<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 16, 1998
REGISTRATION NO. 333-47273
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
DURA AUTOMOTIVE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 38-3185711
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
(Exact name of Co-Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 41-1900709
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 342-2311
(Address, including zip code, and telephone number, including
area code, of Registrant's principal offices)
STEPHEN E. K. GRAHAM
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
2791 RESEARCH DRIVE
ROCHESTER HILLS, MICHIGAN 48309
TELEPHONE: (248) 299-7500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------
COPIES TO:
DENNIS M. MYERS, ESQ. DEWEY B. CRAWFORD, ESQ.
KIRKLAND & ELLIS GARDNER, CARTON & DOUGLAS
200 EAST RANDOLPH DRIVE 321 NORTH CLARK STREET
CHICAGO, ILLINOIS 60601 CHICAGO, ILLINOIS 60610
TELEPHONE: (312) 861-2000 TELEPHONE: (312) 644-3000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: / /
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 16, 1998
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
P R O S P E C T U S
[LOGO]
$50,000,000
2,000,000 CONVERTIBLE TRUST PREFERRED SECURITIES
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
% CONVERTIBLE TRUST PREFERRED SECURITIES
(LIQUIDATION PREFERENCE $25 PER CONVERTIBLE TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH HEREIN BY, AND CONVERTIBLE INTO CLASS A
COMMON STOCK OF,
DURA AUTOMOTIVE SYSTEMS, INC.
------------
The % Convertible Trust Preferred Securities (the "Preferred Securities")
offered hereby (the "Offering") represent preferred undivided beneficial
interests in the assets of Dura Automotive Systems Capital Trust, a statutory
business trust created under the laws of the State of Delaware (the "Issuer").
Dura Automotive Systems, Inc., a Delaware corporation (the "Company"), will
directly or indirectly own all of the common securities of the Issuer (the
"Common Securities"), representing all of the common undivided beneficial
interests in the assets of the Issuer. The Issuer exists for the sole purpose of
issuing the Preferred Securities and the Common Securities and investing the
proceeds thereof in % Convertible Subordinated Debentures due ,
2028, having the terms described herein (the "Debentures"), to be issued by the
Company. The Preferred Securities will have a preference under certain
circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the Common Securities. See
"Description of the Preferred Securities--Subordination of Common Securities."
Application has been made to list the Preferred Securities on the Nasdaq
National Market ("Nasdaq"), subject to official notice of issuance, under the
symbol "DRRAP."
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" BEGINNING ON PAGE 16 FOR A DISCUSSION OF FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS, INCLUDING THE PERIOD AND
CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED
SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF SUCH DEFERRAL.
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.
<TABLE>
<CAPTION>
PRICE PROCEEDS
TO UNDERWRITING TO
PUBLIC(1) COMMISSION(2) ISSUER(3)(4)
<S> <C> <C> <C>
Per Preferred Security.......................... $ (3) $
Total(5)........................................ $ (3) $
</TABLE>
(1) Plus accrued distributions, if any, from , 1998.
(2) The Company, its principal operating subsidiary and the Issuer have agreed
to indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act 1933, as amended. See "Underwriting."
(3) Because the proceeds of the sale of the Preferred Securities will be
invested in the Debentures, the Company has agreed to pay to the
Underwriters, as compensation for arranging the investment therein of such
proceeds, $ per Preferred Security ($ in the aggregate or $ in the
aggregate if the Underwriters exercise the over-allotment option in full).
See "Underwriting."
(4) Before deducting expenses, estimated at $500,000, all of which are payable
by the Company.
(5) The Issuer and the Company have granted the Underwriters a 30-day option to
purchase up to 300,000 additional Preferred Securities on the same terms and
conditions set forth above to cover over-allotments, if any. If the
Underwriters exercise the over-allotment option in full, the total Price to
Public will be $ , the total Underwriting Commission will be
$ and the total Proceeds to Issuer will be $ . See
"Underwriting."
--------------------------
The Preferred Securities are offered by the Underwriters, subject to prior
sale, when, as and if delivered to and accepted by the Underwriters and subject
to their right to reject orders in whole or in part. It is expected that
delivery of certificates representing the Preferred Securities will be made on
or about , 1998 through The Depository Trust Company or at the
offices of Robert W. Baird & Co. Incorporated, Milwaukee, Wisconsin.
ROBERT W. BAIRD & CO. PIPER JAFFRAY INC.
INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS, AND
THE RELATED NOTES THERETO, INCLUDED ELSEWHERE IN THIS PROSPECTUS. AS USED IN
THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, THE TERM "COMPANY"
INCLUDES DURA AUTOMOTIVE SYSTEMS, INC. AND ALL OF ITS SUBSIDIARIES AND ITS AND
THEIR RESPECTIVE PREDECESSORS AND SUBSIDIARIES. THE TERM "PARENT" IS USED HEREIN
TO REFER TO DURA AUTOMOTIVE SYSTEMS, INC., EXCLUSIVE OF ITS SUBSIDIARIES. EXCEPT
AS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS ASSUMES THAT THE
OVER-ALLOTMENT OPTION GRANTED TO THE UNDERWRITERS IS NOT EXERCISED. THE CLASS A
COMMON STOCK AND CLASS B COMMON STOCK ARE COLLECTIVELY REFERRED TO HEREIN AS THE
"COMMON STOCK."
THE COMPANY
Dura Automotive Systems, Inc. is a leading designer and manufacturer of
driver control systems, engineered mechanical components and cable-related
systems for the global automotive industry. The Company's products include
parking brake systems, automotive cables, transmission shifter systems, latches,
underbody tire carriers, jacks, brake, clutch and accelerator pedals and other
mechanical assemblies. The Company sells its products to the major North
American, Japanese and European automotive original equipment manufacturers
("OEMs"). The Company has 26 manufacturing and product development facilities
located in the United States (Indiana, Michigan and Missouri), Australia,
Canada, France, Germany, Mexico, and Spain, and in Brazil through a joint
venture. The Company's revenues have increased from $129.3 million in 1993 to
$489.8 million in 1997 on a pro forma basis, a compound annual growth rate of
approximately 40%. Over this same period, the Company's operating income margin
has improved from 2.8% of revenues to 7.6% of revenues.
The Company believes that it is a leading North American supplier of parking
brake mechanisms, transmission shifter mechanisms and automotive cables, with
estimated market shares in excess of 75%, 40% and 25%, respectively. In
addition, the Company is one of the few suppliers to offer integrated parking
brake, shifter and latch systems. These systems, which consist of mechanisms and
cables, require significant design and engineering expertise because they are
critical to the vehicle's reliability, performance and safety. The Company
believes that its customers value its ability to design, manufacture and
assemble complete systems.
The automotive components supply industry is undergoing significant
consolidation and globalization as OEMs continue to reduce their supplier base.
In order to lower costs and improve quality, OEMs are awarding sole-source
contracts to full-service suppliers who are able to supply larger portions of a
vehicle on a global basis. OEMs' criteria for supplier selection include not
only cost, quality and responsiveness, but also full-service design, engineering
and program management capabilities. OEMs are seeking suppliers capable of
providing complete systems rather than suppliers who only provide separate
component parts. In addition, OEMs are increasingly requiring their suppliers to
have the capability to design and manufacture their products in multiple
geographic markets. As a full-service supplier with strong OEM relationships,
the Company expects to continue to benefit from these trends.
On a pro forma basis, approximately 81% of the Company's 1997 revenues were
generated from sales to North American OEMs, with its major customers being
Ford, GM, Chrysler and Toyota. The Company manufactures products for many of the
most popular car, light truck and sport utility models, including eight of the
top ten selling vehicles in North America for 1997: the Ford Taurus, Explorer,
Ranger and F-Series pickups, GM Cavalier and C/K pickups, Dodge Ram pickups, and
Toyota Camry. As a result of recent acquisitions, approximately 17% of the
Company's 1997 pro forma revenues were generated from sales to European OEMs,
including Mercedes, Volkswagen and BMW. The Company is generally the sole
supplier of the parts it sells to OEMs and will ordinarily continue to supply
parts for a particular model for the life of the model, which usually ranges
from three to seven years.
5
<PAGE>
The Company's business objective is to capitalize on the trends in the
automotive supply industry in order to be the leading provider of driver control
and cable-related systems to OEMs worldwide. The Company's growth strategy
focuses on the identification and pursuit of (i) strategic acquisitions, (ii)
systems opportunities, (iii) increased customer and platform penetration, and
(iv) increased penetration of international markets, including "world car"
opportunities.
The Company has broadened its acquisition scope from the original focus on
cable-driven controls to include other highly engineered automotive components.
As a result, the Company competes in what it believes to be a $6 billion, highly
fragmented market that provides numerous potential acquisition and joint venture
opportunities. The Company seeks acquisition and joint venture opportunities
that: (i) provide additional product, manufacturing and technical capabilities;
(ii) broaden the Company's geographic coverage and strengthen its ability to
supply products on a global basis; (iii) increase the number of models for which
the Company supplies products and increase the content supplied for existing
models; and (iv) add new customers. The following recent acquisitions illustrate
the manner in which the Company has met these acquisition criteria:
- In December 1996, the Company acquired KPI Automotive Group ("KPI"), a
manufacturer of shifter systems, parking brake mechanisms, brake pedals and
underbody tire carriers. At the time of the acquisition, KPI had annual revenues
of approximately $95 million. The acquisition added significant market
penetration in console-based shifter systems, increased platform content and
added a significant new product line in underbody tire carriers.
- In January 1997, the Company acquired the VOFA Group ("VOFA"), a
manufacturer of shifter cables, brake cables and other light duty cables for the
European automotive and industrial markets. At the time of the acquisition, VOFA
had annual revenues of approximately $85 million. The acquisition provided the
Company with additional expertise in cables and a strong presence in Europe. In
addition, the acquisition added new customers, such as Mercedes, Volkswagen and
BMW.
- In August 1997, the Company acquired GT Automotive Systems, Inc. ("GT
Automotive"), a designer and manufacturer of column-mounted shifter systems, and
turn signal and tilt lever assemblies. At the time of the acquisition, GT
Automotive had annual revenues of approximately $70 million and a substantial
share of the North American column-mounted shifter systems market. GT
Automotive's strong position in this market, combined with the Company's
existing position in console-based shifter systems, increased the Company's
share of the North American shifter market. In addition, the acquisition added
Nissan as a customer.
In addition to KPI, VOFA and GT Automotive, the Company has successfully
completed four other strategic acquisitions and one joint venture since August
1994. Collectively, these transactions expanded the Company's global
manufacturing presence, added new customers such as PSA (Peugeot and Citroen)
and Renault and added new products. Recently, the Company completed the
acquisition of Universal Tool & Stamping Co., Inc. ("Universal"), which
manufactures automobile and light truck jacks for North American OEMs.
The Company was formed by an investor group organized by Hidden Creek
Industries ("Hidden Creek") to acquire the Dura Automotive Hardware and
Mechanical Components divisions (the "Dura Divisions") from Wickes Manufacturing
Company ("Wickes"). In August 1994, the Company combined its operations with the
automotive parking brake cable and lever business and light duty cable business
(the "Brake and Cable Business") of Alkin Co. ("Alkin"), which significantly
expanded the Company's size and capabilities. The Company completed an initial
public offering ("IPO") of its Class A Common Stock in August 1996.
6
<PAGE>
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
Dura Automotive Systems Capital Trust (the "Issuer") is a statutory business
trust created under Delaware law pursuant to (i) a trust agreement executed by
the Company (as Depositor), the Delaware Trustee (as defined herein) and one of
the Administrative Trustees (as defined herein) and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on March 2, 1998. In
connection with the Offering, such trust agreement will be amended and restated
in its entirety (as so amended and restated, the "Trust Agreement"). The Trust
Agreement will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Issuer exists for the sole
purposes of (i) issuing and selling the Preferred Securities and Common
Securities, (ii) using the proceeds from the sale of the Preferred Securities
and Common Securities to acquire the Debentures issued by the Company and (iii)
engaging in only those other activities necessary or incidental thereto.
Accordingly, the Debentures will be the sole assets of the Issuer, and payments
under the Debentures will be the sole revenue of the Issuer. The Issuer has a
term of 45 years, but may dissolve earlier as provided in the Trust Agreement.
All of the Common Securities will be owned directly or indirectly by the
Company. The Company will pay all fees and expenses related to the Issuer and
the offering of the Preferred Securities and will pay, directly or indirectly,
all ongoing costs and expenses of the Issuer. The principal corporate offices of
the Issuer are located at 4508 IDS Center, Minneapolis, Minnesota 55402, and its
telephone number is (612) 342-2311.
THE OFFERING
SEE "RISK FACTORS" FOR A DISCUSSION OF FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE PURCHASERS, INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER
WHICH PAYMENTS OF DISTRIBUTIONS ON THE PREFERRED SECURITIES MAY BE DEFERRED AND
THE RELATED UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
<TABLE>
<S> <C>
Securities Offered................ 2,000,000 of the Issuer's % Convertible Trust
Preferred Securities, liquidation preference of $25 per
security (the "Preferred Securities"). Additionally, the
Company and the Issuer have granted the Underwriters an
option for 30 days to purchase up to an additional
300,000 Preferred Securities at the initial offering
price solely to cover over-allotments, if any.
Issuer............................ Dura Automotive Systems Capital Trust, a statutory
business trust created under the laws of the State of
Delaware.
Distributions..................... Distributions on the Preferred Securities will be
cumulative from the date of original issuance of the
Preferred Securities and will be payable at the annual
rate of % of the liquidation preference of $25 per
Preferred Security. Distributions will be made quarterly
in arrears on , ,
and , commencing on , 1998, when and
to the extent that funds of the Issuer are available
therefor. The proceeds from the Offering will be
invested in the Debentures. Interest payment periods on
the Debentures are quarterly but may be deferred from
time to time by the Company for periods of up to 20
consecutive quarters, so long as no Debenture Event of
Default (as defined herein) has occurred and is
continuing. In the event of such a deferral, the Issuer
would be unable to make quarterly Distribution payments
on the Preferred Securities during the period of any
such deferral. During any such deferral period, interest
on the Debentures will continue to accrue (and the
amount of Distributions to which holders of the
Preferred Securities are
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
entitled will accumulate at the stated rate per annum
set forth herein, compounded quarterly) and holders of
Preferred Securities will be required to recognize
interest income for United States Federal income tax
purposes. See "Description of the Debentures--Option to
Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences--Interest Income and Original
Issue Discount."
Distribution Deferral
Provisions...................... The Company has the right to defer payment of interest
on the Debentures at any time or from time to time for a
period not exceeding 20 consecutive quarters with
respect to each deferral period (each, an "Extension
Period"), provided that no Extension Period may extend
beyond the stated maturity of the Debentures. Upon the
termination of any such Extension Period and the payment
of all amounts then due on any Interest Payment Date,
the Company may elect to begin a new Extension Period
subject to the requirements set forth herein.
If interest payments on the Debentures are deferred,
Distributions on the Preferred Securities will also be
deferred and the Company will not be permitted, subject
to certain exceptions described herein, to declare or
pay any cash distribu-tions with respect to the
Company's capital stock or debt securities (including
guarantees of indebtedness for borrowed money) that rank
PARI PASSU with or junior to the Debentures. If a holder
of Preferred Securities converts Preferred Securities
into Class A Common Stock during an Extension Period,
the holder will not receive any of the deferred
Distribution.
Liquidation Preference............ $25 per Preferred Security, plus all accrued and unpaid
Distributions.
Conversion into Class A Common
Stock........................... Each Preferred Security is convertible in the manner
described below at the option of the holder into shares
of Class A Common Stock at the rate of shares of
Class A Common Stock for each Preferred Security
(equivalent to a conversion price of $ per share of
Class A Common Stock), subject to adjustment in certain
circumstances. A holder of Preferred Securities wishing
to exercise its conversion right must surrender any or
all of such Preferred Securities, together with an
irrevocable conversion notice, to the paying, conversion
and exchange agent acting on behalf of the holders of
Preferred Securities (the "Conversion Agent"), which
will exchange the Preferred Securities for a portion
(equal to the aggregate liqui-dation preference of the
Preferred Securities being so converted) of the
Debentures held by the Issuer and immediately convert
such Debentures into Class A Common Stock. However, no
fractional shares of Class A Common Stock will be issued
as a result of conversion, but in lieu thereof, such
fractional interest will be paid in cash. A holder
generally should not recognize gain or loss for United
States Federal income tax purposes upon the exchange
through the Conversion Agent of
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
the Preferred Securities for a proportionate share of
the Debentures followed immediately thereafter by the
conversion of the Debentures into Class A Common Stock.
See "Certain Federal Income Tax Consequences--Conversion
of Preferred Securities into Class A Common Stock."
Common Stock Voting Rights........ The Company's outstanding capital stock consists of
Class A Common Stock and Class B Common Stock. Each
holder of Class A Common Stock is entitled to one vote
per share and each holder of Class B Common Stock is
entitled to ten votes per share on all matters submitted
to a vote of stockholders. Except as required by law and
the Company's Amended and Restated Certificate of
Incorporation (the "Restated Certificate"), holders of
the Class A Common Stock and Class B Common Stock vote
together as a single class. See "Description of Capital
Stock."
Redemption........................ Except as provided below, the Preferred Securities may
not be redeemed by the Issuer prior to , 2001.
From time to time on or after such date, the Preferred
Securities will be subject to redemption, in whole or in
part, at the redemption prices set forth herein (plus
all accrued and unpaid Distributions to the date fixed
for redemption) upon any redemption by the Company of
the Debentures. See "Description of the Preferred
Securities--Optional Redemption" and "Description of the
Debentures--Optional Redemption."
The Preferred Securities are subject to mandatory
redemption upon the repayment at maturity or as a result
of acceleration of the Debentures. See "Description of
the Debentures--Debenture Events of Default; Notice,"
"Description of the Preferred Securities--Mandatory
Redemption" and "Description of the Debentures--Events
of Default."
Special Event Exchange or
Redemption...................... Upon the occurrence of a Special Event (as defined
herein), the Issuer Trustees (as defined herein) will
direct the Conversion Agent to exchange all outstanding
Preferred Securities for Debentures, provided that, in
the case of a Special Event that is a Tax Event (as
defined herein), the Company will have the right to
direct that less than all, or none, of the Preferred
Securities be so exchanged if and for so long as the
Company shall have elected to pay Additional Sums (as
defined herein) such that the amounts received by the
holders of Preferred Securities that remain outstanding
are not reduced thereby, and shall not have revoked any
such election or failed to make such payments. If a Tax
Event occurs and is continuing, the Debentures may be
redeemed by the Company on or after , 2001 at
100% of the principal amount thereof, plus accrued and
unpaid interest thereon. In the event of such a
redemption of the Debentures, the Preferred Securities
will be redeemed by the
</TABLE>
9
<PAGE>
<TABLE>
<S> <C>
Issuer Trustees at $25 per Preferred Security plus
accrued and unpaid Distributions thereon. See
"Description of the Preferred Securities--Special Event
Exchange or Redemption."
A "Special Event" means a Tax Event or an Investment
Company Event. A "Tax Event" means the receipt by the
Property Trustee (as defined herein), on behalf of the
Issuer, of an opinion of counsel, rendered by a law firm
having a national tax and securities practice (which
opinion shall not have been rescinded by such law firm),
to the effect that, as a result of any amendment to, or
change (including any announced prospective change) in,
the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority
thereof or therein affecting taxation, or as a result of
any official administrative pronouncement or judicial
decision interpreting or applying such laws or
regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after
the date of issuance of the Preferred Securities under
the Trust Agreement and does not pertain to the use of
the proceeds of the issuance of the Debentures, there is
more than an insubstantial risk in each case after the
date hereof that (i) the Issuer is, or will be within 90
days of the date thereof, subject to United States
Federal income tax with respect to income received or
accrued on the Debentures, (ii) interest payable by the
Company on such Debentures is not, or within 90 days of
the date thereof will not be, deductible by the Company,
in whole or in part, for United States Federal income
tax purposes, or (iii) the Issuer is, or will be within
90 days of the date thereof, subject to more than a DE
MINIMIS amount of other taxes, duties or other
governmental charges. "Investment Company Event" means
the receipt by the Property Trustee, on behalf of the
Issuer, of an opinion of counsel, rendered by a law firm
having a national tax and securities practice (which
opinion shall not have been rescinded by such law firm),
to the effect that, as a result of the occurrence of a
change in law or regulation by any legislative body,
court, governmental agency or regulatory authority (a
"Change in 1940 Act Law"), there is more than an
insubstantial risk that the Issuer is or will be
considered an investment company that is required to be
registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), which Change in
1940 Act Law becomes effective on or after the date of
original issuance of the Preferred Securities.
"Additional Sums" means the additional amount as may be
necessary in order that the amount of Distributions then
due and payable by the Issuer on the outstanding
Preferred Securities and Common Securities of the Issuer
shall not be reduced as a result of any additional
taxes, duties and other governmental charges to which
the Issuer has become subject as a result of a Tax
Event.
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
Distribution of Debentures........ At any time, the Company will have the right to dissolve
the Issuer and, after satisfaction of the liabilities of
creditors of the Issuer as provided by applicable law,
cause the Debentures to be distributed to the holders of
the Preferred Securities in dissolution of the Issuer.
See "Description of the Preferred
Securities--Distribution of Debentures."
Guarantee......................... Pursuant to the Guarantee, the Company will irrevocably
agree, on a subordinated basis, to guarantee the payment
in full of (a) the Distributions payable by the Issuer
on the Preferred Securities, to the extent the Issuer
has funds on hand available therefor, (b) the redemption
price (including all accumulated and unpaid
Distributions) of the Preferred Securities, to the
extent the Issuer has funds on hand available therefor,
and (c) payments on liquidation with respect to the
Preferred Securities (unless the Debentures are
distributed to the holders of the Preferred Securities),
to the extent that there are assets of the Issuer
available for distribution to holders of the Preferred
Securities. A holder of Preferred Securities may enforce
the Company's obligations under the Guarantee directly
against the Company, and the Company waives any right to
require that an action be brought against the Issuer or
any other person before proceeding against the Company.
