary course of business; or (iii) any indemnification obligation, purchase price adjustment, earnout or other similar obligation of the Person to third parties if such indemnification obligation would not appear as a liability upon a balance sheet of the Person prepared in accordance with GAAP. "Interest Coverage Ratio" means, on any Transaction Date, the ratio of (i) the aggregate amount of Consolidated EBITDA for the then most recent four fiscal quarters prior to such Transaction Date for which reports have been filed with the Commission pursuant to the "Commission Reports and Reports to Holders" covenant (the "Four Quarter Period") to (ii) the aggregate Consolidated Interest Expense during such Four Quarter Period. In making the foregoing calculation, (A) pro forma effect shall be given to any Indebtedness Incurred or repaid during the period (the "Reference Period") commencing on the first day of the Four Quarter Period and ending on the Transaction Date (other than Indebtedness Incurred or repaid under a revolving credit or similar arrangement to the extent of the commitment thereunder (or under any predecessor revolving credit or similar arrangement) in effect on the last day of such Four Quarter Period unless any portion of such Indebtedness is projected, in the reasonable judgment of the senior management of the Company, to remain outstanding for a period in excess of 12 months from the date of the Incurrence thereof), in each case as if such Indebtedness had been Incurred or repaid on the first day of such Reference Period; (B) Consolidated Interest Expense attributable to interest on any Indebtedness (whether existing or being Incurred) computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the Transaction Date (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period; (C) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions (including giving pro forma effect to the application of proceeds of any Asset Disposition) that occur during such Reference Period as if they had occurred and such proceeds had been applied on the first day of such Reference Period; and (D) pro forma effect shall be given to asset dispositions and asset acquisitions (including giving pro forma effect to the application of proceeds of any asset disposition) that have been made by any Person that has become a Restricted Subsidiary or has been merged with or into the Company or any Restricted Subsidiary during such Reference Period and that would have constituted Asset Dispositions or Asset Acquisitions had such transactions occurred when such Person was a Restricted Subsidiary as if such asset dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the first day of such Reference Period; provided that to the extent that clause (C) or (D) of this sentence requires that pro forma effect be given to an Asset Acquisition or Asset Disposition, such pro forma calculation shall be based upon the four full fiscal quarters immediately preceding the Transaction Date of the Person, or division or line of business of the Person, that is acquired or disposed for which financial information is available. 74 81 "Interest Rate Agreement" means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement. "Investment" in any Person means any direct or indirect advance, loan or other extension of credit (including, without limitation, by way of Guarantee or similar arrangement; but excluding payment obligations of customers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable on the balance sheet of the Company or its Restricted Subsidiaries) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, bonds, notes, debentures or other similar instruments issued by, such Person and shall include (i) the designation or redesignation of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair market value of the Capital Stock (or any other Investment), held by the Company or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to be a Restricted Subsidiary, including without limitation, by reason of any transaction permitted by clause (iii) of the "Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries" covenant; provided that the fair market value of the Investment remaining in any Person that has ceased to be a Restricted Subsidiary shall not exceed the aggregate amount of Investments previously made in such Person valued at the time such Investments were made less the net reduction of such Investments. For purposes of the definition of "Unrestricted Subsidiary" and the "Limitation on Restricted Payments" covenant described below, (i) "Investment" shall include the fair market value of the assets (net of liabilities (other than liabilities to the Company or any of its Restricted Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value of the assets (net of liabilities (other than liabilities to the Company or any of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be considered a reduction in outstanding Investments and (iii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any agreement to give any security interest). "Moody's" means Moody's Investors Service, Inc. and its successors. "Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds of such Asset Sale in the form of cash or cash equivalents, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not interest, component thereof) when received in the form of cash or cash equivalents (except to the extent such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary) and proceeds from the conversion of other property received when converted to cash or cash equivalents, net of (i) brokerage commissions and other fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes (whether or not such taxes will actually be paid or are payable) as a result of such Asset Sale without regard to the consolidated results of operations of the Company and its Restricted Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale that either (A) is secured by a Lien on the property or assets sold or (B) is required to be paid as a result of such sale and (iv) appropriate amounts to be provided by the Company or any Restricted Subsidiary as a reserve against any liabilities associated with such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in conformity with GAAP and (b) with respect to any issuance or sale of Capital Stock, the direct or indirect proceeds of such issuance or sale in the form of cash or cash equivalents, net of attorney's fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. 75 82 "Offer to Purchase" means an offer to purchase Notes by the Company from the Holders commenced by mailing a notice to the Trustee and each Holder stating: (i) the covenant pursuant to which the offer is being made and that all Notes validly tendered will be accepted for payment on a pro rata basis; (ii) the purchase price and the date of purchase (which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the "Payment Date"); (iii) that any Note not tendered will continue to accrue interest pursuant to its terms; (iv) that, unless the Company defaults in the payment of the purchase price, any Note accepted for payment pursuant to the Offer to Purchase shall cease to accrue interest on and after the Payment Date; (v) that Holders electing to have a Note purchased pursuant to the Offer to Purchase will be required to surrender the Note, together with the form entitled "Option of the Holder to Elect Purchase" on the reverse side of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day immediately preceding the Payment Date; (vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the third Business Day immediately preceding the Payment Date, a telegram, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Notes delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased; and (vii) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of $1,000 or integral multiples thereof. On the Payment Date, the Company shall (i) accept for payment on a pro rata basis Notes or portions thereof tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes or portions thereof so accepted together with an Officers' Certificate specifying the Notes or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of $1,000 or integral multiples thereof. The Company will publicly announce the results of an Offer to Purchase as soon as practicable after the Payment Date. The Trustee shall act as the Paying Agent for an Offer to Purchase. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to an Offer to Purchase. "Permitted Investment" means (i) an Investment in the Company or a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary or be merged or consolidated with or into or transfer or convey all or substantially all its assets to, the Company or a Restricted Subsidiary; (ii) cash and Temporary Cash Investments; (iii) payroll, travel, relocation and similar loans or advances; (iv) stock, obligations or securities received in the settlement of debts incurred in the ordinary course of business and in satisfaction of judgments; (v) an Investment in an Unrestricted Subsidiary consisting solely of an Investment in another Unrestricted Subsidiary; (vi) Interest Rate Agreements and Currency Agreements designed solely to protect the Company or its Restricted Subsidiaries against fluctuations in interest rates or foreign currency exchange rates; (vii) Investments in the Notes (or the notes issued upon the exchange of the Notes); and (viii) Investments in an aggregate amount outstanding at any time not to exceed $100 million. "Permitted Junior Securities" means any securities of the Company, any Guarantor or any other business entity that are equity securities or are subordinated in right of payment to all Senior Indebtedness, that may at the time be outstanding, to substantially the same extent as, or to a greater extent than, the Notes and the Note Guarantees are so subordinated as provided in the Indenture; provided that Permitted Junior Securities may not have terms less favorable in any material respect to the Company or the holders of the Senior Indebtedness than the terms of the Indenture and the Notes. "Preferred Stock" of any Person means any Capital Sock of such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemption or upon liquidation. 76 83 "Purchase Money Indebtedness" means any Indebtedness Incurred in the ordinary course of business by a Person to finance the cost (including the cost of construction) of an item of property, the principal amount of which Indebtedness does not exceed the sum of (i) 100% of such cost and (ii) reasonable fees and expenses of such Person incurred in connection therewith. "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "Senior Indebtedness" means the following obligations of the Company or any Guarantor, whether outstanding on the Closing Date or thereafter Incurred: (i) all Indebtedness and all other monetary obligations (including principal, interest, expenses, fees, costs, enforcement expenses (including legal fees and disbursements) reimbursement or indemnity obligations and other monetary obligations) of the Company or any Guarantor under or in respect of the Credit Facility, any and all interest accruing or out of pocket costs incurred after the date of any filing by or against the Company or any Guarantor of any petition or under any bankruptcy, insolvency or reorganization act, regardless of whether the claim of the holders of such Senior Indebtedness is allowed or allowable in the case or proceeding relating thereto, (ii) all obligations of the Company or any Guarantor with respect to any Interest Rate Agreement or Currency Agreement, (iii) all obligations of the Company or any Guarantor to reimburse any bank or other Person in respect of amounts paid under letters of credit, acceptances or other similar instruments, (iv) all Indebtedness and all expenses, fees and other monetary obligations of the Company or any Guarantor (other than the Notes and the Note Guarantees), including principal and interest on such Indebtedness, unless such Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such Indebtedness is issued, is pari passu with, or subordinated in right of payment to, the Notes and (v) in addition to and without limiting the foregoing clauses (i) through (iv), all deferrals, renewals, extensions, replacements, substitutions and refundings of, and amendments, modifications and supplements to, with or without the same parties, any of the Senior Indebtedness described above; provided that the term "Senior Indebtedness" shall not include (a) any Indebtedness of the Company or any Guarantor that, when Incurred, was without recourse to the Company or such Guarantor, (b) any Indebtedness of the Company or any Guarantor to a Subsidiary of the Company, or to a joint venture in which the Company or such Guarantor has an interest, (c) any Indebtedness of the Company or any Guarantor, to the extent not permitted by the "Limitation on Indebtedness" covenant or the "Limitation on Senior Subordinated Indebtedness' covenant described below, (d) any repurchase, redemption or other obligation in respect of Disqualified Stock, (e) any Indebtedness to any employee of the Company or any of its Subsidiaries, (f) any liability for taxes owed or owing by the Company or any Guarantor or (g) any Trade Payables. Senior Indebtedness will also include interest accruing subsequent to events of bankruptcy of the Company or any Guarantor at the rate provided for in the document governing such Senior Indebtedness, whether or not such interest is an allowed claim enforceable against the debtor in a bankruptcy case under bankruptcy law. "Senior Subordinated Obligations" means any (i) principal of, premium, if any, or interest on the Notes, (ii) the Note Guarantees and (iii) other amounts (including fees and indemnity rights) payable pursuant to the terms of the Notes or the Note Guarantees or the Indenture or upon acceleration, including any amounts received upon the exercise of rights of rescission or other rights of action (including claims for damages) or otherwise, to the extent relating to the purchase price or the acquisition, repurchase or redemption of the Notes or amounts corresponding to such principal, premium, if any, or interest or other amounts on the Notes. "Significant Subsidiary" means, at any date of determination, any Restricted Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal year of the Company, accounted for more than 10% of the consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as of the end of such fiscal year, was the owner of more than 10% of the consolidated assets of the Company and its Restricted Subsidiaries, all as set forth on the most recently available consolidated financial statements of the Company for such fiscal year. "S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, and its successors. 77 84 "Stated Maturity" means, (i) with respect to any security, the date specified in such security as the fixed date on which the final installment of principal of such debt security is due and payable, including pursuant to any mandatory redemption provision. "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the voting power of the outstanding Voting Stock is owned, directly or indirectly, by such Person and one or more other Subsidiaries of such Person. "Temporary Cash Investment" means any of the following: (i) direct obligations of the United States of America or any agency thereof or obligations fully and unconditionally guaranteed by the United States of America or any agency thereof, (ii) time deposit accounts, certificates of deposit and money market deposits issued by a bank or trust company (including the Trustee) which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50 million (or the foreign currency equivalent thereof) and, with respect to any such entity organized under the laws of any foreign country has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor, (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with a bank or trust company (including the Trustee) meeting the qualifications described in clause (ii) above, (iv) commercial paper issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P, and (v) securities with maturities of five years or less from the date of acquisition issued or fully and unconditionally guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least investment grade by S&P or Moody's. "Trade Payables" means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person or any of its Subsidiaries arising in the ordinary course of business in connection with the acquisition of goods or services. "Transaction Date" means, with respect to the Incurrence of any Indebtedness by the Company or any of its Restricted Subsidiaries, the date such Indebtedness is to be Incurred and, with respect to any Restricted Payment, the date such Restricted Payment is to be made. "Unrestricted Subsidiary" means (i) Hadco Foreign Sales Corporation, CCIR International, Inc., Zycon Corporation and Continental Circuits Corp.; (ii) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below; and (iii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Restricted Subsidiary (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any Restricted Subsidiary; provided that either (I) the Subsidiary to be so designated has total assets of $20,000 or less or (II) if such Subsidiary has assets greater than $20,000, such designation would be permitted under the "Limitation on Restricted Payments" covenant described below. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation (i) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to such designation and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately after such designation would, if Incurred at such time, have been permitted to be Incurred (and shall be deemed to have been Incurred) for all purposes of the Indenture. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. Notwithstanding anything herein contained to the contrary, no Guarantor may be designated an Unrestricted Subsidiary unless all or 78 85 substantially all of the assets of such Guarantor are transferred to another Guarantor or a Person who upon such transfer becomes a Guarantor. "Voting Stock" means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person. "Wholly Owned" means, with respect to any Subsidiary of any Person, the ownership of all of the outstanding Capital Stock of such Subsidiary (other than any director's qualifying shares or Investments by foreign nationals mandated by applicable law) by such Person or one or more Wholly Owned Subsidiaries of such Person. COVENANTS Limitation on Indebtedness (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes and Indebtedness existing on the Closing Date (whether or not any such Indebtedness existing on the Closing Date is repaid or reborrowed)); provided that the Company and any Guarantor may Incur Indebtedness if, after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, the Interest Coverage Ratio would be greater than 3:1. Notwithstanding the foregoing, in addition to Indebtedness permitted by the foregoing paragraph the Company and any Restricted Subsidiary (except as specified below) may Incur each and all of the following: (i) Indebtedness of the Company and the Guarantors outstanding at any time in an aggregate principal amount not to exceed the commitments under the Credit Facility on the Closing Date; (ii) Indebtedness owed (A) to the Company evidenced by an unsubordinated promissory note or (B) to any Restricted Subsidiary; provided that any event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or another Restricted Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such Indebtedness not permitted by this clause (ii); (iii) Indebtedness issued in exchange for, or the net proceeds of which are used to refinance or refund, then outstanding Indebtedness (other than Indebtedness Incurred under clause (i), (ii), (iv), (vi) or (vii) of this paragraph; it being understood that Indebtedness Incurred under such clauses can be refinanced thereunder) and any refinancings thereof in an amount not to exceed the amount so refinanced or refunded (plus premiums, accrued interest, fees and expenses); provided that Indebtedness the proceeds of which are used to refinance or refund the Notes or Indebtedness that is pari passu with, or subordinated in right of payment to, the Notes shall only be permitted under this clause (iii) if (A) in case the Notes are refinanced in part or the Indebtedness to be refinanced is pari passu with the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is outstanding, is expressly made pari passu with, or subordinate in right of payment to, the remaining Notes, (B) in case the Indebtedness to be refinanced is subordinated in right of payment to the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made subordinate in right of payment to the Notes at least to the extent that the Indebtedness to be refinanced is subordinated to the Notes and (C) such new Indebtedness, determined as of the date of Incurrence of such new Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness to be refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining Average Life of the Indebtedness to be refinanced or refunded; and provided further that in no event may Indebtedness of the Company be refinanced by means of any Indebtedness of any Restricted Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in respect of performance, surety or appeal bonds provided in the ordinary course of business, (B) under Currency Agreements and Interest Rate Agreements; provided that such agreements (a) are designed solely to protect the Company or its Restricted Subsidiaries against fluctuations in foreign currency exchange rates or interest rates and (b) do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; and (C) arising from agreements providing for indemnification, adjustment of purchase price, 79 86 earnouts or similar obligations, or from Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in any case Incurred in connection with the disposition of any business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition), in a principal amount not to exceed the gross proceeds actually received by the Company or any Restricted Subsidiary in connection with such disposition; (v) Indebtedness of the Company and any Guarantor, to the extent the net proceeds thereof are promptly (A) used to purchase Notes tendered in an Offer to Purchase made as a result of a Change in Control or (B) deposited to defease the Notes as described below under "Defeasance"; (vi) Guarantees of the Notes and Guarantees of Indebtedness of the Company by any Restricted Subsidiary provided the Guarantee of such Indebtedness is permitted by and made in accordance with the "Limitation on Issuance of Guarantees by Restricted Subsidiaries" covenant described below; (vii) Indebtedness under the Notes and the Note Guarantees (as well as the notes issued upon the exchange of the Notes); (viii) Indebtedness of the Company or any Guarantor constituting Purchase Money Indebtedness or Capitalized Lease Obligations that do not, at any one time outstanding, exceed 10% of the Adjusted Consolidated Net Tangible Assets of the Company and the Guarantors; (ix) Indebtedness of the Company, the Guarantors and the Foreign Subsidiaries outstanding at any time in the aggregate principal amount not to exceed $100 million; and (x) Indebtedness of the Company and the Guarantors (in addition to Indebtedness permitted under clauses (i) through (ix) above) in an aggregate principal amount outstanding at any time not to exceed $50 million. (b) With respect to any particular Indebtedness, notwithstanding any other provision of this "Limitation on Indebtedness" covenant, the maximum amount of Indebtedness that the Company or a Restricted Subsidiary may Incur pursuant to this "Limitation on Indebtedness" covenant shall not be deemed to be exceeded due solely to the result of fluctuations in the exchange rates of currencies. (c) For purposes of determining any particular amount of Indebtedness under this "Limitation on Indebtedness" covenant, (1) Guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included and (2) any Liens granted pursuant to the equal and ratable provisions referred to in the "Limitation on Liens" covenant described below shall not be treated as Indebtedness. For purposes of determining compliance with this "Limitation on Indebtedness" covenant, in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described in the above clauses, the Company, in its sole discretion, shall classify, and from time to time may reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of such clauses. No Indebtedness incurred pursuant to the first paragraph of Section (a) of this "Limitation on Indebtedness" covenant shall be included in calculating any limitation set forth in clauses (i) through (x), of such Section (a). Limitation on Senior Subordinated Indebtedness The Company and the Guarantors shall not Incur any Indebtedness that is subordinate in right of payment to any Senior Indebtedness unless such Indebtedness is pari passu with, or subordinated in right of payment to, the Notes or the Note Guarantee of such Guarantor, as the case may be; provided that the foregoing limitation shall not apply to distinctions between categories of Senior Indebtedness that exist by reason of any Liens or Guarantees arising or created in respect of some but not all Senior Indebtedness. Limitation on Restricted Payments The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, (i) declare or pay any dividend or make any distribution on or with respect to its Capital Stock (other than (x) dividends or distributions payable solely in shares of its Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to acquire shares of such Capital Stock and (y) pro rata dividends or distributions on Common Stock of Restricted Subsidiaries held by minority stockholders) held by Persons other than the Company or any of its Restricted Subsidiaries, (ii) purchase, redeem, retire or otherwise acquire for value any shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary (including options, warrants or other rights to acquire such shares of Capital Stock) held by any Person or (B) a Restricted Subsidiary 80 87 (including options, warrants or other rights to acquire such shares of Capital Stock) held by any Affiliate of the Company (other than a Wholly Owned Restricted Subsidiary) or any holder (or any Affiliate of such holder) of 5% or more of the Capital Stock of the Company, (iii) make any voluntary or optional principal payment, or voluntary or optional redemption, repurchase, defeasance, or other acquisition or retirement for value, of Indebtedness of the Company that is subordinated in right of payment to the Notes or (iv) make any Investment, other than a Permitted Investment, in any Person (such payments or any other actions described in clauses (i) through (iv) above being collectively "Restricted Payments") if, at the time of, and after giving effect to, the proposed Restricted Payment: (A) a Default or Event of Default shall have occurred and be continuing, (B) the Company could not Incur at least $1.00 of Indebtedness under the first paragraph of the "Limitation on Indebtedness" covenant or (C) the aggregate amount of all Restricted Payments (the amount, if other than in cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution) made after the Closing Date shall exceed the sum of (1) 50% of the aggregate amount of the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated Net Income is a loss, minus 100% of the amount of such loss) (determined by excluding income resulting from transfers of assets by the Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter immediately following the Closing Date and ending on the last day of the last fiscal quarter preceding the Transaction Date for which reports have been filed with the Commission or provided to the Trustee pursuant to the "Commission Reports and Reports to Holders" covenant plus (2) the aggregate Net Cash Proceeds received by the Company after the Closing Date from the issuance and sale permitted by the Indenture of its Capital Stock (other than Disqualified Stock) to a Person who is not a Subsidiary of the Company, including an issuance or sale permitted by the Indenture of Indebtedness of the Company for cash subsequent to the Closing Date upon the conversion of such Indebtedness into Capital Stock (other than Disqualified Stock) of the Company, or from the issuance to a Person who is not a Subsidiary of the Company of any options, warrants or other rights to acquire Capital Stock of the Company (in each case, exclusive of any Disqualified Stock or any options, warrants or other rights that are redeemable at the option of the holder, or are required to be redeemed, prior to the Stated Maturity of the Notes) plus (3) an amount equal to the net reduction in Investments (other than reductions in Permitted Investments or Investments made pursuant to the following paragraph) in any Person resulting from payments of interest on Indebtedness, dividends, repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the Net Cash Proceeds from the sale of any such Investment (except, in each case, to the extent any such payment or proceeds are included in the calculation of Adjusted Consolidated Net Income), or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of "Investments"), not to exceed, in each case, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary plus (4) $5 million. The foregoing provision shall not be violated by reason of: (i) the payment of any dividend or distribution within 60 days after the date of declaration thereof if, at said date of declaration, such payment would comply with the foregoing paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or retirement for value of Indebtedness that is subordinated in right of payment to the Notes including premium, if any, and accrued and unpaid interest, with the proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of the second paragraph of part (a) of the "Limitation on Indebtedness" covenant; (iii) the repurchase, redemption or other acquisition of Capital Stock of the Company or an Unrestricted Subsidiary (or options, warrants or other rights to acquire such Capital Stock) in exchange for, or out of the proceeds of a substantially concurrent offering of, shares of Capital Stock (other than Disqualified Stock) of the Company (or options, warrants or other rights to acquire such Capital Stock); (iv) the making of any principal payment or the repurchase, redemption, retirement, defeasance or other acquisition for value of Indebtedness of the Company which is subordinated in right of payment to the Notes in exchange for, or out of the proceeds of, a substantially concurrent offering of, shares of the Capital Stock (other than Disqualified Stock) of the Company (or options, warrants or other rights to acquire such Capital Stock); (v) payments or distributions, to dissenting stockholders pursuant to applicable law, pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of the Indenture applicable to mergers, consolidations and transfers of all or substantially all of the property and assets of the Company; 81 88 (vi) Restricted Payments not to exceed $30 million (provided that to the extent such Restricted Payment is an Investment, Investments not to exceed $30 million at any one time outstanding); or (vii) Investments acquired in exchange for Capital Stock (other than Disqualified Stock) of the Company (or options, warrants or other rights to acquire such Capital Stock) or financed or refinanced out of the proceeds of a substantially concurrent offering of shares of Capital Stock of the Company (or options, warrants or other rights to acquire such Capital Stock); provided that, except in the case of clauses (i) and (iii), no Default or Event of Default shall have occurred and be continuing or occur as a consequence of the actions or payments set forth therein. Each Restricted Payment permitted pursuant to the preceding paragraph (other than the Restricted Payment referred to in clause (ii) thereof, an exchange of Capital Stock for Capital Stock or Indebtedness referred to in clause (iii) or (iv) thereof and an Investment referred to in clause (vi) thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred to in clauses (iii) and (iv), shall be included in calculating whether the conditions of clause (C) of the first paragraph of this "Limitation on Restricted Payments" covenant have been met with respect to any subsequent Restricted Payments. In the event the proceeds of an issuance of Capital Stock of the Company are used for the redemption, repurchase or other acquisition of the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash Proceeds of such issuance shall be included in clause (C) of the first paragraph of this "Limitation on Restricted Payments" covenant only to the extent such proceeds are not used for such redemption, repurchase or other acquisition of Indebtedness. The amount of any Investment "outstanding" at any time shall be deemed to be equal to the amount of such Investment on the date made, less the return on capital to the Company and its Restricted Subsidiaries with respect to such Investment by distribution, sale or otherwise (up to the amount of such Investment on the date made). Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to (i) pay dividends or make any other distributions permitted by applicable law on any Capital Stock of such Restricted Subsidiary owned by the Company or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or any other Restricted Subsidiary, (iii) make loans or advances to the Company or any other Restricted Subsidiary or (iv) transfer any of its property or assets to the Company or any other Restricted Subsidiary. The foregoing provisions shall not restrict any encumbrances or restrictions: (i) existing on the Closing Date in the Credit Facility, the Indenture or any other agreements in effect on the Closing Date, and any amendments, modifications, supplements, extensions, refinancings, renewals or replacements of such agreements; provided that the encumbrances and restrictions in any such amendments, modifications, supplements, extensions, refinancings, renewals or replacements are no less favorable in any material respect to the Holders than those encumbrances or restrictions that are then in effect and that are being amended, modified, supplemented, extended, refinanced, renewed or replaced; (ii) existing under or by reason of applicable law; (iii) under any instrument governing Acquired Indebtedness incurred in accordance with the Indenture; provided that such encumbrances or restrictions are not adopted in contemplation of the related acquisition; (iv) in the case of clause (iv) of the first paragraph of this "Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries" covenant, (A) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset, (B) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by the Indenture or (C) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any Restricted Subsidiary; (v) with respect to a Restricted Subsidiary and imposed pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of, or property and assets of, such Restricted Subsidiary; and (vi) with respect to any Foreign Subsidiary; provided that (A) the 82 89 Investments of the Company and its Subsidiaries in such Foreign Subsidiary are, as determined by the Board of Directors, not made for the purpose of removing assets from the Company and the Guarantors which removal, in the judgment of the Board of Directors, would be likely to have a material adverse impact on the Company's ability to make payments on the Notes and (B) such encumbrances or restrictions are not, in the judgment of the Board of Directors of the Company, likely to have a material adverse impact on the Company's ability to make payments on the Notes. Nothing contained in this "Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries" covenant shall prevent the Company or any Restricted Subsidiary from (1) creating, incurring, assuming or suffering to exist any Liens otherwise permitted in the "Limitation on Liens" covenant or (2) restricting the sale or other disposition of property or assets of the Company or any of its Restricted Subsidiaries that secure Indebtedness of the Company or any of its Restricted Subsidiaries. Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries The Company will not sell, and will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of Capital Stock of a Restricted Subsidiary (including options, warrants or other rights to purchase shares of such Capital Stock) except (i) to the Company or a Wholly Owned Restricted Subsidiary; (ii) issuances of director's qualifying shares or sales to foreign nationals of shares of Capital Stock of foreign Restricted Subsidiaries, to the extent required by applicable law; (iii) if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under the "Limitation on Restricted Payments" covenant if made on the date of such issuance or sale; or (iv) issuances or sales of Common Stock of a Restricted Subsidiary, provided that the Company or such Restricted Subsidiary applies the Net Cash Proceeds, if any, of any such sale in accordance with clause (A) or (B) of the "Limitation on Asset Sales" covenant described below. Limitation on Issuances of Guarantees by Restricted Subsidiaries The Company will not permit any Restricted Subsidiary, directly or indirectly, to Guarantee any Indebtedness of the Company which is pari passu with or subordinate in right of payment to the Notes ("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for a Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee; provided that this paragraph shall not be applicable to any Guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is subordinated to the Notes. Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted Subsidiary may provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's and each Restricted Subsidiary's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by the Indenture) or (ii) the release or discharge of the Guarantee which resulted in the creation of such Subsidiary Guarantee, except a discharge or release by or as a result of payment under such Guarantee. 83 90 Limitation on Transactions with Shareholders and Affiliates The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into, renew or extend any transaction (including, without limitation, the purchase, sale, lease or exchange of property or assets, or the rendering of any service) with any holder (or any Affiliate of such holder) of 10% or more of any class of Capital Stock of the Company (calculated on a fully diluted basis) or with any Affiliate of the Company or any Restricted Subsidiary, except upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than could be obtained, at the time of such transaction or, if such transaction is pursuant to a written agreement, at the time of the execution of the agreement providing therefor, in a comparable arm's-length transaction with a Person that is not such a holder or an Affiliate. The foregoing limitation does not limit, and shall not apply to (i) transactions (A) approved by a majority of the disinterested members of the Board of Directors or (B) for which the Company or a Restricted Subsidiary delivers to the Trustee a written opinion of a nationally recognized investment banking firm stating that the transaction is fair to the Company or such Restricted Subsidiary from a financial point of view; (ii) any transaction solely between the Company and any of its Wholly Owned Restricted Subsidiaries or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment in cash or securities of reasonable and customary regular fees to directors of the Company who are not employees of the Company; (iv) any payments or other transactions pursuant to any tax-sharing agreement between the Company and any other Person with which the Company files a consolidated tax return or with which the Company is part of a consolidated group for tax purposes; or (v) any Restricted Payments not prohibited by the "Limitation on Restricted Payments" covenant. Notwithstanding the foregoing, any transaction or series of related transactions covered by the first paragraph of this "Limitation on Transactions with Shareholders and Affiliates" covenant and not covered by clauses (ii) through (v) of this paragraph, the aggregate amount of which exceeds $2 million in value, must be approved or determined to be fair in the manner provided for in clause (i)(A) or (B) above. Limitation on Liens The Company and the Guarantors shall not Incur any Indebtedness secured by a Lien ("Secured Indebtedness") which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes or the Note Guarantee of such Guarantor, as the case may be, equally and ratably with (or, if the Secured Indebtedness is subordinated in right of payment to the Notes, prior to) such Secured Indebtedness for so long as such Secured Indebtedness is secured by such Lien. The foregoing shall not apply to Liens (including extensions and renewals thereof) upon real or personal property acquired after the Closing Date, provided that (a) such Lien is created solely for the purpose of securing Indebtedness Incurred, in accordance with the "Limitation on Indebtedness' covenant described below, to finance the cost (including the cost of design, development, acquisition, construction, installation, improvement, transportation or integration) of the item of property or assets subject thereto and such Lien is created prior to, at the time of or within six months after the later of the acquisition, the completion of construction or the commencement of full operation of such property, (b) the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost and (c) any such Lien shall not extend to or cover any property or assets other than such item of property or assets and any improvements on such item. Limitation on Asset Sales The Company will not, and will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless (i) the consideration received by the Company or such Restricted Subsidiary is at least equal to the fair market value of the assets sold or disposed of and (ii) at least 75% of the consideration received consists of cash or Temporary Cash Investments; provided, however, that the amount of any note or other securities received by the Company or any such Restricted Subsidiary which are converted into cash within 180 days of such Asset Sale shall be deemed to be cash for purposes of this provision. In the event and to the extent that the Net Cash Proceeds received by the Company or any of its Restricted Subsidiaries from one or more Asset 84 91 Sales occurring on or after the Closing Date in any period of 12 consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the date closest to the commencement of such 12-month period for which a consolidated balance sheet of the Company and its Subsidiaries has been filed with the Commission pursuant to the "Commission Reports and Reports to Holders" covenant), then the Company shall or shall cause the relevant Restricted Subsidiary to (i) within twelve months after the date Net Cash Proceeds so received exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an amount equal to such excess Net Cash Proceeds to permanently repay Senior Indebtedness of the Company, or any Restricted Subsidiary providing a Subsidiary Guarantee pursuant to the "Limitation on Issuances of Guarantees by Restricted Subsidiaries" covenant described above or Indebtedness of any other Restricted Subsidiary, in each case owing to a Person other than the Company or any of its Restricted Subsidiaries or (B) invest an equal amount, or the amount not so applied pursuant to clause (A) (or enter into a definitive agreement committing to so invest within 12 months after the date of such agreement), in property or assets (other than current assets) of a nature or type or that are used in a business (or in a company having property and assets of a nature or type, or engaged in a business) similar or related to the nature or type of the property and assets of, or the business of, the Company and its Restricted Subsidiaries existing on the date of such investment and (ii) apply (no later than the end of the 12-month period referred to in clause (i)) such excess Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as provided in the following paragraph of this "Limitation on Asset Sales" covenant. The amount of such excess Net Cash Proceeds required to be applied (or to be committed to be applied) during such 12-month period as set forth in clause (i) of the preceding sentence and not applied as so required by the end of such period shall constitute "Excess Proceeds." If, as of the first day of any calendar month, the aggregate amount of Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this "Limitation on Asset Sales" covenant totals at least $10 million, the Company must commence, not later than the fifteenth Business Day of such month, and consummate an Offer to Purchase from the Holders on a pro rata basis an aggregate principal amount of Notes equal to the Excess Proceeds on such date, at a purchase price equal to 100% of the principal amount of the Notes, plus, in each case, accrued interest (if any) to the Payment Date. Upon the consummation of any Offer to Purchase pursuant to this "Limitation on Asset Sales" covenant, the amount of Excess Proceeds shall be reset to zero. Any transaction permitted under the covenant described under "Consolidation, Merger and Sale of Assets" shall not be deemed an Asset Sale for purposes of this covenant. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL The Company must commence, within 30 days of the occurrence of a Change of Control, and consummate an Offer to Purchase for all Notes then outstanding, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Payment Date (subject to the right of Holders of record on the relevant Regular Record Date that is prior to the Change of Control to receive interest due on an Interest Payment Date). There can be no assurance that the Company will have sufficient funds available at the time of any Change of Control to make any debt payment (including repurchases of Notes) required by the foregoing covenant (as well as may be contained in other securities of the Company which might be outstanding at the time). The above covenant requiring the Company to repurchase the Notes will, unless consents are obtained, require the Company to repay all indebtedness then outstanding which by its terms would prohibit such Note repurchase, either prior to or concurrently with such Note repurchase. COMMISSION REPORTS AND REPORTS TO HOLDERS Whether or not the Company is then required to file reports with the Commission, the Company shall file with the Commission (if permitted) all such reports and other information as it would be required to file with the Commission by Sections 13(a) or 15(d) under the Securities Exchange Act of 1934 if it were subject thereto. The Company shall supply the Trustee and each Holder or shall supply to the Trustee for forwarding 85 92 to each such Holder, without cost to such Holder, copies of such reports and other information (whether or not so filed). EVENTS OF DEFAULT The following events will be defined as "Events of Default" in the Indenture: (a) default in the payment of principal of (or premium, if any, on) any Note when the same becomes due and payable at Stated Maturity, upon acceleration, redemption or otherwise; (b) default in the payment of interest on any Note when the same becomes due and payable, and such default continues for a period of 30 days whether or not such payment is prohibited by the provisions described above under "--Ranking; Subordination"; (c) default in the performance or breach of the provisions of the Indenture applicable to mergers, consolidations and transfers of all or substantially all of the assets of the Company or the failure to comply for 30 days after notice of its obligation to make an Offer to Purchase in accordance with the "Limitation on Asset Sales" or "Repurchase of Notes upon a Change of Control" covenant; (d) the Company defaults in the performance of or breaches any other covenant or agreement of the Company in the Indenture or under the Notes (other than a default specified in clause (a), (b) or (c) above) and such default or breach continues for a period of 60 consecutive days after written notice by the Trustee or the Holders of 25% or more in aggregate principal amount of the Notes; (e) there occurs with respect to any issue or issues of Indebtedness of the Company or any Significant Subsidiary having an outstanding principal amount of $10 million or more in the aggregate for all such issues of all such Persons, whether such Indebtedness now exists or shall hereafter be created, (I) an event of default that has caused the holder thereof to declare such Indebtedness to be due and payable prior to its Stated Maturity and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within 60 days of such acceleration and/or (II) the failure to make a principal payment at the final (but not any interim) fixed maturity and such defaulted payment shall not have been made, waived or extended within the applicable grace period related to any such payment default; (f) any final judgment or order (not covered by insurance) for the payment of money in excess of $10 million in the aggregate for all such final judgments or orders against all such Persons (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Company or any Significant Subsidiary and shall not be paid or discharged, and there shall be any period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $10 million during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in the premises enters a decree or order for (A) relief in respect of the Company or any Guarantor that would be a Significant Subsidiary if the references to 10% in the definition of Significant Subsidiary were 20% instead of 10% (a "Significant Guarantor") or any Significant Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (B) appointment of a receiver, liquidation, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Guarantor or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Guarantor or any Significant Subsidiary or (C) the winding up or liquidation of the affairs of the Company or any Significant Guarantor or any Significant Subsidiary and, in each case, such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; (h) the Company or any Significant Guarantor or any Significant Subsidiary (A) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver, liquidation, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Guarantor or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Subsidiary or (C) effects any general assignment for the benefit of creditors or (i) the Company or any Guarantor disclaims any Note Guarantee or asserts that any Note Guarantee is not binding on any Guarantor. If an Event of Default (other than an Event of Default specified in clause (g) or (h) above that occurs with respect to the Company or any Significant Guarantor or any Significant Subsidiary) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes, then outstanding, by written notice to the Company (and to the Trustee if such notice is given by 86 93 the Holders), may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued interest on the Notes to be immediately due and payable. Upon a declaration of acceleration, such principal of, premium, if any, and accrued interest shall be immediately due and payable; provided, however, that so long as the Credit Facility is in effect, such declaration shall not become effective until the earlier of (A) five Business Days after delivery of such notice to the representative of the Credit Facility and (B) the acceleration of any Indebtedness under the Credit Facility. In the event of a declaration of acceleration because an Event of Default set forth in clause (e) above has occurred and is continuing, such declaration of acceleration shall be automatically rescinded and annulled if the event of default triggering such Event of Default pursuant to clause (e) shall be remedied or cured by the Company or the relevant Significant Guarantor or the relevant Significant Subsidiary or waived by the holders of the relevant Indebtedness within 60 days after the declaration of acceleration with respect thereto. If an Event of Default specified in clause (g) or (h) above occurs with respect to the Company or any Significant Guarantor or any Significant Subsidiary, the principal of, premium, if any, and accrued interest on the Notes then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of at least a majority in principal amount of the outstanding Notes by written notice to the Company and to the Trustee, may waive all past defaults and rescind and annul a declaration of acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. For information as to the waiver of defaults, see "--Modification and Waiver." The Holders of at least a majority in aggregate principal amount of the outstanding Notes may 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. However, the Trustee may refuse to follow any direction that conflicts with law or the Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of such direction and may take any other action it deems proper that is not inconsistent with any such direction received from Holders of Notes. A Holder may not pursue any remedy with respect to the Indenture or the Notes unless: (i) the Holder gives the Trustee written notice of a continuing Event of Default; (ii) the Holders of at least 25% in aggregate principal amount of outstanding Notes make a written request to the Trustee to pursue the remedy; (iii) such Holder or Holders offer the Trustee indemnity satisfactory to the Trustee against any costs, liability or expense; (iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (v) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request. However, such limitations do not apply to the right of any Holder of an Note to receive payment of the principal of, premium, if any, or interest on, such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, which right shall not be impaired or affected without the consent of the Holder. The Indenture will require certain officers of the Company to certify, on or before a date not more than 120 days after the end of each fiscal year, that a review has been conducted of the activities of the Company and its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries' performance under the Indenture and that the Company has fulfilled all obligations thereunder, or, if there has been a default in the fulfillment of any such obligation, specifying each such default and the nature and status thereof. The Company will also be obligated to notify the Trustee of any default or defaults in the performance of any covenants or agreements under the Indenture. CONSOLIDATION, MERGER AND SALE OF ASSETS The Company will not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially an entirety in one transaction or a series of related transactions) to, any Person or permit any Person to merge with or into the Company unless: (i) the Company shall be the continuing Person, or the Person (if other than the Company) 87 94 formed by such consolidation or into which the Company is merged or that acquired or leased such property and assets of the Company shall be a corporation organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of the Company on all of the Notes and under the Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction on a pro forma basis the Company, or any Person becoming the successor obligor of the Notes, as the case may be, could Incur at least $1.00 of Indebtedness under the first paragraph of the "Limitation on Indebtedness" covenant; provided that this clause (iii) shall not apply to a consolidation, merger or sale of assets of the Company if all Liens and Indebtedness of the Company or any Person becoming the successor obligor on the Notes, as the case may be, and its Restricted Subsidiaries outstanding immediately after such transaction would, if Incurred at such time, have been permitted to be Incurred (and all such Liens and Indebtedness, other than Liens and Indebtedness of the Company and its Restricted Subsidiaries outstanding immediately prior to the transaction, shall be deemed to have been Incurred) for all purposes of the Indenture; and (iv) the Company delivers to the Trustee an Officers' Certificate (attaching the arithmetic computations to demonstrate compliance with clause (iii)) and an Opinion of Counsel, in each case stating that such consolidation, merger or transfer and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with; provided, however, that clauses (iii) and (iv) above do not apply if, in the good faith determination of the Board of Directors of the Company, whose determination shall be evidenced by a Board Resolution, the principal purpose of such transaction is to change the state of incorporation of the Company; and provided further that any such transaction shall not have as one of its purposes the evasion of the foregoing limitations. Notwithstanding the foregoing, (i) any Restricted Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax or other similar benefits. Each Guarantor will not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially an entirety in one transaction or a series of related transactions) to, any Person (other than the Company or another Guarantor) or permit any Person to merge with or into it unless: (i) such Guarantor shall be the continuing Person or (ii) the Person (if other than such Guarantor) formed by such consolidation or into which such Guarantor is merged or that acquired or leased such property and assets of such Guarantor shall be a corporation organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of such Guarantor's Note Guarantee. Notwithstanding the foregoing sentence, a Guarantor shall be discharged and released from all of its obligations under its Note Guarantee if all or substantially all of its assets are sold, or all of its Capital Stock is sold, in each case in a transaction in compliance with the "Limitation on Asset Sales" covenant. DEFEASANCE Defeasance and Discharge. The Indenture will provide that the Company will be deemed to have paid and will be discharged from any and all obligations in respect of the Notes on the 123rd day after the deposit referred to below, and the provisions of the Indenture will no longer be in effect with respect to the Notes (except for, among other matters, certain obligations to register the transfer or exchange of the Notes, to replace stolen, lost or mutilated Notes, to maintain paying agencies and to hold monies for payment in trust) if, among other things, (A) the Company has deposited with the Trustee, in trust, money and/or Government Securities that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of, premium, if any, and accrued interest on the Notes on the Stated Maturity of such payments in accordance with the terms of the Indenture and the Notes, (B) the Company has delivered to the Trustee (i) either (x) an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of 88 95 its option under this "Defeasance' provision and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge had not occurred, which Opinion of Counsel must be based upon (and accompanied by a copy of) a ruling of the Internal Revenue Service to the same effect unless there has been a change in applicable federal income tax law after the Closing Date such that a ruling is no longer required or (y) a ruling directed to the Trustee received from the Internal Revenue Service to the same effect as the aforementioned Opinion of Counsel and (ii) an Opinion of Counsel to the effect that the creation of the defeasance trust does not violate the Investment Company Act of 1940 and after the passage of 123 days following the deposit, the trust fund will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law, (C) immediately after giving effect to such deposit on a pro forma basis, no Event of Default, or event that after the giving of notice or lapse of time or both would become an Event of Default, shall have occurred and be continuing on the date of such deposit or during the period ending on the 123rd day after the date of such deposit, and such deposit shall not result in a breach or violation of, or constitute a default under, any other 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 and (D) if at such time the Notes are listed on a national securities exchange, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Notes will not be delisted as a result of such deposit, defeasance and discharge. Defeasance of Certain Covenants and Certain Events of Default. The Indenture further will provide that the provisions of the Indenture will no longer be in effect with respect to clauses (iii) and (iv) under "Consolidation, Merger and Sale of Assets" and all the covenants described herein under "Covenants," clause (c) under "Events of Default" with respect to such clauses (iii) and (iv) under "Consolidation, Merger and Sale of Assets," clause (d) under "Events of Default" with respect to such other covenants and clauses (e) and (f) under "Events of Default" shall be deemed not to be Events of Default upon, among other things, the deposit with the Trustee, in trust, of money and/or Government Securities that through the payment of interest and principal in respect thereof in accordance with their terms will provide money in an amount sufficient to pay the principal of, premium, if any, and accrued interest on the Notes on the Stated Maturity of such payments in accordance with the terms of the Indenture and the Notes, the satisfaction of the provisions described in clauses (B)(ii), (C) and (D) of the preceding paragraph and the delivery by the Company to the Trustee of an Opinion of Counsel to the effect that, among other things, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain covenants and Events of Default and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred. Defeasance and Certain Other Events of Default. In the event the Company exercises its option to omit compliance with certain covenants and provisions of the Indenture with respect to the Notes as described in the immediately preceding paragraph and the Notes are declared due and payable because of the occurrence of an Event of Default that remains applicable, the amount of money and/or Government Securities on deposit with the Trustee will be sufficient to pay amounts due on the Notes at the time of their Stated Maturity but may not be sufficient to pay amounts due on the Notes at the time of the acceleration resulting from such Event of Default. However, the Company will remain liable for such payments. MODIFICATION AND WAIVER Modifications and amendments of the Indenture may be made by the Company, the Guarantors and the Trustee with the consent of the Holders of not less than a majority in aggregate principal amount of the outstanding Notes and any provisions may be waived with the consent of the Holders of not less than a majority in aggregate principal amount of the outstanding Notes; provided, however, that no such modification or amendment may, without the consent of each Holder affected thereby, (i) change the Stated Maturity of the principal of, or any installment of interest on, any Note, (ii) reduce the principal amount of, or premium, if any, or interest on, any Note, (iii) change the currency of payment of principal of, or premium, if any, or interest on, any Note, (iv) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity (or, in the case of a redemption, on or after the Redemption Date) of any Note, (v) reduce 89 96 the above-stated percentage of outstanding Notes the consent of whose Holders is necessary to modify or amend the Indenture, (vi) waive a default in the payment of principal of, premium, if any, or interest on the Notes, (vii) reduce the percentage or aggregate principal amount of outstanding Notes the consent of whose Holders is necessary for waiver of compliance with certain provisions of the Indenture or for waiver of certain defaults or (viii) remove the Note Guarantee of any Guarantor. NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS, OR EMPLOYEES The Indenture provides that no recourse for the payment of the principal of, premium, if any, or interest on any of the Notes or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture, or in any of the Notes or because of the creation of any Indebtedness represented thereby, shall be had against any incorporator, stockholder, officer, director, employee or controlling person of the Company or of any successor Person thereof. Each Holder, by accepting the Notes, waives and releases all such liability. NOTICES All notices regarding the Notes will be deemed to have been duly given upon (i) the mailing by first-class mail, postage prepaid, of such notices to each holder at the address of such holder as it appears in the Security Register, in each case not earlier than the earliest date and not later than the latest date prescribed in the Indenture for the giving of such notice. In addition, so long as the Notes are listed on the Luxembourg Stock Exchange and it is required by the rules of the Luxembourg Stock Exchange, such notices shall be published in English in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourger Wort) or if in any such case this is not practicable, in one other leading English language daily newspaper with general circulation in Europe, such newspaper being published on each Business Day in morning editions, whether or not it shall be published in Saturday, Sunday or holiday editions. Notice so mailed shall be deemed to have been given on the date of such mailing. CONCERNING THE TRUSTEE The Indenture provides that, except during the continuance of a Default, the Trustee will not be liable, except for the performance of such duties as are specifically set forth in such Indenture. If an Event of Default has occurred and is continuing, the Trustee will use the same degree of care and skill in its exercise of the rights and powers vested in it under the Indenture as a prudent person would exercise under the circumstances in the conduct of such person's own affairs. The Indenture and provisions of the Trust Indenture Act of 1939, as amended, incorporated by reference therein contain limitations on the rights of the Trustee, should it become a creditor of the Company, to obtain payment of claims in certain cases or to realize on certain property received by it in respect of any such claims, as security or otherwise. The Trustee is permitted to engage in other transactions; provided, however, that if it acquires any conflicting interest, it must eliminate such conflict or resign. AGENTS For so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of such exchange shall so require, the Company shall maintain a paying agent and a transfer agent in Luxembourg. BOOK-ENTRY; DELIVERY AND FORM Exchange Notes will be issued in the form of one or more registered notes in global form, without interest coupons (collectively, the "Global Notes"). The Global Notes will be deposited on the date of the closing of the Exchange Offer with, or on behalf of, The Depository Trust Company ("DTC") and will remain in the custody of the Trustee as custodian for DTC. The Global Notes will be registered in the name of a nominee of DTC. 90 97 Except as set forth below, the Global Notes may be transferred, in whole and not in part, solely to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for Notes in physical, certificated form ("Certificated Notes") except in the limited circumstances described below. All interests in the Global Notes may be subject to the procedures and requirements of DTC. Ownership of beneficial interests in a Global Note will be limited to persons who have accounts with DTC ("participants") or persons who hold interests through participants. Ownership of beneficial interests in the Global Notes will be shown on, and the transfer of that ownership will be effected only through, records maintained by DTC or its nominee (with respect to interests of participants) and the records of participants (with respect to interests of persons other than participants). Holders of Notes may hold their interests in the Global Notes directly through DTC if they are participants in such system, or indirectly through organizations which are participants in such system. So long as DTC, or its nominee, is the registered owner or holder of the Global Notes, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented by the Global Notes for all purposes under the Indenture and the Notes. No beneficial owner of an interest in the Global Notes will be able to transfer that interest except in accordance with DTC's applicable procedures, in addition to those provided for under the Indenture and, if applicable, those of Euroclear and Cedel Bank. Payments of the principal of, and interest on, the Global Notes will be made to DTC or its nominee, as the case may be, as the registered owner thereof. Neither the Company, the Trustee nor any Paying Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests. The Company expects that DTC or its nominee, upon receipt of any payment of principal or interest in respect of the Global Notes, will credit participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the Global Notes as shown on the records of DTC or its nominee. The Company also expects that payments by participants to owners of beneficial interests in the Global Notes held through such participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers registered in the names of nominees for such customers. Such payments will be the responsibility of such participants. Transfers between participants in DTC will be effected in the ordinary way in accordance with DTC rules and will be settled in same-day funds. If applicable, transfers between participants in Euroclear and Cedel Bank will be effected in the ordinary way in accordance with their respective rules and operating procedures. The Company expects that DTC will take any action permitted to be taken by a holder of Notes (including the presentation of Notes for exchange as described below) only at the direction of one or more participants to whose account the DTC interests in the Global Notes is credited and only in respect of such portion of the aggregate principal amount of 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, DTC will exchange the Global Notes for Certificated Notes, which it will distribute to its participants. The Company understands that: DTC is a limited purpose trust company organized under the laws of the State of New York, a "banking organization' within the meaning of New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the Uniform Commercial Code and a "Clearing Agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities for its participants and facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants, thereby eliminating the need for physical movement of certificates and certain other organizations. Indirect access to the DTC system is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). 91 98 Although DTC, Euroclear and Cedel Bank are expected to follow the foregoing procedures in order to facilitate transfers of interests in the Global Notes among participants of DTC, Euroclear and Cedel Bank, they are under no obligation to perform or continue to perform such procedures, and such procedures may be discontinued at any time. Neither the Company nor the Trustee will have any responsibility for the performance by DTC, Euroclear or Cedel Bank or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations. If DTC is at any time unwilling or unable to continue as a depositary for the Global Notes and a successor depositary is not appointed by the Company within 90 days, the Company will issue Certificated Notes in exchange for the Global Notes. Holders of an interest in the Global Notes may receive Certificated Notes in accordance with the DTC's rules and procedures in addition to those provided for under the Indenture. 92 99 PLAN OF DISTRIBUTION Each broker-dealer that receives Exchange Notes for its own account pursuant to the Exchange Offer must acknowledge that it will deliver a prospectus in connection with any resale of such Exchange Notes. This Prospectus, as it may be amended or supplemented from time to time, may be used by a 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 or other trading activities; however, this Prospectus may not be used for resales of Notes acquired directly from the Company. The Company has agreed that, for a period ending on the earlier to occur of 180 days after the Expiration Date or the time when all persons subject to the prospectus delivery requirements of the Securities Act have sold all Exchange Notes held by them, it will make this Prospectus, as it may be amended or supplemented form time to time, available to any broker-dealer for use in connection with any such resale. The Company 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 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 and/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 of any such resale of Exchange Notes and any commissions or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The Letter of Transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. For a period ending on the earlier to occur of 180 days after the Expiration Date or the time when all persons subject to the prospectus delivery requirements of the Securities Act have sold all Exchange Notes held by them, the Company will promptly send additional copies of this Prospectus and any amendment or supplement to this Prospectus to any broker-dealer that requests such documents. The Company has agreed to pay all expenses incident to the Exchange Offer and to the Company's performance of, or compliance with, the Registration Rights Agreement (other than commissions or concessions of any brokers or dealers) and will indemnify the holders of the Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. 93 100 CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES The following is a summary of certain United States federal tax consequences to initial purchasers of the Original Notes of (i) the exchange of the Original Notes for the Exchange Notes and (ii) the ownership and disposition of the Exchange Notes by a Non-United States Holder (as defined below). Except where noted, the summary deals only with Exchange Notes held as capital assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"). As used herein, the term "Non-United States Holder" means an owner of an Exchange Note that is, for United States federal income tax purposes, (i) a nonresident alien individual, (ii) a foreign corporation, (iii) a nonresident alien fiduciary of a foreign estate or trust or (iv) a foreign partnership one or more of the members of which is, for United States federal income tax purposes, a nonresident alien individual, a foreign corporation or a nonresident alien fiduciary of a foreign estate or trust. The following summary is based upon the provisions of the Code, and on regulations, rulings and judicial decisions thereunder as of the date hereof, and does not address any state, local or foreign tax consequences. This summary does not discuss all aspects of United States federal taxation which may be important to particular holders in light of their individual investment circumstances, such as Exchange Notes held by investors subject to special tax rules (e.g. financial institutions, insurance companies, broker-dealers, tax- exempt organizations and private foundations) or to persons that will hold the Exchange Notes as part of a straddle, hedge, or synthetic security transaction for United States federal income tax purposes, all of whom may be subject to tax rules that differ significantly from those summarized below. Special rules may also apply to certain Non-United States Holders, such as "controlled foreign corporations," "passive foreign investment companies" and "foreign personal holding companies." Finally, prospective holders of Exchange Notes should be aware that tax laws frequently change. When these changes occur, the statutes, regulations, rulings and judicial decisions giving rise to such changes may have a retroactive effect. Accordingly, there can be no assurance that future changes in such tax laws will not cause the consequences of the exchange of the Original Notes for the Exchange Notes or the ownership and disposition of the Exchange Notes to differ significantly from the consequences summarized below. HOLDERS OF EXCHANGE NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER ANY STATE, LOCAL, FOREIGN OR OTHER LAWS OR ANY APPLICABLE TAX TREATIES, WHICH MAY PROVIDE FOR A LOWER RATE OF WITHHOLDING TAX, EXEMPTION FROM OR REDUCTION OF BRANCH PROFITS TAX, OR OTHER RULES DIFFERENT FROM THOSE DESCRIBED BELOW. EXCHANGE OFFER The exchange of Original Notes for Exchange Notes pursuant to the Exchange Offer should be treated as a continuation of the corresponding Original Notes because the terms of the Exchange Notes are not materially different from the terms of the Original Notes. Accordingly, such exchange should not constitute a taxable event and, therefore, (i) no gain or loss should be realized upon receipt of an Exchange Note, (ii) the holding period of the Exchange Note should include the holding period of the Original Note exchanged therefor and (iii) the adjusted tax basis of the Exchange Note should be the same as the adjusted tax basis of the Original Note exchanged therefor immediately before the exchange. NON-UNITED STATES HOLDERS Non-United States Withholding Tax Under present United States federal income and estate tax law, and subject to the discussion below concerning backup withholding: (a) no United States federal withholding tax will be imposed with respect to the payment by the Company or its paying agent of principal, premium, if any, or interest on an Exchange Note owned by a Non-United States Holder (the "Portfolio Interest Exception"), provided that (i) such Non-United States Holder does not actually or constructively own 10% or more of the total combined voting power of 94 101 all classes of stock of the Company entitled to vote within the meaning of section 871(h)(3) of the Code and the regulations thereunder, (ii) such Non-United States Holder is not a controlled foreign corporation that is related, directly or indirectly, to the Company through stock ownership, (iii) such Non-United States Holder is not a bank whose receipt of interest on an Exchange Note is described in section 881(c)(3)(A) of the Code and (iv) such Non-United States Holder satisfies the statement requirement (described generally below) set forth in section 871(h) and section 881(c) of the Code and the regulations thereunder. (b) no United States federal withholding tax will be imposed generally with respect to any gain or income realized by a Non-United States Holder upon the sale, exchange, redemption, retirement or other disposition of an Exchange Note; and (c) an Exchange Note beneficially owned by an individual who at the time of death is a Non-United States Holder will not be subject to United States federal estate tax as a result of such individual's death, provided that such individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Company entitled to vote within the meaning of Section 871(h)(3) of the Code and provided that the interest payments with respect to such Exchange Note would not have been, if received at the time of such individual's death, effectively connected with the conduct of a United States trade or business by such individual. To satisfy the requirement referred to in (a)(iv) above, the beneficial owner of such Exchange Note, or a financial institution holding the Exchange Note on behalf of such owner, must provide, in accordance with specified procedures, a paying agent of the Company with a statement to the effect that the beneficial owner is not a United States person (as defined in the Code). These requirements will be met if (1) the beneficial owner provides his name and address, and certifies, under penalties of perjury, that he is not a United States person (which certification may be made on an Internal Revenue Service ("IRS") Form W-8 (or substitute form)) or (2) a financial institution holding the Exchange Note on behalf of the beneficial owner certifies, under penalties of perjury, that such statement has been received by it and furnishes the Company or its paying agent, as the case may be, with a copy thereof. With respect to Exchange Notes held by a foreign partnership, under current law, the Form W-8 may be provided by the foreign partnership. However, for interest and disposition proceeds paid with respect to a Note after December 31, 1999, unless the foreign partnership has entered into a withholding agreement with the IRS, a foreign partnership will be required, in addition to providing an intermediary Form W-8, to attach an appropriate certification by each partner. Prospective investors, including foreign partnerships and their partners, should consult their tax advisors regarding possible additional reporting requirements. If a Non-United States Holder cannot satisfy the requirements of the Portfolio Interest Exception described in (a) above, payments on an Exchange Note made to such Non-United States Holder will be subject to a 30% withholding tax unless the beneficial owner of the Exchange Note provides the Company or its paying agent, as the case may be, with a properly executed (1) IRS Form 1001 (or substitute form) claiming an exemption from or reduction of withholding tax under the benefit of a tax treaty or (2) IRS Form 4224 (or substitute form) stating that interest paid on the Exchange Note is not subject to withholding tax because it is effectively connected with the beneficial owner's conduct of a trade or business in the United States. Treasury Regulations ("New Regulations") were recently issued that modify the requirements imposed on a Non-United States Holder and certain intermediaries for establishing the recipient's status as a Non-United States Holder eligible for exemption from or reduction in United States withholding tax and backup withholding (described below). In general, the New Regulations do not significantly alter the substantive withholding and information reporting requirements but rather unify current certification procedures and forms and clarify reliance standards. The New Regulations are generally effective for payments made after December 31, 1999, subject to certain transition rules. In addition, the New Regulations impose different conditions on the ability of financial intermediaries acting for a Non-United States Holder to provide certifications on behalf of the Non-United States Holder, which may include entering into an agreement with the IRS to audit certain documentation with respect to such certifications. The Company or its paying agent may request new withholding tax exemption forms from Non-United States Holders in order to qualify for 95 102 continued exemption from withholding tax under the New Regulations when they become effective. Non-United States Holders should consult their own tax advisors to determine the effects of the application of the New Regulations to their particular circumstances. If a Non-United States Holder is engaged in a trade or business in the United States and if interest on an Exchange Note is effectively connected with the conduct of such trade or business, the Non-United States Holder, although generally exempt from United States federal withholding tax if certain procedures are followed as discussed above, will be subject to United States federal income tax on such interest on a net income basis in the same manner as if the holder were a United States holder. In addition, if such holder is a foreign corporation, it may be subject to a branch profits tax equal to 30% or applicable lower tax treaty rate on its effectively connected earnings and profits for the taxable year, subject to adjustments. For this purpose, interest on an Exchange Note will be included in such foreign corporation's effectively connected earnings and profits. Any gain or income realized upon the sale, exchange, retirement or other disposition of an Exchange Note by a Non-United States Holder generally will not be subject to United States federal income tax unless (i) such gain or income is effectively connected with a trade or business in the United States of the Non- United States Holder, (ii) in the case of a Non-United States Holder who is an individual, such individual is present in the United States for 183 days or more in the taxable year of such sale, exchange, retirement or other disposition, and certain other conditions are met, or (iii) the Non-United States Holder is subject to tax pursuant to the provisions of United States tax law applicable to certain United States expatriates. Information Reporting and Backup Withholding No information reporting or backup withholding will be required with respect to payments made by the Company or its paying agent to Non-United States Holders if a statement described in (a)(iv) above has been received and the payor does not have actual knowledge that the beneficial owner is a United States person. In addition, backup withholding and information reporting will not apply if payments on an Exchange Note are paid or collected by a foreign office of a custodian, nominee or other foreign agent on behalf of the beneficial owner of such Exchange Note, or if a foreign office of a broker (as defined in applicable United States Treasury regulations) pays the proceeds of the sale of an Exchange Note to the owner thereof. If, however, such nominee, custodian, agent or broker is, for United States federal income tax purposes, a United States person, a controlled foreign corporation or 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, such payments will be subject to information reporting (but not backup withholding), unless (1) such custodian, nominee, agent or broker has documentary evidence in its records that the beneficial owner is not a United States person and certain other conditions are met or (2) the beneficial owner otherwise establishes an exemption. Payments on an Exchange Note paid to the beneficial owner of an Exchange Note by a United States office of a custodian nominee or agent, or the payment by the United States office of a broker of the proceeds of sale of an Exchange Note, will be subject to both backup withholding at a rate of 31% and information reporting unless the beneficial owner provides the statement referred to in (a)(iv) above and the payor does not have actual knowledge that the beneficial owner is a United States person or otherwise establishes an exemption. Recently issued Treasury regulations modify certain of the certification and other requirements for backup withholding. These modifications will become generally effective beginning January 1, 2000. It is possible that the Company or its paying agent may request new withholding exemption forms from holders in order to qualify for continued exemption from backup withholding under Treasury regulations when they become effective. Any amounts withheld under the backup withholding rules will be credited toward such Non-United States Holder's United States federal income tax liability, if any. To the extent that the amounts withheld exceed the Non-United States Holder's tax liability, the excess may be refunded to the Non-United States Holder provided the required information is furnished to the IRS. In addition to providing the necessary information, the Non-United States Holder must file a United States tax return in order to obtain a refund of the excess backup withholding. 96 103 LEGAL MATTERS The validity of the Exchange Notes offered hereby will be passed upon for the Company by Testa, Hurwitz & Thibeault, LLP, Boston, Massachusetts, special counsel to the Company. Certain partners and associates of Testa, Hurwitz & Thibeault, LLP, are the beneficial owners, in the aggregate, of 700 shares of Common Stock of the Company. James C. Hamilton, a partner at Hamilton & Dahmen, LLP, which is general counsel to the Company, is the Company's Clerk. He is the beneficial owner of 8,910 shares of Common Stock of the Company. He is also the co-trustee of certain irrevocable trusts for the benefit of members of the family of Horace H. Irvine II, Chairman of the Board of the Company. EXPERTS The Company's audited consolidated financial statements and schedule included in this Prospectus and elsewhere in this Registration Statement have been audited by Arthur Andersen LLP, independent public accountants, as indicated in its reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in giving said reports. The consolidated financial statements of Continental Circuits Corp. as of July 31, 1997 and 1996 and for each of the three years in the period ended July 31, 1997, included in this Prospectus, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report appearing elsewhere herein, and are included in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. ADDITIONAL INFORMATION The Company and the Guarantors have filed with the Commission a Registration Statement on Form S-4 (together with all amendments, exhibits and schedules thereto, the "Registration Statement") under the Securities Act with respect to the Exchange Notes offered hereby. This Prospectus, which constitutes part of the Registration Statement, does not contain all the information set forth in the Registration Statement and the exhibit and schedules thereto, certain parts of which are omitted in accordance with the rules and regulations of the Commission, and to which reference is hereby made. Statements contained in this Prospectus as to the contents of the any contract or any other document referred to are not necessarily complete. Reference is made to such contract or other document filed, or incorporated by reference, as an exhibit to the Registration Statement, and each such statement is qualified in all respects by such reference. The Company is subject to the informational requirements of the Exchange Act, and in accordance therewith files reports, proxy statements and other information with the Commission. The Registration Statement and all such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional offices of the Commission: 7 World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such materials may also be obtained from the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its public reference facilities at New York, New York and Chicago, Illinois at prescribed rates. The Company's common stock is listed on the Nasdaq National Market Exchange, under the symbol "HDCO." In addition, the aforementioned materials may also be inspected at the offices of the Nasdaq National Market at 1735 K Street, N.W., Washington, D.C. 20006. The Commission maintains a Web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission. The address of the Commission's Web site is http://www.sec.gov. The Indenture pursuant to which the Original Notes were, and the Exchange Notes will be, issued requires the Company, whether or not it is then required to file reports with the Commission, to so file such reports and other information as it would be required to file by Sections 13(a) or 15(d) under the Securities Exchange Act of 1934, as amended, if it were subject thereto. In addition, the Company has agreed to supply the Trustee and each holder of Notes with copies of such reports and other information including annual reports containing audited consolidated financial statements of the Company, audited by its independent 97 104 public accountants, and quarterly reports containing unaudited condensed consolidated financial data for the first three quarters of each fiscal year. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed with the Commission under the Securities Exchange Act of 1934, as amended (the "Exchange Act") are hereby incorporated by reference into this Prospectus: (i) Annual Report on Form 10-K for the fiscal year ended October 25, 1997; (ii) Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 1998 and May 2, 1998 and on Form 10-Q/A for the fiscal quarter ended May 2, 1998; (iii) Current Reports on Form 8-K dated February 17, 1998, February 20, 1998, May 1, 1998 and May 14, 1998; and (iv) Current Report on Form 8-K dated March 20, 1998, as amended by Current Report on Form 8-K/A dated May 1, 1998. All documents subsequently filed by Hadco pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the Exchange Offer shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing such documents. Any statement contained herein or in a document incorporated by reference or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that such statement is modified or superseded by any other subsequently filed document which is incorporated or is deemed to be incorporated by reference herein. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. This Prospectus incorporates documents by reference which are not presented herein or delivered herewith. Hadco hereby undertakes to provide without charge to each person, including any beneficial owner, to whom this Prospectus has been delivered, on the written or oral request of such person, a copy of any or all of the documents referred to above which have been or may be incorporated into this Prospectus and deemed to be part hereof, other than exhibits to such documents, unless such exhibits are specifically incorporated by reference in such documents. These documents are available upon request from Timothy P. Losik, Senior Vice President, Chief Financial Officer and Treasurer, Hadco Corporation, 12A Manor Parkway, Salem, New Hampshire 03079, (603) 898-8000. LISTING AND GENERAL INFORMATION The Original Notes have been accepted for clearance through the Euroclear and Cedel Bank clearance systems. Application will be made to list the Notes on the Luxembourg Stock Exchange. The Original Notes have been designated eligible for trading in the PORTAL market. In connection with the application to list the Notes on the Luxembourg Stock Exchange, a legal notice relating to the issuance of the Notes and copies of the Restated Articles of Organization, as amended, of the Company will be deposited with the Registrar of the District Court of Luxembourg (Greffier en Chef du Tribunal d'Arrondissement de et a Luxembourg) where such documents may be examined and copies obtained. Copies of the Restated Articles of Organization, as amended, of the Company, the Registration Rights Agreement and the Indenture (including the forms of Notes) will, so long as the Notes are listed on the Luxembourg Stock Exchange, be available for inspection in the City of Luxembourg at the office of the Luxembourg Paying Agent. In addition, so long as the Notes are listed on the Luxembourg Stock Exchange, copies of the most recent audited annual and interim unaudited financial statements of the Company may be obtained at that office. In addition to being mailed to holders, copies of all notices to holders of the Notes will be published in the Luxemburger Wort, so long as the Notes are listed on the Luxembourg Stock Exchange and the rules of that exchange so require. Trades on the Luxembourg Stock Exchange must be capable of being settled through Cedel Bank or Euroclear. 98 105 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE ---- HADCO CORPORATION: Report of Independent Public Accountants.................... F-2 Consolidated Balance Sheets as of October 26, 1996 and October 25, 1997 and May 2, 1998 (Unaudited).............. F-3 Consolidated Statements of Operations for the Years Ended October 28, 1995, October 26, 1996 and October 25, 1997 and for the Six Months Ended April 26, 1997 (Unaudited) and May 2, 1998 (Unaudited)............................... F-4 Consolidated Statements of Stockholders' Investment for the Years Ended October 28, 1995, October 26, 1996 and October 25, 1997 and for the Six Months Ended May 2, 1998 (Unaudited)............................................... F-5 Consolidated Statements of Cash Flows for the Years Ended October 28, 1995, October 26, 1996 and October 25, 1997 and for the Six Months Ended April 26, 1997 (Unaudited) and May 2, 1998 (Unaudited)............................... F-6 Notes to Consolidated Financial Statements.................. F-7 CONTINENTAL CIRCUITS CORP.: Report of Independent Auditors.............................. F-32 Consolidated Balance Sheets as of July 31, 1996 and 1997 and January 31, 1998 (Unaudited).............................. F-33 Consolidated Statements of Income for the Years Ended July 31, 1995, 1996 and 1997 and the Six Months Ended February 2, 1997 (Unaudited) and January 31, 1998 (Unaudited)...... F-34 Consolidated Statements of Cash Flows for the Years Ended July 31, 1995, 1996 and 1997 and the Six Months Ended February 2, 1997 (Unaudited) and January 31, 1998 (Unaudited)............................................... F-35 Consolidated Statements of Shareholders' Equity for the Years Ended July 31, 1995, 1996 and 1997 and the Six Months Ended January 31, 1998 (Unaudited)................. F-36 Notes to Consolidated Financial Statements.................. F-37
F-1 106 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Hadco Corporation: We have audited the accompanying consolidated balance sheets of Hadco Corporation (a Massachusetts corporation) and subsidiaries as of October 26, 1996 and October 25, 1997, and the related consolidated statements of operations, stockholders' investment and cash flows for each of the three years in the period ended October 25, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hadco Corporation and subsidiaries as of October 26, 1996 and October 25, 1997, and the results of their operations and their cash flows for each of the three years in the period ended October 25, 1997, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Boston, Massachusetts November 14, 1997 F-2 107 HADCO CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
OCTOBER 26, OCTOBER 25, MAY 2, 1996 1997 1998 ----------- ----------- ----------- (UNAUDITED) ASSETS Current Assets: Cash and cash equivalents.............................. $ 32,786 $ 12,171 $ 4,997 Short-term investments................................. 9,401 1,562 -- Accounts receivable, net of allowance for doubtful accounts of $1,100 in 1996, $1,700 in 1997, and $2,589 in 1998, respectively........................ 40,622 92,222 114,352 Inventories............................................ 21,786 46,000 75,095 Deferred tax asset..................................... 7,483 10,483 20,106 Prepaid expenses and other current assets.............. 1,483 4,245 8,058 -------- -------- -------- Total current assets........................... 113,561 166,683 222,608 Property, Plant and Equipment, net....................... 103,735 231,490 318,335 Deferred Tax Asset....................................... 2,117 -- -- Acquired Intangible Assets, net.......................... -- 101,131 195,026 Other Assets............................................. 88 3,213 3,472 -------- -------- -------- $219,501 $502,517 $739,441 ======== ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current portion of long-term debt...................... $ 1,907 $ 5,064 $ 4,837 Accounts payable....................................... 42,265 68,594 74,169 Accrued payroll and other employee benefits............ 17,592 28,279 29,246 Accrued taxes.......................................... -- 1,775 494 Other accrued expenses................................. 8,236 9,278 15,229 -------- -------- -------- Total current liabilities...................... 70,000 112,990 123,975 -------- -------- -------- Long-term Debt, net of current portion................... 1,515 109,716 359,037 -------- -------- -------- Deferred Tax Liability................................... -- 30,685 51,668 -------- -------- -------- Other Long-term Liabilities.............................. 9,145 9,214 9,192 -------- -------- -------- Commitments and Contingencies (Note 9) Stockholders' Investment: Common stock, $.05 par value; Authorized -- 50,000 shares Issued and outstanding -- 10,382 shares in 1996, 13,086 shares in 1997 and 13,212 shares in 1998... 521 655 662 Paid-in Capital........................................ 30,939 168,246 171,466 Deferred Compensation.................................. (240) (117) (75) Retained Earnings...................................... 107,621 71,128 23,516 -------- -------- -------- Total stockholders' investment................. 138,841 239,912 195,569 -------- -------- -------- $219,501 $502,517 $739,441 ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. F-3 108 HADCO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED ----------------------------------------- ------------------------- OCTOBER 28, OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2, 1995 1996 1997 1997 1998 ----------- ----------- ----------- ----------- ---------- (UNAUDITED) Net Sales.......................... $265,168 $350,685 $648,705 $292,198 $407,863 Cost of Sales...................... 197,728 260,230 507,313 227,358 332,065 -------- -------- -------- -------- -------- Gross Profit..................... 67,440 90,455 141,392 64,840 75,798 Operating Expenses................. 33,534 38,923 64,586 28,819 39,310 Restructuring and Other Non-Recurring Charges............ -- -- -- -- 5,947 Write-off of Acquired In-Process Research and Development......... -- -- 78,000 78,000 63,050 -------- -------- -------- -------- -------- Income (Loss) From Operations.... 33,906 51,532 (1,194) (41,979) (32,509) Interest and Other Income.......... 1,669 1,287 3,296 806 1,377 Interest Expense................... (537) (338) (10,923) (5,251) (6,294) -------- -------- -------- -------- -------- Income (Loss) Before Provision for Income Taxes.............. 35,038 52,481 (8,821) (46,424) (37,426) Provision for Income Taxes......... 13,664 20,467 27,672 12,788 10,186 -------- -------- -------- -------- -------- Net Income (Loss)................ $ 21,374 $ 32,014 $(36,493) $(59,212) $(47,612) ======== ======== ======== ======== ======== Net Income (Loss) Per Share: Basic............................ $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63) ======== ======== ======== ======== ======== Diluted.......................... $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63) ======== ======== ======== ======== ======== Weighted Average Shares Outstanding: Basic............................ 9,805 10,245 11,458 10,435 13,130 ======== ======== ======== ======== ======== Diluted.......................... 10,806 11,084 11,458 10,435 13,130 ======== ======== ======== ======== ========
The accompanying notes are an integral part of these consolidated financial statements. F-4 109 HADCO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT (IN THOUSANDS)
COMMON STOCK --------------------- NUMBER $.05 PAR PAID-IN DEFERRED RETAINED OF SHARES VALUE CAPITAL COMPENSATION EARNINGS --------- -------- -------- ------------ -------- Balance, October 29, 1994............ 9,738 $487 $ 22,763 $(731) $ 54,921 Terminated stock options........... -- -- (37) 37 -- Exercise of stock options.......... 529 16 1,079 -- -- Tax benefit of exercise of non-qualified stock options..... -- -- 1,597 -- -- Compensation expense associated with granting non-qualified stock options................... -- -- -- 287 -- Purchase and retirement of common stock........................... (328) (6) (325) -- (688) Net income......................... -- -- -- -- 21,374 ------ ---- -------- ----- -------- Balance, October 28, 1995............ 9,939 497 25,077 (407) 75,607 Terminated stock options........... -- -- (13) 13 -- Exercise of stock options.......... 443 24 1,714 -- -- Tax benefit of exercise of non-qualified stock options..... -- -- 4,161 -- -- Compensation expense associated with granting non-qualified stock options................... -- -- -- 154 -- Net income......................... -- -- -- -- 32,014 ------ ---- -------- ----- -------- Balance, October 26, 1996............ 10,382 521 30,939 (240) 107,621 Terminated stock options........... -- -- (2) 2 -- Exercise of stock options.......... 263 12 1,291 -- -- Tax benefit of exercise of non-qualified stock options..... -- -- 5,052 -- -- Compensation expense associated with granting non-qualified stock options................... -- -- -- 121 -- Sale of common shares in stock offering, net of offering costs of $1,033....................... 2,442 122 130,966 -- -- Net loss........................... -- -- -- -- (36,493) ------ ---- -------- ----- -------- Balance, October 25, 1997............ 13,087 655 168,246 (117) 71,128 Exercise of stock options (unaudited)..................... 85 5 471 -- -- Compensation expense associated with granting non-qualified stock options (unaudited)....... -- -- -- 42 -- Tax benefit of exercise of non-qualified stock options (unaudited)..................... -- -- 1,271 -- -- Sale of Common Stock (unaudited)... 40 2 1,478 -- -- Net income (unaudited)............. -- -- -- -- (47,612) ------ ---- -------- ----- -------- Balance, May 2, 1998 (Unaudited)..... 13,212 $662 $171,466 $ (75) $ 23,516 ====== ==== ======== ===== ========
