-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, oDTrO/IdIyU5H7c/7djcMjA4Yr5ElXhhfMxpRawcCsoE+FVHA11eU8Xd0XH3uJiP bb3WladXGLgQF7vP3c1xUA== 0000950124-94-001137.txt : 19940615 0000950124-94-001137.hdr.sgml : 19940615 ACCESSION NUMBER: 0000950124-94-001137 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 2 REFERENCES 429: 033-47867 FILED AS OF DATE: 19940614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEAR SEATING CORP CENTRAL INDEX KEY: 0000842162 STANDARD INDUSTRIAL CLASSIFICATION: 2531 IRS NUMBER: 133386776 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 033-51317 FILM NUMBER: 94534135 BUSINESS ADDRESS: STREET 1: 21557 TELEGRAPH RD CITY: SOUTHFIELD STATE: MI ZIP: 48034 BUSINESS PHONE: 3137461500 MAIL ADDRESS: STREET 1: 21557 TELEGRAPH CORP CITY: SOUTHFIELD STATE: MI ZIP: 48034 FORMER COMPANY: FORMER CONFORMED NAME: LEAR SIEGLER SEATING CORP DATE OF NAME CHANGE: 19900723 POS AM 1 POST AMENDMENT #2 TO S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14 1994 REGISTRATION NOS. 33-51317 33-47867 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------------ POST-EFFECTIVE AMENDMENT NO. 2 ON FORM S-3 TO REGISTRATION STATEMENT ON FORM S-1 (NO. 33-51317) AND POST-EFFECTIVE AMENDMENT NO. 2 ON FORM S-3 TO REGISTRATION STATEMENT ON FORM S-1 (NO. 33-47867) UNDER THE SECURITIES ACT OF 1933 --------------------------- LEAR SEATING CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 3714 13-3386776 (State or other jurisdiction (Primary Standard Industrial (IRS Employer of Classification Code Number) Identification No.) incorporation or organization)
21557 TELEGRAPH ROAD SOUTHFIELD, MICHIGAN 48034 (810) 746-1500 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) JAMES H. VANDENBERGHE 21557 TELEGRAPH ROAD SOUTHFIELD, MICHIGAN 48034 (810) 746-1500 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------------- Copies to: Bruce A. Toth David O. Brownwood Winston & Strawn Cravath, Swaine & Moore 35 W. Wacker Drive 825 Eighth Avenue Chicago, Illinois 60601 New York, New York 10019 (312) 558-5600 (212) 474-1000
--------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: / / --------------------------- PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE MARKET-MAKING PROSPECTUS INCLUDED IN THIS REGISTRATION STATEMENT, WHICH IS A COMBINED MARKET-MAKING PROSPECTUS TO BE USED BY LEHMAN BROTHERS INC. IN CONNECTION WITH CERTAIN MARKET-MAKING TRANSACTIONS, RELATES TO MARKET-MAKING TRANSACTIONS REGISTERED UNDER THE REGISTRANT'S REGISTRATION STATEMENTS (NO. 33-51317) AND (NO. 33-47867). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 LEAR SEATING CORPORATION CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B) OF REGULATION S-K
ITEM OF FORM S-3 PROSPECTUS CAPTION OR LOCATION ------------------------------------------- ------------------------------------------- 1. Forepart of the Registration Statement and Outside Front Cover Page of Prospectus..... Outside Front Cover Page 2. Inside Front and Outside Back Cover Pages of Prospectus.............................. Inside Front Cover Page; Outside Back Cover Page; Available Information 3. Summary Information, Risk Factors and Ratio of Earnings to Fixed Charges............... Ratio of Earnings to Fixed Charges; Certain Considerations 4. Use of Proceeds............................ Not Applicable 5. Determination of Offering Price............ Not Applicable 6. Dilution................................... Not Applicable 7. Selling Security Holders................... Not Applicable 8. Plan of Distribution....................... Outside Front Cover Page; Plan of Distribution 9. Description of Securities to be Registered................................. Outside Front Cover Page; Prospectus Summary; Description of the Notes; Description of the Senior Subordinated Notes 10. Interests of Named Experts and Counsel..... Legal Matters; Experts 11. Material Changes........................... 12. Incorporation of Certain Information by Reference.................................. Incorporation of Certain Information by Reference 13. Disclosure of Commission Position on Indemnification for Securities Act Liabilities................................ Not Applicable
3 EXPLANATORY NOTES Lear Seating Corporation ("Lear") filed a Registration Statement on Form S-1 (Registration No. 33-51317) (the "1994 Registration Statement"), which was declared effective by the Securities and Exchange Commission (the "Commission") on January 27, 1994, covering $145 million aggregate principal amount of 8 1/4% Subordinated Notes due 2002 of Lear for sale in an underwritten public offering (the "Offering") and for certain market-making transactions by Lehman Brothers Inc. The 1994 Registration Statement contained a complete Prospectus relating to the Offering (the "1994 Offering Prospectus"), together with certain alternate pages to the Offering Prospectus relating solely to such market-making transactions (the "1994 Market-Making Prospectus"). Lear also filed a Registration Statement on Form S-1 (Registration No. 33-47867) (the "1992 Registration Statement"), which was declared effective by the Commission on July 24, 1992, covering $125 million aggregate principal amount of 11 1/4% Senior Subordinated Notes due 2000 of Lear for sale in an underwritten public offering (the "Senior Subordinated Debt Offering") and for certain market-making transactions by Lehman Brothers Inc. The 1992 Registration Statement contained a complete Prospectus relating to the Senior Subordinated Debt Offering (the "1992 Offering Prospectus"), together with certain alternate pages to the 1992 Offering Prospectus relating solely to such market-making transactions (the "1992 Market-Making Prospectus"). This Post-Effective Amendment No. 2 on Form S-3 relates to both the 1994 Registration Statement and the 1992 Registration Statement and is being filed solely to update the 1994 Market-Making Prospectus and the 1992 Market-Making Prospectus. This Post-Effective Amendment No. 2 shall not amend in any way the 1994 Offering Prospectus or the 1992 Offering Prospectus previously filed by Lear with the Commission. 4 PROSPECTUS [LOGO] LEAR SEATING CORPORATION $125,000,000 11 1/4% SENIOR SUBORDINATED NOTES DUE 2000 INTEREST PAYABLE JANUARY 15 AND JULY 15 $145,000,000 8 1/4% SUBORDINATED NOTES DUE 2002 INTEREST PAYABLE FEBRUARY 1 AND AUGUST 1 This Prospectus will be used by Lehman Brothers Inc. (the "Market-maker") in connection with offers and sales in market-making transactions of the 11 1/4% Senior Subordinated Notes due 2000 (the "Senior Subordinated Notes") and the 8 1/4% Subordinated Notes due 2002 (the "Notes") of Lear Seating Corporation ("Lear" or the "Company"). The Market-maker may act as a principal or agent in such transactions. The Senior Subordinated Notes and the Notes may be offered in negotiated transactions or otherwise. Sales will be made at prices related to prevailing market prices at the time of sale. ------------------------- 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. June , 1994 5 No dealer, salesperson or other individual has been authorized to give any information or to 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 Lear or the Market-maker. This Prospectus does not constitute an offer of any securities other than those to which it relates or an offer to sell, or a solicitation of an offer to buy, to any person in any jurisdiction where such an 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
PAGE ----- The Company........................................................................... 2 Incorporation of Certain Information by Reference..................................... 2 Available Information................................................................. 3 Certain Considerations................................................................ 4 Ratio of Earnings to Fixed Charges.................................................... 6 Description of the Senior Subordinated Notes.......................................... 7 Description of the Notes.............................................................. 22 Plan of Distribution.................................................................. 40 Legal Matters......................................................................... 40 Experts............................................................................... 41
6 On December 31, 1993, Lear Seating Corporation, which was a wholly-owned subsidiary of Lear Holdings Corporation ("Holdings"), merged with and into Holdings (the "Merger"). As used in this Prospectus, unless the context otherwise requires, the "Company" or "Lear" refers to Lear Seating Corporation and its consolidated subsidiaries after giving effect to the Merger, together with its predecessors. THE COMPANY Lear is the largest independent supplier of automobile and light truck seat systems in North America and is one of the largest independent suppliers of such systems and components worldwide. The Company's principal products include finished automobile and light truck seat systems, automobile and light truck seat frames, seat covers and other seat components. The Company's principal executive offices are located at 21557 Telegraph Road, Southfield, Michigan 48034, and its telephone number is (810) 746-1500. Lear was incorporated in Delaware on January 13, 1987. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The following documents filed by the Company with the Commission (File No. 1-11311) are incorporated in this Prospectus by reference and made a part hereof: (a) Annual Report on Form 10-K for Lear Holdings Corporation for fiscal year ended June 30, 1993 (b) Annual Report on Form 10-K for Lear Seating Corporation for fiscal year ended June 30, 1993 (c) Transition Report on Form 10-K for Lear Seating Corporation for period from July 1, 1993 to December 31, 1993 (d) Quarterly Report on Form 10-Q for Lear Holdings Corporation for fiscal quarter ended October 2, 1993 (e) Quarterly Report on Form 10-Q for Lear Seating Corporation for fiscal quarter ended October 2, 1993 (f) Amendment to Quarterly Report on Form 10-Q/A for Lear Holdings Corporation for fiscal quarter ended October 2, 1993 (g) Amendment to Quarterly Report on Form 10-Q/A for Lear Seating Corporation for fiscal quarter ended October 2, 1993 (h) Amendment to Quarterly Report on Form 10-Q/A2 for Lear Holdings Corporation for fiscal quarter ended October 2, 1993 (i) Current Report on Form 8-K dated February 8, 1994 for Lear Seating Corporation. (j) Quarterly Report on Form 10-Q for Lear Seating Corporation for the fiscal quarter ended April 2, 1994. All documents subsequently filed by the Company pursuant to Section 13(a), 13(c) 14 or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of this Prospectus and prior to the termination of the offering or offerings made by this Prospectus, shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the respective dates of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference in this Prospectus modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person, including any beneficial owner, to whom this Prospectus is delivered, upon written or oral request of such person, a copy of any or all of the documents that have been or may be incorporated in this Prospectus by reference, other than certain exhibits to such documents. Such requests should be directed to Leslie Touma, Director of Investor Relations, Lear Seating Corporation, 21557 Telegraph Road, Southfield, Michigan 48034 (telephone number 810/746-1500). 2 7 AVAILABLE INFORMATION The Company is subject to the informational reporting requirements of the Securities Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files periodic reports and other information with the Securities and Exchange Commission (the "Commission"). The registration statements relating to the Senior Subordinated Notes and the Notes (the "Registration Statements") (which term encompasses any amendments thereto) and the exhibits thereto filed by the Company with the Commission, as well as the reports, proxy statements and other information filed by the Company with the Commission, may be inspected at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and is also available for inspection and copying at the regional offices of the Commission located at Seven World Trade Center, 13th Floor, New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material may also be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. In addition, reports, proxy statements and other information concerning the Company may be inspected at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York. The Company has filed with the Commission the Registration Statements under the Securities Act of 1933, as amended (the "Securities Act") with respect to the Senior Subordinated Notes and the Notes. This Prospectus does not contain all the information set forth in the Registration Statements and the exhibits and schedules thereto, to which reference is hereby made. Statements made in this Prospectus as to the contents of any contract, agreement, or other document referred to are not necessarily complete. With respect to each such contract, agreement, or other document filed as an exhibit to the Registration Statements, reference is hereby made to the exhibit for a more complete description of the matter involved and each such statement shall be deemed qualified in its entirety by such reference. 3 8 CERTAIN CONSIDERATIONS A prospective investor should consider carefully all of the information contained in this Prospectus before deciding whether to purchase the Senior Subordinated Notes and the Notes and, in particular, should consider the following: LEVERAGE Holdings effected the leveraged acquisition (the "1988 Acquisition") of all of the outstanding stock of Lear Seating Corporation (formerly known as Lear Siegler Seating Corp.) and certain of its affiliates in August 1988. On November 1, 1993, Lear purchased certain portions of the North American seat cover and seat system business (the "NAB") of the Ford Motor Company ("Ford") for $173.4 million in cash (after giving effect to an adjustment in the purchase price for changes in NAB working capital) and approximately $10.5 million in notes payable to Ford or its affiliates (the "NAB Acquisition"). A significant portion of the funds needed to finance the 1988 Acquisition and the NAB Acquisition were raised through borrowings. As a result, the Company has debt that is substantial in relation to its stockholders' equity, and a significant portion of the Company's cash flow from operations is and will be required for debt service. As of December 31, 1993, after giving pro forma effect to the initial public offering of the Notes which was consummated on February 3, 1994 (the "1994 Note Offering"), the initial public offering of Lear's Common Stock which was consummated on April 13, 1994 (the "IPO") and the application of the proceeds therefrom, the Company would have had total long-term debt of $422.2 million and stockholders' equity of $145.6 million, resulting in a total capitalization of $567.8 million. The Company anticipates that it will be required to use substantial amounts of its cash flow from operations to meet its debt service obligations. If the Company is unable to generate sufficient cash flow to meet its debt service obligations, it will have to adopt one or more alternatives, such as reducing or delaying planned expansion and capital expenditures, selling assets, obtaining additional equity capital or restructuring debt. There is no assurance that any of these strategies could be effected on satisfactory terms. In addition, because certain of the Company's obligations under its Credit Agreement dated October 25, 1993 (the "Credit Agreement"), with Chemical Bank, as Agent on behalf of the lenders party thereto, and Bankers Trust Company, The Bank of Nova Scotia, Citicorp USA, Inc. and Lehman Commercial Paper Inc., as Managing Agents, bear interest at floating rates, an increase in interest rates could adversely affect the Company's ability to meet its debt service obligations. As of April 2, 1994, the Company was not a party to any interest rate swaps or similar arrangements; however, in the future the Company may determine to enter into such arrangements on all or a portion of its floating rate debt. Although any interest rate swaps or similar arrangements entered into by the Company would effectively cap or fix associated interest rates, such arrangements could have the effect of increasing total interest expense. NET LOSSES The Company has experienced net losses during two of its last three completed fiscal years ended June 30, principally as a result of the significant interest charges on the debt incurred in connection with the 1988 Acquisition. The Company experienced net losses of $33.2 million and $22.2 million for the fiscal years ended June 30, 1991 and 1992, respectively, net income of $10.1 million for the fiscal year ended June 30, 1993 and a net loss of $34.7 million for the six months ended December 31, 1993. The Company had significant non-cash charges to income during these periods, including (i) charges for depreciation and amortization of goodwill of $36.8 million, $35.0 million, $40.7 million and $21.9 million, (ii) write-offs and amortization of deferred financing fees of $4.1 million, $5.7 million, $3.0 million and $6.0 million, in each case for the fiscal years ended June 30, 1991, 1992, 1993 and for the six months ended December 31, 1993, respectively and (iii) a one-time charge for incentive stock and other compensation of $14.5 million for the six months ended December 31, 1993. 4 9 SUBORDINATION Payments under the Senior Subordinated Notes and the Notes are subordinated to all of Lear's existing and future Senior Indebtedness (as defined in "Description of the Senior Subordinated Notes -- Certain Definitions" and "Description of the Notes -- Certain Definitions," respectively). As of April 2, 1994, the aggregate amount of Senior Indebtedness of Lear with respect to the Senior Subordinated Notes was approximately $271.7 million, comprised of $264.9 million outstanding under the Company's Credit Agreement (of which $39.2 million was outstanding under letters of credit), $2.4 million in notes payable related to the NAB Acquisition and $4.4 million in guarantees of indebtedness of less than majority-owned affiliates. As of April 2, 1994, the aggregate amount of Senior Indebtedness of Lear with respect to the Notes was approximately $396.7 million, comprised of the Senior Indebtedness for purposes of the Senior Subordinated Notes plus the $125 million of Senior Subordinated Notes. In addition, certain of the Company's subsidiaries have outstanding indebtedness and may incur indebtedness in the future. Holders of such indebtedness will have a claim against the assets of such subsidiaries that will rank prior to the claims of the holders of the Senior Subordinated Notes and the Notes. As of April 2, 1994, the Company's subsidiaries had outstanding approximately $32.0 million of indebtedness. Because of the subordination provisions of the Senior Subordinated Notes and the Notes, and after the occurrence of certain events, creditors whose claims are senior to the Senior Subordinated Notes and the Notes may recover more, ratably, than the holders of the Senior Subordinated Notes and the Notes, respectively. Substantially all of the assets of the Company are pledged under the Credit Agreement. Consequently, in the event of a default under the Credit Agreement, such assets could be subject to foreclosure by the lenders under the Credit Agreement. CYCLICAL NATURE OF AUTOMOTIVE INDUSTRY The Company's principal operations are directly related to domestic and foreign automotive vehicle production. Automobile sales and production in North America and Europe are cyclical and can be affected by the strength of a country's general economy and by other factors which may have an effect on the level of the Company's sales to automobile and light truck manufacturers. RELIANCE ON MAJOR CUSTOMERS AND SELECTED CAR MODELS Two of Lear's customers, General Motors and Ford, accounted for approximately 45% and 28%, respectively, of the Company's net sales in the twelve months ended December 31, 1993. The Company's net sales to General Motors and Ford in the twelve months ended December 31, 1993 as a percentage of its total net sales, after giving pro forma effect to the NAB Acquisition as if it had occurred at the beginning of such period, were approximately equal. Although the Company has long-term purchase orders from many of its customers, such purchase orders generally provide for supplying the customer's annual requirements for a particular model or assembly plant, renewable on a year-to-year basis, rather than for manufacturing a specific quantity of products. In addition, certain of the Company's manufacturing and assembly plants are dedicated to a single customer vehicle assembly plant. A customer's decision to close any such plant would require the Company to obtain alternate supply agreements, relocate existing business to such facility or close such facility. To date, neither model discontinuances nor plant closings have had a material adverse effect on the Company because of the breadth of the vehicle lines incorporating the Company's products and the ability of the Company to relocate its manufacturing operations with minimal capital expenditures. There can be no assurances that the Company's loss of business with respect to either a particular vehicle model or a particular assembly plant would not have a material adverse effect on the Company's financial condition in the future. There is substantial and continuing pressure from the major original equipment manufacturers (OEMs) to reduce costs, including costs associated with outside suppliers such as the Company. Management believes that the Company's ability to develop new products and to control its own costs, many of which are variable, will allow the Company to remain competitive. However, there can be no assurance that the Company will be able to improve or maintain its gross margins. 5 10 CONTROL BY LEHMAN BROTHERS HOLDINGS INC. Certain merchant banking partnerships affiliated with Lehman Brothers Holdings Inc. (the "Lehman Funds") own a majority of Lear's outstanding Common Stock. As a result of the stock ownership by the Lehman Funds and related arrangements, the Lehman Funds can effectively control the affairs and policies of the Company. LIMITATION ON THE COMPANY'S CHANGE OF CONTROL REPURCHASE OBLIGATION Transactions which would otherwise constitute a Change of Control under the Indentures for the Senior Subordinated Notes and the Notes will not constitute a Change of Control if consummated by the Lehman Funds, FIMA Finance Management Inc., certain members of the Company's management and/or their respective affiliates ("Permitted Investors"). Such a transaction could result in the Company becoming more leveraged. As a result of this exclusion from the definition of a Change of Control, holders of the Senior Subordinated Notes and the Notes will not be able to require the Company to repurchase their securities upon the consummation of a transaction by Permitted Investors that would otherwise constitute a Change of Control. TRADING MARKET FOR THE SENIOR SUBORDINATED NOTES AND THE NOTES Although they are not obligated to do so, Lehman Brothers Inc. (the "Market-maker") currently makes a market in the Senior Subordinated Notes and the Notes. Any such market-making activity may be discontinued at any time, for any reason, without notice at the sole discretion of the Market-maker. No assurance can be given as to the liquidity of or the trading market for the Senior Subordinated Notes and the Notes. RATIO OF EARNINGS TO FIXED CHARGES Presented below, for the periods indicated, is a calculation of the ratio of the Company's earnings to fixed charges and, where applicable, fixed charges in excess of earnings. For purposes of these calculations: (i) "earnings" consist of income (loss) before taxes on income, fixed charges and undistributed earnings plus minority interest; and (ii) "fixed charges" consists of interest on debt, amortization of deferred financing fees plus that portion of rental expenses representative of interest (deemed to be one-third of rental expenses).