The Guarantee will constitute an unsecured obligation of
the Company and will rank subordinate and junior in
right of payment to all liabilities of the Company and
PARI PASSU with the most senior preferred stock, if any,
issued from time to time by the Company and any
guarantee now or hereinafter entered into by the Company
in respect of any preferred or preference stock of any
affiliate of the Company. See "Risk Factors--Ranking of
Subordinated Obligations Under the Guarantee and the
Debentures," "Risk Factors--Structural Subordination"
and "Description of the Guarantee."
Voting Rights..................... Holders of Preferred Securities will generally have
limited voting rights, which relate primarily to the
modification of the Preferred Securities. Holders of
Preferred Securities will not be entitled to vote to
appoint, remove or replace the Issuer Trustees, which
voting rights are vested exclusively in the holder of
the Common Securities. The Issuer Trustees and the
Company may amend the Trust Agreement without the
consent of holders of Preferred Securities to ensure
that the Issuer will be classified for United States
Federal income tax purposes as a grantor trust even if
such action adversely affects the interests of such
holders. See "Description of the Preferred Securities--
Voting Rights; Amendment of the Trust Agreement."
Debentures........................ The Debentures will have a maturity of 30 years from the
date of original issuance and will bear interest at the
rate of % per annum payable quarterly in arrears. The
Company has the right from time to time to select an
interest payment period or periods longer than one
quarter to defer interest (during which
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
period or periods interest will compound quarterly),
provided that no such deferral of interest payments will
exceed 20 consecutive quarters and provided further that
no such deferral of interest payments may extend beyond
the stated maturity of the Debentures. Accordingly,
Distribution payments on the Preferred Securities may
not be deferred beyond the stated maturity of the
Debentures. If the Company defers interest payments
longer than one quarter, subject to certain exceptions,
it will be prohibited from paying dividends on any of
its capital stock and making certain other restricted
payments until quarterly interest payments are resumed
and all accrued and unpaid interest on the Debentures is
brought current. The Company will have the right to make
partial payments of such interest during a deferral of
interest payments. The Debentures are convertible into
shares of Class A Common Stock at the option of the
holders thereof at a conversion rate of shares of
Class A Common Stock for each $25 in principal amount of
Debentures (equivalent to a conversion price of $
per share of Class A Common Stock) subject to certain
adjustments set forth herein. The Issuer will covenant
not to convert Debentures except pursuant to a notice of
conversion delivered to the Conversion Agent by a holder
of Preferred Securities.
In addition, on and after , 2001, the Debentures
are redeemable at the option of the Company at any time,
in whole or in part, at the redemption prices set forth
herein, together with accrued and unpaid interest to the
date fixed for redemption. See "Description of the
Debentures--Optional Redemption." Upon the occurrence
and continuation of a Tax Event, the Debentures are also
redeemable, in whole or in part, on or after ,
2001, at 100% of the principal amount thereof, plus
accrued and unpaid interest thereon. See "Description of
the Preferred Securities--Special Event Exchange or
Redemption."
The payment of the principal and interest on the
Debentures will be subordinated and junior in right of
payment to all Senior Debt (as defined herein) of the
Company. The Company's obligations under the Debentures
will also be effectively subordinated to all existing
and future obligations of the Company's subsidiaries.
See "Risk Factors--Ranking of Subordinated Obligations
under the Guarantee and the Debentures" and "Risk
Factors--Structural Subordination." While the Preferred
Securities are outstanding, the Issuer will not have the
right to amend the Indenture (as defined herein) or the
terms of the Debentures in a way that adversely affects
the holders of the Preferred Securities or to waive a
Debenture Event of Default (as defined herein) without
the consent of holders of at least a majority in
aggregate liquidation preference of the Preferred
Securities and, in certain cases, the Common
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
Securities then outstanding. See "Description of the
Debentures--Modification of Indenture."
Use of Proceeds................... The proceeds from the sale of the Preferred Securities
offered hereby will be used by the Issuer to purchase
the Debentures issued by the Company. The Company
expects to use such proceeds to repay a portion of the
borrowings under the Bank Credit Agreement. See "Use of
Proceeds."
Listing........................... Application has been made to list the Preferred
Securities on Nasdaq, subject to official notice of
issuance, under the symbol "DRRAP."
</TABLE>
13
<PAGE>
SUMMARY FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
PRO
FORMA
1993 1994(1) 1995(2) 1996(3) 1997(4) 1997(5)
--------- --------- --------- --------- --------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues................................. $ 129,328 $ 189,675 $ 253,726 $ 245,329 $ 449,111 $ 489,752
Gross profit............................. 12,717 19,050 34,167 37,519 74,025 77,237
Operating income......................... 3,587 7,875 17,560 19,326 37,610 37,222
Net income............................... 1,118 2,580 10,126 10,128 16,642 14,586
Basic earnings per share(6).............. $ 0.41 $ 0.75 $ 2.04 $ 1.57 $ 1.89 $ 1.66
Diluted earnings per share(6)............ 0.41 0.75 2.03 1.57 1.88 1.66
OTHER DATA:
Depreciation and amortization............ $ 2,409 $ 3,725 $ 5,578 $ 6,079 $ 12,303 $ 13,787
Capital expenditures, net................ 2,951 5,406 6,116 6,260 16,242 N/A
EBITDA(7)................................ 5,996 11,600 23,138 25,405 49,913 51,009
Net cash provided by (used in):
Operating activities................... 3,724 (6,156) 13,138 19,792 8,516 N/A
Investing activities................... (2,951) (46,878) 11,428 (95,093) (93,386) N/A
Financing activities................... (787) 53,037 (22,851) 75,236 87,620 N/A
EBITDA to interest expense............... 3.9x 3.3x 4.8x 9.8x 5.4x 6.3x
Ratio of earnings to fixed charges(8).... 2.2x 2.2x 3.4x 6.4x 3.8x 3.3x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
--------------------------
ACTUAL AS ADJUSTED(9)
--------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital.......................................................... $ 50,304 $ 50,304
Total assets............................................................. 419,264 419,264
Long-term debt, net of current maturities................................ 178,081 130,331
Preferred securities(10)................................................. -- 50,000
Total stockholders' investment........................................... 101,708 101,708
</TABLE>
- --------------------------
(1) In August 1994, the Company acquired the Brake and Cable Business of Alkin.
The results of operations of this acquired business have been included in
the consolidated financial statements of the Company from August 31, 1994,
the date of acquisition.
(2) In April 1995, the Company sold the net assets of its window regulator
business (the "Window Regulator Business") to Rockwell International
Corporation ("Rockwell"), realizing a pretax gain of approximately $4.2
million. The results of operations of the Window Regulator Business have
been included in the consolidated financial statements of the Company
through April 2, 1995, the date of divestiture.
(3) Includes the results of operations of (i) the parking brake business
acquired from Rockwell (the "Rockwell Parking Brake Business") from October
1, 1996, and (ii) KPI from December 5, 1996, their respective dates of
acquisition. The Company issued an aggregate of 3,795,000 shares of its
Class A Common Stock in August 1996 in connection with the IPO.
(4) Includes the results of operations of (i) VOFA from January 1, 1997, (ii)
the parking brake business of Excel Industries Inc. ("Excel Parking Brake
Business") from May 5, 1997, (iii) GT Automotive from August 29, 1997, and
(iv) REOM Industries (Aust) Pty Ltd. ("REOM") from December 12, 1997, which
represent their respective dates of acquisition.
(5) The pro forma statement of operations data for the year ended December 31,
1997 gives effect to (i) the acquisition of GT Automotive and (ii) the sale
of the Preferred Securities offered hereby and the application of the net
proceeds to the Company as described in "Use of Proceeds," as if such
transactions had occurred on
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<PAGE>
January 1, 1997. The results of operations of the Excel Parking Brake
Business prior to its acquisition in May 1997 and those of REOM prior to its
acquisition on December 12, 1997 have not been included in the Company's pro
forma results of operations for the year ended December 31, 1997 because
such results are not material to the Company's results of operations taken
as a whole. Pro forma operating income and EBITDA for the year ended
December 31, 1997 include the effect of non-recurring charges totaling $3.4
million reflected in the operating results of GT Automotive during the
period from January 1, 1997 through August 29, 1997 (the date of the
acquisition of GT Automotive). These charges included $2.3 million
associated with losses to be incurred on certain future contracts and $1.1
million related to one-time increases in certain asset valuation allowances
and accrued liabilities. These charges reduced earnings per share by $0.23.
(6) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A and Class B Common Stock
outstanding during the year. Diluted earnings per share include the dilutive
effects of outstanding stock options using the treasury stock method. Pro
forma diluted earnings per share excludes the conversion of the Preferred
Securities (into approximately 1,147,000 shares of Class A Common Stock), as
their effect is anti-dilutive. See Note 3 to Notes to Consolidated Financial
Statements.
(7) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and the Company's calculation thereof may not be comparable to
that reported by other companies. The Company believes that it is widely
accepted that EBITDA provides useful information regarding a company's
ability to service and/or incur indebtedness. This belief is based on the
Company's negotiations with its lenders who have indicated that the amount
of indebtedness the Company will be permitted to incur will be based, in
part, on the Company's actual and pro forma EBITDA. EBITDA does not take
into account the Company's working capital requirements, debt service
requirements and other commitments and, accordingly, is not necessarily
indicative of amounts that may be available for discretionary use.
(8) The ratio of earnings to fixed charges is computed by dividing (i) income
before income taxes, interest expense and the portion of rent determined to
be interest by (ii) total fixed charges, which includes interest expense,
minority interest and the portion of rent expense determined to be interest.
The portion of rent expense determined to be interest is 33% of gross rent
expense.
(9) As adjusted to reflect the sale of 2,000,000 Preferred Securities, $25 per
share liquidation preference, and the application of the net proceeds to the
Company as described in "Use of Proceeds." See "Capitalization."
(10) Represents the issuance of the Preferred Securities by the Issuer. The sole
assets of the Issuer will be approximately $51.5 million principal amount of
Debentures, such amount being the sum of the stated liquidation preference
of the Preferred Securities and the capital contributed by the Company in
exchange for the Common Securities.
15
<PAGE>
RISK FACTORS
THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN,
CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). ALSO, DOCUMENTS
SUBSEQUENTLY FILED BY THE COMPANY WITH THE COMMISSION AND INCORPORATED HEREIN BY
REFERENCE WILL CONTAIN FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING
STATEMENTS ARE BASED ON THE BELIEFS OF THE COMPANY'S MANAGEMENT AS WELL AS ON
ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO THE COMPANY AT THE
TIME SUCH STATEMENTS WERE MADE. WHEN USED IN THIS PROSPECTUS, THE WORDS
"ANTICIPATE," "BELIEVE," "ESTIMATE," "EXPECT," "INTENDS" AND SIMILAR
EXPRESSIONS, AS THEY RELATE TO THE COMPANY, ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS, WHICH INCLUDE STATEMENTS RELATING TO, AMONG OTHER
THINGS, (I) THE INTEGRATION OF THE OPERATIONS OF RECENTLY ACQUIRED COMPANIES
WITH THOSE OF THE COMPANY; (II) THE STRATEGIC BENEFITS OF SUCH ACQUISITIONS; AND
(III) THE COMPANY'S ABILITY TO CONTINUE TO IMPLEMENT ITS OPERATING AND GROWTH
STRATEGY. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE PROJECTED IN THE
FORWARD-LOOKING STATEMENTS AS A RESULT OF THE RISK FACTORS SET FORTH BELOW, THE
MATTERS SET FORTH OR INCORPORATED IN THE PROSPECTUS GENERALLY AND CERTAIN
ECONOMIC AND BUSINESS FACTORS, SOME OF WHICH MAY BE BEYOND THE CONTROL OF THE
COMPANY. THE COMPANY CAUTIONS THE READER, HOWEVER, THAT THIS LIST OF FACTORS MAY
NOT BE EXHAUSTIVE, PARTICULARLY WITH RESPECT TO FUTURE FILINGS WITH THE
COMMISSION. IN ANALYZING AN INVESTMENT IN THE PREFERRED SECURITIES OFFERED
HEREBY, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, ALONG WITH THE OTHER
MATTERS REFERRED TO HEREIN, THE RISK FACTORS DESCRIBED BELOW.
RISK FACTORS RELATING TO THE COMPANY
RELIANCE ON MAJOR CUSTOMERS
The Company's net sales to Ford and GM represented approximately 42% and
25%, respectively, of the Company's revenues in 1997 and approximately 49% and
36%, respectively, of the Company's revenues in 1996. Thus, the loss of Ford, GM
or any other significant customer could have a material adverse effect on the
Company. The contracts the Company has entered into with many of its customers
provide for supplying the customers' 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 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 decrease in demand for
certain key models or group of related models sold by any of its major customers
could have a material adverse effect on the Company. The Company is involved in
claims with Ford involving alleged failures of certain self-adjust parking
brakes originally manufactured by the Brake and Cable Business of Alkin. Ford
has maintained that the Company or Alkin is responsible for all damages or
liabilities incurred by Ford as a result of these claims. As a result of these
claims, it is possible that the Company's relationship with Ford could be
adversely affected. See "Business--Legal Proceedings." There is substantial and
continuing pressure from the major OEMs to reduce costs, including the cost of
products purchased from outside suppliers such as the Company. If the Company is
unable to generate sufficient production cost savings in the future to offset
price reductions, the Company's gross margin could be adversely affected. See
"Business--Customers and Marketing."
INDUSTRY CYCLICALITY AND SEASONALITY
The automotive market is highly cyclical and is dependent on consumer
spending. Economic factors adversely affecting automotive production and
consumer spending could adversely impact the Company. In addition, the Company's
business is somewhat seasonal. The Company typically experiences decreased
revenues and operating income during the third calender quarter of each year due
to the impact of OEM plant shutdowns in July for vacations and new model
changeovers. See "Management's Discussion and Analysis of Results of Operations
and Financial Condition--Quarterly Results of Operations and Seasonality."
16
<PAGE>
FAILURE TO OBTAIN BUSINESS RELATED TO NEW AND REDESIGNED MODEL INTRODUCTIONS
The Company principally competes for new business both at the beginning of
the development of new models and upon the redesign of existing models by its
major customers. New model development generally begins two to five years prior
to the marketing of such models to the public. The failure of the Company to
obtain new business on new models or to retain or increase business on
redesigned existing models could adversely affect the Company.
PRODUCT LIABILITY EXPOSURE
The Company faces an inherent business risk of exposure to product liability
claims in the event that the failure of its products results in personal injury
or death, and there can be no assurance that the Company will not experience any
material product liability losses in the future. In addition, if any of the
Company's products prove to be defective, the Company may be required to
participate in a recall involving such products. In late 1994, Ford issued a
recall of a series of manual-transmission Ford F-Series pickups to repair the
self-adjust parking brakes originally manufactured by the Brake and Cable
Business of Alkin. The Company's share of such costs, which was fully reserved
at the time of the acquisition of the Brake and Cable Business from Alkin, has
reached the full $6.0 million limit agreed to by the Company and Ford. The
Company is also involved in a product recall relating to the same issue with
respect to the Mondeo in Europe. The Company has agreed to pay 50% of the costs
of that recall not to exceed $1.0 million, which payments totaled $0.4 million
at December 31, 1997. The types of alleged failures that prompted the F-Series
recall have also led to a number of claims and lawsuits filed against Ford. To
date, two cases have been instituted directly against the Company or Alkin
relating to personal injury claims, and Ford has indicated that it has received
over 400 claims (generally for property damage) relating to alleged defects in
the self-adjust parking brakes. Ford has maintained that the Company or Alkin is
responsible for all damages or liabilities incurred by Ford as a result of these
claims, and as of December 31, 1997, Ford had tendered its defense of 25 such
claims to Dura and Alkin. Dura and Alkin have submitted these claims to their
insurance carriers. The Company maintains insurance against product liability
claims, but there can be no assurance that such coverage will be adequate for
liabilities ultimately incurred or that it will continue to be available on
terms acceptable to the Company. In November 1996, an insurance carrier of the
Company brought a declaratory judgment that its policy did not provide coverage
for an allegedly defective parking brake manufactured prior to August 31, 1994.
A successful claim brought against the Company in excess of available insurance
coverage or a requirement to participate in any product recall may have a
material adverse effect on the Company's results of operations or financial
condition. See "Business--Legal Proceedings."
INDUSTRY CONSOLIDATION; RISKS ASSOCIATED WITH FUTURE ACQUISITIONS
The automotive component supply industry has undergone, and is likely to
continue to experience, consolidation, as OEMs seek to reduce costs and reduce
their supplier base. The Company intends to actively pursue acquisition targets
that will allow the Company to expand into new geographic markets, add new
customers, provide new product, manufacturing and service capabilities or
increase model penetration with existing customers. There can be no assurance
that the Company will find attractive acquisition candidates or successfully
integrate acquired businesses into the Company's existing business. If the
expected synergies from such transactions do not materialize or the Company
fails to successfully integrate new businesses into its existing businesses, the
Company's results of operations could be adversely affected. The Company is
currently in the process of acquiring Universal. To date, however, no definitive
agreement relating to such acquisition has been executed by the parties. As a
result, no assurance can be given that such acquisition will be completed or if
completed will be on the terms set forth herein. To the extent that the Company
may be considered as an acquisition candidate by a third party, certain
provisions in the Restated Certificate and the Amended and Restated By-laws
("By-laws") described below
17
<PAGE>
may inhibit a change in control of the Company. See "--Anti-Takeover Effects of
Certain Charter, By-law and Statutory Provisions."
SUBSTANTIAL LEVERAGE
The Company has consolidated indebtedness that is substantial in relation to
its stockholders' investment. As of December 31, 1997, the Company had
approximately $180 million of outstanding debt and approximately $102 million of
stockholders' investment.
The Company's indebtedness will have several important consequences for the
holders of the Preferred Securities (or Class A Common Stock which may be
acquired upon conversion), including but not limited to the following: (i) a
substantial portion of the Company's cash flow from operations must be dedicated
to debt service requirements (principal and interest) on its indebtedness and
will not be available for other purposes; (ii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, or for general corporate purposes may be impaired; (iii) the
Company's leverage may increase its vulnerability to economic downturns and
limit its ability to withstand competitive pressures; (iv) the Company's ability
to capitalize on significant business opportunities may be limited; and (v) a
portion of the Company's indebtedness will be subject to fluctuations in
interest rates. See "Capitalization."
The Company's ability to satisfy its debt obligations will depend on its
future operating performance, which will be affected by prevailing economic
conditions and financial, business and other factors, certain of which are
beyond the Company's control. The Company believes, based on current
circumstances, that the Company's cash flow, together with available borrowings
under the Bank Credit Agreement (as defined herein) will be sufficient to permit
the Company to meet its operating expenses and to service its debt requirements,
including the Debentures underlying the Preferred Securities, as they become
due. Significant assumptions underlie this belief, including, among other
things, that the Company will succeed in implementing its business strategy and
there will be no material adverse developments in the business, liquidity or
capital requirements of the Company. If the Company is unable to service its
indebtedness, it will be forced to adopt an alternative strategy that may
include actions such as reducing or delaying capital expenditures, selling
assets, restructuring or refinancing its indebtedness or seeking additional
equity capital. There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all. In addition, there can be no
assurance that the Company will not increase its leverage to meet capital
requirements in the future. See "Management's Discussion and Analysis of Results
of Operations and Financial Condition--Liquidity and Capital Resources."
RISKS ASSOCIATED WITH FOREIGN OPERATIONS
The Company has significant international operations, specifically in
Europe, Canada and Latin America and, therefore, the Company is subject to
various political, economic and other uncertainties. Among other risks, the
Company's operations are subject to the risks of taxation policies, foreign
exchange restrictions, foreign trade policies and regulations, changing
political conditions and governmental regulations. Accordingly, no assurance can
be given that any of the Company's strategies will prove to be effective or that
management's goals will be achieved. In addition, the Company generates a
significant portion of its revenues in currencies other than U.S. Dollars.
Fluctuations in the exchange rates of these currencies could have an adverse
effect on the Company's financial results. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition--Foreign Currency
Transactions," and "Business--Properties."
DEPENDENCE ON KEY PERSONNEL
The Company's continued success largely will depend on the efforts and
abilities of its executive officers and certain other key employees. The Company
currently does not have employment agreements
18
<PAGE>
with any of its executive officers or other key employees. The Company's
operations could be adversely affected if, for any reason, such executive
officers or key employees do not remain with the Company. See "Management."
COMPETITION
The automotive component supply industry is highly competitive. Some of the
Company's competitors are companies, or divisions or subsidiaries of companies,
that are larger and have greater financial and other resources than the Company.
In addition, with respect to certain of its products, some of the Company's
competitors are divisions of its OEM customers. There can be no assurance that
the Company's products will be able to compete successfully with the products of
these other companies. See "Business--Competition."
TECHNOLOGICAL AND REGULATORY CHANGES
Changes in legislative, regulatory or industry requirements or competitive
technologies may render certain of the Company's products obsolete. The
Company's 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 the Company's ability to grow and to
remain competitive. There can be no assurance that the Company will be able to
achieve the technological advances that may be necessary for it to remain
competitive or that certain of its products will not become obsolete. The
Company is 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. See
"Business--Competition" and "--Design and Engineering Support."
IMPACT OF ENVIRONMENTAL REGULATION
The Company is subject to the requirements of Federal, state and local
environmental and occupational health and safety laws and regulations. There can
be no assurance that the Company is at all times in complete compliance with all
such requirements. The Company has made and will continue to make capital and
other expenditures to comply with environmental requirements. If a release of
hazardous substances occurs on or from the Company's properties or any
associated offsite disposal location, or if contamination is discovered at any
of the Company's current or former properties, the Company may be held liable,
and the amount of such liability could be material. The Company is currently
involved in environmental matters at its Mancelona, Michigan and Canadian
facilities and at two landfill sites in Toledo, Ohio. See
"Business--Environmental Matters."