The accompanying notes are an integral part of these consolidated financial statements. F-5 110 HADCO CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS)
FOR THE SIX MONTHS FOR THE YEARS ENDED ENDED --------------------------------------- --------------------- OCTOBER 28, OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2, 1995 1996 1997 1997 1998 ----------- ----------- ----------- --------- --------- (UNAUDITED) Cash Flows from Operating Activities: Net income (loss)........................................ $ 21,374 $ 32,014 $ (36,493) $ (59,212) $ (47,612) Adjustments to reconcile net income (loss) to net cash provided by operating activities Write off of acquired in-process research and development.......................................... -- -- 78,000 78,000 63,050 Depreciation, amortization, deferred compensation and deferred taxes....................................... 11,218 17,330 40,972 16,679 31,425 Gain on sale of fixed assets............................... (415) (205) (1,862) -- 1,749 Changes in assets and liabilities, net of acquisition of Zycon Corporation in 1997 and Continental Circuits Corp. in 1998 -- 1,890 (Increase) decrease in accounts receivable............... (10,485) (4,825) (26,762) (19,698) (5,664) Increase in inventories.................................. (3,009) (8,482) (12,824) (4,122) (17,665) (Increase) decrease in prepaid expenses and other expenses............................................... (364) 213 308 1,215 (3,984) Decrease in other assets................................. 25 33 385 (584) 166 Increase in accounts payable and accrued expenses........ 15,291 17,720 8,873 1,642 (10,738) Increase in long-term liabilities........................ 2,714 1,831 70 70 (22) -------- -------- --------- --------- --------- Net cash provided by operating activities.............. 36,349 55,629 50,667 13,990 12,595 -------- -------- --------- --------- --------- Cash Flows from Investing Activities: Purchases of short-term investments...................... (15,464) (8,402) (19,862) 9,401 (2,020) Maturities of short-term investments..................... 12,796 14,168 27,701 -- 3,582 Purchases of property, plant and equipment............... (28,865) (53,966) (69,851) (29,611) (48,186) Proceeds from sale of property, plant and equipment...... 429 290 2,760 -- -- Acquisition of Zycon Corporation in 1997 and Continental Circuits Corp. in 1998, net of cash acquired........... -- -- (209,661) (209,661) (190,032) -------- -------- --------- --------- --------- Net cash used in investing activities.................. (31,104) (47,910) (268,913) (229,871) (236,656) -------- -------- --------- --------- --------- Cash Flows from Financing Activities: Principal payments of long-term debt..................... (4,675) (2,139) (164,766) (36,621) (43,218) Proceeds from issuance of long-term debt................. -- -- 224,954 225,000 256,878 Proceeds from exercise of stock options.................. 1,095 1,738 1,303 435 476 Sale of Common Stock, net of issuance costs.............. -- -- 131,088 -- 1,480 Tax benefit from exercise of stock options............... 1,597 4,161 5,052 1,387 1,271 Purchase and retirement of common stock.................. (1,019) -- -- -- -- -------- -------- --------- --------- --------- Net cash (used in) provided by financing activities.... (3,002) 3,760 197,631 190,201 216,887 -------- -------- --------- --------- --------- Net Increase (Decrease) in Cash and Cash Equivalents....... 2,243 11,479 (20,615) (25,680) (7,174) Cash and Cash Equivalents, Beginning of Period............. 19,064 21,307 32,786 32,786 12,171 -------- -------- --------- --------- --------- Cash and Cash Equivalents, End of Period................... $ 21,307 $ 32,786 $ 12,171 $ 7,106 $ 4,997 ======== ======== ========= ========= ========= Supplemental Schedule of Noncash Investing and Financing Activities: Machinery and equipment acquired under capital lease obligations............................................ $ -- $ 1,032 $ -- $ -- $ -- ======== ======== ========= ========= ========= Supplemental Disclosure of Cash Flow Information: Cash paid during the period for -- Interest................................................. $ 576 $ 279 $ 10,270 $ 4,282 $ 4,689 ======== ======== ========= ========= ========= Income taxes (net of refunds)............................ $ 13,609 $ 16,794 $ 21,099 $ 9,070 $ 10,906 ======== ======== ========= ========= ========= Acquisition of Zycon Corporation in 1997 and Continental Circuits Corp. in 1998: Fair value of assets acquired............................ -- -- $ 206,009 $ 212,509 $ 140,123 Liabilities assumed...................................... -- -- (112,393) (114,993) (47,905) Cash paid................................................ -- -- (204,885) (204,885) (186,083) Acquisition costs incurred............................... -- -- (7,600) (7,600) (3,949) Write-off of acquired in-process research and development............................................ -- -- 78,000 78,000 63,050 -------- -------- --------- --------- --------- Goodwill................................................. $ -- $ -- $ (40,869) $ (36,969) $ (34,764) ======== ======== ========= ========= =========
The accompanying notes are an integral part of these consolidated financial statements. F-6 111 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Hadco Corporation's (the "Company" or "Hadco") principal products are complex multilayer rigid printed circuits and backplane assemblies. The consolidated financial statements reflect the application of certain accounting policies as described in this Note and elsewhere in the accompanying notes to consolidated financial statements. Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Management Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents and Short-Term Investments The Company accounts for investments in accordance with Statement of Financial Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. The Company considers all highly liquid investment instruments purchased with a maturity of three months or less to be cash equivalents. Short-term investments are carried at cost, which approximates market, and have maturities of less than one year. Cash equivalents consist primarily of money market funds and are approximately $29,696,000, $9,850,000 and $700,000 as of October 1996 and 1997 and May 2, 1998, respectively. The Company classifies its investments in corporate and government debt securities as held-to-maturity given the Company's intent and ability to hold the securities to maturity. In accordance with SFAS No. 115, held-to-maturity securities are carried at amortized cost. The Company's investments in held-to-maturity securities are as follows:
OCTOBER 26, 1996 OCTOBER 25, 1997 MAY 2, 1998 ---------------- ------------------------ -------------- FAIR FAIR FAIR MARKET MARKET MARKET COST VALUE COST VALUE COST VALUE MATURITY ------ ------ ------ -------------- ---- ------ ------------- (IN THOUSANDS) US Government Securities..... $1,000 $ 999 $ -- $ -- $-- $-- Within 1 year State and Local Securities... 5,270 5,271 -- -- -- -- Within 1 year Corporate Debt Securities.... 3,131 3,069 -- -- -- -- Within 1 year Certificate of Deposit....... -- -- 1,562 1,562 -- -- Within 1 year ------ ------ ------ -------------- -- -- $9,401 $9,339 $1,562 $ 1,562 $-- $-- ====== ====== ====== ============== == ==
The Company has no financial instruments requiring disclosure under Financial Accounting Standards Board issued SFAS No. 119, Disclosure About Derivative Financial Instruments and Fair Value of the Financial Instruments. F-7 112 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) Concentration of Credit Risk SFAS No. 105, Disclosure of Information About Financial Instruments with Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk, requires disclosure of any significant off-balance-sheet and credit risk concentrations. As of October 25, 1997, the Company has no significant off-balance-sheet concentrations of credit risk such as foreign currency exchange contracts or other hedging arrangements. Financial instruments that subject the Company to credit risk consist of cash and cash equivalents, short-term investments and trade accounts receivable. The Company maintains the majority of its cash and investment balances with financial institutions. The Company has not experienced any losses on these investments to date. Substantially all of the Company's accounts receivable are concentrated in the high technology and electronics industry. The Company has not experienced significant losses related to receivables from individual customers or groups of customers in the high technology and electronics industry or by geographic region. Due to these factors, no additional credit risk beyond amounts provided for collection losses is believed by management to be inherent in the Company's accounts receivable. Depreciation and Amortization of Property, Plant and Equipment The Company provides for depreciation and amortization by charges to operations in amounts that allocate the cost of property, plant and equipment on a straight-line basis over the following estimated useful lives:
ESTIMATED ASSET CLASSIFICATION USEFUL LIFE - -------------------- ----------- Land betterments............................................ 10-18 Years Buildings and improvements.................................. 10-40 Years Machinery and equipment..................................... 3-10 Years Furniture and fixtures...................................... 5-7 Years Computer software........................................... 3 Years Vehicles.................................................... 3-5 Years Capital leases.............................................. Lease term
Net Income (Loss) per Share The Company adopted SFAS No. 128, Earnings per share, effective for the quarter ended January 31, 1998 which replaces the calculation of primary and fully diluted earnings per share with basic and diluted earnings per share. Prior period amounts have been restated to conform to the current period presentation. Under SFAS No. 128, basic net income (loss) per common share is computed based on income (loss) available to common stockholders and the weighted average number of common shares outstanding during the period. The dilutive net income (loss) per share is computed based on including the number of additional common shares that would have been outstanding if the dilutive potential of common shares had been issued. F-8 113 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) Basic and diluted income (loss) per share, as required by SFAS No. 128, are as follows:
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED ----------------------------------------- ------------------------- OCTOBER 28, OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2, 1995 1996 1997 1997 1998 ----------- ----------- ----------- ----------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net income (loss).................. $21,374 $32,014 $(36,493) $(59,212) $(47,612) ======= ======= ======== ======== ======== Basic weighted average shares outstanding...................... 9,805 10,245 11,458 10,435 13,130 Weighted average common equivalent shares........................... 1,001 839 -- -- -- ------- ------- -------- -------- -------- Diluted weighted average shares outstanding...................... 10,806 11,084 11,458 10,435 13,130 ======= ======= ======== ======== ======== Basic net income (loss) per share............................ $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63) ======= ======= ======== ======== ======== Diluted net income (loss) per share............................ $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63) ======= ======= ======== ======== ========
Diluted weighted average shares outstanding does not include 484,000, 512,064 and 401,798 common equivalent shares at October 25, 1997, April 26, 1997 and May 2, 1998, respectively, as their effect would be anti-dilutive. Revenue Recognition The Company recognizes revenue at the time products are shipped. Research and Development Expenses The Company charges research and development expenses to operations as incurred. For the fiscal years ended October 1995, 1996 and 1997, and the six months ended fiscal April 1997 and 1998, research and development expenses were approximately $2,945,000, $4,307,000, $6,929,000, $3,401,000 and $3,254,000, respectively, and are included in operating expenses. Stock Based Compensation The Company has adopted SFAS No. 123, Accounting for Stock-Based Compensation, in fiscal 1997. SFAS No. 123 defines a fair-value-based method of accounting for employee stock options and other stock-based compensation. The compensation expense arising from this method of accounting can be reflected in the financial statements or, alternatively, the pro forma net income and earnings per share effect of the fair-value-based accounting can be disclosed in the financial footnotes. The Company has adopted the disclosure-only alternative. (See Note 10). Foreign Currency Translation The functional currency of the Company's Malaysian subsidiary is the United States dollar. Accordingly, all remeasurement gains and losses resulting from transactions denominated in currencies other than United States dollars are included in the consolidated statements of operations in accordance with SFAS No. 52, Foreign Currency Translation. To date, the resulting gains and losses have not been material. F-9 114 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) Reclassification The Company has reclassified certain prior year information to conform with the current year's presentation. Interim Financial Statements The accompanying consolidated balance sheet as of May 2, 1998, and the consolidated statements of operations and cash flows for the six month periods ended April 26, 1997 and May 2, 1998 and the statement of stockholders' investment for the six months period ended May 2, 1998 are unaudited but, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments) necessary for a fair presentation of results for these interim periods. Results of operations of interim periods are not necessarily indicative of results to be expected for the entire year of any future period. New Accounting Standards In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income. SFAS No. 130 requires disclosure of all components of comprehensive income on an annual and interim basis. Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from nonowner sources. SFAS No. 130 is effective for fiscal years beginning after December 15, 1997. The Company will adopt this statement for its fiscal year ending October 1999. In July 1997, the FASB issued SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information. SFAS No. 131 requires certain financial and supplementary information to be disclosed on an annual and interim basis for each reportable segment of an enterprise. SFAS No. 131 is effective for fiscal years beginning after December 15, 1997. Unless impracticable, companies would be required to restate prior period information upon adoption. The Company will adopt this statement for its fiscal year ending October 1999. In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities. This statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5 Reporting on the Costs of Start-Up Activities (SOP 98-5). SOP 98-5 provides guidance on the financial reporting of start-up activities and organization costs to be expensed as incurred. SOP 98-5 will not have a material impact on the Company's financial statements. (2) ACQUISITIONS On January 10, 1997 the Company acquired (the "Zycon Acquisition") all of the outstanding common stock of Zycon Corporation ("Zycon"), and on March 20, 1998, the Company acquired (the "Continental Acquisition", and together with the Zycon Acquisition, the "Acquisitions") all of the outstanding common stock of Continental Circuit Corp. ("Continental"). These acquisitions were financed by the $400 million unsecured senior revolving credit facility with a group of banks, which amended and restated an existing credit facility (the "Amended Credit Facility"), under which the Company borrowed approximately $215,000,000 upon consummation of the Zycon Acquisition and approximately $220,000,000 upon consummation of the Continental Acquisition. These acquisitions were accounted for as purchases in accordance with Accounting Principles Board Opinion No. 16 and accordingly, Zycon's and Continental's operating results since the F-10 115 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) respective dates of acquisition are included in the accompanying consolidated financial statements. In accordance with APB Opinion No. 16, the Company allocated the purchase price of the Acquisitions based on the fair value of assets acquired and liabilities assumed. Significant portions of the purchase price of both Acquisitions were identified in appraisals as intangible assets using proven valuation procedures and techniques. These intangible assets include approximately $78,000,000 and $63,050,000 for Zycon and Continental, respectively, for acquired in-process research and development ("in-process R&D") for projects that did not have a future alternative use. Acquired intangibles included developed technology, customer relationships, assembled workforce, trade names and trademarks. These intangibles are being amortized over their estimated useful lives of 12 to 30 years. The aggregate purchase prices of $212,485,000 and $190,032,000, including acquisition costs, for the Zycon and Continental Acquisitions, respectively, were allocated as follows:
ZYCON CONTINENTAL --------- ----------- (IN THOUSANDS) Current assets.............................................. $ 41,790 $ 26,556 Property, plant and equipment............................... 95,193 67,144 Acquired intangibles........................................ 65,500 46,190 In-process R&D.............................................. 78,000 63,050 Other assets................................................ 3,526 233 Goodwill.................................................... 40,869 34,764 Liabilities assumed......................................... (112,393) (47,905) --------- -------- $ 212,485 $190,032 ========= ========
Unaudited pro forma operating results for the Company, assuming the acquisition of Zycon occurred on October 28, 1995 and Continental occurred on October 26, 1996 are as follows:
YEAR ENDED SIX MONTHS ENDED -------------------------- --------------------- OCTOBER 26, OCTOBER 25, APRIL 26, MAY 2, 1996 1997 1997 1998 ----------- ----------- --------- -------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net sales.............................. $570,345 $830,468 $414,633 $459,814 Net income............................. 27,222 36,210 16,275 8,880 Basic Net Income per Share............. 2.66 3.16 1.56 0.68 Diluted Net Income per Share........... 2.46 3.03 1.49 0.66
For purposes of these pro forma operating results, the in-process research and development was assumed to have been written off prior to October 29, 1995, so that the operating results presented include only recurring costs. F-11 116 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) (3) INVENTORIES Inventories are stated at the lower of cost, first-in, first-out (FIFO), or market and consist of the following:
OCTOBER 26, OCTOBER 25, MAY 2, 1996 1997 1998 ----------- ----------- ------- (IN THOUSANDS) Raw materials...................................... $ 8,008 $14,167 $33,656 Work-in-process.................................... 13,778 31,833 41,439 ------- ------- ------- $21,786 $46,000 $75,095 ======= ======= =======
The work-in-process consists of materials, labor and manufacturing overhead. (4) PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of the following:
OCTOBER 26, OCTOBER 25, MAY 2, 1996 1997 1998 ----------- ----------- --------- (IN THOUSANDS) Land betterments................................ $ 1,991 $ 2,174 $ 5,760 Buildings and improvements...................... 52,961 74,172 142,344 Construction-in-progress........................ 22,543 38,716 23,029 Machinery and equipment......................... 126,878 262,113 402,434 Furniture and fixtures.......................... 14,082 18,611 6,767 Computer software............................... 2,662 3,152 5,536 Vehicles........................................ 159 626 661 Capital leases.................................. 14,972 45,154 13,125 --------- --------- --------- 236,248 444,718 599,656 Accumulated depreciation and amortization....... (132,513) (213,228) (281,321) --------- --------- --------- $ 103,735 $ 231,490 $ 318,335 ========= ========= =========
(5) INTANGIBLE ASSETS The Company assesses the realizability of intangible assets in accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. Under SFAS No. 121, the Company is required to assess the valuation of its long-lived assets, including intangible assets, based on the estimated cash flows to be generated by such assets. Based on its most recent analysis, the F-12 117 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) Company believes that no material impairment of intangible assets exists as of October 25, 1997. Intangible assets are amortized on a straight-line basis, based on their estimated lives, as follows:
ESTIMATED LIFE OCTOBER 25, 1997 MAY 2, 1998 -------------- ---------------- ----------- (IN THOUSANDS) Developed technology....................... 12 years $ 30,000 $ 52,190 Customer relationships..................... 20-25 years 19,000 37,000 Assembled workforce........................ 12-15 years 10,000 16,000 Trade names/trademarks..................... 30 years 6,500 6,500 Goodwill................................... 20 years 40,869 94,109 -------- -------- 106,369 205,799 Less -- Accumulated amortization........... (5,238) (10,773) -------- -------- $101,131 $195,026 ======== ========
(6) INCOME TAXES The Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes. The provision for income taxes shown in the accompanying consolidated statements of operations is comprised of the following:
YEARS ENDED OCTOBER ----------------------------- 1995 1996 1997 ------- ------- ------- (IN THOUSANDS) Federal Current............................................. $14,331 $18,341 $24,072 Deferred............................................ (2,954) (1,206) 1,369 ------- ------- ------- 11,377 17,135 25,441 ------- ------- ------- State Current............................................. 2,928 3,611 2,273 Deferred............................................ (641) (279) (42) ------- ------- ------- 2,287 3,332 2,231 ------- ------- ------- $13,664 $20,467 $27,672 ======= ======= =======
The tax rate used in the computation of the provision for federal and state income taxes differs from the statutory federal and state rates due to the following: F-13 118 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
1995 1996 1997(1) ---- ---- ------- Provision for statutory rate................................ 34.0% 34.0% 35.0% Increase in tax resulting from -- State income taxes, net of federal tax benefit............ 4.5 4.4 4.3 Tax-exempt interest income................................ (0.5) (0.4) (0.3) Other, net................................................ 1.0 1.0 1.0 ---- ---- ---- Provision for income taxes................................ 39.0% 39.0% 40.0% ==== ==== ====
- --------------- (1) Calculated based on pre-tax income, before non-deductible charges for in-process research and development, of $69.2 million for 1997. In accordance with generally accepted accounting principles, the Company provides for income taxes using its effective annual income tax rate. Although the Company has incurred a loss before income taxes during the year ended October 25, 1997, the Company has recorded an income tax provision because the write-off of in-process research and development is not deductible for income tax purposes. Without taking into consideration the write-off of in-process research and development, the effective annual income tax rate for fiscal 1997 is 40%, which is approximately equal to the expected combined federal and state statutory rates. The Company is providing for income taxes in fiscal 1998 at an effective tax rate of 39.75%, which is lower than the combined federal and state statutory rates. The effective rate is increased by amortization of goodwill and acquired intangibles which is not tax deductible, and this item was offset by the tax benefit of the Company's Foreign Sales Corporation and various state investment tax credits. The deferred provision for income taxes results from the following:
1995 1996 1997 ------- ------- ------ (IN THOUSANDS) Difference between book and tax depreciation........... $ (144) $ (46) $1,939 Deferred compensation.................................. 73 266 146 Amortization of acquired intangible assets............. -- -- (1,210) Reserves and expenses recognized in different periods for book and tax purposes............................ (3,506) (1,658) 480 Other, net............................................. (18) (47) (28) ------- ------- ------ $(3,595) $(1,485) $1,327 ======= ======= ======
F-14 119 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) The tax effects of temporary differences that give rise to significant portions of the current and long-term deferred tax assets and liabilities at October 26, 1996 and October 25, 1997 are as follows:
1996 1997 ------ -------- (IN THOUSANDS) Deferred Tax Assets -- Not currently deductible reserves......................... $7,475 $ 11,592 Not currently deductible environmental accruals........... 3,907 4,127 Deferred compensation plans............................... 275 1,140 ------ -------- Total gross deferred tax assets........................ 11,657 16,859 Less -- valuation allowance............................... (137) (54) ------ -------- 11,520 16,805 Deferred Tax Liability -- Acquisition related intangibles........................... -- (24,096) Property, plant and equipment, principally due to differences in depreciation............................ (1,920) (12,911) ------ -------- Net deferred tax asset (liability)..................... $9,600 $(20,202) ====== ========
Due to the uncertainty relating to the actual value of the favorable tax benefits of deferred compensation from stock options, the Company has recorded a valuation allowance of approximately $137,000 and $54,000 as of October 26, 1996 and October 25, 1997, respectively. The decrease of this allowance for the year ended October 25, 1997 is a result of the decrease in the deferred tax asset relating to deferred compensation. (7) LINES OF CREDIT The Company's $400 million Amended Credit Facility is pursuant to an Amended and Restated Revolving Credit Agreement, as amended (the "Agreement"). The Agreement provides for direct borrowings or letters of credit for up to $400 million and expires January 8, 2002. Borrowings under the Agreement bear interest, at the Company's option, at either: (i) the Eurodollar Rate plus the Applicable Eurodollar Rate Margin (both as defined in the Agreement), ranging between .5% and 1.1375%, based on certain financial ratios of the Company, or (ii) the Base Rate (as defined in the Agreement). The Company is required to pay a quarterly commitment fee ranging from .2% to .375% per annum, based on certain financial ratios of the Company, of the unused commitment under the Agreement. If the Company obtains certain debt financing, as defined, the banks may require the Company to repay up to $150,000,000 of amounts outstanding under the Agreement. At October 25, 1997 and May 2, 1998, borrowings of $100,000,000 and $345,000,000, respectively, were outstanding under the Agreement at weighted average interest rates of 6.26% and 6.56%, respectively. The Agreement places several restrictions on the Company, including limitations on mergers, acquisitions and sales of a substantial portion of its assets, as well as certain limitations on liens, guarantees, additional borrowings, changes in the Company's capitalization, as defined, and investments. The Agreement also requires the Company to maintain certain financial covenants, including, among other things, minimum levels of consolidated net worth, a maximum ratio of consolidated funded debt to EBITDA, maximum capital expenditures and minimum interest coverage, as defined, during the term of the Agreement. At October 25, 1997 and May 2, 1998, the Company was in compliance with all loan covenants. The Company has a line of credit arrangement with a Malaysian bank denominated in Malaysian ringgits and U.S. dollars for aggregate borrowings of approximately $3,400,000 for the purpose of acquiring land, F-15 120 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) facilities and equipment for the Company's Malaysian subsidiary. The arrangement is renewable annually. At October 25, 1997 and May 2, 1998, there were no amounts outstanding under this arrangement. (8) LONG-TERM DEBT Long-term debt consists of the following:
OCTOBER ------------------- APRIL 1996 1997 1998 ------- -------- -------- (IN THOUSANDS) Loan agreements in connection with the expansion of a building. The loans bear interest at rates from 1% to 7% through March 2011 and are collateralized by property and an irrevocable letter of credit. Payments of principal and interest are due quarterly.......................................... $ 916 $ 820 $ 778 Revolving credit agreement (Note 7).................. -- 100,000 345,000 Obligations under capital leases..................... 2,506 13,960 18,096 ------ -------- -------- 3,422 114,780 363,874 Less -- Current portion.............................. 1,907 5,064 4,837 ------ -------- -------- $1,515 $109,716 $359,037 ====== ======== ========
Maturities of long-term debt and capital lease obligations are as follows as of October 25, 1997:
YEAR ENDING OCTOBER -- AMOUNT - ---------------------- -------------- (IN THOUSANDS) 1998........................................................ $ 5,064 1999........................................................ 4,008 2000........................................................ 2,506 2001........................................................ 2,221 2002........................................................ 100,710 Thereafter.................................................. 271 -------- $114,780 ========
F-16 121 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) (9) COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases manufacturing equipment and space under noncancelable operating leases with terms expiring through 2009. Future minimum lease payments under these leases as of October 25, 1997 (in thousands) are as follows:
YEAR ENDING OCTOBER -- EQUIPMENT REAL ESTATE TOTAL - ---------------------- --------- ----------- ------- (IN THOUSANDS) 1998................................................ $123 $ 5,500 $ 5,623 1999................................................ 9 5,371 5,380 2000................................................ -- 4,894 4,894 2001................................................ -- 4,558 4,558 2002................................................ -- 4,670 4,670 Thereafter.......................................... -- 29,665 29,665 ---- ------- ------- Future minimum lease payments....................... $132 $54,658 $54,790 ==== ======= =======
Total rental expense of approximately $1,447,000, $1,434,000, $6,628,000, $3,720,000 and $4,346,000 was incurred for the fiscal years ended October 1995, 1996, and 1997 and the six months ended April 26, 1997 and May 2, 1998, respectively. These operating leases include office and manufacturing space leased from a partnership in which the Chairman of the Board has an interest. Two of the leases are for terms of five years, and expire in October 2000 with options to extend until October 2006. The remaining lease expires in March 2000 with options to extend until 2006. For the fiscal years ended October 1995, 1996 and 1997, and the six months ended April 26, 1997 and May 2, 1998 the related rental expense was approximately $479,000, $529,000, $533,000, $273,000 and $327,000, respectively. Environmental Matters During March 1995, the Company received a Record of Decision ("ROD") from the New York State Department of Environmental Conservation ("NYSDEC"), regarding soil and groundwater contamination at its Owego, New York facility. Based on a Remedial Investigation and Feasibility Study ("RIFS") for apparent on-site contamination at that facility and a Focused Feasibility Study ("FFS"), each prepared by environmental consultants of the Company, the NYSDEC has approved a remediation program of groundwater withdrawal and treatment and iterative soil flushing. The Company has executed a Modification of the Order on Consent to implement the approved ROD. The cost, based upon the FFS, to implement this remediation is estimated to be $4.6 million, and is expected to be expended as follows: $260,000 for capital equipment and $4.3 million for operation and maintenance costs which will be incurred and expended over the estimated life of the program of 30 years. NYSDEC has notified the Company that it will take additional samples from a wetland area near the Company's Owego facility. Analytical reports of earlier sediment samples indicated the presence of certain inorganics. There can be no assurance that the Company and/or other third parties will not be required to conduct additional investigations and remediation at that location, the costs of which are currently indeterminable due to the numerous variables described in the fifth paragraph of this Environmental Matters note. From 1974 to 1980, the Company operated a printed circuit manufacturing facility in Florida as a lessee of property that is now the subject of a pending lawsuit (the "Florida Lawsuit") and investigation by the Florida Department of Environmental Protection ("FDEP"). Hadco and others are participating in alternative dispute resolution regarding the site with an independent mediator. In connection with the mediation, in F-17 122 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) February 1992 the FDEP presented computer-generated estimates of remedial costs, for activities expected to be spread over a number of years, that ranged from approximately $3.3 million to $9.7 million. Mediation sessions were conducted in March 1992 but have been suspended during the ongoing assessment and feasibility activities. On June 9, 1992, the Company entered into a Cooperating Parties Agreement in which it and Gould, Inc., another prior lessee of the site, agreed to fund certain assessment and feasibility study activities at the site. The cost of such activities is not expected to be material to the Company. Management believes it is likely that it will participate in implementing a continuing remedial program for the site, the costs of which are currently unknown. Also see the seventh paragraph of this Environmental Matters Note relating to the Company's having been named as a third-party defendant in the Florida Lawsuit. The Company has commenced the operation of a groundwater extraction system at its Derry, New Hampshire facility to address certain groundwater contamination and migration control issues. Further investigation is underway to determine the areal extent of the groundwater contaminant plume. Because of the uncertainty regarding both the quantity of contaminants beneath the building at the site and the long-term effectiveness of the groundwater migration control system the Company has installed, it is not possible to make a reliable estimate of the length of time remedial activity will have to be performed. However, it is anticipated that the groundwater extraction system will be operated for at least 30 years. There can be no assurance that the Company will not be required to conduct additional investigations and remediation relating to the Derry facility. The total costs of such groundwater extraction system and of conducting any additional investigations and remediation relating to the Derry facility are not fully determinable due to the numerous variables described in the fifth paragraph of this Environmental Matters note. Included in operating expenses are charges for actual expenditures and accruals, based on estimates, for environmental matters. During fiscal 1995, 1996 and 1997, and the six months ended April 26, 1997 and May 2, 1998, the Company made, and charged to operating expenses, actual payments of approximately $1,111,000, $680,000, $296,000, $249,000 and $20,000, respectively, for environmental matters. In 1995 and 1996, the Company also accrued and charged to operating expenses approximately $2,740,000 and $1,825,000, respectively, as cost estimates for environmental matters. The Company accrues estimated costs associated with known environmental matters, when such costs can be reasonably estimated. The cost estimates relating to future environmental clean-up are subject to numerous variables, the effects of which can be difficult to measure, including the stage of the environmental investigations, the nature of potential remedies, possible joint and several liability, the magnitude of possible contamination, the difficulty of determining future liability, the time over which remediation might occur, and the possible effects of changing laws and regulations. The total reserve for environmental matters currently identified by the Company amounted to $10.0 million at October 26, 1996 and $10.6 million at October 25, 1997 and May 2, 1998. The current portion of these costs amounted to approximately $900,000 as of October 26, 1996 and $1.4 million as of October 25, 1997 and May 2, 1998, and is included in other accrued expenses. The long-term portion of these costs amounted to approximately $9.1 million, as of October 26, 1996, and $9.2 million as of October 25, 1997 and May 2, 1998, respectively, and is reported under the caption Other Long-Term Liabilities. Based on its assessment at the current time, management estimates the cost of ultimate disposition of the above known environmental matters to range from approximately $7.0 million to $12.0 million, and is expected to be spread over a number of years. Management believes the ultimate disposition of the above known environmental matters will not have a material adverse effect on the liquidity, capital resources, business or consolidated financial position of the Company. However, one or more of such environmental matters could have a significant negative impact on the Company's consolidated financial results for a particular reporting period. The Company is one of 33 entities which have been named as potentially responsible parties in a lawsuit pending in the federal district court of New Hampshire concerning environmental conditions at the Auburn F-18 123 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) Road, Londonderry, New Hampshire landfill site. Local, state and federal entities and certain other parties to the litigation seek contribution for past costs, totaling approximately $20 million, allegedly incurred to assess and remedy the Auburn Road site. In December 1996, following publication and comment period, the U.S. Environmental Protection Agency (EPA) amended the ROD to change the remedy at the Auburn Road site from active groundwater remediation to future monitoring. Other parties to the lawsuit also allege that future monitoring will be required. The Company is contesting liability, but is participating in mediation with 27 other parties in an effort to resolve the lawsuit. In connection with the Florida Lawsuit (as described in the second paragraph of this Environmental Matters section), pending in the Circuit Court of Broward County, Florida, Hadco and Gould, Inc., another prior lessee of the site of the printed circuit manufacturing facility in Florida, was each served with a third party complaint in June 1995, as third-party defendants in such pending Florida Lawsuit by a party who had previously been named as a defendant when the Florida Lawsuit was commenced in 1993 by the FDEP. The Florida Lawsuit seeks damages relating to environmental pollution and FDEP costs and expenses, civil penalties, and declaratory and injunctive relief to require the parties to complete assessment and remediation of soil and groundwater contamination. The other parties include alleged owners of the property and Fleet Credit Corporation, a secured lender to a prior lessee of the property. In March 1993, the EPA notified Hadco Santa Clara (formerly Zycon) of its potential liability for maintenance and remediation costs in connection with a hazardous waste disposal facility operated by Casmalia Resources, a California Limited Partnership, in Santa Barbara County, California. The EPA identified Hadco Santa Clara as one of the 65 generators which had disposed the greatest amounts of materials at the site. Based on the total tonnage contributed by all generators, Hadco Santa Clara's share is estimated at approximately 0.2% of the total weight. The Casmalia site was regulated by the EPA during the period when the material was accepted. There is no allegation that Hadco Santa Clara violated any law in the disposal of material at the site, rather the EPA's actions stemmed from the fact that Casmalia Resources may not have the financial means to implement a closure plan for the site and because of Hadco Santa Clara's status as a generator of hazardous waste. In June 1997, the United States District Court in Los Angeles, California approved and entered a Consent Decree among the EPA and 49 entities (including Hadco Santa Clara) acting through the Casmalia Steering Committee ("CSC"). The Consent Decree sets forth the terms and conditions under which the CSC will carry out work aimed at final closure of the site. Certain closure activities will be performed by the CSC. Later work will be performed by the CSC, if funded by other parties. Under the Consent Decree, the settling parties will work with the EPA to pursue the non-settling parties to ensure they participate in contributing to the closure and long-term operation and maintenance of the facility. The future costs in connection with the lawsuits described in the above paragraphs are currently indeterminable due to such factors as the unknown timing and extent of any future remedial actions which may be required, the extent of any liability of the Company and of other potentially responsible parties, and the financial resources of the other potentially responsible parties. Management currently believes, based on the facts currently known to it, that it is probable that the ultimate dispositions of the above lawsuits will not have a material adverse effect on the Company's business and financial condition; however, there can be no assurance that this will be the case. Purchase Commitments The Company had commitments to purchase approximately $16,497,000 of manufacturing equipment and approximately $1,289,000 of leasehold improvements as of October 25, 1997. The majority of these commitments is expected to be completed by the end of fiscal 1998. F-19 124 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) (10) STOCKHOLDERS' INVESTMENT Stock Options The following table summarizes stock option activity with respect to the non-qualified stock options:
WEIGHTED NUMBER EXERCISE AVERAGE OF SHARES PRICE RANGE EXERCISE PRICE --------- --------------- -------------- (IN THOUSANDS) Outstanding, October 29, 1994.............. 1,690 $ 2.00 - $ 9.00 $ 4.78 Options granted............................ 223 8.50 - 25.69 9.39 Options exercised.......................... (320) 2.00 - 11.06 3.61 Options canceled........................... (147) 2.10 - 8.81 7.91 ----- --------------- ------ Outstanding, October 28, 1995.............. 1,446 2.00 - 25.69 5.44 Options granted............................ 150 27.00 - 31.50 30.98 Options exercised.......................... (443) 2.00 - 11.06 3.92 Options canceled........................... (45) 2.00 - 31.50 6.75 ----- --------------- ------ Outstanding, October 26, 1996.............. 1,108 2.00 - 31.50 9.45 Options granted............................ 265 45.31 - 67.00 48.52 Options exercised.......................... (261) 2.00 - 31.50 4.98 Options canceled........................... (42) 2.00 - 51.88 19.68 ----- --------------- ------ Outstanding, October 25, 1997.............. 1,070 2.10 - 67.00 19.87 Options granted............................ 487 36.56 - 63.50 49.99 Options exercised.......................... (85) 2.10 - 11.06 5.58 Options canceled........................... (46) 17.19 - 67.00 46.10 ----- --------------- ------ Outstanding, May 2, 1998................... 1,426 $ 2.40 - $67.00 $30.21 ===== =============== ======
The following table summarizes information about stock options outstanding at October 25, 1997:
WEIGHTED AVERAGE REMAINING WEIGHTED RANGE OF OPTIONS CONTRACT LIFE AVERAGE EXERCISE PRICES OUTSTANDING (YEARS) EXERCISE PRICE --------------- ----------- -------------- -------------- $ 2.10 - $ 3.15............................... 88,830 1.2 $ 2.60 3.38 - 4.00............................... 97,595 2.6 3.73 4.94 - 6.69............................... 83,120 4.2 5.15 8.00 - 12.00............................... 406,500 6.3 8.79 17.19................................... 1,750 7.6 17.19 27.00 - 31.50............................... 136,975 7.9 30.93 47.44 - 67.00............................... 255,250 8.8 48.56 --------- ------ 1,070,020 $19.87 ========= ======
F-20 125 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) The following table summarizes information about stock options exercisable at October 25, 1997:
WEIGHTED AVERAGE RANGE OF OPTIONS EXERCISE EXERCISE PRICES EXERCISABLE PRICE --------------- ----------- -------- $ 2.10 - $ 3.15............................................. 88,830 $ 2.60 3.38 - 4.00............................................. 82,755 3.68 4.94 - 6.69............................................. 50,520 5.20 8.00 - 12.00............................................. 130,675 8.97 17.19............................................. -- -- 27.00 - 31.50............................................. 17,220 29.85 47.44 - 67.00............................................. 9,000 46.02 ------- ------ Exercisable October 25, 1997................................ 379,000 $ 7.65 ======= ====== Exercisable October 26, 1996................................ 506,885 $ 4.52 ======= ====== Exercisable October 28, 1995................................ 830,516 $ 4.71 ======= ======
The Company has reserved as of October 25, 1997, a total of 2,005,270 shares of common stock for issuance under the non-qualified stock option plans listed in the above charts. During fiscal 1995, 1996 and 1997, approximately $287,000, $154,000 and $121,000, respectively, were charged against income as compensation expense associated with the granting of these options. For the first six months of each of fiscal 1997 and 1998, $64,000 and $42,000, respectively were charged against income as compensation with the granting of those options. The Company has computed the pro forma disclosures required under SFAS No. 123 using the Black-Scholes option pricing model. The assumptions used, weighted average information and the pro forma effect of applying SFAS No. 123 for the years ended October 26, 1996 and October 25, 1997 are as follows:
1996 1997 ------------ ------------ Risk-free interest rates............................... 6.20% - 6.73% 6.20% - 6.66% Expected dividend yield................................ -- -- Expected lives......................................... 6.53 years 6.77 years Expected volatility.................................... 43.6% 43.6% Weighted average grant-date fair value of options granted during the period, net of an estimated termination rate of 32.70%........................... $ 24.54 $ 26.51 Weighted average exercise price of options granted during the period, net of an estimated termination rate of 32.70%....................................... $ 45.26 $ 48.15 Weighted average remaining contractual life of options outstanding.......................................... 8.92 years 8.66 years Weighted average exercise price of 506,885 and 379,000 options exercisable at October 26, 1996 and October 25, 1997, respectively............................... $ 4.52 $ 7.65 Pro forma net income (loss)............................ $31,802 $(37,088) Pro forma -- basic net income (loss) per share......... $ 3.10 $ (3.24) Pro forma -- diluted net income (loss) per share....... $ 2.87 $ (3.24)
F-21 126 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) The Company has the following non-qualified stock option plans: December 1985 Plan and December 1986 Plan The options under these plans are exercisable immediately, and have various vesting periods up to 10 years according to each individual option agreement with an expiration date no later than 10 years and 90 days from the date of grant. Upon termination of employment under certain circumstances, the Company may, at its option, repurchase the exercised but unvested shares at the original purchase price. The Board of Directors has determined to make no further grants under these plans. September 1990 Plan This plan provides for the granting of options at a price equal to the fair market value at the date of grant. The options vest over periods of up to seven years and become exercisable according to each option agreement, and they expire no later than 10 years from the date of grant. The Board of Directors has determined to make no further grants under this plan. December 1991 Director Plan This plan originally provided for the granting of options to purchase up to 150,000 shares of common stock at a price equal to the fair market value at the date of grant. These options are exercisable ratably over a five-year period and expire no later than seven years from the date of grant. This plan has been amended to (i) increase the number of shares available to 300,000, (ii) provide that any current non-employee director who had five years of service in such capacity on February 26, 1997 be automatically granted, on such date and on each anniversary of service thereafter, a vested option to purchase 3,000 shares and (iii) provide that any current non-employee director who did not have five years of service in such capacity on February 26, 1997 and any future non-employee director each be automatically granted, on the date such non-employee director achieves five years of service in such capacity and on each anniversary of service thereafter, a vested option to purchase 3,000 shares. November 1995 Plan This plan provides for the granting of options to purchase up to 1,000,000 shares of common stock at a price equal to fair market value at the date of grant. The options vest according to each option agreement and they expire no later than 10 years from the date of grant. Stockholder Rights Plan The Company adopted a Stockholder Rights Plan in August 1995 pursuant to which the Company declared the distribution of one Common Stock Purchase Right ("Right") for each share of outstanding common stock. Under certain conditions, each Right may be exercised for one share of common stock at an exercise price of $130, subject to adjustment. Under circumstances defined in the Stockholder Rights Plan, the Rights entitle holders to purchase stock having a value of twice the exercise price of the Rights. Until they become exercisable, the Rights are not transferable apart from the common stock. The Rights may be redeemed by the Company at any time prior to the occurrence of certain events at $.01 per Right. The Stockholder Rights Plan will expire on September 11, 2005, unless the Rights are earlier redeemed by the Company. F-22 127 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) (11) RETIREMENT PLAN The Hadco Corporation Retirement Plan (the "Plan"), as amended, covers all employees with at least six months of continuous service, as defined. Annual profit sharing contributions are determined at the discretion of the Board of Directors but cannot exceed the amount allowable for federal income tax purposes. The Company made profit sharing contributions of $2,285,000, $3,335,000 and $4,016,000 to the Plan for the years ended October 1995, 1996 and 1997, respectively. The Plan permits participants to elect to have contributions made to the Plan in the form of reductions in salary under Section 401(k) of the Internal Revenue Code subject to limitations set out in the Plan. Under the Plan, the Company will match employee contributions up to a set percentage. Employee contributions become vested when made, and Company contributions become vested at the rate of 33 1/3 for each year of service with the Company. The Company matched employee contributions in the amount of approximately $600,000, $736,000, $834,000 and $1,642,000 during fiscal 1995, 1996, and 1997 and the six months ended May 2, 1998, respectively. (12) QUARTERLY RESULTS (UNAUDITED) The following summarized unaudited results of operations for the fiscal quarters in the years ended October 1996 and 1997 and through the first quarter of fiscal 1998 have been accounted for using generally accepted principles for interim reporting purposes and include adjustments (consisting of normal recurring adjustments) that the Company considers necessary for the fair presentation of results for these interim periods.
1996 1997 --------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) First Fiscal Quarter -- Net sales................................................. $76,481 $111,536 Gross profit.............................................. 20,463 26,377 Net income (loss)......................................... 7,191 (69,161) Diluted Net income (loss) per share....................... .65 (6.64) Diluted Weighted average shares outstanding............... 11,104 10,413 Second Fiscal Quarter -- Net sales................................................. $88,096 $180,662 Gross profit.............................................. 22,951 38,463 Net income................................................ 7,895 9,953 Diluted Net income per share.............................. .71 .91 Diluted Weighted average shares outstanding............... 11,135 10,956 Third Fiscal Quarter -- Net sales................................................. $88,225 $183,274 Gross profit.............................................. 22,419 39,254 Net income................................................ 7,994 11,369 Diluted Net income per share.............................. .72 .93 Diluted Weighted average shares outstanding............... 11,100 12,254
F-23 128 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS)
1996 1997 --------- ---------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Fourth Fiscal Quarter -- Net sales................................................. $97,883 $173,233 Gross profit.............................................. 24,623 37,298 Net income................................................ 8,934 11,346 Diluted Net income per share.............................. .81 .84 Diluted Weighted average shares outstanding............... 11,008 13,528
(13) CUSTOMERS During fiscal year 1995, no customer accounted for more than 7% of consolidated net sales. During fiscal years 1996 and 1997, one customer accounted for 15% of consolidated net sales. The Company's five largest customers accounted for 28%, 34% and 34% of consolidated net sales during fiscal 1995, 1996 and 1997, respectively. For the first six months of each of fiscal 1997 and 1998 one customer accounted for more than 10% of consolidated sales. (14) RESTRUCTURING AND OTHER NON-RECURRING CHARGES On April 6, 1998, the Company announced the planned consolidation of its two East Coast quick-turn prototype facilities into the larger of the two facilities located at Haverhill, MA. The Company incurred and recorded in the fiscal quarter ended May 2, 1998 non-recurring charges in connection with the consolidation totaling $5.9 million. The component of this charge classified as restructuring-related met the criteria set forth in Emerging Issues and Task Force Issue ("EITF") 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." The amount recorded as a liability, which totaled $1.5 million, relates to severance and other payroll-related costs, as well as lease termination costs. Non-recurring costs include costs associated with the abandonment of assets at one of the facilities. The components of the restructuring and other non-recurring costs during the three months ended May 2, 1998 are as follows:
AMOUNT -------------- (IN THOUSANDS) Loss on abandonment of assets............................... $1,965 Severance benefits and associated legal costs............... 129 Lease termination loss...................................... 1,336 ------ Total Restructuring Charges................................. 3,430 Other Non-recurring Charges................................. 2,517 ------ Total Restructuring and Other Charges....................... $5,947 ======
Included in the restructuring and other charges is $2.5 million, which represents the write-down of existing assets to their net realizable value, in accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of." (15) SUBSEQUENT EVENT -- DEBT OFFERING On May 18, 1998, the Company sold $200.0 million aggregate principal amount of its 9 1/2% Senior Subordinated Notes due 2008 (the "Notes") to certain purchasers. The purchasers subsequently resold the Notes to "qualified institutional buyers" in reliance upon Rule 144A under the Securities Act of 1933, as F-24 129 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) amended (the "Securities Act"), and offshore purchasers pursuant to Rule 904 of Regulation S under the Securities Act. The Notes were sold at a price equal to 99.66% of their principal amount. Interest on the Notes is payable semiannually on each June 15 and December 15, commencing December 15, 1998. The Notes are redeemable at the option of the Company, in whole or in part, at any time on or after June 15, 2003, at 104.75% of their principal amount, plus accrued interest, with such percentages declining ratably to 100% of their principal amount, plus accrued interest. At any time on or prior to June 15, 2001 and subject to certain conditions, up to 35% of the aggregate principal amount of the Notes may be redeemed, at the option of the Company, with the proceeds of certain equity offerings of the Company at 109.50% of the principal amount thereof, plus accrued interest. In addition, at any time prior to June 15, 2003, the Company may redeem the Notes, at its option, in whole or in part, at a price equal to the principal amount thereof, together with accrued interest, plus the Applicable Premium (as defined in the Indenture governing the Notes). The Notes are guaranteed, on a senior subordinated basis, by each of the Company's U.S. Restricted Subsidiaries (as defined in the Indenture) (the "Guarantors"). The net proceeds received by the Company from the issuance and sale of the Notes, approximately $193.82 million, was used to repay outstanding indebtedness under the Amended Credit Facility previously incurred to, among other things, finance the Acquisitions. The Indenture under that which the Notes were issued (the "Indenture") imposes certain limitations on the ability of the Company, its subsidiaries and, in certain circumstances, the Guarantors, to, among other things, incur indebtedness, pay dividends, prepay subordinated indebtedness, repurchase capital stock, make investments, create liens, engage in transactions with stockholders and affiliates, sell assets and engage in mergers and consolidations. F-25 130 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) (16) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS CONDENSED CONSOLIDATING BALANCE SHEET
AS OF OCTOBER 25, 1997 ------------------------------------------------------------------------ GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL ------------ ------------- ----------- ----------- ------------ (IN THOUSANDS) ASSETS Current Assets: Cash and cash equivalents......... $ (1,603) $ 2,249 $ 11,525 $ -- $ 12,171 Short-term investments............ -- -- 1,562 -- 1,562 Accounts receivable, net.......... 145 56 92,021 -- 92,222 Inventories....................... 11,229 5,116 29,655 -- 46,000 Deferred tax asset................ -- -- 10,483 -- 10,483 Prepaid expenses and other current assets......................... 2,271 113 1,861 -- 4,245 -------- ------- -------- --------- -------- Total current assets...... 12,042 7,534 147,107 166,683 Property, Plant and Equipment, net............................... 67,525 33,462 130,503 231,490 Intercompany Receivable............. 12,184 -- 863 (13,047) -- Investments in subsidiaries......... 23,435 -- 142,560 (165,995) -- Acquired Intangible Assets, net..... 101,131 -- -- -- 101,131 Other Assets........................ 619 1,852 742 -- 3,213 -------- ------- -------- --------- -------- $216,936 $42,848 $421,775 $(179,042) $502,517 ======== ======= ======== ========= ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current portion of long-term debt........................... $ 4,215 $ 104 $ 745 $ -- $ 5,064 Accounts payable.................. 21,608 4,745 42,241 -- 68,594 Intercompany payable.............. -- 13,047 -- (13,047) -- Accrued payroll and other employee benefits....................... 5,693 225 22,361 -- 28,279 Accrued taxes..................... 3,880 269 (2,374) -- 1,775 Other accrued expenses............ 1,514 56 7,708 -- 9,278 -------- ------- -------- --------- -------- Total current liabilities............. 36,910 18,446 70,681 (13,047) 112,990 -------- ------- -------- --------- -------- Long-term Debt, net of current portion........................... 8,278 353 101,085 -- 109,716 -------- ------- -------- --------- -------- Deferred Tax Liability.............. 29,802 -- 883 -- 30,685 -------- ------- -------- --------- -------- Other Long-term Liabilities......... -- -- 9,214 -- 9,214 -------- ------- -------- --------- -------- Stockholders' Investment: Common stock, $.05 par value; Authorized -- 25,000 shares Issued and outstanding -- 13,086 shares in 1997.......... 11 29,654 655 (29,665) 655 Paid-in Capital..................... 212,474 -- 168,246 (212,474) 168,246 Deferred Compensation............... -- -- (117) -- (117) Retained Earnings................... (70,539) (5,605) 71,128 76,144 71,128 -------- ------- -------- --------- -------- Total stockholders' investment.............. 141,946 24,049 239,912 (165,995) 239,912 -------- ------- -------- --------- -------- $216,936 $42,848 $421,775 $(179,042) $502,517 ======== ======= ======== ========= ========
F-26 131 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 25, 1997 --------------------------------------------------------------------------- GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL ------------ ------------- ----------- ----------- ------------ (IN THOUSANDS) Net Sales..................... $195,411 $26,411 $426,883 $ -- $648,705 Cost of Sales................. 164,069 18,773 324,471 -- 507,313 -------- ------- -------- ------- -------- Gross Profit................ 31,342 7,638 102,412 -- 141,392 Operating Expenses............ 12,821 7,696 44,069 -- 64,586 Write-off of Acquired In-Process Research and Development................. 78,000 -- -- -- 78,000 -------- ------- -------- ------- -------- Income (Loss) From Operations............... (59,479) (58) 58,343 -- (1,194) Interest and Other Income..... 655 -- 2,641 -- 3,296 Interest Expense.............. (2,003) (557) (8,363) -- (10,923) -------- ------- -------- ------- -------- Income (Loss) Before Provision for Income Taxes.................... (60,827) (615) 52,621 -- (8,821) Provision for Income Taxes.... 6,860 275 20,537 -- 27,672 Equity in income (loss) of subsidiary.................. (2,852) -- (68,577) 71,429 -- -------- ------- -------- ------- -------- Net Income (Loss)........... $(70,539) $ (890) $(36,493) $71,429 $(36,493) ======== ======= ======== ======= ========
F-27 132 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED OCTOBER 25, 1997 --------------------------------------------------------------------------- GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ENTITIES TOTAL ------------ ------------- ----------- ----------- ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities................. $44,591 $ 9,978 $ (3,902) $ -- $ 50,667 ------- ------- --------- ------- --------- Cash Flows from Investing Activities: Purchases of short-term investments....................... -- -- (19,862) -- (19,862) Maturities of short-term investments....................... -- -- 27,701 -- 27,701 Investments in subsidiaries.......... 9,496 726 (10,222) -- -- Purchases of property, plant and equipment......................... (19,976) (4,092) (45,783) -- (69,851) Proceeds from sale of property, plant and equipment..................... -- -- 2,760 -- 2,760 Foreign Sales Corp. dividend......... -- (1,962) 1,962 -- -- Acquisition of Zycon Corporation in 1997, net of cash acquired........ -- -- (209,661) -- (209,661) ------- ------- --------- ------- --------- Net cash used in investing activities........................ (10,480) (5,328) (253,105) -- (268,913) ------- ------- --------- ------- --------- Cash Flows from Financing Activities: Principal payments of long-term debt.............................. (35,714) (2,505) (126,547) -- (164,766) Proceeds from issuance of long-term debt.............................. -- -- 224,954 -- 224,954 Proceeds from exercise of stock options........................... -- -- 1,303 -- 1,303 Sale of common stock, net of issuance costs............................. -- -- 131,088 -- 131,088 Tax benefit from exercise of stock options........................... -- -- 5,052 -- 5,052 ------- ------- --------- ------- --------- Net cash (used in) provided by financing activities............ (35,714) (2,505) 235,850 -- 197,631 ------- ------- --------- ------- --------- Net Increase (Decrease) in Cash and Cash Equivalents..................... (1,603) 2,145 (21,157) -- (20,615) Cash and Cash Equivalents, Beginning of Period............................... -- 104 32,682 -- 32,786 ------- ------- --------- ------- --------- Cash and Cash Equivalents, End of Period............................... $(1,603) $ 2,249 $ 11,525 $ -- $ 12,171 ======= ======= ========= ======= =========
F-28 133 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (UNAUDITED) CONDENSED CONSOLIDATING BALANCE SHEET (UNAUDITED)
AS OF MAY 2, 1998 ----------------------------------------------------------------------- GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL ------------ ------------- ----------- ----------- ------------ (IN THOUSANDS) ASSETS Current Assets: Cash and cash equivalents................ $ 927 $ 1,534 $ 2,536 $ -- $ 4,997 Accounts receivable, net................. 18,776 441 95,135 -- 114,352 Inventories.............................. 28,696 6,815 40,095 (511) 75,095 Deferred tax asset....................... 8,623 -- 11,483 -- 20,106 Prepaid expenses and other current assets................................ 2,015 4,173 1,870 -- 8,058 -------- ------- -------- --------- -------- Total current assets............. 59,037 12,963 151,119 (511) 222,608 Property, Plant and Equipment, net......... 139,696 43,481 135,158 -- 318,335 Intercompany Receivable.................... 5,218 87 54,694 (59,999) -- Investments in subsidiaries................ 24,106 -- 274,044 (298,150) -- Acquired Intangible Assets, net............ 195,026 -- -- -- 195,026 Other Assets............................... 2,036 330 1,106 -- 3,472 -------- ------- -------- --------- -------- $425,119 $56,861 $616,121 $(358,660) $739,441 ======== ======= ======== ========= ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT Current Liabilities: Current portion of long-term debt........ $ 3,899 $ 107 $ 831 $ -- $ 4,837 Accounts payable......................... 30,237 6,313 37,619 -- 74,169 Intercompany payable..................... 35,219 26,699 -- (61,918) -- Accrued payroll and other employee benefits.............................. 3,755 167 25,324 -- 29,246 Accrued taxes............................ 12,388 368 (12,262) -- 494 Other accrued expenses................... 3,080 80 12,069 -- 15,229 -------- ------- -------- --------- -------- Total current liabilities........ 88,578 33,734 63,581 (61,918) 123,975 Long-term Debt, net of current portion..... 12,326 327 346,384 -- 359,037 Deferred Tax Liability..................... 50,785 -- 883 -- 51,668 Other Long-term Liabilities................ -- -- 9,192 -- 9,192 Stockholders' Investment: Common stock, $0.05 par value; Authorized -- 50,000 shares Issued and outstanding -- 13,212 in 1998................................ 11 29,654 662 (29,665) 662 Paid-in Capital.......................... 400,616 -- 171,466 (400,616) 171,466 Deferred Compensation.................... -- -- (75) -- (75) Retained Earnings........................ (127,197) (6,854) 24,028 133,539 23,516 -------- ------- -------- --------- -------- Total stockholders' investment... 273,430 22,800 196,081 (296,742) 195,569 -------- ------- -------- --------- -------- $425,119 $56,861 $616,121 $(358,660) $739,441 ======== ======= ======== ========= ========
F-29 134 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDING MAY 2, 1998 ----------------------------------------------------------------------- GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL ------------ ------------- ----------- ----------- ------------ (IN THOUSANDS) Net Sales......................................... $152,103 $17,278 $240,078 $(1,596) $407,863 Cost of Sales..................................... 129,926 16,112 187,112 (1,085) 332,065 -------- ------- -------- ------- -------- Gross Profit.................................... 22,177 1,166 52,966 (511) 75,798 Operating Expenses................................ 7,444 1,836 30,030 -- 39,310 Restructuring and Other Non-Recurring Charges..... -- -- 5,947 -- 5,947 Write-off of Acquired In-Process Research and Development..................................... 63,050 -- -- -- 63,050 -------- ------- -------- ------- -------- Income (Loss) From Operations................... (48,317) (670) 16,989 (511) (32,509) Interest and Other Income......................... 822 612 (57) -- 1,377 Interest Expense.................................. (390) (390) (5,514) -- (6,294) -------- ------- -------- ------- -------- Income (Loss) Before Provision for Income Taxes......................................... (47,885) (448) 11,418 (511) (37,426) Provision for Income Taxes........................ 7,524 98 2,564 -- 10,186 Equity in income (loss) of subsidiary............. (1,249) -- (55,955) 57,204 -- -------- ------- -------- ------- -------- Net Income (Loss)............................... $(56,658) $ (546) $(47,101) $56,693 $(47,612) ======== ======= ======== ======= ========
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDING MAY 2, 1998 ----------------------------------------------------------------------- GUARANTOR NON-GUARANTOR PARENT ELIMINATION CONSOLIDATED SUBSIDIARIES SUBSIDIARIES CORPORATION ENTRIES TOTAL ------------ ------------- ----------- ----------- ------------ (IN THOUSANDS) Net cash provided by (used in) operating activities...................................... $ 206 $(2,017) $ 14,917 $ (511) $ 12,595 -------- ------- -------- ------- -------- Cash Flows from Investing Activities: Purchases of short-term investments............. -- -- (2,020) -- (2,020) Maturities of short-term investments............ -- -- 3,582 -- 3,582 Foreign Sales Corp. dividend.................... -- (703) 703 -- -- Purchases of property, plant and equipment...... (11,735) (11,491) (24,960) -- (48,186) Investments in subsidiaries..................... 5,691 -- (6,202) 511 -- Acquisition of Continental Circuits in 1998, net of cash acquired.............................. -- -- (190,032) -- (190,032) -------- ------- -------- ------- -------- Net cash used in investing activities......... (6,044) (12,194) (218,929) 511 (236,656) -------- ------- -------- ------- -------- Cash Flows from Financing Activities: Principal payments of long-term debt............ (42,433) (22) (763) -- (43,218) Proceeds from issuance of long-term debt........ 10,730 -- 246,148 -- 256,878 Proceeds from exercise of stock options......... -- -- 476 -- 476 Increase (Decrease) of intercompany payable..... 40,071 13,518 (53,589) -- -- Sale of common stock, net of issuance costs..... -- -- 1,480 -- 1,480 Tax benefit from exercise of stock options...... -- -- 1,271 -- 1,271 Net cash provided by financing activities..... 8,368 13,496 195,023 -- 216,887 -------- ------- -------- ------- -------- Net Increase (Decrease) in Cash and Cash Equivalents..................................... 2,530 (715) (8,989) 3,085 (7,174) Cash and Cash Equivalents, Beginning of Period.... (1,603) 2,249 11,525 -- 12,171 -------- ------- -------- ------- -------- Cash and Cash Equivalents, End of Period.......... $ 927 $ 1,534 $ 2,536 $ 3,085 $ 4,997 ======== ======= ======== ======= ========
F-30 135 HADCO CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) (INCLUDING DATA APPLICABLE TO UNAUDITED PERIODS) Basis of presentation. In connection with the acquisition of Continental Circuits Corp., which was financed with approximately $184 million of borrowings from the Credit Facility, the Company on May 18, 1998 sold $200,000,000 aggregate principal amount of 9 1/2% Senior Subordinated Notes due in 2008 (the Notes). The Notes are fully and unconditionally guaranteed on a senior subordinated basis, jointly and severally, by certain of the Company's direct wholly-owned domestic subsidiaries (the Guarantors). The Guarantors are Hadco Santa Clara, Inc., Hadco Phoenix, Inc., CCIR of Texas Corp., and CCIR of California Corp. The condensed consolidating financial statements of the Guarantors are presented above and should be read in connection with the Consolidated Financial Statements of the Company. Separate financial statements of the Guarantors are not presented because (i) the Guarantors are wholly-owned and have fully and unconditionally guaranteed the Notes on a joint and several basis and (ii) the Company's management has determined such separate financial statements are not material to investors and believes the condensed consolidating financial statements presented are more meaningful in understanding the financial position of the Guarantors. There are no significant restrictions on the ability of the Guarantors to make distributions to the Company. Condensed consolidating financial information has not been presented for 1996 and 1995 because the Guarantors were not subsidiaries of the Company in its 1996 and 1995 fiscal years. F-31 136 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Shareholders Continental Circuits Corp. We have audited the accompanying consolidated balance sheets of Continental Circuits Corp. and subsidiaries as of July 31, 1996 and 1997, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended July 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Continental Circuits Corp. and subsidiaries at July 31, 1996 and 1997, and the consolidated results of their operations and their cash flows for each of the three years in the period ended July 31, 1997 in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Phoenix, Arizona August 22, 1997 F-32 137 CONTINENTAL CIRCUITS CORP. CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE DATA)
JULY 31, JULY 31, JANUARY 31, 1996 1997 1998 -------- -------- ----------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents................................. $ 3,851 $ 85 $ 180 Accounts receivable, less allowance of $167 in 1996 and $152 in 1997........................................... 15,114 21,431 20,150 Inventories............................................... 4,796 8,805 13,081 Refundable income taxes................................... 240 420 420 Deferred income taxes..................................... 714 125 125 Prepaid expenses and other................................ 259 946 1,109 ------- ------- -------- Total current assets.............................. 24,974 31,812 35,065 Property, plant, and equipment: Land...................................................... 2,899 3,586 3,586 Buildings and improvements................................ 18,353 24,677 30,733 Machinery and equipment................................... 53,065 69,123 80,333 ------- ------- -------- 74,317 97,386 114,652 Accumulated Depreciation.................................. 40,200 46,422 50,774 ------- ------- -------- 34,117 50,964 63,878 Other assets................................................ 495 83 3,340 ------- ------- -------- Total assets...................................... $59,586 $82,859 $102,283 ======= ======= ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 7,193 $14,665 $ 15,774 Accrued vacation expense.................................. 720 688 497 Other accrued expenses.................................... 1,332 2,443 1,965 Current portion of long-term debt......................... 1,000 -- -- ------- ------- -------- Total current liabilities......................... 10,245 17,796 18,236 Long-term debt, less current portion...................... 3,333 10,312 29,375 Deferred income taxes..................................... 1,976 2,507 2,507 Commitments and contingencies Shareholders' equity: Preferred stock, $.01 par value -- Authorized shares 1,000,000.............................................. -- -- -- Issued and outstanding shares none Common stock, $.01 par value -- Authorized shares 20,000,000 Issued and outstanding shares -- 7,194,000 in 1996, 7,252,000 in 1997, and 7,292,000 1998................ 72 73 73 Additional paid-in capital.................................. 10,077 10,266 10,511 Retained earnings........................................... 33,883 41,905 41,581 ------- ------- -------- Total shareholders' equity.................................. 44,032 52,244 52,165 ------- ------- -------- Total liabilities and shareholders' equity........ $59,586 $82,859 $102,283 ======= ======= ========
See accompanying notes F-33 138 CONTINENTAL CIRCUITS CORP. CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS EXCEPT PER SHARE INFORMATION)
SIX MONTHS SIX MONTHS ENDED ENDED JULY 31, JULY 31, JULY 31, FEBRUARY 2, JANUARY 31, 1995 1996 1997 1997 1998 -------- -------- -------- ----------- ----------- (UNAUDITED) (UNAUDITED) Net sales........................... $95,372 $108,362 $120,752 $56,685 $69,650 Cost of products sold............... 76,174 89,502 98,698 47,052 58,763 ------- -------- -------- ------- ------- Gross profit........................ 19,198 18,860 22,054 9,633 10,887 Selling, general and administrative expense........................... 7,381 7,991 8,487 3,839 4,616 In-process research and development....................... -- -- -- -- 4,300 ------- -------- -------- ------- ------- 11,817 10,869 13,567 5,794 1,971 Other expense: Interest............................ 878 470 354 123 734 Other............................... 25 123 365 325 15 ------- -------- -------- ------- ------- Income before income taxes.......... 10,914 10,276 12,848 5,346 1,222 Income taxes........................ 4,260 3,993 4,826 2,096 1,546 ------- -------- -------- ------- ------- Net income (loss)................... $ 6,654 $ 6,283 $ 8,022 $ 3,250 $ (324) ======= ======== ======== ======= ======= Net income (loss) per share Basic............................... $ 0.93 $ 0.88 $ 1.11 $ 0.45 $ (0.04) ======= ======== ======== ======= ======= Diluted............................. $ 0.90 $ 0.85 $ 1.08 $ 0.44 $ (0.04) ======= ======== ======== ======= ======= Number of shares used in computing Basic............................... 7,120 7,152 7,213 7,206 7,267 ======= ======== ======== ======= ======= Diluted............................. 7,409 7,430 7,432 7,428 7,267 ======= ======== ======== ======= =======
See accompanying notes F-34 139 CONTINENTAL CIRCUITS CORP. CONSOLIDATED STATEMENTS OF CASH FLOW (IN THOUSANDS)
SIX MONTHS SIX MONTHS ENDED ENDED JULY 31, JULY 31, JULY 31, FEBRUARY 2, JANUARY 31, 1995 1996 1997 1997 1998 -------- -------- -------- ----------- ----------- (UNAUDITED) (UNAUDITED) OPERATING ACTIVITIES Net income (loss)............................ $ 6,654 $ 6,283 $ 8,022 $ 3,250 $ (324) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation............................... 5,612 6,572 6,292 2,838 4,351 In process research and development write-off............................... -- -- -- -- 4,300 Loss on sale of property, plant, and equipment............................... 70 139 6 -- -- Deferred income taxes...................... 101 (418) 1,120 -- -- Provision (recovery) for doubtful accounts................................ 24 424 (15) (133) 16 Changes in operating assets and liabilities: Accounts receivable........................ (1,327) (1,040) (6,302) (2,971) 2,136 Inventories................................ (1,129) 320 (4,009) (1,919) (3,881) Refundable income taxes.................... -- (240) (180) -- -- Prepaid expenses and other................. (417) 365 (687) 154 (163) Other assets............................... 77 (801) 412 291 (1,870) Accounts payable........................... 1,135 (1,513) 7,472 3,748 535 Accrued expenses........................... 418 (158) 1,079 (72) (1,061) Income taxes............................... 164 (386) -- 692 -- -------- ------- -------- ------- ------- Net cash provided by operating activities.... 11,382 9,547 13,210 5,878 4,039 INVESTING ACTIVITIES Purchases of property, plant, and equipment.................................. (11,676) (8,682) (20,562) (7,589) (16,361) Proceeds from disposal of property, plant, and equipment.............................. 31 102 17 -- -- Acquisition of Flexible Circuits Technology................................. -- -- -- -- (6,891) Acquisition of a division of Radian International LLC.......................... -- -- (2,600) -- -- -------- ------- -------- ------- ------- Net cash used in investing activities........ (11,645) (8,580) (23,145) (7,589) (23,252) FINANCING ACTIVITIES Borrowings under line of credit agreement.... -- -- 9,312 1,000 19,063 Principal payments on long-term debt......... (11,143) (4,167) (4,333) (500) -- Borrowings under long-term debt.............. -- 5,000 1,000 -- -- Proceeds from issuance of common stock, net of issuance cost........................... 9,504 13 190 135 245 Payments to repurchase common stock.......... (57) -- -- -- -- -------- ------- -------- ------- ------- Net cash provided by (used in) financing activities................................. (1,696) 846 6,169 635 19,308 -------- ------- -------- ------- ------- Net increase (decrease) in cash and cash equivalents................................ (1,959) 1,813 (3,766) (1,076) 95 Cash and cash equivalents at beginning of period..................................... 3,997 2,038 3,851 3,851 85 -------- ------- -------- ------- ------- Cash and cash equivalents at end of period... $ 2,038 $ 3,851 $ 85 $ 2,775 $ 180 ======== ======= ======== ======= =======
See accompanying notes F-35 140 CONTINENTAL CIRCUITS CORP. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (IN THOUSANDS)
COMMON STOCK ---------------- ADDITIONAL RETAINED SHARES AMOUNT PAID-IN-CAPITAL EARNINGS TOTAL ------ ------ --------------- -------- ------- BALANCE AT JULY 31, 1994................ 6,133 $61 $ 581 $20,993 $21,635 Cash proceeds from issuance of common stock, net of share issuance costs.... 1,000 10 9,396 -- 9,406 Shares issued in connection with options exercised............................. 10 -- 98 -- 98 Shares repurchased and canceled......... (13) -- (10) (47) (57) Net income.............................. -- -- -- 6,654 6,654 ----- --- ------- ------- ------- BALANCE AT JULY 31, 1995................ 7,130 71 10,065 27,600 37,736 Shares issued in connection with options exercised............................. 64 1 199 -- 200 Share issuance costs.................... -- -- (187) -- (187) Net income.............................. -- -- -- 6,283 6,283 ----- --- ------- ------- ------- BALANCE AT JULY 31, 1996................ 7,194 72 10,077 33,883 44,032 Shares issued in connection with options exercised and for employee stock purchase plan......................... 58 1 189 -- 190 Net income.............................. -- -- -- 8,022 8,022 ----- --- ------- ------- ------- BALANCE AT JULY 31, 1997................ 7,252 73 10,266 41,905 52,244 Shares issued in connection with options exercised and for employee stock purchase plan (unaudited)............. 40 -- 245 -- 245 Net loss (unaudited).................... -- -- -- (324) (324) ----- --- ------- ------- ------- BALANCE AT JANUARY 31, 1998 (UNAUDITED)........................... 7,292 $73 $10,511 $41,581 $52,165 ===== === ======= ======= =======
See accompanying notes F-36 141 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JULY 31, 1997 (THE INFORMATION FOR THE SIX MONTHS ENDED FEBRUARY 2, 1997 AND JANUARY 31, 1998 IS UNAUDITED) 1. ACCOUNTING POLICIES Description Of Business The Company is in one line of business as a manufacturer of complex multilayer, surface mount circuit boards used in sophisticated electronic equipment in the computer, communications, instrumentation and industrial controls industries. The Company sells its products primarily to leading original equipment manufacturers and to contract assemblers in the United States and abroad. Principles Of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiaries, which are wholly owned. Significant intercompany accounts and transactions have been eliminated in consolidation. Cash And Cash Equivalents Cash and cash equivalents consists of checking accounts and funds invested in overnight repurchase agreements and is stated at cost, which approximates market value. The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Inventories Inventories are carried at the lower of cost or market using the first-in, first-out (FIFO) method. Property, Plant, And Equipment Property, plant, and equipment is stated at cost. Depreciation is computed using the double declining balance and the straight-line methods based on the estimated useful lives of the related assets ranging from three to forty years. Fair Value Of Financial Instruments Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Value of Financial Instruments," requires that the Company disclose estimated fair values of financial instruments. Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities are carried at amounts that reasonably approximate their fair values. The carrying amounts of the Company's borrowings under its line of credit arrangement approximates its fair value based on the variable nature of its interest rates. Revenue Recognition Sales are recorded at the time individual items are shipped. Advertising Costs Advertising costs are expensed as incurred. Advertising expense for the years ended July 31, 1995, 1996, and 1997 and for the six months ended January 31, 1998 were $55,000, $54,000, $47,000 and $64,000, respectively. Income Taxes The Company accounts for income taxes under Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes". F-37 142 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Earnings Per Share In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings Per Share" ("SFAS No. 128"), adopted by the Company in the second quarter of fiscal year 1998. SFAS No. 128 replaced the previously reported primary or fully diluted pro forma earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants, and convertible securities. Diluted earnings per share is very similar to the previously reported primary earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the SFAS No. 128 requirements. The impact of SFAS No. 128 on the calculation of fully diluted earnings per share for each of the periods presented was not material. Supplemental Earnings Per Share Supplemental earnings per share, assuming the proceeds from the issuance of 922,000 common shares at the public offering of $10.50, net of issuance costs, were used to repay $9.0 million of the Company's indebtedness as of August 1, 1994, would have reduced diluted earnings per share from $0.90 to $0.85 in 1995. Stock Based Compensation The Company grants stock options for a fixed number of shares to employees with an exercise price equal to the fair value of the shares at the date of grant. The Company accounts for stock option grants to employees in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees," (APB 25) and, accordingly, recognizes no compensation expense for the stock option grants. Use Of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Interim Financial Information The consolidated financial statements for the six months ended February 2, 1997 and January 31, 1998 are unaudited but include all adjustments (consisting only of normal recurring adjustments) that the Company considers necessary for a fair presentation of financial position and results of operations. Operating results for the six months ended January 31, 1998 are not necessarily indicative of the results that may be expected for any future periods. 2. ACQUISITIONS In April 1997, the Company acquired the assets and assumed certain liabilities of a division of Radian International LLC (Radian) for $2,600,000. The acquisition was accounted for as a purchase, and accordingly, the results of its operations have been included in the consolidated results of operations since the transaction date. The purchase price has been allocated to the assets and liabilities acquired based on fair values at acquisition. The results of operations of Radian were not significant in relation to the Company for periods prior to the acquisition. On November 17, 1997, the Company acquired substantially all of the assets of Flexible Circuits Technology, dba Dynaflex Technology, for approximately $6.9 million in cash. The purchase price has been allocated to the assets acquired and included an allocation of $4.3 million to in process research and development. The results of the acquired business were not significant in relation to the Company for periods prior to the acquisition. F-38 143 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 3. INVENTORIES Inventories consisted of the following:
JULY 31, JULY 31, JANUARY 31, 1996 1997 1998 -------- -------- ----------- Raw material................................... $ 649 $2,117 $ 2,943 Work-in-process................................ 2,487 4,878 8,344 Finished Goods................................. 1,660 1,810 1,794 ------ ------ ------- $4,796 $8,805 $13,081 ====== ====== =======
4. LONG-TERM DEBT On July 25, 1997, the Company entered into a $45,000,000 long-term line of credit agreement with a bank. Up to $25,000,000 of the line of credit agreement can be converted into a long-term note payable. At July 31, 1997 there were no amounts converted to a long-term note. The line of credit bears interest at LIBOR plus a fixed rate factor, as defined, and/or the prime rate, payable monthly, and the interest rate can be converted by the Company to a fixed rate when the Company draws above $2,000,000. The line of credit expires on October 31, 2000 and provides for maximum borrowings of the lessor of $45,000,000 less any converted long-term note payable amounts. At July 31, 1997, amounts available under the line of credit were approximately $34,700,000. The weighted average interest rate under the line of credit was 8.5 percent in 1997. The above long-term debt agreements are collateralized by substantially all available assets of the Company. The line of credit agreement contains covenants which place various restrictions on financial ratios, transactions with related parties, and prohibits the payment of dividends. In addition, the line of credit agreement contains an event of default provision whereby all outstanding amounts would be due and payable should there be a change in ownership control. Long-term debt consisted of the following:
JULY 31, JULY 31, JANUARY 31, 1996 1997 1998 -------- -------- ----------- (IN THOUSANDS) $45,000,000 long-term line of credit agreement with a bank, interest payable monthly at LIBOR plus a fixed rate factor, as defined, and/or the prime rate, maturing October 31, 2000........................... $ -- $ 9,312 $28,375 $1,000,000 long-term adjustable rate industrial development revenue bond, interest payable monthly at a variable rate until September 1, 2011 when all outstanding interest and principal is due and payable; secured by $1,000,000 irrevocable letter of credit; bond is subject to certain optional and mandatory redemption, as defined.................... -- 1,000 1,000 $5,000,000 long-term note payable to a bank, paid in full during 1997.................................... 4,333 -- -- ------ ------- ------- 4,333 10,312 29,375 Less current portion.................................. 1,000 -- -- ------ ------- ------- $3,333 $10,312 $29,375 ====== ======= =======
Maturities of long-term debt for the five years succeeding July 31, 1997 are as follows: July 31, 1998 $0, 1999 $0, 2000 $0, 2001 $9,312,000, 2002 $0, and thereafter $1,000,000. Interest payments approximated interest expense during the years ended July 31, 1995, 1996, 1997 and for the six months ended January 31, 1997 and 1998. F-39 144 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 5. STOCK OPTIONS The Company has elected to follow APB 25 and related Interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under FASB Statement No. 123, Accounting for Stock-Based Compensation (Statement 123), requires use of option valuation models that were not developed for use in valuing employee stock options. Under APB 25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation is recognized. During 1987, the Company's stockholders adopted a stock option plan (the 1987 Plan) that provides for the granting of options to employees (including officers) and non-employee directors at fair value at the date of the grant. The 1987 Plan provides for the issuance of options at fair value to purchase a maximum of 750,000 shares of common stock. All options under the 1987 Plan are exercisable cumulatively, beginning on the third anniversary of the date of grant. Generally, after three years from the date of grant, the optionee may purchase 40 percent of the shares granted; an additional 20 percent after four years; an additional 20 percent after five years; and the final 20 percent after six years. However, with respect to 200,000 options granted on August 25, 1994, the options become exercisable at the rate of 15 percent a year. All options expire between seven and ten years after the date of grant. The options granted under the 1987 Plan become fully exercisable if the Company is dissolved, liquidated, merged, consolidated, or undergoes a change in control as defined in the Plan document. During 1996, the Company's stockholders adopted a second stock option plan (the 1996 Plan) that provides for the granting of options to employees (including officers) and non-employee directors at fair value at the date of the grant. The 1996 plan provides for the issuance of options at fair value at the date of the grant. The 1996 plan provides for the issuance of options at fair value to purchase a maximum of 1,000,000 shares of common stock. All options under the 1996 plan are exercisable cumulatively, beginning on the first anniversary of the date of grant. Generally, after one year from the date of grant, the optionee may purchase 20 percent of the shares granted; an additional 20 after two years; an additional 20 percent after three years; an additional 20 percent after four years; and the final 20 percent after five years. All options expire ten years after the date of grant. The options granted under the 1996 Plan become fully exercisable if the Company is dissolved, liquidated, merged, consolidated, or undergoes a change in control as defined in the Plan document. Pro forma information regarding net income and earnings per share is required by Statement 123, and has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions for 1997 and 1996: risk-free interest rate of 5.5 percent, dividend yield of zero percent, volatility factor of the expected market price of the Company's common stock of .46, and a weighted-average expected life of the option of 6.26 years and seven years, respectively. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. Because Statement No. 123 is applicable to options granted subsequent to December 31, 1994, its pro forma effect will not be fully reflected until approximately 2003. For purposes of pro forma disclosures, the F-40 145 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) estimated fair value of the options is amortized to expense over the option's vesting period. The Company's pro forma information follows (in thousands except for earnings per share information):
JULY 31, JULY 31, 1996 1997 --------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) Net income, as reported.................................... $6,283 $8,022 Pro forma compensation expense for options................. 74 142 ------ ------ Pro forma net income....................................... $6,209 $7,880 ====== ====== Diluted earnings per share, as reported.................... $ 0.85 $ 1.08 Diluted earnings per share, pro forma...................... $ 0.84 $ 1.06
Information regarding stock options outstanding under the Plans are as follows:
WEIGHTED-AVERAGE SHARES EXERCISE PRICE -------- ---------------- Outstanding at July 31, 1994.............................. 186,000 $ 3.11 Granted................................................. 225,000 3.27 Exercised............................................... (9,600) 6.72 Forfeited (canceled).................................... (25,000) 3.10 -------- ------ Outstanding at July 31, 1995.............................. 376,400 3.11 Granted................................................. 110,000 15.00 Exercised............................................... (64,040) 3.12 Forfeited (canceled).................................... (24,000) 12.50 -------- ------ Outstanding at July 31, 1996.............................. 398,360 5.69 Granted................................................. 432,000 14.03 Exercised............................................... (40,960) 2.50 Forfeited (canceled).................................... (26,750) 12.85 -------- ------ Outstanding at July 31, 1997.............................. 762,650 $10.48 ======== ======
OPTIONS OUTSTANDING OPTIONS EXERCISABLE - ------------------------------------------------ --------------------------------------------- WEIGHTED- AVERAGE WEIGHTED- WEIGHTED- RANGE OF NUMBER REMAINING AVERAGE NUMBER AVERAGE EXERCISE PRICE OUTSTANDING CONTRACTUAL LIFE EXERCISE PRICE EXERCISABLE EXERCISE PRICE - -------------- ----------- ---------------- -------------- ----------- -------------- $ 2.50 - $ 3.25 258,900 6.83 years $ 3.14 15,100 $2.50 4.00 5,000 7.29 years $ 4.00 -- -- 10.63 - 15.00 368,750 9.24 years $12.85 -- -- 18.00 130,000 9.99 years $18.00 -- --
Exercise prices for options outstanding at July 31, 1997, range from $2.50 to $18.00. The weighted-average fair value of options granted during 1997 and 1996 was $7.43 and $8.36, respectively. F-41 146 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 6. INCOME TAXES Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:
JULY 31 ---------------- 1996 1997 ------ ------ (IN THOUSANDS) Deferred tax liabilities: Tax over book depreciation.................................. $1,970 $2,499 Receivables adjustments..................................... -- 493 Other, net.................................................. 52 52 ------ ------ Total deferred tax liabilities.................... 2,022 3,044 ------ ------ Deferred tax assets: Receivables allowances...................................... 227 61 Inventory allowances........................................ 116 136 Accrued vacation............................................ 227 220 Accrued expenses............................................ 80 87 Unicap and other............................................ 110 158 ------ ------ Total deferred tax assets......................... 760 662 ------ ------ Net deferred taxes.......................................... $1,262 $2,382 ====== ======
Significant components of the federal and state income tax expense are:
YEAR ENDED JULY 31 -------------------------- 1995 1996 1997 ------ ------ ------ (IN THOUSANDS) Current: Federal................................................ $3,287 $3,486 $3,053 State.................................................. 872 925 653 ------ ------ ------ Total current.................................. 4,159 4,411 3,706 Deferred: Federal................................................ 84 (347) 929 State.................................................. 17 (71) 191 ------ ------ ------ Total deferred................................. 101 (418) 1,120 ------ ------ ------ $4,260 $3,993 $4,826 ====== ====== ======
Total income tax payments, net of any refunds received, during the years ended July 31, 1995, 1996 and 1997, were approximately $3,962,000, $5,037,000 and $3,997,000, respectively. F-42 147 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) A reconciliation of the Company's effective income tax rate to the federal statutory rate follows:
SIX MONTHS ENDED YEAR ENDED JULY 31 JANUARY 31 -------------------- ------------ 1995 1996 1997 1997 1998 ---- ---- ---- ---- ---- Federal statutory rate............................ 34% 34% 34% 34% 34% State tax net of federal benefit.................. 7 7 7 7 5 In process research and development write-offs.... -- -- -- -- 136 Tax credits....................................... -- -- -- -- (48) Other............................................. (2) (2) (3) (2) -- -- -- -- -- --- 39% 39% 38% 39% 127% == == == == ===
The effective income tax rate for the six months ended January 31, 1998 includes a year to date adjustment to reflect one time and ongoing tax credits available to the Company, which reduced its estimated income tax rate for the year ending July 31, 1998 to approximately 28% based on estimated earnings for the year. 7. SIGNIFICANT CUSTOMERS AND EXPORT SALES The percentages of total sales to significant customers were as follows:
YEAR ENDED JULY 31 -------------------- 1995 1996 1997 ---- ---- ---- Customer A.............................................. 0% 5% 15% Customer B.............................................. 15 11 7 Customer C.............................................. 15 21 20
The amount of total export sales by geographic area was as follows:
YEAR ENDED JULY 31 ----------------------------- 1995 1996 1997 ------- ------- ------- (IN THOUSANDS) Canada........................................ $ 3,500 $ 3,800 $ 2,700 Singapore..................................... 10,800 6,900 5,800 United Kingdom and others..................... 10,100 9,600 15,600 ------- ------- ------- Total export sales.................. $24,400 $20,300 $24,100 ======= ======= =======
The Company performs ongoing credit risk evaluations of its customers' financial conditions and generally does not require collateral. The Company's significant customers are major, well-known businesses in the electronic equipment industry. Credit losses have been provided for in the financial statements and have been within management's expectations. 8. COMMITMENTS AND CONTINGENCIES The Company leases certain equipment and buildings under noncancelable operating leases that expire in various years through 2004. Total rental expense for all operating leases was approximately $122,000, $357,000 and $397,000, during the years ended July 31, 1995, 1996 and 1997, respectively. Future minimum payments F-43 148 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) under noncancelable operating leases with initial terms of one year or more consisted of the following at July 31, 1997:
(IN THOUSANDS) 1998....................................... $ 672,115 1999....................................... 636,480 2000....................................... 636,480 2001....................................... 636,480 2002....................................... 636,480 Thereafter................................. 1,092,624 ---------- $4,310,659 ==========