NINE MONTHS YEAR YEAR YEAR YEAR SIX MONTHS THREE MONTHS THREE MONTHS ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED JUNE 30, JUNE 30, JUNE 30, JUNE 30, JUNE 30, DECEMBER 31, APRIL 3, APRIL 2, 1989 1990 1991 1992 1993 1993 1993 1994 ----------- -------- -------- -------- -------- ------------ ------------ ------------ Ratio of earnings to fixed charges................. -- -- -- -- 1.55x -- 2.14x 1.91x Fixed charges in excess of earnings................ $(1,249) $(4,344 ) $(20,743) $(6,484 ) -- $ (9,296) -- --
6 11 DESCRIPTION OF THE SENIOR SUBORDINATED NOTES The Senior Subordinated Notes have been issued under an Indenture dated as of July 15, 1992 (the "11 1/4% Indenture"), among the Company, as issuer, Holdings, as guarantor, and The Bank of New York, as trustee (the "Trustee"). Since the date of the 11 1/4% Indenture, Holdings has merged with and into the Company and its separate corporate existence has ceased. As a result, the "Guarantee" referred to in this section, which was the guarantee by Holdings of Lear's obligations under the Senior Subordinated Notes, is no longer in effect. The terms of the Senior Subordinated Notes include those stated in the 11 1/4% Indenture and those made part of the 11 1/4% Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in effect on the date of the 11 1/4% Indenture. The Senior Subordinated Notes are subject to all such terms, and holders of the Senior Subordinated Notes are referred to the 11 1/4% Indenture and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the 11 1/4% Indenture does not purport to be complete and is qualified in its entirety by reference to the 11 1/4% Indenture, including the definitions therein of certain terms used below. A copy of the 11 1/4% Indenture and a specimen of the Senior Subordinated Note have been filed as exhibits to the Registration Statement of which this Prospectus is a part. Capitalized terms used in this section and not otherwise defined below have the meaning assigned to them in the 11 1/4% Indenture, unless the context requires otherwise. GENERAL The Senior Subordinated Notes are direct obligations of the Company, and are issued in denominations of $1,000 and integral multiples thereof. The 11 1/4% Indenture authorizes the issuance of $125,000,000 aggregate principal amount of Senior Subordinated Notes. As described below under "Subordination", the Senior Subordinated Notes are subordinated in right of payment to Senior Indebtedness of the Company. As of April 2, 1994, the aggregate amount of Senior Indebtedness of the Company (including its obligations under the Credit Agreement) was approximately $271.7 million. In addition, certain of the Company's subsidiaries have incurred and will in the future incur Indebtedness. Holders of such indebtedness will have a claim against the assets of such subsidiaries that will rank prior to the claims of the holders of the Senior Subordinated Notes. As of April 2, 1994, the aggregate indebtedness of such subsidiaries for money borrowed was approximately $32.0 million. The Senior Subordinated Notes bear interest at the rate per annum shown on the cover page of this Prospectus, payable semiannually on January 15 and July 15 in each year to holders of record of the Senior Subordinated Notes at the close of business on January 1 and July 1, respectively, of such year. The first interest payment date was January 15, 1993. Interest is computed on the basis of a 360-day year of twelve 30-day months. The Senior Subordinated Notes mature on July 15, 2000. Principal and interest on the Senior Subordinated Notes are payable, and the Senior Subordinated Notes are transferable, initially at the offices of the Trustee in New York, New York. Holders must surrender the Senior Subordinated Notes to the Paying Agent in order to collect principal payments. Interest on the Senior Subordinated Notes may be paid by check mailed to the registered holders of the Senior Subordinated Notes. The Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with certain transfers or exchanges. Initially, the Trustee will act as Paying Agent and Registrar under the 11 1/4% Indenture. The Company or any of its Affiliates may act as Paying Agent and Registrar, and the Company may change the Paying Agent or Registrar without prior notice to holders. OPTIONAL REDEMPTION The Senior Subordinated Notes may not be redeemed prior to July 15, 1997. On or after July 15, 1997, the Company may, at its option, redeem the Senior Subordinated Notes in whole or in part, on at least 30 days' but not more than 60 days' notice to each holder of Senior Subordinated Notes to be redeemed, at 100% of their principal amount together with accrued and unpaid interest (if any) to the redemption date. 7 12 The Credit Agreement contains provisions that limit the Company's ability to optionally redeem the Senior Subordinated Notes. MANDATORY REDEMPTION The Senior Subordinated Notes are not subject to mandatory redemption prior to maturity. SUBORDINATION The Indebtedness evidenced by the Senior Subordinated Notes is subordinated to the prior payment, when due, of all Senior Indebtedness (as defined below) of the Company but will rank senior to the Notes and other Indebtedness of the Company expressly subordinated to the Senior Subordinated Notes. Upon any payment or distribution of assets or securities of the Company due to any dissolution, winding up, total or partial liquidation or reorganization of the Company or in bankruptcy, insolvency, receivership or other proceedings, the payment of the principal of and interest on the Senior Subordinated Notes will be subordinated in right of payment, as set forth in the 11 1/4% Indenture, to the prior payment in full of all Senior Indebtedness. Upon a default in the payment of any Obligations with respect to Senior Indebtedness or upon the acceleration of the maturity of Senior Indebtedness or while any judicial proceeding is pending with respect to a default on Senior Indebtedness (of which the Trustee has received written notice), no payment may be made upon or in respect of the Senior Subordinated Notes until such default shall have been cured or waived. In addition, during the continuance of any other event of default with respect to (i) the Credit Agreement pursuant to which the maturity thereof may be accelerated, upon (a) receipt by the Trustee of written notice from the Agent Bank (or any Representative of any Senior Indebtedness which refinances or refunds the Credit Agreement so long as amounts outstanding under such agreement are in excess of $50,000,000) or (b) if such event of default results from the acceleration of the Senior Subordinated Notes, on the date of such acceleration, no such payment may be made by the Company upon or in respect of the Senior Subordinated Notes for a period ("Payment Blockage Period") commencing on the earlier of the date of receipt of such notice or the date of such acceleration and ending 119 days thereafter (unless such Payment Blockage Period shall be terminated by written notice to the Trustee from the Agent Bank or any Representative of any Senior Indebtedness under any agreement which refinances or refunds the Credit Agreement so long as amounts outstanding under such agreement are in excess of $50,000,000) or (ii) any other Specified Senior Indebtedness, upon receipt by the Company of written notice from the Representative for the holders of such Specified Senior Indebtedness, no such payment may be made by the Company upon or with respect to the Senior Subordinated Notes for a Payment Blockage Period commencing on the date of the receipt of such notice and ending 119 days thereafter (unless such Payment Blockage Period shall be terminated by written notice to the Company from such Representative commencing such Payment Blockage Period). In no event will any one Payment Blockage Period extend beyond 179 days from the date the payment on the Senior Subordinated Notes was due. Not more than one Payment Blockage Period may be commenced with respect to the Senior Subordinated Notes during any period of 360 consecutive days; provided that as long as amounts outstanding under the Credit Agreement or any agreement which refinances or refunds the Credit Agreement are in excess of $50,000,000, the commencement of a Payment Blockage Period by the holders of the Specified Senior Indebtedness other than the Credit Agreement shall not bar the commencement of a Payment Blockage Period by the Agent Bank within such period of 360 days. No event of default which existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Specified Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis for the commencement of a second Payment Blockage Period by the Representative of such Specified 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 90 consecutive days. If payments with respect to both the Senior Subordinated Notes and Senior Indebtedness become due on the same day, then all obligations with respect to such Senior Indebtedness due on that date shall first be paid in full before any payment is made with respect to the Senior Subordinated Notes. 8 13 "Senior Indebtedness" is defined, for the purpose of the 11 1/4% Indenture, as the Obligations of the Company with respect to (i) all Obligations (including reimbursement obligations in respect of letters of credit) incurred and outstanding from time to time under the Credit Agreement or any refinancing or refunding thereof (including interest accruing on or after filing of any petition in bankruptcy or reorganization relating to the Company, at the rate specified in such Senior Indebtedness whether or not a claim for post-filing interest is allowed in such proceeding), (ii) Interest Swap Obligations related to its payment Obligations on Indebtedness under the Credit Agreement and (iii) any other Indebtedness of the Company, whether outstanding on the date of the 11 1/4% Indenture or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness is not senior in right of payment to the Senior Subordinated Notes; provided, that, notwithstanding the foregoing, Senior Indebtedness shall not include (A) Indebtedness evidenced by the Senior Subordinated Notes, (B) Indebtedness represented by the Notes, (C) Indebtedness incurred in violation of the 11 1/4% Indenture, (D) Indebtedness which is represented by Disqualified Stock, (E) amounts payable or any other Indebtedness to trade creditors created, incurred, assumed or guaranteed by the Company or any subsidiary of the Company in the ordinary course of business in connection with obtaining goods or services, (F) amounts payable or any other Indebtedness to employees of the Company or any subsidiary of the Company as compensation for services, (G) Indebtedness of the Company to an Affiliate of the Company or a subsidiary of the Company and (H) any liability for Federal, state, local or other taxes owed or owing by the Company. By reason of the subordination provisions described above, in the event of the Company's insolvency, liquidation, reorganization, dissolution or other winding-up, funds which would otherwise be payable to holders of the Senior Subordinated Notes will be paid to the holders of Senior Indebtedness to the extent necessary to pay the Senior Indebtedness in full. The 11 1/4% Indenture limits the amount of additional Senior Indebtedness which the Company can create, incur, assume or guarantee. See "Certain Covenants -- Limitation on Indebtedness." CERTAIN DEFINITIONS "Acquired Indebtedness" means, with respect to the Company, Indebtedness of a person existing at the time such person becomes a subsidiary of the Company or assumed in connection with the acquisition by the Company or a subsidiary of the Company of assets from such person, which assets constitute all of an operating unit of such person, and not incurred in connection with, or in contemplation of, such person becoming a subsidiary of the Company or such acquisition. "Affiliate" means, when used with reference to the Company or another person, any person directly or indirectly controlling, controlled by, or under direct or indirect common control with, the Company or such other person, as the case may be. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of management or policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. Notwithstanding the foregoing, the term "Affiliate" shall not include any wholly owned subsidiary of the Company. "Agent Bank" means Manufacturers Hanover Trust Company ("MHT") and/or its Affiliates together with any bank which is or becomes a party to the Credit Agreement or any successor to MHT and/or its Affiliates, and any other Agent Bank under the Credit Agreement. "Asset Sale" means any sale exceeding $1,000,000, or any series of sales in related transactions exceeding $1,000,000 in the aggregate, by the Company or any subsidiary of the Company, directly or indirectly, of properties or assets other than in the ordinary course of business, including capital stock of a subsidiary of the Company, except for (i) the sale of receivables by the Company or any subsidiary of the Company in the ordinary course of business consistent with past practice of the Company or any of its subsidiaries and (ii) any sale-and-lease-back transaction involving a Capitalized Lease Obligation permitted under the provisions described under "Certain Covenants -- Limitation on Indebtedness." 9 14 "Automotive Seating Business" means the production, design, development, manufacture, marketing or sale of automotive seat frames, seat components, seat systems or automotive interiors or any related businesses. "average weighted life" means, as of the date of determination, with reference to any debt security, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal payment of such debt security multiplied by the amount of such principal payment by (ii) the sum of all such principal payments. "Cash Proceeds" means, with respect to any Asset Sale, cash payments (including any cash received by way of deferred payment pursuant to a note receivable or otherwise, but only as and when so received) received from such Asset Sale. "Change of Control" means an event or series of events by which (i) (a) prior to an Initial Public Offering a party other than a Permitted Investor or any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) directly or indirectly controlling, controlled by, or under common control with the Permitted Investors (1) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire without condition, other than the passage of time, whether such right is exercisable immediately or only after the passage of time) of 50% or more of the Voting Stock of the Company, (2) is or becomes a shareholder of the Company with the right to appoint or remove directors of the Company holding 50% or more of the voting rights at meetings of the Board of Directors on all, or substantially all, matters or (3) is or becomes able to exercise the right to give directions with respect to the operating and financial policies of the Company with which the relevant directors are obliged to comply by reason of: (A) provisions contained in the organizational documents of the Company or (B) the existence of any contract permitting such person to exercise control over the Company, or (b) after an Initial Public Offering, any "person" is or becomes the "beneficial owner", directly or indirectly, of more than 30% of the total Voting Stock of the Company; provided, that the Permitted Investors, and any person directly or indirectly controlling, controlled by, or under common control with the Permitted Investors, together, are the "beneficial owners" of a lesser percentage of the Voting Stock of the Company than such other person and do not have the right or ability by voting power, contract or otherwise to elect or designate for election a majority of the Board of Directors of the Company; (ii) the Company consolidates with, or merges or amalgamates with or into another person or conveys, transfers, or leases all or substantially all of its assets to any person, or any person consolidates with, or merges or amalgamates with or into the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for cash, securities or other property, other than any such transaction where (A) the outstanding Voting Stock of the Company is changed into or exchanged for (x) voting stock of the surviving corporation which is not redeemable capital stock or (y) cash, securities and other property in an amount which could be paid by the Company as a Restricted Payment pursuant to the provisions described under "Limitation on Restricted Payments" (and such amount shall be treated as a Restricted Payment subject to the provisions described under "Limitation on Restricted Payments") and (B) the holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation immediately after such transaction; or (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office. "Change of Control Triggering Event" means the occurrence of both a Change of Control and a Rating Decline. "Consolidated Adjusted Net Income (Loss)" means, when used with reference to any person for any period, the Consolidated Net Income (Loss) of such person for such period, adjusted by excluding therefrom 10 15 (to the extent otherwise included therein) all gains, to the extent they exceed all losses, realized upon the sale or other disposition (including, without limitation, pursuant to sale-and-lease-back transactions) of property or assets which are not sold or otherwise disposed of in the ordinary course of business or upon the sale or other disposition of any capital stock of such person or any of its subsidiaries. "Consolidated Adjusted Net Worth" means, with respect to any person, as of any date of determination, the total amount of stockholders' equity of such person and its subsidiaries which would appear on the consolidated balance sheet of such person as of the date of determination, less (to the extent otherwise included therein) the following (the amount of such stockholders' equity and deductions therefrom to be computed, except as noted below, in accordance with GAAP): (i) an amount attributable to interests in subsidiaries of such person held by persons other than such person or its subsidiaries, (ii) any reevaluation or other write-up in book value of assets subsequent to March 28, 1992, other than upon the acquisition of assets acquired in a transaction to be accounted for by purchase accounting under GAAP made within twelve months after the acquisition of such assets; (iii) treasury stock; (iv) an amount equal to the excess, if any, of the amount reflected for the securities of any person which is not a subsidiary over the lesser of cost or market value (as determined in good faith by the Board of Directors) of such securities; and (v) Disqualified Stock of the Company or any subsidiary of the Company. "Consolidated Amortization Expense" means for any person, for any period, the amortization of goodwill and other intangible items of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Consolidated Cash Flow Available for Interest Expense" means, for any person and the Company, the sum of the aggregate amount, for the four fiscal quarters for which financial information in respect thereof is available immediately prior to the date of the transaction giving rise to the need to calculate the Consolidated Cash Flow Available for Interest Expense (the "Transaction Date"), of (i) Consolidated Adjusted Net Income of such person, (ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense, (iv) Consolidated Amortization Expense, (v) Consolidated Interest Expense and (vi) other noncash items reducing Consolidated Net Income, minus non-cash items increasing Consolidated Net Income. Consolidated Cash Flow Available for Interest Expense for any period shall be adjusted to give pro forma effect (to the extent applicable) to (i) the Investment by the Company or a subsidiary of the Company during such period up to and including the Transaction Date (the "Reference Period") in any person which, as a result of such Investment, becomes a subsidiary of the Company, or in the acquisition of assets from any person which constitutes substantially all of an operating unit or business of such person and (ii) the sale or other disposition of any assets (including capital stock) of the Company or a subsidiary of the Company, other than in the ordinary course of business, during the Reference Period, as if such Investment or sale or disposition of assets by the Company or a subsidiary of the Company occurred on the first day of the Reference Period. "Consolidated Depreciation Expense" means for any person, for any period, the depreciation expense of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Consolidated Income Tax Expense" means, for any person, for any period, the aggregate of the income tax expense of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, for any person, for any period, the sum of (a) the Interest Expense of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP and (b) dividends in respect of preferred or preference stock of a subsidiary of the Company held by persons other than the Company or a wholly owned subsidiary of the Company. For purposes of clause (b) of the preceding sentence, dividends shall be deemed to be an amount equal to the actual dividends paid divided by one minus the applicable actual combined Federal, state, local and foreign income tax rate of the Company (expressed as a decimal), on a consolidated basis, for the fiscal year immediately preceding the date of the transaction giving rise to the need to calculate Consolidated Interest Expense. 11 16 "Consolidated Interest Expense Coverage Ratio" means, with respect to any person, the ratio of (i) the aggregate amount of the applicable Consolidated Cash Flow Available for Interest Expense of such person to (ii) the aggregate Consolidated Interest Expense which such person shall accrue during the first full fiscal quarter following the Transaction Date and the three fiscal quarters immediately subsequent to such fiscal quarter, such Consolidated Interest Expense to be calculated on the basis of the amount of such person's Indebtedness (on a consolidated basis) outstanding on the Transaction Date and reasonably anticipated by such person in good faith to be outstanding from time to time during such period. "Consolidated Net Income (Loss)" means, with respect to any person, for any period, the aggregate of the net income (loss) of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein) (i) the net income (loss) of any person which is not a subsidiary of such person and which is accounted for by the equity method of accounting, except to the extent of the amount of cash dividends or distributions paid by such other person to such person or to a subsidiary of such person, (ii) the net income (loss) of any person accrued prior to the date on which it is acquired by such person or a subsidiary of such person in a pooling of interests transaction, (iii) the net income (loss) of any subsidiary of such person to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such subsidiary, in each case determined in accordance with GAAP and (iv) any gain (but not loss), together with any related provision for taxes on such gain, realized upon the sale or other disposition (including, without limitation, dispositions pursuant to sale-and-lease-back transactions) of any asset or property outside of the ordinary course of business and any gain (but not loss) realized upon the sale or other disposition by such person of any capital stock or marketable securities. "Disinterested Director" means, with respect to an Affiliate Transaction or series of related Affiliate Transactions, a member of a Board of Directors who has no financial interest, and whose employer has no financial interest, in such Affiliate Transaction or series of related Affiliate Transactions. "Disqualified Stock" means any capital stock of the Company or any subsidiary of the Company which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the maturity date of the Senior Subordinated Notes or which is exchangeable or convertible into debt securities of the Company or any subsidiary of the Company, except to the extent that such exchange or conversion rights cannot be exercised prior to the maturity of the Senior Subordinated Notes. "GAAP" means generally accepted accounting principles on a basis consistently applied. "Indebtedness" means (without duplication), with respect to any person, any indebtedness, contingent or otherwise, in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments or representing the balance deferred and unpaid of the purchase price of any property (except any such balance that constitutes a trade payable in the ordinary course of business that is not overdue by more than 120 days or is being contested in good faith), if and to the extent any of the foregoing indebtedness would appear as a liability upon a balance sheet of such person prepared on a consolidated basis in accordance with GAAP, and shall also include letters of credit, Obligations with respect to Interest Swap Obligations, any Capitalized Lease Obligation, the maximum fixed repurchase price of any Disqualified Stock, Obligations secured by a Lien to which any property or asset, including leasehold interests under Capitalized Lease Obligations and any other tangible or intangible property rights, owned by such person is subject, whether or not the Obligations secured thereby shall have been assumed (provided that, if the Obligations have not been assumed, such Obligations shall be deemed to be in an amount not to exceed the fair market value of the property or properties to which the Lien relates, as determined in good faith by the Board of Directors of such person and as evidenced by a Board Resolution), and guarantees of items which would be included within this definition (regardless of whether such items would appear upon such balance sheet; provided that for the 12 17 purpose of computing the amount of Indebtedness outstanding at any time, such items shall be excluded to the extent that they would be eliminated as intercompany items in consolidation). For purposes of the preceding sentence, the maximum fixed repurchase price of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to the 11 1/4% Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock (or any equity security for which it may be exchanged or converted), such fair market value shall be determined in good faith by the Board of Directors of such person. "Independent Financial Advisor" means a reputable accounting, appraisal or investment banking firm that is, in the reasonable judgment of the Board of Directors of the Company or a subsidiary of the Company, qualified to perform the task for which such firm has been engaged hereunder and disinterested and independent with respect to the Company and its Affiliates. "Initial Public Offering" means the sale of capital stock of the Company pursuant to (a) a registration statement under the Securities Act that has been declared effective by the Commission or (b) a public offering outside the United States and which results, in either case, in an active trading market for such shares. An active trading market shall be deemed to exist if such shares are listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ National Market System or any major international trading market exchange. "Investment Grade" is defined as BBB-or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the event that the Company shall select any other rating agency, the equivalent of such ratings by such rating agency shall be used. "Moody's" means Moody's Investor Services, Inc. or if Moody's shall not then make a rating of the Senior Subordinated Notes publicly available, a nationally recognized securities rating agency selected by the Company. "Net Cash Proceeds" means, with respect to any Asset Sale, the Cash Proceeds of such Asset Sale net of fees, commissions, expenses and other costs of sale (including payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness which is either secured by a Lien on the stock or other assets sold or can be or is accelerated by such sale), taxes paid or payable as a result thereof, and any amount required to be paid to any person (other than the Company or any of its subsidiaries) owning a beneficial interest in the stock or other assets sold. "Obligation" means any principal, interest, premium, penalties, fees and any other liabilities payable under the documentation governing any Indebtedness. "Permitted Indebtedness" means: (i) Indebtedness of the Company pursuant to its guarantee of Obligations under, or Indebtedness of any subsidiary of the Company under, the Credit Agreement; provided that in no event shall the aggregate amount of Indebtedness permitted to be outstanding at any one time pursuant to this clause (i) exceed $221,300,000 (less any amounts permanently repaid thereunder but without deducting payments under the revolving credit facility and the swingline facility of the Credit Agreement unless the commitments thereunder have been permanently reduced); (ii) Indebtedness represented by guarantees of Indebtedness which is permitted by the provisions described under "Certain Covenants -- Limitation on Indebtedness"; (iii) Indebtedness evidenced by the Senior Subordinated Notes and the Guarantee; (iv) Indebtedness (A) incurred in connection with the purchase or improvement of property (real or personal) or equipment or other capital expenditures in the ordinary course of business or (B) secured by a mortgage or arising out of sale-and-lease-back transactions with respect to capital assets; provided that in no event shall the aggregate amount of Indebtedness permitted to be outstanding at any one time pursuant to this clause (iv) exceed $20,000,000; (v) Indebtedness up to $5,000,000 incurred in connection with or arising out of a sale-and-lease-back transaction with respect to the Company's recently constructed facility in Eisenach, Germany; (vi) Indebtedness of the Company to any subsidiary of the Company and Indebtedness of any subsidiary of the Company to the Company or another subsidiary of the Company; provided that the Company or such subsidiary shall not become liable to any person other than the Company or a subsidiary of the 13 18 Company with respect thereto; (vii) Indebtedness of the Company or any subsidiary of the Company represented by Interest Swap Obligations; provided that such Interest Swap Obligations are related to payment Obligations on Indebtedness otherwise permitted by the provisions described under "Certain Covenants -- Limitation on Indebtedness" and shall not result in an increase in the principal amount of any outstanding Indebtedness; (viii) Indebtedness of the Company and its subsidiaries, and any undrawn amounts under legally binding revolving credit facilities or other standby credit facilities, existing on the date of the 11 1/4% Indenture; (ix) Indebtedness of CISA in the amount outstanding on the date of the 11 1/4% Indenture; (x) Indebtedness of the Company or any of its subsidiaries in respect of guarantees of receivables originated by the Company or any of its subsidiaries and sold to other persons to the extent that (A) the sale of such receivables does not constitute an Asset Sale and (B) such guarantees are similar in nature to the guarantees currently provided by a foreign subsidiary of the Company under the Discretionary Draft Purchase Facility dated as of December 15, 1991, between a foreign subsidiary of the Company and The Bank of New York; (xi) other Indebtedness of the Company and of any subsidiary of the Company; provided that in no event shall the aggregate amount of Indebtedness of the Company and of subsidiaries of the Company permitted to be outstanding pursuant to this clause (xi) at any one time exceed $30,000,000; (xii) Indebtedness of the Company and its subsidiaries in respect of guarantees of the Indebtedness of less than majority owned persons; provided that in no event shall Indebtedness permitted pursuant to this clause (xii) exceed $5,000,000; (xiii) Indebtedness secured by Permitted Liens; (xiv) Indebtedness of the Company and its subsidiaries, all of the net proceeds of which (after customary fees, expenses and costs related to the incurrence of such Indebtedness) are applied to repay or to refund outstanding Indebtedness permitted under clauses (i) through (xiii) of this definition ("Refinancing Indebtedness"); provided that (A) the original issue amount of the Refinancing Indebtedness shall not exceed the maximum principal amount and accrued interest of the Indebtedness to be repaid or, if greater in the case of clause (i) of this definition, permitted to be outstanding under the agreements governing the Indebtedness being refinanced (or if such Indebtedness was issued at an original issue discount, the original issue price plus amortization of the original issue discount at the time of the incurrence of the Refinancing Indebtedness) plus the amount of customary fees, expenses and costs related to the incurrence of such Refinancing Indebtedness, (B) Refinancing Indebtedness incurred by any subsidiary shall not be used to repay or refund outstanding Indebtedness of the Company and (C) with respect to any Refinancing Indebtedness which refinances Indebtedness which ranks pari passu or junior in right of payment to the Senior Subordinated Notes or the Guarantee, (1) the Refinancing Indebtedness does not require any principal payments prior to the dates of principal payments under the Senior Subordinated Notes and has an average weighted life which is equal to or greater than the average weighted life of the Senior Subordinated Notes, (2) if such Indebtedness being refinanced is pari passu in right of payment to the Senior Subordinated Notes or to the Guarantee, as the case may be, such Refinancing Indebtedness does not rank senior in right of payment to the payment of principal of and interest on the Senior Subordinated Notes or to the Guarantee, as the case may be, and (3) if such Indebtedness being refinanced is subordinated to the Senior Subordinated Notes or the Guarantee, as the case may be, such Refinancing Indebtedness is subordinated to the Senior Subordinated Notes or the Guarantee, as the case may be, to the same extent and on substantially the same terms. "Permitted Investors" means the parties to the Stockholders Agreement (other than the Company) and their respective Affiliates. "Permitted Liens" means (i) Liens for taxes, assessments, governmental charges or claims which are being contested in good faith by appropriate proceedings, promptly instituted and diligently conducted and, if a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (ii) statutory Liens of landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's, or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate process of law, if a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor; (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance and return-of-money bonds and other Obligations of like nature incurred in the ordinary course of business 14 19 (exclusive of Obligations for the payment of borrowed money); (v) easements, rights-of-way, restrictions, zoning provisions and other governmental restrictions and other similar charges or encumbrances not interfering in any material respect with the business of the Company or any of its subsidiaries; (vi) Liens upon tangible personal property acquired after the date of original issuance of the Senior Subordinated Notes; provided that, (A) any such Lien is created solely for the purpose of securing Indebtedness representing or incurred to finance, refinance or refund the cost of the item of property subject thereto, (B) the principal amount of the Indebtedness secured by such Lien does not exceed 100% of such cost, (C) such Lien does not extend to or cover any property other than such item of property and additions, replacements and improvements thereon and (D) the incurrence of such Indebtedness is permitted by the provisions described below under "Certain Covenants -- Limitation on Indebtedness" (other than clause (xiii) of the definition of Permitted Indebtedness); (vii) judgment Liens not giving rise to a Default or Event of Default; (viii) leases or subleases granted to others not interfering in any material respect with the business of the Company or any of its subsidiaries; (ix) Liens encumbering customary initial deposits and margin deposits, and other Liens incurred in the ordinary course of business and which are within the general parameters customary in the industry, in each case securing Indebtedness under Interest Swap Obligations; (x) any interest or title of a lessor in the property subject to any Capitalized Lease Obligation or operating lease or any Lien granted by a lessor on such property which does not interfere in any material respect with the business of the Company and its subsidiaries; (xi) Liens arising from filing UCC financing statements regarding leases; (xii) Liens securing reimbursement Obligations with respect to Commercial Letters of Credit which encumber documents and other property relating to such Commercial Letters of Credit and the products and proceeds thereof; (xiii) other Liens existing on the date of the 11 1/4% Indenture; and (xiv) other Liens to secure Obligations not in excess of $1,000,000 in the aggregate at any time outstanding, except to secure Indebtedness. "Rating Decline" means the occurrence of the following on, or within 90 days after, the date of public notice of the occurrence of a Change of Control or of the intention of the Company to effect a Change of Control (which period shall be extended so long as the rating of the Senior Subordinated Notes is under publicly announced consideration for possible downgrading by either Moody's or S&P): (i) in the event that the Senior Subordinated Notes are rated by either Moody's or S&P prior to the date of such public notice as Investment Grade, the rating of the Senior Subordinated Notes by both such rating agencies shall be decreased to below Investment Grade or (ii) in the event the Senior Subordinated Notes are rated below Investment Grade by both such rating agencies prior to the date of such public notice, the rating of the Senior Subordinated Notes by either rating agency shall be decreased by one or more gradations (including gradations within rating categories as well as between rating categories). "Restricted Debt Prepayment" means any purchase, redemption, defeasance (including, but not limited to, in substance or legal defeasance) or other acquisition or retirement for value (collectively a "prepayment"), directly or indirectly, by the Company or a subsidiary of the Company (other than to the Company or a subsidiary of the Company), prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment in respect of Indebtedness of the Company or such subsidiary which would rank pari passu with the Senior Subordinated Notes (other than the Senior Subordinated Notes) or the Guarantee (other than the Guarantee) or would be subordinate in right of payment to the Senior Subordinated Notes or the Guarantee, as the case may be, ("Refinanced Debt"); provided, however, that (i) any such prepayment of any Refinanced Debt (including without limitation the 14% Subordinated Debentures) shall not be deemed to be a Restricted Debt Prepayment to the extent such prepayment is made (x) with the proceeds of the substantially concurrent sale (other than to a subsidiary of the Company) of shares of the capital stock (other than Disqualified Stock) of the Company or rights, warrants or options to purchase such capital stock of the Company or (y) in exchange for or with the proceeds from the substantially concurrent issuance of Indebtedness (A) in a principal amount (or, if such Indebtedness was issued at an original issue discount, the original issue price thereof plus amortization of the original issue discount at the time of the issuance) not to exceed the sum of (1) the principal amount of the Refinanced Debt and (2) the amount of customary fees, expenses and costs related to the incurrence of such Indebtedness, (B) that does not require any principal payments prior to the dates of principal payments under the Senior Subordinated Notes and has an average weighted life which is equal to or greater than the average weighted life of the Senior Subordinated Notes, (C) if such Refinanced Debt is pari passu in right of payment to the Senior 15 20 Subordinated Notes or the Guarantee, as the case may be, such Indebtedness does not rank senior in right of payment to the payment of principal of and interest on the Senior Subordinated Notes or to the Guarantee, as the case may be, and (D) if such Refinanced Debt was subordinated to the Senior Subordinated Notes or the Guarantee, as the case may be, such Indebtedness is subordinated to the Senior Subordinated Notes or the Guarantee, as the case may be, to the same extent and on substantially the same terms and (ii) no Default or Event of Default shall have occurred and be continuing at the time or shall occur as a result of such sale of capital stock or issuance of such Indebtedness. "Restricted Payment" means (i) any Restricted Stock Payment or (ii) any Restricted Debt Prepayment. "Restricted Stock Payment" means (i) with respect to the Company, any dividend, either in cash or in property (except dividends payable in Common Stock), on, or the making by the Company of any other distribution in respect of, its capital stock, now or hereafter outstanding, or the redemption, repurchase, retirement or other acquisition for value by the Company or any subsidiary of the Company, directly or indirectly, of capital stock of the Company or any warrants, rights (other than exchangeable or convertible Indebtedness of the Company) or options to purchase or acquire shares of any class of the Company's capital stock, now or hereafter outstanding, and (ii) with respect to any subsidiary of the Company, any redemption, repurchase, retirement or other acquisition for value by the Company or a subsidiary of the Company of capital stock of such subsidiary or any warrants, rights (other than exchangeable or convertible Indebtedness of any subsidiary of the Company), or options to purchase or acquire shares of any class of capital stock of such subsidiary, now or hereafter outstanding, except with respect to capital stock of such subsidiary or such warrants, rights or options owned by (x) the Company or a subsidiary of the Company or (y) any person which is not an Affiliate of the Company. "S&P" means Standard & Poor's Corporation, or if it shall not make a rating of the Senior Subordinated Notes publicly available, a nationally recognized securities rating agency selected by the Company. "Voting Stock" means all classes of capital stock then outstanding of a person normally entitled to vote in elections of directors. CERTAIN COVENANTS Repurchase of Notes Upon a Change of Control Triggering Event. If a "Change of Control Triggering Event" shall occur at any time, then each holder shall have the right to require that the Company repurchase such holder's Senior Subordinated Notes in whole or in part in integral multiples of $1,000, at a purchase price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, which date shall be no earlier than 30 days nor more than 60 days from the date the Company notifies the holders of the occurrence of a Change of Control Triggering Event. The source of funds for any such repurchase will be the Company's available cash or cash generated from operations or other sources, including borrowing, sales of assets or sales of equity. However, there can be no assurance that sufficient funds will be available at the time of any Change of Control Triggering Event to make any required repurchases. Under the 11 1/4% Indenture, the Company can only effect such repurchases either with the consent of the lenders under the Credit Agreement or by repaying amounts owed to such lenders under the Credit Agreement. The failure to satisfy either such condition would constitute a default under the 11 1/4% Indenture. The Credit Agreement also contains prohibitions of certain events that would constitute a Change of Control Triggering Event. In addition, the Company's ability to repurchase Senior Subordinated Notes following a Change of Control Triggering Event may be limited by the terms of its then-existing Senior Indebtedness, including, without limitation, the subordination provisions described above under "Subordination". Therefore, the exercise by the holders of their right to require the Company to repurchase the Senior Subordinated Notes could cause a default under the Senior Indebtedness even if the Change of Control Triggering Event itself does not, due to the financial effect of such repurchase on the Company. Failure of the Company to repurchase the Senior Subordinated Notes in the event of a Change of Control Triggering Event will create an Event of Default with respect to the Senior Subordinated Notes, whether or not such repurchase is permitted by the subordination provisions. the Company agrees that it will comply with all applicable tender 16 21 offer rules, including Rule 14e-1 under the Exchange Act, if the repurchase option is triggered upon a Change of Control Triggering Event. Under the 11 1/4% Indenture, the Company is obligated to give notice to holders of the Senior Subordinated Notes and the Trustee within 30 days following a Change of Control Triggering Event specifying, among other things, the purchase price, the purchase date, the place at which Senior Subordinated Notes shall be presented and surrendered for purchase, that interest accrued to the purchase date will be paid upon such presentation and surrender and that interest will cease to accrue on Senior Subordinated Notes surrendered for purchase as of such purchase date. In order for a holder of Senior Subordinated Notes properly to put its Senior Subordinated Notes to the Company for purchase, the holder must give notice and present and surrender its Senior Subordinated Notes to the Company at the place specified in the Company's aforementioned notice at least 15 days prior to the purchase date. Any such tender by a holder of Senior Subordinated Notes shall be irrevocable. The Company is not obligated to notify holders of or to purchase Senior Subordinated Notes with respect to more than one Change of Control Triggering Event. The Change of Control purchase feature of the Senior Subordinated Notes may in certain circumstances make more difficult or discourage a takeover of the Company, and, thus, the removal of incumbent management. The Change of Control purchase feature, however, is not the result of management's knowledge of any specific effort to accumulate the Company's stock or to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of antitakeover provisions. Instead, the Change of Control purchase feature is a result of negotiations between the Company and the underwriters for the original offering of the Senior Subordinated Notes. Management has no present intention to engage in a transaction involving a Change of Control Triggering Event, although it is possible that the Company would decide to do so in the future. Subject to the limitations discussed below, including the limitation on incurrence of additional indebtedness and the issuance of certain securities, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control Triggering Event under the 11 1/4% Indenture, but that could increase the amount of Company Senior Indebtedness (or any other indebtedness) outstanding at such time or otherwise affect the Company's capital structure or credit ratings. Limitation on Restricted Payments. The 11 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, directly or indirectly, make any Restricted Payment unless (a) no Default or Event of Default has occurred and is continuing at the time or will occur as a consequence of such Restricted Payment and (b) after giving effect to such Restricted Payment, the aggregate amount expended for all Restricted Payments since March 28, 1992 (the amount so expended, if other than in cash, to be determined by the Board of Directors, whose reasonable determination shall be conclusive and evidenced by a Board Resolution), does not exceed the sum of (x) 25% of Consolidated Net Income of the Company (or in the case such Consolidated Net Income shall be a deficit, minus 100% of such deficit) during the period (treated as one accounting period) subsequent to March 28, 1992 and ending on the last day of the fiscal quarter immediately preceding such Restricted Payment and (y) the aggregate net proceeds, including cash and the fair market value of property other than cash (as determined in good faith by the Board of Directors of the Company and evidenced by a Board Resolution), received by the Company during such period from any person other than a subsidiary of the Company, as a result of the issuance of capital stock of the Company (other than any Disqualified Stock) or warrants, rights or options to purchase or acquire such capital stock including such capital stock issued upon conversion or exchange of Indebtedness or upon exercise of warrants or options and any contributions to the capital of the Company received by the Company from any such person less the amount of such net proceeds actually applied as permitted by clause (ii) of the next paragraph or by the proviso to the definition of Restricted Debt Prepayment; provided that, at the time of such Restricted Payment and after giving effect thereto, the Company or any subsidiary of the Company shall be able to incur an additional $1.00 of Indebtedness pursuant to the provisions described under "Limitation on Indebtedness" (as if such additional $1.00 of Indebtedness were not deemed to be Permitted Indebtedness). For purposes of any calculation pursuant to the preceding sentence which is required to be made within 60 days after the declaration of a dividend by the Company, such dividend shall be deemed to be paid at the date of declaration. 17 22 This provision is not violated by reason of (i) the payment of any dividend within 60 days after the date of declaration thereof if, at such date of declaration such payment complied with the provisions hereof; provided that no Default or Event of Default has occurred and is continuing at the time, or will occur as a result, of such Restricted Payment; (ii) the purchase, redemption, acquisition or retirement of any shares of the Company's capital stock in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a subsidiary of the Company) of, other shares of capital stock (other than Disqualified Stock) of the Company or rights, warrants or options to purchase or acquire such capital stock of the Company; provided that no Default or Event of Default has occurred and is continuing at the time, or shall occur as a result, of such Restricted Payment. For purposes of determining the aggregate amount of Restricted Payments in accordance with clause (b) of the preceding paragraph, all amounts expended pursuant to clause (i) (except to the extent deemed to have been paid pursuant to the last sentence of the immediately preceding paragraph) of this paragraph shall be included; or (iii) payments by the Company (A) for the mandatory repurchase of shares of Common Stock of the Company (or scheduled payments of principal of or interest on notes issued to finance the repurchase of such shares) from Management Investors under the Stockholders Agreement or (B) to satisfy any other Obligations under the terms of the Stockholders Agreement. Limitation on Indebtedness. The 11 1/4% Indenture provides that except for Permitted Indebtedness, the Company will not, and will not permit any subsidiary of the Company to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become liable for, contingently or otherwise, extend the maturity of or become responsible for the payment of (collectively, an "incurrence"), any Obligations in respect of any Indebtedness including Acquired Indebtedness unless (a) no Default or Event of Default shall have occurred and be continuing at the time or as a consequence of the incurrence of such Indebtedness and (b) after giving effect to the incurrence of such Indebtedness and the receipt and application of the proceeds thereof, the Consolidated Interest Expense Coverage Ratio of the Company is greater than 1.75 to 1 through the period ending June 30, 1993, and 2.00 to 1 thereafter. Limitation on Payment Restrictions Affecting Subsidiaries. The 11 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, create or otherwise cause or suffer to exist or become effective any consensual restriction which by its terms expressly restricts any such subsidiary from (i) paying dividends or making any other distributions on such subsidiary's capital stock or paying any Indebtedness owed to the Company or any subsidiary of the Company, (ii) making any loans or advances to the Company or any subsidiary of the Company or (iii) transferring any of its property or assets to the Company or any subsidiary of the Company, except (a) any restrictions existing under agreements in effect at the issuance of the Senior Subordinated Notes, (b) any restrictions under any agreement evidencing any Acquired Indebtedness of a subsidiary of the Company incurred pursuant to the provisions described under "Limitation on Indebtedness"; provided that such restrictions shall not restrict or encumber any assets of the Company or its subsidiaries other than such subsidiary or (c) any restrictions existing under any agreement which refinances any Indebtedness in accordance with paragraph (xiv) of the definition of Permitted Indebtedness; provided that the terms and conditions of any such agreement are not materially less favorable to such subsidiary than those under the agreement creating or evidencing the Indebtedness being refinanced. Limitation on Creation of Liens. The 11 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, create, incur, assume or suffer to exist any Liens upon any of their respective assets unless the Guarantee and the Senior Subordinated Notes are equally and ratably secured by such assets except for (i) Liens securing Senior Indebtedness permitted to be incurred under the provisions described under "Limitation on Indebtedness"; (ii) Liens with respect to Acquired Indebtedness; provided that such Liens do not extend to or cover any property or assets of the Company or any subsidiary of the Company other than the