CONTROL BY CERTAIN STOCKHOLDERS
Onex DHC LLC (together with its affiliates, "Onex"), Alkin and certain other
stockholders associated with the Company or Hidden Creek beneficially own all of
the outstanding shares of Class B Common Stock. Each share of Class B Common
Stock has ten votes as compared to one vote for each share of Class A Common
Stock, and thus this amount currently represents 91.8% of the combined voting
power of the outstanding Common Stock. In addition, all of such stockholders
have entered into agreements to vote their shares for the election of directors
designated by certain of the existing stockholders. As a result of such stock
ownership and voting agreements, these stockholders are able to control the vote
on all matters submitted to a vote of the holders of Common Stock, including the
election of Directors, amendments to the Restated Certificate and the By-laws
and approval of significant corporate transactions. See "Description of Capital
Stock." Such consolidation of voting power could also have the effect of
delaying, deterring or preventing a change in control of the Company that might
be otherwise beneficial to stockholders. See "Security Ownership of Certain
Beneficial Owners and Management."
19
<PAGE>
DIVIDEND POLICY; RESTRICTIONS ON PAYMENT OF DIVIDENDS
The Company currently intends to retain earnings to support its growth
strategy and does not anticipate paying dividends on the Common Stock in the
foreseeable future. As a holding company, the ability of the Company to pay
dividends in the future is dependent upon the receipt of dividends or other
payments from its principal operating subsidiary, Dura Operating Corp. The
payment of dividends by such subsidiary to the Company for the purpose of paying
dividends to holders of Common Stock is limited by the terms of its Bank Credit
Agreement (as defined). The Company has received an amendment to its Bank Credit
Agreement to permit the distribution of cash from such subsidiary to the Company
for the purpose of paying interest on the Debentures. See "Dividend Policy."
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
No prediction can be made as to the effect, if any, that future sales of
shares of Class A Common Stock or the availability of such shares for future
sale will have on the market price of the Class A Common Stock prevailing from
time to time. Sales of substantial amounts of Class A Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Class A Common Stock. An aggregate of 4.7 million shares of Class
B Common Stock convertible into shares of Class A Common Stock are eligible for
sale under Rule 144 under the Securities Act. In addition, the holders of an
aggregate of 4.7 million shares of Class B Common Stock convertible into shares
of Class A Common Stock have certain rights to register their shares of Class A
Common Stock under the Securities Act at the Company's expense. See "Security
Ownership of Certain Beneficial Owners and Management."
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Class A Common Stock could be subject to wide
fluctuations in response to variations in the Company's quarterly operating
results, changes in earnings estimates by analysts, conditions in the Company's
businesses or general market or economic conditions. In addition, in recent
years, the stock market has experienced extreme price and volume fluctuations.
These fluctuations have had a substantial effect on the market prices for many
emerging growth companies, often unrelated to the operating performance of the
specific companies. Such market fluctuations could have a material adverse
effect on the market price for the Class A Common Stock. See "Price Range of
Common Stock."
ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BY-LAW AND STATUTORY PROVISIONS
Certain provisions of the Restated Certificate and the By-laws may inhibit
changes in control of the Company not approved by the Company's Board of
Directors (the "Board"). These provisions include (i) disparate voting rights
per share between the Class A Common Stock and the Class B Common Stock, (ii) a
prohibition on stockholder action through written consents, (iii) a requirement
that special meetings of stockholders be called only by the Board, (iv) advance
notice requirements for stockholder proposals and nominations, (v) limitations
on the ability of stockholders to amend, alter or repeal the By-laws and (vi)
the authority of the Board to issue without stockholder approval preferred stock
with such terms as the Board may determine. The Company is also subject to the
protections of Section 203 of the Delaware General Corporation Law, which could
have similar effects. See "Description of Capital Stock."
RISK FACTORS RELATING TO PREFERRED SECURITIES
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE GUARANTEE AND THE DEBENTURES
The obligations of the Parent under the Guarantee issued by the Parent for
the benefit of the holders of Preferred Securities are unsecured and rank
subordinate and junior in right of payment to all Senior Debt of the Parent and
PARI PASSU with most senior preferred stock, if any, issued from time to time by
the Parent and any guarantee now or hereafter entered into by the Parent in
respect of any preferred or preference stock of any affiliate of the Parent. The
obligations of the Parent under the Debentures are
20
<PAGE>
subordinate and junior in right of payment to all present and future Senior Debt
of the Company. The ability of the Issuer to pay amounts due on the Preferred
Securities is solely dependent upon the Parent making payments on the Debentures
as and when required. Neither the Indenture, the Guarantee nor the Trust
Agreement places any limitation on the amount of debt, including Senior Debt,
that may be incurred by the Parent and its subsidiaries. See "Description of the
Guarantee--Status of the Guarantee" and "Description of the
Debentures--Subordination."
STRUCTURAL SUBORDINATION
The Parent is a holding company and its assets consist primarily of
investments in its subsidiaries. The Debentures are obligations exclusively of
the Parent. The Parent's ability to service its indebtedness, including the
Debentures, is dependent primarily upon the earnings of its subsidiaries and the
distribution or other payment of such earnings to the Parent in the form of
dividends, loans or advances, and repayment of loans and advances from the
Parent. The subsidiaries are separate and distinct legal entities and have no
obligation, contingent or otherwise, to pay any amounts due pursuant to the
Debentures or to make any funds available therefore, whether by dividends, loans
or other payments. As of December 31, 1997, on a pro forma basis giving effect
to the Offering and the application of the net proceeds therefrom, the Company's
subsidiaries had aggregate liabilities of $269.8 million, all of which are
structurally senior to the Debentures.
In addition, creditors of the Company's subsidiaries would be entitled to a
claim on the assets of such subsidiaries prior to any claims by the Parent.
Consequently, in the event of a liquidation or reorganization of any subsidiary,
creditors of such subsidiary are likely to be paid in full before any
distribution is made to the Parent, except to the extent that the Parent itself
is recognized as a creditor of such subsidiary, in which case the claims of the
Parent would still be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by the
Parent. See "Description of the Preferred Securities--Distributions" and
"Description of the Debentures--Option to Extend Interest Payment Period."
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
The Company has the right under the Indenture to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may select a new Extension Period and terminate
the payments of all amounts then due, subject to the requirements described
herein. As a consequence of any such deferral, quarterly Distributions on the
Preferred Securities by the Issuer will be deferred (and the amount of
Distributions to which holders of the Preferred Securities are entitled will
accumulate additional Distributions) during any such Extension Period.
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount ("OID")) in
respect of its PRO RATA share of the deferred interest allocable to the
Debentures held by the Issuer for United States Federal income tax purposes. As
a result, a holder of Preferred Securities will include such income in its gross
income for United States Federal income tax purposes in advance of the receipt
of cash and will not receive the cash related to such income from the Issuer if
the holder disposes of the Preferred Securities prior to the record date for the
payment of Distributions. See "Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount." Moreover, if a holder of Preferred
Securities converts Preferred Securities into Class A Common Stock during an
Extension Period, the holder will not receive any of the deferred Distribution.
Additionally, during the pendency of any Extension Period, the Company will not
be permitted, subject to certain exceptions set forth herein, to declare or pay
any cash distribution with respect to the Company's capital stock or debt
securities (including guarantees of indebtedness for money borrowed) that rank
PARI PASSU with or junior to the Debentures. See "Description of the Preferred
Securities--Distributions."
21
<PAGE>
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Debentures.
However, should the Company elect to exercise such right in the future, the
market price of the Preferred Securities is likely to be affected. A holder that
disposes of its Preferred Securities during an Extension Period, therefore,
might not receive the same return on its investment as a holder that continues
to hold its Preferred Securities. In addition, as a result of the existence of
the Company's right to defer interest payments, the price at which the Preferred
Securities trade (which represent preferred undivided beneficial interests in
the Debentures) may be more volatile than the trading prices of other securities
that are not subject to such deferrals. See "Certain Federal Income Tax
Consequences."
SPECIAL EVENT EXCHANGE OR REDEMPTION
Upon certain circumstances following the occurrence and continuation of a
Special Event, the Preferred Securities are also subject to (i) exchange in
whole or, in the case of a Tax Event that has occurred and is continuing, in
whole or in part, in the manner described herein, for the Debentures or (ii)
redemption, in whole or in part, on or after , 2001, at the
liquidation preference thereof plus accrued and unpaid distributions, in the
case of a Tax Event. See "Description of the Preferred Securities--Special Event
Exchange or Redemption."
There can be no assurance as to the market prices for Preferred Securities
or Debentures that may be distributed in exchange for Preferred Securities if a
liquidation of the Issuer occurs or if the Preferred Securities are exchanged
for Debentures in connection with a Special Event. Accordingly, the Preferred
Securities that an investor may purchase, whether pursuant to the offer made
hereby or in the secondary market, or the Debentures that a holder of Preferred
Securities may receive on liquidation of the Issuer, may trade at a discount to
the price that the investor paid to purchase the Preferred Securities offered
hereby. Because holders of Preferred Securities may receive Debentures on
dissolution of the Issuer or if the Preferred Securities are exchanged for
Debentures in connection with a Special Event, prospective purchasers of
Preferred Securities are also making an investment decision with regard to the
Debentures and should carefully review all the information regarding the
Debentures contained herein. See "Description of the Preferred
Securities--Special Event Exchange or Redemption" and "Description of the
Debentures."
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities on a
subordinated basis the following payments, to the extent not paid by the Issuer:
(i) any accumulated and unpaid Distributions required to be paid on the
Preferred Securities, to the extent that the Issuer has funds on hand available
therefor at such time; (ii) the redemption price with respect to any Preferred
Securities called for redemption, to the extent that the Issuer has funds on
hand available therefor at such time; and (iii) upon a voluntary or involuntary
dissolution, winding-up or liquidation of the Issuer (unless the Debentures are
distributed to holders of the Preferred Securities), the lesser of (a) the
aggregate of the liquidation preference and all accrued and unpaid Distributions
to the date of payment to the extent that the Issuer has funds on hand available
therefor at such time and (b) the amount of assets of the Issuer remaining
available for distribution to holders of the Preferred Securities in liquidation
of the Issuer.
As part of the Guarantee, the Parent will agree that it will honor all
obligations described therein relating to the conversion or exchange of the
Preferred Securities into or for Class A Common Stock or Debentures.
The holders of not less than a majority in aggregate liquidation preference
of the Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of
Preferred Securities may institute a proceeding directly against the Parent to
enforce its rights under the Guarantee without first instituting a proceeding
against the Issuer, the Guarantee Trustee or any other person or entity. If the
Parent were to
22
<PAGE>
default on its obligation to pay amounts payable under the Debentures, the
Issuer would lack funds for the payment of Distributions or amounts payable on
redemption of the Preferred Securities or otherwise, and, in such event, holders
of the Preferred Securities would not be able to rely upon the Guarantee for
payment of such amounts. Instead, in the event a Debenture Event of Default
shall have occurred and be continuing, a holder of Preferred Securities would be
required to rely on its enforcement by the Property Trustee of its rights as
registered holder of the Debenture against the Parent pursuant to the terms of
the Debenture. If, however, such event is attributable to the failure of the
Parent to pay interest or premium on or principal of the Debentures on the
payment date on which such payment is due and payable (or, in the case of
redemption, the date fixed for redemption), then a holder of Preferred
Securities may directly institute a proceeding against the Parent for
enforcement of payment to such holder of the interest or premium on or principal
of such Debentures having a principal amount equal to the aggregate liquidation
preference of the Preferred Securities of such holder (a "Direct Action"). In
connection with such Direct Action, the Parent will be subrogated to the rights
of such holder of Preferred Securities under the Trust Agreement to the extent
of any payment made by the Parent to such holder of Preferred Securities in such
Direct Action. Except as set forth herein, holders of Preferred Securities will
not be able to exercise directly any other remedy available to the holders of
Debentures or assert directly any other rights in respect of the Debentures. See
"Description of the Preferred Securities--Enforcement of Certain Rights by
Holders of Preferred Securities," "Description of the Guarantee" and
"Description of the Debentures--Debenture Events of Default." The Trust
Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Trust Agreement Event of Default (as defined herein) occurs and is
continuing, then the holders of Preferred Securities would rely on the
enforcement by the Property Trustee of its rights as the holder of the
Debentures against the Company. In addition, the holders of a majority in
aggregate liquidation preference of the Preferred Securities will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the Trust Agreement, including
the right to direct the Property Trustee to exercise the remedies available to
it as a holder of the Debentures. If the Property Trustee fails to enforce its
rights as holder of the Debentures after a request therefor by a holder of
Preferred Securities, such holder may, to the fullest extent permitted by law,
proceed to enforce such rights directly against the Company. Notwithstanding the
foregoing, if a Trust Agreement Event of Default occurs that results from the
failure of the Company to pay principal of or interest on the Debentures when
due (or in the case of a redemption, on the redemption date), during the
continuance of such an event of default a holder of Preferred Securities may
institute a legal proceeding directly against the Company to obtain payment to
such holder of such principal or interest on Debentures having a principal
amount equal to the aggregate liquidation preference of the Preferred Securities
owned of record by such holder. See "Description of the Preferred
Securities--Trust Agreement Events of Default; Notice" and "--Voting Rights;
Amendment of the Trust Agreement."
LIMITED VOTING RIGHTS
Holders of Preferred Securities generally have limited voting rights,
primarily in connection with modifying the Preferred Securities and directing
the activities of the Property Trustee as the holder of the Debentures. Holders
of Preferred Securities are not entitled to vote to appoint, remove or replace
the Issuer Trustees (as defined), which voting rights are vested exclusively in
the holder of the Common Securities. The Issuer Trustees and the Company may
amend the Trust Agreement without the consent of holders of Preferred Securities
to ensure that the Issuer will be classified for United States Federal income
tax purposes as a grantor trust even if such action adversely affects the
interests of such holders. See "Description of the Preferred Securities--Voting
Rights; Amendment of the Trust Agreement."
23
<PAGE>
LIMITED COVENANTS; ABSENCE OF SINKING FUND
The covenants in the indenture under which the Debentures will be issued
(the "Indenture") are limited. The Company is not required under the Indenture
to meet any financial tests that measure the Company's working capital, interest
coverage or net worth in order to comply with the terms of the Indenture. There
are no covenants relating to the Company in the Trust Agreement. As a result,
neither the Indenture nor the Trust Agreement protects holders of Debentures or
Preferred Securities, respectively, in the event of a material adverse change in
the Company's financial condition or results of operations, or limits the
ability of the Company or any subsidiary to incur additional indebtedness.
Therefore, the provisions of these governing instruments should not be
considered a significant factor in evaluating whether the Company will be able
to comply with its obligations under the Debentures or the Guarantee. Further,
the Debentures do not have the benefit of any sinking fund payment by the
Company.
POSSIBLE TAX LEGISLATION
Prospective investors should be aware that legislation has been introduced
in the United States Congress in the past that would, if enacted, deny an
interest deduction to issuers of instruments such as the Debentures. No such
legislation is currently pending. There can be no assurance, however, that
similar legislation will not ultimately be enacted into law, or that other
developments will not occur after the date hereof that would adversely affect
the tax treatment of the Debentures and could result in the exchange of the
Debentures for Preferred Securities or, in certain limited circumstances, the
redemption of the Debentures by the Company and the distribution of the
resulting cash in redemption of the Preferred Securities. See "Description of
the Preferred Securities--Special Event Exchange or Redemption."
ABSENCE OF PUBLIC MARKET FOR THE PREFERRED SECURITIES; TRADING PRICE OF
PREFERRED SECURITIES
Although an application has been filed to list the Preferred Securities on
Nasdaq, there can be no assurance that such application will be approved, or if
approved, that any market for the Preferred Securities will develop or, if one
does develop, that it will be maintained. If an active market for the Preferred
Securities fails to develop or be sustained, the trading price of the Preferred
Securities could be adversely affected. The Preferred Securities could trade at
prices that may be higher or lower than the offering price hereunder depending
on many factors, including prevailing interest rates, the price of the Common
Stock, the Company's operating results, any election by the Company to extend
interest payment periods and the market for similar securities.
In addition, the Preferred Securities may trade at a price that does not
fully reflect the value of accrued but unpaid interest with respect to the
underlying Debentures. A holder disposing of Preferred Securities between record
dates for payments of distributions thereon will nevertheless be required for
United States Federal income tax purposes to include accrued but unpaid interest
on the Debentures through the date of disposition in income as ordinary income
(i.e., OID), and to add such amount to the adjusted tax basis in the holder's
Preferred Securities. To the extent the selling price is less than the holder's
adjusted tax basis (which will include, in the form of original issue discount,
all accrued but unpaid interest), a holder will recognize a capital loss.
Subject to certain limited exceptions, capital losses cannot be applied to
offset ordinary income for United States Federal income tax purposes. See
"Certain Federal Income Tax Consequences--Sales of Preferred Securities."
24
<PAGE>
THE COMPANY
Dura Automotive Systems, Inc. is a holding company whose predecessor was
formed by Hidden Creek, Onex, J2R Corporation ("J2R") and certain others for the
purpose of acquiring the Dura Divisions from Wickes in November 1990. In August
1994, the Company entered into a transaction that combined the operations of the
Company's operating subsidiary, Dura Operating Corp., with the Brake and Cable
Business of Alkin.
Since August 1994, the Company has successfully completed the following
strategic acquisitions and joint venture:
POLLONE. In August 1996, the Company formed a joint venture with Excel
Industries Inc. ("Excel") to participate equally in the acquisition of a 25.5%
interest in Pollone S.A. ("Pollone"), a manufacturer of automotive components
and mechanical assemblies headquartered in Sao Paulo, Brazil, for $5 million in
total. The joint venture also loaned Pollone an additional $10.5 million
pursuant to notes which are convertible into equity of Pollone at the joint
venture's option. In January 1998, the joint venture increased its interest in
Pollone to 51.0% through the conversion of certain of these notes. This
investment provided the Company with a manufacturing presence in Latin America.
ROCKWELL PARKING BRAKE BUSINESS. In October 1996, the Company acquired the
Rockwell Parking Brake Business for approximately $3.8 million. The parking
brake business, which is operated from a facility in Cluses, France, added a
manufacturing presence in Europe and PSA (Peugeot and Citroen) and Renault as
customers.
KPI. In December 1996, the Company acquired KPI from Sparton Corporation
for approximately $78.8 million. KPI manufactures shifter systems, parking brake
mechanisms, brake pedals, and underbody tire carriers for the North American
automotive industry from facilities in Indiana and Michigan. The acquisition
added significant market penetration in console-based shifter systems, increased
platform content and added a significant new product line in underbody tire
carriers.
VOFA. In January 1997, the Company acquired VOFA for approximately $38.0
million in cash and assumed indebtedness, plus contingent payments. VOFA designs
and manufactures shifter cables, brake cables and other light duty cables for
the European automotive and industrial markets from facilities in Dusseldorf,
Gehren and Daun, Germany and Barcelona, Spain. The acquisition added new
customers, such as Mercedes, Volkswagen and BMW, provided a strong European
position and established the Company's cable manufacturing capabilities
globally.
EXCEL. In May 1997, the Company acquired the Excel Parking Brake Business
from Excel for approximately $2.9 million. The acquisition increased the
Company's penetration of the parking brake market and expanded the Company's
relationship with Chrysler.
GT AUTOMOTIVE. In August 1997, the Company acquired GT Automotive for
approximately $45.0 million in cash and assumed indebtedness, plus contingent
payments. GT Automotive designs and manufactures column-mounted shifter systems
and turn signal and tilt lever assemblies for North American OEMs. At the time
of the acquisition, GT Automotive had a substantial share of the North American
column-based shifter market. The acquisition of GT Automotive, combined with the
Company's existing position in console-based shifter systems, increased the
Company's share of the North American shifter market. In addition, the
acquisition added Nissan as a customer.
THIXOTECH. In December 1997, the Company purchased approximately 19% of the
outstanding common stock of Thixotech Inc. ("Thixotech") for approximately $0.5
million. The Company also loaned Thixotech an additional $2.8 million pursuant
to notes which are convertible into additional common stock of Thixotech at the
Company's option. If exercised, the Company could own a majority of Thixotech.
25
<PAGE>
Thixotech is currently pursuing the development of an alternative manufacturing
technology for component parts.
REOM. In December 1997, the Company acquired REOM, an Australian designer
and manufacturer of jacks and parking brakes, for approximately $3.7 million.
The acquisition added market penetration in parking brakes, added a new product
(jacks) and established a presence in the Pacific Rim.
UNIVERSAL. In March 1998, the Company acquired Universal, a manufacturer of
jacks for the North American automotive industry, for approximately $18.0
million. Universal had 1997 revenues of approximately $37.0 million. Universal's
customers include General Motors, Ford and Honda. The acquisition provides the
Company with a market presence for jacks in North America and adds Honda as a
significant new customer.
In order to focus on its higher margin products, the Company sold its Window
Regulator Business to Rockwell in April 1995 for approximately $18.0 million in
cash, resulting in a pretax gain of $4.2 million.
The principal executive offices of the Company are located at 4508 IDS
Center, Minneapolis, Minnesota 55402, and its telephone number is (612)
342-2311.
26
<PAGE>
USE OF PROCEEDS
The estimated net proceeds to the Company from the Offering, after deducting
the estimated underwriting commission and offering expenses payable by the
Company, are estimated to be approximately $47.8 million ($55.0 million if the
Underwriters' over-allotment option is exercised in full). All of the proceeds
from the sale of the Preferred Securities in the Offering will be invested by
the Issuer in Debentures, the proceeds of which the Company intends to apply to
the repayment of borrowings under its bank credit agreement (the "Bank Credit
Agreement").
The Bank Credit Agreement expires on August 29, 2002. On December 31, 1997,
the interest rates for borrowings under the Bank Credit Agreement ranged from
3.94% to 8.50%. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition--Liquidity and Capital Resources."
PRICE RANGE OF COMMON STOCK
The Company's Class A Common Stock is traded on Nasdaq under the symbol
"DRRA." The following table sets forth, for the periods indicated, the high and
low closing prices for the Class A Common Stock as regularly quoted on Nasdaq.