The Company is a party to certain litigation in the normal course of business. Management does not anticipate any material adverse impact from the resolution of such matters. 9. BENEFIT PLANS The Company has a 401(k) Retirement Plan (Plan) covering all employees who reside in the United States, have completed six months of service, and have attained age 21. Under the terms of the Plan, employees may contribute up to 15 percent of their annual compensation, subject to Internal Revenue Service limitations. The Company matched 25 percent of employee contributions up to 6 percent of the employee's annual compensation. Additional contributions to the Plan can be made at the discretion of the Board of Directors. Company contributions to the Plan during the years ended July 31, 1995, 1996, and 1997, were approximately $164,000, $198,000 and $212,000, respectively. During 1996, the Company adopted the Continental Circuits Corp. Employee Stock Purchase Plan. All employees who are regularly scheduled to work at least 20 hours per week and have completed at least six (6) months of continuous service with the Company are eligible to participate in the plan. Eligible employees are entitled to purchase shares of common stock through payroll deductions of up to 10 percent of their compensation. The price paid for the common stock is equal to 85 percent of the fair market value of the Company's common stock on the last business day of the quarterly investment period. At the Company's option, common stock can either be purchased on the open market or through new shares issued. Total shares reserved for issuance are 200,000, with 17,937 purchased through July 31, 1997 at a market price ranging from $10.75 to $13.88 per share. 10. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) A summary of the quarterly results of operations for the years ended July 31, 1996 and 1997 follows:
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ----------- ----------- ----------- ----------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1997: Net sales............................ $27,123 $29,562 $31,862 $32,205 Gross margin......................... $ 4,463 $ 5,170 $ 6,148 $ 6,273 Net income........................... $ 1,433 $ 1,817 $ 2,379 $ 2,393 Earnings per share................... $ .19 $ .24 $ .32 $ .32 Weighted average common and equivalent shares outstanding...... 7,424 7,432 7,457 7,497
F-44 149 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1ST QUARTER 2ND QUARTER 3RD QUARTER 4TH QUARTER ----------- ----------- ----------- ----------- (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996: Net sales............................ $28,508 $28,860 $26,464 $24,530 Gross margin......................... $ 5,733 $ 6,215 $ 4,406 $ 2,506 Net income........................... $ 2,248 $ 2,305 $ 1,380 $ 350 Earnings per share................... $ .30 $ .31 $ .19 $ .05 Weighted average common and equivalent shares outstanding...... 7,430 7,431 7,413 7,420
The 1997 quarterly results for net earnings per share, when totaled, do not equal the net earnings per share for the year ended July 31, 1997 due to rounding. 11. SUBSEQUENT EVENT On February 9, 1998, the Company announced that it had completed the purchase of substantially all of the assets of a wholly owned subsidiary of CCIR of California Corp., named PCA Design. PCA Design has annual sales of approximately $2.0 million. On February 11, 1998, the Company, through one of its recently acquired businesses, obtained $6.0 million in tax-exempt revenue bonds. On March 20, 1998, Hadco Corporation acquired all of the outstanding capital stock of the Company for approximately $188 million (including costs). F-45 150 ====================================================== NO DEALER, SALESPERSON, OR OTHER PERSONS HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY HADCO CORPORATION OR ANY OF ITS SUBSIDIARIES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS Forward-Looking Statements.......... iv Prospectus Summary.................. 1 Risk Factors........................ 13 Use of Proceeds..................... 23 Capitalization...................... 24 Pro Forma Condensed Consolidated Financial Statements.............. 25 Selected Historical Consolidated Financial Data.................... 28 Management's Discussion and Analysis of Financial Condition and Results of Operations..................... 30 Business............................ 38 Management.......................... 51 Description of Certain Indebtedness...................... 53 The Exchange Offer.................. 55 Description of the Notes............ 64 Plan of Distribution................ 93 Certain United States Federal Tax Consequences...................... 94 Legal Matters....................... 97 Experts............................. 97 Additional Information.............. 97 Incorporation of Certain Documents by Reference...................... 98 Listing and General Information..... 98 Index to Consolidated Financial Statements........................ F-1
====================================================== ====================================================== HADCO CORPORATION OFFER TO EXCHANGE ITS 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, FOR ANY AND ALL OF ITS OUTSTANDING 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008. -------------------- PROSPECTUS -------------------- , 1998 ====================================================== 151 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Section 67 of Chapter 156B of the Massachusetts Business Corporation Law provides: "Indemnification of directors, officers, employees and other agents of a corporation, and persons who serve at its request as directors, officers, employees or other agents of another organization, or who serve at its request in any capacity with respect to any employee benefit plan, may be provided by it to whatever extent shall be specified in or authorized by (i) the articles of organization or (ii) a by-law adopted by the stockholders or (iii) a vote adopted by the holders of a majority of the shares of stock entitled to vote on the election of directors. Except as the articles of organization or by-laws otherwise require, indemnification of any persons referred to in the preceding sentence who are not directors of the corporation may be provided by it to the extent authorized by the directors. Such indemnification may include payment by the corporation of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding, upon receipt of an undertaking by the person indemnified to repay such payment if he shall be adjudicated to be not entitled to indemnification under this section which undertaking may be accepted without reference to the financial ability of such person to make repayment. Any such indemnification may be provided although the person to be indemnified is no longer an officer, director, employee or agent of the corporation or of such other organization or no longer serves with respect to any such employee benefit plan. No indemnification shall be provided for any person with respect to any matter as to which he shall have been adjudicated in any proceeding not to have acted in good faith in the reasonable belief that his action was in the best interest of the corporation or to the extent that such matter relates to service with respect to any employee benefit plan, in the best interests of the participants or beneficiaries of such employee benefit plan. The absence of any express provision for indemnification shall not limit any right of indemnification existing independently of this section. A corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or other agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or other agent of another organization or with respect to any employee benefit plan, against any liability incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability." The Company's Restated Articles of Organization, as amended, provide: "The Corporation eliminates the personal liability of each director to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any statutory provision or other law imposing such liability; provided, that nothing in this paragraph shall eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of law, (iii) under Section sixty-one or sixty-two of Chapter 156B of the Massachusetts General Laws, or (iv) for any transaction from which the director derived an improper personal benefit." Article V, Section 2 of the Company's By-Laws provides: "2. Indemnification. Each Director, officer, employee and other agent of the corporation, and any person who, at the request of the corporation, serves as a director, officer, employee or other agent of another organization in which the corporation directly or indirectly owns shares or of which it is a creditor shall be indemnified by the corporation against any cost, expense (including attorney's fees), judgment, liability and/or amount paid in settlement reasonably incurred by or imposed upon him in connection with any action, suit or proceeding (including any proceeding before any administrative or legislative body or agency), to which he may be made a party or otherwise involved or with which he shall be threatened, by reason of his being, or related to his status as, a director, officer, employee or other agent of the corporation or of any other II-1 152 organization in which the corporation directly or indirectly owns shares or of which the corporation is a creditor, which other organization he serves or has served as director, officer, employee or other agent at the request of the corporation (whether or not he continues to be an officer, director, employee or other agent of the corporation or such other organization at the time such action, suit or proceeding is brought or threatened), unless such indemnification is prohibited by the Business Corporation Law of the Commonwealth of Massachusetts. The foregoing right of indemnification shall be in addition to any rights to which any such person may otherwise be entitled and shall inure to the benefit of the executors or administrator of each such person. The corporation may pay the expenses incurred by any such person in defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding in advance of the final disposition of such action, suit or proceeding, upon receipt of an undertaking by such person to repay such payment if it is determined that such person is not entitled to indemnification hereunder. This section shall be subject to amendment or repeal only by action of the stockholders." Hadco Santa Clara, Inc. ("Hadco SC") and Hadco Phoenix, Inc. ("Hadco Phoenix") are each Delaware corporations. Section 145 of the Delaware General Corporation Law (the "Delaware Code") empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Section 145 also empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted under similar standards, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless, and only to the extent that, the Court of Chancery or the court in which such action was brought shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnify for such expenses which the court shall deem proper. Section 145 further provides that to the extent that a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that the corporation is empowered to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liabilities under Section 145. Article Seventh of each of Hadco Phoenix's Restated Certificate of Incorporation and Hadco SC's Amended and Restated Certificate of Incorporation, as amended, states that such Corporation eliminates the personal liability of each member of its Board of Directors to such Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, that, to the extent provided by applicable law, the foregoing shall not eliminate the liability of a director (i) for any breach of such director's duty of loyalty to such Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from which such director derived an improper personal benefit. II-2 153 Article V of each of Hadco Phoenix's and Hadco SC's By-Laws provides generally as follows: The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or contemplated action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another entity, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful; provided, however, that with respect to actions by or in the right of the corporation, no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. CCIR of California Corp. ("CCIR of CA") is a California corporation. Section 204 of the California Corporations Code (the "CCC") generally provides that articles of incorporation may set forth provisions eliminating or limiting the personal liability of a director for monetary damages in an action brought by or in the right of the corporation for breach of a director's duties to the corporation and its shareholders as set forth in Section 309 of the CCC, provided, however, that (A) such provision may not eliminate or limit the liability of directors (i) for acts or omissions that involve intentional misconduct or a knowing and culpable violation of law, (ii) for acts or omissions that a director believes to be contrary to the best interests of the corporation or its shareholders or that involve the absence of good faith on the part of the director, (iii) for any transaction from which a director derived an improper personal benefit, (iv) for acts or omissions that show a reckless disregard for the director's duty to the corporation or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of serious injury to the corporation or its shareholders, (v) for acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the corporation or its shareholders, (vi) under Section 310 of the CCC or (vii) under Section 316 of the CCC; (B) no such provision shall eliminate or limit the liability of a director for any act or omission occurring prior to the date when the provision becomes effective; and (C) no such provision shall eliminate or limit the liability of an officer for any act or omission as a officer notwithstanding that the officer is also a director or that his actions, if negligent or improper, have been ratified by the directors. Articles V and VI of CCIR of CA's articles of incorporation provide that (i) the liability of the directors of CCIR of CA for monetary damages shall be eliminated to the fullest extent permissible under California law and (ii) CCIR of CA is authorized to provide indemnification of directors, officers, and agents of CCIR of CA through Bylaw provisions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, to the fullest extent permissible under California law. In addition, Section 6.1 of the Bylaws of CCIR of CA provides that CCIR of CA shall to the maximum extent permitted by the CCC, have the power to indemnify each of its agents against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact any such person is or was an agent of CCIR of CA and shall have power to advance to each such agent expenses incurred in defending any such proceeding to the maximum extent permitted by that law. "Agent" includes any person who is or was a director, officer, employee or other agent of CCIR of CA (or its predecessor(s)) or is or was serving at the request of CCIR of CA (or its predecessor(s)) as a director, officer, employee or agent of another entity. CCIR of Texas Corp. ("CCIR of TX") is a Texas corporation. Article 2.02 of the Texas Business Corporation Act (the "TBC") generally provides that a corporation shall have the power to indemnify directors, officers, employees, and agents of the corporation and purchase and maintain liability insurance for such persons. Article 2.02-1 of the TBC generally provides that a II-3 154 corporation may indemnify a person who was, is, or is threatened to be made a named defendant or respondent in a proceeding because the person (i) is or was a director, officer, employee or agent of the corporation or (ii) while a director of the corporation, is or was serving at the request of the corporation as a director, officer, venturer, proprietor, trustee, employee, agent, or similar functionary of another corporation or other entity, provided that such person (1) conducted himself in good faith, (2) reasonably believed (a) in the case of conduct in his official capacity as a director of the corporation, that his conduct was in the corporation's best interest and (b) in all other cases, that his conduct was at least not opposed to the corporation's best interests, and (3) in the case of any criminal proceeding, had no reasonable cause to believe his conduct was unlawful. A corporation's ability to indemnify a person as set forth above is limited in cases where such person is found liable on the basis that a personal benefit was improperly received by him or in cases in which the person is found liable to the corporation. Section 2.02-1 of the TBC further provides that a corporation shall indemnify a director or officer against reasonable expenses incurred by him in connection with a proceeding in which such person is a named defendant or respondent because such person is or was a director or officer if such person has been wholly successful, on the merits or otherwise, in the defense of the proceeding; that a corporation may advance expenses to persons entitled to indemnification under the statute; and the corporation may purchase and maintain insurance on behalf of any person who is a director, officer, partner, or agent of the corporation or who is serving at the request of the corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation or entity, against any liability asserted against him and incurred by him in such capacity or arising out of his status as such a person, whether or not the corporation would have the power to indemnify him against that liability under Section 2.02-1 of the TBC. Article XI of CCIR of TX's Articles of Incorporation provides that the corporation shall indemnify any person who (i) is or was a director, officer, employee, or agent of the corporation, or (ii) while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, to the fullest extent that a corporation may or is required to grant indemnification to a director under the Texas Business Corporation Act as now written or as hereafter amended. In addition, the corporation may indemnify any person to such further extent as permitted by law. Article XII of such Articles provides that a director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for an act or omission in the director's capacity as director, except that this Article XII does not eliminate or limit the liability of a director for: (a) a breach of a director's loyalty to the corporation or its shareholders; (b) an act or omission not in good faith or that involves intentional misconduct or a knowing violation of the law; (c) a transaction from which a director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office; (d) an act or omission for which the liability of a director is expressly provided for by statute; or (e) an act related to an unlawful stock repurchase or payment of a dividend. II-4 155 ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits This Registration Statement includes the following exhibits:
EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.1.1 Restated Articles of Organization of the Company (filed as Exhibit 3.1 to the Registration Statement No. 333-21977 on Form S-3 and incorporated herein by reference). 3.1.2 Articles of Amendment to the Articles of Organization of the Company (filed as Exhibit 3.1 to Form 10-Q, File No. 0-12102, for fiscal quarter ended January 31, 1998 and incorporated herein by reference). 3.2 By-laws of the Company, as amended (filed as Exhibit 3.2 to the Registration Statement No. 333-21977 on Form S-3 and incorporated herein by reference). 3.3 Restated Certificate of Incorporation of Hadco Santa Clara, Inc. 3.4 Amended and Restated By-laws of Zycon Corporation (n/k/a Hadco Santa Clara, Inc.) 3.5 Restated Certificate of Incorporation of Hadco Phoenix, Inc. 3.6 By-laws of Hadco Phoenix, Inc. 3.7 Articles of Incorporation of CCIR of California Corp. 3.8 By-laws of CCIR of California Corp. 3.9 Articles of Incorporation of CCIR of Texas Corp. 3.10 By-laws of CCIR of Texas Corp. 4.1 Indenture (including Form of Exchange Note) dated as of May 18, 1998 by and among the Company, the Guarantors and State Street Bank and Trust Company, as trustee. 4.2 Registration Rights Agreement dated May 13, 1998 among the Company, the Guarantors, Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Robertson Stephens, and BT Alex. Brown Incorporated, as initial purchasers. 5.1 Opinion of Testa, Hurwitz & Thibeault, LLP as to the legality of the securities to be offered. 10.1 Placement Agreement dated May 13, 1998 by and among the Company, the Guarantors, Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Robertson Stephens, and BT Alex. Brown Incorporated, as initial purchasers. 11.1 Statement re: Computation of Per Share Earnings. 12.1 Statement re: Computation of the Ratio of Earnings to Fixed Charges. 23.1 Consent of Testa, Hurwitz & Thibeault, LLP (included as part of Exhibit 5.1). 23.2 Consent of Arthur Andersen LLP. 23.3 Consent of Ernst & Young, LLP. 24.1 Powers of Attorney (included on signature pages to this Registration Statement). 25.1 Statement of Eligibility of State Street Bank and Trust Company, as Trustee, on Form T-1. 27.1 Financial Data Schedule. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery. 99.3 Form of Exchange Agency Agreement.
(b) Financial Statement Schedules: Report of Independent Public Accountants on Schedule Schedule II -- Valuation and Qualifying Accounts (c) Not Applicable. II-5 156 ITEM 22. UNDERTAKINGS. (a) The undersigned registrants hereby undertake that, for purposes of determining any liability under the Securities Act of 1933, each filing of any such registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to 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 may be permitted to directors, officers and controlling persons of any of the registrants pursuant to provisions described in Item 20 above, or otherwise, the registrants have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by any registrant of expenses incurred or paid by a director, officer or controlling person of any 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 registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) The undersigned registrants hereby undertake to respond to requests for information that are incorporated by reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. (c) The undersigned registrants hereby undertake to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. II-6 157 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Salem, State of New Hampshire on June 23, 1998. HADCO CORPORATION By: /s/ ANDREW E. LIETZ -------------------------------------- Andrew E. Lietz President, Chief Executive Officer and Director Each person whose signature appears below in so signing also makes, constitutes and appoints Andrew E. Lietz and Timothy P. Losik, and each of them, his true and lawful attorney-in-fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto, and to the documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ HORACE H. IRVINE II Chairman of the Board and June 23, 1998 - --------------------------------------------------- Director (Horace H. Irvine II) /s/ ANDREW E. LIETZ President, Chief Executive June 23, 1998 - --------------------------------------------------- Officer and Director (Principal (Andrew E. Lietz) Executive Officer) /s/ TIMOTHY P. LOSIK Senior Vice President, Chief June 23, 1998 - --------------------------------------------------- Financial Officer and Treasurer (Timothy P. Losik) (Principal Financial Officer and Principal Accounting Officer) /s/ OLIVER O. WARD Director June 23, 1998 - --------------------------------------------------- (Oliver O. Ward) /s/ PATRICK SWEENEY Director June 23, 1998 - --------------------------------------------------- (Patrick Sweeney) /s/ LAWRENCE COOLIDGE Director June 23, 1998 - --------------------------------------------------- (Lawrence Coolidge) /s/ JOHN F. SMITH Director June 23, 1998 - --------------------------------------------------- (John F. Smith) /s/ JOHN E. POMEROY Director June 23, 1998 - --------------------------------------------------- (John E. Pomeroy) /s/ JAMES C. TAYLOR Director June 23, 1998 - --------------------------------------------------- (James C. Taylor) /s/ MAURO J. WALKER Director June 23, 1998 - --------------------------------------------------- (Mauro J. Walker)
II-7 158 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Salem, State of New Hampshire on June 23, 1998. HADCO SANTA CLARA, INC. By: /s/ ANDREW E. LIETZ -------------------------------------- Andrew E. Lietz President Each person whose signature appears below in so signing also makes, constitutes and appoints Andrew E. Lietz and Timothy P. Losik, and each of them, his true and lawful attorney-in-fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto, and to the documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ ANDREW E. LIETZ President (Principal Executive June 23, 1998 - --------------------------------------------------- Officer) (Andrew E. Lietz) /s/ TIMOTHY P. LOSIK Senior Vice President, Chief June 23, 1998 - --------------------------------------------------- Financial Officer, Treasurer (Timothy P. Losik) and Director (Principal Financial Officer and Principal Accounting Officer)
II-8 159 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Salem, State of New Hampshire on June 23, 1998. HADCO PHOENIX, INC. By: /s/ ANDREW E. LIETZ ------------------------------------ Andrew E. Lietz President and Chief Executive Officer Each person whose signature appears below in so signing also makes, constitutes and appoints Andrew E. Lietz and Joseph G. Andersen, and each of them, his true and lawful attorney-in-fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto, and to the documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ TIMOTHY P. LOSIK Director June 23, 1998 - --------------------------------------------------- (Timothy P. Losik) /s/ ANDREW E. LIETZ President and Chief Executive June 23, 1998 - --------------------------------------------------- Officer (Principal Executive (Andrew E. Lietz) Officer) /s/ JOSEPH G. ANDERSEN Vice President and Chief June 23, 1998 - --------------------------------------------------- Financial Officer (Principal (Joseph G. Andersen) Financial Officer and Principal Accounting Officer)
II-9 160 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Salem, State of New Hampshire on June 23, 1998. CCIR OF CALIFORNIA CORP. By: /s/ FREDERICK G. MCNAMEE III ------------------------------------ Frederick G. McNamee III President Each person whose signature appears below in so signing also makes, constitutes and appoints Frederick G. McNamee III and Timothy P. Losik, and each of them, his true and lawful attorney-in-fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto, and to the documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JOSEPH G. ANDERSEN Director June 23, 1998 - --------------------------------------------------- (Joseph G. Andersen) /s/ FREDERICK G. MCNAMEE III President (Principal Executive June 23, 1998 - --------------------------------------------------- Officer) (Frederick G. McNamee III) /s/ TIMOTHY P. LOSIK Chief Financial Officer June 23, 1998 - --------------------------------------------------- (Principal Financial Officer (Timothy P. Losik) and Principal Accounting Officer)
II-10 161 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Town of Salem, State of New Hampshire on June 23, 1998. CCIR OF TEXAS CORP. By: /s/ FREDERICK G. MCNAMEE III ------------------------------------ Frederick G. McNamee III President Each person whose signature appears below in so signing also makes, constitutes and appoints Frederick G. McNamee III and Timothy P. Losik, and each of them, his true and lawful attorney-in-fact, with full power of substitution, for him in any and all capacities, to execute and cause to be filed with the Securities and Exchange Commission any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto, and to the documents in connection therewith, and hereby ratifies and confirms all that said attorney-in-fact or his substitute or substitutes may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ FREDERICK G. MCNAMEE III President (Principal Executive June 23, 1998 - --------------------------------------------------- Officer) (Frederick G. McNamee III) /s/ TIMOTHY P. LOSIK Chief Financial Officer and June 23, 1998 - --------------------------------------------------- Director (Principal Financial (Timothy P. Losik) Officer and Principal Accounting Officer)
II-11 162 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE To Hadco Corporation: We have audited, in accordance with generally accepted auditing standards, the consolidated financial statements of Hadco Corporation included in this registration statement and have issued our report thereon dated November 14, 1997. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in Item 16(b) is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states, in all material respects, the financial data required to be set forth therein, in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Boston, Massachusetts November 14, 1997 S-1 163 SCHEDULE II HADCO CORPORATION VALUATION AND QUALIFYING ACCOUNTS (IN THOUSANDS)
ADDITIONS BALANCE AT CHARGED TO DEDUCTIONS BALANCE AT BEGINNING COSTS AND FROM END OF OF PERIOD EXPENSES RESERVES(1) PERIOD ---------- ---------- ------------ ---------- Allowance for Doubtful Accounts October 28, 1995............................. $725 277 (152) $ 850 October 26, 1996............................. $850 329 (79) $1,100 October 25, 1997............................. 1,100 922 (322) 1,700
- --------------- (1) Amounts deemed uncollectible. S-2 164 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- 3.1.1 Restated Articles of Organization of the Company (filed as Exhibit 3.1 to the Registration Statement No. 333-21977 on Form S-3 and incorporated herein by reference). 3.1.2 Articles of Amendment to the Articles of Organization of the Company (filed as Exhibit 3.1 to Form 10-Q, File No. 0-12102, for fiscal quarter ended January 31, 1998 and incorporated herein by reference). 3.2 By-laws of the Company, as amended (filed as Exhibit 3.2 to the Registration Statement No. 333-21977 on Form S-3 and incorporated herein by reference). 3.3 Restated Certificate of Incorporation of Hadco Santa Clara, Inc. 3.4 Amended and Restated By-laws of Zycon Corporation (n/k/a Hadco Santa Clara, Inc.) 3.5 Restated Certificate of Incorporation of Hadco Phoenix, Inc. 3.6 By-laws of Hadco Phoenix, Inc. 3.7 Articles of Incorporation of CCIR of California Corp. 3.8 By-laws of CCIR of California Corp. 3.9 Articles of Incorporation of CCIR of Texas Corp. 3.10 By-laws of CCIR of Texas Corp. 4.1 Indenture (including Form of Exchange Note) dated as of May 18, 1998 by and among the Company, the Guarantors and State Street Bank and Trust Company, as trustee. 4.2 Registration Rights Agreement dated May 13, 1998 by and among the Company, the Guarantors, Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Robertson Stephens, and BT Alex. Brown Incorporated, as initial purchasers. 5.1 Opinion of Testa, Hurwitz & Thibeault, LLP as to the legality of the securities to be offered. 10.1 Placement Agreement dated May 13, 1998 by and among the Company, the Guarantors, Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, BancAmerica Robertson Stephens, and BT Alex. Brown Incorporated, as initial purchasers. 11.1 Statement re: Computation of Per Share Earnings. 12.1 Statement re: Computation of the Ratio of Earnings to Fixed Charges. 23.1 Consent of Testa, Hurwitz & Thibeault, LLP (included as part of Exhibit 5.1). 23.2 Consent of Arthur Andersen LLP. 23.3 Consent of Ernst & Young, LLP. 24.1 Powers of Attorney (included on signature pages to this Registration Statement). 25.1 Statement of Eligibility of State Street Bank and Trust Company, as Trustee, on Form T-1. 27.1 Financial Data Schedule. 99.1 Form of Letter of Transmittal. 99.2 Form of Notice of Guaranteed Delivery. 99.3 Form of Exchange Agency Agreement.
EX-3.3 2 RESTATED CERT. OF INC., HADCO OF SANTA CLARA 1 EXHIBIT 3.3 CERTIFICATE OF AMENDMENT OF AMENDED AND RESTATED CERTIFICATE OF INCORPORATION * * * * * Zycon Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That the Board of Directors of said corporation, by the unanimous written consent of its members, filed with the minutes of the Board, adopted a resolution proposing and declaring advisable the following amendment to the Amended and Restated Certificate of Incorporation of said corporation: RESOLVED, that the Certificate of Incorporation of Zycon Corporation be amended by changing the First Article thereof so that, as amended, said Article shall be and read as follows: "The name of the Corporation (hereinafter called the 'Corporation') is Hadco Santa Clara, Inc." SECOND: That in lieu of a meeting and vote of stockholders, the stockholders have given unanimous written consent to said amendment in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware. THIRD: That the aforesaid amendment was duly adopted in accordance with the applicable provisions of Sections 242 and 228 of the General Corporation Law of the State of Delaware. 2 IN WITNESS WHEREOF, said Zycon Corporation has caused this certificate to be signed by Timothy P. Losik, its Vice President, this 9th day of July, 1997. ZYCON CORPORATION By: /s/ Timothy P. Losik ____________________ Timothy P. Losik Vice President 3 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF ZYCON CORPORATION A DELAWARE CORPORATION (Pursuant to Secs. 242 and 245 of the General Corporation Law of the State of Delaware) Zycon Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware, and which filed its original Certificate of Incorporation with the Secretary of State of Delaware on May 22, 1995, DOES HEREBY CERTIFY: FIRST. The name of the corporation is Zycon Corporation (the "Corporation"). SECOND. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, Delaware. The name of its registered agent at such address is The Corporation Trust Company. THIRD. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH. The total number of shares of stock which the Corporation shall have authority to issue is 3,000 shares of Common Stock with a par value of One Cent ($.01) per share. FIFTH. The Corporation is to have perpetual existence. SIXTH. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware: A. The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation. B. Elections of directors need not be by written ballot unless the By-Laws of the Corporation shall so provide. C. The books of the Corporation may be kept at such place within or without the State of Delaware as the By-Laws of the Corporation may provide or as may be designated from time to time by the Board of Directors of the Corporation. 4 SEVENTH. The Corporation eliminates the personal liability of each member of its Board of Directors to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided, however, that, to the extent provided by applicable law, the foregoing shall not eliminate the liability of a director (i) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from which such director derived an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. EIGHTH. The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon a stockholder herein are granted subject to this reservation. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 5 IN WITNESS WHEREOF, the Company has caused this certificate to be signed by Timothy P. Losik, Vice President, this 10th day of January, 1997. ZYCON CORPORATION /s/ Timothy P. Losik ____________________ Timothy P. Losik Vice President, Treasurer and Secretary EX-3.4 3 BY-LAWS OF HADCO SANTA CLARA, INC. 1 Exhibit 3.4 AMENDED AND RESTATED BY-LAWS OF ZYCON CORPORATION ***************** A DELAWARE CORPORATION Dated: January 10, 1997 2 ARTICLE I MEETINGS OF STOCKHOLDERS...................................... 1 SECTION 1. PLACE OF MEETINGS.............................................. 1 SECTION 2. ANNUAL MEETING................................................. 1 SECTION 3. SPECIAL MEETINGS............................................... 1 SECTION 4. NOTICE OF MEETINGS............................................. 1 SECTION 5. VOTING LIST.................................................... 2 SECTION 6. QUORUM......................................................... 2 SECTION 7. ADJOURNMENTS................................................... 2 SECTION 8. ACTION AT MEETINGS............................................. 2 SECTION 9. VOTING AND PROXIES............................................. 3 SECTION 10. ACTION WITHOUT MEETING........................................ 3 ARTICLE II DIRECTORS.................................................... 3 SECTION 1. NUMBER, ELECTION, TENURE AND QUALIFICATION..................... 3 SECTION 2. ENLARGEMENT.................................................... 3 SECTION 3. VACANCIES...................................................... 4 SECTION 4. RESIGNATION AND REMOVAL........................................ 4 SECTION 5. GENERAL POWERS................................................. 4 SECTION 6. CHAIRMAN OF THE BOARD.......................................... 4 SECTION 7. PLACE OF MEETINGS.............................................. 4 SECTION 8. REGULAR MEETINGS............................................... 4 SECTION 9. SPECIAL MEETINGS............................................... 4 SECTION 10. QUORUM, ACTION AT MEETING, ADJOURNMENTS....................... 5 SECTION 11. ACTION BY CONSENT............................................. 5 SECTION 12. TELEPHONIC MEETINGS........................................... 5 SECTION 13. COMMITTEES.................................................... 5 SECTION 14. COMPENSATION.................................................. 6 ARTICLE III OFFICERS.................................................... 6 SECTION 1. ENUMERATION.................................................... 6 SECTION 2. ELECTION....................................................... 6 SECTION 3. TENURE......................................................... 6 SECTION 4. PRESIDENT...................................................... 7 SECTION 5. VICE-PRESIDENTS................................................ 7 SECTION 6. SECRETARY...................................................... 7 SECTION 7. ASSISTANT SECRETARIES.......................................... 8 SECTION 8. TREASURER...................................................... 8 SECTION 9. ASSISTANT TREASURERS........................................... 8 SECTION 10. BOND.......................................................... 8 ARTICLE IV NOTICES...................................................... 9 SECTION 1. DELIVERY....................................................... 9 SECTION 2. WAIVER OF NOTICE............................................... 9 i 3 ARTICLE V INDEMNIFICATION............................................... 9 SECTION 1. ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION....... 9 SECTION 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.................. 10 SECTION 3. SUCCESS ON THE MERITS.......................................... 10 SECTION 4. SPECIFIC AUTHORIZATION......................................... 10 SECTION 5. ADVANCE PAYMENT................................................ 10 SECTION 6. NON-EXCLUSIVITY................................................ 11 SECTION 7. INSURANCE...................................................... 11 SECTION 8. CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES.... 11 SECTION 9. SEVERABILITY................................................... 11 SECTION 10. INTENT OF ARTICLE............................................. 11 ARTICLE VI CAPITAL STOCK................................................ 11 SECTION 1. CERTIFICATES OF STOCK.......................................... 11 SECTION 2. LOST CERTIFICATES.............................................. 12 SECTION 3. TRANSFER OF STOCK.............................................. 12 SECTION 4. RECORD DATE.................................................... 12 SECTION 5. REGISTERED STOCKHOLDERS........................................ 13 ARTICLE VII CERTAIN TRANSACTIONS........................................ 13 SECTION 1. TRANSACTIONS WITH INTERESTED PARTIES........................... 13 SECTION 2. QUORUM......................................................... 14 ARTICLE VIII GENERAL PROVISIONS......................................... 14 SECTION 1. DIVIDENDS...................................................... 14 SECTION 2. RESERVES....................................................... 14 SECTION 3. CHECKS......................................................... 14 SECTION 4. FISCAL YEAR.................................................... 14 SECTION 5. SEAL........................................................... 14 ARTICLE IX AMENDMENTS................................................... 15 Addendum Register of Amendments to the By-Laws ii 4 ZYCON CORPORATION * * * * * AMENDED AND RESTATED BY-LAWS * * * * * ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. All meetings of the stockholders shall be held at such place within or without the State of Delaware as may be fixed from time to time by the board of directors or the chief executive officer, or if not so designated, at the registered office of the corporation. Section 2. Annual Meeting. Annual meetings of stockholders shall be held on the second Tuesday of March in each year if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 a.m., or at such other date and time as shall be designated from time to time by the board of directors or the chief executive officer, at which meeting the stockholders shall elect by a plurality vote a board of directors and shall transact such other business as may properly be brought before the meeting. If no annual meeting is held in accordance with the foregoing provisions, the board of directors shall cause the meeting to be held as soon thereafter as convenient, which meeting shall be designated a special meeting in lieu of annual meeting. Section 3. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, may, unless otherwise prescribed by statute or by the certificate of incorporation, be called by the board of directors or the chief executive officer and shall be called by the chief executive officer or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Section 4. Notice of Meetings. Except as otherwise provided by law, written notice of each meeting of stockholders, annual or special, stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten or more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. 5 Section 5. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or town where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 6. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute, the certificate of incorporation or these by-laws. Where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter. If no quorum shall be present or represented at any meeting of stockholders, such meeting may be adjourned in accordance with Section 7 hereof, until a quorum shall be present or represented. Section 7. Adjournments. Any meeting of stockholders may be adjourned from time to time to any other time and to any other place at which a meeting of stockholders may be held under these by-laws, which time and place shall be announced at the meeting, by a majority of the stockholders present in person or represented by proxy at the meeting and entitled to vote (whether or not a quorum is present), or, if no stockholder is present or represented by proxy, by any officer entitled to preside at or to act as secretary of such meeting, without notice other than announcement at the meeting. At such adjourned meeting, any business may be transacted which might have been transacted at the original meeting, provided that a quorum either was present at the original meeting or is present at the adjourned meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 8. Action at Meetings. When a quorum is present at any meeting, the affirmative vote of the holders of a majority of the stock present in person or represented by proxy, entitled to vote and voting on the matter (or where a separate vote by a class or classes is required, the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting) shall decide any matter (other than the election of directors) brought before such meeting, unless the matter is one upon which by express provision of law, the certificate of incorporation or these by-laws, a different vote is required, in which case such express provision shall govern and control the decision of such matter. The stock of holders who abstain from voting on any matter shall be deemed not to have been voted on such matter. Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting, entitled to vote and voting on the election of directors. 2 6 Section 9. Voting and Proxies. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of capital stock having voting power held of record by such stockholder. Each stockholder entitled to vote at a meeting of stockholders, or to express consent or dissent to corporate action in writing without a meeting, may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Section 10. Action Without Meeting. Any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be (1) signed and dated by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and (2) delivered to the corporation within sixty days of the earliest dated consent by delivery to its registered office in the State of Delaware (in which case delivery shall be by hand or by certified or registered mail, return receipt requested), its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE II DIRECTORS Section 1. Number, Election, Tenure and Qualification. The number of directors which shall constitute the whole board shall be not less than one. Within such limit, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting or at any special meeting of stockholders. The directors shall be elected at the annual meeting or at any special meeting of the stockholders, except as provided in Section 3 of this Article, and each director elected shall hold office until his successor is elected and qualified, unless sooner displaced. Directors need not be stockholders. Section 2. Enlargement. The number of the board of directors may be increased at any time by vote of a majority of the directors then in office. Section 3. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. In the event of a vacancy in the board 3 7 of directors, the remaining directors, except as otherwise provided by law or these by-laws, may exercise the powers of the full board until the vacancy is filled. Section 4. Resignation and Removal. Any director may resign at any time upon written notice to the corporation at its principal place of business or to the chief executive officer or secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, unless otherwise specified by law or the certificate of incorporation. Section 5. General Powers. The business and affairs of the corporation shall be managed by its board of directors, which may exercise all powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. Section 6. Chairman of the Board. If the board of directors appoints a chairman of the board, he shall, when present, preside at all meetings of the stockholders and the board of directors. He shall perform such duties and possess such powers as are customarily vested in the office of the chairman of the board or as may be vested in him by the board of directors. Section 7. Place of Meetings. The board of directors may hold meetings, both regular and special, either within or without the State of Delaware. Section 8. Regular Meetings. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board; provided that any director who is absent when such a determination is made shall be given prompt notice of such determination. A regular meeting of the board of directors may be held without notice immediately after and at the same place as the annual meeting of stockholders. Section 9. Special Meetings. Special meetings of the board may be called by the chief executive officer, secretary, or on the written request of two or more directors, or by one director in the event that there is only one director in office. Two days' notice to each director, either personally or by telegram, cable, telecopy, commercial delivery service, telex or similar means sent to his business or home address, or three days' notice by written notice deposited in the mail, shall be given to each director by the secretary or by the officer or one of the directors calling the meeting. A notice or waiver of notice of a meeting of the board of directors need not specify the purposes of the meeting. Section 10. Quorum, Action at Meeting, Adjournments. At all meetings of the board a majority of directors then in office, but in no event less than one third of the entire board, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by law or by the certificate of incorporation. For purposes of this section, the term "entire board" shall mean the number of directors last fixed 4 8 by the stockholders or directors, as the case may be, in accordance with law and these by-laws; provided, however, that if less than all the number so fixed of directors were elected, the "entire board" shall mean the greatest number of directors so elected to hold office at any one time pursuant to such authorization. If a quorum shall not be present at any meeting of the board of directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 11. Action by Consent. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 12. Telephonic Meetings. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors or of any committee thereof may participate in a meeting of the board of directors or of any committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Section 13. Committees. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution designating such committee or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Each committee shall keep regular minutes of its meetings and make such reports to the board of directors as the board of directors may request. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these by-laws for the conduct of its business by the board of directors. Section 14. Compensation. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix from time to 5 9 time the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and the performance of their responsibilities as directors and may be paid a fixed sum for attendance at each meeting of the board of directors and/or a stated salary as director. No such payment shall preclude any director from serving the corporation or its parent or subsidiary corporations in any other capacity and receiving compensation therefor. The board of directors may also allow compensation for members of special or standing committees for service on such committees. ARTICLE III OFFICERS Section 1. Enumeration. The officers of the corporation shall be chosen by the board of directors and shall be a president, a secretary and a treasurer and such other officers with such titles, terms of office and duties as the board of directors may from time to time determine, including a chairman of the board, one or more vice-presidents, and one or more assistant secretaries and assistant treasurers. If authorized by resolution of the board of directors, the chief executive officer may be empowered to appoint from time to time assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. Election. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, a secretary and a treasurer. Other officers may be appointed by the board of directors at such meeting, at any other meeting, or by written consent. Section 3. Tenure. The officers of the corporation shall hold office until their successors are chosen and qualify, unless a different term is specified in the vote choosing or appointing him, or until his earlier death, resignation or removal. Any officer elected or appointed by the board of directors or by the chief executive officer may be removed at any time, with or without cause, by the affirmative vote of a majority of the board of directors or a committee duly authorized to do so, except that any officer appointed by the chief executive officer may also be removed at any time, with or without cause, by the chief executive officer. Any vacancy occurring in any office of the corporation may be filled by the board of directors, at its discretion. Any officer may resign by delivering his written resignation to the corporation at its principal place of business or to the chief executive officer or the secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Section 4. President. The president shall be the chief operating officer of the corporation. He shall also be the chief executive officer unless the board of directors otherwise provides. If no chief executive officer shall have been appointed by the board of directors, all references herein to the "chief executive officer" shall be to the president. The president shall, unless the board of directors provides otherwise in a specific instance or generally, preside at all 6 10 meetings of the stockholders and the board of directors, have general and active management of the business of the corporation and see that all orders and resolutions of the board of directors are carried into effect. The president shall execute bonds, mortgages, and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. Section 5. Vice-Presidents. In the absence of the president or in the event of his or her inability or refusal to act, the vice-president, or if there be more than one vice-president, the vice-presidents in the order designated by the board of directors or the chief executive officer (or in the absence of any designation, then in the order determined by their tenure in office) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors or the chief executive officer may from time to time prescribe. Section 6. Secretary. The secretary shall have such powers and perform such duties as are incident to the office of secretary. The secretary shall maintain a stock ledger and prepare lists of stockholders and their addresses as required and shall be the custodian of corporate records. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be from time to time prescribed by the board of directors or chief executive officer, under whose supervision the secretary shall be. The secretary shall have custody of the corporate seal of the corporation and the secretary, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his or her signature. Section 7. Assistant Secretaries. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, the chief executive officer or the secretary (or if there be no such determination, then in the order determined by their tenure in office), shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the chief executive officer or the secretary may from time to time prescribe. In the absence of the secretary or any assistant secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary or acting secretary to keep a record of the meeting. Section 8. Treasurer. The treasurer shall perform such duties and shall have such powers as may be assigned to him or her by the board of directors or the chief executive officer. In addition, the treasurer shall perform such duties and have such powers as are incident to the 7 11 office of treasurer. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the chief executive officer and the board of directors, when the chief executive officer or board of directors so requires, an account of all his or her transactions as treasurer and of the financial condition of the corporation. Section 9. Assistant Treasurers. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, the chief executive officer or the treasurer (or if there be no such determination, then in the order determined by their tenure in office), shall, in the absence of the treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors, the chief executive officer or the treasurer may from time to time prescribe. Section 10. Bond. If required by the board of directors, any officer shall give the corporation a bond in such sum and with such surety or sureties and upon such terms and conditions as shall be satisfactory to the board of directors, including without limitation a bond for the faithful performance of the duties of his office and for the restoration to the corporation of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control and belonging to the corporation. ARTICLE IV NOTICES Section 1. Delivery. Whenever, under the provisions of law, or of the certificate of incorporation or these by-laws, written notice is required to be given to any director or stockholder, such notice may be given by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Unless written notice by mail is required by law, written notice may also be given by telegram, cable, telecopy, commercial delivery service, telex or similar means, addressed to such director or stockholder at his address as it appears on the records of the corporation, in which case such notice shall be deemed to be given when delivered into the control of the persons charged with effecting such transmission, the transmission charge to be paid by the corporation or the person sending such notice and not by the addressee. Oral notice or other in-hand delivery (in person or by telephone) shall be deemed given at the time it is actually given. Section 2. Waiver of Notice. Whenever any notice is required to be given under the provisions of law or of the certificate of incorporation or of these by-laws, a waiver thereof in 8 12 writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V INDEMNIFICATION Section 1. Actions other than by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. Actions by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. Section 3. Success on the Merits. To the extent that any person described in Section 1 or 2 of this Article V has been successful on the merits or otherwise in defense of any 9 13 action, suit or proceeding referred to in said Sections, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. Specific Authorization. Any indemnification under Section 1 or 2 of this Article V (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of any person described in said Sections is proper in the circumstances because he has met the applicable standard of conduct set forth in said Sections. Such determination shall be made (1) by the board of directors by a majority vote of directors who were not parties to such action, suit or proceeding (even though less than a quorum), or (2) if there are no disinterested directors or if a majority of disinterested directors so directs, by independent legal counsel (who may be regular legal counsel to the corporation) in a written opinion, or (3) by the stockholders of the corporation. Section 5. Advance Payment. Expenses incurred in defending a pending or threatened civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of any person described in said Section to repay such amount if it shall ultimately be determined that he or she is not entitled to indemnification by the corporation as authorized in this Article V. Section 6. Non-Exclusivity. The indemnification and advancement of expenses provided by, or granted pursuant to, the other Sections of this Article V shall not be deemed exclusive of any other rights to which those provided indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Section 7. Insurance. The board of directors may authorize, by a vote of the majority of the full board, the corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article V. Section 8. Continuation of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 9. Severability. If any word, clause or provision of this Article V or any award made hereunder shall for any reason be determined to be invalid, the provisions hereof shall not otherwise be affected thereby but shall remain in full force and effect. 10 14 Section 10. Intent of Article. The intent of this Article V is to provide for indemnification and advancement of expenses to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware. To the extent that such Section or any successor section may be amended or supplemented from time to time, this Article V shall be amended automatically and construed so as to permit indemnification and advancement of expenses to the fullest extent from time to time permitted by law. ARTICLE VI CAPITAL STOCK Section 1. Certificates of Stock. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by such holder in the corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified. Section 2. Lost Certificates. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give reasonable evidence of such loss, theft or destruction, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate. Section 3. Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares, duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and proper evidence of compliance with other conditions to rightful transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 4. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the 11 15 board of directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which shall not be more than sixty days nor less then ten days before the date of such meeting. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If no record date is fixed, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation as provided in Section 10 of Article I. If no record date is fixed and prior action by the board of directors is required, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the board of directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted, and which shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating to such purpose. Section 5. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII CERTAIN TRANSACTIONS Section 1. Transactions with Interested Parties. No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its 12 16 directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction or solely because his or their votes are counted for such purpose, if: (a) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (b) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. Section 2. Quorum. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. ARTICLE VIII GENERAL PROVISIONS Section 1. Dividends. Dividends upon the capital stock of the corporation, if any, may be declared by the board of directors at any regular or special meeting or by written consent, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Reserves. The directors may set apart out of any funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Section 3. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. Section 4. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors. 13 17 Section 5. Seal. The board of directors may, by resolution, adopt a corporate seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the word "Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. The seal may be altered from time to time by the board of directors. ARTICLE IX AMENDMENTS These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation, at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors provided, however, that in the case of a regular or special meeting of stockholders, notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such meeting. 14 18 Register of Amendments to the By-laws Date Section Affected Change 15 EX-3.5 4 RESTATED CERT. OF INC. OF HADCO PHOENIX 1 Exhibit 3.5 RESTATED CERTIFICATE OF INCORPORATION OF HADCO PHOENIX, INC. A DELAWARE CORPORATION FIRST. The name of the corporation is Hadco Phoenix, Inc. (the "Corporation"). SECOND. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, Wilmington, Delaware. The name of its registered agent at such address is The Corporation Trust Company (New Castle County). THIRD. The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware. FOURTH. The total number of shares of stock which the Corporation shall have authority to issue is 3,000 shares of Common Stock with a par value of One Cent ($.01) per share. FIFTH. The Corporation is to have perpetual existence. SIXTH. In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware: A. The Board of Directors of the Corporation is expressly authorized to adopt, amend or repeal the By-Laws of the Corporation. B. Elections of directors need not be by written ballot unless the By-Laws of the Corporation shall so provide. C. The books of the Corporation may be kept at such place within or without the State of Delaware as the By-Laws of the Corporation may provide or as may be designated from time to time by the Board of Directors of the Corporation. SEVENTH. The Corporation eliminates the personal liability of each member of its Board of Directors to the Corporation or its stockholders for monetary damages for 2 breach of fiduciary duty as a director, provided, however, that, to the extent provided by applicable law, the foregoing shall not eliminate the liability of a director (i) for any breach of such director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of Title 8 of the Delaware Code or (iv) for any transaction from which such director derived an improper personal benefit. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. EIGHTH. The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon a stockholder herein are granted subject to this reservation. EX-3.6 5 BY-LAWS OF HADCO PHOENIX, INC. 1 Exhibit 3.6 BY-LAWS OF HADCO PHOENIX, INC. ***************** A DELAWARE CORPORATION Dated: March 20, 1998 2 ARTICLE I MEETINGS OF STOCKHOLDERS..............................................................................1 SECTION 1. PLACE OF MEETINGS......................................................................................1 SECTION 2. ANNUAL MEETING.........................................................................................1 SECTION 3. SPECIAL MEETINGS.......................................................................................1 SECTION 4. NOTICE OF MEETINGS.....................................................................................1 SECTION 5. VOTING LIST............................................................................................2 SECTION 6. QUORUM.................................................................................................2 SECTION 7. ADJOURNMENTS...........................................................................................2 SECTION 8. ACTION AT MEETINGS.....................................................................................2 SECTION 9. VOTING AND PROXIES.....................................................................................3 SECTION 10. ACTION WITHOUT MEETING................................................................................3 ARTICLE II DIRECTORS............................................................................................3 SECTION 1. NUMBER, ELECTION, TENURE AND QUALIFICATION.............................................................3 SECTION 2. ENLARGEMENT............................................................................................3 SECTION 3. VACANCIES..............................................................................................4 SECTION 4. RESIGNATION AND REMOVAL................................................................................4 SECTION 5. GENERAL POWERS.........................................................................................4 SECTION 6. CHAIRMAN OF THE BOARD..................................................................................4 SECTION 7. PLACE OF MEETINGS......................................................................................4 SECTION 8. REGULAR MEETINGS.......................................................................................4 SECTION 9. SPECIAL MEETINGS.......................................................................................4 SECTION 10. QUORUM, ACTION AT MEETING, ADJOURNMENTS...............................................................5 SECTION 11. ACTION BY CONSENT.....................................................................................5 SECTION 12. TELEPHONIC MEETINGS...................................................................................5 SECTION 13. COMMITTEES............................................................................................5 SECTION 14. COMPENSATION..........................................................................................6 ARTICLE III OFFICERS............................................................................................6 SECTION 1. ENUMERATION............................................................................................6 SECTION 2. ELECTION...............................................................................................6 SECTION 3. TENURE.................................................................................................6 SECTION 4. PRESIDENT..............................................................................................7 SECTION 5. VICE-PRESIDENTS........................................................................................7 SECTION 6. SECRETARY..............................................................................................7 SECTION 7. ASSISTANT SECRETARIES..................................................................................8 SECTION 8. TREASURER..............................................................................................8 SECTION 9. ASSISTANT TREASURERS...................................................................................8 SECTION 10. BOND..................................................................................................8 ARTICLE IV NOTICES..............................................................................................9 SECTION 1. DELIVERY...............................................................................................9 SECTION 2. WAIVER OF NOTICE.......................................................................................9
i 3 ARTICLE V INDEMNIFICATION.......................................................................................9 SECTION 1. ACTIONS OTHER THAN BY OR IN THE RIGHT OF THE CORPORATION...............................................9 SECTION 2. ACTIONS BY OR IN THE RIGHT OF THE CORPORATION.........................................................10 SECTION 3. SUCCESS ON THE MERITS.................................................................................10 SECTION 4. SPECIFIC AUTHORIZATION................................................................................10 SECTION 5. ADVANCE PAYMENT.......................................................................................10 SECTION 6. NON-EXCLUSIVITY.......................................................................................11 SECTION 7. INSURANCE.............................................................................................11 SECTION 8. CONTINUATION OF INDEMNIFICATION AND ADVANCEMENT OF EXPENSES...........................................11 SECTION 9. SEVERABILITY..........................................................................................11 SECTION 10. INTENT OF ARTICLE....................................................................................11 ARTICLE VI CAPITAL STOCK.......................................................................................11 SECTION 1. CERTIFICATES OF STOCK.................................................................................11 SECTION 2. LOST CERTIFICATES.....................................................................................12 SECTION 3. TRANSFER OF STOCK.....................................................................................12 SECTION 4. RECORD DATE...........................................................................................12 SECTION 5. REGISTERED STOCKHOLDERS...............................................................................13 ARTICLE VII CERTAIN TRANSACTIONS...............................................................................13 SECTION 1. TRANSACTIONS WITH INTERESTED PARTIES..................................................................13 SECTION 2. QUORUM................................................................................................14 ARTICLE VIII GENERAL PROVISIONS................................................................................14 SECTION 1. DIVIDENDS.............................................................................................14 SECTION 2. RESERVES..............................................................................................14 SECTION 3. CHECKS................................................................................................14 SECTION 4. FISCAL YEAR...........................................................................................14 SECTION 5. SEAL..................................................................................................14 ARTICLE IX AMENDMENTS..........................................................................................15
Addendum Register of Amendments to the By-Laws ii 4 HADCO PHOENIX, INC. * * * * * ARTICLE I MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. All meetings of the stockholders shall be held at such place within or without the State of Delaware as may be fixed from time to time by the board of directors or the chief executive officer, or if not so designated, at the registered office of the corporation. Section 2. Annual Meeting. Annual meetings of stockholders shall be held on the second Tuesday of March in each year if not a legal holiday, and if a legal holiday, then on the next secular day following, at 10:00 a.m., or at such other date and time as shall be designated from time to time by the board of directors or the chief executive officer, at which meeting the stockholders shall elect by a plurality vote a board of directors and shall transact such other business as may properly be brought before the meeting. If no annual meeting is held in accordance with the foregoing provisions, the board of directors shall cause the meeting to be held as soon thereafter as convenient, which meeting shall be designated a special meeting in lieu of annual meeting. Section 3. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, may, unless otherwise prescribed by statute or by the certificate of incorporation, be called by the board of directors or the chief executive officer and shall be called by the chief executive officer or secretary at the request in writing of a majority of the board of directors, or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting shall be limited to matters relating to the purpose or purposes stated in the notice of meeting. Section 4. Notice of Meetings. Except as otherwise provided by law, written notice of each meeting of stockholders, annual or special, stating the place, date and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be given not less than ten or more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting. Section 5. Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged 5 in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city or town where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 6. Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute, the certificate of incorporation or these by-laws. Where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter. If no quorum shall be present or represented at any meeting of stockholders, such meeting may be adjourned in accordance with Section 7 hereof, until a quorum shall be present or represented. Section 7. Adjournments. Any meeting of stockholders may be adjourned from time to time to any other time and to any other place at which a meeting of stockholders may be held under these by-laws, which time and place shall be announced at the meeting, by a majority of the stockholders present in person or represented by proxy at the meeting and entitled to vote (whether or not a quorum is present), or, if no stockholder is present or represented by proxy, by any officer entitled to preside at or to act as secretary of such meeting, without notice other than announcement at the meeting. At such adjourned meeting, any business may be transacted which might have been transacted at the original meeting, provided that a quorum either was present at the original meeting or is present at the adjourned meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 8. Action at Meetings. When a quorum is present at any meeting, the affirmative vote of the holders of a majority of the stock present in person or represented by proxy, entitled to vote and voting on the matter (or where a separate vote by a class or classes is required, the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting) shall decide any matter (other than the election of directors) brought before such meeting, unless the matter is one upon which by express provision of law, the certificate of incorporation or these by-laws, a different vote is required, in which case such express provision shall govern and control the decision of such matter. The stock of holders who abstain from voting on any matter shall be deemed not to have been voted on such matter. Directors shall be elected by a 2 6 plurality of the votes of the shares present in person or represented by proxy at the meeting, entitled to vote and voting on the election of directors. Section 9. Voting and Proxies. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of capital stock having voting power held of record by such stockholder. Each stockholder entitled to vote at a meeting of stockholders, or to express consent or dissent to corporate action in writing without a meeting, may authorize another person or persons to act for him by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. Section 10. Action Without Meeting. Any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be (1) signed and dated by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and (2) delivered to the corporation within sixty days of the earliest dated consent by delivery to its registered office in the State of Delaware (in which case delivery shall be by hand or by certified or registered mail, return receipt requested), its principal place of business, or an officer or agent of the corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE II DIRECTORS Section 1. Number, Election, Tenure and Qualification. The number of directors which shall constitute the whole board shall be not less than one. Within such limit, the number of directors shall be determined by resolution of the board of directors or by the stockholders at the annual meeting or at any special meeting of stockholders. The directors shall be elected at the annual meeting or at any special meeting of the stockholders, except as provided in Section 3 of this Article, and each director elected shall hold office until his successor is elected and qualified, unless sooner displaced. Directors need not be stockholders. Section 2. Enlargement. The number of the board of directors may be increased at any time by vote of a majority of the directors then in office. Section 3. Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the 3 7 directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. In the event of a vacancy in the board of directors, the remaining directors, except as otherwise provided by law or these by-laws, may exercise the powers of the full board until the vacancy is filled. Section 4. Resignation and Removal. Any director may resign at any time upon written notice to the corporation at its principal place of business or to the chief executive officer or secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, unless otherwise specified by law or the certificate of incorporation. Section 5. General Powers. The business and affairs of the corporation shall be managed by its board of directors, which may exercise all powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. Section 6. Chairman of the Board. If the board of directors appoints a chairman of the board, he shall, when present, preside at all meetings of the stockholders and the board of directors. He shall perform such duties and possess such powers as are customarily vested in the office of the chairman of the board or as may be vested in him by the board of directors. Section 7. Place of Meetings. The board of directors may hold meetings, both regular and special, either within or without the State of Delaware. Section 8. Regular Meetings. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board; provided that any director who is absent when such a determination is made shall be given prompt notice of such determination. A regular meeting of the board of directors may be held without notice immediately after and at the same place as the annual meeting of stockholders. Section 9. Special Meetings. Special meetings of the board may be called by the chief executive officer, secretary, or on the written request of two or more directors, or by one director in the event that there is only one director in office. Two days' notice to each director, either personally or by telegram, cable, telecopy, commercial delivery service, telex or similar means sent to his business or home address, or three days' notice by written notice deposited in the mail, shall be given to each director by the secretary or 4 8 by the officer or one of the directors calling the meeting. A notice or waiver of notice of a meeting of the board of directors need not specify the purposes of the meeting. Section 10. Quorum, Action at Meeting, Adjournments. At all meetings of the board a majority of directors then in office, but in no event less than one third of the entire board, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by law or by the certificate of incorporation. For purposes of this section, the term "entire board" shall mean the number of directors last fixed by the stockholders or directors, as the case may be, in accordance with law and these by-laws; provided, however, that if less than all the number so fixed of directors were elected, the "entire board" shall mean the greatest number of directors so elected to hold office at any one time pursuant to such authorization. If a quorum shall not be present at any meeting of the board of directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 11. Action by Consent. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 12. Telephonic Meetings. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors or of any committee thereof may participate in a meeting of the board of directors or of any committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. Section 13. Committees. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the board of directors, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the by-laws of the corporation; and, unless the resolution designating such committee or 5 9 the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors. Each committee shall keep regular minutes of its meetings and make such reports to the board of directors as the board of directors may request. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these by-laws for the conduct of its business by the board of directors. Section 14. Compensation. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix from time to time the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the board of directors and the performance of their responsibilities as directors and may be paid a fixed sum for attendance at each meeting of the board of directors and/or a stated salary as director. No such payment shall preclude any director from serving the corporation or its parent or subsidiary corporations in any other capacity and receiving compensation therefor. The board of directors may also allow compensation for members of special or standing committees for service on such committees. ARTICLE III OFFICERS Section 1. Enumeration. The officers of the corporation shall be chosen by the board of directors and shall be a president, a secretary and a treasurer and such other officers with such titles, terms of office and duties as the board of directors may from time to time determine, including a chairman of the board, one or more vice-presidents, and one or more assistant secretaries and assistant treasurers. If authorized by resolution of the board of directors, the chief executive officer may be empowered to appoint from time to time assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. Election. The board of directors at its first meeting after each annual meeting of stockholders shall choose a president, a secretary and a treasurer. Other officers may be appointed by the board of directors at such meeting, at any other meeting, or by written consent. Section 3. Tenure. The officers of the corporation shall hold office until their successors are chosen and qualify, unless a different term is specified in the vote choosing or appointing him, or until his earlier death, resignation or removal. Any officer 6 10 elected or appointed by the board of directors or by the chief executive officer may be removed at any time, with or without cause, by the affirmative vote of a majority of the board of directors or a committee duly authorized to do so, except that any officer appointed by the chief executive officer may also be removed at any time, with or without cause, by the chief executive officer. Any vacancy occurring in any office of the corporation may be filled by the board of directors, at its discretion. Any officer may resign by delivering his written resignation to the corporation at its principal place of business or to the chief executive officer or the secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Section 4. President. The president shall be the chief operating officer of the corporation. He shall also be the chief executive officer unless the board of directors otherwise provides. If no chief executive officer shall have been appointed by the board of directors, all references herein to the "chief executive officer" shall be to the president. The president shall, unless the board of directors provides otherwise in a specific instance or generally, preside at all meetings of the stockholders and the board of directors, have general and active management of the business of the corporation and see that all orders and resolutions of the board of directors are carried into effect. The president shall execute bonds, mortgages, and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. Section 5. Vice-Presidents. In the absence of the president or in the event of his or her inability or refusal to act, the vice-president, or if there be more than one vice-president, the vice-presidents in the order designated by the board of directors or the chief executive officer (or in the absence of any designation, then in the order determined by their tenure in office) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the board of directors or the chief executive officer may from time to time prescribe. Section 6. Secretary. The secretary shall have such powers and perform such duties as are incident to the office of secretary. The secretary shall maintain a stock ledger and prepare lists of stockholders and their addresses as required and shall be the custodian of corporate records. The secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be from time to time prescribed by the board of directors or chief executive officer, under whose supervision the secretary shall be. The secretary shall have custody of the corporate seal of the corporation and the secretary, or an assistant secretary, shall have 7 11 authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his or her signature or by the signature of such assistant secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his or her signature. Section 7. Assistant Secretaries. The assistant secretary, or if there be more than one, the assistant secretaries in the order determined by the board of directors, the chief executive officer or the secretary (or if there be no such determination, then in the order determined by their tenure in office), shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors, the chief executive officer or the secretary may from time to time prescribe. In the absence of the secretary or any assistant secretary at any meeting of stockholders or directors, the person presiding at the meeting shall designate a temporary or acting secretary to keep a record of the meeting. Section 8. Treasurer. The treasurer shall perform such duties and shall have such powers as may be assigned to him or her by the board of directors or the chief executive officer. In addition, the treasurer shall perform such duties and have such powers as are incident to the office of treasurer. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the chief executive officer and the board of directors, when the chief executive officer or board of directors so requires, an account of all his or her transactions as treasurer and of the financial condition of the corporation. Section 9. Assistant Treasurers. The assistant treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the board of directors, the chief executive officer or the treasurer (or if there be no such determination, then in the order determined by their tenure in office), shall, in the absence of the treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors, the chief executive officer or the treasurer may from time to time prescribe. Section 10. Bond. If required by the board of directors, any officer shall give the corporation a bond in such sum and with such surety or sureties and upon such terms and conditions as shall be satisfactory to the board of directors, including without limitation a bond for the faithful performance of the duties of his office and for the restoration to the corporation of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control and belonging to the corporation. 8 12 ARTICLE IV NOTICES Section 1. Delivery. Whenever, under the provisions of law, or of the certificate of incorporation or these by-laws, written notice is required to be given to any director or stockholder, such notice may be given by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Unless written notice by mail is required by law, written notice may also be given by telegram, cable, telecopy, commercial delivery service, telex or similar means, addressed to such director or stockholder at his address as it appears on the records of the corporation, in which case such notice shall be deemed to be given when delivered into the control of the persons charged with effecting such transmission, the transmission charge to be paid by the corporation or the person sending such notice and not by the addressee. Oral notice or other in-hand delivery (in person or by telephone) shall be deemed given at the time it is actually given. Section 2. Waiver of Notice. Whenever any notice is required to be given under the provisions of law or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V INDEMNIFICATION Section 1. Actions other than by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceedings, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the 9 13 corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. Section 2. Actions by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper. Section 3. Success on the Merits. To the extent that any person described in Section 1 or 2 of this Article V has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in said Sections, or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. Section 4. Specific Authorization. Any indemnification under Section 1 or 2 of this Article V (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of any person described in said Sections is proper in the circumstances because he has met the applicable standard of conduct set forth in said Sections. Such determination shall be made (1) by the board of directors by a majority vote of directors who were not parties to such action, suit or proceeding (even though less than a quorum), or (2) if there are no disinterested directors or if a majority of disinterested directors so directs, by independent legal counsel (who may be regular legal counsel to the corporation) in a written opinion, or (3) by the stockholders of the corporation. Section 5. Advance Payment. Expenses incurred in defending a pending or threatened civil or criminal action, suit or proceeding may be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of any person described in said Section to repay such amount if it shall ultimately be determined that he or she is not entitled to indemnification by the corporation as authorized in this Article V. 10 14 Section 6. Non-Exclusivity. The indemnification and advancement of expenses provided by, or granted pursuant to, the other Sections of this Article V shall not be deemed exclusive of any other rights to which those provided indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. Section 7. Insurance. The board of directors may authorize, by a vote of the majority of the full board, the corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of this Article V. Section 8. Continuation of Indemnification and Advancement of Expenses. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article V shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person. Section 9. Severability. If any word, clause or provision of this Article V or any award made hereunder shall for any reason be determined to be invalid, the provisions hereof shall not otherwise be affected thereby but shall remain in full force and effect. Section 10. Intent of Article. The intent of this Article V is to provide for indemnification and advancement of expenses to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware. To the extent that such Section or any successor section may be amended or supplemented from time to time, this Article V shall be amended automatically and construed so as to permit indemnification and advancement of expenses to the fullest extent from time to time permitted by law. ARTICLE VI CAPITAL STOCK Section 1. Certificates of Stock. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the chairman or vice-chairman of the board of directors, or the president or a vice-president and the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by such holder in the corporation. 11 15 Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified. Section 2. Lost Certificates. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to give reasonable evidence of such loss, theft or destruction, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed or the issuance of such new certificate. Section 3. Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares, duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and proper evidence of compliance with other conditions to rightful transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Section 4. Record Date. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the board of directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which shall not be more than sixty days nor less then ten days before the date of such meeting. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting. If no record date is fixed, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day before the day on which notice is given, or, if notice is waived, at the close of business on the day before the day on which the meeting is held. In order that the corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the board of directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the board of directors, and which shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the board of directors. If 12 16 no record date is fixed, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the board of directors is required by statute, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the corporation as provided in Section 10 of Article I. If no record date is fixed and prior action by the board of directors is required, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the board of directors adopts the resolution taking such prior action. In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the board of directors may fix a record date, which shall not precede the date upon which the resolution fixing the record date is adopted, and which shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating to such purpose. Section 5. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII CERTAIN TRANSACTIONS Section 1. Transactions with Interested Parties. No contract or transaction between the corporation and one or more of its directors or officers, or between the corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the board or committee thereof which authorizes the contract or transaction or solely because his or their votes are counted for such purpose, if: (a) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the board of directors or the committee, and the board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or 13 17 (b) The material facts as to his relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) The contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified, by the board of directors, a committee thereof, or the stockholders. Section 2. Quorum. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes the contract or transaction. ARTICLE VIII GENERAL PROVISIONS Section 1. Dividends. Dividends upon the capital stock of the corporation, if any, may be declared by the board of directors at any regular or special meeting or by written consent, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Reserves. The directors may set apart out of any funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Section 3. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. Section 4. Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors. Section 5. Seal. The board of directors may, by resolution, adopt a corporate seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the word "Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. The seal may be altered from time to time by the board of directors. 14 18 ARTICLE IX AMENDMENTS These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors, when such power is conferred upon the board of directors by the certificate of incorporation, at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors provided, however, that in the case of a regular or special meeting of stockholders, notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such meeting. 15 19 Register of Amendments to the By-laws Date Section Affected Change 16 EX-3.7 6 ARTICLES OF INCORPORATION OF CCIR OF CALIFORNIA 1 Exhibit 3.7 ARTICLES OF INCORPORATION OF CCIR OF CALIFORNIA CORP. I The name of this corporation is CCIR OF CALIFORNIA CORP. II The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporations Code. III The name and address in the State of California of this corporation's initial agent for service of process is: Richard A. Saffir c/o Bronson, Bronson & McKinnon LLP 505 Montgomery Street San Francisco, CA 94111 IV This corporation is authorized to issue only one class of shares of stock; and the total number of shares which the corporation is authorized to issue is one thousand (1,000). V The liability of the directors of the corporation for monetary damages shall be eliminated to the fullest extent permissible under California law. 2 VI The corporation is authorized to provide indemnification of directors, officers, and agents of the corporation through Bylaw provisions, agreements with agents, vote of shareholders or disinterested directors, or otherwise, to the fullest extent permissible under California law. Dated: November 3, 1997. /s/ Richard A. Saffir ---------------------------------- Richard A. Saffir, Incorporator EX-3.8 7 BY-LAWS OF CCIR OF CALIFORNIA CORP. 1 Exhibit 3.8 BYLAWS OF CCIR OF CALIFORNIA CORPORATION A California corporation 2 TABLE OF CONTENTS Page ARTICLE 1. - OFFICES....................................................... 1 1.1 Principal Executive Office........................................ 1 1.2 Other Offices..................................................... 1 ARTICLE 2. - MEETINGS OF SHAREHOLDERS...................................... 1 2.1 Place of Meetings................................................. 1 2.2 Annual Meetings................................................... 1 2.3 Special Meetings.................................................. 1 2.4 Notice of Shareholders' Meetings.................................. 2 2.5 Manner of Giving Notice; Affidavit of Notice...................... 2 2.6 Adjourned Meetings and Notice Thereof............................. 3 2.7 Voting at Meetings of Shareholders................................ 3 2.8 Record Date for Shareholder Notice, Voting and Giving Consents.... 4 2.9 Quorum............................................................ 4 2.10 Consent of Absentees............................................. 4 2.11 Action Without Meeting........................................... 5 2.12 Proxies.......................................................... 5 2.13 Inspectors of Election........................................... 6 ARTICLE 3. - DIRECTORS..................................................... 7 3.1 Powers of Directors............................................... 7 3.2 Number of Directors............................................... 8 3.3 Election and Term of Office....................................... 8 3.4 Vacancies......................................................... 9 3.5 Place of Meeting.................................................. 9 3.6 Annual Meeting.................................................... 9 3.7 Special Meetings.................................................. 9 3.8 Adjournment of Meetings........................................... 10 3.9 Notice of Adjournment............................................. 10 3.10 Waiver of Notice................................................. 10 3.11 Quorum........................................................... 10 3.12 Fees and Compensation............................................ 10 3.13 Action Without Meeting........................................... 10 ARTICLE 4 - OFFICERS....................................................... 11 4.1 Officers.......................................................... 11 4.2 Election.......................................................... 11 4.3 Subordinate Officers.............................................. 11 4.4 Removal and Resignation of Officers............................... 11 4.5 Vacancies......................................................... 11 - i - 3 4.6 Duties of Officers................................................ 11 4.6.1 Chairman of the Board........................................ 11 4.6.2 President.................................................... 11 4.6.3 Vice Presidents.............................................. 12 4.6.4 Secretary.................................................... 12 4.6.5 Assistant Secretaries........................................ 12 4.6.6 Treasurer.................................................... 12 4.6.7 Assistant Financial Officers................................. 13 ARTICLE 5 - SHARES OF STOCK................................................ 13 5.1 Share Certificates................................................ 13 5.2 Fractional Shares................................................. 13 5.3 Transfer of Shares................................................ 13 5.4 Lost or Destroyed Certificate..................................... 14 ARTICLE 6 - MISCELLANEOUS.................................................. 14 6.1. Indemnity of Officers, Directors, Employees and Other Agents..... 14 6.2 Shareholder Inspection of Bylaws.................................. 14 6.3 Maintenance and Inspection of Records of Shareholders............. 14 6.4 Shareholder Inspection of Corporate Records....................... 15 6.5 Inspection by Directors........................................... 15 6.6 Checks, Drafts, etc............................................... 15 6.7 Contracts, etc., How Executed..................................... 15 6.8 Representation of Shares of Other Corporations.................... 16 6.9 Annual Report..................................................... 16 6.10 Annual Statement of General Information.......................... 16 ARTICLE 7 - AMENDMENTS TO BYLAWS........................................... 16 7.1 Amendment by Shareholders......................................... 