| DURA AUTOMOTIVE SYSTEMS INC Item 1A Risk Factors |
| 16 ITEM 1A RISK FACTORS Our business is subject to a number of risks and uncertainties |
| You should carefully read and consider the risk factors set forth below |
| WE ARE DEPENDENT ON OUR LARGEST CUSTOMERS AND ON SELECTED VEHICLE PROGRAMS We are dependent on Ford, GM, Lear and Volkswagen as our largest customers |
| Our revenues from Ford, GM, Lear and Volkswagen represented approximately 19prca, 10prca, 10prca,and 10prca , respectively, of our revenues for 2005 |
| The loss of Ford, GM, Lear or Volkswagen or any other significant customer could have a material adverse effect on us |
| The contracts we typically enter into with many of our customers, including Ford, GM, Lear and Volkswagen, provide for supplying the customers &apos requirements for a particular model, rather than for manufacturing a specific quantity of products |
| Such contracts range from one year to the life of the platform or model, usually three to seven years, and do not require the purchase by the customer of any minimum number of parts |
| Therefore, the loss of any one of such customers or a significant reduction in demand for certain other key models or a group of related models sold by any of our major customers could have a material adverse effect on our existing and future revenues and net income |
| In 2005, two of our key customers, General Motors and Ford, lost market share in North America above 16 historical levels and, as a result, significantly reduced their production volumes |
| From time to time, we are involved in product liability and pricing claims with certain of our significant customers |
| As a result of these claims, it is possible that our relationship with these customers could be adversely affected |
| THE CURRENT FINANCIAL CONDITION OF THE AUTOMOTIVE INDUSTRY IN THE UNITED STATES COULD HAVE A NEGATIVE IMPACT ON OUR ABILITY TO FINANCE OUR OPERATIONS Several of our key North American customers face significant business challenges due to increased competitive conditions and recent changes in consumer demand |
| In operating our business, we depend on the ability of our customers to timely pay the amounts we have billed them for tools and products |
| Any disruption in our customers &apos ability to pay us in a timely manner because of financial difficulty or otherwise would have a negative impact on our ability to finance our operations |
| In addition, because of the challenging conditions within the US automotive industry, many automotive suppliers have filed for bankruptcy |
| In light of these conditions, our suppliers could impose restrictive payment terms on us that would have a negative impact our ability to finance our operations |
| OUR INABILITY TO COMPETE EFFECTIVELY IN THE HIGHLY COMPETITIVE AUTOMOTIVE SUPPLY INDUSTRY COULD RESULT IN THE LOSS OF CUSTOMERS, WHICH COULD HAVE AN ADVERSE EFFECT ON OUR REVENUES AND OPERATING RESULTS The automotive component supply industry is highly competitive |
| Some of our competitors are companies, or divisions or subsidiaries of companies, that are larger and have greater financial and other resources than we do |
| In addition, with respect to certain of our products, we compete with divisions of our OEM customers |
| There can be no assurance that our products will be able to compete successfully with the products of these other companies, which could result in the loss of customers and, as a result, decrease revenues and profitability |
| We principally compete for new business both at the beginning of the development of new models and upon the redesign of existing models by our major customers |
| New model development generally begins two to five years prior to the marketing of such models to the public |
| The failure to obtain new business on new models or to retain or increase business on redesigned existing models could adversely affect our business and financial results |
| In addition, as a result of the relatively long lead times required for many of our complex structural components, it may be difficult in the short-term for us to obtain new sales to replace any unexpected decline in the sale of existing products |
| We may incur significant expense in preparing to meet anticipated customer requirements which may not be recovered |
| IN THE LAST THREE FISCAL YEARS, WE HAVE EXPERIENCED DECLINING GROSS MARGIN, AND WE MAY NOT SUCCEED IN RETURNING TO HISTORICAL GROSS MARGIN LEVELS Our gross margin has declined in each of the last three fiscal years from 13dtta8prca in 2002 to 12dtta2prca in 2003, 11dtta2prca in 2004 and 11dtta0prca in 2005 |
| These declines were a result of a number of factors including declines in North American OEMs automotive production levels from previous levels resulting in lower fixed cost absorption, and increased raw material costs that could not be passed along fully to our customers |
| We cannot assure you that our gross margin will improve or return to prior historical levels, and that any further reduction in customer demand for the products that we supply would not have an further adverse effect on our gross margin |
| A lack of improvement in our future gross margin levels would harm our financial condition and adversely impact our business |