The Class A Common Stock commenced trading on August 14, 1996. Prior thereto,
there was no public market for the Class A Common Stock.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL YEAR 1996:
Third Quarter (commencing August 14, 1996).................................. $193/4 $17
Fourth Quarter.............................................................. 273/4 183/4
FISCAL YEAR 1997:
First Quarter............................................................... $27 $231/8
Second Quarter.............................................................. 283/4 221/2
Third Quarter............................................................... 333/8 27
Fourth Quarter.............................................................. 353/8 237/8
FISCAL YEAR 1998:
First Quarter (through February 27, 1998)................................... $311/8 $243/8
</TABLE>
On February 27, 1998, the last reported sale price of the Class A Common
Stock on Nasdaq was $31 1/8. As of December 31, 1997, there were approximately
100 holders of record of the Class A Common Stock and 18 holders of record of
the Class B Common Stock. The Company believes that it has significantly more
beneficial owners of its Class A Common Stock.
DIVIDEND POLICY
The Company has not declared or paid any dividends on its Common Stock in
the past and currently intends to retain its earnings to support its growth
strategy and does not anticipate paying dividends in the foreseeable future. As
a holding company, the ability of the Company to pay dividends in the future is
dependent upon the receipt of dividends or other payments from its principal
operating subsidiary. Any future payment of dividends is within the discretion
of the Board and will depend upon, among other factors, the capital
requirements, operating results and financial condition of the Company from time
to time. In addition, the Company's ability to pay cash dividends is limited by
the terms of its Bank Credit Agreement. The Company has received an amendment to
its Bank Credit Agreement to permit the distribution of cash from such
subsidiary to the Parent for the purpose of paying interest on the Debentures.
See "Management's Discussion and Analysis of Results of Operations and Financial
Condition--Liquidity and Capital Resources."
27
<PAGE>
CAPITALIZATION
The following table sets forth as of December 31, 1997 the actual
consolidated capitalization of the Company and the as adjusted capitalization
giving effect to the Offering and the application of the net proceeds therefrom
(after deducting the underwriting commission and estimated expenses of the
Offering) as set forth under "Use of Proceeds." This table should be read in
conjunction with the consolidated financial statements and notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1997
-----------------------------
ACTUAL AS ADJUSTED(1)
---------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Cash and cash equivalents.......................................................... $ 4,148 $ 4,148
---------- --------
---------- --------
Long-term debt:
Bank Credit Agreement............................................................ $ 165,158 $ 117,408
Other............................................................................ 15,164 15,164
Less: current maturities......................................................... (2,241) (2,241)
---------- --------
Total long-term debt........................................................... 178,081 130,331
---------- --------
Company-Obligated Mandatorily Redeemable Convertible Trust Preferred Securities of
Dura Automotive Systems Capital Trust holding solely Debentures(2)................ -- 50,000
Stockholders' investment:
Preferred stock, $1 par value per share; 5,000,000 shares authorized; none issued
or outstanding................................................................. -- --
Class A Common Stock, $.01 par value per share; 30,000,000 shares authorized;
4,161,657 shares issued and outstanding........................................ 42 42
Class B Common Stock, $.01 par value per share; 10,000,000 shares authorized;
4,654,380 shares issued and outstanding........................................ 46 46
Additional paid-in capital....................................................... 63,402 63,402
Retained earnings................................................................ 41,028 41,028
Cumulative translation adjustment................................................ (2,810) (2,810)
---------- --------
Total stockholders' investment................................................. 101,708 101,708
---------- --------
Total capitalization......................................................... $ 279,789 $ 282,039
---------- --------
---------- --------
</TABLE>
- ------------------------
(1) As adjusted to give effect to the Offering, but assuming no exercise of the
Underwriters' over-allotment option. Proceeds are net of the underwriting
commission and estimated expenses of the Offering.
(2) Represents the issuance of the Preferred Securities by the Issuer. The sole
assets of the Issuer will be approximately $51.5 million principal amount of
Debentures, such amount being the sum of the stated liquidation preference
of the Preferred Securities and the capital contributed by the Company in
exchange for the Common Securities.
ACCOUNTING TREATMENT
The financial statements of the Issuer will be consolidated with the
Consolidated Financial Statements of the Company, with the Preferred Securities
shown on such Consolidated Financial Statements as Company-obligated mandatorily
redeemable convertible trust preferred securities of a subsidiary trust. The
sole assets of the Issuer will be the Debentures.
28
<PAGE>
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The Unaudited Pro Forma Statement of Operations for the year ended December
31, 1997 gives effect to (i) the acquisition of GT Automotive and (ii) the sale
of the Preferred Securities offered hereby and the application of the net
proceeds to the Company as described in "Use of Proceeds," as if such
transactions had occurred on January 1, 1997. The Company acquired VOFA on
January 1, 1997. Accordingly, the results of operations of VOFA have been
included in the Company's results of operations for the year ended December 31,
1997. In addition, the results of operations of the Excel Parking Brake Business
prior to its acquisition on May 5, 1997 and those of REOM prior to its
acquisition on December 12, 1997 have not been included in the Company's pro
forma results of operations for the year ended December 31, 1997 because such
results are not material to the Company's results of operations taken as a
whole.
The unaudited pro forma financial data presented herein are based on the
assumptions and adjustments described in the accompanying notes. The Unaudited
Pro Forma Statement of Operations does not purport to represent what the
Company's results of operations actually would have been if the events described
above had occurred as of the dates indicated or what such results will be for
any future periods. The Unaudited Pro Forma Statement of Operations is based
upon assumptions and adjustments that the Company believes are reasonable. The
Unaudited Pro Forma Statement of Operations, and the accompanying notes, should
be read in conjunction with the historical financial statements of the Company,
including the notes thereto, included elsewhere in this Prospectus.
The acquisition of GT Automotive has been accounted for using the purchase
method of accounting and, accordingly, the assets acquired and liabilities
assumed have been or will be recorded at their fair values as of the date of its
acquisition. These amounts have been recorded based upon preliminary estimates
as of the date of the acquisition of GT Automotive. Further adjustments to the
acquired assets and assumed liabilities will be reflected as a change in
goodwill. Such adjustments, if any, are expected to be completed by August 29,
1998.
29
<PAGE>
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------------------------------
PRO FORMA
GT PRO FORMA FOR GT OFFERING
COMPANY(1) AUTOMOTIVE(2) ADJUSTMENTS AUTOMOTIVE ADJUSTMENTS PRO FORMA
----------- ------------- ------------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues........................ $ 449,111 $ 40,641 $ -- $ 489,752 $ -- $ 489,752
Cost of sales................... 375,086 37,450 (21)(3) 412,515 -- 412,515
----------- ------------- ----- ----------- ----------- -----------
Gross profit.................. 74,025 3,191 21 77,237 -- 77,237
Selling, general and
administrative expenses........ 32,815 2,850 -- 35,665 -- 35,665
Amortization expense............ 3,600 280 470(4) 4,350 -- 4,350
----------- ------------- ----- ----------- ----------- -----------
Operating income.............. 37,610 61 (449) 37,222 -- 37,222
Interest expense, net........... 9,298 1,693 453(5) 11,444 (3,343)(7) 8,101
----------- ------------- ----- ----------- ----------- -----------
Income (loss) before provision
for income taxes and
minority interest........... 28,312 (1,632) (902) 25,778 (3,343) 29,121
Provision for income taxes...... 11,670 (549) (173)(6) 10,948 (1,337)(6) 12,285
Minority interest............... -- -- -- -- (2,250)(8) 2,250
----------- ------------- ----- ----------- ----------- -----------
Net income (loss)............. $ 16,642 $ (1,083) $ (729) $ 14,830 $ (244) $ 14,586
----------- ------------- ----- ----------- ----------- -----------
----------- ------------- ----- ----------- ----------- -----------
Basic earnings per share........ $ 1.89 $ 1.68 $ 1.66
----------- ----------- -----------
----------- ----------- -----------
Weighted average common shares
outstanding(9)................. 8,808 8,808 8,808
----------- ----------- -----------
----------- ----------- -----------
Diluted earnings per share(9)... $ 1.88 $ 1.67 $ 1.66
----------- ----------- -----------
----------- ----------- -----------
Diluted shares outstanding(9)... 8,869 8,869 8,869
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See accompanying Notes to Unaudited Pro Forma Statement of Operations.
30
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
(1) Represents the results of operations of the Company for the year ended
December 31, 1997 and the results of operations of VOFA, the Excel Parking
Brake Business, GT Automotive and REOM from the dates of their respective
acquisition.
(2) Represents the results of operations for GT Automotive from January 1, 1997
through the date of acquisition, August 29, 1997. Operating income and
EBITDA for this period include the effect of non-recurring charges totaling
$3.4 million, including $2.3 million associated with losses to be incurred
on certain future contracts and $1.1 million related to one-time increases
in selected asset valuation allowances and accrued liabilities. These
charges reduced earnings per share by $0.23.
(3) Reflects the change in depreciation expense resulting from adjustments to
the depreciable lives of property, plant and equipment of GT Automotive (for
the period preceding its acquisition) to their estimated useful lives at the
time of their acquisition and from adjustments to value such property, plant
and equipment at fair value as of the date of acquisition.
(4) Represents the additional amortization of goodwill arising from the
acquisition of GT Automotive of $0.5 million, which is net of amortization
of goodwill previously recorded by GT Automotive of $0.3 million. Goodwill
is amortized on a straight-line basis over a forty-year period.
(5) Represents increased interest expense arising from indebtedness incurred in
connection with the acquisition of GT Automotive of $0.5 million, net of the
interest expense previously recorded by GT Automotive of $1.7 million.
(6) Adjusts the provision for income taxes on a pro forma basis to reflect the
Company's incremental tax rate of 40%.
(7) Represents the reduction in interest expense which results from the
application of the net proceeds from the Offering at an assumed interest
rate of 7.0% on the repaid borrowings. See "Use of Proceeds."
(8) Represents distributions on the Preferred Securities at an assumed rate of
7.5%, net of income tax benefits at the Company's incremental tax rate of
40%.
(9) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A and Class B Common Stock
outstanding during the year. Diluted earnings per share include the dilutive
effects of outstanding stock options using the treasury stock method. Pro
forma diluted earnings per share excludes the conversion of the Preferred
Securities (into approximately 1,147,000 shares of Class A Common Stock), as
their effect is anti-dilutive. See Note 3 to Notes to Consolidated Financial
Statements.
31
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data with
respect to the Company for each of the periods indicated. The selected
historical financial data for the Company for the years ended December 31, 1993
through 1997 have been derived from the Company's consolidated financial
statements which have been audited by Arthur Andersen LLP, independent public
accountants. The selected historical consolidated financial data should be read
in conjunction with "Management's Discussion and Analysis of Result of
Operations and Financial Condition" and the consolidated financial statements
and notes thereto all included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1993 1994(1) 1995(2) 1996(3) 1997(4)
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................................. $ 129,328 $ 189,675 $ 253,726 $ 245,329 $ 449,111
Cost of sales........................................ 116,611 170,625 219,559 207,810 375,086
---------- ---------- ---------- ---------- ----------
Gross profit....................................... 12,717 19,050 34,167 37,519 74,025
Selling, general and administrative expenses......... 8,643 10,485 15,513 17,157 32,815
Amortization expense................................. 487 690 1,094 1,036 3,600
---------- ---------- ---------- ---------- ----------
Operating income................................... 3,587 7,875 17,560 19,326 37,610
Interest expense, net................................ 1,533 3,473 4,822 2,589 9,298
Other income(2)...................................... -- -- (4,240) -- --
---------- ---------- ---------- ---------- ----------
Income before income taxes......................... 2,054 4,402 16,978 16,737 28,312
Provision for income taxes........................... 936 1,822 6,852 6,609 11,670
---------- ---------- ---------- ---------- ----------
Net income......................................... $ 1,118 $ 2,580 $ 10,126 $ 10,128 $ 16,642
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Basic earnings per share(5).......................... $ 0.41 $ 0.75 $ 2.04 $ 1.57 $ 1.89
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Diluted earnings per share(5)........................ $ 0.41 $ 0.75 $ 2.03 $ 1.57 $ 1.88
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
OTHER DATA:
Depreciation and amortization........................ $ 2,409 $ 3,725 $ 5,578 $ 6,079 $ 12,303
Capital expenditures, net............................ 2,951 5,406 6,116 6,260 16,242
EBITDA(6)............................................ 5,996 11,600 23,138 25,405 49,913
Net cash provided by (used in):
Operating activities............................... 3,724 (6,156) 13,138 19,792 8,516
Investing activities............................... (2,951) (46,878) 11,428 (95,093) (93,386)
Financing activities............................... (787) 53,037 (22,851) 75,236 87,620
EBITDA to interest expense........................... 3.9x 3.3x 4.8x 9.8x 5.4x
Ratio of earnings to fixed charges(7)................ 2.2x 2.2x 3.4x 6.4x 3.8x
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
---------------------------------------------------------
1993 1994 1995 1996 1997
--------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital..................................... $ 3,287 $ 18,631 $ 13,701 $ 27,528 $ 50,304
Total assets........................................ 52,823 166,133 140,531 246,129 419,264
Long-term debt, net of current maturities........... 16,792 70,112 46,639 77,376 178,081
Total stockholders' investment...................... 4,369 17,418 27,683 87,367 101,708
</TABLE>
32
<PAGE>
- ------------------------
(1) In August 1994, the Company acquired the Brake and Cable Business of Alkin.
The results of operations of this acquired business have been included in
the consolidated financial statements of the Company from August 31, 1994,
the date of acquisition.
(2) In April 1995, the Company sold the net assets of its Window Regulator
Business to Rockwell, realizing a pretax gain of approximately $4.2 million.
The results of operations of the Window Regulator Business have been
included in the consolidated financial statements of the Company through
April 2, 1995, the date of divestiture.
(3) Includes the results of operations of (i) the Rockwell Parking Brake
Business from October 1, 1996, and (ii) KPI from December 5, 1996, their
respective dates of acquisition. The Company issued an aggregate of
3,795,000 shares of its Class A Common Stock in August 1996 in connection
with the IPO.
(4) Includes the results of operations of (i) VOFA from January 1, 1997, (ii)
the Excel Parking Brake Business from May 5, 1997, (iii) GT Automotive from
August 29, 1997, and (iv) REOM from December 12, 1997, which represent their
respective dates of acquisition.
(5) Basic earnings per share were computed by dividing net income by the
weighted average number of shares of Class A and Class B Common Stock
outstanding during the year. Diluted earnings per share include the dilutive
effects of outstanding stock options using the treasury stock method. See
Note 3 to Notes to Consolidated Financial Statements.
(6) "EBITDA" is operating income plus depreciation and amortization. EBITDA does
not represent and should not be considered as an alternative to net income
or cash flow from operations as determined by generally accepted accounting
principles, and the Company's calculation thereof may not be comparable to
that reported by other companies. The Company believes that it is widely
accepted that EBITDA provides useful information regarding a company's
ability to service and/or incur indebtedness. This belief is based on the
Company's negotiations with its lenders who have indicated that the amount
of indebtedness the Company will be permitted to incur will be based, in
part, on the Company's actual and pro forma EBITDA. EBITDA does not take
into account the Company's working capital requirements, debt service
requirements and other commitments and, accordingly, is not necessarily
indicative of amounts that may be available for discretionary use.
(7) The ratio of earnings to fixed charges is computed by dividing (i) income
before income taxes, interest expense and the portion of rent determined to
be interest by (ii) total fixed charges, which includes interest expense,
minority interest and the portion of rent expense determined to be interest.
The portion of rent expense determined to be interest is 33% of gross rent
expense.
33
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
GENERAL
The Company ordinarily begins working on products awarded for new or
redesigned models two to five years prior to the marketing of such models to the
public. During such period, the Company incurs (i) costs related to the design
and engineering of such product, (ii) costs related to the production of the
tools and dies used to manufacture the new product and (iii) start-up costs
associated with the initial production of such product. In general, design and
engineering costs are expensed in the period incurred unless they are reimbursed
by the customer, in which case they are capitalized and amortized over the life
of such product as they are recovered from the customer. Costs incurred in the
production of the tools and dies are generally capitalized and reimbursed by the
customer prior to production. Start-up costs, which are generally incurred 30 to
60 days immediately prior to and immediately after initial production, are
expensed as incurred.
The following table sets forth the percentage relationship of certain items
to revenues for the periods indicated:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
PRO
FORMA
1995 1996 1997 1997
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
Revenues.................................................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................................. 86.5 84.7 83.5 84.2
--------- --------- --------- -----
Gross profit............................................................ 13.5 15.3 16.5 15.8
Selling, general and administrative expenses.............................. 6.1 7.0 7.3 7.3
Amortization expense...................................................... 0.5 0.4 0.8 0.9
--------- --------- --------- -----
Operating income........................................................ 6.9 7.9 8.4 7.6
Interest expense, net..................................................... 1.9 1.1 2.1 1.7
Other income.............................................................. 1.7 -- -- --
--------- --------- --------- -----
Income before provision for income taxes and minority interest.......... 6.7 6.8 6.3 5.9
Provision for income taxes................................................ 2.7 2.7 2.6 2.5
Minority interest......................................................... -- -- -- 0.4
--------- --------- --------- -----
Net income.............................................................. 4.0% 4.1% 3.7% 3.0%
--------- --------- --------- -----
--------- --------- --------- -----
</TABLE>
COMPARISON OF YEAR ENDED DECEMBER 31, 1997 TO YEAR ENDED DECEMBER 31, 1996
REVENUES
Revenues for 1997 increased by $203.8 million, or 83.1%, to $449.1 million
from $245.3 million for 1996. Approximately $179.0 million of the increase
relates to the acquisitions of KPI in December 1996, VOFA in January 1997 and GT
Automotive in August 1997. The remaining increase is due to increased production
on models served by the Company and new program awards.
COST OF SALES
Cost of sales for 1997 increased by $167.3 million, or 80.5%, to $375.1
million from $207.8 million for 1996. As a percentage of revenues, cost of sales
decreased to 83.5% for 1997 from 84.7% for 1996, resulting in an improved gross
margin of 16.5% from 15.3% in the preceding year. The higher margins are a
result of continued cost reduction efforts, including manufacturing process
improvements such as cellular
34
<PAGE>
manufacturing, mistake proofing, improved capacity utilization through
rationalization and consolidation of facilities and the effects of material cost
reductions achieved through the centralization of purchasing efforts and the
resulting greater purchasing power.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by $15.7 million, or
91.3%, to $32.8 million for 1997 from $17.2 million for 1996. This increase is
due to incremental costs from the acquisitions of KPI, VOFA and GT Automotive,
engineering costs related to new business and costs associated with the greater
involvement in the design, engineering and prototyping of systems for customers.
As a percentage of revenues, selling, general and administrative expenses were
7.3% for 1997 compared to 7.0% for 1996.
INTEREST EXPENSE
Interest expense for 1997 increased by $6.7 million to $9.3 million from
$2.6 million for 1996. The increase was due principally to borrowings incurred
related to the acquisitions of KPI, VOFA and GT Automotive.
INCOME TAXES
The effective income tax rate for 1997 was 41.2% for 1997 compared to 39.5%
for 1996. The effective rates differed from the statutory rates primarily as a
result of an increased proportion of the Company's earnings being derived in
higher tax rate jurisdictions, such as Germany and Canada, state taxes and an
increase in non-deductible goodwill amortization.
COMPARISON OF YEAR ENDED DECEMBER 31, 1996 TO YEAR ENDED DECEMBER 31, 1995
REVENUES
Revenues for 1996 decreased by $8.4 million, or 3.3% , to $245.3 million
from $253.7 million for 1995. The decrease was due to the divestiture of the
Window Regulator Business to Rockwell in April 1995, which represented a
decrease of approximately $14.1 million, and the effects of the 1996 General
Motors strikes, which adversely impacted the Company's operations by
approximately $4.5 million. These decreases were offset by incremental new
business, including the benefits of the Chrysler mini-van tailgate latch
replacement program and the effects of the December 1996 acquisition of KPI.
COST OF SALES
Cost of sales for 1996 decreased by $11.8 million, or 5.4% , to $207.8
million from $219.6 million in 1995. As a percentage of revenues, cost of sales
decreased to 84.7% for 1996 from 86.5% for 1995, resulting in an improved gross
margin of 15.3% from 13.5% in the preceding year. The improvement in gross
margin is a result of (i) the divestiture of the Window Regulator Business,
which had lower margins, (ii) the Company's cost reduction efforts, which
included the implementation of more flexible cellular manufacturing methods,
(iii) the closing of an under-utilized facility, and (iv) improved margins on
various replacement business as a result of the Company's advanced engineering
process.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased by $1.7 million, or
11.0%, to $17.2 million for 1996 from $15.5 million for 1995. As a percentage of
revenues, selling, general and administrative expenses increased to 7.0% for
1996 from 6.1% for 1995, primarily as a result of the increased costs incurred
in providing a greater level of design and engineering services to customers and
the increased expenses related to the KPI acquisition.
35
<PAGE>
INTEREST EXPENSE
Interest expense for 1996 decreased by $2.2 million, or 45.8%, to $2.6
million from $4.8 million for 1995. The decrease was primarily due to the
repayment of debt with the net proceeds from the sale of the Window Regulator
Business in April 1995 and the 1996 IPO.
INCOME TAXES
The effective income tax rate for 1996 was 39.5% compared to 40.4% for 1995.
The effective rates were higher than Federal statutory rates primarily as a
result of state income taxes and nondeductible goodwill amortization.
LIQUIDITY AND CAPITAL RESOURCES
On August 14, 1996, the Company completed the IPO of 3,795,000 shares of its
Class A Common Stock at a price of $14.50 per share. The Company realized net
proceeds of approximately $50.0 million from such offering.
The Company's principal source of funds has been, and is anticipated to
continue to be, its cash flows from operations. During 1997, the Company
generated $30.5 million from operations, before the effects of changes in
working capital, compared to $19.5 million in 1996. The cash generated from
operations combined with borrowings under the Company's Bank Credit Agreement
were used to fund capital expenditures of $16.2 million, to provide working
capital and to finance the acquisitions of KPI, VOFA and GT Automotive.