property or assets acquired; (iii) Liens securing Indebtedness which is incurred to refinance secured Indebtedness and which is permitted to be incurred under the provisions described under "Limitation on Indebtedness"; provided that such Liens do not extend to or cover any property or assets of the Company or any subsidiary of the Company other than the property or assets securing the Indebtedness being refinanced; and (iv) Permitted Liens. No Senior Subordinated Indebtedness. The 11 1/4% Indenture provides that the Company will not issue, incur, create, assume, guarantee or otherwise become liable for any Indebtedness which is subordinate or 18 23 junior in right of payment to any Indebtedness of the Company unless such Indebtedness is pari passu with or subordinate in right of payment to the Senior Subordinated Notes. Transactions with Shareholders and Affiliates. The 11 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, directly or indirectly, enter into or suffer to exist any transaction (an "Affiliate Transaction") (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder of more than 10% of any class of equity securities of the Company or with any Affiliate of the Company or of any such holder (other than a wholly owned subsidiary of the Company), on terms that are less favorable to the Company or such subsidiary, as the case may be, than would be available in a comparable transaction with an unrelated person. In addition, neither the Company nor any subsidiary of the Company shall enter into any Affiliate Transaction or series of related Affiliate Transactions involving or having a value of (a) more than $2,500,000, unless a majority of Disinterested Directors (or, if there are no Disinterested Directors, a majority of the Board of Directors) of the Company or such subsidiary, as the case may be, determines in good faith pursuant to a Board Resolution that such Affiliate Transaction or series of related Affiliate Transactions is fair to the Company or such subsidiary, as the case may be, or (b) more than $10,000,000, unless (i) a majority of Disinterested Directors (or, if there are no Disinterested Directors, a majority of the Board of Directors) of the Company or such subsidiary, as the case may be, make the determination referred to in clause (a) above and (ii) the Company or such subsidiary, as the case may be, has received an opinion from an Independent Financial Advisor to the effect that such Affiliate Transaction or series of related Affiliate Transactions are fair to the Company or such subsidiary, as the case may be, from a financial point of view. The foregoing provisions shall not apply to payments of investment banking and financial advisory or consulting fees and other fees to Shearson Lehman Brothers Inc. or any of its subsidiaries or Affiliates in connection with the sale of the Senior Subordinated Notes (or any refunding, refinancing or conversion thereof) and other customary investment banking and financial advisory or consulting fees, including fees relating to the Equity Investment. Sales of Assets. The 11 1/4% Indenture provides that subject to the provisions described under "Mergers or Consolidations", the Company will not, and will not permit any subsidiary to, make any Asset Sale unless (i) the Company (or such subsidiary, as the case may be) receives consideration at the time of such sale at least equal to the fair market value of the shares or assets included in such Asset Sale (as determined in good faith by the Board of Directors, including valuation of all noncash consideration) and (ii)(x) either (A) the Net Cash Proceeds are reinvested within 12 months (or, pursuant to a determination of the Board of Directors, held pending reinvestment) in replacement assets or assets used in the Automotive Seating Business or used to purchase all of the issued and outstanding capital stock of a person engaged in such business or (B) if the Net Cash Proceeds are not applied or are not required to be applied as set forth in clause (ii)(x)(A) or if after applying such Net Cash Proceeds as set forth in clause (ii)(x)(A) there remain Net Cash Proceeds, such Net Cash Proceeds are applied within 12 months of the original receipt thereof to the prepayment, repayment or purchase of Senior Indebtedness or Indebtedness of a subsidiary, (y) if and to the extent that the gross proceeds from such Asset Sale (after giving effect to the application of clause (ii)(x)(A) and (B), when added to the gross proceeds from all prior Asset Sales (not applied as set forth in clause (ii)(x)(A) or (B)) exceeds $7,500,000, such proceeds are applied pursuant to a Repurchase Offer (as defined in the 11 1/4% Indenture) to repurchase the Senior Subordinated Notes (on a pro rata basis if the amount available for such purchase is less than the outstanding principal amount of the Senior Subordinated Notes) at a purchase price equal to 100% of the principal amount thereof plus accrued interest to the date of prepayment and (z) if the aggregate principal amount of all Senior Subordinated Notes tendered pursuant to a Repurchase Offer is less than the Repurchase Offer Amount (as defined in the 11 1/4% Indenture), such excess amount is applied for general corporate purposes. Limitation on Issuance of Preferred Stock. The 11 1/4% Indenture provides that the Company will not permit any of its subsidiaries to issue any preferred or preference stock (except to the Company or a wholly owned subsidiary of the Company) or permit any person (other than the Company or any wholly owned subsidiary of the Company) to hold any such preferred or preference stock unless the Company would be entitled to create, incur or assume Indebtedness pursuant to the provisions described under "Limitation on 19 24 Indebtedness" in the aggregate principal amount equal to the aggregate liquidation value of the preferred or preference stock to be issued. MERGERS OR CONSOLIDATIONS Under the 11 1/4% Indenture, the Company will not consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to any person unless: (i) the person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or disposition has been made, is a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia; (ii) the corporation formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or disposition has been made, assumes by supplemental indenture satisfactory in form to the Trustee all the obligations of the Company under the Guarantee and the 11 1/4% Indenture; (iii) immediately before and immediately after such transaction, and giving effect thereto, no Default or Event of Default has occurred and is continuing; (iv) the Company or any corporation formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or disposition has been made, has Consolidated Adjusted Net Worth (immediately after the transaction and giving effect thereto, excluding any write-ups of assets resulting from such consolidation or merger) at least equal to the Consolidated Adjusted Net Worth of the Company immediately preceding the transaction; (v) immediately after such transaction and giving effect thereto, the Company or any corporation formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or disposition shall have been made, shall be able to incur an additional $1.00 of Indebtedness pursuant to the provisions described under "Limitation on Indebtedness" (as if such additional $1.00 of Indebtedness were not deemed to be Permitted Indebtedness); and (vi) the Company has delivered to the Trustee (A) an Officers' Certificate (attaching the calculation to demonstrate compliance with clause (iv) and (v) above) and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture comply with the above provisions and that all conditions precedent relating to such transaction have been complied with, and (B) a certificate from the Company's independent certified public accountants, stating that the Company has made the calculations required by clauses (iv) and (v) above. EVENTS OF DEFAULT The 11 1/4% Indenture defines an Event of Default as: (i) default by the Company for 30 days in the payment of interest on the Senior Subordinated Notes; (ii) default by the Company in the payment when due of principal of the Senior Subordinated Notes; (iii) failure by the Company for 30 days after notice to comply with any of its other agreements in the 11 1/4% Indenture or the Senior Subordinated Notes; (iv) any Indebtedness of the Company or a Significant Subsidiary of the Company for borrowed money (or the payment of which is guaranteed by the Company or one of its subsidiaries) having an outstanding principal amount of $3,000,000 or more under a single payment agreement or $5,000,000 or more in the aggregate, is declared to be due and payable prior to its stated maturity or failure by the Company or any Significant Subsidiary to pay the final scheduled principal installment in an amount of at least $3,000,000 in respect of any such Indebtedness on its stated maturity date unless such Indebtedness which has been declared due and payable prior to its stated maturity is Indebtedness of a Foreign Subsidiary the payment of which is guaranteed by the Syndicated Letters of Credit; (v) failure by the Company, or any subsidiary of the Company to pay certain final judgments aggregating in excess of $3,000,000; and (vi) certain events of bankruptcy or insolvency. Subject to the provisions under "Subordination", if an Event of Default occurs and is continuing, the Trustee or the holders of at least 25% of the principal amount of the Senior Subordinated Notes then outstanding, by written notice to the Company (and the Agent Bank, so long as the Indebtedness under the Credit Agreement is outstanding), may declare to be due and payable all unpaid principal of and accrued interest on the Senior Subordinated Notes. Upon a declaration of acceleration, such principal and accrued interest to the date of such acceleration shall be due and payable upon the first to occur of (i) an acceleration under the Credit Agreement (or any refunding or refinancing thereof), or (ii) five Business Days after notice of such declaration is given to the Company (and the Agent Bank, so long as the Indebtedness under the Credit Agreement is outstanding); 20 25 provided, however, that, if the Event of Default giving rise to such acceleration is cured before the earlier to occur of (i) or (ii), such notice of acceleration and its consequences shall be deemed rescinded and annulled. In the event of a declaration of acceleration under the 11 1/4% Indenture because an Event of Default described in clause (iv) of the second preceding paragraph has occurred and is continuing, such declaration of acceleration shall be automatically annulled if the holders of the Indebtedness which is the subject of such Event of Default have rescinded their declaration of acceleration in respect of such Indebtedness within 90 days thereof or all amounts payable in respect of such Indebtedness have been paid and such Indebtedness has been discharged during such 90-day period and if (i) the annulment of such acceleration would not conflict with any judgment or decree of a court of competent jurisdiction, (ii) all existing Events of Default, except nonpayment of principal or interest that has been due solely because of the acceleration, have been cured or waived, and (iii) the Company has delivered an Officers' Certificate to the Trustee to the effect of clauses (i) and (ii) of this sentence. If an Event of Default described in clause (vi) of the second preceding paragraph with respect to the Company occurs, all unpaid principal and accrued interest on the Senior Subordinated Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority of the outstanding principal amount of the Senior Subordinated Notes by written notice to the Trustee may rescind an acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of principal of or interest on the Senior Subordinated Notes which have become due solely because of the acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. Holders of the Senior Subordinated Notes may not enforce the 11 1/4% Indenture or the Senior Subordinated Notes except as provided in the 11 1/4% Indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding Senior Subordinated Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of the Senior Subordinated Notes notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest. The Company is required to deliver to the Trustee annually a statement regarding compliance with the 11 1/4% Indenture, and upon becoming aware of any Default or Event of Default, a statement specifying such Default or Event of Default. DISCHARGE OF INDENTURE AND DEFEASANCE Except as otherwise limited by the provisions of the Credit Agreement, the Company may terminate its obligations under the Senior Subordinated Notes and the 11 1/4% Indenture when (i) all outstanding Senior Subordinated Notes have been delivered (other than destroyed, lost or stolen Senior Subordinated Notes which have not been replaced or paid) to the Trustee for cancellation or (ii) all outstanding Senior Subordinated Notes have become due and payable, and the Company irrevocably deposits with the Trustee funds or U.S. Government Obligations sufficient (without reinvestment thereof) to pay at maturity all outstanding Senior Subordinated Notes, including all interest thereon (other than destroyed, lost or stolen Senior Subordinated Notes which have not been replaced or paid), and in either case the Company has paid all other sums payable under the 11 1/4% Indenture. In addition, the Company may terminate substantially all its obligations under the Senior Subordinated Notes and the 11 1/4% Indenture if the Company (a) irrevocably deposits in trust for the benefit of the holders money or U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as are sufficient to pay principal of and interest on the then outstanding Senior Subordinated Notes to maturity or redemption, as the case may be, (b) delivers to the Trustee an Opinion of Counsel to the effect that, based on Federal income tax laws then in effect, the holders of the Senior Subordinated Notes will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of such option and shall be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such option had not been exercised or a ruling to that effect has been received from or published by the Internal Revenue Service and (c) certain other conditions are met. The Company shall be released from its obligations with respect to the covenants described under "Certain Covenants" and any Event of Default occurring because of a default with respect to such covenants if (a) the Company deposits or causes to be deposited with the Trustee in trust an amount of cash or U.S. 21 26 Government Obligations sufficient to pay and discharge when due the entire unpaid principal of and interest on all outstanding Senior Subordinated Notes and (b) certain other conditions are met. The obligations of the Company under the 11 1/4% Indenture with respect to the Senior Subordinated Notes, other than with respect to the covenants and Events of Default referred to above, shall remain in full force and effect. TRANSFER AND EXCHANGE A holder may transfer or exchange Senior Subordinated Notes in accordance with the 11 1/4% 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 11 1/4% Indenture. The Registrar is not required to transfer or exchange any Senior Subordinated Note selected for redemption or any Senior Subordinated Note for a period of 15 days before a selection of Senior Subordinated Notes to be redeemed. The registered holder of a Senior Subordinated Note may be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the 11 1/4% Indenture or the Notes may be amended or supplemented by the Company, and the Trustee with the consent of the holders of at least a majority in principal amount of such then outstanding Senior Subordinated Notes and any existing default may be waived with the consent of the holders of at least a majority in principal amount of the then outstanding Senior Subordinated Notes. Without the consent of any holder of the Senior Subordinated Notes, the Company and the Trustee may amend the 11 1/4% Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for the assumption of the Company's obligations to holders of the Senior Subordinated Notes by a successor corporation, to provide for uncertificated Senior Subordinated Notes in addition to certificated Senior Subordinated Notes or to make any change that does not adversely affect the rights of any holder of the Senior Subordinated Notes. Without the consent of each holder of Senior Subordinated Notes affected, the Company may not reduce the principal amount of Senior Subordinated Notes the holders of which must consent to an amendment of the 11 1/4% Indenture; reduce the rate or change the interest payment time of any Senior Subordinated Note; reduce the principal of or change the fixed maturity of any Senior Subordinated Notes or alter the redemption provisions with respect thereto; make any Senior Subordinated Note payable in money other than that stated in the Senior Subordinated Note; make any change in the provisions concerning waiver of Defaults or Events of Default by holders of the Senior Subordinated Notes or rights of holders to receive payment of principal or interest, make any change in the subordination provisions in the 11 1/4% Indenture that affects the right of any holder or release the Company from any of its obligations under the 11 1/4% Indenture. THE TRUSTEE The Bank of New York is the Trustee under the 11 1/4% Indenture. The Bank of New York is a lender under the Credit Agreement. DESCRIPTION OF THE NOTES The Notes have been issued under an Indenture dated as of February 1, 1994 (the "8 1/4% Indenture"), among the Company, as issuer, and The First National Bank of Boston, as trustee (the "Trustee"). The terms of the Notes include those stated in the 8 1/4% Indenture and those made part of the 8 1/4% Indenture by reference to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in effect on the date of the 8 1/4% Indenture. The Notes are subject to all such terms, and holders of the Notes are referred to the 8 1/4% Indenture and the Trust Indenture Act for a statement thereof. The following summary of certain provisions of the 8 1/4% Indenture does not purport to be complete and is qualified in its entirety by reference to the 8 1/4% Indenture, including the definitions therein of certain terms used below. A copy of the 8 1/4% Indenture and a specimen of the Note have been filed as exhibits to the Registration Statement of which this Prospectus is a part. Capitalized terms used herein and not otherwise defined below, have the meaning assigned in the 8 1/4% Indenture. 22 27 GENERAL The Notes are direct obligations of the Company, and are issued in denominations of $1,000 and integral multiples thereof. The 8 1/4% Indenture authorizes the issuance of $145,000,000 aggregate principal amount of Notes. As described below under "Subordination", the Notes are subordinated in right of payment to Senior Indebtedness of the Company. As of April 2, 1994, the aggregate amount of Senior Indebtedness of the Company (including its obligations under the Senior Subordinated Notes and amounts outstanding under the Credit Agreement) was approximately $396.7 million. In addition, certain of the Company's subsidiaries have outstanding and may incur Indebtedness in the future. Holders of such indebtedness will have a claim against the assets of such subsidiaries that will rank prior to the claims of the holders of the Notes. As of April 2, 1994, the aggregate indebtedness of such subsidiaries for money borrowed was approximately $32.0 million. The Notes bear interest at the rate per annum shown on the cover page of this Prospectus, payable semiannually on February 1 and August 1 in each year to holders of record of the Notes at the close of business on January 15 and July 15, respectively, of such year. The first interest payment date is August 1, 1994. Interest is computed on the basis of a 360-day year of twelve 30-day months. The Notes mature on February 1, 2002. Principal and interest on the Notes are payable, and the Notes are transferable, initially at the offices of the Trustee in New York, New York. Holders must surrender the Notes to the Paying Agent in order to collect principal payments. Interest on the Notes may be paid by check mailed to the registered holders of the Notes. The Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection with certain transfers or exchanges. Initially, the Trustee will act as Paying Agent and Registrar under the 8 1/4% Indenture. The Company or any of its Affiliates may act as Paying Agent and Registrar, and the Company may change the Paying Agent or Registrar without prior notice to holders. OPTIONAL REDEMPTION The Notes may not be redeemed prior to February 1, 1998. On or after such date, the Company may, at its option, redeem the Notes in whole or in part, from time to time, at the following redemption prices (expressed in percentages of the principal amount thereof), in each case together with accrued interest, if any, to the date of redemption. If redeemed during the 12-month period commencing February 1:
PERCENTAGE ---------- 1998................................................................ 101.65% 1999 and thereafter................................................. 100.00%
The Credit Agreement and the Senior Subordinated Notes contain provisions that limit the Company's ability to optionally redeem the Notes. MANDATORY REDEMPTION The Notes are not subject to mandatory redemption prior to maturity. SUBORDINATION The Indebtedness evidenced by the Notes is subordinated to the prior payment, when due, of all Senior Indebtedness (including the Senior Subordinated Notes) of the Company but will rank senior to the Indebtedness of the Company expressly subordinated to the Notes. Upon any payment or distribution of assets or securities of the Company due to any dissolution, winding up, total or partial liquidation or reorganization of the Company or in bankruptcy, insolvency, receivership or other proceedings, the payment of the principal of and interest on the Notes will be subordinated in right of 23 28 payment, as set forth in the Indenture, to the prior payment in full of all Senior Indebtedness. Upon a default in the payment of any Obligations with respect to Senior Indebtedness or upon the acceleration of the maturity of Senior Indebtedness or while any judicial proceeding is pending with respect to a default on Senior Indebtedness (of which the Trustee has received written notice), no payment may be made upon or in respect of the Notes until such default shall have been cured or waived. In addition, during the continuance of any other event of default with respect to (i) the Credit Agreement pursuant to which the maturity thereof may be accelerated, upon (a) receipt by the Trustee of written notice from the Agent Bank (or any Representative of any Senior Indebtedness which refinances or refunds the Credit Agreement so long as amounts outstanding under such agreement are in excess of $50,000,000) or (b) if such event of default results from the acceleration of the Notes, on the date of such acceleration, no such payment may be made by the Company upon or in respect of the Notes for a period ("Payment Blockage Period") commencing on the earlier of the date of receipt of such notice or the date of such acceleration and ending 119 days thereafter (unless such Payment Blockage Period shall be terminated by written notice to the Trustee from the Agent Bank or any Representative of any Senior Indebtedness under any agreement which refinances or refunds the Credit Agreement so long as amounts outstanding under such agreement are in excess of $50,000,000) or (ii) any other Specified Senior Indebtedness, upon receipt by the Company of written notice from the Representative for the holders of such Specified Senior Indebtedness, no such payment may be made by the Company upon or with respect to the Notes for a Payment Blockage Period commencing on the date of the receipt of such notice and ending 119 days thereafter (unless such Payment Blockage Period shall be terminated by written notice to the Company from such Representative commencing such Payment Blockage Period). In no event will any one Payment Blockage Period extend beyond 179 days from the date the payment on the Notes was due. Not more than one Payment Blockage Period may be commenced with respect to the Notes during any period of 360 consecutive days; provided that as long as amounts outstanding under the Credit Agreement or any agreement which refinances or refunds the Credit Agreement are in excess of $50,000,000, the commencement of a Payment Blockage Period by the holders of the Specified Senior Indebtedness other than the Credit Agreement shall not bar the commencement of a Payment Blockage Period by the Agent Bank within such period of 360 days. No event of default which existed or was continuing on the date of the commencement of any Payment Blockage Period with respect to the Specified Senior Indebtedness initiating such Payment Blockage Period shall be, or be made, the basis for the commencement of a second Payment Blockage Period by the Representative of such Specified 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 90 consecutive days. If payments with respect to both the Notes and Senior Indebtedness become due on the same day, then all obligations with respect to such Senior Indebtedness due on that date shall first be paid in full before any payment is made with respect to the Notes. By reason of the subordination provisions described above, in the event of the Company's insolvency, liquidation, reorganization, dissolution or other winding-up, funds which would otherwise be payable to holders of Notes will be paid to the holders of Senior Indebtedness to the extent necessary to pay the Senior Indebtedness in full. The 8 1/4% Indenture limits the amount of additional Senior Indebtedness which the Company can create, incur, assume or guarantee. See "Certain Covenants -- Limitation on Indebtedness." CERTAIN DEFINITIONS "Acquired Indebtedness" means, with respect to the Company, Indebtedness of a person existing at the time such person becomes a subsidiary of the Company or assumed in connection with the acquisition by the Company or a subsidiary of the Company of assets from such person, which assets constitute all of an operating unit of such person, and not incurred in connection with, or in contemplation of, such person becoming a subsidiary of the Company or such acquisition. "Affiliate" means, when used with reference to the Company or another person, any person directly or indirectly controlling, controlled by, or under direct or indirect common control with, the Company or such other person, as the case may be. For the purposes of this definition, "control" when used with respect to any specified person means the power to direct or cause the direction of management or policies of such person, 24 29 directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative of the foregoing. Notwithstanding the foregoing, the term "Affiliate" shall not include any wholly owned subsidiary of the Company. "Agent Bank" means Chemical Bank and/or its