16 7.2 Amendment by Directors............................................ 16 - ii - 4 BYLAWS OF CCIR OF CALIFORNIA CORP. ARTICLE 1. OFFICES 1.1 Principal Executive Office. The address of the initial principal executive office for the transaction of the business of CCIR of California Corp., a California corporation (the "Corporation"), is hereby fixed as: CCIR of California Corp., 1758 East Junction Ave., San Jose, California. The board of directors may from time to time change said principal executive office from one location to another within the State of California. 1.2 Other Offices. Branch or subordinate offices may at any time be established by the board of directors at any place or places where the Corporation is qualified to do business. ARTICLE 2. MEETINGS OF SHAREHOLDERS 2.1 Place of Meetings. All meetings of the shareholders of the Corporation shall be held at the principal executive office of the Corporation, or at any other place within or without the State of California which may be designated either by the board of directors or by the written consent of all shareholders entitled to vote thereat, provided such shareholder consent is given either before or after the meeting and filed with the secretary of the Corporation. 2.2 Annual Meetings. The annual meetings of shareholders shall be held on the last Tuesday of January of each year, or on such other date as may be subsequently determined by the board of directors of the Corporation. At such meetings, directors shall be elected, reports of the affairs of the Corporation shall be considered and any other business may be transacted which is within the powers of the shareholders. 2.3 Special Meetings. Special meetings of the shareholders, for any purpose or purposes whatsoever, may be called at any time by the president or by the board of directors or by the chairman of the board or by one or more shareholders holding shares in the aggregate entitled to cast not less than ten percent (10%) of the votes at that meeting. If a special meeting is called by any person or persons other than the board of directors, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the chairman of the board, the president, any vice president or the secretary of the Corporation. The officer receiving the request shall cause notice to be promptly given to the 5 shareholders entitled to vote, in accordance with the provisions of sections 2.4 and 2.5 of this Article 2, and the notice shall set forth that a meeting will be held at the time requested by the person or persons calling the meeting, provided such time is not less than thirty-five (35) or more than sixty (60) days after the receipt of the request. If the notice is not given within twenty (20) days after receipt of the request, the person or persons requesting the meeting may give the notice. Nothing contained in this section 2.3 shall be construed as limiting; fixing or affecting the time when a meeting of shareholders called by action of the board of directors may be held. 2.4 Notice of Shareholders' Meetings. All notices of meetings of shareholders shall be sent or otherwise given in accordance with section 2.5 of this Article 2 not less than ten (10) or more than sixty (60) days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and, (i) in the case of a special meeting, the general nature of the business to be transacted or, (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the shareholders. The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees whom, at the time of the notice, management intends to present for election. Pursuant to the California Corporations Code (the "Corporations Code"), the notice shall also state the general nature of the proposal if action is proposed to be taken at any meeting for approval of (i) a contract or transaction in which a director has a direct or indirect financial interest, (ii) an amendment of the Articles of Incorporation, (iii) a reorganization of the Corporation, (iv) a voluntary dissolution of the Corporation under section 1900 of that Code or (v) a distribution in dissolution other than in accordance with the rights of outstanding preferred shares of the Corporation's stock. 2.5 Manner of Giving Notice: Affidavit of Notice. Notice of any shareholders' meeting shall be given either personally or by first-class mail, charges prepaid, or by facsimile transmission, addressed to the shareholder at the address of that shareholder appearing on the books of the Corporation or given by the shareholder to the Corporation for the purpose of notice. If no such address appears on the Corporation's books or has been so given, notice shall be deemed to have been given if sent to that shareholder by first-class mail or by facsimile transmission to the Corporation's principal executive office, or if published at least once in a newspaper of general circulation in the country where that office is located. Notice shall be deemed to have been given at the time when delivered personally, deposited in the mail, delivered to a common carrier for transmission to the recipient, actually transmitted by electronic means to the recipient by the person giving the notice or sent by other means of written communication. If any notice addressed to a shareholder at the address of that shareholder appearing on the books of the Corporation is returned to the Corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the shareholder at that address, all future notices or reports shall be deemed to have been duly given without further mailing if such notices or reports shall be available to the shareholder on written - 2 - 6 demand of the shareholder at the principal executive office of the Corporation for a period of one (1) year from the date of the giving of the notice or report. An affidavit of the mailing or other means of giving any notice of any shareholders' meeting may be executed by the secretary, assistant secretary, or any transfer agent of the Corporation giving the notice, and filed and maintained in the minute book of the Corporation. 2.6 Adjourned Meetings and Notice Thereof. Any annual or special shareholders' meeting may be adjourned from time to time, whether or not a quorum is present, by the vote of the majority of the shares, the holders of which are either present in person or represented by proxy thereat, but in the absence of a quorum, no other business may be transacted at such meeting except in the case of the withdrawal of a shareholder from a quorum as provided in section 2.9 of this Article 2. When any shareholders' meeting, either annual or special, is adjourned for more than forty-five (45) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of sections 2.4 and 2.5 of this Article 2. Save as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting other than by announcement at the meeting at which such adjournment is taken. At any adjourned meeting, the shareholders may transact any business that might have been transacted at the regular meeting. 2.7 Voting at Meetings of Shareholders. The shareholders entitled to vote at any meeting of shareholders shall be determined in accordance with the provisions of section 2.8 of this Article 2, subject to all applicable provisions of the Corporations Code (relating to voting shares held by a fiduciary, in the name of a Corporation, or in joint ownership). The shareholders' vote may be by voice vote or by ballot; provided, however, that any election for directors must be by ballot if demanded by any shareholder before the voting has begun. On any matter other than the election of directors, any shareholder may vote part of the shares in favor of the proposal and refrain from voting the remaining shares or vote them against the proposal, but if the shareholder fails to specify the number of shares which the shareholder is voting affirmatively, it will be conclusively presumed that the shareholder's approving vote is with respect to all shares that the shareholder is entitled to vote. If a quorum is present (or if a quorum had been present earlier at the meeting but some shareholders had withdrawn), the affirmative vote of a majority of the shares represented and voting, provided such shares voting affirmatively also constitutes a majority of the number of shares required for a quorum, shall be the act of the shareholders, unless the vote of a greater number or voting by classes is required by the Corporations Code or by the Corporation's Articles of Incorporation. Each shareholder shall be entitled to cumulate votes only if the procedures set forth in Section 708 of the Corporations Code have been satisfied. 2.8 Record Date for Shareholder Notice, Voting and Giving Consents. For purposes of determining the shareholders entitled to notice of any meeting or to vote or entitled to give consent to corporate action without a meeting, the board of directors may fix, in advance, a - 3 - 7 record date, which shall not be more than sixty (60) days or less than ten (10) days before the date of any such meeting or more than sixty (60) days before any such action without a meeting, and in this event only those shareholders of record at the close of business on the date so fixed shall be entitled to notice and to vote or to give consent, as the case may be, notwithstanding any transfer of any shares on the books of the Corporation after the record date, except as otherwise provided by the Corporations Code. If the board of directors does not so fix a record date: (a) The record date for determining shareholders entitled to notice of or to vote at a meeting of shareholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held; and (b) The record date for determining shareholders entitled to give consent to corporate action in writing without a meeting shall be (i) when no prior action by the board has been taken, the day on which the first written consent is given, or (ii) when prior action of the board has been taken, at the close of business on the day on which the board adopts the resolution relating to that action, or the sixtieth (60th) day before the date of such other action, whichever is later. 2.9 Quorum. The presence in person or by proxy of persons entitled to vote a majority of the voting shares at any meeting shall constitute a quorum of the shareholders for the transaction of business. The shareholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. 2.10 Consent of Absentees. The transactions of any meeting of shareholders, either annual or special, however called and noticed and wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the shareholders entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or a consent to the holding of such meeting or an approval of the minutes thereof. The waiver of notice or consent need not specify either the business to be transacted or the purpose of any annual or special meeting of shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in the second paragraph of section 2.4 of this Article 2, the waiver of notice or consent shall state the general nature of the proposal. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance by a person at a meeting shall also constitute a waiver of notice of that meeting, except when the persons objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice of the meeting, but not so included, if that objection is expressly made at the meeting. - 4 - 8 2.11 Action Without Meeting. Any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Notwithstanding the previous sentence, directors may be elected by written consent without a meeting only if the written consent of all outstanding shares entitled to vote is obtained, except that a vacancy in the board (other than a vacancy created by removal of a director) not filled by the board may be filled by the written consent of the holders of a majority of the outstanding shares entitled to vote. All such consents shall be filed with the secretary of the Corporation and shall be maintained in the corporate records. Any shareholder giving a written consent, or the shareholder's proxyholders, or a transferee of the shares or a personal representative of the shareholder or their respective proxyholders, may revoke the consent by a writing received by the Corporation prior to the time that written consent of the number of shares required to authorize the proposed action has been filed with the secretary of the Corporation, but may not do so thereafter. Such revocation is effective upon its receipt by the secretary of the Corporation. If the consents of all shareholders entitled to vote have been solicited in writing, and corporate action has been approved without a meeting by less than the unanimous written consent of those shareholders entitled to vote on such action, then the secretary shall give to those shareholders entitled to vote who have not consented in writing: (a) Notice of such approval at least ten (10) calendar days before the consummation of the action authorized by such approval, if the corporate action concerns (i) contracts or transactions in which a director has a direct or indirect financial interest, (ii) indemnification of agents of the Corporation, (iii) a reorganization, or (iv) a distribution in dissolution other than in accordance with the rights of the outstanding preferred shares; and (b) Prompt notice of any other corporate action. The notice required by this section 2.11 shall conform to the requirements of paragraph (b) of section 2.8 of this Article 2. 2.12 Proxies. Every person entitled to vote for directors or on any other matter shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the Corporation. A proxy shall be deemed signed if the shareholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the shareholder or the shareholder's attorney-in-fact. A validly executed proxy that does not state that it is irrevocable shall continue in full force and effect unless (i) revoked by the person executing it, before the vote pursuant to that proxy, by a writing delivered to the Corporation stating that the proxy is revoked, or by attendance at the meeting and voting in person by the person executing the proxy or by a subsequent proxy executed by the same person and presented at the meeting; or (ii) written notice of the death or incapacity of the maker of that proxy is received by the Corporation before the vote pursuant to that proxy is counted; provided, however, that no proxy shall be valid after - 5 - 9 the expiration of eleven (11) months from the date of the proxy, unless otherwise provided in the proxy. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of the Corporations Code. 2.13 Inspectors of Election. Before any meeting of shareholders, the board of directors may appoint any persons other than nominees for office to act as inspectors of election at the meeting or its adjournment. If inspectors of election are not so appointed, the chairman of the meeting may, and on the request of any shareholder or shareholder's proxy shall, appoint inspectors of election at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting on the request of one or more shareholders or proxies, the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, the chairman of the meeting may, and upon the request of any shareholder or shareholder's proxy shall, appoint a person to fill that vacancy. These inspectors shall: (a) Determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of proxies; (b) Receive votes, ballots or consents; (c) Hear and determine all challenges and questions in any way arising in connection with the right to vote; (d) Count and tabulate all votes or consents; (e) Determine when the polls shall close; (f) Determine the results; and (g) Do any other acts that may be proper to conduct the election or vote with fairness to all shareholders. ARTICLE 3. DIRECTORS 3.1 Powers of Directors. Subject to limitations of the Articles of Incorporation, of these Bylaws and of the Corporations Code as to actions which shall be authorized or approved by the shareholders, by the outstanding shares or by a less than majority vote of a class or series of preferred shares, and subject to the duties of directors as prescribed by these Bylaws, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be controlled by, the board of directors. Without prejudice to such general powers but subject to the same limitations, it is hereby expressly declared that the directors shall have the following powers, to wit: - 6 - 10 First: To conduct, manage and control the affairs and business of the Corporation and to make such rules and regulations therefor not inconsistent with law or with the Articles of Incorporation or with these Bylaws, as they may deem best. Second: To select and remove all the other officers, agents and employees of the Corporation, to prescribe such powers and duties for them as may not be inconsistent with law, with the Articles of Incorporation or with these Bylaws, to fix their compensation and to require from them security for faithful service. Third: To change the principal executive office for the transaction of the business of the Corporation from one location to another within the State of California, as provided in Article I, section 1.1, hereof; to fix and locate from time to time one or more subsidiary offices of the Corporation within or without the State of California, as provided in Article 1, section 1.2, hereof; to designate any place within or without the State of California for the holding of any shareholders' meeting or meetings except annual meetings; and to adopt, make and use a corporate seal, to prescribe the forms of certificates of stock and to alter the form of such seal and of such certificates from time to time as in their judgment they may deem best, provided that such seal and such certificates shall at all times comply with the provisions of law. Fourth: To authorize the issuance of shares of stock of the Corporation from time to time, upon such terms as may be lawful, as dividends or in consideration of money paid, labor done or services actually rendered to the Corporation or for its benefit or in its formation or reorganization, debts or securities canceled, or tangible or intangible property actually received, but neither promissory notes of the purchaser, unless secured by property other than the shares acquired or otherwise permitted by the Corporations Code, nor future services shall constitute payment or part payment for shares of the Corporation. Fifth: To borrow money and incur indebtedness for the purposes of the Corporation and to cause to be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities therefor. Sixth: To designate, by resolution adopted by a majority of the authorized number of directors, one or more committees, each consisting of two or more directors, to serve at the pleasure of the board. The board may designate one or more directors as alternative members of any committee, who may replace any absent member at any meeting of the committee. Any such committee shall have all the authority of the board to the extent provided in the resolution of the board or in these Bylaws, except with respect to: (a) The approval of any action for which, under the Corporations Code, shareholders' approval or approval of the outstanding shares is also required; (b) The filling of vacancies on the board or in any committee; (c) The fixing of compensation of the directors for serving on the board or on any committee; - 7 - 11 (d) The amendment or repeal of bylaws or the adoption of new Bylaws; (e) The amendment or repeal of any resolution of the board which by its express terms is not so amendable or repealable; (f) A distribution to the shareholder of the Corporation, except at a rate, in a periodic amount or within a price range set forth or determined by the board; or (g) The appointment of other committees of the board or the members thereof. Seventh: To declare dividends at such times and in such amounts as the condition of the affairs of the Corporation may warrant. Eighth: Generally to exercise all of the powers and to perform all of the acts and duties that from time to time may be permitted by law appertaining to their office. 3.2 Number of Directors. The authorized number of directors of the Corporation shall be one (1) unless and until, as may be required by the Corporations Code, additional members are elected to the Board by the shareholders of the Corporation and this section 3.2 is properly amended; provided, however, that if the number of directors is increased, it cannot thereafter be decreased to less than that number if the votes cast against the adoption of a resolution decreasing said number at a meeting of the shareholders, or the shares not consenting in the case of action by written consent, equals more than 16-2/3 percent of the outstanding shares entitled to vote. 3.3 Election and Term of Office. The directors shall be elected at each annual meeting of shareholders, but if any such annual meeting is not held or the directors are not elected thereat, the directors may be elected at any special meeting of shareholders held for that purpose. All directors shall hold office until their respective successors are elected. 3.4 Vacancies. Vacancies in the board of directors may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director. Each director so elected shall hold office until his successor is elected at an annual or a special meeting of the shareholders. A vacancy or vacancies in the board of directors shall be deemed to exist in case of the death, resignation or removal of any director or if the authorized number of directors be increased or if the shareholders fail, at any annual or special meeting of shareholders at which any director or directors are elected, to elect the full authorized number of directors to be voted for at that meeting. The shareholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors. If the board of directors accepts the resignation of a director tendered to take effect at a future time, the board or the shareholders shall have the power to elect a successor to take office when the resignation is to become effective. - 8 - 12 No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office. 3.5 Place of Meeting. Regular meetings of the board of directors shall be held at any place within or without the State of California which has been designated from time to time by resolution of the board or by written consent of all members of the board. In the absence of such designation, regular meetings shall be held at the principal executive office of the Corporation. Special meetings of the board may be held either at a place so designated or at the principal executive office. Members of the board may participate in a meeting through use of conference telephone or similar communication equipment, so long as all members participating in such meeting can hear one another. Participation in a meeting by means of the above-described procedure shall constitute presence in person at such meeting. 3.6 Annual Meeting. Immediately following each annual meeting of shareholders, the board of directors shall hold a regular meeting for the purpose of organization, election of officers and the transaction of other business. Notice of such meeting is hereby dispensed with. 3.7 Special Meetings. Special meetings of the board of directors for any purpose or purposes shall be called at any time by the chairman of the board, or the president, or any vice president, or the secretary, or any two directors. Written notice of the time and place of a special meeting shall be delivered personally to the directors or sent to each director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it appears upon the records of the Corporation or, if it is not so shown or is not readily ascertainable, at the place in which the meetings of directors are regularly held. In case such notice is mailed, it shall be deposited with the United States Postal Service in the place in which the principal executive office of the Corporation is located at least four (4) days prior to the time of the meeting. In case such notice is delivered personally or telegraphed, it shall be so delivered or deposited with the telegraph company at least forty-eight (48) hours prior to the time of the meeting. Such mailing, telegraphing or delivery, as above provided, shall be due, legal and personal notice to such director. 3.8 Adjournment of Meetings. A majority of the directors present, whether or not a quorum is present, may adjourn any directors' meeting to another time and place. 3.9 Notice of Adjournment. If a meeting is adjourned for more than twenty-four (24) hours, notice of any adjournment to another time or place shall be given prior to the time of the adjourned meeting to the directors who were not present at the time of adjournment. 3.10 Waiver of Notice. The transactions at any meeting of the board of directors, however called and noticed, or wherever held, shall be as valid as though such transactions had occurred at a meeting duly held after regular call and notice if a quorum be present and if, either before or after the meeting, each of the directors not present signs a written waiver of notice of or consent to holding the meeting or an approval of the minutes thereof. All such waiver, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting. - 9 - 13 3.11 Quorum. A majority of the authorized number of directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinabove provided. Every act or decision done or made by a majority of the directors at a meeting duly held at which a quorum is present shall be regarded as an act of the board of directors unless a greater number be required by law or by the Articles of Incorporation. However, a meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for such meeting. 3.12 Fees and Compensation. Directors shall not receive any stated salary for their services as directors but, by resolution of the board, a fixed fee, with or without expenses of attendance, may be allowed to directors not receiving monthly compensation for attendance at each meeting. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity, as an officer, agent, employee or otherwise, and from receiving compensation therefor. 3.13 Action Without Meeting. Any action required or permitted to be taken by the board of directors under the Corporations Code may be taken without a meeting if all members of the board individually or collectively consent in writing to such action. Such consent or consents shall be filed with the minutes of the meetings of the board. Any certificate or other document filed under the provision of the Corporations Code which relates to action so taken shall state that the action was taken by unanimous written consent of the board of directors without a meeting and that these Bylaws authorized the directors to so do. ARTICLE 4 OFFICERS 4.1 Officers. The officers of the Corporation shall be a chairman of the board or a president or both, a secretary and a chief financial officer (treasurer) and such other officers with such titles and duties as may be appointed in accordance with the provisions of section 4.3 of this Article 4. Any number of offices may be held by the same person. 4.2 Election. The officers of the Corporation, except such officers as may be appointed in accordance with the provisions of section 4.3 or section 4.5 of this Article 4, shall be chosen annually by the board of directors, and each shall hold his office until he shall resign or shall be removed or otherwise disqualified to serve or his successor shall be elected and qualified. 4.3 Subordinate Officers. The board of directors may appoint such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in these Bylaws or as the board of directors may from time to time determine. 4.4 Removal and Resignation of Officers. Any officer may be removed, either with or without cause, by a majority of the directors at the time in office, at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors. - 10 - 14 Any office may resign at any time by giving written notice to the board of directors or to the president or to the secretary of the Corporation. Any such resignation shall take effect on the date of the receipt of such notice or any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. 4.5 Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these Bylaws for regular appointments to such office. 4.6 Duties of Officers. 4.6.1 Chairman of the Board. The chairman of the board, if there shall be such an officer, shall, if present, preside at all meetings of the board of directors and shall exercise and perform all such other powers and duties as may from time to time be assigned to him by the board of directors or prescribed by the Bylaws. 4.6.2 President. The president shall be the chief executive office of the Corporation and shall, subject to the board of directors, have general supervision, direction and control of the business and of other officers and employees of the Corporation. The president shall preside at all meetings of the shareholders and, if there is no regular, appointed chairman of the board or if such chairman is absent, at all meetings of the board of directors. The president shall be ex officio a member of all standing committees, including the executive committee, if any, and shall have general powers and duties of management, together with such other powers and duties as may be prescribed by the board of directors. 4.6.3 Vice Presidents. In the absence or disability of the president, the vice presidents in order of their rank as fixed by the board of directors or, if not ranked, the vice president designated by the board of directors shall perform all the duties of the president and, when so acting, shall have all the powers of and be subject to all the restrictions upon the president. Each vice president shall have such other powers and shall perform such other duties as from time to time may be prescribed for him by the board of directors or these Bylaws. 4.6.4 Secretary. The secretary shall keep, or cause to be kept, a book of minutes at the principal executive office of the Corporation, or such other place as the board of directors my order, of all meetings of directors and shareholders, with the time and place of holding, whether regular or special and, if special, how authorized, the notice thereof given, the names of those present at directors' meetings, the number of shares present or represented at shareholders' meetings and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation's transfer agent, a share register or a duplicate share register showing the names of the shareholders and their addresses, the number and classes of shares held by each, the number and the date of certificates issued for the same, and the number and date of cancellation of every certificate surrendered for cancellation. - 11 - 15 The secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the board of directors required by these Bylaws or by law to be given, shall keep the seal of the Corporation in safe custody and shall have such other powers and shall perform such other duties as may be prescribed by the board of directors or these Bylaws. 4.6.5 Assistant Secretaries. In the absence or disability of the secretary, the assistant secretaries in order of their rank as fixed by the board of directors or, if not ranked, the assistant secretary designated by the board of directors shall perform all the duties of the secretary and, when so acting, shall have all the powers of and be subject to all the restrictions upon the secretary. Each assistant secretary shall have such other powers and shall perform such other duties as from time to time may be prescribed for him by the board of directors or these Bylaws. 4.6.6 Treasurer. The chief financial officer of the Corporation shall be the treasurer. The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, surplus and shares. The treasurer shall deposit all moneys and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the board of directors. The treasurer shall be responsible for the proper disbursement of the funds of the Corporation as may be ordered by the board of directors and shall render to the president or the board, whenever requested, an account of all transactions as treasurer and of the financial condition of the Corporation. The treasurer shall prepare a proper annual budget of income and expenses for each calendar year, revised quarterly, for approval of or revision by the board of directors and shall be responsible for the handling of finances in connection therewith. The treasurer shall have such other powers and shall perform such other duties as may be prescribed by the board of directors. The treasurer shall see that all officers signing checks are bonded in such amounts as may be fixed from time to time by the board of directors. 4.6.7 Assistant Financial Officers. In the absence of or disability of the chief financial officer, the assistant financial officers in order of their rank or, if not ranked, the assistant financial officer designated by the board of directors shall perform all the duties of the chief financial officer and, when so acting, shall have the powers of and be subject to all the restrictions upon the chief financial officer. Each assistant financial officer shall have such other powers and perform such other duties as from time to time may be prescribed for him by the board of directors or these Bylaws. ARTICLE 5 SHARES OF STOCK 5.1 Share Certificates. The certificates of shares of the capital stock of the Corporation shall be in such form as is consistent with the Articles of Incorporation and the laws of the State of California and as shall be approved by the board of directors. A certificate or certificates for shares of the capital stock of the Corporation shall be issued to each shareholder when the shares are fully paid, and the board of directors may authorize the issuance of certificates or shares as - 12 - 16 partly paid provided that such certificates shall state the amount of the consideration to be paid for them and the amount paid. All such certificates shall be signed by the chairman of the board, or the president, or any vice president, and by the chief financial officer, or any assistant financial officer, or the secretary, or any assistant secretary, certifying to the number of shares and the class or series of shares issued to the shareholder. Any or all of the signatures on a certificate may be facsimile. 5.2 Fractional Shares. The Corporation shall not issue, sell or transfer fractional shares of its capital stock. 5.3 Transfer of Shares. Subject to the provisions of law, upon the surrender to the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. 5.4 Lost or Destroyed Certificate. The holder of any shares of the Stock of Corporation shall immediately notify the Corporation of any loss or destruction of the certificate therefore, and the Corporation may issue a new certificate in the place of any certificate theretofore issued by it alleged to have been lost or destroyed, upon approval of the board of directors. The board may, in its discretion, and as a condition to authorizing the issuance of such new certificate, require the owner of the lost or destroyed certificate, or his legal representative, to make proof satisfactory to the board of directors of the loss or destruction thereof and to give the Corporation a bond or other security, in such amount and with such surety or sureties as the board of directors may determine, as indemnity against any claim that may be made against the Corporation on account of any such certificate so alleged to have been lost or destroyed. ARTICLE 6 MISCELLANEOUS 6.1 Indemnity of Officers, Directors, Employees and Other Agents. The Corporation shall, to the maximum extent permitted by the Corporations Code, have power to indemnify each of its agents against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact any such person is or was an agent of the Corporation and shall have power to advance to each such agent expenses incurred in defending any such proceeding to the maximum extent permitted by that law. For purposes of this Article, an "agent" of the Corporation includes any person who is or was a director, officer, employee or other agent of the Corporation; or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise; or was a director, officer, employee or agent of a corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation. - 13 - 17 6.2 Shareholder Inspection of Bylaws. The Corporation shall keep at its principal executive office in this state, the original or a copy of the Bylaws and any amendments thereto, certified by the secretary, which shall be open to inspection by shareholders at all reasonable times during office hours. 6.3 Maintenance and Inspection of Records of Shareholders. The Corporation shall keep at its principal executive office, or at the office of its transfer agent or registrar, if either be appointed and as determined by resolution of the board of directors, a record of its shareholders, which sets forth the names and addresses of all shareholders and the number and class of shares held by each shareholder. A shareholder or shareholders of the Corporation holding at least five percent (5%) in the aggregate of the outstanding voting shares of the Corporation may (i) inspect and copy the records of shareholders' names, addresses and shareholdings during usual business hours on five (5) days' prior written demand on the Corporation, and (ii) obtain from the transfer agent of the Corporation, on written demand and on the tender of such transfer agent's usual charges for such list, a list of the names and addresses of shareholders, who are entitled to vote for the election of directors, and their shareholdings, as of the most recent record date for which that list has been compiled or as of a date specified by the shareholder after the date of demand. This list shall be made available to any such shareholder or shareholders by the transfer agent on or before the later of five (5) days after the demand is received or the date specified in the demand as the date as of which the list is to be compiled. The record of shareholders shall also be open to inspection on the written demand of any shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate. Any inspection and copying under this section 6.3 may be made in person or by an agent or attorney of the shareholder or holder of a voting trust certificate making the demand. 6.4 Shareholder Inspection of Corporate Records. The accounting books and records and minutes of proceedings of the shareholders and the board of directors and any committee or committees of the board of directors shall be kept at such place or places designated by the board of directors or, in the absence of such designation, at the principal executive office of the Corporation. The minutes shall be kept in written form and the accounting books and records shall be kept either in written form or in any other form capable of being converted into written form. The minutes and accounting books and records shall be open to inspection upon the written demand of any shareholder or holder of a voting trust certificate, at any reasonable time during usual business hours, for a purpose reasonably related to the holder's interests as a shareholder or as the holder of a voting trust certificate. The inspection may be made in person or by an agent or attorney and shall include the right to copy and make extracts. These rights of inspection shall extend to the records of each subsidiary corporation of the Corporation. 6.5 Inspection by Directors. Every director shall have the absolute right at any reasonable time to inspect all books, records and documents of every kind and the physical properties of the Corporation and each of its subsidiary corporations. This inspection by a director may be made in person or by an agent or attorney, and the right of inspection includes the right to copy and make extracts of documents. - 14 - 18 6.6 Checks, Drafts, etc. All checks, drafts or other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the Corporation, shall be signed or endorsed by such person or persons and in such manner as from time to time shall be determined by the resolution of the board of directors. 6.7 Contracts, etc., How Executed. Except as otherwise provided in these Bylaws, the board of directors may authorize any officer or agent to enter into any contract or execute any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances, and, unless so authorized by the board of directors, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit to render it liable for any purpose or to any amount. 6.8 Representation of Shares of Other Corporations. The chairman of the board, the president, any vice president, or any other person authorized by resolution of the board of directors, is authorized to represent and exercise, on behalf of this Corporation, all rights incidental to any and all shares of any other corporation or corporations, foreign or domestic, standing in the name of this Corporation. The authority herein granted to said officers to vote or represent on behalf of this Corporation any and all shares held by this Corporation in any other corporation or corporations may be exercised either by such officers in person or by any person authorized to do so by proxy or power-of-attorney duly executed by said officers. 6.9 Annual Report. The annual report to shareholders referred to by the Corporations Code, and subject to the limitations thereof, is expressly waived, but the board of directors of the Corporation may cause to be sent to the shareholders, not later than one hundred twenty (120) days after the close of the fiscal or calendar year, an annual report in such form as may be deemed appropriate by the board of directors. 6.10 Annual Statement of General Information. The Corporation shall, each year, during the calendar month in which its Articles of Incorporation originally were filed with the California Secretary of State, or during the preceding five (5) calendar months, file with the Secretary of State, on the prescribed form, a statement setting forth the authorized number of directors, the names and complete business or residence addresses of all incumbent directors, the names and complete business or residence addresses of the chief executive officer, secretary and chief financial officer, the street address of its principal executive office or principal business office in this state, and the general type of business constituting the principal business activity of the Corporation, together with a designation of the agent of the Corporation for the purpose of service of process, all in compliance with the Corporations Code. ARTICLE 7 AMENDMENTS TO BYLAWS 7.1 Amendment by Shareholders. Unless otherwise provided herein or in the Articles of Incorporation, these bylaws may be altered, amended or repealed upon, and only upon the approval of the holders of not less than two-thirds of the voting capital stock of the Corporation. - 15 - 19 7.2 Amendment by Directors. Subject to the rights of the shareholders as provided in section 7.1 of this Article 7 to adopt, amend or repeal the bylaws, these bylaws may be adopted, amended, or repealed by the board of directors; provided, however, that the board of directors may adopt a bylaw or amend a bylaw changing the authorized number of directors only for the purpose of fixing the exact number of directors within the limits specified in the Articles of Incorporation or in Section 3.2 of Article 3 of the bylaws. - 16 - 20 CERTIFICATE OF SECRETARY The undersigned, being the duly elected, qualified and acting Secretary of CCIR of California Corp., a California corporation, does hereby certify the foregoing Bylaws, comprising sixteen (16) pages, are the Bylaws of said Corporation, as duly adopted by the unanimous written consent of the first Board of Directors, effective November 6, 1997. Dated: Effective as of November 6, 1997. /s/ Joseph G. Andersen ------------------------------------ Joseph G. Andersen, Secretary - 17 - EX-3.9 8 ARTICLES OF INCORPORATION OF CCIR OF TEXAS CORP. 1 Exhibit 3.9 ARTICLES OF INCORPORATION OF CCIR OF TEXAS CORP. The undersigned natural person of the age of eighteen (18) years or more, acting as an incorporator of a corporation under the Texas Business Corporation Act, hereby adopts the following Articles of Incorporation for such corporation: ARTICLE I. NAME The name of the corporation is CCIR OF TEXAS CORP. ARTICLE II. DURATION The period of its duration is perpetual. ARTICLE III. PURPOSE The purpose of purposes for which the corporation is organized are to transact any and all lawful business for which corporations may be incorporated under the Texas Business Corporation Act. ARTICLE IV. SHARES The aggregate number of shares which the corporation has authority to issue is 1,000 shares of no par value per share. Such shares are designated as common stock and shall have identical rights and privileges in every respect. ARTICLE V. DENIAL OF PREEMPTIVE RIGHTS Shareholders of the corporation shall have no preemptive right to acquire additional, unissued or treasury shares of the corporation or securities of the corporation convertible into or carrying a right to subscribe to or acquire shares of the corporation. ARTICLE VI. NONCUMULATIVE VOTING Directors shall be elected by majority vote. No holder of any class of shares of the corporation shall have the right to cumulate his votes in the election of directors. ARTICLE VII. COMMENCEMENT OF BUSINESS The corporation will not commence business until it has received for the issuance of its shares consideration of the value of One Thousand Dollars ($1,000.00), consisting of money, labor done, or property actually received. 2 ARTICLE VIII. REGISTERED OFFICE AND AGENT The street address of the initial registered office of the corporation in the State of Texas is c/o Corporation Service Company, d/b/a CSC-Lawyers Incorporating Service Company, 400 North St. Paul, Dallas, Texas 75201, and the name of its initial registered agent at such address is Corporation Service Company, d/b/a CSC-Lawyers Incorporating Service Company, 400 North St. Paul, Dallas, Texas 75201. ARTICLE IX. INCORPORATOR The name and address of the incorporator is : Joseph G. Andersen 3502 E. Roeser Road Phoenix, AZ 85040 ARTICLE X. INITIAL DIRECTORS The number of directors constituting the initial Board of Directors is one (1) and the name and address of the person who is to serve as director until the first annual meeting of the shareholders, or until his successor or successors are elected and qualified is: Angelo A. DeCaro, Jr. 3502 E. Roeser Road Phoenix, AZ 85040 The number of directors may hereafter be increased or decreased as provided in the bylaws of the corporation. ARTICLE XI. LIABILITY OF DIRECTORS The corporation shall indemnify any person who (i) is or was a director, officer, employee, or agent of the corporation, or (ii) while a director, officer, employee, or agent of the corporation, is or was serving at the request of the corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan, or other enterprise, to the fullest extent that a corporation may or is required to grant indemnification to a director under the Texas Business Corporation Act as now written or as hereafter amended. The corporation may indemnify any person to such further extent as permitted by law. 3 ARTICLE XII. INDEMNIFICATION A director of the corporation shall not be liable to the corporation or its shareholders for monetary damages for an act or omission in the director's capacity as director, except that this Article does not eliminate or limit the liability of a director for: (a) a breach of a director's loyalty to the corporation or its shareholders; (b) an act or omission not in good faith or that involves intentional misconduct or a knowing violation of the law; (c) a transaction from which a director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office; (d) an act or omission for which the liability of a director is expressly provided for by statute; or (e) an act related to an unlawful stock repurchase or payment of a dividend. ARTICLE XIII. ACTIONS BY SHAREHOLDERS WITHOUT A MEETING Any action required by the Texas Business Corporation Act to be taken at any annual or special meeting of shareholders, or any action which may be taken at any annual or special meeting of shareholders, may be taken without a meeting, without prior notice, and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take such action at a meeting at which the holders of all shares entitled to vote on the action were present and voted. IN WITNESS WHEREOF, I have hereunto set my hand this 26th day of March, 1997. /s/ Joseph G. Andersen --------------------------------- Joseph G. Andersen 4 STATEMENT OF CHANGE OF REGISTERED OFFICE BY REGISTERED AGENT To the Secretary of State State of Texas Pursuant to the provisions of Article 2.10.1 of the Texas Business Corporation Act, the undersigned registered agent, for the corporation named below submits the following statement for the purpose of changing the registered office address for such corporation in the State of Texas: Charter No. See attached list 1. The name of the corporation (hereinafter called the "Corporation") represented by the said registered agent is: See attached list 2. The address at which the said registered agent has maintained the registered office for the corporation is 400 N. St. Paul Dallas, Texas 75201 3. The new address at which the said registered agent will hereafter maintain the registered office for the corporation is 800 Brazos Austin, Texas 78701 4. Notice of this change of address has been given in writing to the above corporation at least 10 days prior to the date of filing of this Statement. Dated: July 11, 1997 Corporation Service Company d/b/a CSC-Lawyers Incorporating Service Company /s/ John H. Pelletier John H. Pelletier, Assistant Vice President EX-3.10 9 BY-LAWS OF CCIR OF TEXAS CORP. 1 Exhibit 3.10 BYLAWS CCIR OF TEXAS CORP. Adopted as of March 27, 1997 ARTICLE I SHAREHOLDERS Section 1. Annual Meeting. The annual meeting of the shareholders shall be held in the month of December in each year or at such other time as shall be fixed by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. Section 2. Notice of Meeting. Written notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall, unless otherwise prescribed by statute, be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, or at the direction of the president, or the secretary, or the officer or other persons calling the meeting. ARTICLE II BOARD OF DIRECTORS Section 1. Number, Tenure and Qualifications. The number of directors of the corporation shall be not less than one (1) nor more than four (4) as established by the Board of Directors from time to time. Each director shall hold office until the next annual meeting of shareholders and until his successor shall have been elected and qualified. Directors need not be residents of the State of Texas or shareholders of the corporation. Section 2. Regular and Special Meetings. The Board of Directors may call regular and special meetings. ARTICLE III OFFICERS Section 1. Number. The officers of the corporation shall be a president, vice president, a secretary and a treasurer, all of whom shall be elected or appointed by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. Any two or more offices may be held by the same person. Section 2. Election and Term of Office. The officers of the corporation shall be elected annually by the Board of Directors. Each officer shall hold office until his successor shall have been elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. ARTICLE IV FISCAL YEAR The fiscal year of the corporation shall begin on the 1st day of August and end on the 31st day of July each year. EX-4.1 10 INDENTURE (INCLUDING FORM OF EXCHANGE NOTE) 1 EXHIBIT 4.1 ================================================================================ HADCO CORPORATION, Issuer and HADCO SANTA CLARA, INC., HADCO PHOENIX, INC., CCIR OF CALIFORNIA CORP. and CCIR OF TEXAS CORP., Guarantors and STATE STREET BANK AND TRUST COMPANY, Trustee ---------------- Indenture Dated as of May 18, 1998 ---------------- 9 1/2% Senior Subordinated Notes due 2008 ================================================================================ 2 CROSS-REFERENCE TABLE --------------------- Tia Sections Indenture Sections - ------------ ------------------ ss. 310(a)(1)............................................ 7.10 (a)(2)............................................ 7.10 (b)............................................... 7.03; 7.08 ss. 311(a)............................................... 7.03 (b)............................................... 7.03 ss. 312(a)............................................... 2.04 (b)............................................... 12.02 (c)............................................... 12.02 ss. 313(a)............................................... 7.06 (b)(2)............................................ 7.07 (c)............................................... 7.05; 7.06; 12.02 (d)............................................... 7.06 ss. 314(a)............................................... 7.05; 12.02 (a)(4)............................................ 4.17; 12.02 (c)(1)............................................ 12.03 (c)(2)............................................ 12.03 (e)............................................... 4.17; 12.04 ss. 315(a)............................................... 7.02 (b)............................................... 7.05; 12.02 (c)............................................... 7.02 (d)............................................... 7.02 (e)............................................... 6.11 ss. 316(a)(1)(A)......................................... 6.05 (a)(1)(B)......................................... 6.04 (b)............................................... 6.07 (c)............................................... 9.03 ss. 317(a)(1)............................................ 6.08 (a)(2)............................................ 6.09 (b)............................................... 2.05 ss. 318(a)............................................... 12.01 (c)............................................... 12.01 Note: The Cross-Reference Table shall not for any purpose be deemed to be a part of the Indenture. 3 TABLE OF CONTENTS
Page ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions...........................................................................1 SECTION 1.02. Incorporation by Reference of Trust Indenture Act....................................22 SECTION 1.03. Rules of Construction................................................................22 ARTICLE TWO THE NOTES SECTION 2.01. Form and Dating......................................................................23 SECTION 2.02. Restrictive Legends..................................................................24 SECTION 2.03. Execution, Authentication and Denominations..........................................26 SECTION 2.04. Registrar and Paying Agent...........................................................27 SECTION 2.05. Paying Agent to Hold Money in Trust..................................................28 SECTION 2.06. Transfer and Exchange................................................................28 SECTION 2.07. Book-Entry Provisions for Global Notes...............................................29 SECTION 2.08. Special Transfer Provisions..........................................................31 SECTION 2.09. Replacement Notes....................................................................33 SECTION 2.10. Outstanding Notes....................................................................34 SECTION 2.11. Temporary Notes......................................................................34 SECTION 2.12. Cancellation.........................................................................35 SECTION 2.13. CUSIP Numbers........................................................................35 SECTION 2.14. Defaulted Interest...................................................................35 SECTION 2.15. Issuance of Additional Notes.........................................................35 ARTICLE THREE REDEMPTION SECTION 3.01. Right of Redemption..................................................................36 SECTION 3.02. Notices to Trustee...................................................................36 SECTION 3.03. Selection of Notes to Be Redeemed....................................................37 SECTION 3.04. Notice of Redemption.................................................................37 SECTION 3.05. Effect of Notice of Redemption.......................................................38 SECTION 3.06. Deposit of Redemption Price..........................................................38 SECTION 3.07. Payment of Notes Called for Redemption...............................................39 SECTION 3.08. Notes Redeemed in Part...............................................................39 ARTICLE FOUR COVENANTS SECTION 4.01. Payment of Notes.....................................................................39
- ---------- Note: The Table of Contents shall not for any purposes be deemed to be a part of the Indenture. 4 ii SECTION 4.02. Maintenance of Office or Agency......................................................39 SECTION 4.03. Limitation on Indebtedness...........................................................40 SECTION 4.04. Limitation on Senior Subordinated Indebtedness.......................................42 SECTION 4.05. Limitation on Restricted Payments....................................................42 SECTION 4.06. Limitation on Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.........................................................................44 SECTION 4.07. Limitation on the Issuance and Sale of Capital Stock of Restricted Subsidiaries......45 SECTION 4.08. Limitation on Issuances of Guarantees by Restricted Subsidiaries.....................46 SECTION 4.09. Limitation on Transactions with Shareholders and Affiliates..........................46 SECTION 4.10. Limitation on Liens..................................................................47 SECTION 4.11. Limitation on Asset Sales............................................................48 SECTION 4.12. Repurchase of Notes upon a Change of Control.........................................49 SECTION 4.13. Existence............................................................................49 SECTION 4.14. Payment of Taxes and Other Claims....................................................49 SECTION 4.15. Maintenance of Properties and Insurance..............................................49 SECTION 4.16. Notice of Defaults...................................................................50 SECTION 4.17. Compliance Certificates..............................................................50 SECTION 4.18. Commission Reports and Reports to Holders............................................51 SECTION 4.19. Waiver of Stay, Extension or Usury Laws..............................................51 ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. When Company May Merge, Etc..........................................................51 SECTION 5.02. Successor Substituted................................................................53 ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. Events of Default....................................................................53 SECTION 6.02. Acceleration.........................................................................54 SECTION 6.03. Other Remedies.......................................................................55 SECTION 6.04. Waiver of Past Defaults..............................................................56 SECTION 6.05. Control by Majority..................................................................56 SECTION 6.06. Limitation on Suits..................................................................56 SECTION 6.07. Rights of Holders to Receive Payment.................................................57 SECTION 6.08. Collection Suit by Trustee...........................................................57 SECTION 6.09. Trustee May File Proofs of Claim.....................................................57 SECTION 6.10. Priorities...........................................................................58 SECTION 6.11. Undertaking for Costs................................................................58 SECTION 6.12. Restoration of Rights and Remedies...................................................58 SECTION 6.13. Rights and Remedies Cumulative.......................................................59 SECTION 6.14. Delay or Omission Not Waiver.........................................................59
5 iii
ARTICLE SEVEN TRUSTEE SECTION 7.01. General..............................................................................59 SECTION 7.02. Certain Rights of Trustee............................................................59 SECTION 7.03. Individual Rights of Trustee.........................................................60 SECTION 7.04. Trustee's Disclaimer.................................................................60 SECTION 7.05. Notice of Default....................................................................60 SECTION 7.06. Reports by Trustee to Holders........................................................61 SECTION 7.07. Compensation and Indemnity...........................................................61 SECTION 7.08. Replacement of Trustee...............................................................62 SECTION 7.09. Successor Trustee by Merger, Etc.....................................................63 SECTION 7.10. Eligibility..........................................................................63 SECTION 7.11. Money Held in Trust..................................................................63 ARTICLE EIGHT DISCHARGE OF INDENTURE SECTION 8.01. Termination of Company's Obligations.................................................63 SECTION 8.02. Defeasance and Discharge of Indenture................................................64 SECTION 8.03. Defeasance of Certain Obligations....................................................67 SECTION 8.04. Application of Trust Money...........................................................68 SECTION 8.05. Repayment to Company.................................................................68 SECTION 8.06. Reinstatement........................................................................69 ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. Without Consent of Holders...........................................................69 SECTION 9.02. With Consent of Holders..............................................................70 SECTION 9.03. Revocation and Effect of Consent.....................................................71 SECTION 9.04. Notation on or Exchange of Notes.....................................................72 SECTION 9.05. Trustee to Sign Amendments, Etc......................................................72 SECTION 9.06. Conformity with Trust Indenture Act..................................................72 ARTICLE TEN SUBORDINATION OF NOTES SECTION 10.01. Notes and Note Guarantees Subordinated to Senior Indebtedness.......................72 SECTION 10.02. No Payment on Notes in Certain Circumstances........................................73 SECTION 10.03. Payment over Proceeds upon Dissolution, Bankruptcy, Etc.............................74 SECTION 10.04. Subrogation.........................................................................76 SECTION 10.05. Obligations of Company Unconditional................................................77 SECTION 10.06. Notice to Trustee...................................................................77 SECTION 10.07. Reliance on Judicial Order or Certificate of Liquidating Agent......................78 SECTION 10.08. Trustee's Relation to Senior Indebtedness...........................................78 SECTION 10.09. Subordination Rights Not Impaired by Acts or Omissions of the Company or Holders of Senior Indebtedness...........................................78 SECTION 10.10. Holders Authorize Trustee to Effectuate Subordination of Notes......................79 SECTION 10.11. Not to Prevent Events of Default....................................................79
6 iv SECTION 10.12. Trustee's Compensation Not Prejudiced...............................................79 SECTION 10.13. No Waiver of Subordination Provisions...............................................79 SECTION 10.14. Payments May Be Paid Prior to Dissolution...........................................79 SECTION 10.15. Consent of Holders of Senior Indebtedness Under the Credit Facility.................80 SECTION 10.16. Trust Moneys Not Subordinated.......................................................80 ARTICLE ELEVEN GUARANTEE OF NOTES SECTION 11.01. Note Guarantee......................................................................80 SECTION 11.02. Obligations Unconditional...........................................................82 SECTION 11.04. This Article Not to Prevent Events of Default.......................................82 SECTION 11.05. Fraudulent Conveyance Limitation....................................................82 SECTION 11.06. Additional Guarantors...............................................................82 SECTION 11.07. Subordination.......................................................................83 ARTICLE TWELVE MISCELLANEOUS SECTION 12.01. Trust Indenture Act of 1939.........................................................83 SECTION 12.02. Notices.............................................................................83 SECTION 12.03. Certificate and Opinion as to Conditions Precedent..................................84 SECTION 12.04. Statements Required in Certificate or Opinion.......................................84 SECTION 12.05. Rules by Trustee, Paying Agent or Registrar.........................................85 SECTION 12.06. Payment Date Other Than a Business Day..............................................85 SECTION 12.07. Governing Law.......................................................................85 SECTION 12.08. No Adverse Interpretation of Other Agreements.......................................85 SECTION 12.09. No Recourse Against Others..........................................................85 SECTION 12.10. Successors..........................................................................86 SECTION 12.11. Duplicate Originals.................................................................86 SECTION 12.12. Separability........................................................................86 SECTION 12.13. Table of Contents, Headings, Etc....................................................86
7 v EXHIBIT A Form of Note.................................................A-1 EXHIBIT B Form of Certificate..........................................B-1 EXHIBIT C Form of Certificate to Be Delivered in Connection with Transfers to Non-QIB Accredited Investors.................C-1 EXHIBIT D Form of Certificate to Be Delivered in Connection with Transfers Pursuant to Regulation S........................D-1 8 INDENTURE, dated as of May 18, 1998, between HADCO CORPORATION, a corporation organized under the laws of the Commonwealth of Massachusetts (the "COMPANY"), HADCO SANTA CLARA, INC. a Delaware corporation, HADCO PHOENIX, INC. a Delaware corporation, CCIR of California CORP., a California corporation, and CCIR OF TEXAS CORP., a Texas corporation, as guarantors (collectively, the "Guarantors") and STATE STREET BANK AND TRUST COMPANY, a trust company organized under the laws of the Commonwealth of Massachusetts, as trustee (the "TRUSTEE"). RECITALS The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance initially of up to $200,000,000 aggregate principal amount of the Company's 9 1/2% Senior Subordinated Notes due 2008 (the "NOTES") issuable as provided in this Indenture. All things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done, and the Company has done all things necessary to make the Notes, when executed by the Company and authenticated and delivered by the Trustee hereunder and duly issued by the Company, valid obligations of the Company as hereinafter provided. Each of the Guarantors has authorized the making of a Note Guarantee (as defined below) by it. This Indenture is subject to, and shall be governed by, the provisions of the Trust Indenture Act of 1939, as amended, that are required to be a part of and to govern indentures qualified under the Trust Indenture Act of 1939, as amended. AND THIS INDENTURE FURTHER WITNESSETH For and in consideration of the premises and the purchase of the Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows. ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. DEFINITIONS. "Acquired Indebtedness" means Indebtedness of a Person existing at the time such Person (including an Unrestricted Subsidiary) becomes a Restricted Subsidiary or assumed in connection with an Asset Acquisition by a Restricted Subsidiary and not Incurred in connection with such Person becoming a Restricted Subsidiary or such Asset Acquisition; provided that Indebtedness of such Person which is redeemed, defeased, retired or otherwise repaid at the 9 2 time of or immediately upon consummation of the transactions by which such Person becomes a Restricted Subsidiary or such Asset Acquisition shall not be Acquired Indebtedness. "Adjusted Consolidated Net Income" means, for any period, the aggregate net income (or loss) of the Company and its Restricted Subsidiaries for such period determined in conformity with GAAP; provided that the following items shall be excluded in computing Adjusted Consolidated Net Income (without duplication): (i) the net income of any Person that is not a Restricted Subsidiary, except to the extent of the amount of dividends or other distributions actually paid to the Company or any of its Restricted Subsidiaries by such Person during such period; (ii) solely for the purposes of calculating the amount of Restricted Payments that may be made pursuant to clause (C) of the first paragraph of Section 4.05 (and in such case, except to the extent includable pursuant to clause (i) above), the net income (or loss) of any Person accrued prior to the date it becomes a Restricted Subsidiary or is merged into or consolidated with the Company or any of its Restricted Subsidiaries or all or substantially all of the property and assets of such Person are acquired by the Company or any of its Restricted Subsidiaries; (iii) the net income of any Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Restricted Subsidiary of such net income is not at the time permitted by the operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Restricted Subsidiary; (iv) any gains or losses (on an after-tax basis) attributable to Asset Sales; (v) except for purposes of calculating the amount of Restricted Payments that may be made pursuant to clause (C) of the first paragraph of Section 4.05, any amount paid or accrued as dividends on Preferred Stock of the Company or any Restricted Subsidiary owned by Persons other than the Company and any of its Restricted Subsidiaries; (vi) all extraordinary gains and extraordinary losses; (vii) gains or losses on the repurchase or redemption of any securities (including in connection with the retirement or defeasance of any Indebtedness); and (viii) non-cash expenses arising from the write-off of goodwill, in-process research and development costs and inventory and fixed asset charges, in each case associated with Asset Acquisitions. "Adjusted Consolidated Net Tangible Assets" means, as of any date of determination, the total amount of assets of the Company and its Restricted Subsidiaries (less applicable depreciation, amortization and other valuation reserves), except to the extent resulting from write-ups of capital assets (excluding write-ups in connection with accounting for acquisitions in conformity with GAAP and excluding the effects of foreign currency exchange adjustments under Financial Accounting Standards Board Statement of Financial Accounting Standards No. 52), after deducting therefrom (i) all current liabilities of the Company and its Restricted Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount and expense, deferred financing costs and other like intangibles, all as set forth on the most recent quarterly or annual consolidated balance sheet of the Company and its Restricted Subsidiaries, prepared in conformity with GAAP and filed with the Commission or provided to the Trustee pursuant to Section 4.18. 10 3 "Affiliate" means, as applied to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. "Agent" means any Registrar, Co-Registrar, Paying Agent or authenticating agent. "Agent Members" has the meaning provided in Section 2.07(a). "Applicable Premium" means, with respect to a Note and Early Redemption Date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the excess of (A) the present value at such time of (1) the redemption price of such Note at June 15, 2003 as set forth in Section 3.01 plus (2) all semiannual payments of interest through, June 15, 2003 computed using a discount rate equal to the Treasury Rate plus 50 basis points over (B) the principal amount of such Note. "Asset Acquisition" means (i) an investment by the Company or any of its Restricted Subsidiaries in any other Person pursuant to which such Person shall become a Restricted Subsidiary or shall be merged into or consolidated with the Company or any of its Restricted Subsidiaries or (ii) an acquisition by the Company or any of its Restricted Subsidiaries of the property and assets of any Person other than the Company or any of its Restricted Subsidiaries that constitute substantially all of a division or line of business of such Person. "Asset Disposition" means the sale or other disposition by the Company or any of its Restricted Subsidiaries (other than to the Company or another Restricted Subsidiary) of (i) all or substantially all of the Capital Stock of any Restricted Subsidiary or (ii) all or substantially all of the assets that constitute a division or line of business of the Company or any of its Restricted Subsidiaries. "Asset Sale" means any sale, transfer or other disposition (including by way of merger, consolidation or sale-leaseback transaction) in one transaction or a series of related transactions by the Company or any of its Restricted Subsidiaries to any Person other than the Company or any of its Restricted Subsidiaries of (i) all or any of the Capital Stock of any Restricted Subsidiary, (ii) all or substantially all of the property and assets of an operating unit or business of the Company or any of its Restricted Subsidiaries or (iii) any other property and assets (other than the Capital Stock or other Investment in an Unrestricted Subsidiary) of the Company or any of its Restricted Subsidiaries outside the ordinary course of business of the Company or such Restricted Subsidiary and, in each case, that is not governed by Article Five; 11 4 provided that "Asset Sale" shall not include (a) sales or other dispositions of inventory, receivables and other current assets (including, without limitation Temporary Cash Investments), (b) sales, transfers or other dispositions of assets constituting a Restricted Payment permitted to be made under Section 4.05, (c) sales or other dispositions of assets for consideration at least equal to the fair market value of the assets sold or disposed of, to the extent that the consideration received would satisfy clause (B) of Section 4.11, (d) dispositions of equipment that is no longer useful in the conduct of the business of the Company or any of its Restricted Subsidiaries, and (e) sales, leases, conveyances, transfers, or other dispositions to the Company or to a Restricted Subsidiary to any other Person if after giving effect to such sale, lease, conveyance, transfer or other disposition such other Person is or becomes a Restricted Subsidiary. "Average Life" means, at any date of determination with respect to any debt security, the quotient obtained by dividing (i) the sum of the products of (a) the number of years from such date of determination to the dates of each successive scheduled principal payment of such debt security and (b) the amount of such principal payment by (ii) the sum of all such principal payments. "Board of Directors" means the Board of Directors of the Company or any committee of such Board of Directors duly authorized to act under this Indenture. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. "Business Day" means any day except a Saturday, Sunday or other day on which commercial banks in The City of New York, or in the city of the Corporate Trust Office of the Trustee, are authorized by law to close. "Capital Stock" means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Closing Date or issued thereafter including, without limitation, all Common Stock and Preferred Stock. "Capitalized Lease Obligations" means indebtedness represented by obligations under a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP, and the amount of such indebtedness shall be the capitalized amount of such obligations determined in accordance with GAAP. "Change of Control" means such time as (i) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) becomes the ultimate "beneficial owner" 12 5 (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of the Voting Stock of the Company on a fully diluted basis; or (ii) individuals who on the Closing Date constitute the Board of Directors (together with any new directors whose election by the Board of Directors or whose nomination by the Board of Directors for election by the Company's stockholders was approved by a vote of at least a majority of the members of (A) the Board of Directors then in office who either were members of the Board of Directors on the Closing Date or whose election or nomination for election was previously so approved or (B) the nominating committee of the Board of Directors whose members were elected pursuant to the foregoing clause (A)) cease for any reason to constitute a majority of the members of the Board of Directors then in office. "Closing Date" means the date on which the Notes are originally issued under this Indenture. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the TIA, then the body performing such duties at such time. "Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to Article Five of this Indenture and thereafter means the successor. "Company Order" means a written request or order signed in the name of the Company (i) by its Chairman, a Vice Chairman, its President or a Vice President and (ii) by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary and delivered to the Trustee; provided, however, that such written request or order may be signed by any two of the officers or directors listed in clause (i) above in lieu of being signed by one of such officers or directors listed in such clause (i) and one of the officers listed in clause (ii) above. "Consolidated EBITDA" means, for any period, Adjusted Consolidated Net Income for such period plus the following (to the extent deducted in calculating such Adjusted Consolidated Net Income), (i) Consolidated Interest Expense, (ii) income taxes (other than income taxes (either positive or negative) attributable to extraordinary and non-recurring gains or losses or sales of assets), (iii) depreciation expense, (iv) amortization expense and (v) all other non-cash items, including, without limitation, any non-cash charge reflecting compensation expense relating to employee stock option or similar plans, reducing Adjusted Consolidated Net Income (other than items that will require cash payments and for which an accrual or reserve is, or is required by GAAP to be, made), less all non-cash items increasing Adjusted Consolidated Net Income, all as determined on a consolidated basis for the Company and its Restricted Subsidiaries in conformity with GAAP; provided that, if any Restricted 13 6 Subsidiary is not a Wholly Owned Restricted Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise reduced in accordance with GAAP) by an amount equal to (A) the amount of the Adjusted Consolidated Net Income attributable to such Restricted Subsidiary multiplied by (B) the percentage ownership interest in the income of such Restricted Subsidiary not owned on the last day of such period by the Company or any of its Restricted Subsidiaries. "Consolidated Interest Expense" means, without duplication, for any period, the aggregate amount of interest which, in conformity with GAAP, would be set forth opposite the caption "interest expense" or any like caption on a statement of operations (including, without limitation, amortization of debt discount and debt issuance cost; the interest portion of any deferred payment obligation; all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; the net costs associated with Interest Rate Agreements; amortization of other financing fees and expenses; interest on Indebtedness that is Guaranteed or secured by the Company or any of its Restricted Subsidiaries; capitalized interest and accrued interest; dividends in respect of all Disqualified Stock of the Company and all Preferred Stock of Subsidiaries; and all other non-cash interest expense) and all but the principal component of rentals in respect of Capitalized Lease Obligations paid, accrued or scheduled to be paid or to be accrued by the Company and its Restricted Subsidiaries during such period; excluding, however, (i) any amount of such interest of any Restricted Subsidiary if the net income of such Restricted Subsidiary is excluded in the calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the definition thereof (but only in the same proportion as the net income of such Restricted Subsidiary is excluded from the calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of the definition thereof) and (ii) any premiums, fees and expenses (and any amortization thereof) payable in connection with the offering of the Notes, all as determined on a consolidated basis (without taking into account Unrestricted Subsidiaries) in conformity with GAAP. "Corporate Trust Office" means the office of the Trustee at which the corporate trust business of the Trustee shall, at any particular time, be principally administered, which office is, at the date of this Indenture, located at Two International Place - 4th Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department and so long as the Notes are listed on the Luxembourg Stock Exchange, at State Street Bank, Luxembourg, S.A., 47 Boulevard Royal, L-2449, Luxembourg; Attention: Hadco Senior Subordinated Notes due 2008. "Credit Facility" means the Amended and Restated Revolving Credit Agreement dated as of December 8, 1997 among the Company, the lending institutions listed on Schedule 1 thereto, and BankBoston, N.A., as Agent, as guaranteed by the Guarantors, as amended, as such agreement, facility or credit, in whole or in part, may be amended, renewed, extended, substituted, refinanced, restructured, replaced supplemented or otherwise modified from time 14 7 to time and whether by the same or another agent, lender or group of lenders (including, without limitation, any successive renewals, extensions, substitutions, refinancings, restructurings, replacements, supplementations or other modifications of the foregoing) for the Company or any Restricted Subsidiary. "Currency Agreement" means any foreign exchange contract, currency swap agreement or other similar agreement or arrangement. "Default" means any event that is, or after notice or passage of time or both would be, an Event of Default. "Depositary" means The Depository Trust Company, its nominees, and their respective successors. "Designated Senior Indebtedness" means Indebtedness under the Credit Facility and any Indebtedness constituting Senior Indebtedness that, at the date of determination, has an aggregate principal amount outstanding of at least $25 million owed by the Company or the Guarantors and that is specifically designated by the Company or any Guarantor, in the instrument creating or evidencing such Senior Indebtedness as "Designated Senior Indebtedness". "Disqualified Stock" means any class or series of Capital Stock of any Person that by its terms or otherwise is (i) required to be redeemed prior to the Stated Maturity of the Notes, (ii) redeemable at the option of the holder of such class or series of Capital Stock at any time prior to the Stated Maturity of the Notes or (iii) convertible into or exchangeable for Capital Stock referred to in clause (i) or (ii) above or Indebtedness having a scheduled maturity prior to the Stated Maturity of the Notes; provided that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to repurchase or redeem such Capital Stock upon the occurrence of an "asset sale" or "change of control" occurring prior to the Stated Maturity of the Notes shall not constitute Disqualified Stock if the "asset sale" or "change of control" provisions applicable to such Capital Stock are no more favorable to the holders of such Capital Stock than the provisions contained in Section 4.11 and Section 4.12 and such Capital Stock specifically provides that such Person will not repurchase or redeem any such stock pursuant to such provision prior to the Company's repurchase of such Notes as are required to be repurchased pursuant to Section 4.11 and Section 4.12. "Early Redemption Date" has the meaning provided in Section 3.01. "Equity Offering" means (i) a public offering by the Company of its Capital Stock (other than Disqualified Stock) or (ii) the issuance and sale of Capital Stock of the Company to 15 8 a Person engaged primarily in a business that is related, ancillary or complementary to the businesses of the Company and its Restricted Subsidiaries on the date of such issuance or sale, provided that such person has a market capitalization of at least $50 million. "Event of Default" has the meaning provided in Section 6.01. "Excess Proceeds" has the meaning provided in Section 4.11. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Exchange Notes" means any securities of the Company containing terms identical to the Notes (except that such Exchange Notes shall be registered under the Securities Act) that are issued and exchanged for the Notes pursuant to the Registration Rights Agreement and this Indenture. "fair market value" means the price that would be paid in an arm's-length transaction between an informed and willing seller under no compulsion to sell and an informed and willing buyer under no compulsion to buy, as determined in good faith by the Board of Directors, whose determination shall be conclusive if evidenced by a Board Resolution. "Foreign Subsidiary" means any Subsidiary of the Company organized under laws other than the laws of the United States of America or any jurisdiction thereof. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Closing Date, including, without limitation, those 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 approved by a significant segment of the accounting profession. All ratios and computations contained or referred to in this Indenture shall be computed in conformity with GAAP applied on a consistent basis, except that calculations made for purposes of determining compliance with the terms of the covenants and with other provisions of this Indenture shall be made without giving effect to (i) the amortization of any expenses incurred in connection with the offering of the Notes and (ii) except as otherwise provided, the amortization or write-off of any amounts required or permitted (as of the Closing Date) by Accounting Principles Board Opinion Nos. 16 and 17. "Global Notes" has the meaning provided in Section 2.01. "Government Securities" means direct obligations of, obligations fully guaranteed by, or participations in pools consisting solely of obligations or obligations guaranteed by, the United States of America for the payment of which guarantee or obligations the full faith and 16 9 credit of the United States of America is pledged and which are not callable or redeemable at the option of the issuer thereof. "Guarantee" means an obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) 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 agreements to keep-well, to purchase assets, goods, securities or services (unless such purchase arrangements are on arm's-length terms and are entered into in the ordinary course of business), to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) 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); provided that the term "Guarantee" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guarantee" used as a verb has a corresponding meaning. "Guaranteed Indebtedness" has the meaning provided in Section 4.08. "Guarantor" means each party named as such in the first paragraph of this Indenture as well as any Person that becomes a Guarantor pursuant to Section 11.06 until such Guarantor is discharged and released from its Note Guarantee pursuant to Section 5.01. "Holder" or "Noteholder" means the registered holder of any Note. "Incur" means, with respect to any Indebtedness or other obligation of any Person, to incur, create, issue, assume, Guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, such Indebtedness or other obligation or the recording, as required pursuant to GAAP or otherwise, of such Indebtedness or other obligation on the balance sheet of such Person, including an "Incurrence" of Acquired Indebtedness; provided that neither the accrual of interest nor the accretion of original issue discount shall be considered an Incurrence of Indebtedness. "Indebtedness" means, with respect to any Person at any date of determination (without duplication), (i) all indebtedness of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto, but excluding obligations with respect to letters of credit (including trade letters of credit) securing obligations (other than obligations described in (i) or (ii) above or (v), (vi) or (vii) below) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if drawn 17 10 upon, to the extent such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement), (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto or the completion of such services, except Trade Payables, (v) all Capitalized Lease Obligations, (vi) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided that the amount of such Indebtedness shall be the lesser of (A) the fair market value of such asset at such date of determination and (B) the amount of such Indebtedness, (vii) all Indebtedness of other Persons Guaranteed by such Person to the extent such Indebtedness is Guaranteed by such Person and (viii) to the extent not otherwise included in this definition, obligations under Currency Agreements and Interest Rate Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and, with respect to contingent obligations, the maximum liability upon the occurrence of the contingency giving rise to the obligation, provided (A) that the amount outstanding at any time of any Indebtedness issued with original issue discount is the face amount of such Indebtedness less the remaining unamortized portion of the original issue discount of such Indebtedness at the time of its issuance as determined in conformity with GAAP, (B) that money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to prefund the payment of the interest on such Indebtedness shall not be deemed to be "Indebtedness" and (C) that Indebtedness shall not include (i) any liability for federal, state, local or other taxes; (ii) any Trade Payables and other accrued liabilities arising in the ordinary course of business; or (iii) any indemnification obligation, purchase price adjustment, earn out or other similar obligation of the Person to third parties if such indemnification obligation would not appear as a liability upon a balance sheet of the Person prepared in accordance with GAAP. "Indenture" means this Indenture as originally executed or as it may be amended or supplemented from time to time by one or more indentures supplemental to this Indenture entered into pursuant to the applicable provisions of this Indenture. "Institutional Accredited Investor" means an institution that is an "accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act. "Interest Coverage Ratio" means, on any Transaction Date, the ratio of (i) the aggregate amount of Consolidated EBITDA for the then most recent four fiscal quarters prior to such Transaction Date for which reports have been filed with the Commission pursuant to Section 4.18 (the "Four Quarter Period") to (ii) the aggregate Consolidated Interest Expense during such Four Quarter Period. In making the foregoing calculation, (A) pro forma effect shall be given to any Indebtedness Incurred or repaid during the period (the "Reference Period") commencing on the first day of the Four Quarter Period and ending on the 18 11 Transaction Date (other than Indebtedness Incurred or repaid under a revolving credit or similar arrangement to the extent of the commitment thereunder (or under any predecessor revolving credit or similar arrangement) in effect on the last day of such Four Quarter Period unless any portion of such Indebtedness is projected, in the reasonable judgment of the senior management of the Company, to remain outstanding for a period in excess of 12 months from the date of the Incurrence thereof), in each case as if such Indebtedness had been Incurred or repaid on the first day of such Reference Period; (B) Consolidated Interest Expense attributable to interest on any Indebtedness (whether existing or being Incurred) computed on a pro forma basis and bearing a floating interest rate shall be computed as if the rate in effect on the Transaction Date (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months or, if shorter, at least equal to the remaining term of such Indebtedness) had been the applicable rate for the entire period; (C) pro forma effect shall be given to Asset Dispositions and Asset Acquisitions (including giving pro forma effect to the application of proceeds of any Asset Disposition) that occur during such Reference Period as if they had occurred and such proceeds had been applied on the first day of such Reference Period; and (D) pro forma effect shall be given to asset dispositions and asset acquisitions (including giving pro forma effect to the application of proceeds of any asset disposition) that have been made by any Person that has become a Restricted Subsidiary or has been merged with or into the Company or any Restricted Subsidiary during such Reference Period and that would have constituted Asset Dispositions or Asset Acquisitions had such transactions occurred when such Person was a Restricted Subsidiary as if such asset dispositions or asset acquisitions were Asset Dispositions or Asset Acquisitions that occurred on the first day of such Reference Period; provided that to the extent that clause (C) or (D) of this sentence requires that pro forma effect be given to an Asset Acquisition or Asset Disposition, such pro forma calculation shall be based upon the four full fiscal quarters immediately preceding the Transaction Date of the Person, or division or line of business of the Person, that is acquired or disposed for which financial information is available. "Interest Payment Date" means each semiannual interest payment date on June 15 and December 15 of each year, commencing December 15, 1998. "Interest Rate Agreement" means any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement, option or future contract or other similar agreement or arrangement. "Investment" in any Person means any direct or indirect advance, loan or other extension of credit (including, without limitation, by way of Guarantee or similar arrangement; but excluding payment obligations of customers in the ordinary course of business that are, in conformity with GAAP, recorded as accounts receivable on the balance sheet of the Company 19 12 or its Restricted Subsidiaries) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, bonds, notes, debentures or other similar instruments issued by, such Person and shall include (i) the designation or redesignation of a Restricted Subsidiary as an Unrestricted Subsidiary and (ii) the fair market value of the Capital Stock (or any other Investment), held by the Company or any of its Restricted Subsidiaries, of (or in) any Person that has ceased to be a Restricted Subsidiary, including without limitation, by reason of any transaction permitted by clause (iii) of Section 4.07; provided that the fair market value of the Investment remaining in any Person that has ceased to be a Restricted Subsidiary shall not exceed the aggregate amount of Investments previously made in such Person valued at the time such Investments were made less the net reduction of such Investments. For purposes of the definition of "Unrestricted Subsidiary" and Section 4.05, (i) "Investment" shall include the fair market value of the assets (net of liabilities (other than liabilities to the Company or any of its Restricted Subsidiaries)) of any Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary, (ii) the fair market value of the assets (net of liabilities (other than liabilities to the Company or any of its Restricted Subsidiaries)) of any Unrestricted Subsidiary at the time that such Unrestricted Subsidiary is designated a Restricted Subsidiary shall be considered a reduction in outstanding Investments and (iii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including, without limitation, any conditional sale or other title retention agreement or lease in the nature thereof or any agreement to give any security interest). Notwithstanding the foregoing, the following will be deemed not to be Liens with respect to any Person: (a) pledges or deposits by such Person under workmen's compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits or cash or Government Securities to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business; (b) Liens imposed by law, including carriers', warehousemens' and mechanics' Liens, or other Liens arising out of judgments or awards against such person with respect to which such Person is then proceeding with an appeal or other proceedings for review; (c) Liens for taxes, assessments or other governmental charges which are not yet due or which are being contested in good faith by appropriate proceedings provided appropriate reserves have been taken on the books of the Company; (d) Liens in favor of issurers of surety bonds or letters of credit issued pursuant to the request of and for the account of such person in the ordinary course of its business; (e) encumbrances, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or liens 20 13 incidental to the conduct of the business of such Person or to the ownership of its properties which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (f) Liens securing an Interest Rate Agreement or Currency Agreement so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same property securing the Interest Rate Agreement or Currency Agreement; and (g) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries; (h) judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment have not been finally terminated or the period within which such proceedings may be initiated has not expired; (i) Liens for the purpose of securing the payment (or the refinancing of the payment) of all or a part of the purchase price of, or Capitalized Lease Obligations with respect to, assets or property acquired or constructed that are otherwise permitted under this Indenture; (j) Liens to secure Purchase Money Indebtedness that is otherwise permitted under this Indenture; (k) Liens arising solely by virtue of any statutory or common law provision relating to banker's Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor expository institution; (i) Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business; (m) Liens existing on the Closing Date; (n) Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such other Person becoming a Subsidiary; provided further, however, that any such Lien may not extent to any other property owned by the Company or any Restricted Subsidiary; (o) Liens on property at the time the Company or a Subsidiary acquired the property; including any acquisition by means of a merger of consolidation with or into the Company or any Restricted Subsidiary; provided, however, that such Liens are not created, Incurred or assumed in connection with, or in contemplation of, such acquisition; PROVIDED FURTHER, HOWEVER, that such Liens may not extend to any other property owned by the Company or any Restricted Subsidiary; (p) Liens securing Indebtedness or other obligations of a Subsidiary owning to the Company or a Wholly Owned Subsidiary; (q) Liens securing Indebtedness Incurred in exchange for, or the net proceeds of which are used to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the obligations to which such Liens relate and promissory notes received as proceeds of Assets Sales or Permitted Investments; and (r) Liens on margin stock or margin securities, as such terms are defined in Regulations U and X of the Board of Governors of the Federal Reserve System. "Luxembourg Paying Agent" means State Street Bank, Luxembourg, S.A., and any 21 14 successor thereof. "Moody's" means Moody's Investors Service, Inc. and its successors. "Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds of such Asset Sale in the form of cash or cash equivalents, including payments in respect of deferred payment obligations (to the extent corresponding to the principal, but not interest, component thereof) when received in the form of cash or cash equivalents (except to the extent such obligations are financed or sold with recourse to the Company or any Restricted Subsidiary) and proceeds from the conversion of other property received when converted to cash or cash equivalents, net of (i) brokerage commissions and other fees and expenses (including fees and expenses of counsel and investment bankers) related to such Asset Sale, (ii) provisions for all taxes (whether or not such taxes will actually be paid or are payable) as a result of such Asset Sale without regard to the consolidated results of operations of the Company and its Restricted Subsidiaries, taken as a whole, (iii) payments made to repay Indebtedness or any other obligation outstanding at the time of such Asset Sale that either (A) is secured by a Lien on the property or assets sold or (B) is required to be paid as a result of such sale and (iv) appropriate amounts to be provided by the Company or any Restricted Subsidiary as a reserve against any liabilities associated with such Asset Sale, including, without limitation, pension and other post-employment benefit liabilities, liabilities related to environmental matters and liabilities under any indemnification obligations associated with such Asset Sale, all as determined in conformity with GAAP and (b) with respect to any issuance or sale of Capital Stock, the direct or indirect proceeds of such issuance or sale in the form of cash or cash equivalents, net of attorney's fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant and other fees incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Note Guarantee " means the joint and several guarantee of the Notes by the Guarantors hereunder. "Non-U.S. Person" means a person who is not a "U.S. person" (as defined in Regulation S). "Notes" means any of the securities, as defined in the first paragraph of the recitals hereof, that are authenticated and delivered under this Indenture. For all purposes of this Indenture, the term "Notes" shall include the Notes initially issued on the Closing Date, any Exchange Notes to be issued and exchanged for any Notes pursuant to the Registration Rights Agreement and this Indenture and any other Notes issued after the Closing Date under this Indenture. For purposes of this Indenture, all Notes shall vote together as one series of Notes under this Indenture. 