The Bank Credit Agreement consists of a revolving credit facility providing
for borrowings of up to $200.0 million. Borrowings under the Bank Credit
Agreement are secured by substantially all of the Company's assets and
guaranteed by the Parent. The Bank Credit Agreement provides the Company with
the ability to denominate a portion of its borrowings in foreign currencies up
to an amount equal to $50.0 million. As of December 31, 1997, the Company had
outstanding borrowings under the Bank Credit Agreement of approximately $165.2
million (of which approximately $2.8 million were denominated in Canadian
dollars and approximately $3.6 million were denominated in Deutsche Marks). The
Bank Credit Agreement requires the Company to pay a facility fee on the
commitment amount of 0.25% and contains various restrictive covenants, which,
among other things, require the Company to maintain certain financial ratios,
including minimum liquidity and interest coverage.
The Company estimates that it will fund approximately $19 million in capital
expenditures in 1998. These capital expenditures will be used primarily for the
purchase of machinery and equipment to support new business awards, as well as
to finance continued cost reduction efforts.
The Company believes that funds available under its Bank Credit Agreement,
together with funds generated by the Company's operations, will provide the
Company with sufficient liquidity and capital resources for working capital,
capital expenditures and other needs. However, any significant acquisitions may
require additional debt or equity financing in addition to the financing
received as a result of the sale of the Preferred Securities offered hereby. The
Company believes additional financing will be available from bank lenders,
through the issuance of public or private debt securities or through the
additional public offerings of equity securities.
QUARTERLY RESULTS OF OPERATIONS AND SEASONALITY
The Company typically experiences decreased revenues and operating income
during the third calendar quarter of each year due to production shutdowns at
OEMs for model changeovers and vacations.
36
<PAGE>
EFFECTS OF INFLATION
Inflation potentially affects the Company in two principal ways. First, a
portion of the Company's debt is tied to prevailing short-term interest rates
which may change as a result of inflation rates, translating into changes in
interest expense. Second, general inflation can impact material purchases, labor
and other costs. In many cases, the Company has limited ability to pass through
inflation-related cost increases due to the competitive nature of the markets
that the Company serves. In the past few years, however, inflation has not been
a significant factor for the Company.
FOREIGN CURRENCY TRANSACTIONS
A significant portion of the Company's revenues during 1997 were derived
from manufacturing operations in Europe, Latin America and Canada. The results
of operations and the financial position of the Company's operations in these
countries are principally measured in their respective currency and translated
into U.S. dollars. The effects of foreign currency fluctuations in such
countries are somewhat mitigated by the fact that expenses are generally
incurred in the same currencies in which revenues are generated. The reported
income of these subsidiaries will be higher or lower depending on a weakening or
strengthening of the U.S. dollar against the respective foreign currency.
A significant portion of the Company's assets at December 31, 1997 are based
in its foreign operations and are translated into U.S. dollars at foreign
currency exchange rates in effect as of the end of each period, with the effect
of such translation reflected as a separate component of stockholders'
investment. Accordingly, the Company's consolidated stockholders' investment
will fluctuate depending upon the weakening or strengthening of the U.S. dollar
against the respective foreign currency.
The Company's strategy for management of currency risk relies primarily upon
conducting its operations in such countries' respective currency and may, from
time to time, engage in hedging programs intended to reduce the Company exposure
to currency fluctuations.
YEAR 2000
The Company is in the process of replacing and upgrading its computer
systems, which, among other things, will accommodate the year 2000. The Company
currently expects its computer systems to be fully operational prior to the year
2000 so as not to adversely affect its operations. During 1998 and 1999, the
Company expects to incur costs of approximately $1.0 million and $1.5 million,
respectively, to make these replacements and upgrades. Failure of the Company to
make required modifications on a timely basis or the inability of other
companies with which the Company does business to complete their year 2000
modifications on a timely basis, could adversely affect the Company's
operations.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
During June 1997, the Financial Accounting Standards Board released SFAS No.
130, "Reporting Comprehensive Income," effective for fiscal years beginning
after December 15, 1997. SFAS No. 130 establishes standards for reporting and
display in the financial statements of total net income and the components of
all other nonowner changes in equity, referred to as comprehensive income. The
Company will adopt SFAS No. 130 in 1998 and is currently analyzing the impact it
will have on the disclosures in the financial statements.
During June 1997, the Financial Accounting Standards Board released SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information,"
effective for fiscal years beginning after December 15, 1997. SFAS No. 131
requires disclosure of business and geographic segments in the consolidated
financial statements of the Company. The Company will adopt SFAS No. 131 in 1998
and is currently analyzing the impact it will have on the disclosures in its
financial statements.
37
<PAGE>
BUSINESS
The Company is a leading designer and manufacturer of driver control
systems, engineered mechanical components and cable-related systems for the
global automotive industry. The Company's products include parking brake
systems, automotive cables, transmission shifter systems, latches, underbody
tire carriers, jacks, brake, clutch and accelerator pedals and other mechanical
assemblies. The Company sells its products to the major North American, Japanese
and European automotive OEMs. The Company has 26 manufacturing and product
development facilities located in the United States (Indiana, Michigan and
Missouri), Australia, Canada, France, Germany, Mexico, and Spain, and in Brazil
through a joint venture. The Company's revenues have increased from $129.3
million in 1993 to $489.8 million in 1997 on a pro forma basis, a compound
annual growth rate of approximately 40%. Over this same period, the Company's
operating income margin has improved from 2.8% of revenues to 7.6% of revenues.
The Company believes that it is a leading North American supplier of parking
brake mechanisms, transmission shifter mechanisms and automotive cables, with
estimated market shares in excess of 75%, 40% and 25%, respectively. In
addition, the Company is one of the few suppliers to offer integrated parking
brake, shifter and latch systems. These systems, which consist of mechanisms and
cables, require significant design and engineering expertise because they are
critical to the vehicle's reliability, performance and safety. The Company
believes that its customers value its ability to design, manufacture and
assemble complete systems.
On a pro forma basis, approximately 81% of the Company's 1997 revenues were
generated from sales to North American OEMs, with its major customers being
Ford, GM, Chrysler and Toyota. The Company manufactures products for many of the
most popular car, light truck and sport utility models, including eight of the
top ten selling vehicles in North America for 1997: the Ford Taurus, Explorer,
Ranger and F-Series pickups, GM Cavalier and C/K pickups, Dodge Ram pickups, and
Toyota Camry. As a result of recent acquisitions, approximately 17% of the
Company's 1997 pro forma revenues were generated from sales to European OEMs,
including Mercedes, Volkswagen and BMW. The Company is generally the sole
supplier of the parts it sells to OEMs and will ordinarily continue to supply
parts for a particular model for the life of the model, which usually ranges
from three to seven years.
INDUSTRY TRENDS
The Company's performance and growth is directly related to certain trends
within the automotive market, including the consolidation of the component
supply industry, the growth of system sourcing and the increase in global
sourcing.
SUPPLIER CONSOLIDATION. During the 1990s, OEMs have continued to reduce
their supplier base in certain product segments, including mechanical
assemblies, awarding sole-source contracts to full-service suppliers. As a
result, OEMs currently work with a smaller number of full-service supplier's
each of which supplies a greater proportion of the total vehicle. These
requirements can best be met by suppliers with sufficient size and financial
resources to meet such demands. For full-service suppliers such as the Company,
this new environment provides an opportunity to grow by obtaining business
previously provided by other non full-service suppliers and by acquiring
suppliers that further enhance product, manufacturing and service capabilities.
OEMs rigorously evaluate suppliers on the basis of product quality, cost
control, reliability of delivery, product design capability, financial strength,
new technology implementation, quality and condition of facilities and overall
management. Suppliers that obtain superior ratings are considered for sourcing
new business; those that do not generally continue their existing contracts, but
normally do not receive additional business. Although these new supplier
policies have already resulted in significant consolidation of component
suppliers in certain segments, the Company believes that opportunities exist for
further consolidation within the Company's segment. This is particularly true in
Europe which has many suppliers in this segment, many with relatively small
market shares.
38
<PAGE>
SYSTEM SOURCING. OEMs increasingly seek suppliers capable of manufacturing
complete systems of a vehicle rather than suppliers who only produce the
separate parts that comprise a system. By outsourcing complete systems, OEMs are
able to reduce their costs associated with the design and integration of
different components and improve quality by enabling their suppliers to assemble
and test major portions of the vehicle prior to beginning production. The
Company has capitalized on this trend by designing its mechanisms and cable
systems to function together and by providing cable and mechanism designs that
are integrated into the design of the entire vehicle.
GLOBAL SOURCING. Regions such as Asia, Latin America and Eastern Europe are
expected to experience significant growth in vehicle demand over the next ten
years. OEMs are positioning themselves to reach these emerging markets in a
cost-effective manner by seeking to design and produce "world cars" which can be
designed in one vehicle center but produced and sold in many different
geographic markets, thereby allowing OEMs to reduce design costs and take full
advantage of low-cost manufacturing locations. OEMs increasingly are requiring
their suppliers to have the capability to design and manufacture their products
in multiple geographic markets.
The Company has seven manufacturing facilities located in France, Germany,
Spain, Australia and through its joint venture in Brazil. In addition, the
Company has formed, or is in the process of forming, strategic alliances with
other suppliers throughout the world. These strategic alliances, which range
from investments in other manufacturers to informal understandings, should not
only give the Company access to new geographic markets and customers, but also
the capability of offering complementary products. The Company also has two
technical centers located at its facilities in Europe and it has relocated
technical personnel resources to locations in which OEMs will develop "world
cars." By participating in the design of these vehicles and through
implementation of manufacturing processes near the international facilities of
the OEMs, the Company believes it can continue to expand on its international
presence.
STRATEGY
The Company's business objective is to capitalize on the consolidation,
globalization and system/ modular sourcing trends in the automotive supply
industry in order to be the leading provider of driver control systems,
engineered mechanical components and cable-related systems and to OEMs
worldwide. Key elements of the Company's operating and growth strategies are
outlined below:
OPERATING STRATEGY
FULL-SERVICE DESIGN AND ENGINEERING CAPABILITIES. The Company has
maintained a technological advantage through its investment in product
development and advanced engineering. The Company works with OEMs throughout the
product development process from concept vehicle and prototype development
through the design and implementation of manufacturing processes. The Company's
computer-aided design systems are compatible with its major customers, enabling
the Company to communicate design developments with customer engineers
throughout the design and development stage.
EFFICIENT MANUFACTURING/CONTINUOUS IMPROVEMENT PROGRAMS. The Company
continues to implement strategic initiatives designed to improve product quality
and reduce manufacturing costs through, among other things, the introduction of
cellular manufacturing methods, consolidation of manufacturing facilities,
improvement in inventory management and reduction of scrap. Manufacturing
flexibility enables the Company's facilities to produce modules and systems in a
cost-effective manner and strengthens the Company's ability to meet the
just-in-time and in-line sequence delivery schedules of many of its customers.
In addition, the Company utilizes the Dura Operating System, which is a common
set of key metrics used in all facilities, to measure actual performance in
comparison to standards and goals.
STRONG CUSTOMER RELATIONSHIPS. The Company has developed strong customer
relationships with over 20 OEMs based on its long history of high-quality
manufacturing and full system customer support.
39
<PAGE>
Significant investment in design and engineering capabilities drive new product
development, lower costs and provide the capabilities necessary to produce
complete systems. Access to and relationships with OEMs' engineering and
purchasing personnel allow the Company to identify business opportunities and
react to customer needs in the early stages of vehicle design and give it a
competitive advantage in securing new business.
DECENTRALIZED, PARTICIPATORY CULTURE. The Company's decentralized approach
to managing its manufacturing facilities encourages decision making and employee
participation in areas such as manufacturing processes and customer service.
This "team" approach enhances communication of strategic direction and goals
while facilitating a greater success rate in reaching and exceeding its
objectives and fosters a unified culture. The Company provides ownership-related
incentives to managers and salaried and hourly employees through grants under
the Company's stock option plan and participation in the employee stock purchase
plan.
GROWTH STRATEGY
STRATEGIC ACQUISITIONS. Since August 1994, the Company has successfully
completed seven strategic acquisitions and one joint venture. The Company seeks
to make acquisitions that: (i) provide additional product, manufacturing and
technical capabilities; (ii) broaden the Company's geographic coverage and
strengthen its ability to supply products on a global basis; (iii) increase the
number of models for which the Company supplies products and increase the
content level on existing models; and (iv) add new customers. The Company
competes in what it believes to be a $6 billion, highly fragmented market that
provides numerous potential acquisition and joint venture opportunities.
FOCUS ON HIGHER VALUE-ADDED SYSTEMS. OEMs continue to seek suppliers
capable of manufacturing complete systems for a vehicle rather than suppliers
that produce only the component parts which comprise a system. Systems
manufacturing offers OEMs the opportunity for significant cost savings and
improved product quality and consistency. By capitalizing on the Company's
existing product portfolio and through the combination of multifunctional
mechanical and cable products, the Company intends to continue to expand its
capabilities to provide additional integrated systems.
INCREASE PLATFORM AND CUSTOMER PENETRATION. The Company's strategy is to
increase volume by adding new customers and to strengthen existing customer
relationships by broadening its range of products through internal development
efforts and acquisitions. During 1997, the Company established important new
customer relationships with Mercedes, Volkswagen and BMW through the acquisition
of VOFA. While maintaining its strong relationships with Ford and GM, the
Company has also successfully increased its participation in the supply of its
other customers' model lines. For example, during 1991, the Company participated
in only a limited number of Toyota's production models. By 1997, the Company had
established a supply relationship that covers a full range of Toyota vehicles,
including two models manufactured in Japan. The Company has also increased the
sales content on popular vehicle platforms such as Ford's Taurus/Sable and
Escort, Chrysler's minivan and Grand Cherokee, Dodge Ram and Dakota pickups, by
providing additional products which were developed by the Company or added to
its product line through acquisition.
EXPAND PENETRATION OF INTERNATIONAL MARKETS. In 1997, over 70% of total
worldwide passenger vehicle production occurred outside North America. To meet
OEMs' increasing preference for suppliers with global capabilities, the Company
has expanded its manufacturing operations into new geographic markets through
strategic acquisitions and a joint venture. Consistent with this strategy, the
Company believes that the VOFA (Germany and Spain), Rockwell Parking Brake
Business (France) and REOM (Australia) acquisitions as well as the Pollone
(Brazil) joint venture will expand its ability to serve its customers globally.
The Company believes that increased international sales will allow the Company
to mitigate the effects of cyclical downturns in a given geographic region and
further diversify the Company's OEM
40
<PAGE>
customer base. In addition, the Company believes that its increased
international presence will provide a competitive advantage in the pursuit of
certain "world car" supply opportunities.
PRODUCTS
The Company's product offerings include: automotive cables (such as parking
brake, shifter, throttle, oil level, hood release, and fuel door); parking brake
mechanisms (foot and hand operated); transmission shifter mechanisms (manual and
automatic console-based and column-mounted); latches (primary, secondary, and
combination hood, deck lid and tail gate); and other engineered mechanical
components (such as underbody tire carriers, jacks, brake, clutch and
accelerator pedals, and turn signal and tilt lever assemblies). The Company
believes that it is a leading North American supplier of parking brake
mechanisms, transmission shifter mechanisms and automotive cables, with
estimated market shares in excess of 75%, 40% and 25%, respectively. The Company
offers individual components as well as integrated parking brake, shifter and
latch systems, which consist of mechanisms and cables.
The following table sets forth the approximate composition by product
category of the Company's revenues on a pro forma basis for the last three
fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
PRODUCT CATEGORY 1995 1996 1997
- ---------------------------------------------------------------- ----- ----- -----
<S> <C> <C> <C>
Parking brake mechanisms........................................ 57% 39% 23%
Automotive cables............................................... 29 39 38
Latches......................................................... 9 12 4
Transmission shifter mechanisms................................. 3 4 24
Other body hardware............................................. 2 6 11
--- --- ---
Total....................................................... 100% 100% 100%
--- --- ---
--- --- ---
</TABLE>
CUSTOMERS AND MARKETING
The North American automotive market is dominated by Ford, GM and Chrysler,
with Japanese and foreign manufacturers accounting for approximately 20% of the
market. In North America, the Company supplies its products primarily to Ford,
GM, Chrysler and Toyota. As a result of recent acquisitions, the Company added
Mercedes, Volkswagen and BMW as new customers in 1997.
The following is a summary of the Company's customers that accounted for a
significant portion of consolidated revenues in the past three fiscal years:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
CUSTOMER 1995 1996 1997
- ---------------------------------------------------------------- ----- ----- -----
<S> <C> <C> <C>
Ford............................................................ 52% 49% 42%
GM.............................................................. 35 36 25
Chrysler........................................................ 6 8 7
Toyota.......................................................... 5 5 4
Mercedes........................................................ -- -- 4
Volkswagen...................................................... -- -- 4
BMW............................................................. -- -- 3
Other........................................................... 2 2 11
--- --- ---
Total......................................................... 100% 100% 100%
--- --- ---
--- --- ---
</TABLE>
41
<PAGE>
The Company's customers award contracts for a particular car platform, which
may include more than one car model. Such contracts range from one year to the
life of the models, which is generally three to seven years, and do not require
the purchase by the customer of any minimum number of parts. The Company also
competes for new business to supply parts for successor models and therefore is
subject to the risk that the OEM will not select the Company to produce parts on
a successor model. Because the Company supplies parts for a broad cross-section
of both new and mature models, its reliance on any particular model is
minimized. The Company manufactures products for many of the most popular car,
light truck, sport utility and mini-van models in North America and Europe.
Although not comprehensive, the following table presents an overview of the
major models for which the Company has orders to supply products on current or
new model vehicles:
<TABLE>
<CAPTION>
CUSTOMER CAR MODELS* TRUCK AND VAN MODELS*
- ---------------- ------------------------------------ ------------------------------------
<S> <C> <C>
Ford............ Crown Victoria/Grand Marquis, Bronco, Econoline, Expedition/
Contour/Mystique/MONDEO, Navigator, Navajo/Explorer/
Continental/ Town Car, Mark/Mark Mountaineer, F-Series, Ranger,
VIII, Taurus/ Sable, Cougar, Villager, Windstar, AUTOEUROPA MPV,
Escort/Tracer, Mustang, FIESTA, KA ESCORT VAN
GM.............. Achieva/Grand Am, Century, Corvette, Safari/Astro, Blazer/Jimmy/Bravada,
Deville/Seville/Eldorado, Firebird/ C/K Pickup/Tahoe/Sierra/Yukon,
Camaro, Lumina/Monte Carlo/Regal/ Silhouette/TransSport/Venture, S-10
Intrigue, Aurora/Riviera/Park Pickup/Sonoma, Suburban
Avenue, Olds 88/ Bonneville/LeSabre,
Saturn/ Innovate, Sunfire/Cavalier,
Malibu/ Cutlass/Grand Prix, ASTRA,
CORSA, VECTRA
Chrysler........ Intrepid/Concorde/LHS/300M, Neon, Caravan/Voyager, Dakota/Durango,
Prowler, Viper, Cirrus, Stratus, Cherokee/Grand Cherokee, Ram Van and
Breeze Pickup, Wrangler
Toyota.......... Avalon, Camry, Corolla, LEXUS, Sienna, Toyota Pickup
Prizm, Solara
Mercedes........ A, C, E, M AND S CLASS, CABRIO --
Volkswagen/Audi.. POLO, GOLF, PASSAT, A4, A8 TRANSPORTER, BUS
BMW............. 3, 5, 7 AND 8 SERIES --
</TABLE>
- ------------------------
*Models manufactured outside of North America are italicized.
Most of the parts the Company produces have a lead time of two to five years
from product development to production. Although not comprehensive, the
following table presents an overview of the
42
<PAGE>
major models for which the Company has been awarded new business (i.e., parts
not currently supplied by the Company):
<TABLE>
<CAPTION>
MODEL YEAR MODEL*
- -------------------- ------------------------------------------------
<S> <C>
1999................ GM CORSA park brake and door cables and Innovate
shifter system
Chrysler Grand Cherokee parking brake system and
shifter and hood release cables
PEUGEOT T1 parking brake
Cami Sidekick shifter
2000................ GM Lumina/Monte Carlo shifter and
C/K Pickup hood latch
2001................ Ford Explorer shifter
</TABLE>
- ------------------------
*Models manufactured outside of North America are italicized.
DESIGN AND ENGINEERING SUPPORT
The Company believes that engineering service and support are key factors in
successfully obtaining new business. The Company utilizes program management
with customer-dedicated program teams, which have full design, development, test
and commercial issues under the operational control of a single manager. In
addition, cross-functional teams are established for each new program to ensure
efficient product development from program conception through product launch.
The advanced technology development group focuses on enhancing product and
process technology.
The Company has four Technical Centers, two in Michigan, one in Germany and
one in France. A separate Advanced Technology Group has been established to
maintain the Company's position as a technology leader. The Advanced Technology
Group has developed many innovative features in the Company's products,
including many features which were developed in conjunction with the Company's
customers. The Company utilizes Computer Aided Designs ("CAD") in the design
process, which enables the Company to share data files with its customers via
compatible systems during the design stage, thereby improving function, fit and
performance within the total vehicle. The Company also utilizes CAD links with
its manufacturing engineers to enhance manufacturability and quality of the
designs early in the development process.
The Company has more than 200 patents granted or in the application process.
The patents granted expire over several years beginning in June 1998. Although
the Company believes that, taken together, the patents are significant, the loss
or expiration of any particular patent would not be material to the Company.
MANUFACTURING
In manufacturing its products, the Company utilizes two different
manufacturing processes, one for mechanisms and one for cables that will
ultimately attach to such mechanisms, creating a system. The Company utilizes
flexible manufacturing cells in both the mechanism and cable assembly processes.
Manufacturing cells are clusters of individual manufacturing operations and work
stations grouped in a cylindrical configuration, with the operators placed
centrally within the configuration. This provides flexibility by allowing
efficient changes to the number of operations each operator performs. When
compared to the more traditional, less flexible assembly line process, cell
manufacturing allows the Company to maintain its product output consistent with
its customers' requirements and reduce the level of inventory.
43
<PAGE>
Mechanical assemblies consist of between five and 50 individual components,
which are attached to form an integrated mechanism. The Company's assembly
operations are performed on either dedicated, high-volume, automated assembly
machines or on low capital-intensive, flexible, cell-oriented assembly units
capable of low or high volume production runs. The assembly operations construct
the final product through hot or cold forging machines, plastic injection
molding, welding, staking and riveting the component parts. A large portion of
the component parts are purchased from outside suppliers to the Company.