Affiliates together with any bank which is or becomes a party to the Credit Agreement or any successor to Chemical Bank and/or its Affiliates, and any other Agent Bank under the Credit Agreement. "Asset Sale" means any sale exceeding $2,000,000, or any series of sales in related transactions exceeding $2,000,000 in the aggregate, by the Company or any subsidiary of the Company, directly or indirectly, of properties or assets other than in the ordinary course of business, including capital stock of a subsidiary of the Company, except for (i) the sale of receivables by the Company or any subsidiary of the Company in the ordinary course of business consistent with past practice of the Company or any of its subsidiaries, or the transfer of receivables to a special-purpose subsidiary of the Company and the issuance by such special-purpose subsidiary, on a basis which is non-recourse (except for representations as to the status or eligibility of such receivables or to the limited extent described in clause (vii)(B) of the definition of "Permitted Indebtedness") to the Company or any other subsidiary of the Company, of securities secured by such receivables, and (ii) any sale-and-lease-back transaction involving a Capitalized Lease Obligation permitted under the provisions described under "Limitation on Indebtedness." "average weighted life" means, as of the date of determination, with reference to any debt security, the quotient obtained by dividing (i) the sum of the products of the number of years from the date of determination to the dates of each successive scheduled principal payment of such debt security multiplied by the amount of such principal payment by (ii) the sum of all such principal payments. "Capitalized Lease Obligation" means any lease obligation of a person incurred with respect to any property (whether real, personal or mixed) acquired or leased by such person and used in its business that is accounted for as a capital lease on the balance sheet of such person in accordance with GAAP. "Cash Equivalents" means (A) any evidence of Indebtedness maturing, or otherwise payable without penalty, not more than 365 days after the date of acquisition issued by the United States of America or an instrumentality or agency thereof and guaranteed fully as to principal, premium, if any, and interest by the United States of America, (B) any certificate of deposit maturing, or otherwise payable without penalty, not more than 365 days after the date of acquisition issued by, or time deposit of, a commercial banking institution that has combined capital and surplus of not less than $300,000,000, whose debt is rated, at the time as of which any Investment therein is made, "A2" (or higher) according to Moody's or "A" (or higher) according to S & P, (C) commercial paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate or subsidiary of the Company) organized and existing under the laws of the United States of America or any jurisdiction thereof, 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 (D) any money market deposit accounts issued or offered by any domestic institution in the business of accepting money market accounts or any commercial bank having capital and surplus in excess of $300,000,000. "Cash Proceeds" means, with respect to any Asset Sale, cash payments (including any cash received by way of deferred payment pursuant to a note receivable or otherwise, but only as and when so received) received from such Asset Sale. "Change of Control" means an event or series of events by which (i) a party other than a Permitted Investor or any "person" (as such term is used in Sections 13 (d) and 14 (d) of the Exchange Act) directly or indirectly controlling, controlled by, or under common control with the Permitted Investors (1) is or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire without condition, other than the passage of time, whether such right is exercisable immediately or only after the passage of time) of 50% or more of the Voting Stock of the Company, (2) is or becomes a shareholder of the Company with the right to appoint or remove directors of the Company holding 50% or more of the voting rights at meetings of the Board of Directors on all, or substantially all, matters or (3) is or becomes able to 25 30 exercise the right to give directions with respect to the operating and financial policies of the Company with which the relevant directors are obliged to comply by reason of: (A) provisions contained in the organizational documents of the Company or (B) the existence of any contract permitting such person to exercise control over the Company; (ii) the Company consolidates with, or merges or amalgamates with or into another person or conveys, transfers, or leases all or substantially all of its assets to any person, or any person consolidates with, or merges or amalgamates with or into the Company, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for cash, securities or other property, other than any such transaction where (A) the outstanding Voting Stock of the Company is changed into or exchanged for Voting Stock of the surviving corporation which is not redeemable capital stock or (x) such Voting Stock and (y) cash, securities and other property in an amount which could be paid by the Company as a Restricted Payment pursuant to the provisions described under "Limitation on Restricted Payments" (and such amount shall be treated as a Restricted Payment subject to the provisions described under "Limitation on Restricted Payments") and (B) the holders of the Voting Stock of the Company immediately prior to such transaction own, directly or indirectly, not less than a majority of the Voting Stock of the surviving corporation immediately after such transaction; (iii) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Company was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or (iv) the shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company (whether or not otherwise in compliance with the provisions of the Indenture). "Change of Control Triggering Event" means the occurrence of both a Change of Control and a Rating Decline. "Common Stock" means the common stock, par value $.01 per share, of the Company. "Consolidated Adjusted Net Worth" means, with respect to any person, as of any date of determination, the total amount of stockholders' equity of such person and its subsidiaries which would appear on the consolidated balance sheet of such person as of the date of determination, less (to the extent otherwise included therein) the following (the amount of such stockholders' equity and deductions therefrom to be computed, except as noted below, in accordance with GAAP): (i) an amount attributable to interests in subsidiaries of such person held by persons other than such person or its subsidiaries; (ii) any reevaluation or other write-up in book value of assets subsequent to December 31, 1993, other than upon the acquisition of assets acquired in a transaction to be accounted for by purchase accounting under GAAP made within twelve months after the acquisition of such assets; (iii) treasury stock; (iv) an amount equal to the excess, if any, of the amount reflected for the securities of any person which is not a subsidiary over the lesser of cost or market value (as determined in good faith by the Board of Directors) of such securities; and (v) Disqualified Stock of the Company or any subsidiary of the Company. "Consolidated Amortization Expense" means for any person, for any period, the amortization of goodwill and other intangible items of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Consolidated Cash Flow Available for Interest Expense" means, for any person and the Company, the sum of the aggregate amount, for the four fiscal quarters for which financial information in respect thereof is available immediately prior to the date of the transaction giving rise to the need to calculate the Consolidated Cash Flow Available for Interest Expense (the "Transaction Date"), of (i) Consolidated Net Income (Loss) of such person, (ii) Consolidated Income Tax Expense, (iii) Consolidated Depreciation Expense, (iv) Consolidated Amortization Expense, (v) Consolidated Interest Expense and (vi) other noncash items reducing Consolidated Net Income (Loss), minus non-cash items increasing Consolidated Net Income (Loss). Consolidated Cash Flow Available for Interest Expense for any period shall be adjusted to give pro forma effect (to the extent applicable) to (i) each acquisition by the Company or a subsidiary of the Company during such period up to and including the Transaction Date (the "Reference Period") in any 26 31 person which, as a result of such acquisition, becomes a subsidiary of the Company, or the acquisition of assets from any person which constitutes substantially all of an operating unit or business of such person and (ii) the sale or other disposition of any assets (including capital stock) of the Company or a subsidiary of the Company, other than in the ordinary course of business, during the Reference Period, as if such acquisition or sale or disposition of assets by the Company or a subsidiary of the Company occurred on the first day of the Reference Period. "Consolidated Depreciation Expense" means for any person, for any period, the depreciation expense of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Consolidated Income Tax Expense" means, for any person, for any period, the aggregate of the income tax expense of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, for any person, for any period, the sum of (a) the Interest Expense of such person and its subsidiaries for such period, determined on a consolidated basis, (b) dividends in respect of preferred or preference stock of a subsidiary of the Company held by persons other than the Company or a wholly owned subsidiary of the Company and (c) interest incurred during the period and capitalized by the Company and its subsidiaries on a consolidated basis in accordance with GAAP. For purposes of clause (b) of the preceding sentence, dividends will be deemed to be an amount equal to the actual dividends paid divided by one minus the applicable actual combined Federal, state, local and foreign income tax rate of the Company (expressed as a decimal), on a consolidated basis, for the fiscal year immediately preceding the date of the transaction giving rise to the need to calculate Consolidated Interest Expense. "Consolidated Interest Expense Coverage Ratio" means, with respect to any person, the ratio of (i) the aggregate amount of the applicable Consolidated Cash Flow Available for Interest Expense of such person to (ii) the aggregate Consolidated Interest Expense which such person shall accrue during the first full fiscal quarter following the Transaction Date and the three fiscal quarters immediately subsequent to such fiscal quarter, such Consolidated Interest Expense to be calculated on the basis of the amount of such person's Indebtedness (on a consolidated basis) outstanding on the Transaction Date and reasonably anticipated by such person in good faith to be outstanding from time to time during such period. "Consolidated Net Income (Loss)" means, with respect to any person, for any period, the aggregate of the net income (loss) of such person and its subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein) (i) the net income (loss) of any person which is not a subsidiary of such person and which is accounted for by the equity method of accounting, except to the extent of the amount of cash dividends or distributions paid by such other person to such person or to a subsidiary of such person, (ii) the net income (loss) of any person accrued prior to the date on which it is acquired by such person or a subsidiary of such person in a pooling of interests transaction, (iii) except for NS Beteiligungs GmbH (a German Foreign Subsidiary) or any successor entity, the net income (loss) of any subsidiary of such person to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such subsidiary, in each case determined in accordance with GAAP, (iv) any gain or loss, together with any related provision for taxes in respect of such gain or loss, realized upon the sale or other disposition (including, without limitation, dispositions pursuant to sale-and-lease-back transactions) of any asset or property outside of the ordinary course of business and any gain or loss realized upon the sale or other disposition by such person of any capital stock or marketable securities and (v) any noncash charges incurred by the Company at any time in connection with SFAS 106. "Credit Agreement" means the Amended and Restated Credit Agreement dated as of October 25, 1993 among Lear Holdings Corporation, the Company, the several financial institutions parties thereto from time to time (the "Banks"), the Agent Bank and Bankers Trust Company, The Bank of Nova Scotia, Citicorp USA, Inc. and Lehman Commercial Paper Inc., as managing agents, as the same has been heretofore amended and 27 32 may be amended hereafter from time to time, and any subsequent credit agreement constituting a refinancing, extension or modification thereof. "Default" means any event which is, or after notice or lapse of time or both would be, an Event of Default. "Disinterested Director" means, with respect to an Affiliate Transaction or series of related Affiliate Transactions, a member of a Board of Directors who has no financial interest, and whose employer has no financial interest, in such Affiliate Transaction or series of related Affiliate Transactions. "Disqualified Stock" means any capital stock of the Company or any subsidiary of the Company which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the maturity date of the Notes or which is exchangeable or convertible into debt securities of the Company or any subsidiary of the Company, except to the extent that such exchange or conversion rights cannot be exercised prior to the maturity of the Notes. "Foreign Subsidiary" means any subsidiary of the Company organized and conducting its principal operations outside the United States. "GAAP" means generally accepted accounting principles on a basis consistently applied, provided that all ratios and calculations contained in the 8 1/4% Indenture will be calculated in accordance with generally accepted accounting principles in effect on the date of the 8 1/4% Indenture. "Indebtedness" means (without duplication), with respect to any person, any indebtedness, contingent or otherwise, in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof), or evidenced by bonds, notes, debentures or similar instruments or representing the balance deferred and unpaid of the purchase price of any property (except any such balance that constitutes a trade payable in the ordinary course of business that is not overdue by more than 120 days or is being contested in good faith), if and to the extent any of the foregoing indebtedness would appear as a liability upon a balance sheet of such person prepared on a consolidated basis in accordance with GAAP, and shall also include letters of credit, Obligations with respect to Interest Swap Obligations, any Capitalized Lease Obligation, the maximum fixed repurchase price of any Disqualified Stock, Obligations secured by a Lien to which any property or asset, including leasehold interests under Capitalized Lease Obligations and any other tangible or intangible property rights, owned by such person is subject, whether or not the Obligations secured thereby shall have been assumed (provided that, if the Obligations have not been assumed, such Obligations shall be deemed to be in an amount not to exceed the fair market value of the property or properties to which the Lien relates, as determined in good faith by the Board of Directors of such person and as evidenced by a Board Resolution), and guarantees of items which would be included within this definition (regardless of whether such items would appear upon such balance sheet; provided that for the purpose of computing the amount of Indebtedness outstanding at any time, such items shall be excluded to the extent that they would be eliminated as intercompany items in consolidation). For purposes of the preceding sentence, the maximum fixed repurchase price of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were repurchased on any date on which Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock (or any equity security for which it may be exchanged or converted), such fair market value shall be determined in good faith by the Board of Directors of such person. "Independent Financial Advisor" means a reputable accounting, appraisal or investment banking firm that is, in the reasonable judgment of the Board of Directors of the Company or a subsidiary of the Company, qualified to perform the task for which such firm has been engaged hereunder and disinterested and independent with respect to the Company and its Affiliates. "Initial Public Offering" means the sale of capital stock of the Company pursuant to (a) a registration statement under the Securities Act that has been declared effective by the Commission or (b) a public 28 33 offering outside the United States and which results, in either case, in an active trading market for such shares. An active trading market shall be deemed to exist if such shares are listed on the New York Stock Exchange or the American Stock Exchange or the quoted on the NASDAQ National Market System or any major international trading market or exchange. "Interest Expense" means for any person, for any period, the aggregate amount of interest in respect of Indebtedness (including all fees and charges owed with respect to letters of credit and bankers' acceptance financing and the net costs associated with Interest Swap Obligations and all but the principal component of rentals in respect of Capitalized Lease Obligations) incurred or scheduled to be incurred by such person during such period, all as determined in accordance with GAAP, except that non-cash amortization or write-off of deferred financing fees and expenses will not be included in the calculation of Interest Expense. For purposes of this definition, (a) interest on Indebtedness determined on a fluctuating basis for periods succeeding the date of determination will be deemed to accrue at a rate equal to the rate of interest on such indebtedness in effect on the last day of the fiscal quarter immediately preceding the date of determination and (b) interest on a Capitalized Lease Obligation will be deemed to accrue at an interest rate reasonably determined in good faith by the chief financial officer and the chief accounting officer of such person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP (including Statement of Financial Accounting Standards No. 13 of the Financial Accounting Standards Board). "Investment" of any person means (i) all investments by such person in any other person in the form of loans, advances or capital contributions, (ii) all guarantees of indebtedness or other obligations of any other person by such person, (iii) all purchases (or other acquisitions for consideration) by such person of indebtedness, capital stock or other securities of any other person and (iv) all other items that would be classified as investments (including, without limitation, purchases of assets outside the ordinary course of business) on a balance sheet of such person prepared in accordance with GAAP. "Investment Grade" is defined as BBB-or higher by S&P or Baa3 or higher by Moody's or the equivalent of such ratings by S&P or Moody's. "Letters of Credit" means the Letters of Credit as defined in the Credit Agreement as in effect on October 25, 1993. "Lien" means any lien, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement or any lease creating a Capitalized Lease Obligation). "Management Investors" means the persons who are designated as Management Investors in the Stockholders Agreement. "Moody's" means Moody's Investor Services, Inc. or if Moody's ceases to make a rating of the Notes publicly available, a nationally recognized securities rating agency selected by the Company. "Net Cash Proceeds" means, with respect to any Asset Sale, the Cash Proceeds of such Asset Sale net of fees, commissions, expenses and other costs of sale (including payment of the outstanding principal amount of, premium or penalty, if any, and interest on any Indebtedness which is either secured by a Lien on the stock or other assets sold or can be or is accelerated by such sale), taxes paid or payable as a result thereof, and any amount required to be paid to any person (other than the Company or any of its subsidiaries) owning a beneficial interest in the stock or other assets sold, provided that when any noncash consideration for an Asset Sale is converted into cash, such cash shall then constitute Net Cash Proceeds. "Obligation" means any principal, interest, premium, penalties, fees and any other liabilities payable under the documentation governing any Indebtedness. "Permitted Indebtedness" means: (i) Indebtedness of the Company pursuant to its Obligations under, or Indebtedness of any subsidiary of the Company under, the Credit Agreement; provided that in no event shall the aggregate amount of Indebtedness permitted to be outstanding at any one time pursuant to this clause (i) exceed $425,000,000 (less any (x) any amounts outstanding in respect of the United States, Canada and Mexico under the program described in clause (xi) below (the "North American clause (xi) amounts") and (y) any amounts permanently repaid under the Credit Agreement but without deducting payments under the 29 34 revolving credit facility and the swing line facility of the Credit Agreement unless the commitments thereunder have been permanently reduced and without deducting under this subclause (y) any such permanent repayments or permanent reductions made in respect of the North American clause (xi) amounts); (ii) Indebtedness represented by guarantees of Indebtedness which is permitted by the provisions described under "Certain Covenants -- Limitation on Indebtedness"; (iii) Indebtedness evidenced by the Notes; (iv) Indebtedness of the Company to any subsidiary of the Company and Indebtedness of any subsidiary of the Company to the Company or another subsidiary of the Company, provided that the Company or such subsidiary shall not become liable to any person other than the Company or a subsidiary of the Company with respect thereto; (v) Indebtedness of the Company or any subsidiary of the Company represented by Interest Swap Obligations; provided that such Interest Swap Obligations are related to payment Obligations on Indebtedness otherwise permitted by the provisions described under "Certain Covenants -- Limitation on Indebtedness" and will not result in an increase in the principal amount of the underlying outstanding Indebtedness; (vi) Indebtedness of the Company and its subsidiaries, and any undrawn amounts under the Specified Lines of Credit or legally binding revolving credit or standby credit facilities existing on the date of the 8 1/4% Indenture and Refinancing Indebtedness in respect of such Indebtedness or amounts; (vii) Indebtedness of the Company or any of its subsidiaries in respect of guarantees of receivables originated by the Company or any of its subsidiaries and sold to other persons to the extent that (A) the sale of such receivables does not constitute an Asset Sale and (B) such guarantees are in respect of warranties granted by the Company on the products giving rise to such receivables and such guarantees are not in respect of any other aspect of such receivables, including the capacity of any customer to meet its obligations under such receivables; (viii) Indebtedness incurred for working capital purposes by Foreign Subsidiaries in aggregate principal amount at any one time outstanding not to exceed (in each case calculated based on currency exchange rates in effect at the time of any proposed incurrence of Indebtedness) (A) for Foreign Subsidiaries organized under the laws of countries located in Europe, $45,000,000 in the aggregate, (B) for Foreign Subsidiaries organized under the laws of Mexico, $30,000,000 in the aggregate, and (C) for Foreign Subsidiaries organized under the laws of Canada, $25,000,000 in the aggregate; (ix) Indebtedness of the Company and its subsidiaries in respect of guarantees of Indebtedness of less than majority owned persons; provided that in no event will Indebtedness permitted pursuant to this clause (ix) exceed $5,000,000; (x) other Indebtedness of the Company and of any subsidiary of the Company, provided that in no event shall the aggregate amount of Indebtedness of the Company and of subsidiaries of the Company permitted to be outstanding pursuant to this clause (x) at any one time exceed $50,000,000; and (xi) Indebtedness of special-purpose subsidiaries of the Company in respect of securities secured by receivables transferred to such special-purpose subsidiaries by the Company or a subsidiary of the Company, provided that (A) the transfer of such receivables does not constitute an Asset Sale, (B) such special-purpose subsidiaries engage in no activities other than the purchase of such receivables and the issuance of such securities, and (C) such securities are non-recourse to the Company or any subsidiary of the Company (except for representations as to the status or eligibility of such receivables or to the limited extent described in clause (vii)(B) above in this definition). "Permitted Investors" means the parties to the Stockholders Agreement (other than the Company) and their respective Affiliates. "Permitted Liens" means (i) Liens for taxes, assessments, governmental charges or claims which are being contested in good faith by appropriate proceedings, promptly instituted and diligently conducted and, if a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (ii) statutory Liens of landlords and carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's, or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent or being contested in good faith by appropriate process of law, if a reserve or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor, (iii) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security; (iv) Liens incurred or deposits made to secure the performance of tenders, bids, leases, statutory obligations, surety and appeal bonds, government contracts, performance and return-of-money bonds and other Obligations of like nature incurred in the ordinary course of business (exclusive of Obligations for the payment of borrowed money); (v) easements, rights-of-way, restrictions, zoning provisions and other governmental restrictions and other similar charges or encumbrances not 30 35 interfering in any material respect with the business of the Company or any of its subsidiaries; (vi) judgment Liens not giving rise to a Default or Event of Default; (vii) leases or subleases granted to others not interfering in any material respect with the business of the Company or any of its subsidiaries; (viii) Liens encumbering customary initial deposits and margin deposits, and other Liens incurred in the ordinary course of business and which are within the general parameters customary in the industry, in each case securing Indebtedness under