22 15 "Offer to Purchase" means an offer to purchase Notes by the Company from the Holders commenced by mailing a notice to the Trustee and each Holder stating: (i) the covenant pursuant to which the offer is being made and that all Notes validly tendered will be accepted for payment on a pro rata basis; (ii) the purchase price and the date of purchase (which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the "Payment Date"); (iii) that any Note not tendered will continue to accrue interest pursuant to its terms; (iv) that, unless the Company defaults in the payment of the purchase price, any Note accepted for payment pursuant to the Offer to Purchase shall cease to accrue interest on and after the Payment Date; (v) that Holders electing to have a Note purchased pursuant to the Offer to Purchase will be required to surrender the Note, together with the form entitled "Option of the Holder to Elect Purchase" on the reverse side of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day immediately preceding the Payment Date; (vi) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the third Business Day immediately preceding the Payment Date, a telegram, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Notes delivered for purchase and a statement that such Holder is withdrawing his election to have such Notes purchased; and (vii) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of $1,000 or integral multiples thereof. On the Payment Date, the Company shall (i) accept for payment on a pro rata basis Notes or portions thereof tendered pursuant to an Offer to Purchase; (ii) deposit with the Paying Agent money sufficient to pay the purchase price of all Notes or portions thereof so accepted; and (iii) deliver, or cause to be delivered, to the Trustee all Notes or portions thereof so accepted together with an Officers' Certificate specifying the Notes or portions thereof accepted for payment by the Company. The Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price, and the Trustee shall promptly authenticate and mail to such Holders a new Note equal in principal amount to any unpurchased portion of the Note surrendered; provided that each Note purchased and each new Note issued shall be in a principal amount of $1,000 or integral multiples thereof. The Company will publicly announce the results of an Offer to Purchase as soon as practicable after the Payment Date. The Trustee shall act as the Paying Agent for an Offer to Purchase. The Company will comply with Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable, in the event that the Company is required to repurchase Notes pursuant to an Offer to Purchase. "Officer" means, with respect to the Company, (i) the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or the Chief Financial Officer, and (ii) the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant Secretary. 23 16 "Officers' Certificate" means a certificate signed by one Officer listed in clause (i) of the definition thereof and one Officer listed in clause (ii) of the definition thereof or two officers listed in clause (i) of the definition thereof. Each Officers' Certificate (other than certificates provided pursuant to TIA Section 314(a)(4)) shall include the statements provided for in TIA Section 314(e). "Offshore Global Note" has the meaning provided in Section 2.01. "Offshore Physical Notes" has the meaning provided in Section 2.01. "Opinion of Counsel" means a written opinion signed by legal counsel, who may be an employee of or counsel to the Company, that meets the requirements of Section 10.04 hereof. Each such Opinion of Counsel shall include the statements provided for in TIA Section 314(e). "Paying Agent" has the meaning provided in Section 2.04, except that, for the purposes of Article Eight, the Paying Agent shall not be the Company or a Subsidiary of the Company or an Affiliate of any of them. The term "Paying Agent" includes the Luxembourg Paying Agent and any additional Paying Agent. "Payment Blockage Period" has the meaning provided in Section 10.02. "Payment Date" has the meaning provided in the definition of Offer to Purchase. "Permanent Offshore Global Notes" has the meaning provided in Section 2.01. "Permitted Investment" means (i) an Investment in the Company or a Restricted Subsidiary or a Person which will, upon the making of such Investment, become a Restricted Subsidiary or be merged or consolidated with or into or transfer or convey all or substantially all its assets to, the Company or a Restricted Subsidiary; (ii) cash and Temporary Cash Investments; (iii) payroll, travel, relocation and similar loans or advances; (iv) stock, obligations or securities received in the settlement of debts incurred in the ordinary course of business and in satisfaction of judgments; (v) an Investment in an Unrestricted Subsidiary consisting solely of an Investment in another Unrestricted Subsidiary; (vi) Interest Rate Agreements and Currency Agreements designed solely to protect the Company or its Restricted Subsidiaries against fluctuations in interest rates or foreign currency exchange rates; (vii) Investments in the Notes (or the notes issued upon the exchange of the Notes); and (viii) Investments in an aggregate amount outstanding at any time not to exceed $100 million. "Permitted Junior Securities" means any securities of the Company, any Guarantor or any other business entity that are equity securities or are subordinated in right of payment to 24 17 all Senior Indebtedness that may at the time be outstanding, to substantially the same extent as, or to a greater extent than, the Notes and the Note Guarantees are so subordinated as provided herein; provided that Permitted Junior Securities may not have terms less favorable in any material respect to the Company or the holders of the Senior Indebtedness than the terms of this Indenture and the Notes. "Person" means an individual, a corporation, a partnership, a limited liability company, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Physical Notes" has the meaning provided in Section 2.01. "Preferred Stock" of any Person means any Capital Stock such Person that has preferential rights to any other Capital Stock of such Person with respect to dividends or redemption or upon liquidation. "principal" of a debt security, including the Notes, means the principal amount due on the Stated Maturity as shown on such debt security. "Private Placement Legend" means the legend initially set forth on the Notes in the form set forth in Section 2.02. "Purchase Money Indebtedness" means any Indebtedness Incurred in the ordinary course of business by a Person to finance the cost (including the cost of construction) of an item of property, the principal amount of which Indebtedness does not exceed the sum of (i) 100% of such cost and (ii) reasonable fees and expenses of such Person incurred in connection therewith. "QIB" means a "qualified institutional buyer" as defined in Rule 144A. "Redemption Date" means, when used with respect to any Note to be redeemed, the date fixed for such redemption by or pursuant to this Indenture. "Redemption Price" means, when used with respect to any Note to be redeemed, the price at which such Note is to be redeemed pursuant to this Indenture. "Registrar" has the meaning provided in Section 2.04. "Registration Rights Agreement" means the Registration Rights Agreement, dated May 13, 1998 between the Company and Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bancamerica Robertson Stephens and BT Alex. Brown 25 18 Incorporated and certain permitted assigns specified therein. "Registration Statement" means the Registration Statement as defined and described in the Registration Rights Agreement. "Regular Record Date" for the interest payable on any Interest Payment Date means the June 1 or December 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. "Regulation S" means Regulation S under the Securities Act. "Responsible Officer", when used with respect to the Trustee, means any vice president, any assistant vice president, any assistant secretary, any assistant treasurer, any trust officer or assistant trust officer, or any other officer of the Trustee in its corporate trust department customarily performing functions similar to those performed by any of the above-designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his or her knowledge of and familiarity with the particular subject. "Restricted Payments" has the meaning provided in Section 4.05. "Restricted Subsidiary" means any Subsidiary of the Company other than an Unrestricted Subsidiary. "Rule 144A" means Rule 144A under the Securities Act. "Securities Act" means the Securities Act of 1933, as amended. "Security Register" has the meaning provided in Section 2.04. "Senior Indebtedness" means the following obligations of the Company and any Guarantor, whether outstanding on the Closing Date or thereafter Incurred: (i) all Indebtedness and all other monetary obligations (including principal, interest, expenses, fees, costs, enforcement expenses (including legal fees and disbursements) reimbursement or indemnity obligations and other monetary obligations) of the Company or any Guarantor under or in respect of the Credit Facility, any and all interest accruing or out of pocket costs incurred after the date of any filing by or against the Company or any Guarantor of any petition or under any bankruptcy, insolvency or reorganization act, regardless of whether the claim of the holders of such Senior Indebtedness is allowed or allowable in the case or proceeding relating thereto, (ii) all obligations of the Company or any Guarantor with respect to any Interest Rate Agreement or Currency Agreement, (iii) all obligations of the Company or any Guarantor to reimburse any bank or other Person in respect of amounts paid under letters of credit, 26 19 acceptances or other similar instruments, (iv) all Indebtedness and all expenses, fees and other monetary obligations of the Company or any Guarantor (other than the Notes), including principal and interest on such Indebtedness, unless such Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such Indebtedness is issued, is pari passu with, or subordinated in right of payment to, the Notes and (v) in addition to and without limiting the foregoing clauses (i) through (iv), all deferrals, renewals, extensions, replacements, substitutions and refundings of, and amendments, modifications and supplements to, with or without the same parties, any of the Senior Indebtedness described above; provided that the term "Senior Indebtedness" shall not include (a) any Indebtedness of the Company or any Guarantor that, when Incurred, was without recourse to the Company or such Guarantor, (b) any Indebtedness of the Company or any Guarantor to a Subsidiary of the Company, or to a joint venture in which the Company or such Guarantor has an interest, (c) any Indebtedness of the Company or any Guarantor, to the extent not permitted by Section 4.03 or Section 4.04, (d) any repurchase, redemption or other obligation in respect of Disqualified Stock, (e) any Indebtedness to any employee of the Company or any of its Subsidiaries, (f) any liability for taxes owed or owing by the Company or any Guarantor or (g) any Trade Payables. Senior Indebtedness will also include interest accruing subsequent to events of bankruptcy of the Company or any Guarantor at the rate provided for in the document governing such Senior Indebtedness, whether or not such interest is an allowed claim enforceable against the debtor in a bankruptcy case under bankruptcy law. "Senior Subordinated Obligations" means any (i) principal of, premium, if any, or interest on the Notes, (ii) the Note Guarantees and (iii) other amounts (including fees and indemnity rights) payable pursuant to the terms of the Notes or the Note Guarantees or this Indenture or upon acceleration, including any amounts received upon the exercise of rights of rescission or other rights of action (including claims for damages) or otherwise, to the extent relating to the purchase price or the acquisition, repurchase or redemption of the Notes or amounts corresponding to such principal, premium, if any, or interest or other amounts on the Notes. "Shelf Registration Statement" means the Shelf Registration Statement as defined in the Registration Rights Agreement. "Significant Guarantor" has the meaning provided in Section 6.01. "Significant Subsidiary" means, at any date of determination, any Restricted Subsidiary that, together with its Subsidiaries, (i) for the most recent fiscal year of the Company, accounted for more than 10% of the consolidated revenues of the Company and its Restricted Subsidiaries or (ii) as of the end of such fiscal year, was the owner of more than 10% of the consolidated assets of the Company and its Restricted Subsidiaries, all as set forth on the most recently available consolidated financial statements of the Company for such fiscal year. 27 20 "S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, and its successors. "Stated Maturity" means with respect to any security, the date specified in such debt security as the fixed date on which the final installment of principal of such debt security is due and payable, including pursuant to any mandatory redemption provision. "Subsidiary" means, with respect to any Person, any corporation, association or other business entity of which more than 50% of the voting power of the outstanding Voting Stock is owned, directly or indirectly, by such Person and one or more other Subsidiaries of such Person. "Subsidiary Guarantee" has the meaning provided in Section 4.08. "Temporary Cash Investment" means any of the following: (i) direct obligations of the United States of America or any agency thereof or obligations fully and unconditionally guaranteed by the United States of America or any agency thereof, (ii) time deposit accounts, certificates of deposit and money market deposits issued by a bank or trust company (including the Trustee) which is organized under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50 million (or the foreign currency equivalent thereof) and with respect to any such entity organized under the laws of any foreign country has outstanding debt which is rated "A" (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor, (iii) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (i) above entered into with a bank or trust company (including the Trustee) meeting the qualifications described in clause (ii) above, (iv) commercial paper issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America, any state thereof or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P, and (v) securities with maturities of five years or less from the date of acquisition issued or fully and unconditionally guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least investment grade by S&P or Moody's. "TIA" or "Trust Indenture Act" means the Trust Indenture Act of 1939 (15 U.S. Codess.ss. 77aaa-77bbbb), as in effect on the date this Indenture was executed, except as provided in Section 9.06. 28 21 "Trade Payables" means, with respect to any Person, any accounts payable or any other indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person or any of its Subsidiaries arising in the ordinary course of business in connection with the acquisition of goods or services. "Transaction Date" means, with respect to the Incurrence of any Indebtedness by the Company or any of its Restricted Subsidiaries, the date such Indebtedness is to be Incurred and, with respect to any Restricted Payment, the date such Restricted Payment is to be made. "Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Release H.15 (519) which has become publicly available at least two business days prior to the date fixed for repayment (or, if such Statistical Release is no longer published, any publicly available source or similar market data)), most nearly equal to then remaining Average Life to Stated Maturity of the Notes, provided, however, that if the Average Life to Stated Maturity of the Notes is not equal to the constant maturity of the United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given. "Trustee" means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of Article Seven of this Indenture and thereafter means such successor. "United States Bankruptcy Code" means the Bankruptcy Reform Act of 1978, as amended and as codified in Title 11 of the United States Code, as amended from time to time hereafter, or any successor federal bankruptcy law. "Unrestricted Subsidiary" means (i) Hadco Foreign Sales Corporation, CCIR International, Inc., Zycon Corporation and Continental Circuits Corp.; (ii) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below; and (iii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Restricted Subsidiary (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property of, the Company or any Restricted Subsidiary; provided that either (i) the Subsidiary to be so designated has total assets of $20,000 or less or (II) if such Subsidiary has assets greater than $20,000, such designation would be permitted under Section 4.05. The Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation (i) no Default or Event of Default shall have occurred and be continuing at the time of or after giving effect to 29 22 such designation and (ii) all Liens and Indebtedness of such Unrestricted Subsidiary outstanding immediately after such designation would, if Incurred at such time, have been permitted to be Incurred (and shall be deemed to have been Incurred) for all purposes of this Indenture. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing provisions. Notwithstanding anything herein contained to the contrary, no Guarantor may be designated an Unrestricted Subsidiary unless all or substantially all of the assets of such Guarantor are transferred to another Guarantor or a Person who upon such transfer becomes a Guarantor. "U.S. Global Notes" has the meaning provided in Section 2.01. "U.S. Physical Notes" has the meaning provided in Section 2.01. "Voting Stock" means with respect to any Person, Capital Stock of any class or kind ordinarily having the power to vote for the election of directors, managers or other voting members of the governing body of such Person. "Wholly Owned" means, with respect to any Subsidiary of any Person, the ownership of all of the outstanding Capital Stock of such Subsidiary (other than any director's qualifying shares or Investments by foreign nationals mandated by applicable law) by such Person or one or more Wholly Owned Subsidiaries of such Person. SECTION 1.02. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" means a Holder or a Noteholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company or any other obligor on the Notes. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA 30 23 reference to another statute or defined by a rule of the Commission and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.03. RULES OF CONSTRUCTION. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (iii) "or" is not exclusive; (iv) words in the singular include the plural, and words in the plural include the singular; (v) provisions apply to successive events and transactions; (vi) "herein", "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; (vii) all ratios and computations based on GAAP contained in this Indenture shall be computed in accordance with the definition of GAAP set forth in Section 1.01; and (viii) all references to Sections or Articles refer to Sections or Articles of this Indenture unless otherwise indicated. ARTICLE TWO THE NOTES SECTION 2.01. FORM AND DATING. The Notes and the Trustee's certificate of authentication shall be substantially in the form annexed hereto as Exhibit A with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture. The Notes may have notations, legends or endorsements required by law, stock exchange agreements to which the Company is subject or usage. The Company shall approve the form of the Notes and any notation, legend or endorsement on the Notes. Each Note shall be dated the date of its authentication. The terms and provisions contained in the form of the Notes annexed hereto as Exhibit A 31 24 shall constitute, and are hereby expressly made, a part of this Indenture. To the extent applicable, each of the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. Notes offered and sold in reliance on Rule 144A shall be issued initially in the form of one or more permanent global Notes in registered form, substantially in the form set forth in Exhibit A (the "U.S. GLOBAL NOTES"), registered in the name of the nominee of the Depositary, deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the U.S. Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, in accordance with the instructions given by the Holder thereof, as hereinafter provided. Notes offered and sold in offshore transactions in reliance on Regulation S shall be issued initially in the form of one or more permanent global Notes in registered form substantially in the form set forth in Exhibit A (the "OFFSHORE GLOBAL NOTES"), registered in the name of the nominee of the Depositary, deposited with the Trustee, as custodian for the Depositary, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Offshore Global Notes may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary or its nominee, as hereinafter provided. Notes offered and sold in reliance on Regulation D under the Securities Act shall be issued in the form of permanent certificated Notes in registered form in substantially the form set forth in Exhibit A (the "U.S. PHYSICAL NOTES"). Notes issued pursuant to Section 2.07 in exchange for interests in the Offshore Global Notes shall be in the form of permanent certificated Notes in registered form substantially in the form set forth in Exhibit A (the "OFFSHORE PHYSICAL NOTES"). The Offshore Physical Notes and U.S. Physical Notes are sometimes collectively herein referred to as the "PHYSICAL NOTES". The U.S. Global Notes and the Offshore Global Notes are sometimes referred to herein as the "GLOBAL NOTES". The definitive Notes shall be typed, printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any securities exchange on which the Notes may be listed, all as determined by the Officers executing such Notes, as evidenced by their execution of such Notes. 32 25 2.02. RESTRICTIVE LEGENDS. Unless and until a Note is exchanged for an Exchange Note or sold in connection with an effective Registration Statement pursuant to the Registration Rights Agreement, (i) the U.S. Global Notes and U.S. Physical Notes shall bear the legend set forth below on the face thereof and (ii) the Offshore Physical Notes and Offshore Global Notes shall bear the legend set forth below on the face thereof until at least the 41st day after the Closing Date and receipt by the Company and the Trustee of a certificate substantially in the form of Exhibit B hereto. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN 33 26 CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS. Each Global Note, whether or not an Exchange Note, shall also bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 2.08 OF THE INDENTURE. 34 27 SECTION 2.03. EXECUTION, AUTHENTICATION AND DENOMINATIONS. Subject to Article Four and applicable law, the aggregate principal amount of Notes which may be authenticated and delivered under this Indenture is unlimited. The Notes shall be executed by two Officers of the Company. The signature of these Officers on the Notes may be by facsimile or manual signature in the name and on behalf of the Company. If an Officer whose signature is on a Note no longer holds that office at the time the Trustee or authenticating agent authenticates the Note, the Note shall be valid nevertheless. A Note shall not be valid until the Trustee manually signs the certificate of authentication on the Note. The manually executed certificate of authentication of the Trustee shall be conclusive evidence that the Note has been authenticated under this Indenture. At any time and from time to time after the execution of this Indenture, the Trustee shall upon receipt of a Company Order authenticate for original issue Notes in the aggregate principal amount specified in such Company Order; provided that the Trustee shall be entitled to receive an Officers' Certificate and an Opinion of Counsel of the Company in connection with such authentication of Notes. Such Company Order shall specify the amount of Notes to be authenticated and the date on which the original issue of Notes is to be authenticated and, in case of an issuance of Notes pursuant to Section 2.15, shall certify that such issuance is in compliance with Article Four. The Trustee may appoint an authenticating agent to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such authenticating agent. An authenticating agent has the same rights as an Agent to deal with the Company or an Affiliate of the Company. The Notes shall be issuable only in registered form without coupons and only in denominations of $1,000 in principal amount and any integral multiple thereof. SECTION 2.04. REGISTRAR AND PAYING AGENT The Company shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "REGISTRAR"), an office or agency where Notes may be presented for payment (the "PAYING Agent") and an office or agency where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served, which shall be in Boston, Massachusetts and so long as the Notes are listed on the Luxembourg Stock Exchange, in Luxembourg. The Company shall cause the Registrar to keep a register of the Notes and of their transfer and exchange (the "SECURITY REGISTER"). The Security Register shall be in written form or any other form capable of being converted into written form within 35 28 a reasonable time. The Company may have one or more co-Registrars and one or more additional Paying Agents. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall give prompt written notice to the Trustee of the name and address of any such Agent and any change in the address of such Agent. If the Company fails to maintain a Registrar, Paying Agent and/or agent for service of notices and demands, the Trustee shall act as such Registrar, Paying Agent and/or agent for service of notices and demands. The Company may remove any Agent upon written notice to such Agent and the Trustee; provided that no such removal shall become effective until (i) the acceptance of an appointment by a successor Agent to such Agent as evidenced by an appropriate agency agreement entered into by the Company and such successor Agent and delivered to the Trustee or (ii) notification to the Trustee that the Trustee shall serve as such Agent until the appointment of a successor Agent in accordance with clause (i) of this proviso. The Company, any Subsidiary of the Company, or any Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar, and/or agent for service of notice and demands. The Company initially appoints the Trustee as Registrar, Paying Agent, authenticating agent and agent for service of notice and demands. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Company shall furnish to the Trustee as of each Regular Record Date and at such other times as the Trustee may reasonably request the names and addresses of Holders as they appear in the Security Register, including the aggregate principal amount of Notes held by each Holder. SECTION 2.05. PAYING AGENT TO HOLD MONEY. Not later than 11:00 a.m. (New York City time) each due date of the principal, premium, if any, and interest on any Notes, the Company shall deposit with the Paying Agent money in immediately available funds sufficient to pay such principal, premium, if any, and interest so becoming due. The Company shall require each Paying Agent other than the Trustee to agree in writing that such Paying Agent shall hold for the benefit of the Holders or the Trustee all money held by the Paying Agent for the payment of principal of, premium, if any, and interest on the Notes (whether such money has been paid to it by the Company or any other obligor on the Notes), and such Paying Agent shall promptly notify the Trustee of any default by the Company (or any other obligor on the Notes) in making any such payment. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and account for any funds disbursed, and the Trustee may at any time during the continuance of any payment default, upon written request to a Paying Agent, require such Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed. Upon doing 36 29 so, the Paying Agent shall have no further liability for the money so paid over to the Trustee. If the Company or any Subsidiary of the Company or any Affiliate of any of them acts as Paying Agent, it will, on or before each due date of any principal of, premium, if any, or interest on the Notes, segregate and hold in a separate trust fund for the benefit of the Holders a sum of money sufficient to pay such principal, premium, if any, or interest so becoming due until such sum of money shall be paid to such Holders or otherwise disposed of as provided in this Indenture, and will promptly notify the Trustee of its action or failure to act. SECTION 2.06. TRANSFER AND EXCHANGE. The Notes are issuable only in registered form. A Holder may transfer a Note only by written application to the Registrar stating the name of the proposed transferee and otherwise complying with the terms of this Indenture. No such transfer shall be effected until, and such transferee shall succeed to the rights of a Holder only upon, final acceptance and registration of the transfer by the Registrar in the Security Register. Prior to the registration of any transfer by a Holder as provided herein, the Company, the Trustee, and any agent of the Company shall treat the person in whose name the Note is registered as the owner thereof for all purposes whether or not the Note shall be overdue, and neither the Company, the Trustee, nor any such agent shall be affected by notice to the contrary. Furthermore, any Holder of a Global Note shall, by acceptance of such Global Note, agree that transfers of beneficial interests in such Global Note may be effected only through a book entry system maintained by the Holder of such Global Note (or its agent) and that ownership of a beneficial interest in the Note shall be required to be reflected in a book entry. When Notes are presented to the Registrar or a co-Registrar with a request to register the transfer or to exchange them for an equal principal amount of Notes of other authorized denominations (including an exchange of Notes for Exchange Notes), the Registrar shall register the transfer or make the exchange as requested if its requirements for such transactions are met (including that such Notes are duly endorsed or accompanied by a written instrument of transfer in form satisfactory to the Trustee and Registrar duly executed by the Holder thereof or by an attorney who is authorized in writing to act on behalf of the Holder); provided that no exchanges of Notes for Exchange Notes shall occur until a Registration Statement shall have been declared effective by the Commission and that any Notes that are exchanged for Exchange Notes shall be canceled by the Trustee. To permit registrations of transfers and exchanges, the Company shall execute and the Trustee shall authenticate Notes at the Registrar's request. No service charge shall be made for any registration of transfer or exchange or redemption of the Notes, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or other similar governmental charge payable upon exchanges pursuant to Section 2.11, 3.08 or 9.04). The Registrar shall not be required (i) to issue, register the transfer of or exchange any Note during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Notes selected for redemption under Section 3.03 and 37 30 ending at the close of business on the day of such mailing, or (ii) to register the transfer of or exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. SECTION 2.07. BOOK-ENTRY PROVISIONS FOR GLOBAL NOTES. (a) The U.S. Global Notes and Offshore Global Notes initially shall (i) be registered in the name of the Depositary for such Global Notes or the nominee of such Depositary, (ii) be delivered to the Trustee as custodian for such Depositary and (iii) bear legends as set forth in Section 2.02. Members of, or participants in, the Depositary ("AGENT MEMBERS") shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, or the Trustee as its custodian, or under such Global Note, and the Depositary may be treated by the Company, the Guarantors, the Trustee and any agent of the Company, the Guarantors or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantors, the Trustee or any agent of the Company, the Guarantors or the Trustee, from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a holder of any Note. (b) Transfers of a Global Note shall be limited to transfers of such Global Note in whole, but not in part, to the Depositary, its successors or their respective nominees. Interests of beneficial owners in Global Notes may be transferred in accordance with the rules and procedures of the Depositary and the provisions of Section 2.08. In addition, U.S. Physical Notes and Offshore Physical Notes shall be transferred to all beneficial owners in exchange for their beneficial interests in the U.S. Global Notes or the Offshore Global Notes, as the case may be, if (i) the Depositary notifies the Company that it is unwilling or unable to continue as Depositary for the U.S. Global Notes or the Offshore Global Notes, as the case may be, and a successor depositary is not appointed by the Company within 90 days of such notice, (ii) an Event of Default has occurred and is continuing and the Registrar has received a request from the Depositary or (iii) in accordance with the rules and procedures of the Depositary and the provisions of Section 2.08. (c) Any beneficial interest in one of the Global Notes that is transferred to a person who takes delivery in the form of an interest in another Global Note will, upon transfer, cease to be an interest in such Global Note and become an interest in such other Global Note and, accordingly, will thereafter be subject to all transfer restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. 38 31 (d) In connection with any transfer of a portion of the beneficial interests in a Global Note to beneficial owners pursuant to paragraph (b) of this Section 2.07, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of such Global Note in an amount equal to the principal amount of the beneficial interest in such Global Note to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more U.S. Physical Notes or Offshore Physical Notes, as the case may be, of like tenor and amount. (e) In connection with the transfer of the U.S. Global Notes or the Offshore Global Notes, in whole, to beneficial owners pursuant to paragraph (b) of this Section 2.07, the U.S. Global Notes or Offshore Global Notes, as the case may be, shall be deemed to be surrendered to the Trustee for cancellation, and the Company shall execute, and the Trustee shall authenticate and deliver, to each beneficial owner identified by the Depositary in exchange for its beneficial interest in the U.S. Global Notes or Offshore Global Notes, as the case may be, an equal aggregate principal amount of U.S. Physical Notes or Offshore Physical Notes, as the case may be, of authorized denominations. (f) Any U.S. Physical Note delivered in exchange for an interest in the U.S. Global Notes pursuant to paragraph (b), (d) or (e) of this Section 2.07 shall, except as otherwise provided by paragraph (e) of Section 2.08, bear the legend regarding transfer restrictions applicable to the U.S. Physical Note set forth in Section 2.02. (g) Any Offshore Physical Note delivered in exchange for an interest in the Offshore Global Notes pursuant to paragraph (b), (d) or (e) of this Section 2.07 shall, except as otherwise provided by paragraph (f) of Section 2.08, bear the legend regarding transfer restrictions applicable to the Offshore Physical Note set forth in Section 2.02. (h) The registered holder of a Global Note may grant proxies and otherwise authorize any person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes. SECTION 2.08. SPECIAL TRANSFER PROVISIONS. Unless and until a Note is exchanged for an Exchange Note or sold in connection with an effective Registration Statement pursuant to the Registration Rights Agreement, the following provisions shall apply: (a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS. The following provisions shall apply with respect to the registration of any proposed transfer of a Note to any Institutional Accredited Investor which is not a QIB (excluding Non-U.S. Persons): 39 32 (i) The Registrar shall register the transfer of any Note, whether or not such Note bears the Private Placement Legend, if (x) the requested transfer is after the time period referred to in Rule 144(k) under the Securities Act or (y) the proposed transferee has delivered to the Registrar (A) a certificate substantially in the form of Exhibit C hereto and (B) if the aggregate principal amount of the Notes being transferred is less than $100,000, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act. (ii) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Notes, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (i) above and (y) instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the U.S. Global Notes in an amount equal to the principal amount of the beneficial interest in the U.S. Global Notes to be transferred, and the Company shall execute, and the Trustee shall authenticate and deliver, one or more U.S. Physical Notes of like tenor and amount. (b) TRANSFERS TO QIBS. The following provisions shall apply with respect to the registration of any proposed transfer of a Note to a QIB (excluding Non-U.S. Persons): (i) If the Note to be transferred consists of (x) either Offshore Physical Notes prior to the removal of the Private Placement Legend or U.S. Physical Notes, the Registrar shall register the transfer if such transfer is being made by a proposed transferor who has checked the box provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that the sale has been made in compliance with the provisions of Rule 144A to a transferee who has signed the certification provided for on the form of Note stating, or has otherwise advised the Company and the Registrar in writing, that it is purchasing the Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a QIB within the meaning of Rule 144A and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as it has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon its foregoing representations in order to claim the exemption from registration provided by Rule 144A or (y) an interest in the U.S. Global Notes, the transfer of such interest may be effected only through the book entry system maintained by the Depositary. (ii) If the proposed transferee is an Agent Member, and the Note to be transferred consists of U.S. Physical Notes, upon receipt by the Registrar of the documents referred to in paragraph (i) above and instructions given in accordance with 40 33 the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of U.S. Global Notes in an amount equal to the principal amount of the U.S. Physical Notes to be transferred, and the Trustee shall cancel the U.S. Physical Notes so transferred. (c) TRANSFERS OF INTERESTS IN THE OFFSHORE GLOBAL NOTES OR OFFSHORE PHYSICAL NOTES. The following provisions shall apply with respect to any transfer of interests in Offshore Global Notes or Offshore Physical Notes: (i) prior to the removal of the Private Placement Legend from the Offshore Global Notes or Offshore Physical Notes pursuant to Section 2.02, the Registrar shall refuse to register such transfer unless such transfer complies with Section 2.08(b) or Section 2.08(d), as the case may be, and (ii) after such removal, the Registrar shall register the transfer of any such Note without requiring any additional certification. (d) TRANSFERS TO NON-U.S. PERSONS AT ANY TIME. The following provisions shall apply with respect to any transfer of a Note to a Non-U.S. Person: (i) The Registrar shall register any proposed transfer to any Non-U.S. Person if the Note to be transferred is a U.S. Physical Note or an interest in U.S. Global Notes, upon receipt of a certificate substantially in the form of Exhibit D hereto from the proposed transferor. (ii) (a) If the proposed transferor is an Agent Member holding a beneficial interest in the U.S. Global Notes, upon receipt by the Registrar of (x) the documents, if any, required by paragraph (ii) and (y) instructions in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and a decrease in the principal amount of the U.S. Global Notes in an amount equal to the principal amount of the beneficial interest in the U.S. Global Notes to be transferred, and (b) if the proposed transferee is an Agent Member, upon receipt by the Registrar of instructions given in accordance with the Depositary's and the Registrar's procedures, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Offshore Global Notes in an amount equal to the principal amount of the U.S. Physical Notes or the U.S. Global Notes, as the case may be, to be transferred, and the Trustee shall cancel the Physical Note, if any, so transferred or decrease the amount of the U.S. Global Notes. (e) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or replacement of Notes not bearing the Private Placement Legend, the Registrar shall deliver Notes that do not 41 34 bear the Private Placement Legend. Upon the transfer, exchange or replacement of Notes bearing the Private Placement Legend, the Registrar shall deliver only Notes that bear the Private Placement Legend unless either (i) the circumstances contemplated by paragraph (a)(i)(x) or (c)(ii) of this Section 2.08 exist or (ii) there is delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the Company and the Trustee to the effect that neither such legend nor the related restrictions on transfer are required in order to maintain compliance with the provisions of the Securities Act. (f) GENERAL. By its acceptance of any Note bearing the Private Placement Legend, each Holder of such a Note acknowledges the restrictions on transfer of such Note set forth in this Indenture and in the Private Placement Legend and agrees that it will transfer such Note only as provided in this Indenture. The Registrar shall not register a transfer of any Note unless such transfer complies with the restrictions on transfer of such Note set forth in this Indenture. In connection with any transfer of Notes, each Holder agrees by its acceptance of the Notes to furnish the Registrar or the Company such certifications, legal opinions or other information as either of them may reasonably require to confirm that such transfer is being made pursuant to an exemption from, or a transaction not subject to, the registration requirements of the Securities Act; provided that the Registrar shall not be required to determine (but may rely on a determination made by the Company with respect to) the sufficiency of any such certifications, legal opinions or other information. The Registrar shall retain copies of all letters, notices and other written communications received pursuant to Section 2.07 or this Section 2.08. The Company shall have the right to inspect and make copies of all such letters, notices or other written communications at any reasonable time upon the giving of reasonable written notice to the Registrar. SECTION 2.09. REPLACEMENT NOTES SECTION. If a mutilated Note is surrendered to the Trustee or if the Holder claims that the Note has been lost, destroyed or wrongfully taken, then, in the absence of notice to the Company or the Trustee that such Note has been acquired by a bona fide purchaser, the Company shall issue and the Trustee shall authenticate a replacement Note of like tenor and principal amount and bearing a number not contemporaneously outstanding; provided that the requirements of this Section 2.09 are met. If required by the Trustee or the Company, an indemnity bond must be furnished that is sufficient in the judgment of both the Trustee and the Company to protect the Company, the Trustee or any Agent from any loss that any of them may suffer if a Note is replaced. The Company may charge such Holder for its expenses and the expenses of the Trustee in replacing a Note. In case any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Company in its discretion may pay such Note instead of issuing a new Note in replacement thereof. 42 35 Every replacement Note is an additional obligation of the Company and shall be entitled to the benefits of this Indenture. SECTION 2.10. OUTSTANDING NOTES. Notes outstanding at any time are all Notes that have been authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.10 as not outstanding. If a Note is replaced pursuant to Section 2.09, it ceases to be outstanding unless and until the Trustee and the Company receive proof satisfactory to them that the replaced Note is held by a bona fide purchaser. If the Paying Agent (other than the Company or an Affiliate of the Company) holds on the maturity date money sufficient to pay Notes payable on that date, then on and after that date such Notes cease to be outstanding and interest on them shall cease to accrue. A Note does not cease to be outstanding because the Company or one of its Affiliates holds such Note, provided, however, that in determining whether the Holders of the requisite principal amount of the outstanding Notes have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Notes owned by the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Trustee has actual knowledge to be so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Notes and that the pledgee is not the Company or any other obligor upon the Notes or any Affiliate of the Company or of such other obligor. SECTION 2.11. TEMPORARY NOTES. Until definitive Notes are ready for delivery, the Company may prepare and execute and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have insertions, substitutions, omissions and other variations determined to be appropriate by the Officers executing the temporary Notes, as evidenced by their execution of such temporary Notes. If temporary Notes are issued, the Company will cause definitive Notes to be prepared without unreasonable delay. After the preparation of definitive Notes, the temporary Notes shall be exchangeable for definitive Notes upon surrender of the temporary Notes at the office or agency of the Company designated for such purpose pursuant to Section 4.02, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Notes 43 36 of authorized denominations. Until so exchanged, the temporary Notes shall be entitled to the same benefits under this Indenture as definitive Notes. SECTION 2.12. CANCELLATION. The Company at any time may deliver to the Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and may deliver to the Trustee for cancellation any Notes previously authenticated hereunder which the Company has not issued and sold. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee shall cancel all Notes surrendered for transfer, exchange, payment or cancellation and shall destroy them in accordance with its normal procedure. SECTION 2.13. CUSIP NUMBERS. The Company in issuing the Notes may use "CUSIP", "CINS" or "ISIN" numbers (if then generally in use), and the Company and the Trustee shall use CUSIP, CINS or ISIN numbers, as the case may be, in notices of redemption or exchange as a convenience to Holders; provided that any such notice shall state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of redemption or exchange and that reliance may be placed only on the other identification numbers printed on the Notes. The Company shall promptly notify the Trustee of any change in "CUSIP", "CINS" or "ISIN" numbers for the Notes. SECTION 2.14. DEFAULTED INTEREST. If the Company defaults in a payment of interest on the Notes, it shall pay, or shall deposit with the Paying Agent money in immediately available funds sufficient to pay, the defaulted interest, plus (to the extent lawful) any interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date. A special record date, as used in this Section 2.14 with respect to the payment of any defaulted interest, shall mean the 15th day next preceding the date fixed by the Company for the payment of defaulted interest, whether or not such day is a Business Day. At least 15 days before the subsequent special record date, the Company shall mail to each Holder and to the Trustee a notice that states the subsequent special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.15. ISSUANCE OF ADDITIONAL NOTES. The Company may, subject to Article Four of this Indenture and applicable law, issue additional Notes under this Indenture. The Notes issued on the Closing Date and any additional Notes subsequently issued shall be treated as a single class for all purposes under this Indenture. 44 37 ARTICLE THREE REDEMPTION SECTION 3.01. RIGHT OF REDEMPTION. (a) The Notes are redeemable, at the Company's option, in whole or in part, at any time or from time to time, on or after June 15, 2003 and prior to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by first-class mail to each Holder's last address, as it appears in the Security Register, at the following Redemption Prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date that is prior to the Redemption Date to receive interest due on an Interest Payment Date), if redeemed during the 12-month period commencing June 15 of the years set forth below: Redemption Year Price ---- ---------- 2003............................... 104.750% 2004............................... 103.167 2005............................... 101.583 2006 and thereafter................ 100.000 (b) In addition, at any time prior to June 15, 2001, the Company may redeem up to 35% of the aggregate principal amount of the Notes with the proceeds of one or more Equity Offerings, at a Redemption Price of 109.50%, plus accrued and unpaid interest to the Redemption Date (subject to the rights of Holders of record on the relevant Regular Record Date that is prior to the Redemption Date to receive interest due on an Interest Payment Date); provided that (i) Notes representing 65% of the principal amount of Notes initially issued remain outstanding after each such redemption and (ii) notice of such redemption is mailed within 60 days of the related Equity Offering. (c) Prior to June 15, 2003, the Notes will be redeemable at the Company's option, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' prior notice mailed by first class mail to each Holder's registered address, at a redemption price (expressed as a percentage of principal amount) equal to the sum of the principal amount such Notes plus the Applicable Premium thereon at the time of redemption (an "Early Redemption Date") (subject to the right of holders of record on the relevant record date to receive due on the relevant interest payment date). SECTION 3.02. NOTICES TO TRUSTEE. If the Company elects to redeem Notes pursuant to Section 3.01, it shall notify the Trustee in writing of the Redemption Date and the principal amount of Notes to be redeemed and the clause of this Indenture pursuant to which redemption shall occur. 45 38 The Company shall give each notice provided for in this Section 3.02 in an Officers' Certificate at least 45 days before the Redemption Date (unless a shorter period shall be satisfactory to the Trustee). SECTION 3.03. SELECTION OF NOTES TO BE REDEEMED. In the case of partial redemption, selection of the Notes for redemption shall be made by the Trustee in compliance with the requirements, as certified to it by the Company, of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not listed on a national securities exchange or automated quotation system, by lot, pro rata or by such other method as the Trustee in its sole discretion shall deem fair and appropriate or, as to any Notes in global form, in accordance with the procedures of the Depository; provided that no Note of $1,000 in principal amount or less shall be redeemed in part. The Trustee shall make the selection from the Notes outstanding and not previously called for redemption. Notes in denominations of $1,000 in principal amount may only be redeemed in whole. The Trustee may select for redemption portions (equal to $1,000 in principal amount or any integral multiple thereof) of Notes that have denominations larger than $1,000 in principal amount. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. The Trustee shall notify the Company and the Registrar promptly in writing of the Notes or portions of Notes to be called for redemption. SECTION 3.04. NOTICE OF REDEMPTION. With respect to any redemption of Notes pursuant to Section 3.01, at least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail to each Holder whose Notes are to be redeemed. The notice shall identify the Notes to be redeemed and shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) the name and address of the Paying Agent; (iv) that Notes called for redemption must be surrendered to the Paying Agent in order to collect the Redemption Price; (v) that, unless the Company defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption 46 39 Date and the only remaining right of the Holders is to receive payment of the Redemption Price plus accrued interest to the Redemption Date upon surrender of the Notes to the Paying Agent; (vi) that, if any Note is being redeemed in part, the portion of the principal amount (equal to $1,000 in principal amount or any integral multiple thereof) of such Note to be redeemed and that, on and after the Redemption Date, upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion thereof will be reissued; and (vii) that, if any Note contains a CUSIP, CINS or ISIN number as provided in Section 2.13, no representation is being made as to the correctness of the CUSIP, CINS or ISIN number either as printed on the Notes or as contained in the notice of redemption and that reliance may be placed only on the other identification numbers printed on the Notes. At the Company's request (which request may be revoked by the Company at any time prior to the time at which the Trustee shall have given such notice to the Holders), made in writing to the Trustee at least 45 days (or such shorter period as shall be satisfactory to the Trustee) before a Redemption Date, the Trustee shall give the notice of redemption in the name and at the expense of the Company. If, however, the Company gives such notice to the Holders, the Company shall concurrently deliver to the Trustee an Officers' Certificate stating that such notice has been given. SECTION 3.05. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Notes called for redemption become due and payable on the Redemption Date and at the Redemption Price. Upon surrender of any Notes to the Paying Agent, such Notes shall be paid at the Redemption Price, plus accrued interest, if any, to the Redemption Date. Notice of redemption shall be deemed to be given when mailed, whether or not the Holder receives the notice. In any event, failure to give such notice, or any defect therein, shall not affect the validity of the proceedings for the redemption of Notes held by Holders to whom such notice was properly given. SECTION 3.06. DEPOSIT OF REDEMPTION PRICE. On or prior to the Business Day immediately preceding any Redemption Date, the Company shall deposit with the Paying Agent (or, if the Company is acting as its own Paying Agent, shall segregate and hold in trust as provided in Section 2.05) money sufficient to pay the Redemption Price of and accrued interest on all Notes to be redeemed on that date other than Notes or portions thereof called for redemption on that date that have been delivered by the Company to the Trustee for cancellation. 47 40 SECTION 3.07. PAYMENT OF NOTES CALLED FOR REDEMPTION. If notice of redemption has been given in the manner provided above, the Notes or portion of Notes specified in such notice to be redeemed shall become due and payable on the Redemption Date at the Redemption Price stated therein, together with accrued interest to such Redemption Date, and on and after such date (unless the Company shall default in the payment of such Notes at the Redemption Price and accrued interest to the Redemption Date, in which case the principal, until paid, shall bear interest from the Redemption Date at the rate prescribed in the Notes), such Notes shall cease to accrue interest. Upon surrender of any Note for redemption in accordance with a notice of redemption, such Note shall be paid and redeemed by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided that installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the Holders registered as such at the close of business on the relevant Regular Record Date. SECTION 3.08. NOTES REDEEMED IN PART. Upon surrender and cancellation of any Note that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder without service charge, a new Note equal in principal amount to the unredeemed portion of such surrendered Note. ARTICLE FOUR COVENANTS SECTION 4.01. PAYMENT OF NOTES. The Company shall pay the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes and this Indenture. An installment of principal, premium, if any, or interest shall be considered paid on the date due if the Trustee or Paying Agent (other than the Company, a Subsidiary of the Company, or any Affiliate of any of them) holds on that date money designated for and sufficient to pay the installment. If the Company or any Subsidiary of the Company or any Affiliate of any of them acts as Paying Agent, an installment of principal, premium, if any, or interest shall be considered paid on the due date if the entity acting as Paying Agent complies with the last sentence of Section 2.05. As provided in Section 6.09, upon any bankruptcy or reorganization procedure relative to the Company, the Trustee shall serve as the Paying Agent, if any, for the Notes. The Company shall pay interest on overdue principal and premium, if any, and interest on overdue installments of interest, to the extent lawful, at the rate per annum specified in the Notes. 48 41 SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain in Boston, Massachusetts and, so long as the Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, an office or agency where Notes may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 10.02. The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in Boston, Massachusetts and, so long as the Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, for such purposes. The Company shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Company hereby initially designates the Corporate Trust Office of the Trustee as such office of the Company in accordance with Section 2.04. SECTION 4.03. LIMITATION ON INDEBTEDNESS. (a) The Company will not, and will not permit any of its Restricted Subsidiaries to, Incur any Indebtedness (other than the Notes and Indebtedness existing on the Closing Date, whether or not any such Indebtedness existing on the Closing Date is repaid or reborrowed ); provided that the Company and any Guarantor may Incur Indebtedness if, after giving effect to the Incurrence of such Indebtedness and the receipt and application of the proceeds therefrom, the Interest Coverage Ratio would be greater than 3:1. Notwithstanding the foregoing and, in addition to Indebtedness permitted by the foregoing paragraph, the Company and any Restricted Subsidiary (except as specified below) may Incur each and all of the following: (i) Indebtedness of the Company and the Guarantors outstanding at any time in an aggregate principal amount not to exceed the commitments under the Credit Facility on the Closing Date; (ii) Indebtedness owed (A) to the Company evidenced by an unsubordinated promissory note or (B) to any Restricted Subsidiary; provided that any event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any subsequent transfer of such Indebtedness (other than to the Company or another Restricted Subsidiary) shall be deemed, in each case, to constitute an Incurrence of such Indebtedness not permitted by this clause (ii); (iii) Indebtedness issued in exchange for, or the net proceeds of 49 42 which are used to refinance or refund, then outstanding Indebtedness (other than Indebtedness Incurred under clause (i), (ii), (iv), (vi) or (vii) of this paragraph; it being understood that Indebtedness Incurred under such clauses can be refinanced thereunder) and any refinancings thereof in an amount not to exceed the amount so refinanced or refunded (plus premiums, accrued interest, fees and expenses); provided that Indebtedness the proceeds of which are used to refinance or refund the Notes or Indebtedness that is pari passu with, or subordinated in right of payment to, the Notes shall only be permitted under this clause (iii) if (A) in case the Notes are refinanced in part or the Indebtedness to be refinanced is pari passu with the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is outstanding, is expressly made pari passu with, or subordinate in right of payment to, the remaining Notes, (B) in case the Indebtedness to be refinanced is subordinated in right of payment to the Notes, such new Indebtedness, by its terms or by the terms of any agreement or instrument pursuant to which such new Indebtedness is issued or remains outstanding, is expressly made subordinate in right of payment to the Notes at least to the extent that the Indebtedness to be refinanced is subordinated to the Notes and (C) such new Indebtedness, determined as of the date of Incurrence of such new Indebtedness, does not mature prior to the Stated Maturity of the Indebtedness to be refinanced or refunded, and the Average Life of such new Indebtedness is at least equal to the remaining Average Life of the Indebtedness to be refinanced or refunded; and provided further that in no event may Indebtedness of the Company be refinanced by means of any Indebtedness of any Restricted Subsidiary pursuant to this clause (iii); (iv) Indebtedness (A) in respect of performance, surety or appeal bonds provided in the ordinary course of business, (B) under Currency Agreements and Interest Rate Agreements; provided that such agreements (a) are designed solely to protect the Company or its Restricted Subsidiaries against fluctuations in foreign currency exchange rates or interest rates and (b) do not increase the Indebtedness of the obligor outstanding at any time other than as a result of fluctuations in foreign currency exchange rates or interest rates or by reason of fees, indemnities and compensation payable thereunder; and (C) arising from agreements providing for indemnification, adjustment of purchase price, earn outs or similar obligations, or from Guarantees or letters of credit, surety bonds or performance bonds securing any obligations of the Company or any of its Restricted Subsidiaries pursuant to such agreements, in any case Incurred in connection with the disposition of any business, assets or Restricted Subsidiary (other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or Restricted Subsidiary for the purpose of financing such acquisition), in a principal amount not to exceed the gross proceeds actually received by the Company or any Restricted Subsidiary in connection with such disposition; (v) Indebtedness of the Company and any Guarantor, to the extent the net proceeds thereof are promptly (A) used to purchase Notes tendered in an Offer to Purchase made as a result of a Change in Control or (B) deposited to defease the Notes pursuant to Article Eight; (vi) Guarantees of the Notes and Guarantees of Indebtedness of the Company by any Restricted Subsidiary provided the Guarantee of such Indebtedness is permitted by and made in accordance with Section 4.08; 50 43 (vii) Indebtedness under the Notes and the Note Guarantees (as well as the notes issued upon the exchange of the Notes); (viii) Indebtedness of the Company or any Guarantor constituting Purchase Money Indebtedness or Capitalized Lease Obligations that do not, at any one time outstanding, exceed 10% of the Adjusted Consolidated Net Tangible Assets of the Company and the Guarantors; (ix) Indebtedness of the Company, the Guarantors and the Foreign Subsidiaries of the Company outstanding at any time in the aggregate principal amount not to exceed $100 million; and (x) Indebtedness of the Company and the Guarantors (in addition to Indebtedness permitted under clauses (i) through (ix) above) in an aggregate principal amount outstanding at any time not to exceed $50 million. (b) With respect to any particular Indebtedness, notwithstanding any other provision of this Section 4.03, the maximum amount of Indebtedness that the Company or a Restricted Subsidiary may Incur pursuant to this Section 4.03 shall not be deemed to be exceeded due solely to the result of fluctuations in the exchange rates of currencies. (c) For purposes of determining any particular amount of Indebtedness under this Section 4.03, (1) Guarantees, Liens or obligations with respect to letters of credit supporting Indebtedness otherwise included in the determination of such particular amount shall not be included and (2) any Liens granted pursuant to the equal and ratable provisions referred to in Section 4.10 shall not be treated as Indebtedness. For purposes of determining compliance with this Section 4.10, in the event that an item of Indebtedness meets the criteria of more than one of the types of Indebtedness described in the above clauses, the Company, in its sole discretion, shall classify, and from time to time may reclassify, such item of Indebtedness and only be required to include the amount and type of such Indebtedness in one of such clauses. No Indebtedness incurred pursuant to the first paragraph of Section (a) of this Section 4.03 shall be included in calculating any limitation set forth in clauses (i) through (x), of such Section (a). SECTION 4.04. LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS. The Company and the Guarantors shall not Incur any Indebtedness that is subordinate in right of payment to any Senior Indebtedness unless such Indebtedness is pari passu with, or subordinated in right of payment to, the Notes or the Note Guarantee of such Guarantor, as the case may be; provided that the foregoing limitation shall not apply to distinctions between categories of Senior Indebtedness that exist by reason of any Liens or Guarantees arising or created in respect of some but not all Senior Indebtedness. SECTION 4.05. LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, (i) declare or pay any dividend or make any distribution on or with respect to its Capital Stock (other than (x) dividends or distributions payable solely in shares of its Capital Stock (other than Disqualified Stock) or in options, warrants or other rights to 51 44 acquire shares of such Capital Stock and (y) pro rata dividends or distributions on Common Stock of Restricted Subsidiaries held by minority stockholders) held by Persons other than the Company or any of its Restricted Subsidiaries, (ii) purchase, redeem, retire or otherwise acquire for value any shares of Capital Stock of (A) the Company or an Unrestricted Subsidiary (including options, warrants or other rights to acquire such shares of Capital Stock) held by any Person or (B) a Restricted Subsidiary (including options, warrants or other rights to acquire such shares of Capital Stock) held by any Affiliate of the Company (other than a Wholly Owned Restricted Subsidiary) or any holder (or any Affiliate of such holder) of 5% or more of the Capital Stock of the Company, (iii) make any voluntary or optional principal payment, or voluntary or optional redemption, repurchase, defeasance, or other acquisition or retirement for value, of Indebtedness of the Company that is subordinated in right of payment to the Notes or (iv) make any Investment, other than a Permitted Investment, in any Person (such payments or any other actions described in clauses (i) through (iv) above being collectively "Restricted Payments") if, at the time of, and after giving effect to, the proposed Restricted Payment: (A) a Default or Event of Default shall have occurred and be continuing, (B) the Company could not Incur at least $1.00 of Indebtedness under the first paragraph of Section 4.03 or (C) the aggregate amount of all Restricted Payments (the amount, if other than in cash, to be determined in good faith by the Board of Directors, whose determination shall be conclusive and evidenced by a Board Resolution) made after the Closing Date shall exceed the sum of (1) 50% of the aggregate amount of the Adjusted Consolidated Net Income (or, if the Adjusted Consolidated Net Income is a loss, minus 100% of the amount of such loss) (determined by excluding income resulting from transfers of assets by the Company or a Restricted Subsidiary to an Unrestricted Subsidiary) accrued on a cumulative basis during the period (taken as one accounting period) beginning on the first day of the fiscal quarter immediately following the Closing Date and ending on the last day of the last fiscal quarter preceding the Transaction Date for which reports have been filed with the Commission or provided to the Trustee pursuant to Section 4.18 plus (2) the aggregate Net Cash Proceeds received by the Company after the Closing Date from the issuance and sale permitted by this Indenture of its Capital Stock (other than Disqualified Stock) to a Person who is not a Subsidiary of the Company, including an issuance or sale permitted by this Indenture of Indebtedness of the Company for cash subsequent to the Closing Date upon the conversion of such Indebtedness into Capital Stock (other than Disqualified Stock) of the Company, or from the issuance to a Person who is not a Subsidiary of the Company of any options, warrants or other rights to acquire Capital Stock of the Company (in each case, exclusive of any Disqualified Stock or any options, warrants or other rights that are redeemable at the option of the holder, or are required to be redeemed, prior to the Stated Maturity of the Notes) plus (3) an amount equal to the net reduction in Investments (other than reductions in Permitted Investments or Investments made pursuant to the following paragraph) in any Person resulting from payments of interest on Indebtedness, dividends, repayments of loans or advances, or other transfers of assets, in each case to the Company or any Restricted Subsidiary or from the Net Cash Proceeds from the sale of any such Investment (except, in each case, to the extent 52 45 any such payment or proceeds are included in the calculation of Adjusted Consolidated Net Income), or from redesignations of Unrestricted Subsidiaries as Restricted Subsidiaries (valued in each case as provided in the definition of "Investments"), not to exceed, in each case, the amount of Investments previously made by the Company or any Restricted Subsidiary in such Person or Unrestricted Subsidiary plus (4) $5 million. The foregoing provision shall not be violated by reason of: (i) the payment of any dividend or distribution within 60 days after the date of declaration thereof if, at said date of declaration, such payment would comply with the foregoing paragraph; (ii) the redemption, repurchase, defeasance or other acquisition or retirement for value of Indebtedness that is subordinated in right of payment to the Notes including premium, if any, and accrued and unpaid interest, with the proceeds of, or in exchange for, Indebtedness Incurred under clause (iii) of the second paragraph of part (a) of Section 4.03(a); (iii) the repurchase, redemption or other acquisition of Capital Stock of the Company or an Unrestricted Subsidiary (or options, warrants or other rights to acquire such Capital Stock) in exchange for, or out of the proceeds of a substantially concurrent offering of, shares of Capital Stock (other than Disqualified Stock) of the Company (or options, warrants or other rights to acquire such Capital Stock); (iv) the making of any principal payment or the repurchase, redemption, retirement, defeasance or other acquisition for value of Indebtedness of the Company which is subordinated in right of payment to the Notes in exchange for, or out of the proceeds of, a substantially concurrent offering of, shares of the Capital Stock (other than Disqualified Stock) of the Company (or options, warrants or other rights to acquire such Capital Stock); (v) payments or distributions, to dissenting stockholders pursuant to applicable law, pursuant to or in connection with a consolidation, merger or transfer of assets that complies with the provisions of Article Five; (vi) Restricted Payments not to exceed $30 million (provided that to the extent such Restricted Payment is an Investment, Investments not to exceed $30 million at any one time outstanding); or (vii) Investments acquired in exchange for Capital Stock (other than Disqualified Stock) of the Company (or options, warrants or other rights to acquire such Capital Stock) or financed or refinanced out of the proceeds of a substantially concurrent offering of shares of Capital Stock of the Company (or options, warrants or other rights to acquire such Capital Stock); provided that, except in the case of clauses (i) and (iii), no Default or Event of Default shall have occurred and be continuing or occur as a consequence of the actions or payments set forth therein. Each Restricted Payment permitted pursuant to the preceding paragraph (other than the Restricted Payment referred to in clause (ii) thereof, an exchange of Capital Stock for Capital Stock or Indebtedness referred to in clause (iii) or (iv) thereof and an Investment referred to in clause (vi) thereof), and the Net Cash Proceeds from any issuance of Capital Stock referred to in clauses (iii) and (iv), shall be included in calculating whether the conditions of clause (C) of the first paragraph of this Section 4.05 have been met with respect to any subsequent Restricted Payments. In the event the proceeds of an issuance of Capital Stock of the 53 46 Company are used for the redemption, repurchase or other acquisition of the Notes, or Indebtedness that is pari passu with the Notes, then the Net Cash Proceeds of such issuance shall be included in clause (C) of the first paragraph of this Section 4.05 only to the extent such proceeds are not used for such redemption, repurchase or other acquisition of Indebtedness. The amount of any Investment "outstanding" at any time shall be deemed to be equal to the amount of such Investment on the date made, less the return on capital to the Company and its Restricted Subsidiaries with respect to such Investment by distribution, sale or otherwise (up to the amount of such Investment on the date made). SECTION 4.06. LIMITATION ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. The Company will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to (i) pay dividends or make any other distributions permitted by applicable law on any Capital Stock of such Restricted Subsidiary owned by the Company or any other Restricted Subsidiary, (ii) pay any Indebtedness owed to the Company or any other Restricted Subsidiary, (iii) make loans or advances to the Company or any other Restricted Subsidiary or (iv) transfer any of its property or assets to the Company or any other Restricted Subsidiary. The foregoing provisions shall not restrict any encumbrances or restrictions: (i) existing on the Closing Date in the Credit Facility, this Indenture or any other agreements in effect on the Closing Date, and any amendments, modifications, supplements, extensions, refinancings, renewals or replacements of such agreements; provided that the encumbrances and restrictions in any such amendments, modifications, supplements, extensions, refinancings, renewals or replacements are no less favorable in any material respect to the Holders than those encumbrances or restrictions that are then in effect and that are being amended, modified, supplemented, extended, refinanced, renewed or replaced; (ii) existing under or by reason of applicable law; (iii) under any instrument governing Acquired Indebtedness incurred in accordance with this Indenture; provided that such encumbrances or restrictions are not adopted in contemplation of the related acquisition; (iv) in the case of clause (iv) of the first paragraph of this Section 4.06, (A) that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset, (B) existing by virtue of any transfer of, agreement to transfer, option or right with respect to, or Lien on, any property or assets of the Company or any Restricted Subsidiary not otherwise prohibited by this Indenture or (C) arising or agreed to in the ordinary course of business, not relating to any Indebtedness, and that do not, individually or in the aggregate, detract from the value of property or assets of the Company or any Restricted Subsidiary in any manner material to the Company or any 54 47 Restricted Subsidiary; (v) with respect to a Restricted Subsidiary and imposed pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock of, or property and assets of, such Restricted Subsidiary; and (vi) with respect to any Foreign Subsidiary; provided that (A) the Investments of the Company and its Subsidiaries in such Foreign Subsidiary are, as determined by the Board of Directors, not made for the purpose of removing assets from the Company and the Guarantors which removal, in the judgment of the Board of Directors, would be likely to have a material adverse impact on the Company's ability to make payments on the Notes and (B) such encumbrances or restrictions are not, in the judgment of the Board of Directors, likely to have a material adverse impact on the Company's ability to make payments on the Notes. Nothing contained in this Section 4.06 shall prevent the Company or any Restricted Subsidiary from (1) creating, incurring, assuming or suffering to exist any Liens otherwise permitted by Section 4.10 or (2) restricting the sale or other disposition of property or assets of the Company or any of its Restricted Subsidiaries that secure Indebtedness of the Company or any of its Restricted Subsidiaries. SECTION 4.07. LIMITATION ON THE ISSUANCE AND SALE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES. The Company will not sell, and will not permit any Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of Capital Stock of a Restricted Subsidiary (including options, warrants or other rights to purchase shares of such Capital Stock) except (i) to the Company or a Wholly Owned Restricted Subsidiary; (ii) issuances of director's qualifying shares or sales to foreign nationals of shares of Capital Stock of foreign Restricted Subsidiaries, to the extent required by applicable law; (iii) if, immediately after giving effect to such issuance or sale, such Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any Investment in such Person remaining after giving effect to such issuance or sale would have been permitted to be made under Section 4.05 if made on the date of such issuance or sale; or (iv) issuances or sales of Common Stock of a Restricted Subsidiary, provided that the Company or such Restricted Subsidiary applies the Net Cash Proceeds, if any, of any such sale in accordance with clause (A) or (B) of Section 4.11. SECTION 4.08. LIMITATION ON ISSUANCES OF GUARANTEES BY RESTRICTED SUBSIDIARIES. The Company will not permit any Restricted Subsidiary, directly or indirectly, to Guarantee any Indebtedness of the Company which is pari passu with or subordinate in right of payment to the Notes ("Guaranteed Indebtedness"), unless (i) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to this Indenture providing for a Guarantee (a "Subsidiary Guarantee") of payment of the Notes by such Restricted Subsidiary and (ii) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against the Company or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Subsidiary Guarantee; provided that this paragraph shall not be 55 48 applicable to any Guarantee of any Restricted Subsidiary that existed at the time such Person became a Restricted Subsidiary and was not Incurred in connection with, or in contemplation of, such Person becoming a Restricted Subsidiary. If the Guaranteed Indebtedness is (A) pari passu with the Notes, then the Guarantee of such Guaranteed Indebtedness shall be pari passu with, or subordinated to, the Subsidiary Guarantee or (B) subordinated to the Notes, then the Guarantee of such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee at least to the extent that the Guaranteed Indebtedness is subordinated to the Notes. Notwithstanding the foregoing, any Subsidiary Guarantee by a Restricted Subsidiary may provide by its terms that it shall be automatically and unconditionally released and discharged upon (i) any sale, exchange or transfer, to any Person not an Affiliate of the Company, of all of the Company's and each Restricted Subsidiary's Capital Stock in, or all or substantially all the assets of, such Restricted Subsidiary (which sale, exchange or transfer is not prohibited by this Indenture) or (ii) the release or discharge of the Guarantee which resulted in the creation of such Subsidiary Guarantee, except a discharge or release by or as a result of payment under such Guarantee. SECTION 4.09. LIMITATIONS ON TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES. The Company will not, and will not permit any Restricted Subsidiary to, directly or indirectly, enter into, renew or extend any transaction (including, without limitation, the purchase, sale, lease or exchange of property or assets, or the rendering of any service) with any holder (or any Affiliate of such holder) of 10% or more of any class of Capital Stock of the Company (calculated on a fully diluted basis) or with any Affiliate of the Company or any Restricted Subsidiary, except upon fair and reasonable terms no less favorable to the Company or such Restricted Subsidiary than could be obtained, at the time of such transaction or, if such transaction is pursuant to a written agreement, at the time of the execution of the agreement providing therefor, in a comparable arm's-length transaction with a Person that is not such a holder or an Affiliate. The foregoing limitation does not limit, and shall not apply to (i) transactions (A) approved by a majority of the disinterested members of the Board of Directors or (B) for which the Company or a Restricted Subsidiary delivers to the Trustee a written opinion of a nationally recognized investment banking firm stating that the transaction is fair to the Company or such Restricted Subsidiary from a financial point of view; (ii) any transaction solely between the Company and any of its Wholly Owned Restricted Subsidiaries or solely between Wholly Owned Restricted Subsidiaries; (iii) the payment in cash or securities of reasonable and customary regular fees to directors of the Company who are not employees of the Company; (iv) any payments or other transactions pursuant to any tax-sharing agreement between the Company and any other Person with which the Company files a consolidated tax return or with which the Company is part of a consolidated group for tax purposes; or (v) any Restricted Payments not prohibited by Section 4.05. Notwithstanding the foregoing, any 56 49 transaction or series of related transactions covered by the first paragraph of this Section 4.09 and not covered by clauses (ii) through (v) of this paragraph, the aggregate amount of which exceeds $2 million in value, must be approved or determined to be fair in the manner provided for in clause (i)(A) or (B) above. SECTION 4.10. LIMITATION ON LIENS. The Company and the Guarantors shall not Incur any Indebtedness secured by a Lien ("Secured Indebtedness") which is not Senior Indebtedness unless contemporaneously therewith effective provision is made to secure the Notes or the Note Guarantee of such Guarantor, as the case may be, equally and ratably with (or, if the Secured Indebtedness is subordinated in right of payment to the Notes, prior to) such Secured Indebtedness for so long as such Secured Indebtedness is secured by such Lien. The foregoing shall not apply to Liens (including extensions and renewals thereof) upon real or personal property acquired after the Closing Date, provided that (a) such Lien is created solely for the purpose of securing Indebtedness Incurred, in accordance with Section 4.03, to finance the cost (including the cost of design, development, acquisition, construction, installation, improvement, transportation or integration) of the item of property or assets subject thereto and such Lien is created prior to, at the time of or within six months after the later of the acquisition, the completion of construction or the commencement of full operation of such property, (b) the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost and (c) any such Lien shall not extend to or cover any property or assets other than such item of property or assets and any improvements on such item. SECTION 4.11. LIMITATION ON ASSET SALES. The Company will not, and will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless (i) the consideration received by the Company or such Restricted Subsidiary is at least equal to the fair market value of the assets sold or disposed of and (ii) at least 75% of the consideration received consists of cash or Temporary Cash Investments; provided, however, that the amount of any note or other securities received by the Company or any such Restricted Subsidiary which are converted into cash within 180 days of such Asset Sale shall be deemed to be cash for purposes of this provision. In the event and to the extent that the Net Cash Proceeds received by the Company or any of its Restricted Subsidiaries from one or more Asset Sales occurring on or after the Closing Date in any period of 12 consecutive months exceed 10% of Adjusted Consolidated Net Tangible Assets (determined as of the date closest to the commencement of such 12-month period for which a consolidated balance sheet of the Company and its Subsidiaries has been filed with the Commission pursuant to Section 4.18), then the Company shall or shall cause the relevant Restricted Subsidiary to (i) within twelve months after the date Net Cash Proceeds so received exceed 10% of Adjusted Consolidated Net Tangible Assets (A) apply an amount equal to such excess Net Cash Proceeds to permanently repay Senior Indebtedness of the Company, or any Restricted 57 50 Subsidiary providing a Subsidiary Guarantee pursuant to Section 4.08 or Indebtedness of any other Restricted Subsidiary, in each case owing to a Person other than the Company or any of its Restricted Subsidiaries or (B) invest an equal amount, or the amount not so applied pursuant to clause (A) (or enter into a definitive agreement committing to so invest within 12 months after the date of such agreement), in property or assets (other than current assets) of a nature or type or that are used in a business (or in a company having property and assets of a nature or type, or engaged in a business) similar or related to the nature or type of the property and assets of, or the business of, the Company and its Restricted Subsidiaries existing on the date of such investment and (ii) apply (no later than the end of the 12-month period referred to in clause (i)) such excess Net Cash Proceeds (to the extent not applied pursuant to clause (i)) as provided in the following paragraph of this Section 4.11. The amount of such excess Net Cash Proceeds required to be applied (or to be committed to be applied) during such 12-month period as set forth in clause (i) of the preceding sentence and not applied as so required by the end of such period shall constitute "Excess Proceeds". If, as of the first day of any calendar month, the aggregate amount of Excess Proceeds not theretofore subject to an Offer to Purchase pursuant to this Section 4.11 totals at least $10 million, the Company must commence, not later than the fifteenth Business Day of such month, and consummate an Offer to Purchase from the Holders on a pro rata basis an aggregate principal amount of Notes equal to the Excess Proceeds on such date, at a purchase price equal to 100% of the principal amount of the Notes, plus, in each case, accrued interest (if any) to the Payment Date. Upon the consummation of any Offer to Purchase pursuant to this Section 4.11, the amount of Excess Proceeds shall be reset to zero. Any transaction permitted under Article Five shall not be deemed an Asset Sale for purposes of this Section 4.11. A Guarantor shall be discharged and released automatically from all of its obligations under its Note Guarantee if all or substantially all of its assets are sold or all of its Capital Stock is sold, in each case in a transaction in compliance with this Section 4.11. SECTION 4.12. REPURCHASE OF NOTES UPON A CHANGE OF CONTROL. The Company shall commence, within 30 days of the occurrence of a Change of Control, and consummate an Offer to Purchase for all Notes then outstanding, at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the Payment Date (subject to the right of Holders of record on the relevant Regular Record Date that is prior to the Change of Control to receive interest due on an Interest Payment Date). 58 51 SECTION 4.13. EXISTENCE. Subject to Articles Four and Five of this Indenture, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its existence and the existence of each of its Restricted Subsidiaries in accordance with the respective organizational documents of the Company and each Restricted Subsidiary and the rights (whether pursuant to charter, partnership certificate, agreement, statute or otherwise), licenses and franchises of the Company and each Restricted Subsidiary; provided that the Company shall not be required to preserve any such right, license or franchise, or the existence of any Restricted Subsidiary, if the maintenance or preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Subsidiaries taken as a whole. SECTION 4.14. PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge and shall cause each of its Subsidiaries to pay or discharge, or cause to be paid or discharged, before the same shall become delinquent (i) all material taxes, assessments and governmental charges levied or imposed upon (a) the Company or any such Subsidiary, (b) the income or profits of any such Subsidiary which is a corporation or (c) the property of the Company or any such Subsidiary and (ii) all material lawful claims for labor, materials and supplies that, if unpaid, might by law become a lien upon the property of the Company or any such Subsidiary; provided that the Company shall not be required to pay or discharge, or cause to be paid or discharged, any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which adequate reserves have been established. SECTION 4.15. MAINTENANCE OF PROPERTIES AND INSURANCE. The Company will cause all properties used or useful in the conduct of its business or the business of any of its Restricted Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided that nothing in this Section 4.15 shall prevent the Company or any Restricted Subsidiary from discontinuing the use, operation or maintenance of any of such properties or disposing of any of them, if such discontinuance or disposal is, in the judgment of the Company, desirable in the conduct of the business of the Company or such Restricted Subsidiary. The Company will provide or cause to be provided, for itself and its Restricted Subsidiaries, insurance (including appropriate self-insurance) against loss or damage of the kinds customarily insured against by corporations similarly situated and owning like properties, including, but not limited to, products liability insurance and public liability insurance, with reputable insurers or with the government of the United States of America, or 59 52 an agency or instrumentality thereof, in such amounts, with such deductibles and by such methods as shall be customary for corporations similarly situated in the industry in which the Company or any such Restricted Subsidiary, as the case may be, is then conducting business. SECTION 4.16. NOTICE OF DEFAULTS. In the event that any Officer becomes aware of any Default or Event of Default, the Company shall promptly deliver to the Trustee an Officers' Certificate specifying such Default or Event of Default. SECTION 4.17. COMPLIANCE CERTIFICATES (a) The Company shall deliver to the Trustee, within 60 days after the end of each fiscal quarter (120 days after the end of the last fiscal quarter of each year), an Officers' Certificate stating whether or not the signers know of any Default or Event of Default that occurred during such fiscal quarter. In the case of the Officers' Certificate delivered within 120 days after the end of the Company's fiscal year, such certificate shall contain a certification from the principal executive officer, principal financial officer or principal accounting officer of the Company that a review has been conducted of the activities of the Company and its Restricted Subsidiaries and the Company's and its Restricted Subsidiaries' performance under this Indenture and that the Company has complied with all conditions and covenants under this Indenture. For purposes of this Section 4.17, such compliance shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. If any of the officers of the Company signing such certificate has knowledge of such a Default or Event of Default, the certificate shall specify each such Default or Event of Default and the nature and status thereof. The first certificate to be delivered pursuant to this Section 4.17(a) shall be for the first fiscal quarter beginning after the execution of this Indenture. (b) The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, beginning with the fiscal year in which this Indenture was executed, a certificate signed by the Company's independent certified public accountants stating (i) that their audit examination has included a review of the terms of this Indenture and the Notes as they relate to accounting matters, (ii) that they have read the most recent Officers' Certificate delivered to the Trustee pursuant to paragraph (a) of this Section 4.17 and (iii) whether, in connection with their audit examination, anything came to their attention that caused them to believe that the Company was not in compliance with any of the terms, covenants, provisions or conditions of Article Four and Section 5.01 as they pertain to accounting matters and, if any Default or Event of Default has come to their attention, specifying the nature and period of existence thereof; provided that such independent certified public accountants shall not be liable in respect of such statement by reason of any failure to obtain knowledge of any such Default or Event of Default that would not be disclosed in the course of an audit examination conducted in accordance with generally accepted auditing standards in effect at the date of such examination. 60 53 SECTION 4.18 COMMISSION REPORTS AND REPORTS TO HOLDERS. Whether or not the Company is then required to file reports with the Commission, the Company shall file with the Commission (if permitted) all such reports and other information as it would be required to file with the Commission by Sections 13(a) or 15(d) under the Exchange Act if it were subject thereto. The Company shall supply the Trustee and each Holder or shall supply to the Trustee for forwarding to each such Holder, without cost to such Holder, copies of such reports and other information (whether or not so filed) within 15 days after the date it would have been required to file such reports or other information with the Commission had it been subject to such Sections. The Company also shall comply with the other provisions of TIA Section 314 (a). SECTION 4.19. WAIVER OF STAY, EXTENSION OR USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest on the Notes as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Indenture; and (to the extent that it may lawfully do so) the Company hereby expressly waives all benefit or advantage of any such law and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE FIVE SUCCESSOR CORPORATION SECTION 5.01. WHEN THE COMPANY MAY MERGE, ETC. The Company will not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially an entirety in one transaction or a series of related transactions) to, any Person or permit any Person to merge with or into the Company unless: (i) the Company shall be the continuing Person, or the Person (if other than the Company) formed by such consolidation or into which the Company is merged or that acquired or leased such property and assets of the Company shall be a corporation organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of the Company on all of the Notes and under this Indenture; (ii) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; (iii) immediately after giving effect to such transaction on a pro forma basis the Company, or any Person becoming the successor obligor of the Notes, as the case may be, could Incur at least $1.00 of Indebtedness under the first paragraph of Section 4.03; provided that this clause 61 54 (iii) shall not apply to a consolidation, merger or sale of assets of the Company if all Liens and Indebtedness of the Company or any Person becoming the successor obligor on the Notes, as the case may be, and its Restricted Subsidiaries outstanding immediately after such transaction would, if Incurred at such time, have been permitted to be Incurred (and all such Liens and Indebtedness, other than Liens and Indebtedness of the Company and its Restricted Subsidiaries outstanding immediately prior to the transaction, shall be deemed to have been Incurred) for all purposes of this Indenture; and (iv) the Company delivers to the Trustee an Officers' Certificate (attaching the arithmetic computations to demonstrate compliance with clause (iii)) and an Opinion of Counsel, in each case stating that such consolidation, merger or transfer and such supplemental indenture complies with this provision and that all conditions precedent provided for herein relating to such transaction have been complied with; provided, however, that clauses (iii) and (iv) above do not apply if, in the good faith determination of the Board of Directors of the Company, whose determination shall be evidenced by a Board Resolution, the principal purpose of such transaction is to change the state of incorporation of the Company; and provided further that any such transaction shall not have as one of its purposes the evasion of the foregoing limitations. Notwithstanding the foregoing, (i) any Restricted Subsidiary of the Company may consolidate with, merge into or transfer all or part of its properties and assets to the Company and (ii) the Company may merge with an Affiliate incorporated solely for the purpose of reincorporating the Company in another jurisdiction to realize tax or other similar benefits. Each Guarantor will not consolidate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of all or substantially all of its property and assets (as an entirety or substantially an entirety in one transaction or a series of related transactions) to, any Person (other than the Company or another Guarantor) or permit any Person to merge with or into it unless: (i) such Guarantor shall be the continuing Person, or (ii) the Person (if other than such Guarantor) formed by such consolidation or into which such Guarantor is merged or that acquired or leased such property and assets of such Guarantor shall be a corporation organized and validly existing under the laws of the United States of America or any jurisdiction thereof and shall expressly assume, by a supplemental indenture, executed and delivered to the Trustee, all of the obligations of such Guarantor's Note Guarantee. Notwithstanding the foregoing sentence, a Guarantor shall be discharged and released from all of its obligations under its Note Guarantee if all or substantially all of its assets are sold, or all of its Capital Stock is sold, in each case in a transaction in compliance with Section 4.11. SECTION 5.02. SUCCESSOR SUBSTITUTED. Upon any consolidation or merger, or any sale, conveyance, transfer, lease or other disposition of all or substantially all of the property and assets of the Company in accordance with Section 5.01, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, conveyance, transfer, lease or other disposition is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this 62 55 Indenture with the same effect as if such successor Person had been named as the Company herein; provided that the Company shall not be released from its obligation to pay the principal of, premium, if any, or interest on the Notes in the case of a lease of all or substantially all of its property and assets. ARTICLE SIX DEFAULT AND REMEDIES SECTION 6.01. EVENTS OF DEFAULT. Any of the following events shall constitute an "EVENT OF DEFAULT" hereunder: (a) default in the payment of principal of (or premium, if any, on) any Note when the same becomes due and payable at Stated Maturity, upon acceleration, redemption or otherwise; (b) default in the payment of interest on any Note when the same becomes due and payable, and such default continues for a period of 30 days whether or not such payment is prohibited by Article Ten; (c) default in the performance or breach of Article Five or the failure to comply for 30 days after notice of its obligation to make an Offer to Purchase in accordance with Section 4.11 or Section 4.12; (d) the Company defaults in the performance of or breaches any other covenant or agreement of the Company in this Indenture or under the Notes (other than a default specified in clause (a), (b) or (c) above) and such default or breach continues for a period of 60 consecutive days after written notice by the Trustee or the Holders of 25% or more in aggregate principal amount of the Notes; (e) there occurs with respect to any issue or issues of Indebtedness of the Company or any Significant Subsidiary having an outstanding principal amount of $10 million or more in the aggregate for all such issues of all such Persons, whether such Indebtedness now exists or shall hereafter be created, (i) an event of default that has caused the holder thereof to declare such Indebtedness to be due and payable prior to its Stated Maturity and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within 60 days of such acceleration and/or (ii) the failure to make a principal payment at the final (but not any interim) fixed maturity and such defaulted payment shall not have been made, waived or extended within the applicable grace period related to any such payment default; (f) any final judgment or order (not covered by insurance) for the payment of 63 56 money in excess of $10 million in the aggregate for all such final judgments or orders against all such Persons (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Company or any Significant Subsidiary and shall not be paid or discharged, and there shall be any period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $10 million during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in the premises enters a decree or order for (A) relief in respect of the Company or any Guarantor that would be a Significant Subsidiary if the references to 10% in the definition of Significant Subsidiary were 20% instead of 10% (a "Significant Guarantor") or any Significant Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (B) appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Guarantor or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Guarantor or any Significant Subsidiary or (C) the winding up or liquidation of the affairs of the Company or any Significant Guarantor or any Significant Subsidiary and, in each case, such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; (h) the Company or any Significant Guarantor or any Significant Subsidiary (A) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Guarantor or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Guarantor or any Significant Subsidiary or (C) effects any general assignment for the benefit of creditors; or (i) the Company or any Guarantor disclaims any Note Guarantee or asserts that any Note Guarantee is not binding on any Guarantor. SECTION 6.02. ACCELERATION. If an Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 that occurs with respect to the Company or any Significant Guarantor or any Significant Subsidiary) occurs and is continuing under this Indenture, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes, then outstanding, by written notice to the Company (and to the Trustee if such notice is given by the Holders), may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued interest on the Notes to be immediately due and payable. Upon a declaration of acceleration, such principal, premium, if any, and accrued interest shall be immediately due and payable; provided, however, that so long as the Credit Facility is in effect, such declaration shall not become 64 57 effective until the earlier of (A) five Business Days after delivery of such notice to the representative of the Credit Facility and (B) the acceleration of any Indebtedness under the Credit Facility. In the event of a declaration of acceleration because an Event of Default set forth in clause (e) of Section 6.01 has occurred and is continuing, such declaration of acceleration shall be automatically rescinded and annulled if the event of default triggering such Event of Default pursuant to clause (e) shall be remedied or cured by the Company or the relevant Significant Guarantor or the relevant Significant Subsidiary or waived by the holders of the relevant Indebtedness within 60 days after the declaration of acceleration with respect thereto. If an Event of Default specified in clause (g) or (h) of Section 6.01 occurs with respect to the Company or any Significant Guarantor or Significant Subsidiary, the principal of, premium, if any, and accrued interest on the Notes then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. At any time after such declaration of acceleration, but before a judgment or decree for the payment of the money due has been obtained by the Trustee, the Holders of at least a majority in principal amount of the outstanding Notes by written notice to the Company and to the Trustee, may waive all past Defaults and rescind and annul a declaration of acceleration and its consequences if (a) the Company has paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (ii) all overdue interest on all Notes, (iii) the principal of and premium, if any, on the Notes that have become due otherwise than by such declaration or occurrence of acceleration and interest thereon at the rate prescribed therefor by such Notes, and (iv) to the extent that the payment of such interest is lawful, interest upon overdue interest, if any, at the rate prescribed therefor, by such Notes, (b) existing Events of Default, other than the non-payment of the principal of, premium, if any, and accrued interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived and (c) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. SECTION 6.03. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may, and at the direction of the Holders of at least a majority in principal amount of the outstanding Notes shall, pursue any available remedy by proceeding at law or in equity to collect the payment of principal of, premium, if any, or interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. SECTION 6.04. WAIVER OF PAST DEFAULTS. Subject to Sections 6.02, 6.07 and 9.02, the Holders of at least a majority in principal amount of the outstanding Notes, by notice to the Trustee, may waive an existing Default or Event of 65 58 Default and its consequences, except a Default in the payment of principal of, premium, if any, or interest on any Note as specified in clause (a) or (b) of Section 6.01 or in respect of a covenant or provision of this Indenture which cannot be modified or amended without the consent of the Holder of each outstanding Note affected. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto. SECTION 6.05. CONTROL BY MAJORITY. The Holders of at least a majority in aggregate principal amount of the outstanding Notes may 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; provided that, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that may involve the Trustee in personal liability, or that the Trustee determines in good faith may be unduly prejudicial to the rights of Holders of Notes not joining in the giving of such direction; and provided further that the Trustee may take any other action it deems proper that is not inconsistent with any such direction received from Holders of Notes. SECTION 6.06. LIMITATION ON SUITS. A Holder may not institute any proceeding, judicial or otherwise, with respect to this Indenture or the Notes, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) the Holder gives the Trustee written notice of a continuing Event of Default; (ii) the Holders of at least 25% in aggregate principal amount of outstanding Notes shall have made a written request to the Trustee to pursue such remedy; (iii) such Holder or Holders offer the Trustee indemnity reasonably satisfactory to the Trustee against any costs, liability or expense; (iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and (v) during such 60-day period, the Holders of a majority in aggregate principal amount of the outstanding Notes do not give the Trustee a direction that is inconsistent with the request. For purposes of Section 6.05 and this Section 6.06, the Trustee shall comply with TIA Section 316(a) in making any determination of whether the Holders of the required aggregate principal amount of outstanding Notes have concurred in any request or direction of the 66 59 Trustee to pursue any remedy available to the Trustee or the Holders with respect to this Indenture or the Notes or otherwise under the law. A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over such other Holder. SECTION 6.07. RIGHTS OF HOLDERS TO RECEIVE PAYMENT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of the principal of, premium, if any, or interest on, such Note or to bring suit for the enforcement of any such payment, on or after the due date expressed in the Notes, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. COLLECTION SUIT BY TRUSTEE. If an Event of Default in payment of principal, premium or interest specified in clause (a), (b) or (c) of Section 6.01 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or any other obligor of the Notes for the whole amount of principal, premium, if any, and accrued interest remaining unpaid, together with interest on overdue principal, premium, if any, and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate specified in the Notes, and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor of the Notes), its creditors or its property and shall be entitled and empowered to collect and receive any monies, securities or other property payable or deliverable upon conversion or exchange of the Notes or upon any such claims and to distribute the same, and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07. Nothing herein contained shall be deemed to empower the Trustee to authorize or consent to, or accept or adopt on behalf of any Holder, any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in 67 60 any such proceeding. SECTION 6.10. PRIORITIES. If the Trustee collects any money pursuant to this Article Six, it shall pay out the money in the following order: First: to the Trustee for all amounts due under Section 7.07, subject only to the written disapproval of any representative of the holders of the Senior Indebtedness as to amounts reasonably determined by them or it to be excessive and unreasonable; Second: to the holders of Senior Indebtedness, as and to the extent required by Article Ten; Third: to the Trustee as to all remaining amounts due it under Section 7.07 and not paid pursuant to priority First, above; Fourth: to Holders for amounts then due and unpaid for principal of, premium, if any, and interest on the Notes in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Notes for principal, premium, if any, and interest, respectively; and Fifth: to the Company or any other obligors of the Notes, as their interests may appear, or as a court of competent jurisdiction may direct. The Trustee, upon prior written notice to the Company, may fix a record date and payment date for any payment to Holders pursuant to this Section 6.10. SECTION 6.11 UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court may require any party litigant in such suit to file an undertaking to pay the costs of the suit, and the court may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in principal amount of the outstanding Notes. SECTION 6.12. RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then, and in every such case, subject to any determination in such proceeding, the Company, 68 61 the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Company, Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 6.13. RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or wrongfully taken Notes in Section 2.09, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. SECTION 6.14. DELAY OR OMISSION NOT WAIVER. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article Six or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. ARTICLE SEVEN TRUSTEE SECTION 7.01. GENERAL. The duties and responsibilities of the Trustee shall be as provided by the TIA and as set forth herein. Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not herein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Article Seven. SECTION 7.02. CERTAIN RIGHTS OF TRUSTEE. Subject to TIA Sections 315(a) through (d): (i) the Trustee may rely, and shall be protected in acting or refraining from acting, upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of 69 62 indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper person; (ii) before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Section 10.04. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion; (iii) the Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any attorney or agent appointed with due care by it hereunder; (iv) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction; (v) the Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within its rights or powers, provided that the Trustee's conduct does not constitute negligence or bad faith; (vi) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officers' Certificate; and (vii) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company personally or by agent or attorney. SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not the Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to TIA Sections 310(b) and 311. 70 63 SECTION 7.04. TRUSTEE'S DISCLAIMER. The Trustee (i) makes no representation as to the validity or adequacy of this Indenture or the Notes, (ii) shall not be accountable for the Company's use or application of the proceeds from the Notes and (iii) shall not be responsible for any statement in the Notes other than its certificate of authentication. SECTION 7.05. NOTICE OF DEFAULT. If any Default or any Event of Default occurs and is continuing and if such Default or Event of Default is known to the Trustee, the Trustee shall mail to each Holder in the manner and to the extent provided in TIA Section 313(c) notice of the Default or Event of Default within 45 days after it occurs, unless such Default or Event of Default has been cured; provided, however, that, except in the case of a default in the payment of the principal of, premium, if any, or interest on any Note, the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interest of the Holders. SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS. Within 60 days after each May 15, beginning with May 15, 1999, the Trustee shall mail to each Holder as provided in TIA Section 313(c) a brief report dated as of such May 15, if required by TIA Section 313(a). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Company and filed with the Commission and each stock exchange on which the Notes are listed in accordance with TIA Section 313(d). The Company shall promptly notify the Trustee when the Notes are listed on any stock exchange or of any delisting thereof. SECTION 7.07. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee such compensation as shall be agreed upon in writing for its services hereunder. The compensation of the Trustee shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by the Trustee without negligence or bad faith on its part. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee for, and hold it harmless against, any loss or liability or expense incurred by it without negligence or bad faith on its part in connection with the acceptance or administration of this Indenture and its duties under this Indenture and the Notes, including the costs and expenses of defending itself against any claim or liability and of complying with any process served upon it or any of its officers in connection with the exercise or performance of any of its powers or duties under this Indenture and the Notes. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. 71 64 Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder, unless the Company is materially prejudiced thereby. The Company shall defend the claim and the Trustee shall cooperate in the defense. Unless otherwise set forth herein, the Trustee may have separate counsel and the Company shall pay the reasonable fees and expenses of such counsel. The Company need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. To secure the Company's payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee, in its capacity as Trustee, except money or property held in trust to pay principal of, premium, if any, and interest on particular Notes. If the Trustee incurs expenses or renders services after the occurrence of an Event of Default specified in clause (g) or (h) of Section 6.01, the expenses and the compensation for the services will be intended to constitute expenses of administration under Title 11 of the United States Bankruptcy Code or any applicable federal or state law for the relief of debtors. The provisions of this Section 7.07 shall survive the termination of this Indenture. The Trustee shall comply with the provisions of TIA Section 313(b)(2) to the extent applicable. SECTION 7.08. REPLACEMENT OF TRUSTEE. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign at any time by so notifying the Company in writing at least 30 days prior to the date of the proposed resignation. The Holders of a majority in principal amount of the outstanding Notes may remove the Trustee by so notifying the Trustee in writing and may appoint a successor Trustee with the consent of the Company. The Company may remove the Trustee if: (i) the Trustee is no longer eligible under Section 7.10; (ii) the Trustee is adjudged a bankrupt or an insolvent; (iii) a receiver or other public officer takes charge of the Trustee or its property; or (iv) the Trustee becomes incapable of acting. If the Trustee resigns or is removed, or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company. If the successor Trustee does not deliver its written acceptance required by the next succeeding paragraph of this Section 7.08 within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in 72 65 principal amount of the outstanding Notes may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after the delivery of such written acceptance, subject to the lien provided in Section 7.07, (i) the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee, (ii) the resignation or removal of the retiring Trustee shall become effective and (iii) the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. If the Trustee is no longer eligible under Section 7.10 or shall fail to comply with TIA Section 310(b), any Holder who satisfies the requirements of TIA Section 310(b) may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.08, the Trustee shall resign immediately in the manner and with the effect provided in this Section. The Company shall give notice of any resignation and any removal of the Trustee and each appointment of a successor Trustee to all Holders. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company's obligation under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the resulting, surviving or transferee corporation or national banking association without any further act shall be the successor Trustee with the same effect as if the successor Trustee had been named as the Trustee herein, provided such corporation shall be otherwise qualified and eligible under this Article. SECTION 7.10. ELIGIBILITY. This Indenture shall always have a Trustee who satisfies the requirements of TIA Section 310(a)(1). The Trustee shall have a combined capital and surplus of at least $25 million as set forth in its most recent published annual report of condition that is subject to the requirements of applicable Federal or state supervising or examining authority. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in this Article. 73 66 SECTION 7.11. MONEY HELD IN TRUST. The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law and except for money held in trust under Article Eight of this Indenture. ARTICLE EIGHT DISCHARGE OF INDENTURE SECTION 8.01. TERMINATION OF COMPANY'S OBLIGATIONS. Except as otherwise provided in this Section 8.01, the Company may terminate its obligations under the Notes and this Indenture if: (i) all Notes previously authenticated and delivered (other than destroyed, lost or stolen Notes that have been replaced or Notes that are paid pursuant to Section 4.01 or Notes for whose payment money or securities have theretofore been held in trust and thereafter repaid to the Company, as provided in Section 8.05) have been delivered to the Trustee for cancellation and the Company has paid all sums payable by it hereunder; or (ii) (A) the Notes mature within one year or all of them are to be called for redemption within one year under arrangements satisfactory to the Trustee for giving the notice of redemption, (B) the Company irrevocably deposits in trust with the Trustee during such one-year period, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, as trust funds solely for the benefit of the Holders for that purpose, money or Government Securities sufficient (in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee), without consideration of any reinvestment of any interest thereon, to pay principal, premium, if, any, and interest on the Notes to maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder, (C) no Default or Event of Default with respect to the Notes shall have occurred and be continuing on the date of such deposit, (D) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company or any Guarantor is a party or by which it is bound and (E) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the satisfaction and discharge of this Indenture have been complied with. With respect to the foregoing clause (i), the Company's obligations under Section 7.07 74 67 shall survive. With respect to the foregoing clause (ii), the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the Notes are no longer outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.04, 8.05 and 8.06 and Article Ten (with respect to payments in respect of Senior Subordinated Obligations other than with the assets held in trust as described in clause (ii) above) shall survive. After any such irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Notes and this Indenture except for those surviving obligations specified above. SECTION 8.02. DEFEASANCE AND DISCHARGE OF INDENTURE. The Company will be deemed to have paid and will be discharged from any and all obligations in respect of the Notes on the 123rd day after the date of the deposit referred to in clause (A) of this Section 8.02, and the provisions of this Indenture will no longer be in effect with respect to the Notes, and the Trustee, at the expense of the Company, shall execute proper instruments acknowledging the same if: (A) with reference to this Section 8.02, the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10) and conveyed all right, title and interest to the Trustee for the benefit of the Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee as trust funds in trust, specifically pledged to the Trustee for the benefit of the Holders as security for payment of the principal of, premium, if any, and interest, if any, on the Notes, and dedicated solely to, the benefit of the Holders, in and to (1) money in an amount, (2) Government Securities that, through the payment of interest, premium, if any, and principal in respect thereof in accordance with their terms, will provide, not later than one day before the due date of any payment referred to in this clause (A), money in an amount or (3) a combination thereof in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, without consideration of the reinvestment of such interest and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, the principal of, premium, if any, and interest on the outstanding Notes on the Stated Maturity of such principal or interest; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Securities to the payment of such principal, premium, if any, and interest with respect to the Notes; (B) the Company has delivered to the Trustee (1) either (x) an Opinion of Counsel to the effect that Holders will not recognize income, gain or loss for federal income tax purposes as a result of the Company's exercise of its option under this Section 8.02 and will be subject to federal income tax on the same amount and in the 75 68 same manner and at the same times as would have been the case if such option had not been exercised, which Opinion of Counsel shall be based upon (and accompanied by a copy of) a ruling of the Internal Revenue Service to the same effect unless there has been a change in applicable federal income tax law after the Closing Date such that a ruling is no longer required or (y) a ruling directed to the Trustee received from the Internal Revenue Service to the same effect as the aforementioned Opinion of Counsel and (2) an Opinion of Counsel to the effect that the creation of the defeasance trust does not violate the Investment Company Act of 1940 and that after the passage of 123 days following the deposit (except, with respect to any trust funds for the account of any Holder who may be deemed to be an "insider" for purposes of the United States Bankruptcy Code, after one year following the deposit), the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a case commenced by or against the Company under either such statute, and either (i) the trust funds will no longer remain the property of the Company (and therefore will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally) or (II) if a court were to rule under any such law in any case or proceeding that the trust funds remained property of the Company, (a) assuming such trust funds remained in the possession of the Trustee prior to such court ruling to the extent not paid to the Holders, the Trustee will hold, for the benefit of the Holders, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise except for the effect of Section 552(b) of the United States Bankruptcy Code on interest on the trust funds accruing after the commencement of a case under such statute and (b) the Holders will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used in such case or proceeding; (C) immediately after giving effect to such deposit, on a pro forma basis, no Default or Event of Default shall have occurred and be continuing on the date of such deposit or during the period ending on the 123rd day after such date of such deposit, and such deposit shall not result in a breach or violation of, or constitute a Default under, this Indenture or any other 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 and is permitted by Article Ten; (D) if the Notes are then listed on a national securities exchange, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Notes will not be delisted as a result of such deposit, defeasance and discharge; and (E) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the defeasance contemplated by this Section 8.02 have been complied with. 76 69 Notwithstanding the foregoing, prior to the end of the 123-day (or one year) period referred to in clause (B)(2) of this Section 8.02, none of the Company's obligations under this Indenture shall be discharged. Subsequent to the end of such 123-day (or one year) period with respect to this Section 8.02, the Company's obligations in Sections 2.02, 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09, 2.14, 4.01, 4.02, 8.04, 8.05, 8.06 and the rights, powers, trusts, duties and immunities of the Trustee hereunder and Article Ten (with respect to payments in respect of Senior Subordinated Obligations other than with the assets held in trust as described in this Section 8.02) shall survive until the Notes are no longer outstanding. Thereafter, only the Company's obligations in Sections 7.07, 8.04, 8.05 and 8.06 shall survive. If and when a ruling from the Internal Revenue Service or an Opinion of Counsel referred to in clause (B)(1) of this Section 8.02 is able to be provided specifically without regard to, and not in reliance upon, the continuance of the Company's obligations under Section 4.01, then the Company's obligations under such Section 4.01 shall cease upon delivery to the Trustee of such ruling or Opinion of Counsel and compliance with the other conditions precedent provided for herein relating to the defeasance contemplated by this Section 8.02. After any such irrevocable deposit, the Trustee upon request shall acknowledge in writing the discharge of the Company's obligations under the Notes and this Indenture except for those surviving obligations in the immediately preceding paragraph. SECTION 8.03. DEFEASANCE OF CERTAIN OBLIGATIONS. The Company may omit to comply with any term, provision or condition set forth in clauses (iii) and (iv) of Section 5.01 and Sections 4.03 through 4.11 and clause (c) of Section 6.01 with respect to clauses (iii) and (iv) of Section 5.01, clause (d) of Section 6.01 with respect to Sections 4.01, 4.02 and 4.12 through 4.19 and clauses (e) and (f) of Section 6.01 shall be deemed not to be Events of Default and Article Ten shall not apply to the money and/or U.S. Government Securities held by the trust referred to in clause (i) below, in each case with respect to the outstanding Notes if: (i) with reference to this Section 8.03, the Company has irrevocably deposited or caused to be irrevocably deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10) and conveyed all right, title and interest to the Trustee for the benefit of the Holders, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee as trust funds in trust, specifically pledged to the Trustee for the benefit of the Holders as security for payment of the principal of, premium, if any, and interest, if any, on the Notes, and dedicated solely to, the benefit of the Holders, in and to (A) money in an amount, (B) Government Securities that, through the payment of interest, premium, if any, and principal in respect thereof in accordance with their terms, will provide, not later than 77 70 one day before the due date of any payment referred to in this clause (i), money in an amount or (C) a combination thereof in an amount sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, without consideration of the reinvestment of such interest and after payment of all federal, state and local taxes or other charges and assessments in respect thereof payable by the Trustee, the principal of, premium, if any, and interest on the outstanding Notes on the Stated Maturity of such principal or interest; provided that the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Securities to the payment of such principal, premium, if any, and interest with respect to the Notes; (ii) the Company has delivered to the Trustee an Opinion of Counsel to the effect that (A) the creation of the defeasance trust does not violate the Investment Company Act of 1940, (B) after the passage of 123 days following the deposit (except, with respect to any trust funds for the account of any Holder who may be deemed to be an "insider" for purposes of the United States Bankruptcy Code, after one year following the deposit), the trust funds will not be subject to the effect of Section 547 of the United States Bankruptcy Code or Section 15 of the New York Debtor and Creditor Law in a case commenced by or against the Company under either such statute, and either (1) the trust funds will no longer remain the property of the Company (and therefore will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors' rights generally) or (2) if a court were to rule under any such law in any case or proceeding that the trust funds remained property of the Company, (x) assuming such trust funds remained in the possession of the Trustee prior to such court ruling to the extent not paid to the Holders, the Trustee will hold, for the benefit of the Holders, a valid and perfected security interest in such trust funds that is not avoidable in bankruptcy or otherwise (except for the effect of Section 552(b) of the United States Bankruptcy Code on interest on the trust funds accruing after the commencement of a case under such statute) and (y) the Holders will be entitled to receive adequate protection of their interests in such trust funds if such trust funds are used in such case or proceeding, (C) the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain covenants and Events of Default and will be subject to federal income tax on the same amount and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred and (D) the Trustee, for the benefit of the Holders, has a valid first-priority security interest in the trust funds; (iii) immediately after giving effect to such deposit on a pro forma basis, no Default or Event of Default shall have occurred and be continuing on the date of such deposit or during the period ending on the 123rd day after such date of such deposit, 78 71 and such deposit shall not result in a breach or violation of, or constitute a default under, this Indenture or any other 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 and is permitted by Article Ten; (iv) if the Notes are then listed on a national securities exchange, the Company has delivered to the Trustee an Opinion of Counsel to the effect that the Notes will not be delisted as a result of such deposit, defeasance and discharge; and (v) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, in each case stating that all conditions precedent provided for herein relating to the defeasance contemplated by this Section 8.03 have been complied with. SECTION 8.04. APPLICATION OF TRUST MONEY. Subject to Section 8.06, the Trustee or Paying Agent shall hold in trust money or Government Securities deposited with it pursuant to Section 8.01, 8.02 or 8.03, as the case may be, and shall apply the deposited money and the money from Government Securities in accordance with the Notes and this Indenture to the payment of principal of, premium, if any, and interest on the Notes; but such money need not be segregated from other funds except to the extent required by law. SECTION 8.05. REPAYMENT TO COMPANY. Subject to Sections 7.07, 8.01, 8.02 and 8.03, the Trustee and the Paying Agent shall promptly pay to the Company upon request set forth in an Officers' Certificate any excess money held by them at any time and thereupon shall be relieved from all liability with respect to such money. The Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal, premium, if any, or interest that remains unclaimed for two years; provided that the Trustee or Paying Agent before being required to make any payment may cause to be published at the expense of the Company once in a newspaper of general circulation in The City of New York and, in the event the Notes are listed on the Luxembourg Stock Exchange, in Luxembourg, or mail to each Holder entitled to such money at such Holder's address (as set forth in the Security Register) notice that such money remains unclaimed and that after a date specified therein (which shall be at least 30 days from the date of such publication or mailing) any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to such money must look to the Company for payment as general creditors unless an applicable law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. SECTION 8.06. REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with 79 72 Section 8.01, 8.02 or 8.03, as the case may be, by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.01, 8.02 or 8.03, as the case may be, until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Securities in accordance with Section 8.01, 8.02 or 8.03, as the case may be; provided that, if the Company has made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Securities held by the Trustee or Paying Agent. ARTICLE NINE AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 9.01. WITHOUT CONSENT OF HOLDERS. The Company, when authorized by a resolution of its Board of Directors (as evidenced by a Board Resolution delivered to the Trustee), and the Trustee may amend or supplement this Indenture or the Notes without notice to or the consent of any Holder: (1) to cure any ambiguity, defect or inconsistency in this Indenture; provided that such amendments or supplements shall not, in the good faith opinion of the Board of Directors as evidenced by a Board Resolution, adversely affect the interests of the Holders in any material respect; (2) to comply with Article Five; (3) to comply with any requirements of the Commission in connection with the qualification of this Indenture under the TIA; (4) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee; (5) to provide for uncertificated Notes in addition to or in place of certificated Notes; (6) to add one or more subsidiary guarantees on the terms required by this Indenture; or (7) to make any change that, in the good faith opinion of the Board of Directors as evidenced by a Board Resolution, does not materially and adversely affect the rights of any Holder. 80 73 SECTION 9.02. WITH CONSENT OF HOLDERS. Subject to Sections 6.04 and 6.07 and without prior notice to the Holders, the Company and the Guarantors, when authorized by their respective Boards of Directors (as evidenced by a Board Resolution delivered to the Trustee), and the Trustee may amend this Indenture and the Notes with the written consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding, and the Holders of a majority in aggregate principal amount of the Notes then outstanding by written notice to the Trustee may waive future compliance by the Company with any provision of this Indenture or the Notes. Notwithstanding the provisions of this Section 9.02, without the consent of each Holder affected, an amendment or waiver, including a waiver pursuant to Section 6.04, may not: (i) change the Stated Maturity of the principal of, or any installment of interest on, any Note; (ii) reduce the principal amount of, premium, if any, or interest on any Note; (iii) change the currency of payment of principal of, premium, if any, or interest on, any Note; (iv) impair the right to institute suit for the enforcement of any payment on or after the Stated Maturity (or, in the case of redemption, on or after the Redemption Date) on any Note; (v) reduce the percentage or principal amount of outstanding Notes the consent of whose Holders is necessary to modify or amend this Indenture or to waive compliance with certain provisions of or certain Defaults under this Indenture; (vi) waive a default in the payment of principal of, premium, if any, or interest on, any Note; (vii) modify any of the provisions of this Section 9.02, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each outstanding Note affected thereby; (viii) release the Note Guarantee of any Guarantor, except pursuant to Section 4.11; or (ix) modify any of the provisions of Article Ten in a manner adverse to the Holders. 81 74 It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company shall mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. The Company will mail supplemental indentures to Holders upon request. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver. SECTION 9.03. REVOCATION AND EFFECT OF CONSENT. Until an amendment or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the Note of the consenting Holder, even if notation of the consent is not made on any Note. However, any such Holder or subsequent Holder may revoke the consent as to its Note or portion of its Note. Such revocation shall be effective only if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver shall become effective on receipt by the Trustee of written consents from the Holders of the requisite percentage in principal amount of the outstanding Notes. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to consent to any amendment, supplement or waiver. If a record date is fixed, then, notwithstanding the last two sentences of the immediately preceding paragraph, those persons who were Holders at such record date (or their duly designated proxies) and only those persons shall be entitled to consent to such amendment, supplement or waiver or to revoke any consent previously given, whether or not such persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 90 days after such record date. After an amendment, supplement or waiver becomes effective, it shall bind every Holder unless it is of the type described in the second paragraph of Section 9.02. In case of an amendment or waiver of the type described in the second paragraph of Section 9.02, the amendment or waiver shall bind each Holder who has consented to it and every subsequent Holder of a Note that evidences the same indebtedness as the Note of the consenting Holder. SECTION 9.04. NOTATION ON OR EXCHANGE OF NOTES. If an amendment, supplement or waiver changes the terms of a Note, the Trustee may require the Holder to deliver such Note to the Trustee. At the Company's expense, the Trustee may place an appropriate notation on the Note about the changed terms 82 75 and return it to the Holder and the Trustee may place an appropriate notation on any Note thereafter authenticated. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation, or issue a new Note, shall not affect the validity and effect of such amendment, supplement or waiver. SECTION 9.05. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of any amendment, supplement or waiver authorized pursuant to this Article Nine is authorized or permitted by this Indenture and that it will be valid and binding upon the Company. Subject to the preceding sentence, the Trustee shall sign such amendment, supplement or waiver if the same does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Trustee may, but shall not be obligated to, execute any such amendment, supplement or waiver that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 9.06. CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article Nine shall conform to the requirements of the TIA as then in effect. ARTICLE TEN SUBORDINATION OF NOTES AND NOTE GUARANTEES SECTION 10.01. NOTES AND NOTE GUARANTEES SUBORDINATED TO SENIOR INDEBTEDNESS. The Company and the Trustee each covenants and agrees, and each Holder, by its acceptance of a Note, likewise covenants and agrees that all Notes and Note Guarantees shall be issued subject to the provisions of this Article Ten; and each Person holding any Note, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that Senior Subordinated Obligations shall, to the extent and in the manner set forth in this Article Ten, be subordinated in right of payment to the prior payment in full, in cash or cash equivalents, of all existing and future Senior Indebtedness, including, without limitation, the Company's obligations under the Credit Facility, (including any interest accruing subsequent to an event specified in Sections 6.01(g) and 6.01(h), whether or not such interest is an allowed claim enforceable against the debtor under the United States Bankruptcy Code). SECTION 10.02. NO PAYMENT ON NOTES IN CERTAIN CIRCUMSTANCES. (a) No direct or indirect payment (other than a payment or distribution in the form of Permitted Junior Securities) by or on behalf of the Company or any Guarantor of Senior Subordinated Obligations (other than with the money and/or Government Securities held under any defeasance trust established in accordance with 83 76 this Indenture on the Closing Date and not in violation of the terms of any Senior Indebtedness), whether pursuant to the terms of the Notes or the Note Guarantees or upon acceleration or otherwise shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of the obligations on any Senior Indebtedness of the Company or such Guarantor and such default shall not have been cured or waived or the benefits of this sentence waived by or on behalf of the holders of such Senior Indebtedness. (b) During the continuance of any other event of default with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated, upon receipt by the Trustee of written notice from the trustee or other representative for the holders of such Designated Senior Indebtedness (or the holders of at least a majority in principal amount of such Designated Senior Indebtedness then outstanding), no payment (other than a payment or distribution in the form of Permitted Junior Securities) of Senior Subordinated Obligations (other than with the money and/or Government Securities held under any defeasance trust established in accordance with this Indenture on the Closing Date and not in violation of the terms of any Senior Indebtedness) may be made by or on behalf of the Company or such Guarantor upon or in respect of the Notes or the Note Guarantees for a period (a "PAYMENT BLOCKAGE PERIOD") commencing on the date of receipt of such notice and ending 179 days thereafter (unless, in each case, such Payment Blockage Period shall be terminated by written notice to the Trustee from such trustee of, or other representatives for, such holders or by payment in full in cash or cash equivalents of such Designated Senior Indebtedness or at such time as defaults cease to exist or have been cured or waived). Not more than one Payment Blockage Period may be commenced with respect to the Notes (with respect to the Company or any particular Guarantor) during any period of 360 consecutive days. Notwithstanding anything in this Indenture to the contrary (with respect to the Company and each Guarantor), there must be 180 consecutive days in any 360-day period in which no Payment Blockage Period is in effect. No event of default that existed or was continuing (it being acknowledged that any subsequent action that would give rise to an event of default pursuant to any provision under which an event of default previously existed or was continuing shall constitute a new event of default for this purpose) on the date of the commencement of any Payment Blockage Period with respect to the Designated Senior Indebtedness initiating such Payment Blockage Period shall be, or shall be made, the basis for the commencement of a second Payment Blockage Period by the representative for, or the holders of, such Designated Senior Indebtedness, whether or not within a period of 360 consecutive days, unless such event of default shall have been cured or waived for a period of not less than 60 consecutive days. (c) In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee or any Holder when such payment is prohibited by Section 10.02(a) or 10.02(b), the Trustee shall promptly notify the holders of Senior Indebtedness of such prohibited payment and such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or 84 77 to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that, upon notice from the Trustee to the holders of Senior Indebtedness that such prohibited payment has been made, the holders of the Senior Indebtedness (or their representative or representatives of a trustee) within 30 days of receipt of such notice from the Trustee notify the Trustee of the amounts then due and owing on the Senior Indebtedness, if any, and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness and any excess above such amounts due and owing on Senior Indebtedness shall be paid to the Company. SECTION 10.03. PAYMENT OVER PROCEEDS UPON DISSOLUTION, BANKRUPTCY, ETC. (a) Upon any payment or distribution of assets or securities of the Company or any Guarantor of any kind or character, whether in cash, property or securities (other than with the money and/or Government Securities held under any defeasance trust established in accordance with this Indenture and not in violation of the terms of any Senior Indebtedness), in connection with any dissolution or winding up or total or partial liquidation or reorganization of the Company or any Guarantor, whether voluntary or involuntary, or in bankruptcy, insolvency, receivership or other proceedings or other marshaling of assets for the benefit of creditors, all amounts due or to become due upon all Senior Indebtedness (including any interest accruing subsequent to an event specified in Sections 6.01(g) and 6.01(h), whether or not such interest is an allowed claim enforceable against the debtor under the United States Bankruptcy Code) shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee on their behalf shall be entitled to receive any payment by (or on behalf of) the Company or such Guarantor on account of Senior Subordinated Obligations, or any payment to acquire any of the Notes for cash, property or securities, or any distribution with respect to the Notes of any cash, property or securities (other than a payment or distribution in the form of Permitted Junior Securities). Before any payment may be made by, or on behalf of, the Company or such Guarantor on any Senior Subordinated Obligations (other than with the money and/or Government Securities held under any defeasance trust established in accordance with this Indenture and not in violation of the terms of any Senior Indebtedness) in connection with any such dissolution, winding up, liquidation or reorganization, any payment or distribution of assets or securities of the Company or such Guarantor of any kind or character, whether in cash, property or securities (other than a payment or distribution in the form of Permitted Junior Securities), to which the Holders or the Trustee on their behalf would be entitled, but for the provisions of this Article Ten, shall be made by the Company, such Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, or by the Holders or the Trustee if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness held by such holders) or their representatives or to any trustee or trustees under any other indenture pursuant to which any such Senior Indebtedness may have been issued, as their respective interests appear, to the extent necessary to pay all such Senior 85 78 Indebtedness in full, in cash or cash equivalents after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Indebtedness. (b) To the extent any payment of Senior Indebtedness (whether by or on behalf of the Company or any Guarantor, as proceeds of security or enforcement of any right of setoff or otherwise) is declared to be fraudulent or preferential, set aside or required to be paid to any receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then if such payment is recovered by, or paid over to, such receiver, trustee in bankruptcy, liquidating trustee or other similar Person, the Senior Indebtedness or part thereof originally intended to be satisfied shall be deemed to be reinstated and outstanding as if such payment had not occurred. To the extent the obligation to repay any Senior Indebtedness is declared to be fraudulent, invalid, or otherwise set aside under any bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then the obligation so declared fraudulent, invalid or otherwise set aside (and all other amounts that would come due with respect thereto had such obligation not been so affected) shall be deemed to be reinstated and outstanding as Senior Indebtedness for all purposes hereof as if such declaration, invalidity or setting aside had not occurred. (c) In the event that, notwithstanding the foregoing provision prohibiting such payment or distribution, any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, property or securities, shall be received by the Trustee or any Holder at a time when such payment or distribution is prohibited by Section 10.03(a) and before all obligations in respect of Senior Indebtedness are paid in full, in cash or cash equivalents, such payment or distribution shall be received and held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness (pro rata to such holders on the basis of such respective amount of Senior Indebtedness held by such holders) or their representatives, or to the trustee or trustees under any indenture pursuant to which any such Senior Indebtedness may have been issued, as their respective interests appear, for application to the payment of Senior Indebtedness remaining unpaid until all such Senior Indebtedness has been paid in full, in cash or cash equivalents, after giving effect to any concurrent payment, distribution or provision therefor to or for the holders of such Senior Indebtedness. (d) For purposes of this Section 10.03, the words "cash, property or securities" shall not be deemed to include, so long as the effect of this clause is not to cause the Notes or the Note Guarantees to be treated in any case or proceeding or similar event described in this Section 10.03 as part of the same class of claims as the Senior Indebtedness or any class of claims pari passu with, or senior to, the Senior Indebtedness for any payment or distribution, Permitted Junior Securities of the Company or any other corporation provided for by a plan of reorganization or readjustment; provided that (1) if a new corporation results from such reorganization or readjustment, such corporation assumes the Senior Indebtedness and (2) the 86 79 rights of the holders of the Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company with or into, another corporation or the liquidation or dissolution of the Company following the sale, conveyance, transfer, lease or other disposition of all or substantially all of its property and assets to another corporation upon the terms and conditions provided in Article Five of this Indenture (including in connection with the Acquisition) shall not be deemed a dissolution, winding up, liquidation or reorganization for the purposes of this Section 10.03 if such other corporation shall, as a part of such consolidation, merger, sale, conveyance, transfer, lease or other disposition, comply (to the extent required) with the conditions stated in Article Five of this Indenture. (e) In the event of any bankruptcy, insolvency, receivership or other proceeding or other marshalling of assets for the benefit of creditors or any total or partial liquidation or reorganization of the Company or any of the Guarantors, whether voluntary or involuntary, the Holders shall retain the right to vote and otherwise act with respect to the Notes (including, without limitation, the right to vote to accept or reject any plan of partial or complete liquidation, reorganization, arrangement, composition or extension), provided that the Holders shall not in any way take or omit any action so as to contest (i) the validity of any Senior Indebtedness or any collateral therefor or guaranties thereof, (ii) the relative rights and duties of any holders of any Senior Indebtedness established in any instruments or agreements creating or evidencing any of the Senior Indebtedness with respect to any of such collateral or guaranties or (iii) the Holders' obligations and agreements set forth herein. In the event that any Holder or the Trustee fails to file a proof of claim in any such proceeding within five days of the deadline of such filing, the representatives of the Senior Indebtedness shall be permitted to file such claim on behalf of such Holder. SECTION 10.04. SUBROGATION. (a) Upon the payment in full of all Senior Indebtedness in cash or cash equivalents, the Holders shall be subrogated to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company made on such Senior Indebtedness until the principal of, premium, if any, and interest on the Notes shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of the Senior Indebtedness of any cash, property or securities to which the Holders or the Trustee on their behalf would be entitled except for the provisions of this Article Ten, and no payment pursuant to the provisions of this Article Ten to the holders of Senior Indebtedness by Holders or the Trustee on their behalf shall, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders, be deemed to be a payment by the Company to or on account of the Senior Indebtedness. It is understood that the provisions of this Article Ten are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness, on the other hand. (b) If any payment or distribution to which the Holders would otherwise have been 87 80 entitled but for the provisions of this Article Ten shall have been applied, pursuant to the provisions of this Article Ten, to the payment of all amounts payable under Senior Indebtedness, then, and in such case, the Holders shall be entitled to receive from the holders of such Senior Indebtedness, unless otherwise required by applicable law, any payments or distributions received by such holders of Senior Indebtedness in excess of the amount required to make payment in full, in cash or cash equivalents, of such Senior Indebtedness of such holders. SECTION 10.05. OBLIGATIONS OF COMPANY UNCONDITIONAL. (a) Nothing contained in this Article Ten or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among the Company and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of, premium, if any, and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders and creditors of the Company other than the holders of the Senior Indebtedness, nor shall anything herein or therein prevent the Holders or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article Ten of the holders of the Senior Indebtedness. (b) Without limiting the generality of the foregoing, nothing contained in this Article Ten will restrict the right of the Trustee or the Holders to take any action to declare the Notes to be due and payable prior to their Stated Maturity pursuant to Section 6.01 or to pursue any rights or remedies hereunder; provided, however, that all Senior Indebtedness then due and payable or thereafter declared to be due and payable shall first be paid in full, in cash or cash equivalents, before the Holders or the Trustee (to the extent provided in Section 6.10) are entitled to receive any direct or indirect payment from the Company of Senior Subordinated Obligations. SECTION 10.06. NOTICE TO TRUSTEE. (a) The Company shall give prompt written notice to the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Notes pursuant to the provisions of this Article Ten. The Trustee shall not be charged with the knowledge of the existence of any default or event of default with respect to any Senior Indebtedness or of any other facts that would prohibit the making of any payment to or by the Trustee unless and until the Trustee shall have received notice in writing at its Corporate Trust Office to that effect signed by an Officer of the Company, or by a holder of Senior Indebtedness or trustee or agent thereof; and prior to the receipt of any such written notice, the Trustee shall, subject to Article Seven, be entitled to assume that no such facts exist; provided that, if the Trustee shall not have received the notice provided for in this Section 10.06 at least one Business Day prior to the date upon which, by the terms of this Indenture, any monies shall become payable for any purpose (including, without limitation, the payment of the 88 81 principal of, premium, if any, or interest on any Note), then, notwithstanding anything herein to the contrary, the Trustee shall have full power and authority to receive any monies from the Company and to apply the same to the purpose for which they were received, and shall not be affected by any notice to the contrary that may be received by it on or after such prior date except for an acceleration of the Notes prior to such application. Nothing contained in this Section 10.06 shall limit the right of the holders of Senior Indebtedness to recover payments as contemplated by this Article Ten. The foregoing shall not apply if the Paying Agent is the Company. The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or itself to be a holder of any Senior Indebtedness (or a trustee on behalf of, or other representative of, such holder) to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative on behalf of any such holder. (b) In the event that the Trustee determines in good faith that any evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article Ten, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article Ten and, if such evidence is not furnished to the Trustee, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. SECTION 10.07. RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF LIQUIDATING AGENT. Upon any payment or distribution of assets or securities referred to in this Article Ten, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which bankruptcy, dissolution, winding up, liquidation or reorganization proceedings are pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other similar Person making such payment or distribution, delivered to the Trustee or to the Holders for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article Ten. SECTION 10.08. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS. (a) The Trustee and any Paying Agent shall be entitled to all the rights set forth in this Article Ten with respect to any Senior Indebtedness that may at any time be held by it in its individual or any other capacity to the same extent as any other holder of Senior Indebtedness and nothing in this Indenture shall deprive the Trustee or any Paying Agent of any of its rights as such holder. 89 82 (b) With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article Ten and in Section 6.10, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. SECTION 10.09. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF THE COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS. No right of any present or future holders of any Senior Indebtedness to enforce subordination as provided in this Article Ten will at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or any Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company or any Guarantor with the terms of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. The provisions of this Article Ten are intended to be for the benefit of, and shall be enforceable directly by, the holders of Senior Indebtedness. SECTION 10.10. HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE SUBORDINATION OF NOTES. Each Holder by its acceptance of any Notes authorizes and expressly directs the Trustee on its behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article Ten, and appoints the Trustee its attorney-in-fact for such purposes, including, in the event of any dissolution, winding up, liquidation or reorganization of the Company (whether in bankruptcy, insolvency, receivership, reorganization or similar proceedings or upon an assignment for the benefit of creditors or otherwise) tending towards liquidation of the property and assets of the Company, the filing of a claim for the unpaid balance of its Notes in the form required in those proceedings. If the Trustee does not file a proper claim or proof in indebtedness in the form required in such proceeding at least 30 days before the expiration of the time to file such claim or claims, each holder of Senior Indebtedness is hereby authorized to file an appropriate claim for and on behalf of the Holders. SECTION 10.11. NOT TO PREVENT EVENTS OF DEFAULT. The failure to make a payment on account of principal of, premium, if any, or interest on the Notes by reason of any provision of this Article Ten will not be construed as preventing the occurrence of an Event of Default. SECTION 10.12. TRUSTEE'S COMPENSATION NOT PREJUDICED. Subject to Section 6.10, nothing in this Article Ten will apply to amounts due to the Trustee pursuant to other sections of this Indenture, including Section 7.07. SECTION 10.13. NO WAIVER OF SUBORDINATION PROVISIONS. Without in any way limiting the generality of Section 90 83 10.09, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders, without incurring responsibility to the Holders and without impairing or releasing the subordination provided in this Article Ten or the obligations hereunder of the Holders to the holders of Senior Indebtedness, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Indebtedness or any instrument evidencing the same or any agreement under which Senior Indebtedness is outstanding or secured; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Indebtedness; (c) release any Person liable in any manner for the collection of Senior Indebtedness; and (d) exercise or refrain from exercising any rights against the Company and any other Person. SECTION 10.14. PAYMENTS MAY BE PAID PRIOR TO DISSOLUTION. Nothing contained in this Article Ten or elsewhere in this Indenture shall prevent (i) the Company except under the conditions described in Section 10.02 or 10.03, from making payments of principal of, premium, if any, and interest on the Notes, or from depositing with the Trustee any money for such payments, or (ii) the application by the Trustee of any money deposited with it for the purpose of making such payments of principal of, premium, if any, and interest on the Notes to the holders entitled thereto unless, at least one Business Day prior to the date upon which such payment becomes due and payable, the Trustee shall have received the written notice provided for in Section 10.02(b) (or there shall have been an acceleration of the Notes prior to such application) or in Section 10.06. The Company shall give prompt written notice to the Trustee of any dissolution, winding up, liquidation or reorganization of the Company. SECTION 10.15. CONSENT OF HOLDERS OF SENIOR INDEBTEDNESS UNDER THE CREDIT FACILITY. The provisions of this Article Ten (including the definitions contained in this Article and references to this Article contained in this Indenture) shall not be amended in a manner that would adversely affect the rights of the holders of Senior Indebtedness under the Credit Facility, and no such amendment shall become effective unless the holders of Senior Indebtedness under the Credit Facility shall have consented (in accordance with the provisions of the Credit Facility) to such amendment. The Trustee shall be entitled to receive and rely on an Officers' Certificate stating that such consent has been given. SECTION 10.16. TRUST MONEYS NOT SUBORDINATED. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of Government Securities held in trust under Article Eight by the Trustee for the payment of principal of, premium, if any, and interest on the Notes shall not be subordinated to the prior payment of any Senior Indebtedness (provided that, at the time deposited, such deposit did not violate any then outstanding Senior Indebtedness), and none of the Holders shall be obligated to pay over any such amount to any holder of Senior 91 84 Indebtedness. ARTICLE ELEVEN GUARANTEE OF NOTES SECTION 11.01. NOTE GUARANTEE. Subject to the provisions of this Article Eleven, each of the Guarantors hereby, jointly and severally, fully, unconditionally and irrevocably guarantees to each Holder and to the Trustee on behalf of the Holders: (i) the due and punctual payment of the principal of, premium, if any, on and interest on each Note, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal of and interest, if any, on the Notes, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee, all in accordance with the terms of such Note and this Indenture and (ii) in the case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at Stated Maturity, by acceleration or otherwise. Each of the Guarantors hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Company, any right to require a proceeding first against the Company, the benefit of discussion, protest or notice with respect to any such Note or the debt evidenced thereby and all demands whatsoever (except as specified above), and covenants that this Note Guarantee will not be discharged as to any such Note except by payment in full of the principal thereof and interest thereon and as provided in Section 8.01 and Section 8.02, or if all or substantially all of such Guarantor's assets are sold, or all of its Capital Stock is sold, in each case in a transaction in compliance with Section 4.11. The maturity of the obligations guaranteed hereby may be accelerated as provided in Article Six for the purposes of this Article Eleven. In the event of any declaration of acceleration of such obligations as provided in Article Six, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Article Eleven. In addition, without limiting the foregoing provisions, upon the effectiveness of an acceleration under Article Six, the Trustee shall promptly make a demand for payment on the Notes under the Note Guarantees provided for in this Article Eleven. If the Trustee or the Holder of any Note is required by any court or otherwise to return to the Company or any Guarantor, or any custodian, receiver, liquidator, trustee, sequestrator or other similar official acting in relating to the Company or such Guarantor, any amount paid to the Trustee or such Holder in respect of a Note, the Note Guarantees, to the extent theretofore discharged, shall be reinstated in full force and effect. Each of the Guarantors further agrees, to the fullest extent that it may lawfully do so, that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the obligations 92 85 guaranteed hereby may be accelerated as provided in Article Six hereof for the purposes of its Note Guarantee, notwithstanding any stay, injunction or other prohibition extant under any applicable bankruptcy law preventing such acceleration in respect of the obligations guaranteed hereby. Each of the Guarantors hereby irrevocably waives any claim or other right which it may now or hereafter acquire against the Company or any other Guarantor that arise from the existence, payment, performance or enforcement of its obligations under its Note Guarantee and this Indenture, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, any right to participate in any claim or remedy of the Holders against the Company or any Guarantor or any collateral which any such Holder or the Trustee on behalf of such Holder hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Company or a Guarantor, directly or indirectly, in cash or other property or by setoff or in any other manner, payment or Note on account of such claim or other rights, except to the extent that such claim or right would be necessary to preserve the enforceability of a Note Guarantee as provided in Section 11.05. If any amount shall be paid to a Guarantor in violation of the preceding sentence and the principal of, premium, of any, and accrued interest on the Notes shall not have been paid in full, such amount shall be deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Holders, and shall forthwith be paid to the Trustee for the benefit of the Holders to be credited and applied upon the principal of, premium, if any, and accrued interest on the Notes. Each of the Guarantors acknowledges that it will receive direct and indirect benefits from the issuance of the Notes pursuant to this Indenture and that the waivers set forth in this Section 11.01 are knowingly made in contemplation of such benefits. The Note Guarantees set forth in this Section 11.01 shall not be valid or become obligatory for any purpose with respect to a Note until the certificate of authentication on such Note shall have been signed by or on behalf of the Trustee. SECTION 11.02. OBLIGATIONS UNCONDITIONAL. Subject to Section 11.05, nothing contained in this Article Eleven or elsewhere in this Indenture or in the Notes is intended to or shall impair, as among any Guarantor and the holders of the Notes, the obligation of such Guarantor, which is absolute and unconditional, upon failure by the Company, to pay to the holders of the Notes the principal of, premium, if any, and interest on the Notes as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the holders of Notes and creditors of such Guarantor, nor shall anything herein or therein prevent the holder of any Note or the Trustee on their behalf from exercising all remedies otherwise permitted by applicable law upon default under this Indenture. Without limiting the foregoing, nothing contained in this Article Eleven will restrict the 93 86 right of the Trustee or the holders of the Notes to take any action to declare the Note Guarantee to be due and payable prior to the Stated Maturity of the Notes pursuant to Section 6.02 or to pursue any rights or remedies hereunder. SECTION 11.03. NOTICE TO TRUSTEE. Each Guarantor shall give prompt written notice to the Trustee of any fact known to such Guarantor which would prohibit the making of any payment to or by the Trustee in respect of the Note Guarantee of such Guarantor pursuant to the provisions of this Article Eleven. SECTION 11.04. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The failure to make a payment on account of principal of, premium, if any, or interest on the Notes by reason of any provision of this Article will not be construed as preventing the occurrence of an Event of Default. SECTION 11.05. FRAUDULENT CONVEYANCE LIMITATION. Notwithstanding any other provision of this Indenture or the Notes, no Note Guarantee shall be enforceable against any Guarantor in an amount that would cause such Note Guarantee to be a fraudulent conveyance under applicable law. SECTION 11.06. ADDITIONAL GUARANTORS. The Company shall cause any Person (other than a Foreign Subsidiary) that becomes a Restricted Subsidiary on or after the Closing Date to execute a supplemental indenture as a Guarantor. SECTION 11.07. SUBORDINATION. The obligations of the Guarantors under this Article Eleven are obligations of the Guarantors subject in all respects to the subordination provisions of Article Ten hereof. ARTICLE TWELVE MISCELLANEOUS SECTION 12.01. TRUST INDENTURE ACT OF 1939. Prior to the effectiveness of the Registration Statement, this Indenture shall incorporate and be governed by the provisions of the TIA that are required to be part of and to govern indentures qualified under the TIA. After the effectiveness of the Registration Statement, this Indenture shall be subject to the provisions of the TIA that are required to be a part of this Indenture and shall, to the extent applicable, be governed by such provisions. SECTION 12.02. NOTICES. Any notice or communication shall be sufficiently given if in writing and delivered in person, mailed by first-class mail or sent by telecopier transmission addressed as follows: 94 87 IF TO THE COMPANY OR ANY OF THE GUARANTORS, TO EACH OF THEM, CARE OF: HADCO CORPORATION 12A Manor Parkway Salem, New Hampshire Telecopier No.: (603) 898-0025 Attention: Patricia Randall IF TO THE TRUSTEE: STATE STREET BANK AND TRUST COMPANY Two International Place Boston, MA 02110 Telecopier No.: (617) 664-5150 Attention: Corporate Trust Division The Company, the Guarantors or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Holder shall be mailed to it at its address as it appears in each case on the Security Register by first-class mail and shall be sufficiently given to him if so mailed within the time prescribed. Any notice or communication shall also be so mailed to any Person described in TIA Section 313(c), to the extent required by the TIA. In addition, so long as the Notes are listed on the Luxembourg Stock Exchange and it is required by the rules of such stock exchange, such notices shall be published in English in a leading newspaper having general circulation in Luxembourg (which is expected to be the Luxembourger Wort) or if any such case is not applicable, in one other leading English language daily newspaper with general circulation in Europe, such newspaper being published on each Business Day in morning editions, whether or not it shall be published on a Saturday, Sunday or a holiday. COPIES of any such communication or notice to a Holder shall also be mailed to the Trustee and each Agent at the same time. Failure to mail a notice or communication to a Holder as provided herein or any defect in any such notice or communication shall not affect its sufficiency with respect to other Holders. Except for a notice to the Trustee, which is deemed given only when received, and except as otherwise provided in this Indenture, if a notice or communication is mailed in the manner provided in this Section 12.02, it is duly given, whether or not the addressee receives it. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with 95 88 the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver. In case by reason of the suspension of regular mail service or by reason of any other cause it shall be impracticable to give such notice by mail, then such notification as shall be made with the approval of the Trustee shall constitute a sufficient notification for every purpose hereunder. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Guarantor, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 12.03. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee: (i) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (ii) an Opinion of Counsel stating that, in the opinion of such Counsel, all such conditions precedent have been complied with. SECTION 12.04. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (i) a statement that each person signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statement or opinion contained in such certificate or opinion is based; (iii) a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether or not, in the opinion of each such person, such condition or covenant has been complied with; provided, however, that, with respect to matters of fact, an Opinion of Counsel may rely on an Officers' Certificate 96 89 or certificates of public officials. SECTION 12.05. RULES BY TRUSTEE, PAYING AGENT OR REGISTRAR. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Paying Agent or Registrar may make reasonable rules for its functions. SECTION 12.06. PAYMENT DATE OTHER THAN A BUSINESS DAY. If an Interest Payment Date, Redemption Date, Payment Date, Stated Maturity or date of maturity of any Note shall not be a Business Day, then payment of principal of, premium, if any, or interest on such Note, as the case may be, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Payment Date or Redemption Date, or at the Stated Maturity or date of maturity of such Note; provided that no interest shall accrue for the period from and after such Interest Payment Date, Payment Date, Redemption Date, Stated Maturity or date of maturity, as the case may be. SECTION 12.07. GOVERNING LAW. This Indenture and the Notes shall be governed by the laws of the State of New York. The Trustee, the Company, the Guarantors and the Holders agree to submit to the jurisdiction of the courts of the State of New York in any action or proceeding arising out of or relating to this Indenture or the Notes. SECTION 12.08. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or any Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.09. NO RECOURSE AGAINST OTHERS. No recourse for the payment of the principal of, premium, if any, or interest on any of the Notes, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company contained in this Indenture or in any of the Notes, or because of the creation of any Indebtedness represented thereby, shall be had against any incorporator or against any past, present or future partner, stockholder, other equity holder, officer, director, employee or controlling person, as such, of the Company or of any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Notes. SECTION 12.10. SUCCESSORS. All agreements of the Company in this Indenture and the Notes shall bind its successors. All agreements of the 97 90 Trustee in this Indenture shall bind its successor. SECTION 12.11. DUPLICATE ORIGINALS. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. SECTION 12.12. SEPARABILITY. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC. The Table of Contents, Cross-Reference Table and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms and provisions hereof. 98 SIGNATURES IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed, all as of the date first written above. HADCO CORPORATION By: /s/ Timothy P. Losik ______________________________________ Name: Timothy P. Losik Title: Senior Vice President, Chief Financial Officer and Treasurer HADCO SANTA CLARA, INC. By: /s/ Timothy P. Losik ______________________________________ Name: Timothy P. Losik Title: Senior Vice President, Chief Financial Officer and Treasurer HADCO PHOENIX, INC. By: /s/ Timothy P. Losik ______________________________________ Name: Timothy P. Losik Title: Senior Vice President and Treasurer CCIR OF CALIFORNIA CORP. By: /s/ Timothy P. Losik ______________________________________ Name: Timothy P. Losik Title: Chief Financial Officer CCIR OF TEXAS CORP. By: /s/ Timothy P. Losik ______________________________________ Name: Timothy P. Losik Title: Chief Financial Officer STATE STREET BANK AND TRUST COMPANY, as Trustee By: /s/ Carolina D. Altomare ______________________________________ Name: Carolina D. Altomare Title: Assistant Vice President 99 Title EXHIBIT A --------- [APPLICABLE LEGENDS] [FACE OF NOTE] HADCO CORPORATION 9 1/2% Senior Subordinated Note due 2008 [CUSIP] [CINS] [ISIN] [__________] No. ____ $_________ HADCO CORPORATION, a corporation organized under the laws of the Commonwealth of Massachusetts (the "Company", which term includes any successor under the Indenture hereinafter referred to), for value received, promises to pay to _____________, or its registered assigns, the principal sum of ____________ ($____) on June 15, 2008 Interest Payment Dates: June 15 and December 15, commencing December 15, 1998. Regular Record Dates: June 1 and December 1. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place. 100 IN WITNESS WHEREOF, the Company has caused this Note to be signed manually or by facsimile by its duly authorized officers. Date: May , 1998 HADCO CORPORATION By: ______________________________________ Name: Title By: ______________________________________ Name: Title Trustee's Certificate of Authentication This is one of the 9 1/2% Senior Subordinated Notes due 2008 described in the within-mentioned Indenture. STATE STREET BANK AND TRUST COMPANY, as Trustee By: ______________________________________ Authorized Signatory 101 A-3 [REVERSE SIDE OF NOTE] HADCO CORPORATION 9 1/2% Senior Subordinated Note due 2008 1. PRINCIPAL AND INTEREST. The Company will pay the principal of this Note on June 15, 2008. The Company promises to pay interest on the principal amount of this Note on each Interest Payment Date, as set forth below, at the rate per annum shown above. Interest will be payable semiannually (to the holders of record of the Notes at the close of business on the June 1 or December 1 immediately preceding the Interest Payment Date) on each Interest Payment Date, commencing December 15, 1998. If an exchange offer (the "Exchange Offer") registered under the Securities Act is not consummated or a shelf registration statement (the "Shelf Registration Statement") under the Securities Act with respect to resales of the Notes is not declared effective by the Commission on or before November 18, 1998 in accordance with the terms of the Registration Rights Agreement dated as of May 13, 1998 between the Company and Hadco Santa Clara, Inc. Hadco Phoenix, Inc., CCIR of California Corp. and CCIR of Texas Corp., as guarantors (collectively, the "Guarantors") and Morgan Stanley & Co. Incorporated, Merrill Lynch, Pierce, Fenner and Smith Incorporated, BancAmerica Robertson Stephens and BT Alex. Brown Incorporated (a "Registration Default"), the annual interest rate borne by the Notes shall be increased by 0.5% from the rate shown above accruing from the date of such Registration Default, payable in cash semiannually, in arrears, on each Interest Payment Date, commencing with the first such date occurring after any such Registration Default until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective. After the date on which such Registration Default is cured, the interest rate on the Notes will revert to the interest rate shown above. The Holder of this Note is entitled to the benefits of such Registration Rights Agreement. 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 May 18, 1998; provided that, if there is no existing default in the payment of interest and this Note is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such Interest Payment Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 102 A-4 The Company shall pay interest on overdue principal and premium, if any, and interest on overdue installments of interest, to the extent lawful, at a rate per annum that is 2% in excess of the rate otherwise payable. 2. METHOD OF PAYMENT. The Company will pay interest (except defaulted interest) on the principal amount of the Notes as provided above on each June 15 and December 15, commencing December 15, 1998 to the persons who are Holders (as reflected in the Security Register at the close of business on the June 1 or December 1 immediately preceding the Interest Payment Date), in each case, even if the Note is canceled on registration of transfer or registration of exchange after such record date; provided that, with respect to the payment of principal, the Company will make payment to the Holder that surrenders this Note to a Paying Agent on or after June 15, 2008. The Company will pay principal, premium, if any, and as provided above, interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal, premium, if any, and interest by its check payable in such money. It may mail an interest check to a Holder's registered address (as reflected in the Security Register). If a payment date is a date other than a Business Day at a place of payment, payment may be made at that place on the next succeeding day that is a Business Day and no interest shall accrue for the intervening period. 3. PAYING AGENT AND REGISTRAR. Initially, the Trustee will act as authenticating agent, Paying Agent and Registrar. The Company may change any authenticating agent, Paying Agent or Registrar without notice. The Company, any Subsidiary or any Affiliate of any of them may act as Paying Agent, Registrar or co-Registrar. 4. INDENTURE; LIMITATIONS. The Company issued the Notes under an Indenture dated as of May 18, 1998 (the "Indenture"), between the Company, the Guarantors and State Street Bank and Trust Company, trustee (the "Trustee"). Capitalized terms herein are used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act. The Notes are subject to all such terms, and Holders are referred to the Indenture and the Trust Indenture Act for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture shall control. 103 A-5 The Notes are general unsecured Securities of the Company. The Company may, subject to Article Four of the Indenture and applicable law, issue additional Notes under the Indenture. 5. OPTIONAL REDEMPTION. The Notes are redeemable, at the Company's option, in whole or in part, at any time or from time to time, on or after June 15, 2003 and prior to maturity, upon not less than 30 nor more than 60 days' prior notice mailed by first class mail to each Holder's last address, as it appears in the Security Register, at the following Redemption Prices (expressed in percentages of principal amount), plus accrued and unpaid interest, if any, to the Redemption Date (subject to the right of Holders of record on the relevant Regular Record Date that is prior to the Redemption Date to receive interest due on an Interest Payment Date), if redeemed during the 12-month period commencing June 15 of the years set forth below: Redemption Year Price ---- ---------- 2003........................................ 104.750 2004........................................ 103.167 2005........................................ 101.583 2006 and thereafter......................... 100.000 In addition, at any time and from time to time, prior to June 15, 2001, the Company may redeem up to 35% of the aggregate principal amount of the Notes originally issued with the proceeds of one or more Equity Offerings, at a Redemption Price of 109.50%, plus accrued and unpaid interest to the Redemption Date (subject to the rights of Holders of record on the relevant Regular Record Date that is prior to the Redemption Date to receive interest due on an Interest Payment Date); provided that (i) Notes representing 65% of the principal amount of Notes initially issued remain outstanding after each such redemption and (ii) notice of such redemption is mailed within 60 days of the related Equity Offering. Prior to June 15, 2003, the Notes will be redeemable at the Company's option, in whole or in part, at any time or from time to time, upon not less than 30 nor more than 60 days' prior notice mailed by first class mail to each Holder's registered address, at a redemption price (expressed as a percentage of principal amount) equal to the sum of the principal amount of such Notes plus the Applicable Premium thereon on the Early Redemption Date (subject to the right of holders of record on the Relevant Record Date to receive interest due on the relevant interest payment date). Notes in original denominations larger than $1,000 may be redeemed in part. On and after the Redemption Date, interest ceases to accrue on Notes or portions of Notes called for 104 A-6 redemption, unless the Company defaults in the payment of the Redemption Price. 6. REPURCHASE UPON CHANGE OF CONTROL. The Company shall commence, within 30 days of the occurrence of any Change of Control, and consummate an Offer to Purchase for all Notes then outstanding, at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase (the "Payment Date") (subject to the right of Holders of record on the relevant Regular Record Date that is prior to the Change of Control to receive interest due on an Interest Payment Date). 7. DENOMINATIONS; TRANSFER; EXCHANGE. The Notes are in registered form without coupons in denominations of $1,000 of principal amount and multiples of $1,000 in excess thereof. A Holder may register the transfer or exchange of Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer or exchange of any Notes selected for redemption. Also, it need not register the transfer or exchange of any Notes for a period of 15 days before the day of mailing of a notice of redemption of Notes selected for redemption. 8. PERSONS DEEMED OWNERS. A Holder shall be treated as the owner of a Note for all purposes. 9. UNCLAIMED MONEY. If money for the payment of principal, premium, if any, or interest remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its request. After that, Holders entitled to the money must look to the Company for payment, unless an abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. 10. DISCHARGE PRIOR TO REDEMPTION OR MATURITY. If the Company deposits with the Trustee money or Government Securities sufficient to pay the then outstanding principal of, premium, if any, and accrued interest on the Notes (a) to redemption or maturity, the Company will be discharged from the Indenture and the Notes, except in certain circumstances for certain provisions thereof, and (b) to the Stated Maturity, the Company will be discharged from certain covenants set forth in the Indenture. 105 A-7 11. AMENDMENT; SUPPLEMENT; WAIVER. Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding, and any existing default or compliance with any provision may be waived with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding. Without notice to or the consent of any Holder, the parties thereto may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency and make any change that does not materially and adversely affect the rights of any Holder. 12. RESTRICTIVE COVENANTS. The Indenture imposes certain limitations on the ability of the Company and its Restricted Subsidiaries and, in certain circumstances, the Guarantors, among other things, to Incur additional Indebtedness, incur Senior Subordinated Indebtedness, make Restricted Payments, suffer to exist restrictions on the ability of Restricted Subsidiaries to make certain payments to the Company, issue Capital Stock of Restricted Subsidiaries, guarantee Indebtedness of the Company, engage in transactions with Affiliates, suffer to exist or incur Liens, use the proceeds from Asset Sales, or merge, consolidate or transfer substantially all of its assets. Within 60 days after the end of each fiscal quarter (120 days after the end of the last fiscal quarter of each year), the Company shall deliver to the Trustee an Officers' Certificate stating whether or not the signers thereof know of any Default or Event of Default under such restrictive covenants. 13. SUCCESSOR PERSONS. When a successor person or other entity assumes all the obligations of its predecessor under the Notes and the Indenture, the predecessor person will be released from those obligations. 14. DEFAULTS AND REMEDIES. Any of the following events shall constitute an "Event of Default" under the Indenture: (a) default in the payment of principal of (or premium, if any, on) any Note when the same becomes due and payable at Stated Maturity, upon acceleration, redemption or otherwise; (b) default in the payment of interest on any Note when the same becomes due and payable, and such default continues for a period of 30 days whether or not such payment is prohibited by Article Ten of the Indenture; 106 A-8 (c) default in the performance or breach of Article Five of the Indenture or the failure to comply for 30 days after notice of its obligation to make an Offer to Purchase in accordance with Section 4.11 or Section 4.12 of the Indenture; (d) the Company defaults in the performance of or breaches any other covenant or agreement of the Company in the Indenture or this Note (other than a default specified in clause (a), (b) or (c) above) and such default or breach continues for a period of 60 consecutive days after written notice by the Trustee or the Holders of 25% or more in aggregate principal amount of the Notes; (e) there occurs with respect to any issue or issues of Indebtedness of the Company or any Significant Subsidiary having an outstanding principal amount of $10 million or more in the aggregate for all such issues of all such Persons, whether such Indebtedness now exists or shall hereafter be created, (i) an event of default that has caused the holder thereof to declare such Indebtedness to be due and payable prior to its Stated Maturity and such Indebtedness has not been discharged in full or such acceleration has not been rescinded or annulled within 60 days of such acceleration and/or (ii) the failure to make a principal payment at the final (but not any interim) fixed maturity and such defaulted payment shall not have been made, waived or extended within the applicable grace period related to any such payment default; (f) any final judgment or order (not covered by insurance) for the payment of money in excess of $10 million in the aggregate for all such final judgments or orders against all such Persons (treating any deductibles, self-insurance or retention as not so covered) shall be rendered against the Company or any Significant Subsidiary and shall not be paid or discharged, and there shall be any period of 60 consecutive days following entry of the final judgment or order that causes the aggregate amount for all such final judgments or orders outstanding and not paid or discharged against all such Persons to exceed $10 million during which a stay of enforcement of such final judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; (g) a court having jurisdiction in the premises enters a decree or order for (A) relief in respect of the Company or any Significant Guarantor or any Significant Subsidiary in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, (B) appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Guarantor or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Guarantor or any Significant Subsidiary or (C) the winding up or liquidation of the affairs of the Company or any Significant Guarantor or any Significant Subsidiary and, in each case, such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; 107 A-9 (h) the Company or any Significant Guarantor or any Significant Subsidiary (A) commences a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (B) consents to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Company or any Significant Guarantor or any Significant Subsidiary or for all or substantially all of the property and assets of the Company or any Significant Guarantor or any Significant Subsidiary or (C) effects any general assignment for the benefit of creditors; or (i) the Company or any Guarantor disclaims any Note Guarantee or asserts that any Note Guarantee is not binding on any Guarantor. If an Event of Default, as defined in the Indenture, occurs and is continuing, the Trustee may, and at the direction of the Holders of at least 25% in aggregate principal amount of the Notes then outstanding shall, declare all the Notes to be due and payable. If a bankruptcy or insolvency default with respect to the Company or any Guarantor occurs and is continuing, the Notes automatically become due and payable. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of at least a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. 15. SUBORDINATION. The payment of the Notes and the obligations of the Guarantors under the Note Guarantees will, to the extent set forth in the Indenture, be subordinated in right of payment to the prior payment in full, in cash or cash equivalents, of all Senior Indebtedness. 16. NOTE GUARANTEE The Company's obligations under the Notes are fully, unconditionally and irrevocably guaranteed on a joint and several basis, by the Guarantors, and the obligations of the Guarantors under such Note Guarantees are subordinated to the prior payment in full, in cash or cash equivalents, of all Senior Indebtedness of the Guarantors to the same extent as the Notes are subordinated to the Senior Indebtedness of the Company. 17. TRUSTEE DEALINGS WITH THE COMPANY. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or its Affiliates and may otherwise deal with the Company or its Affiliates as if it were not the Trustee. 108 A-10 18. NO RECOURSE AGAINST OTHERS. No incorporator or any past, present or future partner, stockholder, other equity holder, officer, director, employee or controlling person, as such, of the Company or of any successor Person shall have any liability for any obligations of the Company under the Notes or the Indenture or for any claim based on, in respect of or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 19. AUTHENTICATION. This Note shall not be valid until the Trustee or authenticating agent signs the certificate of authentication on the other side of this Note. 20. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors Act). The Company will furnish a copy of the Indenture to any Holder upon written request and without charge. Requests may be made to Hadco Corporation, 12A Manor Parkway, Salem, New Hampshire 03079; Attention: Patricia Randall. 109 A-11 [FORM OF TRANSFER NOTICE] FOR VALUE RECEIVED the undersigned registered holder hereby sell(s), assign(s) and transfer(s) unto INSERT TAXPAYER IDENTIFICATION NO. _______________________________________________________________________________ Please print or typewrite name and address including zip code of assignee _______________________________________________________________________________ the within Note and all rights thereunder, hereby irrevocably constituting and appointing ____________________________________ attorney to transfer said Note on the books of the Company with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL NOTES OTHER THAN EXCHANGE NOTES, UNLEGENDED OFFSHORE GLOBAL NOTES AND UNLEGENDED OFFSHORE PHYSICAL NOTES] In connection with any transfer of this Note occurring prior to the date which is the earlier of (i) the date the Shelf Registration Statement is declared effective or (ii) the end of the period referred to in Rule 144(k) under the Securities Act, the undersigned confirms that without utilizing any general solicitation or general advertising that: [CHECK ONE] [ ] (a) this Note is being transferred in compliance with the exemption from registration under the Securities Act of 1933 provided by Rule 144A thereunder. OR [ ] (b) this Note is being transferred other than in accordance with (a) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. 110 A-12 If none of the foregoing boxes is checked, the Trustee or other Registrar shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.08 of the Indenture shall have been satisfied. Date: ______________ ______________________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within-mentioned instrument in every particular, without alteration or any change whatsoever. TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED. The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act of 1933 and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Dated: _____________ ______ NOTICE: To be executed by an executive officer 111 A-13 OPTION OF HOLDER TO ELECT PURCHASE If you wish to have this Note purchased by the Company pursuant to Section 4.11 or 4.12 of the Indenture, check the Box: [ ] If you wish to have a portion of this Note purchased by the Company pursuant to Section 4.11 or 4.12 of the Indenture, state the amount: $___________________. Date: _____________ Your Signature:_________________________________________________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee: ______________________________ 112 EXHIBIT B --------- FORM OF CERTIFICATE ___________, ____ State Street Bank and Trust Company Two International Place - 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Division Re: Hadco Corporation (the "Company") 9 1/2% Senior Subordinated Notes due 2008 (the "Notes") ------------------------------------------------------- Dear Sirs: This letter relates to U.S. $__________ principal amount of Notes represented by a Note (the "Legended Note") which bears a legend outlining restrictions upon transfer of such Legended Note. Pursuant to Section 2.02 of the Indenture dated as of May 18, 1998 (the "Indenture") relating to the Notes, we hereby certify that we are (or we will hold such securities on behalf of) a person outside the United States to whom the Notes could be transferred in accordance with Rule 904 of Regulation promulgated under the U.S. Securities Act of 1933. Accordingly, you are hereby requested to exchange the legended certificate for an unlegended certificate representing an identical principal amount of Notes, all in the manner provided for in the Indenture. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Holder] By: ____________________________________ Authorized Signature 113 EXHIBIT C --------- Form of Certificate to Be Delivered in Connection with Transfers to Non-Qib Accredited Investors ----------------------------------------- ___________, ____ State Street Bank and Trust Company Two International Place - 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Division Re: Hadco Corporation (the "Company") 9 1/2% Senior Subordinated Notes due 2008 (the "Notes") ------------------------------------------------------- Dear Sirs: In connection with our proposed purchase of $_______________ aggregate principal amount of the Notes, we confirm that: 1. We understand that any subsequent transfer of the Notes is subject to certain restrictions and conditions set forth in the Indenture dated as of May 18, 1998 (the "Indenture") relating to the Notes and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes except in compliance with such restrictions and conditions and the Securities Act of 1933, amended (the "Securities Act"). 2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell any Notes within the time period referred to in Rule 144(k) of the Securities Act, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a "qualified institutional buyer" (as defined therein), (C) to an institutional "accredited investor" (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of an aggregate principal amount of less than $100,000, an opinion of counsel acceptable to the Company that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing any of the 114 Notes from us a notice advising such purchaser that resales of the Notes are restricted as stated herein. 3. We understand that, on any proposed resale of any Notes, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect. 4. We are an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment. 5. We are acquiring the Notes purchased by us for our own account or for one or more accounts (each of which is an institutional "accredited investor") as to each of which we exercise sole investment discretion. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Very truly yours, [Name of Transferee] By: ______________________ Authorized Signature 115 EXHIBIT D --------- Form of Certificate to Be Delivered in Connection with Transfers Pursuant to Regulation S -------------------------------------------------- ___________, ____ State Street Bank and Trust Company Two International Place - 4th Floor Boston, Massachusetts 02110 Attention: Corporate Trust Department Re: Hadco Corporation (the "Company") 9 1/2% Senior Subordinated Notes due 2008 (the "Notes") ------------------------------------------------------- Dear Sirs: In connection with our proposed sale of U.S. $______________ aggregate principal of the Notes, we confirm that such sale has been effected pursuant to and in accordance with Regulation S under the Securities Act of 1933 and, accordingly, we represent that: (1) the offer of the Notes was not made to a person in the United States; (2) at the time the buy order was originated, the transferee was outside the United States or we and any person acting on our behalf reasonably believed that the transferee was outside the United States; (3) no directed selling efforts have been made by us in the United States in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S, as applicable; and (4) the transaction is not part of a plan or scheme to evade the registration requirements of the U.S. Securities Act of 1933. You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby. Terms used in this certificate have the meanings set forth in Regulation S. Very truly yours, [Name of Transferor] 116 By: _______________________ Authorized Signature EX-4.2 11 REGISTRATION RIGHTS AGREEMENT 1 Exhibit 4.2 - -------------------------------------------------------------------------------- REGISTRATION RIGHTS AGREEMENT Dated May 13, 1998 among HADCO CORPORATION and HADCO SANTA CLARA, INC. HADCO PHOENIX, INC. CCIR OF CALIFORNIA CORP. CCIR OF TEXAS CORP. and MORGAN STANLEY & CO. INCORPORATED MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANCAMERICA ROBERTSON STEPHENS and BT ALEX. BROWN INCORPORATED - -------------------------------------------------------------------------------- 2 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into May 13, 1998, among HADCO CORPORATION, a corporation organized under the laws of the Commonwealth of Massachusetts (the "Company"), and HADCO SANTA CLARA, INC., a Delaware corporation, HADCO PHOENIX, INC., a Delaware corporation, CCIR OF CALIFORNIA CORP., a California corporation, and CCIR OF TEXAS CORP., a Texas corporation (collectively, the "Guarantors"), and MORGAN STANLEY & CO. INCORPORATED, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, BANCAMERICA ROBERTSON STEPHENS and BT ALEX. BROWN INCORPORATED (the "Placement Agents"). This Agreement is made pursuant to the Placement Agreement dated May 13, 1998, among the Company, the Guarantors and the Placement Agents (the "Placement Agreement"), which provides for the sale by the Company to the Placement Agents of an aggregate of $200,000,000 principal amount of the Company's 9 1/2% Senior Subordinated Notes Due 2008 (the "Securities"), to be fully and unconditionally guaranteed on a senior subordinated basis, jointly and severally, by the Guarantors (the "Note Guarantees"). In order to induce the Placement Agents to enter into the Placement Agreement, the Company and the Guarantors have agreed to provide to the Placement Agents and their direct and indirect transferees the registration rights set forth in this Agreement. The execution of this Agreement is a condition to the closing under the Placement Agreement. This Agreement shall become effective upon the issuance of the Notes under the Indenture as of the Closing Date. In consideration of the foregoing, the parties hereto agree as follows: 1. DEFINITIONS. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "1933 ACT" shall mean the Securities Act of 1933, as amended from time to time. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time. "CLOSING DATE" shall mean the Closing Date as defined in the Placement Agreement. 