| IF WE ARE UNABLE TO OBTAIN OUR RAW MATERIALS AT FAVORABLE PRICES, IT COULD ADVERSELY IMPACT OUR FINANCIAL CONDITION Numerous raw materials are used in the manufacture of our products |
| Our principal raw materials include (1) coil steel and resin in mechanism production, (2) metal wire and resin in cable production and (3) glass in window systems |
| The types of steel we purchase include hot and cold rolled, galvanized, organically coated and aluminized steel |
| Overall, steel accounted for the most significant component of our raw material costs in 2005 |
| Steel prices increased during 2004 to cyclical highs and remained at that level during part of 2005, which had a negative impact on our gross profit in 2004 and 2005 |
| To the extent we are not able to pass on fully increased steel and other raw material costs to our customers in a timely fashion or otherwise able to offset these increased 17 operating costs, our business, results of operations and financial condition will continue to be adversely affected |
| Moreover, we may be materially and adversely affected by the failure of our suppliers to perform as expected |
| OUR GROSS MARGIN AND PROFITABILITY WILL BE ADVERSELY AFFECTED BY THE INABILITY TO REDUCE COSTS OR INCREASE PRICES There is substantial continuing pressure from the major OEMs to reduce costs, including the cost of products purchased from outside suppliers |
| Therefore, our profitability is dependent, in part, on our ability to spread fixed production costs over increasing product sales |
| If we are unable to generate sufficient production cost savings in the future to offset price reductions and any reduction in consumer demand for automobiles resulting in decreased sales, our gross margin and profitability would be adversely affected |
| In addition, our customers often times require engineering, design or production changes |
| In some circumstances, we may not be able to achieve price increases in amounts sufficient to cover the costs of these changes |
| CYCLICALITY AND SEASONALITY IN THE AUTOMOTIVE, RECREATION AND SPECIALTY VEHICLE MARKETS COULD ADVERSELY AFFECT OUR REVENUES AND NET INCOME The automotive, recreation and specialty vehicle markets are highly cyclical and both markets are dependent on general economic conditions and other factors, including consumer spending preferences and the attractiveness of incentives offered by OEMs, if any |
| In addition, automotive production and sales can be affected by labor relations issues, regulatory requirements, trade agreements and other factors |
| Economic factors adversely affecting automotive production and consumer spending could adversely impact our revenues and net income |
| The volume of automotive production in North America, Europe and the rest of the world has fluctuated, sometimes significantly, from year to year, and such fluctuations give rise to fluctuations in demand for our products |
| The weakness in the North American OEMs automotive market has adversely affected our operating results in 2005, and the weakness is expected to continue for some time |
| In addition, because we have significant fixed production costs, relatively modest declines in our customers &apos production levels can have a significant adverse impact on our profitability |
| Our business is also somewhat seasonal |
| We typically experience decreased revenues and operating income during the third calendar quarter of each year due to the impact of scheduled OEM plant shutdowns in July and August for vacations and new model changeovers |
| WE ARE SUBJECT TO CERTAIN RISKS ASSOCIATED WITH OUR FOREIGN OPERATIONS THAT COULD HARM OUR REVENUES AND PROFITABILITY We have significant operations in Europe, Canada, Asia and Latin America |
| Certain risks are inherent in international operations, including: - difficulty of enforcing agreements and collecting receivables through certain foreign legal systems; - foreign customers may have longer payment cycles than customers in the United States; - tax rates in certain foreign countries may exceed those in the United States and foreign earnings may be subject to withholding requirements or the imposition of tariffs, exchange controls or other restrictions; - currency fluctuations and devaluations; - general economic conditions, political unrest and terrorist attacks against American interests in countries where we operate may have an adverse effect on our operations in those countries; - exposure to possible expropriation or other governmental actions; - difficulties associated with managing a large organization spread throughout various countries; and - required compliance with a variety of foreign laws and regulations |
| As we continue to expand our business globally, our success will be dependent, in part, on our ability to anticipate and effectively manage these and other risks |
| We cannot assure you that these and other factors will not 18 have a material adverse effect on our international operations or our business, results of operations and financial condition as a whole |
| CURRENCY EXCHANGE RATE FLUCTUATIONS COULD HAVE AN ADVERSE EFFECT ON OUR REVENUES AND FINANCIAL RESULTS We generate a significant portion of our revenues and incur a significant portion of our expenses in currencies other than US dollars |