However, the Company manufactures its own stampings, a process which consists of
passing sheet metal through dies in a stamping press to form the metal into
three-dimensional parts. The Company produces stamped parts using single-stage
and progressive dies in presses, which range in size from 150 to 600 tons.
Through cell teams, which stress employee involvement, the Company's processes
are continuously upgraded to increase flexibility, improve operating safety and
minimize changeover times of the dies.
Cables are manufactured using a variety of processes, including plastic
injection molding, extrusion, wire flattening, spring making and zinc
diecasting. Wire is purchased from outside suppliers and then formed into
contra-twisted layers on tubular stranders and bunching machines to produce up
to 19-wire stranded cable. Corrosion resistance is provided by a proprietary,
ceramic coating applied during the stranding process. The cable then is
plastic-coated by an extrusion process to provide a smooth, low coefficient
surface that results in high efficiency and durability. Conduit is then produced
by flattening and coiling wire, which is then extruded with a protective
coating. Proprietary strand and conduit cutting machines enable efficient
processing. Assembly operations are arranged in cells to minimize inventory,
improve quality, reduce scrap, improve productivity and enhance employee
involvement. The cables are assembled with various attachments and end fittings
that allow the customer to install the cables to the appropriate mating
mechanisms.
The Company utilizes frequent communication meetings at all levels of
manufacturing to provide training and instruction as well as to assure a
cohesive, focused effort toward common goals. The Company encourages employee
involvement in all production activity and views such involvement as a key
element in the success of the Company. The Company also aggressively pursues
involvement from its suppliers, which is necessary to assure a consistent flow
of raw materials and components on a timely basis with consistently high
quality. The Company utilizes the component suppliers where practical in the
design and prototype stages of the new product development to facilitate the
most comprehensive, state-of-the-art designs available. The Company has made
substantial investments in manufacturing technology and product design
capability to support its products, including modern manufacturing equipment,
fineblanking, sophisticated computer-aided design systems and highly-trained
engineering personnel. These advanced capabilities have helped to further reduce
scrap rates, ensure superior product quality and increase efficiency.
The automotive industry has adopted a quality rating system known as
QS-9000, a rigorous inspection of a supplier's facilities and operating systems
performed by independent certified auditors. Certification and on-going
maintenance of certification is mandatory for future supply consideration. The
Company has received QS-9000 certification at all of its facilities except the
Rockwell Parking Brake Business, which is scheduled for certification in 1998.
The Company's plants have been recognized by its customers with various
awards, such as the Chrysler Pentastar Award, GM Target for Excellence, Nummi
Delivery Performance Award, Isuzu Quality Achievement Award and Calsonic
Supplier of the Year Award. The Company has received Ford Q-1 certification at
all facilities shipping current model Ford products.
COMPETITION
The Company principally competes for new business at the beginning of the
development of new models and upon the redesign of existing models. New model
development generally begins two to five years before marketing of such models
to the public. Once a producer has been designated to supply parts
44
<PAGE>
for a new program an OEM usually will continue to purchase those parts from the
designated producer for the life of the program, although not necessarily for a
redesign. Competitive factors in the market for the Company's products include
product quality and reliability, cost, timely delivery, technical expertise and
development capability, new product innovation and customer service. The Company
operates in a highly competitive environment. The number of the Company's
competitors has decreased due to the supplier consolidation resulting from
changing OEM policies. The Company's primary competitors in mechanisms are
Adwest Incorporated, Scharwaechter GmbH & Co. ("Edscha"), Teleflex Incorporated,
Ficosa International, S.A., Ventra Group, Inc. ("Seeburn Division"), and Aries
Industries. The Company's primary competitors in cables are Teleflex
Incorporated, Ficosa International, S.A., Trident Automotive plc and Nippon
Cable System Inc.
SUPPLIERS AND RAW MATERIALS
The principal raw materials purchased by the Company are steel, wire and
resin. The types of steel the Company purchases include hot and cold rolled,
galvanized, organically coated and aluminized steel. In general, the wire used
by the Company is produced from steel with many of the same characteristics with
the exception that it has a higher carbon content. The Company utilizes plastic
resin to produce the protective coating for its cables and production of shifter
components. The Company employs just-in-time manufacturing and sourcing systems
enabling it to meet customer requirements for faster deliveries while minimizing
its need to carry significant inventory levels. The Company has not experienced
any significant shortages of raw materials and normally does not carry
inventories of raw materials or finished products in excess of those reasonably
required to meet production and shipping schedules.
The Company typically negotiates blanket purchase orders or 12-month supply
agreements with integrated steel suppliers, mini-mills and service centers that
have demonstrated timely delivery, quality steel and competitive prices. These
relationships allow the Company to order precise quantities and types of steel
for delivery on short notice, thereby permitting the Company to maintain low
inventories. In addition, the Company occasionally may "spot buy" steel from
service centers to meet customer demand, engineering changes or new part tool
trials.
Other raw materials purchased by the Company include dies, fasteners,
springs, rivets and rubber products, all of which are available from numerous
sources.
EMPLOYEES
As of December 31, 1997, the Company had approximately 5,200 employees,
approximately 825 of whom are salaried and the balance of whom are paid on an
hourly basis. Approximately 2,170 employees located at the Company's facilities
in Matamoros, Mexico, Windsor and Brantford, Ontario, Dusseldorf, Gehren and
Daun, Germany, Barcelona, Spain, Melbourne, Australia and East Jordan and
Mancelona, Michigan are currently covered by collective bargaining agreements.
<TABLE>
<CAPTION>
COLLECTIVE BARGAINING
LOCATION AGREEMENT EXPIRATION
- --------------------------- ----------------------------- -------------------------
<S> <C> <C>
Mexico..................... Confederacion de Trabajadores Annually
de Mexico
Canada..................... CAW December 1998; June 1999;
September 1999
Germany.................... IG-Metall December 1998
Spain...................... Comisiones Oberera December 1999
Australia.................. Australian Metals Workers No term
United States.............. UAW December 2000
</TABLE>
45
<PAGE>
Although management believes that the Company's relationship with its union
employees at these facilities is good, there can be no assurance that the
Company will be able to negotiate new agreements on favorable terms. In the
event the Company is unsuccessful in negotiating new agreements, these
facilities could be subject to work stoppages, which would have a material
adverse effect on the operations of the Company.
PROPERTIES
The following table provides information regarding the Company's principal
facilities. The Company believes that the productive capacity and utilization of
its facilities are sufficient to allow the Company to conduct its operations in
accordance with its business strategy. All of the owned facilities are subject
to liens under the Company's Bank Credit Agreement.
<TABLE>
<CAPTION>
SQUARE TYPE OF
LOCATION FOOTAGE INTEREST DESCRIPTION OF USE
- ------------------------------------------ ----------- --------- --------------------
<S> <C> <C> <C>
Barcelona, Spain.......................... 179,000 Owned Manufacturing
Mancelona, Michigan....................... 167,000 Owned Manufacturing
Moberly, Missouri......................... 165,000 Owned Manufacturing
Fremont, Michigan......................... 160,000 Owned Manufacturing
Daun, Germany............................. 140,000 Owned Manufacturing
East Jordan, Michigan..................... 135,000 Owned Manufacturing
Gehren, Germany........................... 129,000 Owned Manufacturing
Dusseldorf, Germany....................... 113,000 Leased Manufacturing/
Product Development
Spring Lake, Michigan*.................... 95,000 Owned Manufacturing
White Cloud, Michigan*.................... 94,000 Leased Manufacturing
Hannibal, Missouri (South)................ 90,000 Owned Manufacturing
Livonia, Michigan......................... 84,000 Owned Manufacturing
Windsor, Ontario (2 locations)............ 84,000 Owned Manufacturing
Melbourne, Australia...................... 77,500 Leased Manufacturing
Hartford City, Indiana.................... 70,000 Owned Manufacturing
Brownstown, Indiana....................... 68,000 Owned Manufacturing
Brantford, Ontario........................ 66,000 Owned Manufacturing
Rochester Hills, Michigan................. 65,000 Leased Product Development/
Operating
Headquarters
Hannibal, Missouri (North)................ 64,000 Owned Manufacturing
Gladwin, Michigan......................... 60,000 Owned Manufacturing
Brookfield, Missouri...................... 51,000 Owned Manufacturing
Grand Haven, Michigan*.................... 48,000 Leased Product Development
Matamoros, Mexico......................... 42,000 Owned Manufacturing
Warren, Michigan.......................... 40,000 Leased Manufacturing
Cluses, France............................ 10,000 Leased Manufacturing
Minneapolis, Minnesota.................... 5,700 Leased Corporate
Headquarters
</TABLE>
- ------------------------
*Manufacturing at these facilities will be consolidated into the Fremont,
Michigan facility in 1998.
46
<PAGE>
Management believes that substantially all of its property and equipment is
in good condition and that it has sufficient capacity to meet its current
manufacturing needs.
LEGAL PROCEEDINGS
The Company faces an inherent business risk of exposure to product liability
claims in the event that the failure of its products results in personal injury
or death, and there can be no assurance that the Company will not experience any
material product liability losses in the future. In addition, if any
Company-designed products prove to be defective, the Company may be required to
participate in a recall involving such products.
In late 1994, Ford issued a recall of a series of manual transmission Ford
F-Series pickups to repair the self-adjust parking brakes originally
manufactured by the Brake and Cable Business. Ford had received several reports
that the brakes failed. Pursuant to a letter agreement entered into in
connection with the acquisition of the Brake and Cable Business, the Company
agreed to reimburse Ford for up to $6.0 million of Ford's costs of the recall.
The Company has reimbursed Ford for the full amount under this agreement. The
Company is also involved in a product recall relating to the same issue with
respect to the Ford Mondeo in Europe. The Company has agreed to pay 50% of the
costs of that recall not to exceed $1.0 million, which payments totaled $0.4
million as of December 31, 1997.
The type of alleged failures that prompted the F-Series recalls have also
led to a number of claims and lawsuits filed against Ford and, in certain
instances, against the Company and/or Alkin. The Company may be subject to
claims brought directly against the Company by injured occupants of Ford
vehicles and to claims for contribution or indemnification asserted by Ford. The
agreement relating to the acquisition of the Brake and Cable Business provided
that the Company is liable for claims arising out of accidents that take place
on or after August 31, 1994 and that the Company will be liable for other claims
only to the extent any losses by Alkin relating to such claims are not paid by
Alkin's insurance policies (either because they are not over the deductible
amount, because Alkin's policy limits have been exceeded or because they are not
covered by Alkin's insurance policies for other reasons). Two cases were brought
directly against the Company or Alkin relating to personal injury claims, and
Ford has received over 400 claims (generally for property damage) relating to
alleged defects in the self-adjust parking brakes. The claims that purport to
seek recovery for personal injury allegedly as a result of the recall condition,
with several exceptions, have generally involved relatively minor injuries,
suffered principally while occupants were trying to stop or jump out of rolling
vehicles. Ford has maintained that the Company or Alkin is responsible for all
damages or liabilities arising out of these claims. The Company disputes this
position. As of December 31, 1997, Ford had tendered its defense of 25 such
claims to the Company and Alkin, and indicated that it would look to the Company
and Alkin for indemnification were Ford ultimately found to be liable and
required to make any payments relating to such claims. The Company and Alkin
have submitted these claims to their insurance carriers. The Company has
attempted to work with Ford to address the claims arising from the self-adjust
parking brakes originally manufactured by the Brake and Cable Business and does
not believe that these claims have adversely affected its business relationship
with Ford.
From time to time, in the ordinary course of its business, the Company
receives notice from a customer that a product may not be properly functioning.
For example, in November 1995, the Company was notified by Chrysler that it had
received reports of a number of parking brake failures in manual transmission
vehicles, particularly in Europe. Chrysler has notified the Company that as many
as 60,000 vehicles may be affected. The Company is working with Chrysler to
resolve this matter and does not believe the ultimate cost of resolution will
have a material effect on the Company's results of operations and financial
position. In addition, Chrysler has alleged that KPI produced minivan brake
pedals with improper pedal pad reinforcements, resulting in some failures as a
consequence of pedal pads bending. It is possible that Chrysler could seek
contribution from the Company for costs it incurs if recalls were undertaken for
these or similar matters or for costs associated with possible repairs.
47
<PAGE>
In June 1996, the Company was served with a complaint alleging a wrongful
death as the result of injuries purportedly caused by a defectively designed
rear latch on a Chrysler mini-van. Chrysler and two other suppliers to Chrysler
were also named as defendants in the complaint. The lawsuit was referred to the
Company's insurance carrier. Chrysler agreed to assume the defense of, and to
indemnify the Company with respect to, this claim as long as the plaintiffs do
not make any claim alleging a manufacturing defect as it relates to the Company.
The plaintiffs have not made such an allegation and the Company was dismissed
from the claim.
In early November 1996, the Company was served with a lawsuit brought by
affiliates of AIG, the Company's excess insurance carrier, in Toronto, Canada
seeking a declaratory judgment that the umbrella and excess liability policies
that it had issued to Onex do not provide coverage in connection with allegedly
defective self-adjust parking brakes manufactured by Alkin prior to August 31,
1994. The AIG policies at issue provided (a) the first layer of excess coverage
(beyond the Company's $3 million primary policy per year) for claims arising
from August 31, 1994 to April 1, 1996 in the amount of $20 million per year, and
(b) an additional layer of excess coverage at $33 to $53 million per year. In
principal part, the AIG affiliates claim that the policies do not provide
coverage with respect to products manufactured prior to August 31, 1994 or
liabilities assumed by the Company pursuant to purchase agreements. The AIG
affiliates also claim that the policies should be voided with respect to
self-adjust parking brake claims for inadequate disclosure at the time the
policies were applied for. The Company and Onex dispute the allegations of the
Ontario lawsuit and have filed a counterclaim against the AIG affiliates for
breach of contract.
The Company believes it maintains adequate insurance, including product
liability coverage, to cover the claims described above. The Company has also
established reserves in amounts it believes adequate to cover any adverse
judgments. However, any adverse judgment in excess of its insurance coverage and
such reserves could result in a material adverse effect on the Company.
ENVIRONMENTAL MATTERS
The Company is subject to the requirements of Federal, state, and local
environmental and occupational health and safety laws and regulations. There can
be no assurance that the Company is at all times in complete compliance with all
such requirements. Although the Company has made and will continue to make
capital and other expenditures to comply with environmental requirements, the
Company does not expect to incur material capital expenditures for environmental
controls in 1998. If a release of hazardous substances occurs on or from the
Company's properties or any associated offsite disposal location, or if
contamination is discovered at any of the Company's current or former
properties, the Company may be held liable for remediation costs and expenses,
and the amount of such liability could be material.
In 1995, the Michigan Department of Environmental Quality ("MDEQ") requested
that Wickes and the Company investigate environmental conditions at the
Company's Mancelona facility and at a certain adjacent property retained by
Wickes. Wickes and the Company jointly completed the requested investigation in
January of 1996. In 1997, Wickes and the Company agreed to undertake additional
investigatory work requested by MDEQ. The investigation found varying levels of
trichlorethylene at levels well above acceptable drinking water levels in wells
located off the Company's premises. While the source of the contamination has
yet to be identified, the Company immediately assumed the lead to establish
acceptable sources of drinking water for residents. The Company expanded its
investigatory work to delineate and monitor the characteristics of the
contamination. Additional work plans and test results have been reported to the
MDEQ. Depending upon the results of this work, the Company could incur
additional costs to further investigate or conduct cleanup at the facility.
In 1993, the Company received requests for information pursuant to CERCLA
from the U.S. EPA with respect to two landfill sites located in Toledo, Ohio. In
1994, the Company received a notice of potential liability under CERCLA from the
EPA with respect to one of the sites. The Company responded
48
<PAGE>
to the requests and notice by explaining to the EPA that it had no involvement
with these sites, which ceased operations prior to the formation of the Company
in 1990. In October 1996, the Company received notice that a motion had been
filed to add the Company as a defendant in a suit by the City of Toledo
involving one of the sites. As of August 22, 1997, the Company has received no
word of the disposition of the motion, the time period for services has expired
and the Company has received no indication that the plaintiff intends to pursue
a claim against it. The City alleges that the Company is liable as the
successor-in-interest to Dura Corporation. The Company has written to the City
denying that the Company is a successor and urging that the claim against the
Company be dropped. The Company is awaiting a response. If the claims goes
forward, the Company would be one of approximately 25 defendants. The total
recovery sought by the City, and the amount allegedly attributable to the
Company, are unknown to the Company.
In connection with the Company's acquisition of certain assets from Wickes
in 1990, and subject to certain limitations, Wickes agreed to indemnify the
Company for environmental liabilities arising from the operation of the acquired
facilities prior to the acquisition. The Company and Wickes subsequently agreed
that the Company had provided Wickes with timely and adequate notice with
respect to certain matters (including the matters described in the immediately
preceding paragraphs) and that, subject to the limitations set forth in the
agreement, those matters are covered by the Wickes indemnification. There can be
no assurance, however, that all costs associated with such matters will
ultimately be reimbursed by Wickes. The Company does not currently believe that
any liability associated with the foregoing matters will be material to the
Company.
In December 1996, the Company acquired the stock of KPI from Sparton
Corporation ("Sparton"). In connection with the acquisition, such subsidiaries
retained their liability under CERCLA with respect to certain waste disposal
sites, subject to indemnification by Sparton for liability in excess of a $1
million aggregate threshold amount, up to a $15 million aggregate cap. Of these
sites, the sites as to which the subsidiaries' liability has not yet been
resolved through a settlement are the Third Site in Zionsville, Indiana and the
Northeast Gravel Site in Grand Rapids, Michigan. Based upon estimates provided
by Sparton, the cost to resolve the liability of the acquired subsidiaries at
the Sparton-related sites is not currently expected to be material.
In January 1997, the Company acquired the stock of VOFA. The sellers agreed
to indemnify the Company for environmental liabilities arising from the
operation of the acquired facilities prior to the acquisition up to a $10
million aggregate cap. The sellers gave notice to the Company of potential
environmental liabilities at the Dusseldorf facility that, subject to the
limitations set forth in the agreement, should be covered by the
indemnification. There can be no assurance, however, that all costs associated
with such matters will ultimately be reimbursed by the sellers. The Company does
not currently believe that any liability associated with the foregoing matters
will be material to the Company.
In August 1997, the Company acquired GT Automotive. In connection with the
acquisition, a clean up report was commissioned to determine whether hazardous
materials or hazardous substances were present in the soil, surface water or
ground water at the Brantford and Windsor, Ontario facilities. The Company
believes that the cost of any environmental remediation with respect to this
matter will not be material.
49
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
Directors and executive officers of the Company as of December 31, 1997:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL POSITION(S)
- ------------------------------------- --- -------------------------------------
<S> <C> <C>
S. A. (Tony) Johnson................. 57 Chairman and Director
Karl F. Storrie...................... 60 President, Chief Executive Officer
and Director
David R. Bovee....................... 48 Vice President
Joe A. Bubenzer...................... 46 Senior Vice President
Stephen E. K. Graham................. 40 Vice President and Chief Financial
Officer
Robert R. Hibbs...................... 35 Vice President and Director
John J. Knappenberger................ 51 Vice President
Milton D. Kniss...................... 50 Vice President
Scott D. Rued........................ 41 Vice President
Neil C. Anderson..................... 47 Director
Robert E. Brooker, Jr................ 60 Director
W. H. Clement........................ 70 Director
Jack K. Edwards...................... 53 Director
James L. O'Loughlin.................. 52 Director
William L. (Barry) Orscheln.......... 47 Director
Eric J. Rosen........................ 36 Director
Barbara A. Westhues.................. 37 Director
</TABLE>
S. A. (TONY) JOHNSON has served as Chairman and a Director of the Company
since November 1990. Mr. Johnson is the founder, Chief Executive Officer and
President of Hidden Creek, a private industrial management company based in
Minneapolis, Minnesota, which has provided certain management and other services
to the Company. Mr. Johnson is also the President of J2R. Prior to forming
Hidden Creek, Mr. Johnson served from 1985 to 1989 as Chief Operating Officer of
Pentair, Inc., a diversified industrial company. From 1981 to 1985, Mr. Johnson
was President and Chief Executive Officer of Onan Corp., a diversified
manufacturer of electrical generating equipment and engines for commercial,
defense and industrial markets. Mr. Johnson served as Chairman and a director of
Automotive Industries Holding, Inc., a supplier of interior trim components to
the automotive industry, from May 1990 to August 1995. Mr. Johnson is also
Chairman and a director of Tower Automotive, Inc., a manufacturer of engineered
metal stampings and assemblies for the automotive industry.
KARL F. STORRIE has served as President, Chief Executive Officer and a
Director of the Company since March 1991. Prior to joining the Company and from
1986, Mr. Storrie was Group President of a number of aerospace manufacturing
companies owned by Coltec Industries, a multi-divisional public corporation.
Prior to becoming a Group President, Mr. Storrie was a Division President of two
aerospace design and manufacturing companies for Coltec Industries from 1981 to
1986. During his thirty-five year career, Mr. Storrie has held a variety of
positions in technical and operations management. Mr. Storrie is also a director
of Argo-Tech Corporation, a manufacturer of aircraft fuel, boost and transfer
pumps.
50
<PAGE>
DAVID R. BOVEE has served as Vice President of the Company since November
1990 and Chief Financial Officer of the Company from November 1990 to May 1997.
Mr. Bovee also serves as Assistant Secretary for the Company. Prior to joining
the Company, Mr. Bovee served as Vice President at Wickes in its Automotive
Group from 1987 to 1990.
JOE A. BUBENZER has had responsibility for European operations since June
1997. From October 1993 to May 1997, Mr. Bubenzer served as Vice President
Sales/Engineering since joining the Company in October 1993 and was named Senior
Vice President in 1995. Prior to joining the Company in October 1993, Mr.
Bubenzer filled various executive positions with ITT Automotive, a supplier of
components to the automotive industry, where he worked for six years, and, prior
to such time, at GM, where he worked for 14 years.
STEPHEN E. K. GRAHAM has served as Vice President and Chief Financial
Officer since joining the Company in June 1997. From 1996 to May 1997, Mr.