Interest Swap Obligations; (ix) any interest or title of a lessor in the property subject to any Capitalized Lease Obligation or operating lease or any Lien granted by a lessor on such property which does not interfere in any material respect with the business of the Company and its subsidiaries; (x) Liens arising from filing UCC financing statements regarding leases; (xi) Liens securing reimbursement Obligations with respect to Commercial Letters of Credit which encumber documents and other property relating to such Commercial Letters of Credit and the products and proceeds thereof; (xii) other Liens existing on the date of the Indenture; (xiii) other Liens to secure Obligations not in excess of $1,000,000 in the aggregate at any time outstanding, except to secure Indebtedness; and (xiv) Liens securing Indebtedness permitted pursuant to clauses (i), (v), (vi), (viii), (x) and (xi) of the definition of Permitted Indebtedness. "principal" of a debt security means the principal of the security plus, if such security has been called for redemption, the premium, if any, payable on such security upon redemption of such security. "Rating Decline" means the occurrence of the following on, or within 90 days after, the date of public notice of the occurrence of a Change of Control or of the intention of the Company to effect a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrading by either Moody's or S&P): (i) in the event that the Notes are rated by either Moody's or S&P prior to the date of such public notice as Investment Grade, the rating of the Notes by both such rating agencies shall be decreased to below Investment Grade or (ii) in the event the Notes are rated below Investment Grade by both such rating agencies prior to the date of such public notice, the rating of the Notes by either rating agency shall be decreased by one or more gradations (including gradations within rating categories as well as between rating categories). "Refinancing Indebtedness" means Indebtedness of the Company and its subsidiaries, all of the net proceeds of which (after customary fees, expenses and costs related to the incurrence of such Indebtedness) are applied to repay, refund, prepay, repurchase, redeem, defease, retire or refinance (collectively, "refinance") outstanding Indebtedness permitted to be incurred under the terms of this Indenture; provided that Refinancing Indebtedness that refinances any Permitted Indebtedness will be deemed to be incurred and to be outstanding under the relevant clause in the definition of "Permitted Indebtedness"; and provided further that (A) the original issue amount of the Refinancing Indebtedness shall not exceed the maximum principal amount and accrued interest of the Indebtedness to be repaid or, if greater in the case of clause (i) of the definition of Permitted Indebtedness, permitted to be outstanding under the agreements governing the Indebtedness being refinanced (or if such Indebtedness was issued at an original issue discount, the original issue price plus amortization of the original issue discount at the time of the incurrence of the Refinancing Indebtedness) plus the amount of customary fees, expenses and costs related to the incurrence of such Refinancing Indebtedness, (B) Refinancing Indebtedness incurred by any subsidiary of the Company shall not be used to refinance outstanding Indebtedness of the Company and (C) with respect to any Refinancing Indebtedness which refinances Indebtedness which ranks pari passu or junior in right of payment to the Securities, (1) the Refinancing Indebtedness has an average weighted life which is equal to or greater than the average weighted life of the Indebtedness being refinanced, (2) if such Indebtedness being refinanced is pari passu in right of payment to the Securities, such Refinancing Indebtedness does not rank senior in right of payment to the payment of principal of and interest on the Securities, and (3) if such Indebtedness being refinanced is subordinated to the Securities, such Refinancing Indebtedness is subordinated to the Securities to the same extent and on substantially the same terms. "Restricted Debt Prepayment" means any purchase, redemption, defeasance (including, but not limited to, in substance or legal defeasance) or other acquisition or retirement for value (collectively a "prepayment"), directly or indirectly, by the Company or a subsidiary of the Company (other than to the Company or a subsidiary of the Company), prior to the scheduled maturity or prior to any scheduled repayment of principal or sinking fund payment in respect of Indebtedness of the Company or such subsidiary which would 31 36 rank pari passu with the Notes (other than the Notes) or would be subordinate in right of payment to the Notes ("Prepaid Debt"); provided, that (i) any such prepayment of any Prepaid Debt shall not be deemed to be a Restricted Debt Prepayment to the extent such prepayment is made (x) with the proceeds of the substantially concurrent sale (other than to a subsidiary of the Company) of shares of the capital stock (other than Disqualified Stock) of the Company or rights, warrants or options to purchase such capital stock of the Company or (y) in exchange for or with the proceeds from the substantially concurrent issuance of Refinancing Indebtedness and (ii) no Default or Event of Default shall have occurred and be continuing at the time or shall occur as a result of such sale of capital stock or issuance of such Indebtedness. "Restricted Investment" means, with respect to any person, any Investments by such person in (i) any of its Affiliates (other than its subsidiaries) or in any person that becomes an Affiliate (unless it becomes a subsidiary) as a result of such Investment to the extent that the aggregate amount of all such Investments made after the date of the Indenture, whether or not outstanding, less the amount of cash received by such person upon the disposition of any such Investment, exceeds $25,000,000; (ii) any executive officer or director of such person; or (iii) any executive officer or director of any Affiliate or any wholly owned subsidiary of such person; provided, in the case of clauses (ii) and (iii), that (x) loans to any individual executive officer or director of such person in an amount less than $100,000 in the aggregate outstanding at any time which have been approved by the chief executive officer of such person and (y) such loans in excess of that amount which have been approved by a majority of the Disinterested Directors of such person shall not be considered Restricted Investments. "Restricted Payment" means (i) any Restricted Stock Payment, (ii) any Restricted Debt Prepayment or (iii) any Restricted Investment. "Restricted Stock Payment" means (i) with respect to the Company, any dividend, either in cash or in property (except dividends payable in Common Stock), on, or the making by the Company of any other distribution in respect of, its capital stock, now or hereafter outstanding, or the redemption, repurchase, retirement or other acquisition for value by the Company or any subsidiary of the Company, directly or indirectly, of capital stock of the Company or any warrants, rights (other than exchangeable or convertible Indebtedness of the Company) or options to purchase or acquire shares of any class of the Company's capital stock, now or hereafter outstanding, and (ii) with respect to any subsidiary of the Company, any redemption, repurchase, retirement or other acquisition for value by the Company or a subsidiary of the Company of capital stock of such subsidiary or any warrants, rights (other than exchangeable or convertible Indebtedness of any subsidiary of the Company), or options to purchase or acquire shares of any class of capital stock of such subsidiary, now or hereafter outstanding, except with respect to capital stock of such subsidiary or such warrants, rights or options owned by (x) the Company or a subsidiary of the Company or (y) any person which is not an Affiliate of the Company. "S&P" means Standard & Poor's Corporation, or if it ceases to make a rating of the Notes publicly available, a nationally recognized securities rating agency selected by the Company. "Seating Business" means the production, design, development, manufacture, marketing or sale of seat systems, seat frames, seat components, or vehicle interiors or any related businesses. "Senior Indebtedness" means the Obligations of the Company with respect to (i) any and all amounts payable by the Company under or in respect of its obligations (including reimbursement obligations in respect of letters of credit) incurred and outstanding from time to time under the Credit Agreement, or any refinancings thereof (including interest accruing on or after filing of any petition in bankruptcy or reorganization relating to the Company, at the rate specified in such Senior Indebtedness whether or not a claim for post- filing interest is allowed in such proceeding), (ii) Interest Swap Obligations related to its payment Obligations on Senior Indebtedness, (iii) any and all amounts payable by the Company under or in respect of its Obligations incurred and outstanding from time to time under the Senior Subordinated Notes but not including any refinancings thereof and (iv) any other Indebtedness of the Company, whether outstanding on the date of the 8 1/4% Indenture or thereafter created, incurred or assumed, unless, in the case of any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness is not senior in right of payment to the Notes; provided that 32 37 notwithstanding the foregoing, Senior Indebtedness shall not include (A) Indebtedness represented by the Notes, (B) Indebtedness incurred in violation of the 8 1/4% Indenture, (C) Indebtedness which is represented by Disqualified Stock, (D) amounts payable or any other Indebtedness to trade creditors created, incurred, assumed or guaranteed by the Company or any subsidiary of the Company in the ordinary course of business in connection with obtaining goods or services, (E) amounts payable or any other Indebtedness to employees of the Company or any subsidiary of the Company as compensation for services, (F) Indebtedness of the Company to a subsidiary of the Company, (G) any liability for Federal, state, local or other taxes owed or owing by the Company and (H) Indebtedness represented by the 14% Subordinated Debentures. "Senior Subordinated Indebtedness" means, with respect to any person, any Indebtedness of a person that specifically provides that such Indebtedness is to rank pari passu with other Senior Subordinated Indebtedness of such person and is not subordinated by its terms to any Indebtedness of such person which is not Senior Indebtedness. "Senior Subordinated Notes" means the 11 1/4% Senior Subordinated Notes of the Company due 2000, issued pursuant to an Indenture dated as of July 15, 1992 among the Company and The Bank of New York, as trustee. "Significant Subsidiary" means one or more subsidiaries of the Company which, in the aggregate, have (i) assets, or in which the Company and its other subsidiaries have Investments, equal to or greater than 5% or more of the total assets of the Company and its subsidiaries consolidated at the end of the most recently completed fiscal year of the Company or (ii) consolidated gross revenue equal to or exceeding 5% of the consolidated gross revenue of the Company for its most recently completed fiscal year. "Specified Lines of Credit" means the following informal lines of credit existing on the date of the 8 1/4% Indenture: (a) Indebtedness incurred by an Austrian Foreign Subsidiary to Sparkasse Bank under a working capital credit line in a principal amount not to exceed 20,000,000 Austrian schillings; (b) Indebtedness incurred by a Mexican Foreign Subsidiary to Banco Internacional under a note payable facility for working capital in a principal amount not to exceed $15,000,000; (c) Indebtedness incurred by a Mexican Foreign Subsidiary to Bancomer, Banco Mexicano and Banamex under a note payable facility for working capital in a principal amount not to exceed 45,000,000 Mexican pesos; (d) Indebtedness incurred by a Swedish Foreign Subsidiary to SE Banken under a working capital credit facility in a principal amount not to exceed 6,500,000 Swedish krona; and (e) Indebtedness consisting only of trade acceptances of NS Beteiligungs GmbH and Lear Seating Sweden, AB in an aggregate principal amount not to exceed $1,000,000. "Specified Senior Indebtedness" means (i) Indebtedness under the Credit Agreement (or any refunding or refinancing thereof), (ii) any other single issue of Senior Indebtedness (other than the Senior Subordinated Notes) having an initial principal amount of $30,000,000 or more. For purposes of this definition, a refinancing of any Specified Senior Indebtedness shall be treated as such only if it ranks or would rank on a pari passu basis with the Indebtedness refinanced. "14% Subordinated Debentures" means the Company's 14% Subordinated Debentures due December 1, 2000, issued on December 22, 1988, pursuant to the Subordinated Debenture Indenture. "subsidiary" of any person means (i) a corporation a majority of whose capital stock with voting power, under ordinary circumstances, to elect directors is at the time, directly or indirectly, owned by such person or by such person and a subsidiary or subsidiaries of such person or by a subsidiary or subsidiaries of such person or (ii) any other person (other than a corporation) in which such person or such person and a subsidiary or subsidiaries of such person or a subsidiary or subsidiaries of such persons, at the time, directly or indirectly, owned at least a majority ownership interest. "Voting Stock" means all classes of capital stock then outstanding of a person normally entitled to vote in elections of directors. CERTAIN COVENANTS Repurchase of Notes Upon a Change of Control Triggering Event. If a "Change of Control Triggering Event" shall occur at any time, then each holder shall have the right to require that the Company repurchase such holder's Notes in whole or in part in integral multiples of $1,000, at a purchase price in cash in an amount 33 38 equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, which date shall be no earlier than 30 days nor more than 60 days from the date the Company notifies the holders of the occurrence of a Change of Control Triggering Event. The source of funds for any such repurchase will be the Company's available cash or cash generated from operations or other sources, including borrowing, sales of assets or sales of equity. However, there can be no assurance that sufficient funds will be available at the time of any Change of Control Triggering Event to make any required repurchases. Under the 8 1/4% Indenture, the Company can only effect such repurchases either with the consent of the lenders under the Credit Agreement or by repaying amounts owed to such lenders under the Credit Agreement. The failure to satisfy either such condition would constitute a default under the 8 1/4% Indenture. The Credit Agreement also contains prohibitions of certain events that would constitute a Change of Control Triggering Event. In addition, the Company's ability to repurchase Notes following a Change of Control Triggering Event may be limited by the terms of its then-existing Senior Indebtedness, including, without limitation, the subordination provisions described above under "Subordination". Therefore, the exercise by the holders of their right to require the Company to repurchase the Notes could cause a default under the Senior Indebtedness (including Specified Senior Indebtedness) even if the Change of Control Triggering Event itself does not, due to the financial effect of such repurchase on the Company. Failure of the Company to repurchase the Notes in the event of a Change of Control Triggering Event will create an Event of Default with respect to the Notes, whether or not such repurchase is permitted by the subordination provisions. The Company agrees that it will comply with all applicable tender offer rules, including Rule 14e-1 under the Exchange Act, if the repurchase option is triggered upon a Change of Control Triggering Event. Under the 8 1/4% Indenture, the Company is obligated to give notice to holders of Notes and the Trustee within 30 days following a Change of Control Triggering Event specifying, among other things, the purchase price, the purchase date, the place at which Notes shall be presented and surrendered for purchase, that interest accrued to the purchase date will be paid upon such presentation and surrender and that interest will cease to accrue on Notes surrendered for purchase as of such purchase date. In order for a holder of Notes properly to put its Notes to the Company for purchase, the holder must give notice and present and surrender its Notes to the Company at the place specified in the Company's aforementioned notice at least 15 days prior to the purchase date. Any such tender by a holder of Notes shall be irrevocable. The Company is not obligated to notify holders of or to purchase Notes with respect to more than one Change of Control Triggering Event. The Change of Control purchase feature of the Notes may in certain circumstances make more difficult or discourage a takeover of the Company, and, thus, the removal of incumbent management. The Change of Control purchase feature, however, is not the result of management's knowledge of any specific effort to accumulate the Company's stock or to obtain control of the Company by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of antitakeover provisions. Instead, the Change of Control purchase feature is a result of negotiations between the Company and the Underwriters. Management has no present intention to engage in a transaction involving a Change of Control Triggering Event, although it is possible that the Company would decide to do so in the future. Subject to the limitations discussed below, including the limitation on incurrence of additional indebtedness and the issuance of certain securities, the Company could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control Triggering Event under the 8 1/4% Indenture, but that could increase the amount of Senior Indebtedness of the Company (or any other indebtedness) outstanding at such time or otherwise affect the Company's capital structure or credit ratings. Limitation on Restricted Payments. The 8 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, directly or indirectly, make any Restricted Payment unless (a) no Default or Event of Default has occurred and is continuing at the time or will occur as a consequence of such Restricted Payment and (b) after giving effect to such Restricted Payment, the aggregate amount expended for all Restricted Payments subsequent to December 31, 1993 (the amount so expended, if other than in cash, to be determined by the Board of Directors, whose reasonable determination shall be conclusive and evidenced by a Board Resolution), does not exceed the sum of (x) 50% of Consolidated Net Income of the Company (or in the case such Consolidated Net Income shall be a deficit, minus 100% of such deficit) during the period (treated as one accounting period) subsequent to December 31, 1993 and ending on the last day of the fiscal 34 39 quarter immediately preceding such Restricted Payment and (y) the aggregate net proceeds, including cash and the fair market value of property other than cash (as determined in good faith by the Board of Directors of the Company and evidenced by a Board Resolution), received by the Company during such period from any person other than a subsidiary of the Company, as a result of the issuance of capital stock of the Company (other than any Disqualified Stock) or warrants, rights or options to purchase or acquire such capital stock including such capital stock issued upon conversion or exchange of Indebtedness or upon exercise of warrants or options and any contributions to the capital of the Company received by the Company from any such person less the amount of such net proceeds actually applied as permitted by clause (ii) of the next paragraph or by the proviso to the definition of Restricted Debt Prepayment; provided that, at the time of such Restricted Payment and after giving effect thereto, the Company or any subsidiary of the Company shall be able to incur an additional $1.00 of Indebtedness pursuant to clauses (a) and (b) of the provisions described under "Limitation on Indebtedness". For purposes of any calculation pursuant to the preceding sentence which is required to be made within 60 days after the declaration of a dividend by the Company, such dividend shall be deemed to be paid at the date of declaration. This provision is not violated by reason of (i) the payment of any dividend within 60 days after the date of declaration thereof if, at such date of declaration such payment complied with the provisions hereof; (ii) the purchase, redemption, acquisition or retirement of any shares of the Company's capital stock in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a subsidiary of the Company) of, other shares of capital stock (other than Disqualified Stock) of the Company or rights, warrants or options to purchase or acquire such capital stock of the Company or (iii) payments by the Company (A) for the mandatory repurchase of shares of Common Stock of the Company (or scheduled payments of principal of or interest on notes issued to finance the repurchase of such shares) from Management Investors under the Stockholders Agreement or (B) to satisfy any other Obligations under the terms of the Stockholders Agreement provided that no Default or Event of Default has occurred and is continuing at the time, or shall occur as a result, of such Restricted Payment. For purposes of determining the aggregate amount of Restricted Payments in accordance with clause (b) of the preceding paragraph, all amounts expended pursuant to clause (i) or (ii) (except to the extent deemed to have been paid pursuant to the last sentence of the immediately preceding paragraph) of this paragraph shall be included. Limitation on Indebtedness. The 8 1/4% Indenture provides that, except for Permitted Indebtedness and Refinancing Indebtedness, the Company will not, and will not permit any subsidiary of the Company to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become liable for, contingently or otherwise, extend the maturity of or become responsible for the payment of (collectively, an "incurrence"), any Obligations in respect of any Indebtedness including Acquired Indebtedness unless (a) no Default or Event of Default shall have occurred and be continuing at the time or as a consequence of the incurrence of such Indebtedness and (b) after giving effect to the incurrence of such Indebtedness and the receipt and application of the proceeds thereof on a pro forma basis, the Consolidated Interest Expense Coverage Ratio of the Company is greater than 2 to 1. Limitation on Payment Restrictions Affecting Subsidiaries. The 8 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, create or otherwise cause or suffer to exist or become effective any consensual restriction which by its terms expressly restricts any such subsidiary from (i) paying dividends or making any other distributions on such subsidiary's capital stock or paying any Indebtedness owed to the Company or any subsidiary of the Company, (ii) making any loans or advances to the Company or any subsidiary of the Company or (iii) transferring any of its property or assets to the Company or any subsidiary of the Company, except (a) any restrictions existing under agreements in effect at the issuance of the Notes, (b) any restrictions under any agreement evidencing any Acquired Indebtedness of a subsidiary of the Company incurred pursuant to the provisions described under "Limitation on Indebtedness"; provided that such restrictions shall not restrict or encumber any assets of the Company or its subsidiaries other than such subsidiary or (c) any restrictions existing under any agreement which refinances any Indebtedness in accordance with paragraph (xiv) of the definition of Permitted Indebtedness; provided that the terms and conditions of any such agreement are not materially less favorable to such subsidiary than those under the agreement creating or evidencing the Indebtedness being refinanced. 