| To the extent that we are unable to match revenues received in foreign currencies with costs paid in the same currency, exchange rate fluctuations in any such currency could have an adverse effect on our revenues and financial results |
| During times of a strengthening US dollar, our reported sales and earnings from our international operations will be reduced because the applicable local currency will be translated into fewer US dollars |
| The strengthening of the foreign currencies in relation to the US dollar had a positive impact on our 2005 revenues of dlra40dtta0 million; in 2006, such currencies are currently experiencing a decline |
| As of December 31, 2005, a substantial number of our employees were unionized |
| We have collective bargaining agreements with several unions including the United Auto Workers, the Canadian Auto Workers, the International Brotherhood of Teamsters and the International Association of Machinists and Aerospace Workers |
| Virtually all of our unionized facilities in the United States and Canada have separate local contracts with the union which represents the workers employed there, with each such contract having an expiration date independent of other labor contracts |
| The majority of our non US and Canadian employees are members of industrial trade union organizations and confederations within their respective countries |
| Many of these organizations and confederations operate under national contracts which are not specific to any one employer |
| As a result, we may encounter strikes, further unionization efforts or other types of conflicts with labor unions or our employees, any of which could have an adverse effect on our operations or may limit our flexibility in dealing with our workforce |
| OUR OPERATING RESULTS MAY BE ADVERSELY AFFECTED BY ENVIRONMENTAL, HEALTH AND SAFETY REQUIREMENTS We are required to comply with federal, state, local and foreign laws and regulations governing the protection of the environment and occupational health and safety, including laws regulating the generation, storage, handling, use and transportation of hazardous materials; the emission and discharge of hazardous materials into soil, air or water; and the health and safety of our colleagues |
| We are also required to obtain and comply with environmental permits for certain operations |
| We cannot assure you that we are at all times in complete compliance with such laws, regulations and permits |
| If we violate or fail to comply with the requirements, we could be fined or otherwise sanctioned by regulators |
| In some instances, such a fine or sanction could be material |
| In addition, we have made and will continue to make capital and other expenditures to comply with environmental requirements |
| Environmental requirements may become more stringent over time and we cannot assure you that we will not incur material environmental costs or liabilities in the future |
| We are also subject to laws requiring the cleanup of contaminated property |
| Under these laws, we could be held liable for costs and damages relating to contamination at our past or present facilities and at third-party sites to which these facilities sent wastes |
| If a release of hazardous substances occurs at or from any of our current or former facilities or another location where we have disposed of wastes, we may be held liable for the contamination, and the amount of such liability could be material |
| We are currently conducting a cleanup of contamination at certain facilities in Germany |
| We are monitoring environmental contamination at certain facilities in North America |
| We have also been named a potentially responsible party for cleanup costs at two "e Superfund "e cleanup sites |
| We have established accounting reserves for these contamination liabilities, but we cannot assure you that our liabilities will not exceed our reserves |
| 19 WE MAY BE ADVERSELY AFFECTED BY PRODUCT LIABILITY EXPOSURE CLAIMS We face an inherent business risk of exposure to product liability claims in the event that the failure of our products to perform to specifications results, or is alleged to result, in property damage, bodily injury and/or death |
| We cannot assure you that we will not incur significant costs to defend these claims or that we will not experience any material product liability losses in the future |
| In addition, if any DURA-designed products are, or are alleged to be defective, we may be required to participate in a recall involving those products |
| Each OEM has its own policy regarding product recalls and other product liability actions relating to its suppliers |
| However, as suppliers become more integrally involved in the vehicle design process and assume more vehicle assembly functions, OEMs are increasingly looking to their suppliers for contribution when faced with product recalls, product liability or warranty claims |
| We cannot assure you that the future costs associated with providing product warranties will not be material |
| A successful product liability claim brought against us in excess of available insurance coverage or a requirement to participate in any product recall may have a material adverse effect on our results of operations or financial condition |