Graham was Chief Financial Officer of Cambridge Industries, Inc., a North
American supplier of components to the automotive industry. From 1994 to 1996,
Mr. Graham was Chief Financial Officer of Truck Components, Inc., a supplier of
components to the automotive and heavy truck industry. From 1989 to 1994, Mr.
Graham held several positions with Magna International, Inc., an automotive
components supplier.
ROBERT R. HIBBS has served as a Director of the Company since August 1994
and as Vice President since November 1990. Mr. Hibbs, a stockholder of J2R, has
also served as Vice President-Corporate Development of Hidden Creek since
January 1994 and as its Director from April 1990 through December 1993. Prior
thereto, Mr. Hibbs worked in the corporate finance area with Drexel Burnham
Lambert, an investment banking firm, in New York from 1988 to 1990.
JOHN J. KNAPPENBERGER has served as Vice President of Quality and Materials
of the Company since December 1995. Mr. Knappenberger assumed the responsibility
for sales and engineering in June 1997. Prior to joining the Company, Mr.
Knappenberger was Director of Quality for Carrier Corporation's North American
Operations, manufacturers of heating and air conditioning systems, from February
1992. From 1985 to 1991, Mr. Knappenberger was employed by TRW Inc., a supplier
of components to the automotive industry, beginning as Director of Quality in
1985 for the Steering and Suspension Division and becoming Vice President,
Quality for the Automotive Sector in 1990.
MILTON D. KNISS has served as Vice President of Operations of the Company
since January 1994. From April 1991 until January 1994, Mr. Kniss served as
Director of Michigan Operations for the Company. Mr. Kniss joined the
predecessor in 1981 as a Divisional Purchasing Manager, served as Plant Manager
of East Jordan, Michigan from 1982 until 1986, and Plant Manager of
Gordonsville, Tennessee until 1991.
SCOTT D. RUED has served as Vice President of the Company since November
1990. Mr. Rued, a stockholder of J2R, has also served as Executive Vice
President and Chief Financial Officer of Hidden Creek since January 1994 and
served as its Vice President Finance and Corporate Development from June 1989
through 1993. Mr. Rued has served as Vice President, Corporate Development and a
director of Tower Automotive, Inc. since April 1993. Mr. Rued served as Vice
President, Chief Financial Officer and a director of Automotive Industries
Holding, Inc. from April 1990 to August 1995. Mr. Rued is also a director of The
Rottlund Company, Inc., a corporation engaged in the development and sale of
residential real estate.
NEIL C. ANDERSON has served as a Director of the Company since August 1994.
Mr. Anderson has also served as Vice President of Finance for Orscheln
Management Co. since March 1991 and was named Senior Vice President of Finance
in October 1995. Mr. Anderson has also served as a director for Analytical Bio
Chemistry Laboratories, Inc. since June 1995.
ROBERT E. BROOKER, JR. has served as a Director of the Company since
September 1996. From 1993 to 1995, Mr. Brooker was President and Chief Operating
Officer of Connell Limited Partnership. Prior
51
<PAGE>
thereto, Mr. Brooker served six years as President and Chief Executive Officer
at Lord Corporation. Mr. Brooker is also a director of Full Circle Investments,
a private investment company.
W. H. CLEMENT has served as a Director of the Company since 1993. Mr.
Clement serves as a consultant to Hidden Creek. From 1975 until May 1994, Mr.
Clement served as Chief Executive Officer or as President of Automotive
Industries Holding, Inc. and its predecessor. Mr. Clement is also a director of
F&M National Corporation, a bank holding company, and Tower Automotive, Inc.
JACK K. EDWARDS has served as a Director of the Company since December 1996.
Mr. Edwards joined Cummins Engine Co., Inc. in 1972 and has served as Executive
Vice President and Group President-- Power Generation and International since
March 1996. Mr. Edwards is also a director of David J. Joseph Co., a processor
and trader of steel scrap.
JAMES L. O'LOUGHLIN has served as a Director of the Company since August
1994. Mr. O'Loughlin has also served as Vice President and General Counsel to
Orscheln Management Co. since December 1987 and was named Senior Vice President
in October 1995.
WILLIAM L. (BARRY) ORSCHELN has served as a Director of the Company since
August 1994. Mr. Orscheln has also served as President of Alkin (and its
predecessors) since March 1994, as President of Orscheln Farm and Home since
September 1995, as President of Orscheln Properties Co., L.L.C., since October
1994 and as President of Orscheln Management Co. since December 1987. Mr.
Orscheln has served as a director of UMB Bank, a bank holding company, since
July 1989 and as a director of Orscheln Management Co. since 1987.
ERIC J. ROSEN has served as a Director of the Company since January 1995.
Mr. Rosen is Managing Director of Onex Investment Corp., a diversified
industrial corporation and an affiliate of Onex, and served as a Vice President
of Onex Investment Corp. from 1989 to February 1994. Prior thereto, Mr. Rosen
worked in the merchant banking group at Kidder, Peabody & Co. Incorporated from
1987 to 1989. Mr. Rosen is also a director of Tower Automotive, Inc.
BARBARA A. WESTHUES has served as a Director of the Company since August
1994. Ms. Westhues has served on the Audit Committee since August 1994. Ms.
Westhues has also served as the Controller of Orscheln Management Co. since
December 1987 and was named Senior Vice President in October 1995.
The Company currently has eleven Directors. Each Director is elected to
serve until the next annual meeting of stockholders or until a successor is duly
elected and qualified. Executive officers of the Company are duly elected by the
Board to serve until their respective successors are elected and qualified.
There are no family relationships between any of the Directors or executive
officers of the Company.
Certain of the Company's existing stockholders have entered into agreements
pursuant to which such stockholders have agreed to vote their shares of the
Company's voting stock for the election of directors designated by certain of
the existing stockholders. See "Security Ownership of Certain Beneficial Owners
and Management--Stockholders Agreement."
There are three Committees of the Board: the Executive Committee, the
Compensation Committee and the Audit Committee. The Executive Committee, which
is currently composed of Messrs. Johnson, Storrie and Orscheln, exercises the
powers of the Board of Directors during intervals between Board meetings and
acts as an advisory body to the Board by reviewing various matters prior to
their submission to the Board. The Compensation Committee, which is currently
composed of Messrs. Clement, Brooker and Edwards, reviews and makes
recommendations to the Board of Directors regarding salaries, compensation and
benefits of executive officers and key employees of the Company and grants all
options to purchase Common Stock of the Company. The Audit Committee is
currently composed of Messrs. Hibbs and Rosen and Ms. Westhues. Among other
duties, the Audit Committee reviews the internal and external financial
reporting of the Company, reviews the scope of the independent audit and
considers comments
52
<PAGE>
by the auditors regarding internal controls and accounting procedures and
management's response to these comments. The Company does not have a nominating
committee.
DIRECTOR COMPENSATION
Directors who are not employees of the Company or any of its affiliates each
receive an annual fee of $16,000 for serving as a director of the Company. In
addition, each non-employee director receives $1,000 for each Board of Directors
meeting attended, $500 for each committee meeting attended and reimbursement of
out-of-pocket expenses incurred to attend such meetings.
EXECUTIVE COMPENSATION
The following table sets forth the Company's chief executive officer's and
the four other most highly compensated executive officers' (the "Named Executive
Officers") compensation packages for the years ended December 31, 1997, 1996 and
1995. Other than the Company's 1996 Key Employee Stock Option Plan (the "Stock
Option Plan"), the Company does not maintain any long-term compensation plans.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
----------------------------------------- COMPENSATION
NAME AND OTHER ANNUAL --------------- ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS(1) COMPENSATION(2) OPTIONS GRANTED COMPENSATION(3)
- ---------------------------------- --------- ----------- --------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Karl F. Storrie................... 1997 $ 345,833 $ 425,000 $ 13,917 30,000 $ 6,856
President and Chief 1996 294,168 400,000 10,872 80,000 3,725
Executive Officer 1995 258,340 300,000 11,775 -- 3,600
Joe A. Bubenzer................... 1997 187,083 150,000 7,218 12,500 5,322
Senior Vice President 1996 168,000 140,000 10,424 10,000 2,637
1995 157,333 120,000 8,322 -- 2,616
Milton D. Kniss................... 1997 167,917 150,000 3,981 12,500 5,724
Vice President 1996 144,000 135,000 5,082 10,000 4,512
1995 122,000 110,000 6,250 -- 2,776
David R. Bovee.................... 1997 155,000 125,000 11,041 10,000 4,931
Vice President 1996 140,000 125,000 10,257 10,000 4,447
1995 130,833 100,000 4,389 -- 2,832
John J. Knappenberger............. 1997 147,500 120,000 5,852 10,000 5,614
Vice President 1996 135,000 110,000 47,156(5) 27,373 3,375
1995 4,625(4) 45,000 83 -- --
</TABLE>
- ------------------------------
(1) Includes amounts deferred by employees under the Company's 401(k) employee
savings plan, pursuant to Section 401(k) of the Internal Revenue Code.
(2) Includes the value of personal benefits and perquisites.
(3) The amounts disclosed in this column include amounts contributed by the
Company to the Company's 401(k) employees savings plan and profit sharing
plan and dollar value of premiums paid by the Company for term life
insurance on behalf of the named executive officers.
(4) Mr. Knappenberger became an employee of the Company on December 18, 1995.
(5) Includes $39,263 for reimbursement of relocation costs.
53
<PAGE>
The following table discloses for the Named Executive Officers, information
regarding stock options granted during, or held at the end of, 1997 pursuant to
the Stock Option Plan.
OPTION GRANT TABLE
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED ANNUAL
% OF TOTAL RATES OF STOCK PRICE
OPTIONS APPRECIATION FOR OPTION
GRANTED TO TERM(2)
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ------------------------
NAME GRANTED(1) FISCAL YEAR PRICE DATE 5% 10%
- ------------------------------- ------------- ------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
K.F. Storrie................... 30,000 20.8% $ 24.50 12/17/07 $ 462,238 $1,171,401
J.A. Bubenzer.................. 12,500 8.7% 24.50 12/17/07 192,599 488,084
M.D. Kniss..................... 12,500 8.7% 24.50 12/17/07 192,599 488,084
D.R. Bovee..................... 10,000 6.9% 24.50 12/17/07 154,079 390,457
J.J. Knappenberger............. 10,000 6.9% 24.50 12/17/07 154,079 390,467
</TABLE>
- --------------------------
(1) These options vest ratably over four years commencing one year from the date
of grant.
(2) Amounts reflect certain assumed rates of appreciation set forth in the
executive compensation disclosure rules of the Securities and Exchange
Commission. Actual gains, if any, on stock option exercises depend on future
performance of the Company's Common Stock and overall stock market
conditions. No assurances can be made that the amounts reflected in these
columns will be achieved.
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
YEAR-END YEAR-END
------------- -----------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ------------- -----------------
<S> <C> <C>
40,000 / $ 410,000 /
K.F. Storrie............................................. 70,000 $471,500
2,500 /
J.A. Bubenzer............................................ 20,000 10,000 / 33,125
2,500 /
M.D. Kniss............................................... 20,000 10,000 / 33,125
2,500 /
D.R. Bovee............................................... 17,500 10,000 / 32,500
23,623 / 234,323 /
J.J. Knappenberger....................................... 13,750 17,500
</TABLE>
54
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth certain information regarding the equity
ownership of the Company as of December 31, 1997 by (i) each person or entity
known to the Company who beneficially owns five percent or more of the Common
Stock of the Company, (ii) each Director and Named Executive Officer and (iii)
all Directors and executive officers of the Company as a group. Unless otherwise
stated, each of the persons named in the table has sole voting and investment
power with respect to the securities beneficially owned by it or him as set
forth opposite its or his name. Beneficial ownership of the Common Stock listed
in the table has been determined in accordance with the applicable rules and
regulations promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
------------------------------------------------
CLASS A CLASS B
COMMON STOCK COMMON STOCK
------------------------ ----------------------
DIRECTORS, OFFICERS AND NUMBER OF PERCENT OF NUMBER OF PERCENT OF
5% STOCKHOLDERS SHARES CLASS SHARES CLASS
- ----------------------------------------------------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
ONEX DHC LLC(1)(2)................................... -- --% 2,501,990 53.8%
Alkin Co.(2)(3)...................................... -- -- 2,166,810 46.6
J2R Corporation(2)(4)................................ -- -- 408,211 8.8
S. A. Johnson(2)(4).................................. -- -- 417,879 9.0
Karl F. Storrie(2)(5)................................ 4,400 * 155,531 3.3
David R. Bovee(2).................................... 1,000 * 33,808 *
Joe A. Bubenzer(2)................................... 1,200 * 38,314 *
Stephen E. K. Graham................................. -- -- -- --
Robert R. Hibbs(2)(6)................................ -- -- 416,160 8.9
John J. Knappenberger................................ 29,709 * 1,250 *
Milton D. Kniss(2)................................... -- -- 11,461 *
Neil C. Anderson(2)(3)............................... -- -- 2,166,810 46.6
Robert E. Brooker, Jr................................ 20,000 * 2,500 *
W. H. Clement(2)..................................... 2,000 * -- --
Jack K. Edwards...................................... -- -- 2,500 *
James L. O'Loughlin(2)(3)............................ -- -- 2,166,810 46.6
William L. Orscheln(2)(3)............................ -- -- 2,166,810 46.6
Eric J. Rosen(1)(2).................................. -- -- 2,501,990 53.8
Scott D. Rued(2)(7).................................. -- -- 412,107 8.9
Barbara A. Westhues(2)(3)............................ -- -- 2,166,810 46.6
American Express Company(8).......................... 695,000 16.7 -- --
Dresdner RCM Global Investors LLC(9)................. 396,500 9.5 -- --
The TCW Group, Inc.(10).............................. 366,000 8.8 -- --
State of Wisconsin Investment Board(11).............. 237,000 5.7 -- --
Frontier Capital Management Company, Inc.(12) 216,700 5.2 -- --
The Northwestern Mutual Life Insurance Company(13)... 206,900 5.0 -- --
All Directors and Officers as a group (17 persons)... 58,309 1.4 4,636,813 99.6
</TABLE>
- --------------------------
* Less than one percent.
(1) Reflects shares of Class B Common Stock held by Onex DHC LLC, which has
shared voting power over 2,501,990 shares of Common Stock (see footnote (2))
and sole dispositive power over 1,794,913 shares of Class B Common Stock.
Mr. Rosen, a Director of the Company, is Managing Director of Onex
Investment Corp. and disclaims beneficial ownership of all shares of Common
Stock owned by Onex DHC LLC. Onex DHC LLC and Onex Investment Corp. are both
wholly owned subsidiaries of Onex Corporation. The address for Onex DHC LLC
and Mr. Rosen is c/o Onex Investment Corp., 712 Fifth Avenue, 40th Floor,
New York, New York 10019.
55
<PAGE>
(2) Onex, J2R, Messrs. Johnson, Storrie, Bovee, Bubenzer, Hibbs, Kniss, Clement,
Rosen and Rued and certain of the Company's other existing stockholders have
entered into agreements pursuant to which such stockholders agreed to vote
their shares of Common Stock in the same manner as Onex votes its shares on
all matters presented to the Company's stockholders for a vote and, to the
extent permitted by law, granted to Onex a proxy to effectuate such
agreement. As a result, Onex has voting control of approximately 49.3% of
the Common Stock. All of the Company's existing stockholders, including
Alkin, have entered into an agreement providing for the election of the
Board. As a result, such stockholders collectively have voting control over
91.8% of the Common Stock.
(3) Includes 14,420 shares issuable upon the exercise of currently exercisable
options issued to Alkin in connection with the Company's acquisition of the
automotive parking brake cable and lever business and light duty cable
business from Alkin. Alkin has granted each of Messrs. Anderson and
O'Loughlin and Ms. Westhues options to acquire 13,218 shares of the Class B
Common Stock owned by Alkin. Messrs. Anderson, O'Loughlin and Orscheln and
Ms. Westhues are officers of Alkin and, other than Mr. Orscheln, each
disclaims beneficial ownership of the shares owned by Alkin other than the
shares subject to each of their outstanding options. The address for Alkin
is 2000 U.S. Highway 63 South, Moberly, Missouri 65270, and the address of
each such individual is c/o Alkin at the same address.
(4) Includes 408,211 shares owned by J2R, of which Mr. Johnson is President, and
9,668 shares owned by Mr. Johnson. The address for Mr. Johnson and J2R is
c/o Dura Automotive Systems, Inc., 4508 IDS Center, Minneapolis, Minnesota
55402.
(5) Includes 1,400 shares owned by Mr. Storrie's wife. Mr. Storrie disclaims
beneficial ownership of such shares.
(6) Includes 408,211 shares owned by J2R, of which Mr. Hibbs is a stockholder,
and 7,949 shares owned by Mr. Hibbs. Mr. Hibbs disclaims beneficial
ownership of the shares owned by J2R. The address for Mr. Hibbs is c/o Dura
Automotive Systems, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402.
(7) Includes 408,211 shares owned by J2R, of which Mr. Rued is a stockholder,
and 3,898 shares owned by Mr. Rued. Mr. Rued disclaims beneficial ownership
of the shares owned by J2R. The address for Mr. Rued is c/o Dura Automotive
Systems, Inc., 4508 IDS Center, Minneapolis, Minnesota 55402.
(8) American Express Company ("AEC") and American Express Financial Corporation
("AEFC") each reported as of December 31, 1997 shared dispositive power with
respect to 695,000 shares of Class A Common Stock. IDS Discovery Fund Inc.
reported as of December 31, 1997 shared dispositive power with respect to
475,000 shares of Class A Common Stock. The address for AEC is American
Express Tower, 200 Vesey Street, New York, New York 10285 and the address
for AEFC and IDS Discovery Fund Inc. is IDS Tower 10, Minneapolis, Minnesota
55440.
(9) Dresdner RCM Global Investors LLC, RCM Limited L.P. and RCM General
Corporation each reported as of December 31, 1997 sole voting power with
respect to 354,600 shares of Class A Common Stock and sole dispositive power
with respect to 396,500 shares of Class A Common Stock. The address for
these entities is Four Embarcadero Center, Suite 2900, San Francisco,
California 94111.
(10) The TCW Group, Inc. ("TCW") and Robert Day each reported as of December 31,
1997 sole voting and dispositive power with respect to 366,000 shares of
Class A Common Stock. The address for TCW is 865 South Figueroa Street, Los
Angeles, California 90017 and the address for Robert Day is 200 Park Avenue,
Suite 2200, New York, New York 10166.
(11) State of Wisconsin Investment Board ("SWIB") reported as of December 31,
1997 sole voting and dispositive power with respect to 237,000 shares of
Class A Common Stock. The address for SWIB is P.O. Box 7842, Madison,
Wisconsin 53707.
(12) As of December 31, 1997. The address for Frontier Capital Management
Company, Inc. is 99 Summer Street, Boston, Massachusetts 02110.
(13) The Northwestern Mutual Life Insurance Company ("NWMI") reported as of
December 31, 1997 shared voting and dispositive power with respect to
206,900 shares of Class A Common Stock. The address for NWMI is 720 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202. NWMI indirectly owns a
majority of the oustanding capital stock of Robert W. Baird & Co.
Incorporated.
56
<PAGE>
STOCKHOLDERS AGREEMENT
On August 31, 1994, the Company, Onex, J2R, Alkin and certain individuals
named therein (including members of the Company's management) entered into a
Stockholders Agreement (as amended, the "Stockholders Agreement"). The
Stockholders Agreement requires all the parties thereto to vote their shares of
Common Stock and take any other action necessary to ensure the Board will be
comprised of eleven persons, seven of whom, including the two independent
directors, shall be designated by Onex, J2R and certain stockholders affiliated
with Hidden Creek (collectively, the "MC Stockholders") and four of whom shall
be designated by Alkin (the "Alkin Stockholders"). The voting provision
terminates automatically when the Alkin Stockholders cease to own at least 10%
of the outstanding Common Stock. The Stockholders Agreement also contains
provisions granting the parties thereto certain tag-along rights allowing them
to sell their shares in certain private sales of Common Stock initiated by the
other parties to the Stockholders Agreement. The Stockholders Agreement also
provides that the affirmative vote of two-thirds of the Board is required to
issue any Preferred Stock (as defined below) of the Company. The Stockholders
Agreement also binds subsequent transferees who have acquired their shares in
private sales from the parties to the Stockholders Agreement. Subject to certain
exemptions, each of Alkin, Onex, J2R and the MC Stockholders have agreed not to
compete with the business of the Company for a period of five years after the
date of the original Stockholders Agreement and Onex, J2R, the MC Stockholders
and the Company have agreed not to compete with the business of Alkin during
that period. J2R, Onex and Messrs. Johnson, Rued and Hibbs have also entered
into an agreement requiring the parties to vote their shares of Common Stock as
directed by Onex, and providing Onex with certain first offer rights in
connection with private sales of Common Stock.
CERTAIN TRANSACTIONS
The Company paid fees to Hidden Creek of approximately $250,000 in 1995,
$750,000 in 1996 and $850,000 in 1997 for services rendered to the Company
related to certain acquisitions, divestitures and corporate financings. In
addition, under the terms of a management agreement, the Company paid Hidden
Creek a monthly management fee for certain administrative services. Total
management fees were $733,000 for 1995 and $881,000 for 1996. The management
agreement was terminated in August 1996.
In connection with the December 1991 private placement of Common Stock, Mr.
Storrie acquired 139,531 shares of Class B Common Stock. The Company loaned Mr.
Storrie $75,000 in connection with such purchase. The loan bears interest at
1 1/2% above the Base Rate, matures on December 31, 1998 and is secured by a
pledge of the shares.
In connection with the 1994 acquisition of the Brake and Cable Business of
Alkin, the Company entered into agreements with Alkin whereby the Company
receives services related to data processing, payroll and personnel
administration, and other administrative matters. Amounts paid under these
service agreements were $1.8 million, $1.3 million and $1.1 million for the
years ended December 31, 1995, 1996 and 1997. In addition, the Company and Alkin
have mutually agreed to supply each other's operations with certain items
necessary for the manufacture of their products. These supply agreements are for
periods of up to five years and are at terms which the Company believes are no
less favorable than could be obtained from an independent party.