3 2 "COMPANY" shall have the meaning set forth in the preamble and shall also include the Company's successors. "EXCHANGE OFFER" shall mean the exchange offer by the Company of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION" shall mean a registration under the 1933 Act effected pursuant to Section 2(a) hereof. "EXCHANGE OFFER REGISTRATION STATEMENT" shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and supplements to such registration statement, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "EXCHANGE SECURITIES" shall mean securities issued by the Company and guaranteed by the Guarantors under the Indenture containing terms identical to the Securities, including the Note Guarantees (except that the Exchange Securities will not contain restrictions on transfer) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer. "GUARANTORS" shall have the meaning set forth on the preamble and shall also include the successors of the Guarantors. "HOLDER" shall mean the Placement Agents, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture; PROVIDED that for purposes of Sections 4 and 5 of this Agreement, the term "Holder" shall include Participating Broker-Dealers (as defined in Section 4(a)). "INDENTURE" shall mean the Indenture relating to the Securities dated as of May 18, 1998 among the Company, the Guarantors and State Street Bank and Trust Company, as trustee, and as the same may be amended from time to time in accordance with the terms thereof. "MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate principal amount of outstanding Registrable Securities; PROVIDED that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or any of its affiliates (as such term is defined in Rule 405 under the 1933 Act) (other than the Placement Agents or subsequent Holders of Registrable Securities if such subsequent holders are 4 3 deemed to be such affiliates solely by reason of their holding of such Registrable Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount. "PERSON" shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof. "PLACEMENT AGENTS" shall have the meaning set forth in the preamble. "PLACEMENT AGREEMENT" shall have the meaning set forth in the preamble. "PROSPECTUS" shall mean the prospectus included in a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including all material incorporated by reference therein. "REGISTRABLE SECURITIES" shall mean the Securities (including as part of such Securities the Note Guarantees); PROVIDED, HOWEVER, that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities and the Note Guarantees shall have been declared effective under the 1933 Act and such Securities shall have been disposed of or exchanged pursuant to the Exchange Offer pursuant to such Registration Statement, (ii) when such Securities have been sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the 1933 Act or are salable pursuant to Rule 144(k) (or any similar provision then in force, but not Rule 144A) under the 1933 Act or (iii) when such Securities shall have ceased to be outstanding. "REGISTRATION EXPENSES" shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantors with this Agreement, including without limitation: (i) all SEC, stock exchange or National Association of Securities Dealers, Inc. registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with blue sky qualification of any of the Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, 5 4 securities sales agreements and other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantors and, in the case of a Shelf Registration Statement, the reasonable fees and disbursements of one counsel for the Holders (which counsel shall be selected by the Majority Holders and which counsel may also be counsel for the Placement Agents) and (viii) the fees and disbursements of the independent public accountants of the Company and the Guarantors, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, but excluding fees and expenses of counsel to the underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "REGISTRATION STATEMENT" shall mean any registration statement of the Company and the Guarantors that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such Registration Statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "SEC" shall mean the Securities and Exchange Commission. "SHELF REGISTRATION" shall mean a registration effected pursuant to Section 2(b) hereof. "SHELF REGISTRATION STATEMENT" shall mean a "shelf" registration statement of the Company and the Guarantors pursuant to the provisions of Section 2(b) of this Agreement which covers all of the Registrable Securities (but no other securities unless approved by the Holders whose Registrable Securities are covered by such Shelf Registration Statement) on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "TRUSTEE" shall mean the trustee with respect to the Securities under the Indenture. "UNDERWRITER" shall have the meaning set forth in Section 3 hereof. 6 5 "UNDERWRITTEN REGISTRATION" or "UNDERWRITTEN OFFERING" shall mean a registration in which Registrable Securities are sold to an Underwriter for reoffering to the public. 2. REGISTRATION UNDER THE 1933 ACT. (a) To the extent not prohibited by any applicable law or applicable interpretation of the Staff of the SEC, each of the Company and the Guarantors shall use its best efforts to cause to be filed an Exchange Offer Registration Statement covering the offer by the Company and the Guarantors to the Holders to exchange all of the Registrable Securities for Exchange Securities and to have such Registration Statement remain effective until the closing of the Exchange Offer. The Company and the Guarantors shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement has been declared effective by the SEC and use their best efforts to have the Exchange Offer consummated not later than 60 days after such effective date. The Company and the Guarantors shall commence the Exchange Offer by mailing the related exchange offer Prospectus and accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law: (i) that the Exchange Offer is being made pursuant to this Registration Rights Agreement and that all Registrable Securities validly tendered will be accepted for exchange; (ii) the dates of acceptance for exchange (which shall be a period of at least 20 business days from the date such notice is mailed) (the "Exchange Dates"); (iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest, but will not retain any rights under this Registration Rights Agreement; (iv) that Holders electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to surrender such Registrable Security, together with the enclosed letters of transmittal, to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice prior to the close of business on the last Exchange Date; and (v) that Holders will be entitled to withdraw their election, not later than the close of business on the last Exchange Date, by sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a 7 6 statement that such Holder is withdrawing his election to have such Securities exchanged. As soon as practicable after the last Exchange Date, the Company and the Guarantors shall: (i) accept for exchange Registrable Securities or portions thereof tendered and not validly withdrawn pursuant to the Exchange Offer; and (ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and the Guarantors and issue, and cause the Trustee to promptly authenticate and mail to each Holder, an Exchange Security equal in principal amount to the principal amount of the Registrable Securities surrendered by such Holder. Each of the Company and the Guarantors shall use its best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the 1933 Act, the 1934 Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate applicable law or any applicable interpretation of the Staff of the SEC. The Company and the Guarantors shall inform the Placement Agents of the names and addresses of the Holders to whom the Exchange Offer is made, and the Placement Agents shall have the right, subject to applicable law, to contact such Holders and otherwise facilitate the tender of Registrable Securities in the Exchange Offer. Each Holder who participates in the Exchange Offer will be required to represent that any Exchange Securities received by it will be acquired in the ordinary course of its business, that at the time of the consummation of the Exchange Offer such Holder will have no arrangement or understanding with any person to participate in the distribution of the Exchange Securities, and that such Holder is not an affiliate of the Company within the meaning of Rule 405 promulgated under the 1933 Act or if it is such an affiliate, that it will comply with the registration and prospectus delivery requirements of the 1933 Act, to the extent applicable. (b) In the event that (i) the Company and the Guarantors determine that the Exchange Offer Registration provided for in Section 2(a) above is not available or may not be consummated as soon as practicable after the last Exchange Date because it would violate applicable law or the applicable interpretations of the Staff of the SEC, (ii) the Exchange Offer is not for any other reason consummated by November 18, 1998 or (iii) the Exchange Offer has been completed and in the opinion of counsel for the Placement Agents a Registration Statement must be filed and a Prospectus must be delivered by the Placement Agents in connection with any offering or sale of Registrable Securities, each of the Company and the Guarantors shall use its best efforts to cause to be filed as soon as practicable after such 8 7 determination, date or notice of such opinion of counsel is given to the Company and the Guarantors, as the case may be, a Shelf Registration Statement providing for the sale by the Holders of all of the Registrable Securities and to have such Shelf Registration Statement declared effective by the SEC. In the event the Company and the Guarantors are required to file a Shelf Registration Statement solely as a result of the matters referred to in clause (iii) of the preceding sentence, each of the Company and the Guarantors shall use its best efforts to file and have declared effective by the SEC both an Exchange Offer Registration Statement pursuant to Section 2(a) with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Placement Agents after completion of the Exchange Offer. Each of the Company and the Guarantors agrees to use its best efforts to keep the Shelf Registration Statement continuously effective until the expiration of the period referred to in Rule 144(k) (or any similar provision then in force, but not Rule 144A) with respect to the Registrable Securities or such shorter period that will terminate when all of the Registrable Securities covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement. The Company and the Guarantors further agree to supplement or amend the Shelf Registration Statement if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the 1933 Act or by any other rules and regulations thereunder for shelf registration or if reasonably requested by a Holder with respect to information relating to such Holder, and to use its best efforts to cause any such amendment to become effective and such Shelf Registration Statement to become usable as soon as thereafter practicable. The Company and the Guarantors agree to furnish to the Holders of Registrable Securities copies of any such supplement or amendment promptly after its being used or filed with the SEC. (c) The Company and the Guarantors shall pay all Registration Expenses in connection with the registration pursuant to Section 2(a) or Section 2(b). Each Holder shall pay all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Shelf Registration Statement. (d) (i) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC; PROVIDED, HOWEVER, that, if, after it has been declared effective, the offering of Registrable Securities pursuant to a Shelf Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement will be deemed not to have become effective during the period of such interference until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. As provided for in the Indenture, in the event the Exchange Offer is not 9 8 consummated and the Shelf Registration Statement is not declared effective on or prior to November 18, 1998, the annual interest rate on the Securities will be increased by .5% per annum (the "ADDITIONAL INTEREST") effective until the Exchange Offer is consummated or the Shelf Registration Statement is declared effective by the SEC after which the interest rate on the Securities will revert to the interest rate originally borne by the Securities. In addition to the foregoing sentence, in the event a Shelf Registration Statement is required by Section 2(b) and the effectiveness of such Shelf Registration Statement is interfered with on or after November 18, 1998, as described in the first sentence of this Section 2(d), the annual interest rate on the Securities will be increased by the Additional Interest effective until the offering of the Registrable Securities pursuant to such Registration Statement may legally resume, after which the interest rate on the Securities will revert to the interest rate initially borne on the Securities. The Additional Interest shall be payable to Holders of the Securities on the Interest Payment Dates (as defined in the Indenture) commencing with the first Interest Payment Date after any such Additional Interest commences to accrue. (e) Without limiting the remedies available to the Placement Agents and the Holders, each of the Company and the Guarantors acknowledge that any failure by the Company or any of the Guarantors to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Placement Agents or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Placement Agents or any Holder may obtain such relief as may be required to specifically enforce the Company's and the Guarantor's obligations under Section 2(a) and Section 2(b) hereof. 3. REGISTRATION PROCEDURES. In connection with the obligations of the Company and the Guarantors with respect to the Registration Statements pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantors shall as expeditiously as possible: (a) prepare and file with the SEC a Registration Statement on the appropriate form under the 1933 Act, which form (x) shall be selected by the Company and the Guarantors, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the selling Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith, and use its best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such 10 9 Registration Statement effective for the applicable period and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424 under the 1933 Act; to keep each Prospectus current during the period described under Section 4(3) and Rule 174 under the 1933 Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities; (c) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, to counsel for the Placement Agents, to counsel for the Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, including each preliminary Prospectus, and any amendment or supplement thereto and such other documents as such Holder or Underwriter may reasonably request, in order to facilitate the public sale or other disposition of the Registrable Securities; and each of the Company and the Guarantors consents to the use of such Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the selling Holders of Registrable Securities and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus or any amendment or supplement thereto in accordance with applicable law; (d) use its best efforts to register or qualify the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement shall reasonably request in writing by the time the applicable Registration Statement is declared effective by the SEC, to cooperate with such Holders in connection with any filings required to be made with the National Association of Securities Dealers, Inc. and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; PROVIDED, HOWEVER, that neither the Company nor the Guarantors shall be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d), (ii) file any general consent to service of process or (iii) subject itself to taxation in any such jurisdiction if it is not so subject; (e) in the case of a Shelf Registration, notify each Holder of Registrable Securities, counsel for the Holders and counsel for the Placement Agents promptly and, if requested by any such Holder or counsel, confirm such advice in writing (i) when a Registration Statement has become effective and when any post-effective amendment thereto has been filed and becomes effective, (ii) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement and Prospectus or for additional information after the Registration Statement has become 11 10 effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if, between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company and the Guarantors contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to the offering cease to be true and correct in all material respects or if the Company or any of the Guarantors receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (v) of the happening of any event during the period a Shelf Registration Statement is effective which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading and (vi) of any determination by the Company or any of the Guarantors that a post-effective amendment to a Registration Statement would be appropriate; (f) use its best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement as soon as is reasonably practicable and provide immediate notice to each Holder of the withdrawal of any such order; and such Holder agrees that upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(e)(iii), such Holder will forthwith discontinue disposition of Registrable Securities pursuant to such Registration Statement until the receipt of notice of withdrawal of any such order, and, if so directed by the Company or any of the Guarantors, such Holder will deliver to the Company (at its expense) all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice; (g) in the case of a Shelf Registration, furnish to each Holder of Registrable Securities, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without documents incorporated therein by reference or exhibits thereto, unless requested); (h) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be in such denominations (consistent with the provisions of the Indenture) and registered in such names as the selling Holders may reasonably request at least one business day prior to the closing of any sale of Registrable Securities; 12 11 (i) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(e)(v) hereof, use its best efforts to prepare and file with the SEC a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company and the Guarantors agree to notify the Holders to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and the Holders hereby agree to suspend use of the Prospectus until the Company and the Guarantors have amended or supplemented the Prospectus to correct such misstatement or omission; (j) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus after initial filing of a Registration Statement, provide copies of such document to the Placement Agents and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) and make such of the representatives of the Company and the Guarantors as shall be reasonably requested by the Placement Agents or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) available for discussion of such document, and shall not at any time file or make any amendment to the Registration Statement, any Prospectus or any amendment of or supplement to a Registration Statement or a Prospectus or any document which is to be incorporated by reference into a Registration Statement or a Prospectus, of which the Placement Agents and their counsel (and, in the case of a Shelf Registration Statement, the Holders and their counsel) shall not have previously been advised and furnished a copy or to which the Placement Agents or their counsel (and, in the case of a Shelf Registration Statement, the Holders or their counsel) shall object; (k) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the effective date of a Registration Statement; (l) cause the Indenture to be qualified under the Trust Indenture Act of 1939, as amended (the "TIA"), in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be, cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and execute, and use its best efforts to cause the Trustee to execute, all documents as may be required to effect such 13 12 changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; (m) in the case of a Shelf Registration, make available for inspection by a representative of the Holders of the Registrable Securities, any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, and one (1) counsel and one (1) accounting firm designated by the Holders (collectively, the "Inspectors"), at reasonable times and in a reasonable manner, all financial and other records, pertinent documents and properties of the Company and the Guarantors (collectively, the "Records"), and cause the respective officers, directors and employees of the Company and the Guarantors to supply all Records reasonably requested by any such Inspector in connection with a Shelf Registration Statement; PROVIDED that, notwithstanding the foregoing, in the event that Holders have actual or potential differing interests thereby making representation of all Holders by one counsel inappropriate, they shall be permitted to appoint separate counsel; and, PROVIDED FURTHER that, Records which the Company and the Guarantors determine in good faith, to be confidential and any Records which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless (i) counsel to the Holders or Underwriters or the Company reasonably advise the Inspectors that the disclosure of such Records is necessary to avoid or correct a material misstatement or material omission in such Registration Statement or is otherwise necessary to comply with the 1933 Act or 1934 Act, (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or (iii) the information in such Records has been made generally available to the public other than through the Inspectors' breach of any confidentiality agreement. Each selling Holder of such Registrable Securities and each such Participating Broker-Dealer or Underwriter will be required to agree that information obtained by it as a result of such inspections shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company unless and until such is made generally available to the public (any information in a Registration Statement shall be deemed to have been made generally available to the public). Each selling Holder of such Registrable Securities and each such Participating Broker-Dealer will be required to further agree that it will, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company in a reasonably timely manner prior to disclosure of such Records. (n) in the case of a Shelf Registration, use its best efforts to cause all Registrable Securities to be listed on any securities exchange or any automated quotation system on which similar securities issued by the Company and the Guarantors are then listed if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements; 14 13 (o) use its best efforts to cause the Exchange Securities or Registrable Securities, as the case may be, to be rated by two nationally recognized statistical rating organizations (as such term is defined in Rule 436(g)(2) under the 1933 Act); (p) if reasonably requested by any Holder of Registrable Securities covered by a Registration Statement, (i) promptly incorporate in a Prospectus supplement or post-effective amendment such information with respect to such Holder as such Holder reasonably requests to be included therein and (ii) make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company or any of the Guarantors has received notification of the matters to be incorporated in such filing; and (q) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the Holders of a majority of the Registrable Securities being sold) in order to expedite or facilitate the disposition of such Registrable Securities including, but not limited to, an Underwritten Offering and in such connection, (i) to the extent possible, make such representations and warranties to the Holders and any Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries, the Registration Statement, Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (ii) obtain opinions of counsel to the Company and the Guarantors (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Holders and such Underwriters and their respective counsel) addressed to each selling Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (iii) obtain "cold comfort" letters from the independent certified public accountants of the Company (and, if necessary, any other certified public accountant of any subsidiary of the Company, or of any business acquired by the Company or any of the Guarantors for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each selling Holder and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings, and (iv) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantors made pursuant to clause (i) above and to evidence compliance with any customary conditions contained in an underwriting agreement. 15 14 In the case of a Shelf Registration Statement, the Company and the Guarantors may require each Holder of Registrable Securities to furnish to the Company and the Guarantors such information regarding the Holder and the proposed distribution by such Holder of such Registrable Securities as the Company and the Guarantors may from time to time reasonably request in writing. The Company and the Guarantors may exclude from such registration the Registrable Securities of any Holder or Participating Broker-Dealer who fails to furnish such information within a reasonable time after receiving such request. In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any notice from the Company or the Guarantors of the happening of any event of the kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if so directed by the Company or any of the Guarantors, such Holder will deliver to the Company (at its expense) all copies in its possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. If the Company or the Guarantors shall give any such notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantors shall extend the period during which the Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders shall have received copies of the supplemented or amended Prospectus necessary to resume such dispositions or such earlier time when none of the Securities constitute Registrable Securities. The Company and the Guarantors may give any such notice only twice during any 365 day period and any such suspensions may not exceed 30 days for each suspension and there may not be more than two suspensions in effect during any 365 day period, unless in the good faith judgment of the Company's Board of Directors, upon advice of counsel, the sale of the Securities under the Shelf Registration Statement would be reasonably likely to cause a violation of the 1933 Act or the 1934 Act and result in potential liability to the Company or any of the Guarantors; PROVIDED that the Company and the Guarantors shall pay to each Holder of Registrable Securities that are covered under the Shelf Registration Statement and have not sold pursuant thereto additional interest on such Securities of .5% per annum (calculated for the actual number of days of suspension in excess of 60 days in any 365 day period). In no event shall such suspensions by the Company and the Guarantors exceed 180 days in any 365 day period. The Holders of Registrable Securities covered by a Shelf Registration Statement who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers (the "Underwriters") that will administer the offering will be selected by the 16 15 Majority Holders of the Registrable Securities included in such offering provided that such selection is reasonably acceptable to the Company and the Guarantors. No Holder of Registrable Securities may participate in an underwritten registration hereunder unless such Holder agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements and completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents; provided that such arrangements and documents are customary for underwritten offerings and are reasonably acceptable to the Holders. 4. PARTICIPATION OF BROKER-DEALERS IN EXCHANGE OFFER. (a) The Staff of the SEC has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a "Participating Broker-Dealer"), may be deemed to be an "underwriter" within the meaning of the 1933 Act and must deliver a prospectus meeting the requirements of the 1933 Act in connection with any resale of such Exchange Securities. The Company and the Guarantors understand that it is the Staff's position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers to satisfy their prospectus delivery obligation under the 1933 Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the 1933 Act. (b) In light of the above, notwithstanding the other provisions of this Agreement, the Company and the Guarantors agree that the provisions of this Agreement as they relate to a Shelf Registration shall also apply to an Exchange Offer Registration to the extent, and with such reasonable modifications thereto as may be, reasonably requested by the Placement Agents or by one or more Participating Broker-Dealers, in each case as provided in clause (ii) below, in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above; PROVIDED that: (i) neither the Company nor the Guarantors shall be required to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement, as would otherwise be contemplated by Section 3(i), for a period exceeding the lesser of (i) 180 days after the last Exchange Date (as such period may be extended pursuant to 17 16 the penultimate paragraph of Section 3 of this Agreement) and (ii) the date on which all persons subject to the prospectus delivery requirements of the 1933 Act (as described above) have sold all Exchange Securities held by them hereunder; and Participating Broker-Dealers shall not be authorized by the Company or any of the Guarantors to deliver and shall not deliver such Prospectus after such period in connection with the resales contemplated by this Section 4; and (ii) the application of the Shelf Registration procedures set forth in Section 3 of this Agreement to an Exchange Offer Registration, to the extent not required by the positions of the Staff of the SEC or the 1933 Act and the rules and regulations thereunder, will be in conformity with the reasonable request to the Company and the Guarantors by the Placement Agents or with the reasonable request in writing to the Company and the Guarantors by one or more broker-dealers who certify to the Placement Agents and the Company and the Guarantors in writing that they anticipate that they will be Participating Broker-Dealers; and PROVIDED FURTHER that, in connection with such application of the Shelf Registration procedures set forth in Section 3 to an Exchange Offer Registration, the Company shall be obligated (x) to deal only with one entity representing the Participating Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated unless it elects not to act as such representative, (y) to pay the reasonable fees and expenses of only one counsel representing the Participating Broker-Dealers, which shall be counsel to the Placement Agents unless such counsel elects not to so act and (z) to cause to be delivered only one, if any, "cold comfort" letter with respect to the Prospectus in the form existing on the last Exchange Date and with respect to each subsequent amendment or supplement, if any, effected during the period specified in clause (i) above. (c) The Placement Agents shall have no liability to the Company, any of the Guarantors or any Holder with respect to any request that it may make pursuant to Section 4(b) above. 5. INDEMNIFICATION AND CONTRIBUTION. (a) Each of the Company and the Guarantors, jointly and severally, agrees to indemnify and hold harmless the Placement Agents, each Holder and each Person, if any, who controls any Placement Agent or any Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under common control with, or is controlled by, any Placement Agent or any Holder, from and against all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred by the Placement Agent, any Holder or any such controlling or affiliated Person in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment 18 17 thereto) pursuant to which Exchange Securities or Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or caused by any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (as amended or supplemented if the Company and the Guarantors shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to the Placement Agents or any Holder furnished to the Company in writing through Morgan Stanley & Co. Incorporated or any selling Holder expressly for use therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement with respect to any preliminary prospectus shall not inure to the benefit of any Placement Agent or Holder from whom the person asserting any such losses, claims, damages or liabilities purchased Securities, or any person controlling such Placement Agent or Holder, if a copy of the final Prospectus (as then amended or supplemented if the Company and the Guarantors shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Placement Agent or Holder to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Securities to such person, and if the final Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities, unless such failure is the result of the failure of the Company to furnish copies of the final Prospectus, any documents incorporated by reference therein or any supplements or amendments thereto pursuant to Section 3(c) or Section 4(b). In connection with any Underwritten Offering permitted by Section 3, each of the Company and the Guarantors will also, jointly and severally, indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their officers and directors and each Person who controls such Persons (within the meaning of the 1933 Act and the 1934 Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement. (b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors, the Placement Agents and the other selling Holders, and each of their respective directors, officers who sign the Registration Statement and each Person, if any, who controls the Company, the Guarantors, any Placement Agent and any other selling Holder within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing indemnity from the Company and the Guarantors to the Placement Agents and the Holders, but only with reference to information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto). 19 18 (c) In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above, such Person (the "indemnified party") shall promptly notify the Person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the reasonable fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (a) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Placement Agents and all Persons, if any, who control any Placement Agent within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, the Guarantors, their directors, their officers who sign the Registration Statement and each Person, if any, who controls the Company and the Guarantors within the meaning of either such Section and (c) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Holders and all Persons, if any, who control any Holders within the meaning of either such Section, and that all such fees and expenses shall be reimbursed as they are incurred. In such case involving the Placement Agents and Persons who control the Placement Agents, such firm shall be designated in writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders and such Persons who control Holders, such firm shall be designated in writing by the Majority Holders. In all other cases, such firm shall be designated by the Company. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent but, if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the indemnifying party agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party for such fees and expenses of counsel in accordance with such request prior to the date of such settlement. No indemnifying party shall, without the prior written consent of the indemnified 20 19 party, effect any settlement of any pending or threatened proceeding in respect of which such indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) If the indemnification provided for in paragraph (a) or paragraph (b) of this Section 5 is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company, the Guarantors and the Holders shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantors or by the Holders and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Holders' respective obligations to contribute pursuant to this Section 5(d) are several in proportion to the respective principal amount of Registrable Securities of such Holder that were registered pursuant to a Registration Statement. (e) The Company, the Guarantors and each Holder agree that it would not be just or equitable if contribution pursuant to this Section 5 were determined by PRO RATA allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 5, no Holder shall be required to indemnify or contribute any amount in excess of the amount by which the total price at which Registrable Securities were sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. 21 20 The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Placement Agents, any Holder or any Person controlling any Placement Agent or any Holder, or by or on behalf of the Company, the Guarantors, their officers or directors or any Person controlling the Company or the Guarantors, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement. 6. MISCELLANEOUS. (a) NO INCONSISTENT AGREEMENTS. Neither the Company nor any of the Guarantors has not entered into, and on or after the date of this Agreement will not enter into, any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's or the Guarantors' other issued and outstanding securities under any such agreements. (b) AMENDMENTS AND WAIVERS. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Guarantors has obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; PROVIDED, HOWEVER, that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. (c) NOTICES. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company and the Guarantors by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Placement Agents, the address set forth in the Placement Agreement; and (ii) if to the Company and the Guarantors, initially at the Company's address set forth in the Placement Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt is 22 21 acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands, or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. (d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; PROVIDED that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Placement Agreement. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The Placement Agents (in their capacity as Placement Agents) shall have no liability or obligation to the Company or any of the Guarantors with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement. (e) PURCHASES AND SALES OF SECURITIES. The Company and the Guarantors shall not, and shall use their best efforts to cause their affiliates (as defined in Rule 405 under the 1933 Act) not to, purchase and then resell or otherwise transfer any Securities. (f) THIRD PARTY BENEFICIARY. The Holders shall be third party beneficiaries to the agreements made hereunder between the Company and the Guarantors, on the one hand, and the Placement Agents, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of Holders hereunder. (g) COUNTERPARTS. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (h) HEADINGS. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 23 22 (i) GOVERNING LAW. This Agreement shall be governed by the laws of the State of New York, excluding (to the greatest extent a New York court would permit) any rule of law that would cover application of the law of any jurisdiction other than the State of New York. (j) SEVERABILITY. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 24 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. HADCO CORPORATION By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Senior Vice President, Chief Financial Officer and Treasurer HADCO SANTA CLARA, INC. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Senior Vice President, Chief Financial Officer and Treasurer HADCO PHOENIX, INC. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Senior Vice President and Treasurer CCIR OF CALIFORNIA CORP. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Chief Financial Officer CCIR OF TEXAS CORP. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Chief Financial Officer 25 Confirmed and accepted as of the date first above written: MORGAN STANLEY & CO. INCORPORATED MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANCAMERICA ROBERTSON STEPHENS BT ALEX. BROWN INCORPORATED By: MORGAN STANLEY & CO. INCORPORATED By /s/ William H. Wright II ----------------------------------- Name: William H. Wright II Title: Managing Director EX-5.1 12 OPINION OF TESTA, HURWITZ & THIBEAULT 1 EXHIBIT 5.1 June 23, 1998 Hadco Corporation 12A Manor Parkway Salem, NH 03079 Dear Ladies and Gentlemen: We are acting as counsel to Hadco Corporation, a Massachusetts corporation (the "Company") in connection with the registration on a Registration Statement on Form S-4 (the "Registration Statement") and the prospectus forming a part thereof (the "Prospectus") under the Securities Act of 1933, as amended, of $200,000,000 aggregate principal amount of the Company's 9-1/2% Senior Subordinated Notes due 2008 (the "Exchange Notes") and the related guarantees (the "Guarantees") of certain of the Company's subsidiaries named in the Registration Statement (the "Guarantors"). The Exchange Notes and the Guarantees are proposed to be issued under an indenture dated as of May 18, 1998 (the "Indenture") among the Company, the Guarantors and State Street Bank and Trust Company, as trustee, and the related Registration Rights Agreement (the "Registration Rights Agreement"), dated May 13, 1998, among the Company, the Guarantors and the Initial Purchasers (as defined in the Registration Rights Agreement) in exchange for the Company's 9-1/2% Senior Subordinated Notes due 2008 (the "Original Notes") and related guarantees. We have examined such documents, records and matters of law as we have deemed necessary for purposes of this opinion. We have assumed that the Exchange Notes and the Guarantees will be executed and delivered as set forth in the Registration Statement, the Prospectus and the Letter of Transmittal set forth as an exhibit to the Registration Statement. We have assumed the genuineness of all signatures and the conformity to original documents of all copies of documents submitted to us as copies, whether certified or not. We have assumed the conformity of the certificates for the Exchange Notes and the Guarantees to the specimens of the certificates, which are included as an exhibit to the Registration Statement. We have assumed that the Exchange Notes, the Guarantees and the Indenture have been duly authorized, executed and authenticated in accordance with the terms of the Indenture by each of the parties thereto. Our opinions expressed herein with respect to the validly and binding effect the Exchange Notes and the Guarantees are qualified to the extent that the validity and binding effect thereof may be limited by (i) applicable bankruptcy, reorganization, arrangements, insolvency, fraud on creditors, preference, moratorium or similar laws affecting the enforcement of creditors' rights generally as at the time in effect and (ii) general principles of equity (whether considered in a proceeding of law or in equity). 2 Hadco Corporation June 23, 1998 Page 2 We are members only of the bar of the Commonwealth of Massachusetts and therefore do not hold ourselves out as experts in, and express no opinion as to, the laws of any other state or jurisdiction other than the Laws of the Commonwealth of Massachusetts and the federal laws of the United States of America. The Indenture and the Exchange Notes provide that each is governed by the laws of the State of New York, without giving effect to the conflict of laws provisions thereof. We have assumed that the substantive laws of the State of New York are the same as the substantive laws of the Commonwealth of Massachusetts. We have also assumed that the choice of law provisions of the Indenture and the Exchange Notes would be given effect. Based upon and subject to the foregoing, we are of the opinion that the Exchange Notes and the Guarantees, when duly executed and authenticated in accordance with the terms of the Indenture and delivered in exchange for the Original Notes as contemplated in the Prospectus, will be valid and binding obligations of the Company and the Guarantors, respectively. We consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to us under the caption "Legal Matters" in the Registration Statement. Very truly yours, /s/ Testa, Hurwitz & Thibeault, LLP TESTA, HURWITZ & THIBEAULT, LLP EX-10.1 13 PLACEMENT AGREEMENT 1 Exhibit 10.1 $200,000,000 HADCO CORPORATION 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008 PLACEMENT AGREEMENT May 13, 1998 2 May 13, 1998 Morgan Stanley & Co. Incorporated Merrill Lynch, Pierce, Fenner & Smith Incorporated BancAmerica Robertson Stephens BT Alex. Brown Incorporated c/o Morgan Stanley & Co. Incorporated 1585 Broadway New York, New York 10036 Dear Sirs and Mesdames: HADCO CORPORATION, a corporation organized under the laws of the Commonwealth of Massachusetts (the "Company"), proposes to issue and sell to the several purchasers named in Schedule I hereto (the "Placement Agents") $200,000,000 principal amount of its 9 1/2% Senior Subordinated Notes due 2008 (the "Securities") to be issued pursuant to the provisions of an Indenture dated as of May 18, 1998 (the "Indenture") among the Company, the Guarantors (as defined) and State Street Bank and Trust Company, as Trustee (the "Trustee"). The Securities will be guaranteed (the "Note Guarantees") on a senior subordinated basis, jointly and severally by HADCO SANTA CLARA, INC., a Delaware corporation, HADCO PHOENIX, INC., a Delaware corporation, CCIR OF CALIFORNIA CORP., a California corporation, and CCIR OF TEXAS CORP., a Texas corporation (collectively, the "Guarantors"). The Securities will be offered without being registered under the Securities Act of 1933, as amended (the "Securities Act"), to qualified institutional buyers in compliance with the exemption from registration provided by Rule 144A under the Securities Act, in offshore transactions in reliance on Regulation S under the Securities Act ("Regulation S") and to a limited number of institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) that deliver a letter in the form annexed to the Final Memorandum (as defined below). The Placement Agents and their direct and indirect transferees will be entitled to the benefits of a Registration Rights Agreement dated the date hereof between the Company, the Guarantors and the Placement Agents (the "Registration Rights Agreement"). In connection with the sale of the Securities, the Company has prepared a preliminary offering memorandum (the "Preliminary Memorandum") and will prepare a final offering memorandum (the "Final Memorandum" and, with the Preliminary Memorandum, each a "Memorandum") including or incorporating by reference a description of the terms of the Securities, the terms of the offering and a description of the Company. As used herein, the term "Memorandum" shall include in each case the documents incorporated by reference 3 2 therein. The terms "supplement", "amendment" and "amend" as used herein with respect to a Memorandum shall include all documents deemed to be incorporated by reference in the Preliminary Memorandum or Final Memorandum that are filed subsequent to the date of such Memorandum with the Securities and Exchange Commission (the "Commission") pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). 1. Representations and Warranties. Each of the Company and the Guarantors, jointly and severally, represents and warrants to, and agrees with, you that: (a) (i) Each document, if any, filed or to be filed pursuant to the Exchange Act and incorporated by reference in either Memorandum complied or will comply when so filed in all material respects with the Exchange Act and the applicable rules and regulations of the Commission thereunder and (ii) the Preliminary Memorandum does not contain and the Final Memorandum, in the form used by the Placement Agents to confirm sales and on the Closing Date (as defined in Section 4), will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in either Memorandum based upon information relating to any Placement Agent furnished to the Company in writing by such Placement Agent through you expressly for use therein. (b) The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in each Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing in the jurisdiction of its incorporation or such foreign jurisdiction would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; no proceeding has been instituted in any such jurisdiction, revoking, limiting or curtailing, or seeking to revoke, limit or curtail, such power and authority or qualification. (c) Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in each Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing in the jurisdiction of its 4 3 incorporation or such foreign jurisdiction would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and, except as otherwise described in the Final Memorandum, are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims other than those which would not have a material adverse effect on the Company and its subsidiaries taken as a whole. (d) This Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors. (e) The Securities have been duly authorized and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Placement Agents in accordance with the terms of this Agreement, will be valid and binding obligations of the Company, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity, and will be entitled to the benefits of the Indenture and the Registration Rights Agreement. (f) The Note Guarantees have been duly authorized by each of the Guarantors and, when the Securities are executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Placement Agents in accordance with the terms of this Agreement, will be valid and binding obligations of each of the Guarantors, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity, and will be entitled to the benefits of the Indenture and the Registration Rights Agreement. (g) The Indenture has been duly authorized and, when executed and delivered by the Company and each of the Guarantors, and assuming due authorization, execution and delivery by the Trustee, will be a valid and binding agreement of the Company and each of the Guarantors, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity. (h) The Registration Rights Agreement has been duly authorized, executed and delivered by the Company and each of the Guarantors, and is a valid and binding agreement of the Company and each of the Guarantors, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity and except as rights to 5 4 indemnification and contribution under the Registration Rights Agreement may be limited under applicable law. (i) The execution and delivery by the Company and each of the Guarantors of, and the performance by the Company and each of the Guarantors of their respective obligations under, this Agreement, the Indenture, the Registration Rights Agreement and, in the case of the Company, the Securities, and in the case of the Guarantors, the Note Guarantees will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or of the Guarantors or any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree presently in effect or in effect on the Closing Date of any governmental body, agency or court having jurisdiction over the Company or any subsidiary that is material to the Company and its subsidiaries, taken as a whole, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company or the Guarantors of their respective obligations under this Agreement, the Indenture, the Registration Rights Agreement or, in the case of the Company, the Securities or, in the case of the Guarantors, the Note Guarantees, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities and by Federal and state securities laws with respect to the Company's and the Guarantors' obligations under the Registration Rights Agreement. (j) Neither the Company nor any of its subsidiaries is in violation of its respective charter or by-laws or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any material bond, debenture, note or other evidence of indebtedness, or in any material lease, contract, indenture, deed of trust, loan agreement, joint venture or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which it or any of its subsidiaries or their respective properties may be bound; and neither the Company nor any of its subsidiaries is in material violation of any law, order, rule, regulation, writ, injunction, judgment or decree of any court, government or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or over their respective properties of which it has knowledge. (k) There has not occurred any material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations or business prospects of the Company and its subsidiaries, taken as a whole, from that set forth in the Final Memorandum. 6 5 (l) There are no legal or governmental proceedings pending or, to the best of the Company's knowledge, threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject other than proceedings accurately described in all material respects in each Memorandum and proceedings that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, or on the power or ability of the Company or the Guarantors to perform their respective obligations under this Agreement, the Indenture, the Registration Rights Agreement or, in the case of the Company, the Securities or, in the case of the Guarantors, the Note Guarantees, or to consummate the transactions contemplated by the Final Memorandum. (m) Except as set forth in the Final Memorandum, the Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii) to the best of their knowledge after reasonable inquiry, have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (n) Except as set forth in the Final Memorandum, to the best of the Company's knowledge after reasonable inquiry, there are no costs or liabilities associated with Environmental Laws (including, without limitation, any capital or operating expenditures required for clean-up, closure of properties or compliance with Environmental Laws or any permit, license or approval, any related constraints on operating activities and any potential liabilities to third parties) which would, singly or in the aggregate, have a material adverse effect on the Company and its subsidiaries, taken as a whole. (o) None of the Company nor any of the Guarantors is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Memorandum, will be an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. (p) Neither the Company, the Guarantors nor any affiliate (as defined in Rule 501(b) of Regulation D under the Securities Act, an "Affiliate") of the Company or the Guarantors has directly, or through any agent (other than the Placement Agents), 7 6 (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (other than the Securities to be offered hereunder) (as defined in the Securities Act) which is or will be integrated with the sale of the Securities in a manner that would require the registration under the Securities Act of the Securities or (ii) engaged in any form of general solicitation or general advertising in connection with the offering of the Securities, (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act, provided that with respect to the Placement Agents, this representation is based solely on the representations of the Placement Agents in Section 7 hereof. (q) None of the Company, the Guarantors, their Affiliates or any person acting on its or their behalf has engaged or will engage in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities and the Company, the Guarantors and their Affiliates and any person acting on its or their behalf have complied and will comply with the offering restrictions requirement of Regulation S, except no representation, warranty or agreement is made by the Company or the Guarantors in this paragraph with respect to the Placement Agents. (r) Assuming the accuracy of each of the Placement Agents' representations and warranties set forth in Section 7 hereof and the due performance by each Placement Agent of the covenants and agreements set forth herein, it is not necessary in connection with the offer, sale and delivery of the Securities to the Placement Agents in the manner contemplated by this Agreement to register the Securities or the Note Guarantees under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended. (s) The Securities and the Note Guarantees satisfy the requirements set forth in Rule 144A(d)(3) under the Securities Act. (t) The Securities and the Note Guarantees conform in all material respects to the descriptions thereof contained in the Final Memorandum under the heading "Description of the Notes." (u) Each of the Company and its subsidiaries has all necessary consents, authorizations, approvals, orders, certificates and permits of and from, and has made all declarations and filings with, all federal, state, local, foreign and other governmental authorities, all self-regulatory organizations and all courts and other tribunals to own, lease, license and use its properties and assets and to conduct its business in the manner described in the Final Memorandum except as would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; and 8 7 neither the Company nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such consent, authorization, approval, order, certificate or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the Company and its subsidiaries, taken as a whole, except as described in the Final Memorandum. (v) The Company and its subsidiaries have timely filed all necessary federal, state and foreign income and franchise tax returns required to be filed prior to the Closing Date and have paid all taxes shown thereon as due other than those taxes being contested in good faith and for which adequate reserves have been made, which amount of taxes being contested, if the subject to an unfavorable decision, would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, and except for where failure to file such returns or to pay such taxes would not, in the aggregate, have a material adverse effect on the Company and its subsidiaries taken as a whole, and there is no tax deficiency that has been or, to the best of the Company's knowledge, might be asserted against the Company or any of its subsidiaries that might have a material adverse effect on the Company and its subsidiaries, taken as a whole; and all tax liabilities are adequately provided for on the books of the Company and its subsidiaries. (w) Arthur Andersen LLP, which has examined the consolidated financial statements of the Company, together with the related schedules and notes, as of October 25, 1997 and for each of the three years ended October 25, 1997 and Ernst & Young LLP, which has examined the consolidated financial statements of Continental Circuits Corp. ("Continental") together with the related schedules and notes, as of July 31, 1997, and for each of the three years ended July 31, 1997, which are included or incorporated by reference in the Final Memorandum are independent accountants within the meaning of the Act and the rules and regulations of the Act; the audited consolidated financial statements of the Company and Continental, together with the related schedules and notes, and the unaudited consolidated financial information, forming part of the Final Memorandum, fairly present in all material respects the financial position and the results of operations of the Company and its subsidiaries and Continental and its subsidiaries at the respective dates and for the respective periods to which they apply; and all audited consolidated financial statements of the Company and Continental, together with the related schedules and notes, and the unaudited consolidated financial information included or incorporated by reference in the Final Memorandum, have been consistently applied throughout the periods involved except as may be otherwise stated therein. The selected and summary financial and statistical data included or incorporated by reference in the Final Memorandum present fairly in all material respects the information shown therein and have been compiled on a basis 9 8 consistent with the audited financial statements presented therein. No other financial statements or schedules are required to be included or incorporated by reference in the Final Memorandum. (x) Subsequent to the respective dates as of which information is given in the Final Memorandum, (i) the Company and its subsidiaries have not incurred any material liability or obligation, including any material contingent liability or obligation which would be required to be disclosed on the Company's consolidated balance sheet in accordance with GAAP, nor entered into any material transaction not in the ordinary course of business; (ii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock, other than ordinary and customary dividends; and (iii) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and its subsidiaries, except in each case as described in the Final Memorandum. (y) The Company and its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in the Final Memorandum or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company and its subsidiaries, in each case except as described in the Final Memorandum. (z) The Company and its subsidiaries own, license or possess, or can acquire on reasonable terms, all patents, patent rights, licenses, inventions, copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks and trade names currently employed by them in connection with the business now operated by them and material to the business of the Company and its subsidiaries, taken as a whole, and, except as described in the Final Memorandum, neither the Company nor any of its subsidiaries has received any notice of infringement of or conflict with asserted rights of others with respect to any of the foregoing which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would have a material adverse effect on the Company and its subsidiaries, taken as a whole. 10 9 (aa) No material labor dispute with the employees of the Company or any of its subsidiaries exists, except as described in the Final Memorandum, or, to the knowledge of the Company, is imminent; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that is reasonably expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole. (bb) The Company and its subsidiaries are insured by insurers of recognized financial responsibility (or self-insured) against such losses and risks and in such amounts as customary in the businesses in which they are engaged; neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for, except where such refusal would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, except as described in the Final Memorandum. (cc) The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (dd) There are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees of indebtedness by the Company to or for the benefit of any of the executive officers or directors of the Company or any of the members of the families of any of them, except as disclosed in the Final Memorandum and any incorporated document. (ee) The Unrestricted Subsidiaries designated in the Indenture are not "significant subsidiaries" as such term is defined in Regulation S-X. 2. Agreements to Sell and Purchase. The Company hereby agrees to sell to the several Placement Agents, and each Placement Agent, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, 11 10 severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth in Schedule I hereto opposite its name at a purchase price of 96.91% of the principal amount thereof (the "Purchase Price") plus accrued interest, if any, to the Closing Date. The Company and the Guarantors hereby agree that, without the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the Placement Agents, they will not, during the period beginning on the date hereof and continuing to and including the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt of the Company or the Guarantors or warrants to purchase debt of the Company or the Guarantors substantially similar to the Securities (other than the sale of the Securities under this Agreement.) 3. Terms of Offering. You have advised the Company and the Guarantors that the Placement Agents will make an offering of the Securities purchased by the Placement Agents hereunder on the terms to be set forth in the Final Memorandum, as soon as practicable after this Agreement is entered into as in your judgment is advisable. 4. Payment and Delivery. Payment for the Securities shall be made to the Company in Federal or other funds immediately available in New York City against delivery of such Securities for the respective accounts of the several Placement Agents at 10:00 a.m., New York City time, on May 18, 1998, or at such other time on the same or such other date, not later than June 2, 1998, as shall be designated in writing by you. The time and date of such payment are hereinafter referred to as the "Closing Date." Certificates for the Securities shall be in definitive form or global form, as specified by you, and registered in such names and in such denominations as you shall request in writing not later than one full business day prior to the Closing Date. The certificates evidencing the Securities shall be delivered to you on the Closing Date for the respective accounts of the several Placement Agents, with any transfer taxes payable in connection with the initial transfer of the Securities to the Placement Agents duly paid, against payment of the Purchase Price therefor plus accrued interest, if any, to the date of payment and delivery. 5. Conditions to the Placement Agents' Obligations. The several obligations of the Placement Agents to purchase and pay for the Securities on the Closing Date are subject to the following conditions: (a) Subsequent to the execution and delivery of this Agreement and prior to the Closing Date: (i) there shall not have occurred any downgrading, nor shall any notice have been given of any intended or potential downgrading or of any 12 11 review for a possible change that does not indicate the direction of the possible change, in the Company's or any of the Guarantors' securities by any "nationally recognized statistical rating organization," as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; and (ii) there shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Final Memorandum (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in your judgment, is material and adverse and that makes it, in your judgment, impracticable to market the Securities on the terms and in the manner contemplated in the Final Memorandum. (b) The Placement Agents shall have received on the Closing Date a certificate, dated the Closing Date and signed by an executive officer of each of the Company and the Guarantors, to the effect set forth in Section 5(a)(i) and to the effect that the representations and warranties of the Company and the Guarantors contained in this Agreement are true and correct as of the Closing Date and the Company and the Guarantors have complied in all material respects with all of the agreements and satisfied all of the conditions on their part to be performed or satisfied hereunder on or before the Closing Date or that such conditions have been waived by the Placement Agents. Any officer signing and delivering such certificate may rely upon the best of his or her knowledge as to proceedings threatened. (c) The Placement Agents shall have received on the Closing Date an opinion of Testa, Hurwitz & Thibeault, LLP, special counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit A. Such opinion shall be rendered to the Placement Agents at the request of the Company and the Guarantors and shall so state therein. (d) The Placement Agents shall have received on the Closing Date an opinion of Hamilton & Dahmen, LLP general counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit B. Such opinion shall be rendered to the Placement Agents at the request of the Company and the Guarantors and shall so state therein. 13 12 (e) The Placement Agents shall have received on the Closing Date an opinion of Shearman & Sterling, counsel for the Placement Agents, dated the Closing Date, in form and substance satisfactory to you. (f) The Placement Agents shall have received on each of the date hereof and the Closing Date a letter, dated the date hereof or the Closing Date, as the case may be, in form and substance satisfactory to the Placement Agents, from Arthur Andersen LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information of the Company contained in or incorporated by reference into the Final Memorandum; provided that the letter delivered on the Closing Date shall use a "cut-off date" not earlier than the date hereof. (g) The Placement Agents shall have received on the date hereof a letter, dated the date hereof, in form and substance satisfactory to the Placement Agents, from Ernst & Young L.L.P., independent public accountants, containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information of Continental contained in or incorporated by reference into the Final Memorandum. (h) The Placement Agents shall have received such other documents and certificates as are reasonably requested by you or your counsel. (i) On or prior to the Closing Date, the Company, BankBoston, N.A. and the other lenders party thereto, shall have executed a second amendment and modification to the Amended and Restated Revolving Credit Agreement dated as of December 8, 1997, which shall be in full force and effect as of the Closing Date and shall be reasonably satisfactory to the Placement Agents. 6. Covenants of the Company. In further consideration of the agreements of the Placement Agents contained in this Agreement, each of the Company and the Guarantors covenants with each Placement Agent as follows: (a) To furnish to you in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in Section 6(c), as many copies of the Final Memorandum, any documents incorporated by reference therein and any supplements and amendments thereto as you may reasonably request. (b) Prior to the expiration of the period referred to in Section 6(c), before amending or supplementing either Memorandum, to furnish to you a copy of each such 14 13 proposed amendment or supplement and not to use any such proposed amendment or supplement to which you reasonably object. (c) If, during such period after the date hereof and prior to the date on which all of the Securities shall have been sold by the Placement Agents, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Final Memorandum in order to make the statements therein, in the light of the circumstances when the Final Memorandum is delivered to a purchaser, not misleading, or if, in the opinion of counsel for the Placement Agents, it is necessary to amend or supplement the Final Memorandum to comply with applicable law, forthwith to prepare and furnish, at its own expense, to the Placement Agents, either amendments or supplements to the Final Memorandum so that the statements in the Final Memorandum as so amended or supplemented will not, in the light of the circumstances when the Final Memorandum is delivered to a purchaser, be misleading or so that the Final Memorandum, as amended or supplemented, will comply with applicable law. (d) To endeavor to qualify the Securities and the Note Guarantees for offer and sale under the securities or Blue Sky laws of such jurisdictions as you shall reasonably request for so long as is reasonably necessary to complete the resale of the Securities and the Note Guarantees; provided the Company shall not be required to qualify as a foreign corporation or consent to service of process in any jurisdiction, incur any tax or amend its charter or by-laws. (e) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of the Company's counsel and the Company's accountants in connection with the issuance and sale of the Securities and all other fees or expenses in connection with the preparation of each Memorandum and all amendments and supplements thereto, including all printing costs associated therewith, and the delivering of copies thereof to the Placement Agents, in the quantities herein above specified, (ii) all costs and expenses related to the transfer and delivery of the Securities to the Placement Agents, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or legal investment memorandum in connection with the offer and sale of the Securities under state securities laws and all expenses in connection with the qualification of the Securities and the Note Guarantees for offer and sale under state securities laws as provided in Section 6(d) hereof, including filing fees and the reasonable fees and disbursements of one counsel for the Placement Agents in connection with such qualification and in connection with the Blue Sky or legal investment memorandum, (iv) any fees charged 15 14 by rating agencies for the rating of the Securities, (v) the fees and expenses, if any, incurred in connection with the admission of the Securities for trading in PORTAL or any appropriate market system and on the Luxembourg Stock Exchange, (vi) the costs and charges of the Trustee and any transfer agent, registrar or depositary, (viii) the cost of the preparation, issuance and delivery of the Securities, (viii) the costs and expenses of the Company relating to investor presentations on any "road show" undertaken in connection with the marketing of the offering of the Securities, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and the cost of any aircraft chartered in connection with the road show, and (ix) all other costs and expenses incident to the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 8, and the last paragraph of Section 10, the Placement Agents will pay all of their costs and expenses, including fees and disbursements of their counsel, their travel and lodging expenses, transfer taxes payable on resale of any of the Securities by them and any advertising expenses connected with any offers they may make. (f) Neither the Company, the Guarantors, nor any Affiliate will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) which could be integrated with the sale of the Securities in a manner which would require the registration under the Securities Act of the Securities. (g) Not to solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. (h) While any of the Securities remain "restricted securities" within the meaning of the Securities Act and not salable in full under Rule 144 (or any successor thereto), to make available, upon request, to any seller of the Securities the information specified in Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act. (i) If requested by you, to use its best efforts to permit the Securities to be designated PORTAL securities in accordance with the rules and regulations adopted by the National Association of Securities Dealers, Inc. relating to trading in the PORTAL Market. 16 15 (j) None of the Company, the Guarantors, their Affiliates or any person acting on its or their behalf (other than the Placement Agents) will engage in any directed selling efforts (as that term is defined in Regulation S) with respect to the Securities, and the Company, the Guarantors and their Affiliates and each person acting on its or their behalf (other than the Placement Agents) will comply with the offering restrictions requirement of Regulation S. (k) During the period of two years after the Closing Date, the Company and the Guarantors will not, and will not permit any of their affiliates (as defined in Rule 144 under the Securities Act) to resell any of the Securities which constitute "restricted securities" under Rule 144 that have been reacquired by any of them. (l) As soon as reasonably practicable to qualify the Securities for listing on the Luxembourg Stock Exchange. 7. Offering of Securities; Restrictions on Transfer. (a) Each Placement Agent, severally and not jointly, represents and warrants that such Placement Agent is a qualified institutional buyer as defined in Rule 144A under the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly, agrees with the Company and the Guarantors that (i) it has not and will not directly or indirectly solicit offers for, or offer or sell, such Securities by any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act and (ii) it has and will solicit offers for such Securities only from, and will offer, sell and deliver such Securities only to, persons that it reasonably believes to be (A) in the case of offers inside the United States, (1) QIBs or (2) a limited number of other institutional accredited investors (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("institutional accredited investors") that, prior to their purchase of the Securities, deliver to such Placement Agent a letter containing the representations and agreements set forth in Appendix A to the Memorandum and (B) in the case of offers outside the United States, to persons other than U.S. persons ("foreign purchasers," which term shall include dealers or other professional fiduciaries in the United States acting on a discretionary basis for foreign beneficial owners (other than an estate or trust)) in reliance upon Regulation S under the Securities Act that, in each case, in purchasing such Securities are deemed to have represented and agreed as provided in the Final Memorandum under the caption "Transfer Restrictions." (b) Each Placement Agent, severally and not jointly, represents, warrants, and agrees with respect to offers and sales outside the United States that: (i) such Placement Agent understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the 17 16 Securities, or possession or distribution of either Memorandum or any other offering or publicity material relating to the Securities, in any country or jurisdiction where action for that purpose is required; (ii) such Placement Agent will comply with all applicable laws and regulations in each jurisdiction in which it acquires, offers, sells or delivers Securities or has in its possession or distributes either Memorandum or any such other material, in all cases at its own expense; (iii) the Securities have not been registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in accordance with Rule 144A or Regulation S under the Securities Act or pursuant to another exemption from the registration requirements of the Securities Act; (iv) such Placement Agent has offered the Securities and will offer and sell the Securities (A) as part of their distribution at any time and (B) otherwise until 40 days after the later of the commencement of the offering and the Closing Date, only in accordance with Rule 903 of Regulation S or as otherwise permitted in Section 7(a); accordingly, neither such Placement Agent, its Affiliates nor any persons acting on its or their behalf have engaged or will engage, directly or indirectly, in any directed selling efforts (within the meaning of Regulation S) with respect to the Securities, and any such Placement Agent, its Affiliates and any such persons have complied and will comply with the offering restrictions requirement of Regulation S; (v) such Placement Agent has (A) not offered or sold and, prior to the date six months after the Closing Date, will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (B) complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom, and (C) only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issue of the Securities to a person who is of a kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on; 18 17 (vi) such Placement Agent understands that the Securities have not been and will not be registered under the Securities and Exchange Law of Japan, and represents that it has not offered or sold, and agrees not to offer or sell, directly or indirectly, any Securities in Japan or for the account of any resident thereof except pursuant to any exemption from the registration requirements of the Securities and Exchange Law of Japan and otherwise in compliance with applicable provisions of Japanese law; and (vii) such Placement Agent agrees that, at or prior to confirmation of sales of the Securities, it will have sent to each distributor, dealer or person receiving a selling concession, fee or other remuneration that purchases Securities from it during the restricted period a confirmation or notice to substantially the following effect: "The Securities covered hereby have not been registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of their distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the offering and the closing date, except in either case in accordance with Regulation S (or Rule 144A if available) under the Securities Act. Terms used above have the meaning given to them by Regulation S." Terms used in this Section 7(b) have the meanings given to them by Regulation S. 8. Indemnity and Contribution. (a) Each of the Company and the Guarantors, jointly and severally, agrees to indemnify and hold harmless each Placement Agent and each person, if any, who controls any Placement Agent within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) caused by any untrue statement or alleged untrue statement of a material fact contained in either Memorandum (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or caused by any omission or alleged omission to state therein a material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Placement Agent furnished to the Company in writing by such Placement Agent through you expressly for use therein; PROVIDED, HOWEVER, that the foregoing indemnity agreement with respect to any Preliminary Memorandum shall not inure to the benefit of any Placement Agent from whom the person asserting any such losses, claims, damages or liabilities purchased Securities, or any person controlling such Placement Agent, if a copy of the Final Memorandum (as then 19 18 amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Placement Agent to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Securities to such person, and if the Final Memorandum (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages or liabilities, unless such failure is the result of noncompliance by the Company with Section 6(a) hereof. (b) Each Placement Agent agrees, severally and not jointly, to indemnify and hold harmless the Company and the Guarantors, their directors, their officers and each person, if any, who controls the Company and the Guarantors within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company and the Guarantors to such Placement Agent, but only with reference to information relating to such Placement Agent furnished to the Company in writing by such Placement Agent through you expressly for use in either Memorandum or any amendments or supplements thereto. (c) In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b), such person (the "indemnified party") shall promptly notify the person against whom such indemnity may be sought (the "indemnifying party") in writing and the indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the indemnifying party shall not, in respect of the legal expenses of any indemnified party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all such indemnified parties and that all such reasonable fees and expenses shall be reimbursed as they are incurred. Such firm shall be designated in writing by Morgan Stanley & Co. Incorporated, in the case of parties indemnified pursuant to Section 8(a), and by the Company, in the case of parties indemnified pursuant to Section 8(b). The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of 20 19 such settlement or judgment. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding. (d) To the extent the indemnification provided for in Section 8(a) or 8(b) is unavailable to an indemnified party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each indemnifying party under such paragraph, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantors on the one hand and the Placement Agents on the other hand from the offering of the Securities or (ii) if the allocation provided by clause 8(d)(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 8(d)(i) above but also the relative fault of the Company and the Guarantors on the one hand and of the Placement Agents on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company and the Guarantors on the one hand and the Placement Agents on the other hand in connection with the offering of the Securities shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Securities (before deducting expenses, but after deducting all discounts, commissions and fees received by the Placement Agents) received by the Company and the Guarantors and the total discounts and commissions received by the Placement Agents in respect thereof, bear to the aggregate offering price of the Securities. The relative fault of the Company and the Guarantors on the one hand and of the Placement Agents on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company, the Guarantors or by the Placement Agents and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Placement Agents' respective obligations to contribute pursuant to this Section 8 are several in proportion to the respective principal amount of Securities they have purchased hereunder, and not joint. (e) The Company, the Guarantors and the Placement Agents agree that it would not be just or equitable if contribution pursuant to this Section 8 were determined by pro rata allocation (even if the Placement Agents were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in Section 8(d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages and liabilities referred to in Section 8(d) shall be deemed to include, subject 21 20 to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, no Placement Agent shall be required to contribute any amount in excess of the amount by which the total price at which the Securities resold by it in the initial placement of such Securities were offered to investors exceeds the amount of any damages that such Placement Agent has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 8 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. (f) The indemnity and contribution provisions contained in this Section 8 and the representations, warranties and other statements of the Company and the Guarantors contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Placement Agent or any person controlling any Placement Agent or by or on behalf of the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Securities. 9. Termination. This Agreement shall be subject to termination by notice given by you to the Company, if (a) after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, the National Association of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York State authorities or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any national or international calamity or crisis that, in your judgment, is material and adverse and (b) in the case of any of the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or together with any other such event, makes it, in your judgment, impracticable to market the Securities on the terms and in the manner contemplated in the Final Memorandum. 10. Effectiveness; Defaulting Placement Agents. This Agreement shall become effective upon the execution and delivery hereof by the parties hereto. 22 21 If, on the Closing Date, any one or more of the Placement Agents shall fail or refuse to purchase Securities that it or they have agreed to purchase hereunder on such date, and the aggregate principal amount of Securities which such defaulting Placement Agent or Placement Agents agreed but failed or refused to purchase is not more than one-tenth of the aggregate principal amount of the Securities to be purchased on such date, the other Placement Agents shall be obligated severally in the proportions that the principal amount of Securities set forth opposite their respective names in Schedule I bears to the aggregate principal amount of Securities set forth opposite the names of all such non-defaulting Placement Agents, or in such other proportions as you may specify, to purchase the Securities which such defaulting Placement Agent or Placement Agents agreed but failed or refused to purchase on such date; PROVIDED that in no event shall the principal amount of Securities that any Placement Agent has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of one-ninth of such principal amount of Securities without the written consent of such Placement Agent. If, on the Closing Date, any Placement Agent or Placement Agents shall fail or refuse to purchase Securities which it or they have agreed to purchase hereunder on such date and the aggregate principal amount of Securities with respect to which such default occurs is more than one-tenth of the aggregate principal amount of Securities to be purchased on such date, and arrangements satisfactory to you and the Company for the purchase of such Securities are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Placement Agent or the Company. In any such case either you or the Company shall have the right to postpone the Closing Date but in no event for longer than seven days, in order that the required changes, if any, in the Final Memorandum or in any other documents or arrangements may be effected. Any action taken under this paragraph shall not relieve any defaulting Placement Agent from liability in respect of any default of such Placement Agent under this Agreement. If this Agreement shall be terminated by the Placement Agents, or any of them, because of any failure or refusal on the part of the Company or any of the Guarantors to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company or any of the Guarantors shall be unable to perform its obligations under this Agreement, the Company or the Guarantors will reimburse the Placement Agents or such Placement Agents as have so terminated this Agreement with respect to themselves, severally, for all out-of-pocket expenses (including the reasonable fees and disbursements of their counsel) reasonably incurred by such Placement Agents in connection with this Agreement or the offering contemplated hereunder. 11. Notices. All notices and other communications under this Agreement shall be in writing and mailed, delivered or sent by facsimile transmission to: if sent to the Placement Agents, Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036, attention: High Yield New Issues Group, facsimile number (212) 761-0587 and if sent to the Company or any of the Guarantors c/o the Company, to 12A Manor Parkway, 23 22 Salem, New Hampshire 03079, attention: Patricia Randall, Vice President and General Counsel, facsimile number (603)898-6756. 12. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. 13. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. 14. Headings. The headings of the sections of this Agreement have been inserted for convenience of reference only and shall not be deemed a part of this Agreement. 24 Very truly yours, HADCO CORPORATION By: ------------------------------- Name: Title: HADCO SANTA CLARA, INC. By: ------------------------------- Name: Title: HADCO PHOENIX, INC. By: ------------------------------- Name: Title: CCIR OF CALIFORNIA CORP. By: ------------------------------- Name: Title: CCIR OF TEXAS CORP. By: ------------------------------- Name: Title: 25 Accepted as of the date hereof MORGAN STANLEY & CO. INCORPORATED MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANCAMERICA ROBERTSON STEPHENS BT ALEX. BROWN INCORPORATED By: Morgan Stanley & Co. Incorporated By: ---------------------------------- Name: Title: 26 SCHEDULE I - -------------------------------------------------------------------------------- PRINCIPAL AMOUNT OF PLACEMENT AGENT SECURITIES TO BE PURCHASED - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Morgan Stanley & Co. Incorporated $110,000,000 - -------------------------------------------------------------------------------- Merrill Lynch, Pierce, Fenner & Smith Incorporated 40,000,000 - -------------------------------------------------------------------------------- BancAmerica Robertson Stephens 30,000,000 - -------------------------------------------------------------------------------- BT Alex. Brown Incorporated 20,000,000 - -------------------------------------------------------------------------------- Total:.............................................. $200,000,000 - -------------------------------------------------------------------------------- 27 EXHIBIT A OPINION OF COUNSEL FOR THE COMPANY Attach draft opinion of the counsel for the Company to be delivered pursuant to Section 5(c) of the Placement Agreement to the effect that: A. The Placement Agreement has been duly authorized, executed and delivered by the Company. B. The Securities have been duly authorized by the Company and, when executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Placement Agents in accordance with the terms of the Placement Agreement, will be valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity, and will be entitled to the benefits of the Indenture and the Registration Rights Agreement. C. Each of the Indenture and the Registration Rights Agreement has been duly authorized, executed and delivered by the Company, and assuming due authorization, execution and delivery by the Trustee in the case of the Indenture and the Placement Agents in the case of the Registration Rights Agreement, is a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity and except as rights to indemnification and contribution under the Registration Rights Agreement may be limited under applicable law. D. After due inquiry, such counsel does not know of any legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject other than proceedings set forth in the Final Memorandum and proceedings which such counsel believes are not likely to have a material adverse effect on the Company and its subsidiaries, taken as a whole, or on the power or ability of the Company to perform its obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement or the Securities, or to consummate the transactions contemplated by the Final Memorandum. E. None of the Company nor any of the Guarantors is, and after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Final Memorandum, will be an "investment company" as such term is defined in the Investment Company Act of 1940, as amended. 28 A-2 F. The statements in the Final Memorandum under the captions "Business Environmental Matters", " - Legal Proceedings and Claims" (except for statements relating to environmental matters and statements relating to the Riley lawsuit), "Description of the Notes", "Private Placement", "Description of Certain Indebtedness" and "Transfer Restrictions", insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly summarize the matters referred to therein in all material respects. G. The statements in the Final Memorandum under the caption "Certain United States Federal Income Tax Considerations," insofar as such statements constitute a summary of the United States federal tax laws referred to therein, are accurate and fairly summarize in all material respects the United States federal tax laws referred to therein. H. Based upon the representations, warranties and agreements of the Company in the Placement Agreement and of the Placement Agents in the Placement Agreement, it is not necessary in connection with the offer, sale and delivery of the Securities to the Placement Agents under the Placement Agreement or in connection with the initial resale of such Securities by the Placement Agents in accordance with the Placement Agreement to register the Securities or the Note Guarantees under the Securities Act of 1933 or to qualify the Indenture under the Trust Indenture Act of 1939, it being understood that no opinion is expressed as to any subsequent resale of any Security. I. Such counsel is of the opinion that each document incorporated by reference in the Final Memorandum (except for financial statements and schedules and the notes thereto and the other financial and statistical data included in the Final Memorandum) complied as to form when filed with the Commission in all material respects with the Exchange Act and the rules and regulations of the Commission thereunder. We have participated in conferences with officers and other representatives of the Company and the Guarantors, the Placement Agents, counsel for the Placement Agents and representatives of the independent public accountants of the Company, at which the contents of the Final Memorandum and related matters were discussed and, although we are not passing upon and do not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Final Memorandum, no facts have come to our attention which lead us to believe that (i) the Final Memorandum contained as of its date or contains as of the Closing Date an untrue statement of a material fact or omitted or omits to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that we have not been requested to and do not make any comment with respect to the financial statements and the notes thereto and the other financial and statistical data included in the Final Memorandum). 29 A-3 With respect to the paragraph above, counsel may state that his or her opinion and belief are based upon his or her participation in the preparation of the Final Memorandum (and any amendments or supplements thereto) and review and discussion of the contents thereof and review of the documents incorporated by reference therein, but are without independent check or verification except with respect to paragraphs F and G. 30 EXHIBIT B OPINION OF COUNSEL FOR THE COMPANY AND THE GUARANTORS Attach draft opinion of the counsel for the Company and the Guarantors to be delivered pursuant to Section 5(d) of the Placement Agreement to the effect that: A. The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Final Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole. B. Each subsidiary of the Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its property and to conduct its business as described in the Final Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable, and are owned directly by the Company, free and clear of all liens, encumbrances, equities or claims. C. The Placement Agreement has been duly authorized, executed and delivered by each of the Guarantors. D. Each of the Indenture and the Registration Rights Agreement has been duly authorized, executed and delivered by each of the Guarantors, and assuming due authorization, execution and delivery by the Trustee in the case of the Indenture and the Placement Agents in the case of the Registration Rights Agreement, is a valid and binding agreement of, each of the Guarantors, enforceable against each of the Guarantors in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity and except as rights to indemnification and contribution under the Registration Rights Agreement may be limited under applicable law. E. After due inquiry, such counsel does not know of any legal or governmental proceedings pending or threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject other than proceedings set forth in the Final Memorandum and proceedings which such counsel 31 B-1 believes are not likely to have a material adverse effect on the Company and its subsidiaries, taken as a whole, or on the power or ability of the Guarantors to perform their respective obligations under the Placement Agreement, the Indenture, the Registration Rights Agreement or the Note Guarantees, or to consummate the transactions contemplated by the Final Memorandum. F. The execution and delivery by the Company and each of the Guarantors of, and the performance by the Company and each of the Guarantors of their respective obligations under, this Agreement, the Indenture, the Registration Rights Agreement and in the case of the Company, the Securities will not contravene any provision of applicable law or the certificate of incorporation or by-laws of the Company or of the Guarantors or, to the best of such counsel's knowledge, any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree presently in effect or in effect on the Closing Date of any governmental body, agency or court having jurisdiction over the Company or any subsidiary that is material to the Company and its subsidiaries, taken as a whole, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company or of the Guarantors of their respective obligations under this Agreement, the Indenture, the Registration Rights Agreement or, in the case of the Company, the Securities or, in the case of the Guarantors, the Note Guarantees, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities and by Federal and state securities laws with respect to the Company's and the Guarantors' obligations under the Registration Rights Agreement. G. The Note Guarantees have been duly authorized by each of the Guarantors and, when the Securities are executed and authenticated in accordance with the provisions of the Indenture and delivered to and paid for by the Placement Agents in accordance with the terms of this Agreement, will be valid and binding obligations of each of the Guarantors, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally and general principles of equity, and will be entitled to the benefits of the Indenture and the Registration Rights Agreement. H. The statements in the Final Memorandum under the caption "Business - Legal Proceedings and Claims" (except with respect to the Lemelson claim), insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly summarize the matters referred to therein in all material respects. 32 Very truly yours, HADCO CORPORATION By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Senior Vice President, Chief Financial Officer and Treasurer HADCO SANTA CLARA, INC. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Senior Vice President, Chief Financial Officer and Treasurer HADCO PHOENIX, INC. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Senior Vice President and Treasurer CCIR OF CALIFORNIA CORP. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Chief Financial Officer CCIR OF TEXAS CORP. By: /s/ Timothy P. Losik ------------------------------- Name: Timothy P. Losik Title: Chief Financial Officer 33 Accepted as of the date hereof MORGAN STANLEY & CO. INCORPORATED MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED BANCAMERICA ROBERTSON STEPHENS BT ALEX. BROWN INCORPORATED By: Morgan Stanley & Co. Incorporated By: /s/ William H. Wright II ---------------------------------- Name: William H. Wright II Title: Managing Director EX-11.1 14 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.1 HADCO CORPORATION STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE YEARS ENDED FOR THE SIX MONTHS ENDED ----------------------------------- ------------------------ October 28, October 26, October 25, April 26, May 2, 1995 1996 1997 1997 1998 ---------- ---------- ---------- -------- ------- (in thousands, except per share data) Net income (loss)..................... $21,374 $32,014 $(36,493) $(59,212) $(47,612) ======= ======= ======= ======= ======= Basic weighted average shares outstanding........................ 9,805 10,245 11,458 10,435 13,130 Weighted average common equivalent shares............................. 1,001 839 -- -- -- ------- ------- ------- ------- ------- Diluted weighted average shares outstanding........................ 10,806 11,084 11,458 10,435 13,130 ======= ======= ======= ======= ======= Basic net income (loss) per share..... $ 2.18 $ 3.12 $ (3.18) $ (5.67) $ (3.63) ======= ======= ======= ======= ======= Diluted net income (loss) per share... $ 1.98 $ 2.89 $ (3.18) $ (5.67) $ (3.63) ======= ======= ======= ======= =======
EX-12.1 15 STATEMENT RE: COMPUTATION OF RATIOS 1 EXHIBIT 12.1 HADCO CORPORATION COMPUTATION OF THE RATIO OF EARNINGS TO FIXED CHARGES The following table sets forth the ratio of earnings to fixed charges of Hadco Corporation for the period October 30, 1993 to May 2, 1998, including pro forma financial data. The ratio of earnings to fixed charges is computed by dividing net fixed charges (interest expense on all debt plus the interest portion of rent expense) into earnings before income taxes and fixed charges.