| In addition, OEMs are also increasingly requiring their outside suppliers to guarantee or warrant their products and bear the costs of repair and replacement of such products under new vehicle warranties |
| Depending on the terms under which we supply products to an OEM, an OEM may hold us responsible for some or all of the repair or replacement costs of defective products under new vehicle warranties, when the product supplied did not perform as represented |
| Over the past five years, we have been involved in a number of product warranty matters |
| In the aggregate, we incurred charges of dlra2dtta8 million, dlra2dtta1 million and dlra2dtta0 million in 2005, 2004 and 2003, respectively, in connection with product warranty matters |
| We carry insurance for certain legal matters including product liability; however, we do not carry insurance for warranty or recall matters, as the cost and availability for such insurance, in the opinion of management, is cost prohibitive or not available |
| We have established reserves for matters that are probable and estimable in amounts management believes are adequate to cover reasonable adverse judgments not covered by insurance; however, we cannot assure you that these reserves will be adequate to cover all warranty matters that could possibly arise |
| The outcome of the various legal actions and claims that are discussed above or other legal actions and claims that are incidental to our business may have a material adverse impact on our consolidated financial position, results of operations or cash flows |
| TECHNOLOGICAL AND REGULATORY CHANGES MAY ADVERSELY AFFECT US Changes in legislative, regulatory or industry requirements or competitive technologies may render certain of our products obsolete |
| Our ability to anticipate changes in technology and regulatory standards and to develop and introduce new and enhanced products successfully on a timely basis will be a significant factor in our ability to grow and to remain competitive |
| We cannot assure you that we will be able to achieve the technological advances that may be necessary for us to remain competitive or that certain of our products will not become obsolete |
| We are also subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in product development and failure of products to operate properly |
| WE MAY MAKE STRATEGIC ACQUISITIONS AND ALLIANCES, WHICH PRESENT ADDITIONAL RISKS Part of our growth strategy includes pursuing strategic acquisitions and alliances |
| We cannot assure you that we will be able to consummate acquisitions or alliances in the future on terms acceptable to us, if at all |
| In addition, we cannot assure you that the integration of any future acquisitions will be successful or that the expected strategic benefits of any future acquisitions or alliances will be realized |
| Acquisitions may involve a number of special risks, including, but not limited to: - adverse short-term effects on our reported operating results; - diversion of managementapstas attention; - difficulties assimilating and integrating the operations of the acquired company with our own; and - unanticipated liabilities or contingencies relating to the acquired company |
| 20 WE MAY INCUR RESTRUCTURING CHARGES THAT WOULD REDUCE OUR EARNINGS During the last several years, we have evaluated our worldwide manufacturing capacity utilization and opportunities for cost savings in light of conditions in the North American and European automotive and recreational vehicle markets |
| As a result of these evaluations, we have taken several actions including closing certain facilities, combining facilities, reducing and consolidating certain support activities and disposing of certain business units |
| We have recorded restructuring charges and charges related to discontinued operations as a result of these actions over the last several years |
| Our reported earnings will be reduced in the event as we incur additional charges in the future as a result of the current and any additional restructuring activities undertaken by us |
| WE MAY NOT ACCOMPLISH THE OBJECTIVES OF OUR FEBRUARY 9, 2006 RESTRUCTURING IMITATIVE In February 2006, we announced a restructuring plan that we anticipate to be complete by the end of 2007 |
| The restructuring plan is expected to impact over 50prca of our worldwide operations either through product movement or facility closures |
| Cash costs for the restructuring plan are expected to be approximately dlra100 million, which includes estimated capital expenditures between dlra25 and dlra35 million |
| The remaining costs will relate primarily to employee severance, capital investment, facility closure and product move costs |
| The majority of these expenditures will occur by year end 2007 |
| As part of this initiative, we have identified certain key actions that must be accomplished to achieve our projected cost savings: - Our customers, as industry practice, must approve the movement of the production of their parts along with prequalifying (PPAP) the new production facility and production lines; - Our customers must agree these cost reduction actions are being made to meet our previously agreed to price reduction commitments; - The representatives of our affected employees must support the streamlining and moving of operations in a timely manner in order that we meet the cost reduction objectives in the planned time period; and - We must execute this initiative in the prescribed time period (all actions must be accomplished by the end of 2007) |