35 40 Limitation on Creation of Liens. The 8 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, create, incur, assume or suffer to exist any Liens upon any of their respective assets unless the Notes are secured by such assets on an equal and ratable basis with the obligation so secured until such time as such obligation is no longer secured by a Lien, provided that if the obligation secured by such Lien is subordinated to the Notes, the Lien securing such obligation will be subordinate and junior to the Lien securing the Notes with the same relative priority as such subordinated obligations have with respect to the Notes, except for (i) Liens securing Senior Indebtedness that would be permitted to be incurred under clauses (a) and (b) of the provisions described under "Limitation on Indebtedness" if such Indebtedness were incurred on the date such Lien is granted; (ii) Liens with respect to Acquired Indebtedness, provided that such Liens do not extend to or cover any property or assets of the Company or any subsidiary of the Company other than the property or assets acquired, and provided further that such Liens were not incurred in connection with, or in contemplation of, the transactions giving rise to such Acquired Indebtedness; (iii) Liens securing Indebtedness which is incurred to refinance secured Indebtedness and which is permitted to be incurred under the provisions described under "Limitation on Indebtedness"; provided that such Liens do not extend to or cover any property or assets of the Company or any subsidiary of the Company other than the property or assets securing the Indebtedness being refinanced; and (iv) Permitted Liens. No Senior Subordinated Indebtedness. The 8 1/4% Indenture provides that the Company will not issue, incur, create, assume, guarantee or otherwise become liable for any Indebtedness which is subordinate or junior in right of payment to any Indebtedness of the Company, including, without limitation, Indebtedness that refinances the Senior Subordinated Notes, unless such Indebtedness is pari passu with or subordinate in right of payment to the Notes. Transactions with Shareholders and Affiliates. The 8 1/4% Indenture provides that the Company will not, and will not permit any subsidiary of the Company to, directly or indirectly, enter into or suffer to exist any transaction (an "Affiliate Transaction") (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any holder of more than 10% of any class of equity securities of the Company or with any Affiliate of the Company or of any such holder (other than a wholly owned subsidiary of the Company), on terms that are less favorable to the Company or such subsidiary, as the case may be, than would be available in a comparable transaction with an unrelated person. In addition, neither the Company nor any subsidiary of the Company shall enter into any Affiliate Transaction or series of related Affiliate Transactions involving or having a value of (a) more than $2,500,000, unless a majority of Disinterested Directors (or, if there are no Disinterested Directors, a majority of the Board of Directors) of the Company or such subsidiary, as the case may be, determines in good faith pursuant to a Board Resolution that such Affiliate Transaction or series of related Affiliate Transactions is fair to the Company or such subsidiary, as the case may be, or (b) more than $10,000,000 unless (i) a majority of Disinterested Directors (or, if there are no Disinterested Directors, a majority of the Board of Directors) of the Company or such subsidiary, as the case may be, make the determination referred to in clause (a) above and (ii) the Company or such subsidiary, as the case may be, has received an opinion from an Independent Financial Advisor to the effect that such Affiliate Transaction or series of related Affiliate Transactions are fair to the Company or such subsidiary, as the case may be, from a financial point of view. The foregoing provisions will not apply to payments of investment banking and financial advisory or consulting fees and other fees to Lehman Brothers Inc. or any of its subsidiaries or Affiliates in connection with the sale of the Notes (or any refunding, refinancing or conversion thereof) and other customary investment banking and financial advisory or consulting fees. Sales of Assets. The 8 1/4% Indenture provides that subject to the provisions described under "Mergers or Consolidations", the Company will not, and will not permit any subsidiary to, make any Asset Sale unless (i) the Company (or such subsidiary, as the case may be) receives consideration at the time of such sale at least equal to the fair market value of the shares or assets included in such Asset Sale (as determined in good faith by the Board of Directors, including valuation of all noncash consideration) and (ii) (x) either (A) the Net Cash Proceeds are reinvested within 12 months (or, pursuant to a determination of the Board of Directors, held pending reinvestment) in replacement assets or assets used in the Seating Business or used to 36 41 purchase all of the issued and outstanding capital stock of a person engaged in such business or used to fund research and development costs or (B) if the Net Cash Proceeds are not applied or are not required to be applied as set forth in clause (ii) (x) (A) or if after applying such Net Cash Proceeds as set forth in clause (ii) (x) (A) there remain Net Cash Proceeds, such Net Cash Proceeds are applied within 12 months of the original receipt thereof to the permanent prepayment, repayment, retirement or purchase of Senior Indebtedness or Indebtedness of a subsidiary, (y) if and to the extent that the gross proceeds from such Asset Sale (after giving effect to the application of clause (ii)(x)(A) and (B), when added to the gross proceeds from all prior Asset Sales (not applied as set forth in clause (ii)(x)(A) or (B)) exceeds $15,000,000, such proceeds are applied pursuant to a Repurchase Offer (as defined in the 8 1/4% Indenture) to repurchase the Notes (on a pro rata basis if the amount available for such purchase is less than the outstanding principal amount of the Notes) at a purchase price equal to 100% of the principal amount thereof plus accrued interest to the date of prepayment and (z) if the aggregate principal amount of all Notes tendered pursuant to a Repurchase Offer is less than the Repurchase Offer Amount (as defined in the Indenture), such excess amount is applied for general corporate purposes; provided that when any noncash consideration is converted into cash, such cash will then constitute Net Cash Proceeds and will be subject to clause (ii) of this sentence. Limitation on Issuance of Preferred Stock. The Indenture provides that the Company will not permit any of its subsidiaries to issue any preferred or preference stock (except to the Company or a wholly owned subsidiary of the Company) or permit any person (other than the Company or any wholly owned subsidiary of the Company) to hold any such preferred or preference stock unless the Company would be entitled to create, incur or assume Indebtedness pursuant to the provisions described under "Limitation on Indebtedness" in the aggregate principal amount equal to the aggregate liquidation value of the preferred or preference stock to be issued. MERGERS OR CONSOLIDATIONS Under the 8 1/4% Indenture, the Company will not consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to any person unless: (1) the person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or disposition has been made, is a corporation organized and existing under the laws of the United States of America, any state thereof or the District of Columbia; (ii) the corporation formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, lease, conveyance or disposition has been made, assumes by supplemental indenture satisfactory in form to the Trustee all the obligations of the Company under the 8 1/4% Indenture; (iii) immediately after such transaction, and giving effect thereto, no Default or Event of Default has occurred and is continuing; (iv) the Company or any corporation formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or disposition has been made, has Consolidated Adjusted Net Worth (immediately after the transaction and giving effect thereto, excluding any write-ups of assets resulting from such consolidation or merger) at least equal to the Consolidated Adjusted Net Worth of the Company immediately preceding the transaction; (v) immediately after such transaction and giving effect thereto, the Company or any corporation formed by or surviving any such consolidation or merger, or to which such sale, assignment, transfer, lease, conveyance or disposition shall have been made, shall be able to incur an additional $1.00 of Indebtedness pursuant to clause (b) of the provisions described under "Limitation on Indebtedness"; and (vi) the Company has delivered to the Trustee (A) an Officers' Certificate (attaching the calculation to demonstrate compliance with clause (iv) and (v) above) and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture comply with the above provisions and that all conditions precedent relating to such transaction have been complied with, and (B) a certificate from the Company's independent certified public accountants, stating that the Company has made the calculations required by clauses (iv) and (v) above. EVENTS OF DEFAULT The 8 1/4% Indenture defines an Event of Default as: (i) default by the Company for 30 days in the payment of interest on the Notes; (ii) default by the Company in the payment when due of principal of the 37 42 Notes; (iii) failure by the Company for 30 days after notice to comply with any of its other agreements in the Indenture or the Notes; (iv) any Indebtedness of the Company or a Significant Subsidiary of the Company for borrowed money (or the payment of which is guaranteed by the Company or one of its subsidiaries) having an outstanding principal amount of $10,000,000 or more in the aggregate, is declared to be due and payable prior to its stated maturity or failure by the Company or any Significant Subsidiary to pay the final scheduled principal installment in an amount of at least $10,000,000 in respect of any such Indebtedness on its stated maturity date unless such Indebtedness which has been declared due and payable prior to its stated maturity is Indebtedness of a Foreign Subsidiary the payment of which is guaranteed by the Letters of Credit; (v) failure by the Company or any subsidiary of the Company to pay certain final judgments aggregating in excess of $10,000,000; and (vi) certain events of bankruptcy or insolvency. A Default under the provisions of the Indenture described hereunder is not an Event of Default until the Trustee notifies the Company in writing, or the Holders of at least 25% in principal amount of the Notes then outstanding notify the Company and the Trustee, in writing of the Default, and the Company does not cure the Default within 30 days after receipt of the notice; provided that a Default by the Company with respect to the provisions of the Indenture described under "Mergers or Consolidations" and "Certain Covenants -- Repurchase of Notes upon a Change of Control Triggering Event" will constitute an Event of Default immediately upon such notification and without passage of time. Subject to the provisions under "Subordination", if an Event of Default (other than as a result of certain events of bankruptcy or insolvency) occurs and is continuing, the Trustee or the holders of at least 25% of the principal amount of the Notes then outstanding, by written notice to the Company (and the Agent Bank, so long as the Indebtedness under the Credit Agreement is outstanding) (and the Senior Subordinated Notes Trustee, so long as the Indebtedness under the Senior Subordinated Notes is outstanding) may declare to be due and payable all unpaid principal of and only accrued interest on the Notes. Upon a declaration of acceleration, such principal and accrued interest to the date of such acceleration shall be due and payable upon the first to occur of (i) an acceleration under the Credit Agreement (or any refunding or refinancing thereof), or (ii) five Business Days after notice of such declaration is given to the Company (and the Agent Bank, so long as the Indebtedness under the Credit Agreement is outstanding) (and the Senior Subordinated Notes Trustee, so long as the Indebtedness under the Senior Subordinated Notes is outstanding); provided that, if the Event of Default giving rise to such acceleration is cured before the earlier to occur of (i) or (ii), such notice of acceleration and its consequences shall be deemed rescinded and annulled. In the event of a declaration of acceleration under the Indenture because an Event of Default described in clause (iv) of the third preceding paragraph has occurred and is continuing, such declaration of acceleration shall be automatically annulled if the holders of the Indebtedness which is the subject of such Event of Default have rescinded their declaration of acceleration in respect of such Indebtedness within 90 days thereof or all amounts payable in respect of such Indebtedness have been paid and such Indebtedness has been discharged during such 90-day period and if (i) the annulment of such acceleration would not conflict with any judgment or decree of a court of competent jurisdiction, (ii) all existing Events of Default, except nonpayment of principal or interest that has been due solely because of the acceleration, have been cured or waived, and (iii) the Company has delivered an Officers' Certificate to the Trustee to the effect of clauses (i) and (ii) of this sentence. If an Event of Default described in clause (vi) of the third preceding paragraph with respect to the Company occurs, all unpaid principal and accrued interest on the Notes shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority of the outstanding principal amount of the Notes by written notice to the Trustee may rescind an acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of principal of or interest on the Notes which have become due solely because of the acceleration, have been cured or waived and (ii) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction. Holders of the Notes may not enforce the 8 1/4% Indenture or the Notes except as provided in the 8 1/4% Indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding 38 43 Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default in payment of principal or interest) if it determines that withholding notice is in their interest. The Company is required to deliver to the Trustee annually a statement regarding compliance with the 8 1/4% Indenture, and upon becoming aware of any Default or Event of Default, a statement specifying such Default or Event of Default. DISCHARGE OF INDENTURE AND DEFEASANCE Except as otherwise limited by the provisions of the Credit Agreement, the Company may terminate its obligations under the Notes and the 8 1/4% Indenture when (i) all outstanding Notes have been delivered (other than destroyed, lost or stolen Notes which have not been replaced or paid) to the Trustee for cancellation or (ii) all outstanding Notes have become due and payable, and the Company irrevocably deposits with the Trustee funds or U.S. Government Obligations sufficient (without reinvestment thereof) to pay at maturity all outstanding Notes, including all interest thereon (other than destroyed, lost or stolen Notes which have not been replaced or paid), and in either case the Company has paid all other sums payable under the 8 1/4% Indenture. In addition, the Company may terminate substantially all its obligations under the Notes and the 8 1/4% Indenture if the Company (a) irrevocably deposits in trust for the benefit of the holders money or U.S. Government Obligations maturing as to principal and interest in such amounts and at such times as are sufficient to pay principal of and interest on the then outstanding Notes to maturity or redemption, as the case may be, (b) delivers to the Trustee an Opinion of Counsel to the effect that, based on Federal income tax laws then in effect, the holders of the Notes will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of such option and shall be subject to Federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such option had not been exercised or a ruling to that effect has been received from or published by the Internal Revenue Service and (c) certain other conditions are met. The Company shall be released from its obligations with respect to the covenants described under "Certain Covenants" and any Event of Default occurring because of a default with respect to such covenants if (a) the Company deposits or causes to be deposited with the Trustee in trust an amount of cash or U.S. Government Obligations sufficient to pay and discharge when due the entire unpaid principal of and interest on all outstanding Notes and (b) certain other conditions are met. The obligations of the Company under the 8 1/4% Indenture with respect to the Notes, other than with respect to the covenants and Events of Default referred to above, shall remain in full force and effect. TRANSFER AND EXCHANGE A holder may transfer or exchange Notes in accordance with the 8 1/4% 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 is not required to transfer or exchange any Note selected for redemption or any Note for a period of 15 days before a selection of Notes to be redeemed. The registered holder of a Note may be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the 8 1/4% Indenture or the Notes may be amended or supplemented by the Company and the Trustee with the consent of the holders of at least a majority in principal amount of such then outstanding Notes and any existing default may be waived with the consent of the holders of at least a majority in principal amount of the then outstanding Notes. Without the consent of any holder of the Notes, the Company and the Trustee may amend the 8 1/4% Indenture or the Notes to cure any ambiguity, defect or inconsistency, to provide for the assumption of the Company's obligations to holders of the Notes by a successor corporation, to provide for uncertificated Notes in addition to certificated Notes or to make any change that does not adversely affect the rights of any holder of the Notes. Without the consent of each holder 39 44 of Notes affected, the Company may not reduce the principal amount of Notes the holders of which must consent to an amendment of the 8 1/4% Indenture; reduce the rate or change the interest payment time of any Note; reduce the principal of or change the fixed maturity of any Notes or alter the redemption provisions with respect thereto; make any Note payable in money other than that stated in the Note; make any change in the provisions concerning waiver of Defaults or Events of Default by holders of the Notes or rights of holders to receive payment of principal or interest, make any change in the subordination provisions in the 8 1/4% Indenture that affects the right of any holder or release the Company from any of its obligations under the 8 1/4% Indenture or the Notes. THE TRUSTEE The First National Bank of Boston is the Trustee under the 8 1/4% Indenture. The First National Bank of Boston is a lender under the Credit Agreement. PLAN OF DISTRIBUTION This Prospectus is to be used by the Market-maker in connection with offers and sales of the Senior Subordinated Notes and the Notes in market-making transactions. The Market-maker may act as a principal or agent in such transactions. The Senior Subordinated Notes and the Notes may be offered in negotiated transactions or otherwise. Sales will be made at prices related to prevailing market prices at the time of sale. The Market-maker has no obligation to make a market in the Senior Subordinated Notes or in the Notes and may discontinue market-making activities at any time without notice, in its sole discretion. The Lehman Funds, each an affiliate of Lehman Brothers Inc., beneficially own, in the aggregate, a majority of the outstanding Common Stock of the Company. In accordance with Schedule E to the Bylaws of the National Association of Securities Dealers, Inc., the Market-maker will not make sales of the Senior Subordinated Notes or the Notes to customers' discretionary accounts without the prior specific written approval of such customers. Lehman Brothers Inc., acted as underwriter in connection with the offerings of the Senior Subordinated Notes and the Notes and received gross underwriting discounts of approximately $2,000,000 and $2,392,500, respectively, in connection therewith. Lehman Brothers Inc. acted as an underwriter in the Company's initial public offering of Common Stock, which was consummated on April 13, 1994, for which it received fees and gross underwriting discounts of approximately $3,300,000. In addition, Lehman Brothers Inc. has from time to time provided investment banking, financial advisory and other services to the Company, for which it has received fees. Lehman Brothers Inc. is an affiliate of Lehman Commercial Paper Inc., which is a managing agent and a lender to Lear under the Credit Agreement. In addition, Lehman Brothers Inc. or its affiliates may participate on a regular basis in various general financing and banking transactions for Lear. LEGAL MATTERS The validity of the Notes has been passed upon for the Company by Winston & Strawn, Chicago, Illinois. The validity of the Senior Subordinated Notes has been passed upon for the Company by Skadden, Arps, Slate, Meagher & Flom, New York, New York. Certain legal matters with respect to the Notes and the Senior Subordinated Notes have been passed upon for the underwriters of the original offerings of the Notes and the Senior Subordinated Notes by Cravath, Swaine & Moore, New York, New York. Cravath, Swaine & Moore has performed, and continues to perform, services for the Lehman Funds from time to time. 40 45 EXPERTS The consolidated balance sheets as of June 30, 1992, June 30, 1993 and December 31, 1993 and the related consolidated statements of operations, stockholders' equity, cash flows and schedules for the years ended June 30, 1991, 1992 and 1993 and for the twelve months and the six months ended December 31, 1993 of the Company included in the periodic reports filed by the Company pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated herein by reference have been audited by Arthur Andersen & Co., independent public accountants, as indicated in their reports with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in giving said reports. In addition, the financial statements of the NAB included in certain periodic reports filed by the Company pursuant to the Exchange Act and incorporated herein by reference have been audited by Coopers & Lybrand, independent public accountants, as indicated in their report with respect thereto, and are incorporated herein in reliance upon the authority of said firm as experts in giving said report. 41 46 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth all fees and expenses payable by the Registrant in connection with this Amendment. All of such expenses, are estimated. Legal fees and expenses............................................ $ 6,000 Printing and engraving............................................. 5,000 Accounting fees and expenses....................................... 3,000 Miscellaneous...................................................... 2,000 -------- Total......................................................... $ 16,000 ========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS As authorized by Section 145 of the General Corporation Law of Delaware (the "Delaware Corporation Law"), each director and officer of the Registrant may be indemnified by the Registrant against expenses (including attorney's fees, judgments, fines and amounts paid in settlement) actually and reasonably incurred in connection with the defense or settlement of any threatened, pending or completed legal proceedings in which he is involved by reason of the fact that he is or was a director or officer of the Registrant if he acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Registrant, and, with respect to any criminal action or proceeding, if he had no reasonable cause to believe that his conduct was unlawful. If the legal proceeding, however, is by or in the right of the Registrant, the director or officer may not be indemnified in respect to any claim, issue or matters as to which he shall have been adjudged to be liable for negligence or misconduct in the performance of his duty to the Registrant unless a court determines otherwise. Article Fifth of the Restated Certificate of Incorporation of the Registrant, a copy of which is filed as Exhibit 3.1 to this Registration Statement, provides that no director of the Registrant shall be personally liable to that Registrant or its stockholders for monetary damages for any breach of his fiduciary duty as a director; provided, however, that such clause shall not apply to any liability of a director (1) for any breach of his duty of loyalty to the Registrant or its stockholders, (2) for acts or omissions that are not in good faith or involve intentional misconduct or a knowing violation of the law, (3) under Section 174 of the Delaware Corporation Law, or (4) for any transaction from which the director derived an improper personal benefit. In addition, Article Sixth of the Restated Certificate of Incorporation Article VIII of the Amended and Restated By-Laws of the Registrant, a copy of which is filed as Exhibit 3.2 hereto, provide for the indemnification of the Registrant's directors and officers. The Registrant has directors and officers liability insurance that insures the directors and officers of the Registrant against certain liabilities. In addition, Lehman Brothers Inc. has agreed to indemnify Jeffrey P. Hughes, David P. Spalding, James A. Stern, Eliot Fried and Alan Washkowitz, each being a director of the Registrant and an officer or former officer of Lehman Brothers Inc., in connection with their service as directors of the Registrant. The Market-Maker Agreement dated July 30, 1992 and the Market-Maker Agreement dated February 3, 1994, in each case between Lear and Lehman Brothers Inc., provides for indemnification by Lehman Brothers Inc. of directors and officers of Lear against certain liabilities, including liabilities under the Securities Act of 1933, under certain circumstances. II-1 47 ITEM 16. EXHIBITS
Exhibits: - --------- * 1.1 -- Form of Underwriting Agreement relating to the 8 1/4% Subordinated Notes of Lear. * 1.2 -- Form of Underwriting Agreement relating to the 11 1/4% Senior Subordinated Notes of Lear. * 3.1 -- Restated Certificate of Incorporation of Lear (incorporated by reference to Exhibit 3.3 to the Company's Transition Report on Form 10-K filed on March 31, 1994). * 3.4 -- Amended and Restated By-laws of Lear. * 3.5 -- Merger Agreement dated December 31, 1993, by and between Lear and Holdings (incorporated by reference to Exhibit 3.4 to Lear's Registration Statement on Form S-1 (No. 33-51317)). * 4.1 -- Indenture by and between Lear and The First National Bank of Boston, as Trustee, relating to the 8 1/4% Subordinated Notes (the "Subordinated Note Indenture") (incorporated by reference to Exhibit 4.1 to the Company's Transition Report on Form 10-K filed on March 31, 1994). * 4.2 -- Form of 11 1/4% Senior Subordinated Note Indenture dated as of July 15, 1992 between Lear and The Bank of New York, as Trustee (the "Senior Subordinated Note Indenture") (incorporated by reference to Exhibit 4.1 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). * 5.1 -- Opinion of Winston & Strawn, special counsel to the Company. * 5.2 -- Opinion of Skadden, Arps, Slate, Meagher & Flom, special counsel to the Company. * 10.1 -- Amended and Restated Credit Agreement dated as of October 25, 1993 (the "Credit Agreement") among Holdings, Lear, Chemical Bank, as agent for the bank parties thereto, and Bankers Trust Company, The Bank of Nova Scotia, Citicorp USA, Inc. and Lehman Commercial Paper Inc., as managing agents (incorporated by reference to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 1993). * 10.2 -- Amendment No. 1 to the Credit Agreement dated as of January 27, 1994 (incorporated by reference to Exhibit 10 to Lear's Current Report on Form 8-K dated February 11, 1994). * 10.3 -- Credit Agreement dated as of March 8, 1989, as amended June 21, 1989 (the "Canadian Credit Agreement"), between Lear Seating Canada, Ltd. and The Bank of Nova Scotia with respect to the establishment of credit facilities (incorporated by reference to Exhibit 10.28 to Lear's Annual Report on Form 10-K for the year ended June 30, 1989). * 10.4 -- Amendment dated September 13, 1989 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.30 to Lear's Quarterly Report on Form 10-Q for the quarter ended September 30, 1989). * 10.5 -- Amendment dated March 28, 1990 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.11 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). * 10.6 -- Amendment dated October 11, 1990 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.12 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). * 10.7 -- Amendment dated January 23, 1992 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.13 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). * 10.8 -- Senior Executive Incentive Compensation Plan of Lear (incorporated by reference to Exhibit 10.14 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). * 10.9 -- Management Incentive Compensation Plan of Lear (incorporated by reference to Exhibit 10.15 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.10 -- Form of Warrant Agreement dated as of December 15, 1988 between Holdings and Norwest Bank, N.A., as Warrant Agent (incorporated by reference to Exhibit 4.3 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.11 -- Stock Option Agreement dated as of September 29, 1988 between Holdings and certain management investors (the "Management Investors") (incorporated by reference to Exhibit 10.6 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)).