Fiscal Year Ended, Six Months Ended, --------------------------------------------------------------------- ------------------------------------ Oct. 30, Oct. 29, Oct. 28, Oct. 26, Oct.25, Oct. 25, Apr.26, May 2, May 2, 1993 1994 1995 1996 1997 1997 1997 1998 1998 -------- -------- -------- -------- -------- ------------- -------- -------- -------------- (Pro Forma) (Pro Forma) Earnings before income taxes 12,941 $16,434 $35,038 $52,481 $(8,821) $61,113 $(46,424) $(37,426) $14,739 Interest expense, including interest portion of rental expense 1,402 891 537 338 10,923 27,544 5,251 6,294 12,083 Amortization of Debt Issuance Costs -- -- -- -- 5 -- 5 -- -- ------ ------- ------- ------- ------- ------- ------- -------- ------- Earnings before fixed charges 14,343 17,325 35,575 52,819 2,107 88,657 (41,168) (31,132) 26,822 ------ ------- ------- ------- ------- ------- ------- -------- ------- Fixed Charges: Interest expense, including interest portion of rental expense 1,402 891 537 338 10,923 27,544 5,251 6,294 12,083 Amortization of Debt Issuance Costs -- -- -- -- 5 -- 5 -- -- ------ ------- ------- ------- ------- ------- ------- -------- ------- Fixed charges 1,402 891 537 338 10,928 27,544 5,256 6,294 12,083 ------ ------- ------- ------- ------- ------- ------- -------- ------- Ratio of earnings to fixed charges 10.2x 19.4x 66.2x 156.3x 0.2x 3.2x -- -- 2.2x
EX-23.2 16 CONSENT OF ARTHUR ANDERSEN LLP 1 Exhibit 23.2 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the use of our reports (and to all references to our Firm) included in or made a part of this registration statement. ARTHUR ANDERSEN LLP Boston, Massachusetts June 22, 1998 EX-23.3 17 CONSENT OF ERNST & YOUNG, LLP 1 Exhibit 23.3 Consent of Ernst & Young LLP We consent to the reference to our firm under the caption "Experts" and to the use of our report dated August 22, 1997, with respect to the consolidated financial statements of Continental Circuits Corp. included in the Registration Statement (Form S-4) and related Prospectus of Hadco Corporation for the registration of $200,000,000 of Senior Subordinated Notes due 2008. /s/ ERNST & YOUNG LLP Phoenix, Arizona June 19, 1998 EX-25.1 18 STATEMENT OF ELIGIBILITY OF TRUSTEE ON FORM T-1 1 Exhibit 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM T-1 -------- STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) STATE STREET BANK AND TRUST COMPANY (Exact name of trustee as specified in its charter) Massachusetts 04-1867445 (Jurisdiction of incorporation or (I.R.S. Employer organization if not a U.S. national bank) Identification No.) 225 Franklin Street, Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) Maureen Scannell Bateman, Esq. Executive Vice President and General Counsel 225 Franklin Street, Boston, Massachusetts 02110 (617) 654-3253 (Name, address and telephone number of agent for service) HADCO CORPORATION (Exact name of obligor as specified in its charter) MASSACHUSETTS 04-2393279 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 12A MANOR PARKWAY SALEM, NEW HAMPSHIRE 03079 (Address of principal executive offices) (Zip Code) SENIOR SUBORDINATED NOTES (Title of indenture securities) 2 GENERAL ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE: (a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO WHICH IT IS SUBJECT. Department of Banking and Insurance of The Commonwealth of Massachusetts, 100 Cambridge Street, Boston, Massachusetts. Board of Governors of the Federal Reserve System, Washington, D.C., Federal Deposit Insurance Corporation, Washington, D.C. (B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH AFFILIATION. The obligor is not an affiliate of the trustee or of its parent, State Street Corporation. (See note on page 2.) ITEM 3. THROUGH ITEM 15. NOT APPLICABLE. ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY. 1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN EFFECT. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 1 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION. A copy of a Statement from the Commissioner of Banks of Massachusetts that no certificate of authority for the trustee to commence business was necessary or issued is on file with the Securities and Exchange Commission as Exhibit 2 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE. A copy of the authorization of the trustee to exercise corporate trust powers is on file with the Securities and Exchange Commission as Exhibit 3 to Amendment No. 1 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Morse Shoe, Inc. (File No. 22-17940) and is incorporated herein by reference thereto. 4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS CORRESPONDING THERETO. A copy of the by-laws of the trustee, as now in effect, is on file with the Securities and Exchange Commission as Exhibit 4 to the Statement of Eligibility and Qualification of Trustee (Form T-1) filed with the Registration Statement of Eastern Edison Company (File No. 33-37823) and is incorporated herein by reference thereto. 1 3 5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN DEFAULT. Not applicable. 6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY SECTION 321(b) OF THE ACT. The consent of the trustee required by Section 321(b) of the Act is annexed hereto as Exhibit 6 and made a part hereof. 7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING AUTHORITY. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority is annexed hereto as Exhibit 7 and made a part hereof. NOTES In answering any item of this Statement of Eligibility which relates to matters peculiarly within the knowledge of the obligor or any underwriter for the obligor, the trustee has relied upon information furnished to it by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The answer furnished to Item 2. of this statement will be amended, if necessary, to reflect any facts which differ from those stated and which would have been required to be stated if known at the date hereof. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the trustee, State Street Bank and Trust Company, a corporation organized and existing under the laws of The Commonwealth of Massachusetts, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Boston and The Commonwealth of Massachusetts, on the JUNE 9, 1998. STATE STREET BANK AND TRUST COMPANY By: /s/ E. Decker Adams ---------------------------------- NAME E. DECKER ADAMS TITLE VICE PRESIDENT 2 4 EXHIBIT 6 CONSENT OF THE TRUSTEE Pursuant to the requirements of Section 321(b) of the Trust Indenture Act of 1939, as amended, in connection with the proposed issuance by HADCO CORPORATION. of its SENIOR SUBORDINATED NOTES, we hereby consent that reports of examination by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon request therefor. STATE STREET BANK AND TRUST COMPANY By: /s/ E. Decker Adams ---------------------------------- NAME E. DECKER ADAMS TITLE VICE PRESIDENT DATED: JUNE 9, 1998 3 5 EXHIBIT 7 Consolidated Report of Condition of State Street Bank and Trust Company, Massachusetts and foreign and domestic subsidiaries, a state banking institution organized and operating under the banking laws of this commonwealth and a member of the Federal Reserve System, at the close of business March 31, 1998, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act and in accordance with a call made by the Commissioner of Banks under General Laws, Chapter 172, Section 22(a).
Thousands of ASSETS Dollars Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin .................... 1,144,309 Interest-bearing balances ............................................. 9,914,704 Securities ..................................................................... 10,062,052 Federal funds sold and securities purchased under agreements to resell in domestic offices of the bank and its Edge subsidiary ................................... 8,073,970 Loans and lease financing receivables: Loans and leases, net of unearned income .............................. 6,433,627 Allowance for loan and lease losses ................................... 88,820 Allocated transfer risk reserve ....................................... 0 Loans and leases, net of unearned income and allowances ............... 6,344,807 Assets held in trading accounts ................................................ 1,117,547 Premises and fixed assets ...................................................... 453,576 Other real estate owned ........................................................ 100 Investments in unconsolidated subsidiaries ..................................... 44,985 Customers' liability to this bank on acceptances outstanding ................... 66,149 Intangible assets .............................................................. 263,249 Other assets ................................................................... 1,066,572 ---------- Total assets ................................................................... 38,552,020 ========== LIABILITIES Deposits: In domestic offices ................................................... 9,266,492 Noninterest-bearing .......................................... 6,824,432 Interest-bearing ............................................. 2,442,060 In foreign offices and Edge subsidiary ................................ 14,385,048 Noninterest-bearing .......................................... 75,909 Interest-bearing ............................................. 14,309,139 Federal funds purchased and securities sold under agreements to repurchase in domestic offices of the bank and of its Edge subsidiary ................................... 9,949,994 Demand notes issued to the U.S. Treasury and Trading Liabilities ............... 171,783 Trading liabilities ............................................................ 1,078,189 Other borrowed money ........................................................... 406,583 Subordinated notes and debentures .............................................. 0 Bank's liability on acceptances executed and outstanding ....................... 66,149 Other liabilities .............................................................. 878,947 Total liabilities .............................................................. 36,203,185 ---------- EQUITY CAPITAL Perpetual preferred stock and related surplus .................................. 0 Common stock ................................................................... 29,931 Surplus ........................................................................ 450,003 Undivided profits and capital reserves/Net unrealized holding gains (losses) ... 1,857,021 Net unrealized holding gains (losses) on available-for-sale securities ......... 18,136 Cumulative foreign currency translation adjustments ............................ (6,256) Total equity capital ........................................................... 2,348,835 ----------- Total liabilities and equity capital ........................................... 38,552,020 ----------
4 6 I, Rex S. Schuette, Senior Vice President and Comptroller of the above named bank do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true to the best of my knowledge and belief. Rex S. Schuette We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the Board of Governors of the Federal Reserve System and is true and correct. David A. Spina Marshall N. Carter Truman S. Casner 5 EX-27.1 19 FINANCIAL DATA SCHEDULE
5 0000729533 HADCO CORPORATION 1,000 U.S. DOLLARS YEAR OCT-25-1997 OCT-27-1996 OCT-25-1997 1 12,171 1,562 93,922 1,700 46,000 166,683 444,718 213,228 502,517 112,990 0 0 0 655 239,257 502,517 648,705 648,705 507,313 571,899 78,000 0 (7,627) (8,821) 27,672 (36,493) 0 0 0 (36,493) (3.18) 0
EX-99.1 20 FORM OF LETTER OF TRANSMITTAL 1 Exhibit 99.1 LETTER OF TRANSMITTAL TO TENDER FOR EXCHANGE 9-1/2% SENIOR SUBORDINATED NOTES DUE 2008 OF HADCO CORPORATION PURSUANT TO PROSPECTUS DATED , 1998 THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON , 1998, UNLESS EXTENDED. TENDERS OF 9-1/2% SENIOR SUBORDINATED NOTES DUE 2008 MAY ONLY BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND HEREIN. The Exchange Agent for the Exchange Offer is: STATE STREET BANK AND TRUST COMPANY Facsimile Transmission: (Eligible Institutions Only) 617-664-5290 Confirm by Telephone: 617-664-5587 By Mail: By Hand/Overnight Delivery: State Street Bank and Trust Company State Street Bank and Trust Company Two International Place-- 61 Broadway-- 4th Floor 15th Floor Boston, MA 02110 New York, NY 10006 Attention: Corporate Trust Division/Kellie Attention: Corporate Trust Division/Kellie Mullen Mullen Tel.: (617) 664-5587
For Information Call (617) 664-5587
DESCRIPTION OF ORIGINAL NOTES TENDERED - ------------------------------------------------------------------------------------------------------------ Name(s) and Address(es) of Registered Holder(s) Original Notes Tendered (Please fill in, if blank, exactly as name(s) (Attach additional schedule, if necessary) appear(s) on Original Notes) - ------------------------------------------------------ ----------------------------------------------------- (1) (2) (3) -------------------------- -------------------------- Certificate Number(s) Total Principal Amount (if applicable) of Original Notes Tendered -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- -------------------------- Total - ------------------------------------------------------ -------------------------- --------------------------
THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE PROSPECTUS, DATED , 1998 (THE "PROSPECTUS"), OF HADCO CORPORATION, A MASSACHUSETTS CORPORATION (THE "COMPANY"), RELATING TO THE OFFER (THE "EXCHANGE OFFER") OF THE COMPANY, UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THE PROSPECTUS AND HEREIN AND THE INSTRUCTIONS HERETO, TO EXCHANGE $1,000 PRINCIPAL AMOUNT OF ITS 9-1/2% SENIOR SUBORDINATED NOTES DUE 2008, WHICH HAVE BEEN 2 REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, (THE "EXCHANGE NOTES") FOR EACH $1,000 PRINCIPAL AMOUNT OF THE OUTSTANDING 9-1/2% SENIOR SUBORDINATED NOTES DUE 2008, (THE "ORIGINAL NOTES"), OF WHICH $200 MILLION AGGREGATE PRINCIPAL AMOUNT IS OUTSTANDING. THE MINIMUM PERMITTED TENDER IS $1,000 PRINCIPAL AMOUNT OF ORIGINAL NOTES, AND ALL OTHER TENDERS MUST BE IN INTEGRAL MULTIPLES OF $1,000. DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION BY FACSIMILE, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. The Exchange Offer will expire at 5:00 p.m., New York City time, on , 1998 (the "Expiration Date"), unless extended. HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER THEIR ORIGINAL NOTES TO THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE. This Letter of Transmittal should be used only to exchange the Original Notes, pursuant to the Exchange Offer as set forth in the Prospectus. This Letter of Transmittal is to be used (a) if Original Notes are to be physically delivered to the Exchange Agent or (b) if delivery of Original Notes is to be made by book-entry transfer to the account maintained by the Exchange Agent at The Depository Trust Company ("DTC" or the "Book-Entry Transfer Facility") pursuant to the procedures set forth in the Prospectus under the caption "The Exchange Offer-Procedures for Tendering." Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Exchange Agent. Holders whose Original Notes are not immediately available or who cannot deliver their Original Notes and all other documents required hereby to the Exchange Agent on or prior to the Expiration Date nevertheless may tender their Original Notes in accordance with the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery Procedures." See Instruction 1. THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF ORIGINAL NOTES FOR EXCHANGE BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. All capitalized terms used herein and not defined herein shall have the meanings ascribed to them in the Prospectus. HOLDERS WHO WISH TO EXCHANGE THEIR ORIGINAL NOTES MUST COMPLETE THE BOX BELOW ENTITLED "METHOD OF DELIVERY," COMPLETE COLUMNS (1) THROUGH (3) IN THE BOX ON THE COVER ENTITLED "DESCRIPTION OF ORIGINAL NOTES TENDERED" AND SIGN IN THE APPROPRIATE BOX(ES) BELOW. 2 3 METHOD OF DELIVERY [ ] CHECK HERE IF CERTIFICATES FOR TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH. [ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY TRANSFER FACILITY SPECIFIED ABOVE AND COMPLETE THE FOLLOWING: Name of Tendering Institution: ------------------------------------------ Name of Book-Entry Transfer Facility: [ ] The Depository Trust Company Account Number: Transaction Code Number: ------------------- ------- [ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING (SEE INSTRUCTIONS 1 AND 4): Name(s) of Registered Holder(s): ---------------------------------------- Window Ticket Number (if any): ---------------------------------------- Date of Execution of Notice of Guaranteed Delivery: --------------------- Name of Eligible Institution which Guaranteed Delivery: ----------------- IF DELIVERED BY THE BOOK-ENTRY TRANSFER FACILITY, CHECK BOX OF BOOK-ENTRY TRANSFER FACILITY: [ ] The Depository Trust Company Account Number: Transaction Code Number: --------------------- --------- [ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE TEN ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO. Name: ------------------------------------------------------------------ Address: ------------------------------------------------------------------ ------------------------------------------------------------------ ------------------------------------------------------------------ 3 4 NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: Upon the terms and subject to the conditions of the Exchange Offer, the undersigned hereby tenders to the Company the principal amount of Original Notes indicated in the box on the cover entitled "Description of Original Notes Tendered." Subject to, and effective upon, the acceptance for exchange of the Original Notes tendered hereby, the undersigned hereby irrevocably sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to such Original Notes, and hereby irrevocably constitutes and appoints the Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned (with full knowledge that said Exchange Agent also acts as the agent of the Company and as Trustee under the indenture governing the Original Notes and the Exchange Notes) with respect to such Original Notes, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver certificates representing such Original Notes, and to deliver all accompanying evidences of transfer and authenticity to or upon the order of the Company upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange Notes to which the undersigned is entitled upon the acceptance by the Company of such Original Notes for exchange pursuant to the Exchange Offer, (b) receive all benefits and otherwise to exercise all rights of beneficial ownership of such Original Notes, all in accordance with the terms of the Exchange Offer, and (c) present such Original Notes for transfer on the register for such Original Notes. The undersigned acknowledges that prior to this Exchange Offer, there has been no public market for the Original Notes or the Exchange Notes. If a market for the Exchange Notes should develop, the Exchange Notes could trade at a discount from their principal amount. The undersigned is aware that the Company does not intend to list the Exchange Notes on a national securities exchange and that there can be no assurance that an active market for the Exchange Notes will develop. The undersigned also acknowledges that this Exchange Offer is being made in reliance on an interpretation by the staff of the Securities and Exchange Commission (the "Commission") that the Exchange Notes issued pursuant to the Exchange Offer in exchange for the Original Notes may be offered for resale, resold and otherwise transferred by any person receiving such Exchange Notes whether or not such person is the holder thereof, (other than any such holder or other person which is (i) a 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 or other trading activities, or (ii) an "affiliate" of the Company or any Guarantor within the meaning of Rule 405 under the Securities Act of 1933, as amended (the "Securities Act")) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such Exchange Notes are acquired in the ordinary course of business of such holder or other person, such holder or other person is not engaged in or intending to engage in a distribution of the Exchange Notes, and such holder or other person has no arrangement with any person to participate in the distribution of such Exchange Notes. See Morgan Stanley & Co. Incorporated, SEC No-Action Letter (available June 5, 1991) and Exxon Capital Holdings Corporation, SEC No-Action Letter (available May 13, 1988). If the undersigned is not a broker-dealer, the undersigned represents that it is not engaged in, and does not intend to engage in, a distribution of Exchange Notes. If the undersigned is a broker-dealer that will receive Exchange Notes, it represents that the Original Notes to be exchanged for Exchange Notes were acquired as a result of market-making or other trading activities and it acknowledges that it will deliver a prospectus in connection with any resale of such Exchange Notes; however, by so acknowledging and by delivering a prospectus, the undersigned will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF, HOLDERS OF THE ORIGINAL NOTES IN ANY JURISDICTION IN WHICH THE MAKING OF THE EXCHANGE OFFER OR 4 5 ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE WITH ANY PROVISION OF ANY APPLICABLE SECURITY LAW. The undersigned represents that (a) the Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the undersigned or other person receiving such Exchange Notes, (b) neither the undersigned nor any such other person is engaged in or intends to engage in a distribution of such Exchange Notes, (c) neither the undersigned nor any such other person has any arrangement or understanding with any person to participate in a distribution of the Exchange Notes and (d) neither the undersigned nor any such other person is an "affiliate" as defined under Rule 405 of the Securities Act, of the Company or any Guarantor, or if such holder is such an affiliate, that such holder will comply with the registration and the prospectus delivery requirements of the Securities Act in connection with the disposition of any Exchange Notes to the extent applicable. The undersigned understands and acknowledges that the Company reserves the right in its sole discretion to purchase or make offers for any Original Notes that remain outstanding subsequent to the Expiration Date or, as set forth in the Prospectus under the caption "The Exchange Offer -- Conditions," to terminate the Exchange Offer and, to the extent permitted by applicable law, purchase Original Notes in the open market, in privately negotiated transactions or otherwise. The terms of any such purchases or offers will differ from the terms of the Exchange Offer. The undersigned hereby represents and warrants that the undersigned accepts the terms and conditions of the Exchange Offer, has full power and authority to tender, exchange, assign and transfer the Original Notes tendered hereby, and that when the same are accepted for exchange by the Company, the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim or right. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the sale, assignment and transfer of the Original Notes tendered hereby. The undersigned agrees that all authority conferred or agreed to be conferred by this Letter of Transmittal and every obligation of the undersigned hereunder shall be binding upon the successors, assigns, heirs, executors, administrators, trustees in bankruptcy and legal representatives of the undersigned and shall not be affected by, and shall survive, the death or incapacity of the undersigned. The undersigned also agrees that, except as stated in the Prospectus, the Original Notes tendered hereby cannot be withdrawn. The undersigned understands that tenders of the Original Notes pursuant to any one of the procedures described in the Prospectus under the caption "The Exchange Offer-Procedures for Tendering" and in the instructions hereto will constitute a binding agreement between the undersigned and the Company in accordance with the terms and subject to the conditions of the Exchange Offer. The undersigned understands that by tendering Original Notes pursuant to one of the procedures described in the Prospectus and the instructions thereto, the tendering holder will be deemed to have waived the right to receive any payment in respect of interest on the Original Notes accrued up to the date of issuance of the Exchange Notes. The undersigned recognizes that, under certain circumstances set forth in the Prospectus, the Company may not be required to accept for exchange any of the Original Notes tendered. Original Notes not accepted for exchange or withdrawn will be returned to the undersigned at the address set forth below unless otherwise indicated under "Special Delivery Instructions" below. Unless otherwise indicated herein under the box entitled "Special Issuance Instructions" below, Exchange Notes, and Original Notes not validly tendered or accepted for exchange, will be issued in the name of the undersigned or, in the case of a book-entry transfer of Original Notes, credited to the account indicated above at DTC. Similarly, unless otherwise indicated under the box entitled "Special Delivery Instructions" below, Exchange Notes, and Original Notes not validly tendered or accepted for exchange, will be delivered to the undersigned at the address shown below the signature of the undersigned or, in the case of a book-entry transfer of Original Notes, credited to the account indicated above at DTC. The 5 6 undersigned recognizes that the Company has no obligation pursuant to the "Special Issuance Instructions" to transfer any Original Notes from the name of the registered holder thereof if the Company does not accept for exchange any of the principal amount of such Original Notes so tendered. All questions as to the validity, form, eligibility (including time of receipt), and withdrawal of the tendered Original Notes will be determined by the Company in its sole discretion, which determination will be final and binding. The Company reserves the absolute right to reject any and all Original Notes not properly tendered or any Original Notes the Company's acceptance of which would, in the opinion of counsel for the Company, be unlawful. The Company also reserves the right to waive any irregularities or conditions of tender as to particular Original Notes. The Company's interpretation of the terms and conditions of the Exchange Offer (including the instructions in this 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 such time as the Company shall determine. None of the Company, the Exchange Agent or any other person shall be under any duty to give notification of defects or irregularities with respect to tenders of Original Notes, nor shall any of them incur any liability for failure to give such notification. Tenders of Original Notes will not be deemed to have been made until such 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 (or, in the case of Original Notes tendered by book-entry transfer, credited to an account at DTC) without cost to such holder by the Exchange Agent to the tendering holders of Original Notes, unless otherwise provided in this Letter of Transmittal, as soon as practicable following the Expiration Date. THE COMPANY HAS AGREED THAT, SUBJECT TO THE PROVISIONS OF A REGISTRATION RIGHTS AGREEMENT DATED MAY 13, 1998 BETWEEN THE COMPANY, THE GUARANTORS AND THE PLACEMENT AGENTS NAME THEREIN, THE PROSPECTUS, AS IT MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, MAY BE USED BY A EXCHANGING BROKER-DEALER (AS DEFINED BELOW) IN CONNECTION WITH RESALES OF EXCHANGE NOTES RECEIVED IN EXCHANGE FOR ORIGINAL NOTES, WHERE SUCH ORIGINAL NOTES WERE ACQUIRED BY SUCH EXCHANGING BROKER-DEALER FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES, FOR A PERIOD ENDING 180 DAYS AFTER THE EXPIRATION DATE OR, IF EARLIER, WHEN ALL SUCH EXCHANGE NOTES HAVE BEEN DISPOSED OF BY SUCH EXCHANGING BROKER-DEALER. IN THAT REGARD, EACH BROKER-DEALER WHO ACQUIRED ORIGINAL NOTES FOR ITS OWN ACCOUNT AS A RESULT OF MARKET-MAKING OR OTHER TRADING ACTIVITIES (AN "EXCHANGING BROKER-DEALER"), BY TENDERING SUCH ORIGINAL NOTES AND EXECUTING THIS LETTER OF TRANSMITTAL, AGREES THAT, UPON RECEIPT OF NOTICE FROM THE COMPANY OF THE OCCURRENCE OF ANY EVENT OR THE DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES THE PROSPECTUS TO OMIT TO STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE THE STATEMENTS CONTAINED THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR OF THE OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS AGREEMENT, SUCH EXCHANGING BROKER-DEALER WILL SUSPEND THE SALE OF EXCHANGE NOTES PURSUANT TO THE PROSPECTUS UNTIL THE COMPANY HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR SUPPLEMENTED PROSPECTUS TO THE EXCHANGING BROKER-DEALER OR THE COMPANY HAS GIVEN NOTICE THAT THE SALE OF THE EXCHANGE NOTES MAY BE RESUMED, AS THE CASE MAY BE. 6 7 THE UNDERSIGNED, BY COMPLETING THE BOX ON THE COVER ENTITLED "DESCRIPTION OF ORIGINAL NOTES TENDERED" AND SIGNING THIS LETTER OF TRANSMITTAL, WILL BE DEEMED TO HAVE TENDERED THE ORIGINAL NOTES AND MADE CERTAIN REPRESENTATIONS (INCLUDING AS TO FINANCIAL STATUS) DESCRIBED IN THE PROSPECTUS AND HEREIN. SIGN HERE (TO BE COMPLETED BY ALL TENDERING HOLDERS) X ----------------------------------------------------------------------------- X ----------------------------------------------------------------------------- (SIGNATURE(S) OF HOLDER(S) OR AUTHORIZED SIGNATORY) Must be signed by the registered holder(s) of Original Notes exactly as their name(s) appear(s) on certificate(s) for the Original Notes or by person(s) authorized to become registered holder(s) by endorsements and documents transmitted with this Letter of Transmittal. If signature is by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, agent or other person is acting in a fiduciary or representative capacity, please provide the following information. See Instruction 3. Name(s): ---------------------------------------------------------------------- ----------------------------------------------------------------------------- (PLEASE PRINT) Capacity (full title): -------------------------------------------------------- Address: --------------------------------------------------------------------- ----------------------------------------------------------------------------- (INCLUDING ZIP CODE) Area Code and Telephone No.: -------------------------------------------------- Tax Identification or Social Security Number(s): ----------------------------- SIGNATURE GUARANTEE (SEE INSTRUCTION 3) ----------------------------------------------------------------------------- (NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURE(S)) ----------------------------------------------------------------------------- (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NO., INCLUDING AREA CODE, OF FIRM) ----------------------------------------------------------------------------- (AUTHORIZED SIGNATURE) ----------------------------------------------------------------------------- (PRINTED NAME) ----------------------------------------------------------------------------- (TITLE) Date: , 1998 ------------------- 7 8 SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 3, 4 AND 6) To be completed ONLY if certificates for Original Notes in a principal amount not exchanged and/or certificates for Exchange Notes are to be issued in the name of someone other than the undersigned, of if Original Notes are to be returned by credit to an account maintained by the Book-Entry Transfer Facility. Issue (check appropriate box) [ ] Exchange Notes to: [ ] Original Notes to: Name: ----------------------------- (Please Print) Address: ------------------------------ ------------------------------ (Zip Code) ------------------------------ Taxpayer Identification Number (YOU MUST ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW.) Credit unaccepted or withdrawn Original Notes tendered by book-entry transfer to: [ ] The Depository Trust Company account set forth below - -------------------------------------- (DTC ACCOUNT NUMBER) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 3, 4 AND 6) To be completed ONLY if certificates for Original Notes in a principal amount not exchanged and/or certificates for Exchange Notes are to be sent to someone other than the undersigned at an address other than that shown above. Deliver (check appropriate box) [ ] Exchange Notes to: [ ] Original Notes to: Name: ------------------------------- (Please Print) Address: ------------------------------ ------------------------------ (Zip Code) ------------------------------ Taxpayer Identification Number (YOU MUST ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW.) 8 9 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER 1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY PROCEDURES. To be effectively tendered pursuant to the Exchange Offer, the Original Notes (or timely confirmation of a book-entry transfer of such Original Notes into the Exchange Agent's account at DTC), together with a properly completed Letter of Transmittal (or facsimile thereof), duly executed by the registered holder thereof, and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at one of its addresses set forth on the front page of this Letter of Transmittal. If the beneficial owner of any Original Notes is not the registered holder, then such person may validly tender his or her Original Notes only by obtaining and submitting to the Exchange Agent a properly completed Letter of Transmittal from the registered holder. ORIGINAL NOTES SHOULD BE DELIVERED ONLY TO THE EXCHANGE AGENT AND NOT TO THE COMPANY OR TO ANY OTHER PERSON. THE METHOD OF DELIVERY OF ORIGINAL NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER, BUT IF SUCH DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED OR CERTIFIED MAIL WITH RETURN RECEIPT REQUESTED. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT ORIGINAL NOTES USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IF CERTIFICATES FOR ORIGINAL NOTES ARE SENT BY MAIL, IT IS SUGGESTED THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE. If a holder desires to tender Original Notes and such holder's Original Notes are not immediately available or time will not permit such holder's Letter or Transmittal, Original Notes, or other required documents to reach the Exchange Agent on or before the Expiration Date or such holder cannot complete the procedures for book-entry transfer on a timely basis, such holder's tender may be effected if: (a) such tender is made by or through an Eligible Institution (as defined); (b) prior to the Expiration Date, the Exchange Agent has received a properly completed and duly executed Notice of Guaranteed Delivery (by facsimile transmission, mail or hand delivery) from such Eligible Institution setting forth the name and address of the holder of such Original Notes, the certificate number or numbers of such Original Notes and the principal amount of Original Notes tendered and stating that the tender is being made thereby and guaranteeing that, within three business days after the Expiration Date, a duly executed Letter of Transmittal, or facsimile thereof, together with the Original Notes to be tendered in proper form for transfer (or a confirmation of a book-entry transfer into the Exchange Agent's account at the Depository of Original Notes delivered electronically) and any other documents required by this Letter of Transmittal and the instructions hereto, will be deposited by such Eligible Institution with the Exchange Agent; and (c) this Letter of Transmittal (or facsimile thereof), a Notice of Guaranteed Delivery and Original Notes, in proper form for transfer (or a confirmation of a book-entry transfer into the Exchange Agent's account at the Depository of Original Notes delivered electronically), and all other required documents are received by the Exchange Agent within three business days after the date of such telegram, facsimile transmission or letter. 9 10 2. WITHDRAWAL OF TENDERS. Tendered Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration Date, unless previously accepted for exchange. To be effective, a written or facsimile transmission notice of withdrawal must (a) be received by the Exchange Agent at one of its addresses set forth on the first page of this Letter of Transmittal prior to 5:00 p.m., New York City time, on the Expiration Date, unless previously accepted for exchange, (b) specify the name of the person who tendered the Original Notes, (c) contain the description of the Original Notes to be withdrawn, the certificate numbers shown on the particular certificates evidencing such Original Notes and the aggregate principal amount represented by such Original Notes and (d) be signed by the holder of such Original Notes in the same manner as the original signature appears on this Letter of Transmittal (including any required signature guarantees) or be accompanied by evidence sufficient to have the Trustee with respect to the Original Notes register the transfer of such Original Notes into the name of the holder withdrawing the tender. The notice must also specify the name in which any such Original Notes are to be registered, if different from that of the depositor of such Original Notes. If Original Notes have been tendered pursuant to the procedures for book-entry transfer, the notice of withdrawal must specify the name and number of the account at DTC to be credited with the withdrawal of the Original Notes. The signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution unless such Original Notes have been tendered (a) by a registered holder of Original Notes who has not completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) for the account of an Eligible Institution. All questions as to the validly, form and eligibility (including time of receipt) of such withdrawal notices shall be determined by the Company, whose determination shall be final and binding on all parties. If the Original Notes to be withdrawn have been delivered or otherwise identified to the Exchange Agent, a signed notice of withdrawal is effective immediately upon receipt by the Exchange Agent of a written or facsimile transmission notice of withdrawal even if physical release is not yet effected. Withdrawals may not be rescinded, and any Original Notes withdrawn will thereafter be deemed not validly tendered for purposes of the Exchange Offer. However, properly withdrawn Original Notes may be retendered by following one of the procedures described under "The Exchange Offer -- Procedures for Tendering" in the Prospectus at any time on or prior to the applicable Expiration Date. Any Original Notes which have been tendered but which are not accepted for exchange will be returned to the holder thereof without cost to such holder as soon as practicable after withdrawal, rejection of tender or termination of the Exchange Offer. Where Original Notes were tendered by book-entry transfer and such Original Notes are to be returned to the holder thereof for any reason, such Original Notes will be credited to the account of such holder maintained at DTC, and such procedure shall satisfy the Company's obligation to return Original Notes in the event such return is required by the terms described herein and in the Prospectus. 3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the registered holder(s) of the Original Notes tendered hereby, the signature must correspond exactly with the name(s) as written on the face of the certificates without any change whatsoever. If any Original Notes tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any Original Notes tendered hereby are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate copies of this Letter of Transmittal as there are different registrations of certificates. 10 11 When this Letter of Transmittal is signed by the registered holder or holders specified herein and tendered hereby, no endorsements of certificates or separate bond powers are required unless Exchange Notes are to be issued, or certificates for any untendered principal amount of Original Notes are to be reissued, to a person other than the registered holder. If this Letter of Transmittal is signed by a person other than the registered holder(s) of any certificate(s) specified herein such certificate(s) must be endorsed or accompanied by appropriate bond powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the certificate(s). If this Letter of Transmittal or a Notice of Guaranteed Delivery or any certificates or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and unless waived by the Company, proper evidence satisfactory to the Company of their authority so to act must be submitted. Except as described below, signatures on this Letter of Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by an Eligible Institution. Signatures on this Letter of Transmittal or a notice of withdrawal, as the case may be, need not be guaranteed if the Original Notes tendered pursuant hereto are tendered (a) by a registered holder of Original Notes who has not completed either the box entitled "Special Issuance Instructions" or the box entitled "Special Delivery Instructions" on this Letter of Transmittal or (b) for the account of an Eligible Institution. In the event that signatures on this Letter of Transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, such guarantee must be by a firm which is a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or by a commercial bank or trust company having an office or correspondent in the United States (each as "Eligible Institutions"). Endorsements on certificates for Original Notes or signatures on bond powers required by this Instruction 3 must be guaranteed by an Eligible Institution. 4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should indicate in the applicable box the name and address to which certificates for Exchange Notes and/or substitute certificates evidencing Original Notes for the principal amounts not exchanged are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the employer identification or social security number of the person named must also be indicated. If no such instructions are given, any Original Notes not exchanged will be returned to the name and address of the person signing this Letter of Transmittal. 5. TAX IDENTIFICATION NUMBER AND BACKUP WITHHOLDING. Federal income tax law of the United States requires that a holder of Original Notes whose Original Notes are accepted for exchange provide the Company with his correct taxpayer identification number, which, in the case of a holder who is an individual, is his or her social security number, or otherwise establish an exemption from backup withholding. If the Company is not provided with the correct taxpayer identification number, the exchanging holder of Original Notes may be subject to a $50 penalty imposed by the Internal Revenue Service (the "IRS"). In addition, interest on the Exchange Notes acquired pursuant to the Exchange Offer may be subject to backup withholding in an amount equal to 31% of any interest payment. If withholding occurs and results in an overpayment of taxes, a refund may be obtained. To prevent backup withholding, each exchanging holder of Original Notes subject to backup withholding must provide his correct taxpayer identification number by completing the Substitute Form W-9 provided in this Letter of Transmittal, certifying that the taxpayer identification 11 12 number provided is correct (or that the exchanging holder of Original Notes is awaiting a taxpayer identification number) and that either (a) the exchanging holder has not yet notified by the IRS that such holder is subject to backup withholding as a result of failure to report all interest or dividends or (b) the IRS has notified the exchanging holder that such holder is no longer subject to backup withholding. Certain exchanging holders of Original Notes (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding requirements. A foreign individual and other exempt holders (i.e. corporations) should certify, in accordance with the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9," to such exempt status on the Substitute Form W-9 provided in this Letter of Transmittal. 6. TRANSFER TAXES. Holders tendering pursuant to the Exchange Offer will not be obligated to pay brokerage commissions or fees or to pay transfer taxes with respect to their exchange under the Exchange Offer unless the box entitled "Special Issuance Instructions" in this Letter of Transmittal has been completed, or unless the Exchange Notes are to be issued to any person other than the holder of the Original Notes tendered for exchange. The Company will pay all other charges or expenses in connection with the Exchange Offer. If holders tender Original Notes for exchange and the Exchange Offer is not consummated, certificates representing the Original Notes will be returned to the holders at the Company's expense. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the certificate(s) specified in this Letter of Transmittal. 7. INADEQUATE SPACE. If the space provided herein is inadequate, the aggregate principal amount of the Original Notes being tendered and the certificate numbers (if available) should be listed on a separate schedule attached hereto and separately signed by all parties required to sign this Letter of Transmittal. 8. PARTIAL TENDERS. Tenders of Original Notes will be accepted only in integral multiples of $1,000. If tenders are to be made with respect to less than the entire principal amount of any Original Notes, fill in the principal amount of Original Notes which are tendered in column (3) in the box on the cover entitled "Description of Original Notes Tendered." In the case of partial tenders, new certificates representing the Original Notes in fully registered form for the remainder of the principal amount of the Original Notes will be sent to the person(s) signing this Letter of Transmittal, unless otherwise indicated in the appropriate place on this Letter of Transmittal, as promptly as practicable after the expiration or termination of the Exchange Offer. 9. MUTILATED, LOST, STOLEN OR DESTROYED ORIGINAL NOTES. Any holder whose Original Notes have been mutilated, lost, stolen or destroyed should contact the Exchange Agent at the address indicated above for further instructions. 10. REQUEST FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Prospectus or this Letter of Transmittal may be obtained from the Exchange Agent at its telephone number set forth on the cover. 12 13 PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY - -------------------------------------------------------------------------------- SUBSTITUTE Part I - PLEASE PROVIDE FORM W-9 YOUR TIN IN THE BOX AT Department of the Treasury RIGHT AND CERTIFY BY ------------------------------ Internal Revenue Service SIGNING AND DATING Social Security Number BELOW. Payer's Request for Taxpayer's Identification Number (TIN) OR -------------------------- Employer Identification Number
- -------------------------------------------------------------------------------- CERTIFICATION - UNDER PENALTIES OF PERJURY, I CERTIFY THAT: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and (2) I am not subject to backup withholding either because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. ---------------------------------------- ------------------------------- PART II -- AWAITING TIN [ ] PART III -- EXEMPT [ ] ---------------------------------------- ------------------------------- CERTIFICATION INSTRUCTIONS - You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). If you are exempt from backup withholding, check the box in Part III. Signature Date -------------------------------- -------------------- PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER (TIN) Please fill out your name and address below: - -------------------------------------------------------------------------------- Name - -------------------------------------------------------------------------------- Address (Number and street) - -------------------------------------------------------------------------------- City, State and Zip Code NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER AND THE SOLICITATION. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART II OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number to the payor by the time of payment, 31% of all reportable payments made to me will be withheld until I provide a number and that, if I do not provide my taxpayer identification number within 60 days, such retained amounts shall be remitted to the IRS as backup withholding. - ---------------------------------- ------------------------------- Signature Date 13 EX-99.2 21 FORM OF NOTICE OF GUARANTEED DELIVERY 1 Exibit 99.2 NOTICE OF GUARANTEED DELIVERY TO TENDER FOR EXCHANGE 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008 OF HADCO CORPORATION PURSUANT TO PROSPECTUS DATED _______ __, 1998 This Notice of Guaranteed Delivery or a form substantially equivalent hereto must be used to accept the offer (the "Exchange Offer") of Hadco Corporation, a Massachusetts corporation (the "Company"), to exchange $1,000 principal amount of its 9 1/2% Senior Subordinated Notes due 2008, which have been registered under the Securities Act of 1933, as amended, for each $1,000 principal amount of the outstanding 9 1/2% Senior Subordinated Notes due 2008 (the "Original Notes") if (a) certificates representing the Original Notes are not immediately available or (b) time will not permit the Original Notes and all other required documents to reach the Exchange Agent on or prior to the Expiration Date or (c) the procedures for book-entry transfer cannot be completed on a timely basis. This form may be delivered by an Eligible Institution (as defined) by mail or hand delivery or transmitted, via facsimile, telegram or telex to the Exchange Agent as set forth below. All capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Prospectus dated __________ __, 1998 (the "Prospectus"). THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL THE SURRENDER OF ORIGINAL NOTES BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF ORIGINAL NOTES IN ANY JURISDICTION IN WHICH THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME ON _________ __, 1998, UNLESS EXTENDED. TENDERS OF 9 1/2% SENIOR SUBORDINATED NOTES DUE 2008 MAY ONLY BE WITHDRAWN UNDER THE CIRCUMSTANCES DESCRIBED IN THE PROSPECTUS AND THE LETTER OF TRANSMITTAL. The Exchange Agent for the Exchange Offer: STATE STREET BANK AND TRUST COMPANY Facsimile Transmission: (Eligible Institutions Only) 617-664-5290 Confirm by Telephone: 617-664-5587
By Mail: By Hand/Overnight Delivery: State Street Bank and Trust Company State Street Bank and Trust Company Two International Place 61 Broadway 4th Floor 15th Floor Boston, MA 02110 New York, NY 10006 Attention: Corporate Trust Division/Kellie Mullen Attention: Corporate Trust Division/Kellie Mullen Tel: (617) 664-5587
For Information Call: (617) 664-5587 2 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, TELEGRAM OR TELEX, OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on the Letter of Transmittal is required to be guaranteed by an "Eligible Institution" under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. 2 3 Ladies and Gentlemen: The undersigned hereby tender(s) to the Company, upon the terms and subject to the conditions set forth in the Prospectus, receipt of which is hereby acknowledged, the principal amount of Original Notes set forth below, pursuant to the guaranteed delivery procedures set forth in the Prospectus under the caption "The Exchange Offer-Guaranteed Delivery Procedures." Subject to and effective upon acceptance for exchange of the Original Notes tendered herewith, the undersigned hereby sells, assigns and transfers to or upon the order of the Company all right, title and interest in and to, and any and all claims in respect of or arising or having arisen as a result of the undersigned's status as a holder of, all Original Notes tendered hereby. In the event of a termination of the Exchange Offer, the Original Notes tendered pursuant thereto will be returned to the tendering Original Note holder promptly. The undersigned hereby represents and warrants that the undersigned accepts the terms and conditions of the Prospectus and the Letter of Transmittal, has full power and authority to tender, sell, assign and transfer the Original Notes tendered hereby and that the Company will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Exchange Agent or the Company to be necessary or desirable to complete the sale, assignment and transfer of the Original Notes tendered. All authority herein conferred or agreed to be conferred by this Notice of Guaranteed Delivery shall survive the death or incapacity of the undersigned and every obligation of the undersigned under this Notice of Guaranteed Delivery shall be binding upon the heirs, personal representatives, executors, administrators, successors, assigns, trustees in bankruptcy and other legal representatives of the undersigned. PLEASE SIGN AND COMPLETE Signature(s) of Registered Holder(s) Address(es): or Authorized Signatory: -------------------- - --------------------------------- -------------------- - --------------------------------- -------------------- -------------------- Name(s) of Registered Holder(s): Area Code and Telephone No.: - -------------------------------- -------------------- - -------------------------------- Principal Amount of Original Notes Tendered: - ------------------------------ If Original Notes will be delivered by a book-entry transfer, check trust company: Certificate No(s). of Original Notes (if available): [ ] The Depository Trust Company - ------------------------- Transaction Code No.: - ------------------------- --------------------- Depository Account No.: - ------------------------- ---------------------
4 This Notice of Guaranteed Delivery must be signed by the registered holder(s) of Original Notes exactly as their name(s) appear(s) on the Original Notes or by person(s) authorized to become registered holder(s) by endorsements and documents transmitted with this Notice of Guaranteed Delivery. If signature is by a trustee, guardian, attorney-in-fact, officer of a corporation, executor, administrator, agent or other representative, such person must provide the following information: PLEASE PRINT NAME(S) AND ADDRESS(ES) Name(s): - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- Capacity: - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- Address(es): - ---------------------------------------------------------------------------- - ---------------------------------------------------------------------------- GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a member of a registered national securities exchange or a member of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office or correspondent in the United States (each, an "Eligible Institution") hereby guarantees that, within three business days from the date of this Notice of Guaranteed Delivery, a properly completed and validly executed Letter of Transmittal (or a facsimile thereof), together with Original Notes tendered hereby in proper form for transfer (or confirmation of the book-entry transfer of such Original Notes into the Exchange Agent's account at the Book-Entry Transfer Facility (as defined in the Letter of Transmittal)) and all other required documents will be deposited by the undersigned with the Exchange Agent at one of its addresses set forth above. Name of Firm: ------------------------------------ -------------------------------- Authorized Signature Address: Name: --------------------------------- ------------------------------- Title: --------------------------------- ------------------------------- Area Code and Telephone No.: Date: --------------------------------- -------------------------------
DO NOT SEND ORIGINAL NOTES WITH THIS FORM. ACTUAL SURRENDER OF ORIGINAL NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED BY, A PROPERLY COMPLETED AND VALIDLY EXECUTED LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS. 4 EX-99.3 22 FORM OF EXCHANGE AGENCY AGREEMENT 1 Exhibit 99.3 EXCHANGE AGENCY AGREEMENT June __, 1998 State Street Bank and Trust Company Corporate Trust Department Two International Place - 4th Floor Boston, Massachusetts 02110 Ladies and Gentlemen: Hadco Corporation, a corporation organized under the laws of the Commonwealth of Massachusetts (the "Company") is offering to exchange (the "Exchange Offer"), upon the terms and subject to the conditions set forth in the Company's Form S-4 Registration Statement filed with the SEC on __________, 1998 (the "Prospectus"), and the accompanying Letter of Transmittal and instructions thereto (the "Letter of Transmittal"), its 9-1/2% Senior Subordinated Notes Due 2008 (the "New Notes") for all of its outstanding 9-1/2% Senior Subordinated Notes Due 2008 (the "Old Notes") of the Company of which $ 200,000.00 principal amount is outstanding. The New Notes and the Old Notes are together referred to herein as the "Notes". Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Prospectus or Letter of Transmittal. You are hereby appointed and authorized to act as agent (the "Exchange Agent") to effectuate the exchange of Old Notes for New Notes, on the terms and subject to the conditions of this agreement (the "Agreement"). In that connection, the following documents have been delivered to you: (i) Prospectus; (ii) the Letter of Transmittal accompanying the Prospectus, to be used by the holders of Old Notes ("Old Noteholders") in tendering their Old Notes; and (iii) the Notice of Guaranteed Delivery to be used by Old Noteholders whose Old Notes are not immediately available or who cannot deliver their Old Notes, the 2 State Street Bank and Trust Company June __, 1998 Page 2 Letter of Transmittal or any other required documents to you prior to the expiration of the Exchange Offer. The Exchange Offer will expire at the time and on the date specified in the Prospectus (the "Expiration Date") unless the Exchange Offer is extended by the Company, in which case the term "Expiration Date" shall mean the latest date to which the Exchange Offer is extended. You are hereby requested, and you hereby agree, to act as follows: 1. You are to accept Old Notes which are accompanied by the appropriate Letter of Transmittal or facsimile thereof, properly completed and duly executed in accordance with the instructions thereon and any requisite collateral documents or, in the case of Old Notes tendered by book-entry transfer, an Agent's Message in lieu of the Letter of Transmittal, and all other instruments and communications submitted to you in connection with the Exchange Offer and to hold the same upon the terms and conditions set forth in this Agreement. 2. You are to examine the Letters of Transmittal, or Agent's Message in lieu thereof, Old Notes and other documents delivered or mailed to you by or for Old Noteholders to ascertain whether (i) the Letters of Transmittal are properly completed and duly executed in accordance with the instructions set forth therein, (ii) the other documents are properly completed and duly executed, and (iii) the Old Notes have otherwise been properly tendered. You need not pass on the legal sufficiency of any signature or verify any signature guarantee. The Exchange Agent's obligations with respect to receipt and inspection of the Letter of Transmittal in connection with this Exchange Offer shall be satisfied for all purposes hereof by inspection of the electronic message transmitted to the Exchange Agent by Depository Trust Company ("DTC") participants in accordance with the Automated Tender Offer Program ("ATOP") of the DTC and by otherwise observing and complying with all procedures established by DTC in connection with ATOP. 3. In the event any Letter of Transmittal or other document has been improperly executed or completed or any of the certificates are not in proper form or have been improperly tendered or any book-entry delivery of Old Notes has been improperly made, or if some other irregularity in connection with the delivery of Old Notes by a holder thereof exists, you are authorized, upon consultation with the Company or its counsel, to endeavor to take such action as may be necessary to cause such irregularity to be corrected. You are authorized, upon consultation with the Company or one of its representatives, to request from any person tendering Old Notes such additional documents or undertakings as you may deem appropriate. All questions as to the form of all documents and the validity, eligibility 3 State Street Bank and Trust Company June __, 1998 Page 3 (including time of receipt) and acceptance of tendered Old Notes will be determined by the Company, in its sole discretion, whose determination will be final and binding. The Company reserves the absolute right to reject any or all tenders of any particular Old Notes, which would, in the opinion of the Company's counsel, be unlawful. The Company also reserves the absolute right to waive any of the conditions of the Exchange Offer or any defect or irregularity in the tender of any Old Notes, and the Company's interpretation of the terms and conditions of the Exchange Offer (including the Letter of Transmittal and the instructions set forth therein) will be final. No tender of Old Notes will be deemed to have been properly made until all defects and irregularities have been cured or waived. 4. Tenders of Old Notes may be made only as set forth in the Prospectus and Letter of Transmittal, and Old Notes shall be considered properly tendered to you only when: a. a properly completed and duly executed Letter of Transmittal, with any required signature guarantees and any other required documents as set forth in the Letter of Transmittal, is received by you at your address set forth in the Prospectus and Letter of Transmittal, and Old Notes are received by you at such addresses or a timely confirmation of a book-entry transfer of such Old Notes, along with an Agent's Message is received by you at or prior to the Expiration Date at your address set forth in the Prospectus and Letter of Transmittal; or a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Company, with an appropriate guarantee of signature and delivery from an Eligible Institution, is received by you at or prior to the Expiration Date and Old Notes (in respect of which there have been delivered to you prior to the Expiration Date a properly completed and duly executed Notice of Guaranteed Delivery) in proper form for transfer together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) or Agent's Message, and any other required documents as set forth in the Letter of Transmittal, are received by you within three New York Stock Exchange trading days; and b. the adequacy of the items relating to Old Notes, the Letter of Transmittal therefor and any Notice of Guaranteed Delivery has been favorably passed upon as above provided. Notwithstanding the provisions of the preceding paragraph, Old Notes which the Company shall approve as having been properly tendered shall be considered to be properly tendered. 5. Holders of Old Notes may make book-entry delivery of their securities. You will establish in your name or the name of your nominee an account with respect to the Old 4 State Street Bank and Trust Company June __, 1998 Page 4 Notes at Depository Trust Company ("DTC") for purpose of the Exchange Offer to permit book-entry transfers of Old Notes. Except as otherwise provided below, Old Notes, or any book-entry transfer into your account at DTC of Old Notes tendered electronically, as well as a properly completed and duly executed copy of the Letter of Transmittal or Agent's Message, and any other documents required by the Letter of Transmittal, must be received by you or, in the case of tenders of book-entry transfer, confirmed to you by transfer to your account on or prior to the Expiration Date. 6. a. A tendering Old Noteholder may withdraw tendered Old Notes in accordance with the procedures set forth in the Prospectus and Letter of Transmittal, in which event, except as may be otherwise specified in the Old Noteholder's notice of withdrawal, all items in your possession which shall have been received from the Old Noteholder with respect to those Old Notes shall be promptly returned to or upon the order of the Old Noteholder and the Old Notes covered by those items shall no longer be considered to be properly tendered. b. A withdrawal may not be rescinded. Withdrawn Old Notes may, however, be tendered at anytime on or prior to the Expiration Date. 7. You are to record and to hold all tenders received by you and to promptly notify by telephone after the close of business on each business day, the following person as to the total number of Old Notes tendered on such day and the cumulative numbers with respect to the Old Notes received through the time of such call: _____________________________________________________ Each daily report should identify: the number and principal amount of Old Notes represented by (i) certificates, and (ii) Notices of Guaranteed Delivery actually received by you through the time of the report. The foregoing information should also be sent to Mr. in a daily letter. In addition, you will also provide, and cooperate in making available to Mr. ________________________ ____________________, such other information as he or the Company's counsel may reasonably request upon oral request made from time to time. Your cooperation shall include, without limitation, the granting by you to the Company, and such other persons as it may reasonably request, of access to those persons on your staff who are responsible for receiving tenders of Old Notes in order to insure that immediately prior to the Expiration Date, the Company shall have received information in sufficient detail to enable it to decide whether to extend the Exchange Offer. 8. Letters of Transmittal, Notices of Guaranteed Delivery and telegrams, facsimile transmissions and letters submitted in lieu thereof pursuant to the Exchange Offer 5 State Street Bank and Trust Company June __, 1998 Page 5 shall be stamped by you as to the date and time of receipt and shall be retained in your possession until the Expiration Date. As promptly as practicable after the Expiration Date, you will deliver those items, together with all properly tendered Old Notes to the Company. 9. You are to follow up and to act upon any amendments, modifications or supplements to these instructions mutually satisfactory to you and the Company, and upon any further information in connection with the terms of the Exchange Offer, any of which may be given to you by the Company, including instructions with respect to (i) any extension or other modification of the Exchange Offer, (ii) the amount or manner of payment for any Old Notes exchanged, and (iii) the cancellation of the Exchange Offer. 10. If under the conditions set forth in the Prospectus and Letter of Transmittal, the Company becomes obligated to accept Old Notes tendered, it will, as promptly as practicable thereafter, deposit with you certificates representing New Notes in the amount determined according to the ratio prescribed in the Prospectus and Letter of Transmittal. Unless otherwise indicated under any Special Issuance Instructions or any Special Delivery Instructions set forth in any Letter of Transmittal, you shall mail the certificates representing the New Notes and the certificates for any Old Notes submitted but not tendered for exchange to the registered owner of the securities at the address shown in the Letter of Transmittal. In the event that either or both the Special Issuance Instructions and the Special Delivery Instructions are completed, you shall mail all certificates representing New Notes (or Old Notes to be returned, if any) to the person or persons so indicated in the Letter of Transmittal. Certificates shall be post-marked by you within a reasonable period of time after certificates have been provided to you. 11. No exchange shall be made as to any Old Notes unless and until such Old Notes have been properly tendered as provided in Section 4 of this Agreement. 12. For performing your services hereunder, you shall be entitled to receive from the Company a fee of $_______. You shall also be reimbursed by the Company for all reasonable expenses, including counsel fees, if any, and mailing costs you may incur in connection with the performance of your duties. 13. As Exchange Agent hereunder you: (a) shall not have duties or obligations other than those specifically set forth or as may subsequently be agreed to by you and the Company; 6 State Street Bank and Trust Company June __, 1998 Page 6 (b) shall not be obligated to take any legal action hereunder which might in your judgment involve any expense or liability unless you have been furnished with reasonable indemnification; (c) may rely on and shall be protected in acting upon any certificate, instrument, opinion, notice, letter, telegram or other document or security delivered to you and believed by you to be genuine and to have been signed by the proper party or parties; (d) may rely on and shall be protected in acting or refraining from acting upon the written instructions of the Company; and (e) may consult counsel satisfactory to you (including counsel to the Company), and the opinion of such counsel shall be full and complete authorization and protection with respect to any action taken, suffered, or omitted by you hereunder in good faith and in accordance with the opinion of such counsel. (f) you shall not be deemed to have notice of any fact, claim or demand with respect hereto unless actually known by an officer charged with responsibility for administering this Agreement or unless in writing received by you and making specific reference to this Agreement. 14. You undertake the duties and obligations imposed herein upon the following additional terms and conditions: (a) you shall perform your duties and obligations hereunder with due care; (b) you shall not be under any responsibility in respect of the validity or sufficiency (not only as to genuineness, but also as to its due execution, the genuineness of signatures appearing thereon and as to the truth and accuracy of any information therein contained) of any Letter of Transmittal, certificate representing Old Notes, book-entry transfer of Old Notes or Notice of Guaranteed Delivery; and (c) neither you nor any of your directors, officers or employees shall be liable to anyone for any error of judgment, or for any act done or step taken or omitted to be taken by you or any of your directors, officers or employees, or for any mistake of fact or law, or for anything which you or any of your directors, officers or employees, may do or refrain from doing in connection with or in the administration of this Agreement, unless and except to the extent the same constitutes gross negligence or willful misconduct on your part. 7 State Street Bank and Trust Company June __, 1998 Page 7 15. You are not authorized to make any recommendation on behalf of the Company as to whether a holder of Old Notes should or should not tender his, her or its Old Notes. 16. All certificates representing New Notes shall be forwarded by (i) first-class mail under a blanket surety bond protecting you and the Company from loss or liability arising out of the non-receipt or non-deliver of such certificates or (ii) registered mail, insured separately for the replacement value of such certificates. 17. You are authorized to cooperate with and furnish information to any organization (and its representatives) designated from time to time by the Company, in any manner reasonably requested by any of them and acceptable to you in connection with the Exchange Offer. 18. The Company covenants and agrees to reimburse, indemnify and hold you harmless against any costs, expenses (including reasonable expenses of your legal counsel), losses or damages which, without negligence, misconduct or bad faith on your part may be paid, incurred or suffered by you or to which you may become subject by reason of or as a result of the administration of your duties hereunder or by reason of or as a result of your compliance with the instructions set forth herein or with any written or oral instructions delivered to you pursuant hereto, or liability resulting from your actions as Exchange Agent pursuant hereto, including any claims against you by any Old Noteholder. 19. You hereby acknowledge receipt of each of the documents listed in items (i) through (iii) of the introduction to this Agreement and further acknowledge that you have examined the same. The Company shall supply you with a sufficient number of copies of such documents to enable you to perform your services hereunder. Any inconsistency between this Agreement on the one hand and the documents listed in items (i) through (iii) of the introduction of this Agreement, as they may from time to time be amended, on the other, shall be resolved in favor of the latter, except with respect to the duties, liabilities and indemnification of you as Exchange Agent. 20. All notices, statements and other communications hereunder shall be in writing, signed by a duly authorized officer of the party sending such notices, and shall be deemed given when delivered by hand or by certified mail, postage prepaid, addressed as follows: To the Company: Hadco Corporation 12A Manor Parkway Salem, New Hampshire 03079 8 State Street Bank and Trust Company June __, 1998 Page 8 Attention: ________________________________ Facsimile: ________________________________ Telephone: (603) 898-8000 to you: State Street Bank and Trust Company Corporate Trust Division Two International Place Boston, MA 02110-0778 Attention: Hadco Corporation Facsimile: (617) 664-5607 Telephone: (617) 664-5371 or to such other address as either party may furnish hereunder by notice; provided that notice of change of address shall be deemed given only when received. 21. This agreement shall be construed and enforced in accordance with the law of the State of New York applicable to agreements made and to be performed in the State of New York and shall inure to the benefit of, and the obligations created hereby shall be binding upon, the successors and assigns of the parties hereto. 22. These instructions may be reasonably modified or supplemented by the Company or by any officer thereof authorized to give notice, approval or waiver on its behalf. 23. As used herein, "business day" shall mean any day other than a Saturday or Sunday, or any other day on which you are authorized or required to be closed for business. 9 State Street Bank and Trust Company June __, 1998 Page 9 Please acknowledge receipt of this letter and confirm the arrangements herein provided by signing and returning the enclosed copy. Very truly yours, HADCO CORPORATION By:_________________________________ Name: Title: ACCEPTED AS OF June __, 1998 STATE STREET BANK AND TRUST COMPANY As Exchange Agent By:_________________________________________ Name: Title: PABOS2:LKF:148771_1 -----END PRIVACY-ENHANCED MESSAGE-----