| Any failure to obtain substantial completion of any of these key actions may result in us not reaching a sufficient profitability level to enable us to: beneficially refinance debt coming due in 2009; maintain the recorded goodwill valuation; and not record a valuation reserve against the deferred income tax benefits recognized for net operating loss and research and experimental tax credit carryforwards |
| WE MIGHT FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY OR THIRD PARTIES MIGHT ASSERT THAT OUR TECHNOLOGIES INFRINGE ON THEIR INTELLECTUAL PROPERTY As part of our business strategy, we intend to accelerate our investment in new product and process technologies in an effort to strengthen and differentiate our product portfolio |
| As a result, we believe that the protection of our intellectual property will become increasingly important to our business |
| We rely on a combination of patents, trade secrets, trademarks and copyrights to provide protection in this regard, but this protection might be inadequate |
| For example, our pending or future patent applications might not be approved or, if allowed, they might not be of sufficient strength or scope |
| Conversely, third parties might assert that our technologies infringe their proprietary rights |
| In either case, litigation which could result in substantial costs and diversion of our efforts, might be necessary, and whether or not we are ultimately successful, the litigation could adversely affect our business |
| OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER OUR OUTSTANDING INDEBTEDNESS We have a significant amount of indebtedness |
| As of December 31, 2005, we had dlra1cmam150dtta7 million of outstanding debt (excluding the fair market value of interest rate swap agreements), and dlra339dtta7 million of stockholders &apos investment |
| Our ratio of earnings to fixed charges for the year ended December 31, 2005, was 1dtta0x (See Exhibit 12dtta1) |
| In addition, we may incur substantial additional indebtedness in the future |
| Our existing senior 21 secured revolving credit facility ( "e Credit Agreement "e ), provides for borrowings up to dlra175dtta0 million, which may be increased by up to dlra50dtta0 million, subject to compliance with certain financial covenants and borrowing conditions set forth therein |
| Our indebtedness could have several important consequences, including but not limited to the following: - our ability to obtain additional financing in the future for working capital, capital expenditures, potential acquisition opportunities, general corporate purposes or other purposes may be impaired; - our ability to finance our international operations in an effective tax manner if we are unable to maintain the prescribed fixed charge ratio; - fluctuations in market interest rates will affect the cost of our borrowings, if not hedged by interest rate hedge agreements, because a substantial portion of our indebtedness, is payable at variable rates; - we are more highly leveraged than some of our competitors, which may place us at a competitive disadvantage; - a substantial portion of our cash flow from operations will be dedicated to the repayment of our indebtedness, including indebtedness we may incur in the future, and will not be available for other purposes, including our operations, capital expenditures and future business opportunities; - there would be a material adverse effect on our business and financial condition if we were unable to service our indebtedness or obtain additional financing, as needed; and - we may be more vulnerable to economic downturns, may be limited in our ability to withstand competitive pressures and may have reduced flexibility in responding to changing business, regulatory and economic conditions |
| Our ability to service our indebtedness will depend on our future performance, which will be affected by prevailing economic conditions and financial, business, regulatory and other factors |
| We believe that, based upon current levels of operations, we will be able to meet our debt service obligations over the next 24 months |
| Significant assumptions underlie this belief, including among other things, that we will continue to be successful in implementing our business strategy and restructuring initiatives; and that there will be no material adverse developments in our business, liquidity or capital requirements |
| If we cannot generate sufficient cash flow from operations to service our indebtedness and to meet our other obligations and commitments, we might be required to refinance our debt or to dispose of assets to obtain funds for such purpose |
| There is no assurance that refinancings or asset dispositions could be effected on a timely basis or on satisfactory terms, if at all, or would be permitted by the terms of our indentures and our existing Credit Agreement and dlra150dtta0 million senior secured second lien term loan ( "e Second Lien Term Loan "e , collectively with Credit Agreement, "e Credit Facilities "e ) |