II-2 48
Exhibits: - --------- *10.12 -- Employment Agreement dated September 29, 1988 between Lear and Kenneth L. Way (incorporated by reference to Exhibit 10.7 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.13 -- Employment Agreement dated September 29, 1988 between Lear and Robert E. Rossiter (incorporated by reference to Exhibit 10.8 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.14 -- Employment Agreement dated September 29, 1988 between Lear and James H. Vandenberghe (incorporated by reference to Exhibit 10.9 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.15 -- Employment Agreement dated September 29, 1988 between Lear and James A. Hollars (incorporated by reference to Exhibit 10.10 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.16 -- Employment Agreement dated September 29, 1988 between Lear and Randal T. Murphy (incorporated by reference to Exhibit 10.12 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.17 -- Employment Agreement dated as of September 29, 1988 between Lear and Ted E. Melson (incorporated by reference to Exhibit 10.13 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.18 -- Employment Agreement dated June 1, 1992 between Lear and Donald J. Stebbins (incorporated by reference to Exhibit 10.17 to Lear's Registration Statement on Form S-1 (No. 33-51317)). *10.19 -- Amendments to Employment Agreements dated as of September 21, 1991 by and between Lear and each of Messrs. Way, Vandenberghe, Rossiter, Hollars, Melson and Murphy (incorporated by reference to Exhibit 28.7 to Holdings' Current Report on Form 8-K dated September 24, 1991). *10.20 -- Stock Purchase Agreement dated July 25, 1990 by and between Fair Haven Industries, Inc., Bradley D. Osgood, Robert Michelin and LS Acquisition Corporation No. 24. (incorporated by reference to Exhibit 10.34 to Holdings' Annual Report on Form 10-K for the year ended June 30, 1991). *10.21 -- Purchase Agreement dated July, 1990 by and between Fairfax Industries, Inc. and LS Acquisition Corporation No. 24 (incorporated by reference to Exhibit 10.37 to the Company's Annual Report on Form 10-K for the year ended June 30, 1991). *10.22 -- Amended and Restated Stockholders and Registration Rights Agreement dated as of September 27, 1991 by and among Holdings, the Lehman Funds, Lehman Merchant Banking Partners Inc., as representative of the Lehman Partnerships, FIMA Finance Management Inc., a British Virgin Islands corporation, and the Management Investors (incorporated by reference to Exhibit 2.2 to Holdings' Current Report on Form 8-K dated September 24, 1991). *10.23 -- Waiver and Agreement dated September 27, 1991, by and among Holdings, Kidder Peabody Group Inc., KP/Hanover Partners 1988, L.P., General Electric Capital Corporation, FIMA Finance Management Inc., a Panamanian corporation, FIMA Finance Management Inc., a British Virgin Islands corporation, MH Capital Partners Inc., successor by merger and name change to MH Equity Corp., SO.PA.F. Societa Partecipazioni Finanziarie S.p.A., INVEST Societa Italiana Investimenti S.p.A., the Lehman Partnerships and the Management Investors (incorporated by reference to Exhibit 2.3 to Holdings' Current Report on Form 8-K dated September 24, 1991). *10.24 -- Amendment to Amended and Restated Stockholders and Registration Rights Agreement dated as of March 31, 1994 (incorporated by reference to Exhibit 10.24 to the Company's Transition Report on Form 10-K filed on March 31, 1994). *10.25 -- 1992 Stock Option Plan (incorporated by reference to Exhibit 10.7 to Lear's Annual Report on Form 10-K for the year ended June 30, 1993). *10.26 -- Amendment to 1992 Stock Option Plan of Lear (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 2, 1994). *10.27 -- 1994 Stock Option Plan of Lear (incorporated by reference to Exhibit 10.27 to the Company's Transition Report on Form 10-K filed on March 31, 1994). *10.28 -- Stock Purchase Agreement dated as of July 21, 1992 among the Company, the Lehman Funds and FIMA Finance Management Inc., a British Virgin Islands corporation
II-3 49
Exhibits: - --------- (incorporated by reference to Exhibit 10.33 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.29 -- Asset Purchase & Supply Agreement dated as of November 18, 1991 between Lear Seating Sweden, AB and Volvo Car Corporation (incorporated by reference to Exhibit 10.34 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.30 -- Purchase Agreement dated as of November 1, 1993 between the Company and Ford Motor Company (incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 1993). * 11.1 -- Computation of income (loss) per share. * 21.1 -- List of subsidiaries of the Company. 23.1 -- Consents of Experts * 23.2 -- Consent of Winston & Strawn (included in Exhibit 5.1). * 23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5.2) * 24.1 -- Powers of Attorney. * 25.1 -- Form T-1 with respect to the eligibility of The First National Bank of Boston as Trustee under the Subordinated Note Indenture. * 25.2 -- Form T-1 with respect to the eligibility of The Bank of New York as Trustee under the Senior Subordinated Note Indenture.
- ------------------------- * Previously filed. ITEM 17. UNDERTAKINGS 1. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by them is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue. 2. The undersigned Registrant hereby undertakes that: (a) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this Registration Statement as of the time it was declared effective. (b) For purposes of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus 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. (c) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in this Registration Statement shall be deemed to be a new Registration Statement relating to the Securities offered therein, and the offering of such Securities shall be deemed to be the initial bona fide offering thereof. II-4 50 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the undersigned Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Post-Effective Amendment No. 2 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Southfield, State of Michigan on June 13, 1994. LEAR SEATING CORPORATION By: /s/ KENNETH L. WAY --------------------------------- Kenneth L. Way Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment No. 2 to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURE TITLE DATE - ------------------------------------- --------------------------------- ------------------ /s/ KENNETH L. WAY Chairman of the Board and June 13, 1994 Chief Executive Officer - ------------------------------------- (Principal Executive Officer) Kenneth L. Way * President and Director June 13, 1994 - ------------------------------------- Robert E. Rossiter /s/ JAMES H. VANDENBERGHE Executive Vice President June 13, 1994 - ------------------------------------- and Chief Financial Officer James H. Vandenberghe (Principal Financial and Principal Accounting Officer) * Director June 13, 1994 - ------------------------------------- Larry W. McCurdy Director - ------------------------------------- Gian Andrea Botta * Director June 13, 1994 - ------------------------------------- Eliot Fried * Director June 13, 1994 - ------------------------------------- Robert W. Shower * Director June 13, 1994 - ------------------------------------- Jeffrey P. Hughes * Director June 13, 1994 - ------------------------------------- David P. Spalding * Director June 13, 1994 - ------------------------------------- James A. Stern Director - ------------------------------------- Alan Washkowitz *By: /s/ JAMES H. VANDENBERGHE - ------------------------------------- James H. Vandenberghe Attorney-in-Fact
II-5 51 INDEX TO EXHIBITS
SEQUENTIALLY EXHIBIT NUMBERED NUMBER EXHIBIT PAGE - ---------- --------------------------------------------------------------------- ------------- *1.1 -- Form of Underwriting Agreement relating to the 8 1/4% Subordinated Notes of Lear. *1.2 -- Form of Underwriting Agreement relating to the 11 1/4% Senior Subordinated Notes of Lear. *3.1 -- Restated Certificate of Incorporation of Lear (incorporated by reference to Exhibit 3.3 to the Company's Transition Report on Form 10-K filed on March 31, 1994). *3.4 -- Amended and Restated By-laws of Lear. *3.5 -- Merger Agreement dated December 31, 1993, by and between Lear and Holdings (incorporated by reference to Exhibit 3.4 to Lear's Registration Statement on Form S-1 (No. 33-51317)). *4.1 -- Indenture by and between Lear and The First National Bank of Boston, as Trustee, relating to the 8 1/4% Subordinated Notes (the "Subordinated Note Indenture") (incorporated by reference to Exhibit 4.1 to the Company's Transition Report on Form 10-K filed on March 31, 1994). *4.2 -- Form of 11 1/4% Senior Subordinated Note Indenture dated as of July 15, 1992 between Lear and The Bank of New York, as Trustee (the "Senior Subordinated Note Indenture") (incorporated by reference to Exhibit 4.1 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *5.1 -- Opinion of Winston & Strawn, special counsel to the Company. *5.2 -- Opinion of Skadden, Arps, Slate, Meagher & Flom, special counsel to the Company. *10.1 -- Amended and Restated Credit Agreement dated as of October 25, 1993 (the "Credit Agreement") among Holdings, Lear, Chemical Bank, as agent for the bank parties thereto, and Bankers Trust Company, The Bank of Nova Scotia, Citicorp USA, Inc. and Lehman Commercial Paper Inc., as managing agents (incorporated by reference to Exhibit 4 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 1993). *10.2 -- Amendment No. 1 to the Credit Agreement dated as of January 27, 1994 (incorporated by reference to Exhibit 10 to Lear's Current Report on Form 8-K dated February 11, 1994). *10.3 -- Credit Agreement dated as of March 8, 1989, as amended June 21, 1989 (the "Canadian Credit Agreement"), between Lear Seating Canada, Ltd. and The Bank of Nova Scotia with respect to the establishment of credit facilities (incorporated by reference to Exhibit 10.28 to Lear's Annual Report on Form 10-K for the year ended June 30, 1989). *10.4 -- Amendment dated September 13, 1989 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.30 to Lear's Quarterly Report on Form 10-Q for the quarter ended September 30, 1989). *10.5 -- Amendment dated March 28, 1990 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.11 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.6 -- Amendment dated October 11, 1990 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.12 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.7 -- Amendment dated January 23, 1992 to the Canadian Credit Agreement (incorporated by reference to Exhibit 10.13 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)).
52 *10.8 -- Senior Executive Incentive Compensation Plan of Lear (incorporated by reference to Exhibit 10.14 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.9 -- Management Incentive Compensation Plan of Lear (incorporated by reference to Exhibit 10.15 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.10 -- Form of Warrant Agreement dated as of December 15, 1988 between Holdings and Norwest Bank, N.A., as Warrant Agent (incorporated by reference to Exhibit 4.3 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.11 -- Stock Option Agreement dated as of September 29, 1988 between Holdings and certain management investors (the "Management Investors") (incorporated by reference to Exhibit 10.6 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.12 -- Employment Agreement dated September 29, 1988 between Lear and Kenneth L. Way (incorporated by reference to Exhibit 10.7 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.13 -- Employment Agreement dated September 29, 1988 between Lear and Robert E. Rossiter (incorporated by reference to Exhibit 10.8 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.14 -- Employment Agreement dated September 29, 1988 between Lear and James H. Vandenberghe (incorporated by reference to Exhibit 10.9 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.15 -- Employment Agreement dated September 29, 1988 between Lear and James A. Hollars (incorporated by reference to Exhibit 10.10 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.16 -- Employment Agreement dated September 29, 1988 between Lear and Randal T. Murphy (incorporated by reference to Exhibit 10.12 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.17 -- Employment Agreement dated as of September 29, 1988 between Lear and Ted E. Melson (incorporated by reference to Exhibit 10.13 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-25256)). *10.18 -- Employment Agreement dated June 1, 1992 between Lear and Donald J. Stebbins (incorporated by reference to Exhibit 10.17 to Lear's Registration Statement on Form S-1 (No. 33-51317)). *10.19 -- Amendments to Employment Agreements dated as of September 21, 1991 by and between Lear and each of Messrs. Way, Vandenberghe, Rossiter, Hollars, Melson and Murphy (incorporated by reference to Exhibit 28.7 to Holdings' Current Report on Form 8-K dated September 24, 1991). *10.20 -- Stock Purchase Agreement dated July 25, 1990 by and between Fair Haven Industries, Inc., Bradley D. Osgood, Robert Michelin and LS Acquisition Corporation No. 24. (incorporated by reference to Exhibit 10.34 to Holdings' Annual Report on Form 10-K for the year ended June 30, 1991). *10.21 -- Purchase Agreement dated July, 1990 by and between Fairfax Industries, Inc. and LS Acquisition Corporation No. 24 (incorporated by reference to Exhibit 10.37 to the Company's Annual Report on Form 10-K for the year ended June 30, 1991). *10.22 -- Amended and Restated Stockholders and Registration Rights Agreement dated as of September 27, 1991 by and among Holdings, the Lehman Funds, Lehman Merchant Banking Partners Inc., as representative of the Lehman Partnerships, FIMA Finance Management Inc., a British Virgin Islands corporation, and the Management Investors (incorporated by reference to Exhibit 2.2 to Holdings' Current Report on Form 8-K dated September 24, 1991).
53 *10.23 -- Waiver and Agreement dated September 27, 1991, by and among Holdings, Kidder Peabody Group Inc., KP/Hanover Partners 1988, L.P., General Electric Capital Corporation, FIMA Finance Management Inc., a Panamanian corporation, FIMA Finance Management Inc., a British Virgin Islands corporation, MH Capital Partners Inc., successor by merger and name change to MH Equity Corp., SO.PA.F. Societa Partecipazioni Finanziarie S.p.A., INVEST Societa Italiana Investimenti S.p.A., the Lehman Partnerships and the Management Investors (incorporated by reference to Exhibit 2.3 to Holdings' Current Report on Form 8-K dated September 24, 1991). *10.24 -- Amendment to Amended and Restated Stockholders and Registration Rights Agreement dated as of March 31, 1994 (incorporated by reference to Exhibit 10.24 to the Company's Transition Report on Form 10-K filed on March 31, 1994). *10.25 -- 1992 Stock Option Plan (incorporated by reference to Exhibit 10.7 to Lear's Annual Report on Form 10-K for the year ended June 30, 1993). *10.26 -- Amendment to 1992 Stock Option Plan of Lear (incorporated by reference to Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended April 2, 1994). *10.27 -- 1994 Stock Option Plan of Lear (incorporated by reference to Exhibit 10.27 to the Company's Transition Report on Form 10-K filed on March 31, 1994). *10.28 -- Stock Purchase Agreement dated as of July 21, 1992 among the Company, the Lehman Funds and FIMA Finance Management Inc., a British Virgin Islands corporation (incorporated by reference to Exhibit 10.33 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.29 -- Asset Purchase & Supply Agreement dated as of November 18, 1991 between Lear Seating Sweden, AB and Volvo Car Corporation (incorporated by reference to Exhibit 10.34 to Holdings' and Lear's Registration Statement on Form S-1 (No. 33-47867)). *10.30 -- Purchase Agreement dated as of November 1, 1993 between the Company and Ford Motor Company (incorporated by reference to Exhibit 10 to the Company's Quarterly Report on Form 10-Q for the quarter ended October 2, 1993). *11.1 -- Computation of income (loss) per share. *21.1 -- List of subsidiaries of the Company. 23.1 -- Consent of Experts *23.2 -- Consent of Winston & Strawn (included in Exhibit 5.1). *23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included in Exhibit 5.2) *24.1 -- Powers of Attorney. *25.1 -- Form T-1 with respect to the eligibility of The First National Bank of Boston as Trustee under the Subordinated Note Indenture. *25.2 -- Form T-1 with respect to the eligibility of The Bank of New York as Trustee under the Senior Subordinated Note Indenture.
- ------------------------- * Previously filed. EX-23.1 2 CONSENT OF EXPERTS 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation by reference in this registration statement of our reports dated August 20, 1993 and February 10, 1994 included in Lear Seating Corporation's Forms 10-K for the year ended June 30, 1993 and the six months ended December 31, 1993, respectively, and our report dated August 20, 1993 included in Lear Holdings Corporation's Form 10-K for the year ended June 30, 1993 and to all references to our firm included in this registration statement. /s/ ARTHUR ANDERSEN & CO. ARTHUR ANDERSEN & CO. Detroit, Michigan, June 10, 1994. 2 [COOPERS & LYBRAND LETTERHEAD] CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this Registration Statement, Post-Effective Amendment No. 2, on Form S-3 to Registration Statement on Form S-1 (File No. 33-51317), and Post-Effective Amendment No. 2 on Form S-3 to Registration Statement on Form S-1 (File No. 33-47867), of our report, dated November 18, 1993, which includes an explanatory paragraph concerning a change in accounting principle and a subsequent event, on our audits of the financial statements of The North American Business (an operating component of Ford Motor Company) as of September 30, 1993 and December 31, 1992, and for the nine months ended September 30, 1993 and the years ended December 31, 1992 and 1991. We also consent to the reference to our firm under the caption "Experts." /s/ COOPERS & LYBRAND COOPERS & LYBRAND Detroit, Michigan June 13, 1994 -----END PRIVACY-ENHANCED MESSAGE-----