| In the event that we were unable to refinance our existing indebtedness or raise funds through asset sales, sales of equity or otherwise, our ability to pay principal of, and interest on, the indebtedness would be impaired |
| DESPITE OUR SUBSTANTIAL INDEBTEDNESS, WE MAY STILL INCUR SIGNIFICANTLY MORE DEBT, WHICH COULD FURTHER EXACERBATE THE RISKS DESCRIBED ABOVE As of December 31, 2005, we could have incurred dlra125dtta5 million of additional indebtedness under the terms of our existing Credit Agreement |
| The terms of the indentures governing our outstanding debt securities could permit us to incur significant further indebtedness in the future |
| TO SERVICE OUR INDEBTEDNESS, WE WILL REQUIRE A SIGNIFICANT AMOUNT OF CASH OUR ABILITY TO GENERATE CASH DEPENDS ON MANY FACTORS BEYOND OUR CONTROL Our ability to make payments on our indebtedness, and to fund planned capital expenditures will depend on our ability to generate cash from our operations in the future |
| This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control |
| Based on our current 22 level of operations, we believe our cash flow from operations, available cash and available borrowings under our Credit Agreement will be adequate to meet our future liquidity needs for the foreseeable future |
| We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our Credit Agreement or otherwise in an amount sufficient to enable us to pay our indebtedness, or to fund our other liquidity needs |
| Our ability to borrow under our Credit Agreement may be constrained by conditions including limits on borrowings exceeding specified percentages of the applicable borrowing base |
| We have two significant public debt amortizations due in 2009 and 2012; 9prca senior subordinated notes due May 2009 ( "e Senior Subordinated Notes "e ) in the amount of dlra523dtta9 million; and 8 5/8prca senior unsecured notes due April 2012 ( "e Senior Unsecured Notes "e ) in the amount of dlra400dtta0 million |
| A substantial portion of our indebtedness bears interest at floating rates, and therefore if interest rates increase, our debt service requirements will increase |
| We may need to refinance or restructure all or a portion of our indebtedness on or before maturity |
| We cannot assure you that we will be able to refinance any of our indebtedness, including our Credit Facilities and our outstanding debt securities, on commercially reasonable terms or at all |
| If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances |
| We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms, or at all |
| In addition, the indentures relating to our debt securities and our Credit Facilities, may restrict our ability to take any of these actions |
| RESTRICTIVE COVENANTS IN OUR EXISTING SENIOR CREDIT FACILITY AND THE INDENTURES GOVERNING OUR DEBT SECURITIES MAY RESTRICT OUR ABILITY TO PURSUE OUR BUSINESS STRATEGIES The indentures governing our debt securities and our existing Credit Facilities limit our ability, among other things, to: - incur additional indebtedness; - pay dividends, repurchase our capital stock or make certain other restricted payments or investments; - make investments; - sell assets; - consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and - create liens |
| The ability of our foreign subsidiaries to incur any form of indebtedness is prohibited under our indentures if we do not meet the fixed charge coverage ratio, as defined therein, of at least 2 to 1 |
| In addition, our Credit Agreement includes other and more restrictive covenants that prohibit us from prepaying our other indebtedness, while indebtedness under our Credit Agreement is outstanding |
| Our Credit Agreement requires us to maintain a minimum fixed charge coverage ratio if excess availability, as defined, falls below dlra35 million |
| The restrictions contained in our Credit Facilities and the indentures governing our debt securities could: - limit our ability to plan for or react to market conditions or meet capital needs or otherwise restrict our activities or business plans; and - adversely affect our ability to finance our operations, strategic acquisitions, investments or alliances or other capital needs or to engage in other business activities that would be in our interest |
| A breach of any of these restrictive covenants or our inability to comply with the required financial ratios could result in a default under our Credit Facilities and indentures |
| If a default occurs, the lenders under our Credit Agreement may elect to declare all borrowings outstanding, together with accrued interest and other fees, to be immediately due and payable which would result in an event of default under our outstanding notes |
| The lenders will also have the right in these circumstances to terminate any commitments they have to provide further 23 borrowings |
| If we are unable to repay outstanding borrowings when due, the lenders will also have the right to proceed against the collateral, including our available cash, granted to them to secure the indebtedness |
| If the indebtedness under either of our Credit Facilities and debt securities were to be accelerated, we cannot assure you that our assets would be sufficient to repay in full the indebtedness and our other indebtedness |