57
<PAGE>
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
Dura Automotive Systems Capital Trust (the "Issuer") is a statutory business
trust created under Delaware law pursuant to (i) a trust agreement executed by
the Company (as Depositor), the Delaware Trustee and one of the Administrative
Trustees (each as defined herein) and (ii) the filing of a certificate of trust
with the Delaware Secretary of State on March 2, 1998. In connection with the
Offering, such trust agreement will be amended and restated in its entirety (as
so amended and restated, the "Trust Agreement"). The Issuer exists for the sole
purposes of (i) issuing and selling the Preferred Securities and Common
Securities, (ii) using the proceeds from the sale of the Preferred Securities
and Common Securities to acquire the Debentures issued by the Company and (iii)
engaging in only those other activities necessary or incidental thereto.
Accordingly, the Debentures will be the sole assets of the Issuer, and payments
under the Debentures will be the sole revenue of the Issuer. The Issuer has a
term of 45 years, but may dissolve earlier as provided in the Trust Agreement.
All of the Common Securities will be directly or indirectly owned by the
Company. The Common Securities will rank PARI PASSU, and payments will be made
thereon PRO RATA, with the Preferred Securities, except that upon the occurrence
and continuance of a Declaration Event of Default (as defined herein) resulting
from an Event of Default under the Indenture, the rights of the Company as
holder of the Common Securities to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise will be subordinated to the
rights of the holders of the Preferred Securities. See "Description of the
Preferred Securities--Subordination of Common Securities." The Company will
acquire Common Securities in an aggregate liquidation preference equal to not
less than 3% of the total capitalization of the Issuer.
The Issuer's business and affairs are conducted by its trustees, which will
be appointed by the Company as holder of the Common Securities. Pursuant to the
Trust Agreement, the number of trustees will initially be five. Three of the
trustees (the "Administrative Trustees") will be persons who are employees or
officers of, or affiliated with, the Company. A fourth trustee will be a
financial institution unaffiliated with the Company that will serve as property
trustee (the "Property Trustee") under the Trust Agreement. The First National
Bank of Chicago will act as the Property Trustee until removed or replaced by
the holder of the Common Securities. See "Description of the Debentures." The
fifth trustee will be a financial institution or an affiliate thereof which
maintains a principal place of business or residence in the State of Delaware
(the "Delaware Trustee"). First Chicago Delaware Inc. will act as Delaware
Trustee until removed or replaced by the holder of the Common Securities. The
Administrative Trustees, the Property Trustee and the Delaware Trustee are
referred to herein as the "Issuer Trustees." First National Bank of Chicago will
also act as indenture trustee under the Guarantee (the "Guarantee Trustee") and
as the indenture trustee under the indenture relating to the Debentures. See
"Description of the Guarantee" and "Description of the Debentures."
The Property Trustee will hold the title to the Debentures for the benefit
of the Issuer and holders of the Preferred Securities and the Common Securities
and will have the power to exercise all of the rights, powers and privileges as
the holder of the Debentures. In addition, the Property Trustee will maintain
exclusive control of a segregated non-interest bearing bank account (the
"Property Account") to hold all payments made in respect of the Debentures for
the benefit of the Issuer and holders of the Preferred Securities and the Common
Securities. The Property Trustee will make payments of Distributions and
payments on liquidation, redemption and otherwise to the holders of the
Preferred Securities and the Common Securities out of funds from the Property
Account. The Guarantee Trustee will hold the Guarantee for the benefit of the
holders of the Preferred Securities. The Company, as the holder of all the
Common Securities, will have the right to appoint, remove or replace any Issuer
Trustee and to increase or decrease the number of Issuer Trustees, provided that
the number of Issuer Trustees shall be at least three, a majority of which will
be Administrative Trustees. The duties and obligations of the Issuer Trustees
are governed by the Trust Agreement. The rights of the holders of the Preferred
Securities, including economic rights, right to information and voting rights,
are as set forth in the Trust Agreement and the Delaware
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Business Trust Act, as amended (the "Trust Act"). The Trust Agreement, the
Indenture and the Guarantee also incorporate by reference the terms of the Trust
Indenture Act. The Trust Agreement, the Indenture and the Guarantee will each be
qualified under the Trust Indenture Act.
The Company will pay all fees and expenses related to the Issuer and the
offering of the Preferred Securities and will pay, directly or indirectly, all
ongoing costs and expenses of the Issuer. See "Description of the
Debentures--Expenses of Issuer." The principal executive offices of the Issuer
are located at 4508 IDS Center, Minneapolis, Minnesota 55402, and its telephone
number is (612) 342-2311.
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DESCRIPTION OF THE PREFERRED SECURITIES
This summary of certain terms of the Preferred Securities and of certain
provisions of documents described below does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all of the
provisions of such documents (including the definitions therein of certain
terms), forms of which are included as exhibits to the Registration Statement of
which this Prospectus forms a part. Wherever particular Sections of, or terms
defined in, such documents are referred to herein, such Sections or defined
terms are incorporated by reference herein. As used in this section, the
"Company" refers to Dura Automotive Systems, Inc., exclusive of its
subsidiaries.
GENERAL
Pursuant to the terms of the Trust Agreement, the Issuer Trustees, on behalf
of the Issuer, will issue the Preferred Securities and the Common Securities.
The Preferred Securities will represent preferred undivided beneficial interests
in the assets of the Issuer and the Common Securities will represent common
undivided beneficial interests in the assets of the Issuer. All of the Common
Securities are owned by the Company. The Preferred Securities rank PARI PASSU,
and payments will be made thereon PRO RATA, with the Common Securities except as
described under "--Subordination of Common Securities." Legal title to the
Debentures will be held by the Property Trustee in trust for the benefit of the
holders of the Preferred Securities and Common Securities. The Trust Agreement
will not permit the issuance by the Issuer of any securities other than the
Preferred Securities and the Common Securities or the incurrence of any
indebtedness by the Issuer. The payment of Distributions out of money held by
the Issuer, and payments upon redemption of the Preferred Securities or
dissolution of the Issuer, are guaranteed by the Company to the extent described
under "Description of the Guarantee." The Guarantee is held by the Guarantee
Trustee for the benefit of the holders of the Preferred Securities. The
Guarantee does not cover payment of Distributions when the Issuer does not have
sufficient available funds to pay such Distributions. The remedy of a holder of
Preferred Securities in such an event is as described herein in "--Enforcement
of Certain Rights by Holders of Preferred Securities" and in "--Voting Rights;
Amendment of the Trust Agreement."
DISTRIBUTIONS
Distributions on each Preferred Security will be payable at the annual rate
of % of the liquidation preference of $25 per Preferred Security.
Distributions will accumulate from the date of original issuance and will be
payable quarterly in arrears on , , and of each
year to holders of record on the applicable record date, commencing ,
1998, when, as and if available for payment by the Property Trustee, except as
otherwise described below. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months. In the
event that any date on which Distributions are payable on the Preferred
Securities is not a Business Day (as defined below), then payment of the
Distributions payable on such date will be made on the next succeeding day that
is a Business Day and without any additional Distributions or other payment in
respect of any such delay (each date on which Distributions are payable in
accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in the City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office of
the Property Trustee or the Debenture Trustee is closed for business.
So long as no Debenture Event of Default has occurred and is continuing, the
Company has the right under the Indenture to defer the payment of interest on
the Debentures at any time or from time to time for a period not exceeding 20
consecutive quarters with respect to each deferral period (each an "Extension
Period"), provided that no Extension Period may extend beyond the stated
maturity of the Debentures. As a consequence of any such election, quarterly
Distributions on the Preferred Securities will be deferred by the Issuer during
any such Extension Period. Distributions to which holders of the Preferred
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Securities are entitled will accumulate additional Distributions thereon at the
rate per annum set forth herein, compounded quarterly from the relevant payment
date for such Distributions. The term "Distributions" as used herein shall
include any such additional Distributions. During any such Extension Period, the
Company may not, and may not cause any of its subsidiaries to, (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock, or (ii)
make any payment of principal, interest or premium, if any, on, or repay,
repurchase or redeem any debt securities (including guarantees of indebtedness
for money borrowed) of the Company that rank PARI PASSU with or junior to the
Debentures (other than (a) any dividend, redemption, liquidation, interest,
principal or guarantee payment by the Company where the payment is made by way
of securities (including capital stock) that rank PARI PASSU with or junior to
the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made, (b) payments under the Guarantee, (c) purchases
of Common Stock related to the issuance of Common Stock under any of the
Company's benefit plans for its directors, officers or employees, (d) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one series or class of the Company's capital stock for another
series or class of the Company's capital stock, and (e) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged). Prior to the termination of any such Extension Period,
the Company may further extend the interest payment period, provided that no
Extension Period may exceed 20 consecutive quarters or extend beyond the stated
maturity of the Debentures. Upon the termination of any such Extension Period
and the payment of all amounts then due on any Interest Payment Date, the
Company may elect to begin a new Extension Period. See "Description of the
Debentures--Option to Extend Interest Payment Period" and "Certain Federal
Income Tax Consequences--Interest Income and Original Issue Discount."
The Company has no current intention to exercise its right to defer payments
of interest by extending the interest payment period on the Debentures.
Distributions with respect to the Preferred Securities must be paid on the
dates payable to the extent that the Issuer has funds available for the payment
of such Distributions in the Property Account. The funds of the Issuer available
for distribution to holders of the Preferred Securities are limited to payments
under the Debentures in which the Issuer invested the proceeds from the issuance
and sale of the Preferred Securities and the Common Securities. See "Description
of the Debentures." If the Company does not make interest payments on such
Debentures, the Property Trustee will not have funds available to pay
Distributions on the Preferred Securities. The payment of Distributions (if and
to the extent the Issuer has funds on hand available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by the
Company on a limited basis as set forth herein under "Description of the
Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of the Issuer on the relevant record
dates, which shall be the fifteenth day (whether or not a Business Day) next
preceding the relevant distribution date. As long as the Preferred Securities
remain in book-entry form, subject to any applicable laws and regulations and
the provisions of the Trust Agreement, each such payment will be made as
described under "--Certain Book-Entry Procedures for Global Certificates."
CONVERSION RIGHTS
GENERAL
The Preferred Securities will be convertible at any time, at the option of
the holder thereof and in the manner described below, into shares of Class A
Common Stock at the rate of shares of Class A Common Stock for each Preferred
Security (equivalent to a conversion price of $ per share of Class A Common
Stock), subject to adjustment as described under "--Conversion Price
Adjustments" below.
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A holder of Preferred Securities wishing to exercise its conversion right
shall surrender such Preferred Securities together with an irrevocable
conversion notice to the Property Trustee, as conversion agent or to such other
agent appointed for such purpose (the "Conversion Agent"), which shall, on
behalf of such holder, exchange the Preferred Securities for a portion of the
Debentures and immediately convert such Debentures into Class A Common Stock. So
long as a book-entry system for the Preferred Securities is in effect, however,
the procedures for converting the Preferred Securities that are in the form of
Global Certificates into shares of Class A Common Stock will be as described
under "--Certain Book-Entry Procedures for Global Certificates." The Company's
delivery upon conversion of the fixed number of shares of Class A Common Stock
into which the Debentures are convertible (together with the cash payment, if
any, in lieu of any fractional share) shall be deemed to satisfy the Company's
obligation to pay the principal amount at maturity of the portion of the
Debentures so converted and any unpaid interest accrued on such Debentures at
the time of such conversion. For a discussion of the taxation of such an
exchange to holders, see "Certain Federal Income Tax Consequences--Conversion of
Preferred Securities into Class A Common Stock." Holders may obtain copies of
the required form of the conversion notice from the Conversion Agent.
Accrued Distributions will not be paid on Preferred Securities that are
converted, PROVIDED HOWEVER, that holders of Preferred Securities at the close
of business on a Distribution payment record date will be entitled to receive
the Distribution payable on such Preferred Securities on the corresponding
Distribution payment date notwithstanding the conversion of such Preferred
Securities on or subsequent to such Distribution record date but prior to such
Distribution payment date. Except as provided in the immediately preceding
sentence, the Issuer will make no payment or allowance for accumulated and
unpaid Distributions, whether or not in arrears, on converted Preferred
Securities. The Company will make no payment or allowance for dividends on the
shares of Class A Common Stock issued upon such conversion. Each conversion will
be deemed to have been effected immediately prior to the close of business on
the day on which proper notice was received by the Conversion Agent.
Shares of Class A Common Stock issued upon conversion of Preferred
Securities will be validly issued, fully paid and non-assessable. No fractional
shares of Class A Common Stock will be issued as a result of conversion, but in
lieu thereof such fractional interest will be paid in cash.
CONVERSION PRICE ADJUSTMENTS
GENERAL
The conversion price will be subject to adjustment in certain events
including, without duplication: (i) the payment of dividends (and other
distributions) payable exclusively in Common Stock on Common Stock; (ii) the
issuance to all holders of Common Stock of rights or warrants entitling holders
of such rights or warrants (for a period not exceeding 45 days) to subscribe for
or purchase Common Stock at less than the then Current Market Price (as defined
below); (iii) subdivisions and combinations of Common Stock; (iv) the payment of
dividends (and other distributions) to all holders of Common Stock consisting of
evidences of indebtedness of the Company, securities or capital stock, cash, or
assets (including securities, but excluding those rights or warrants referred to
above in clause (ii) and dividends and distributions paid exclusively in cash);
(v) the payment of dividends (and other distributions) on Common Stock paid
exclusively in cash, excluding (A) cash dividends that do not exceed the per
share amount of the immediately preceding regular cash dividend (as adjusted to
reflect any of the events referred to in clauses (i) through (vi) of this
sentence), and (B) cash dividends if the annualized per share amount thereof
does not exceed 12.5% of the last sale price of Common Stock, as reported on the
Nasdaq National Market, on the trading day immediately preceding the date of
declaration of such dividend (such adjustment being limited to the amount in
excess of 12.5% of such Current Market Price); and (vi) payment in respect of a
tender or exchange offer (other than an odd-lot offer) by the Company or any
subsidiary of the Company for Common Stock at a price per share in excess of
110% of the Current Market Price of Common Stock on the trading day next
succeeding the last date tenders or exchanges may be made pursuant to such
tender
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or exchange offer (such adjustment being limited, in respect of the excess over
Current Market Price, to the amount in excess of 110% of such Current Market
Price).
The Company from time to time may reduce the conversion price of the
Debentures (and thus the conversion price of the Preferred Securities) by any
amount selected by the Company for any period of at least 30 days, in which case
the Company shall give at least 15 days' notice of such reduction. The Company
may, at its option, make such reductions in the conversion price, in addition to
those set forth above, as the Board of Directors of the Company deems advisable
to avoid or diminish any income tax to holders of Common Stock resulting from
any dividend or distribution of stock (or rights to acquire stock) or from any
event treated as such for income tax purposes. See "Certain Federal Income Tax
Consequences-- Adjustment of Conversion Price."
There will be no adjustment in the conversion price in the case of the
issuance of any Common Stock (or securities convertible into or exchangeable for
Common Stock), except as specifically described above. For example, no
adjustment of the conversion price will be made upon the issuance of any shares
of Common Stock pursuant to any present or future plan providing for the
reinvestment of dividends or interest payable on securities of the Company and
the investment of additional optional amounts in shares of Common Stock under
any such plan, or the issuance of any shares of Common Stock or options or
rights to purchase such shares pursuant to any present or future employee
benefit plan or program of the Company or pursuant to any option, warrant,
right, or exercisable, exchangeable or convertible security which does not
constitute an issuance to all holders of Common Stock of rights or warrants
entitling holders of such rights or warrants to subscribe for or purchase Common
Stock at less than the Current Market Price. There shall also be no adjustment
of the conversion price in case of the issuance of any Common Stock (or
securities convertible into or exchangeable for Common Stock), except as
specifically described above. If any action would require adjustment of the
conversion price pursuant to more than one of the anti-dilution provisions, only
one adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to holders of the Preferred
Securities. No adjustment in the conversion price will be required unless such
adjustment would require an increase or decrease of at least 1% of the
conversion price, but any adjustment that would otherwise be required to be made
shall be carried forward and taken into account in any subsequent adjustment.
The term "Current Market Price" of Common Stock for any day means the last
reported sale price, regular way, on such day, or, if no sale takes place on
such day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Consolidated Transactions
Tape, or, if the Common Stock is not listed or admitted to trading on the NYSE
on such day, on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, if the Common Stock is listed on a
national securities exchange, or the Nasdaq National Market, or, if the Common
Stock is not quoted or admitted to trading on such quotation system, on the
principal quotation system on which the Common Stock may be listed or admitted
to trading or quoted, or, if not listed or admitted to trading or quoted on any
national securities exchange or quotation system, the average of the closing bid
and asked prices of the Common Stock in the over-the-counter market on the day
in question as reported by the National Quotation Bureau Incorporated, or a
similar generally accepted reporting service, or, if not so available in such
manner, as furnished by any NYSE member firm selected from time to time by the
Board of Directors of the Company for that purpose or, if not so available in
such manner, as otherwise determined in good faith by the Board of Directors of
the Company.
MERGER, CONSOLIDATION OR SALE OF ASSETS OF THE COMPANY
In the event that the Company is a party to any transaction (including,
without limitation, a merger other than a merger that does not result in a
reclassification, conversion, exchange or cancellation of Common Stock),
consolidation, sale of all or substantially all of the assets of the Company,
recapitalization or reclassification of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination of Common Stock) or any
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compulsory share exchange (each of the foregoing being referred to as a
"Transaction"), in each case, as a result of which shares of Common Stock shall
be converted into the right to receive, or shall be exchanged for, (i) in the
case of any Transaction other than a Transaction involving a Common Stock
Fundamental Change (as defined below) (and subject to funds being legally
available for such purpose under applicable law at the time of such conversion),
securities, cash or other property, each Preferred Security shall thereafter be
convertible into the kind and, in the case of a Transaction which does not
involve a Fundamental Change (as defined below), amount of securities, cash and
other property receivable upon the consummation of such Transaction by a holder
of that number of shares of Common Stock into which a Preferred Security was
convertible immediately prior to such Transaction, or (ii) in the case of a
Transaction involving a Common Stock Fundamental Change, common stock, each
Preferred Security shall thereafter be convertible (in the manner described
herein) into common stock of the kind received by holders of Common Stock (but
in each case after giving effect to any adjustment discussed below relating to a
Fundamental Change if such Transaction constitutes a Fundamental Change). The
holders of Preferred Securities will have no voting rights with respect to any
Transaction described in this section.
If any Fundamental Change occurs, then the conversion price in effect will
be adjusted immediately after such Fundamental Change as described below. In
addition, in the event of a Common Stock Fundamental Change, each Preferred
Security shall be convertible solely into common stock of the kind received by
holders of Common Stock as a result of such Common Stock Fundamental Change.
The conversion price in the case of any Transaction involving a Fundamental
Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change (as defined
below), the conversion price of the Preferred Securities will thereupon
become the lower of (A) the conversion price in effect immediately prior
to such Non-Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to the preceding paragraphs,
and (B) the result obtained by multiplying the greater of the Applicable
Price (as defined below) or the then applicable Reference Market Price
(as defined below) by a fraction, the numerator of which is $25 and the
denominator of which is (x) the amount of the redemption price per
Preferred Security if the redemption date were the date of such
Non-Stock Fundamental Change (or, for the period commencing on
and through , and the twelve-month periods commencing
and , the product of , and , respectively, multiplied by
$25) plus (y) any then-accrued and unpaid distributions on one Preferred
Security; and
(ii) in the case of a Common Stock Fundamental Change, the
conversion price of the Preferred Securities in effect immediately prior
to such Common Stock Fundamental Change, but after giving effect to any
other prior adjustments effected pursuant to the preceding paragraphs,
will thereupon be adjusted by multiplying such conversion price by a
fraction of which the numerator will be the Purchaser Stock Price (as
defined below) and the denominator will be the Applicable Price;
provided, however, that in the event of a Common Stock Fundamental
Change in which (A) 100% of the value of the consideration received by a
holder of Common Stock is common stock of the successor, acquiror, or
other third party (and cash, if any, is paid only with respect to any
fractional interests in such common stock resulting from such Common
Stock Fundamental Change) and (B) all Common Stock will have been
exchanged for, converted into, or acquired for common stock (and cash
with respect to fractional interests) of the successor, acquiror, or
other third party, the conversion price of the Preferred Securities in
effect immediately prior to such Common Stock Fundamental Change will
thereupon be adjusted by multiplying such conversion price by a fraction
of which the numerator will be one and the denominator will be the
number of shares of common stock of the successor, acquiror, or other
third party received by a holder of one share of Common Stock as a
result of such Common Stock Fundamental Change.
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The foregoing conversion price adjustments are designed, in certain
circumstances, to reduce the conversion price that would be applicable in
Fundamental Change Transactions where all or substantially all the Common Stock
is converted into securities, cash, or property and not more than 50% of the
value received by the holders of Common Stock consists of stock listed or
admitted for listing subject to notice of issuance on the NYSE or a national
securities exchange or quoted on Nasdaq (a Non-Stock Fundamental Change, as
defined below). Such reduction would result in an increase in the amount of the
securities, cash, or property into which each Preferred Security is convertible
over that which would have been obtained in the absence of such conversion price
adjustments.
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Common Stock (measured as described in the definition of
Applicable Price below) is lower than the then applicable conversion price of a
Preferred Security but greater than or equal to the "Reference Market Price,"
the conversion price will be adjusted as described above with the effect that
each Preferred Security will be convertible into securities, cash or property of
the same type received by the holders of Common Stock in the Transaction but in
an amount per Preferred Security that would at the time of the Transaction have
had a value equal to the then applicable redemption price per Preferred Security
set forth below under "--Optional Redemption."
In a Non-Stock Fundamental Change Transaction where the initial value
received per share of Common Stock (measured as described in the definition of
Applicable Price) is lower than both the conversion price of a Preferred
Security in effect prior to any adjustment described above and the Reference
Market Price, the conversion price will be adjusted as described above but
calculated as though such initial value had been the Reference Market Price.
In a Fundamental Change Transaction where all or substantially all the
Common Stock was converted into securities, cash, or property and more than 50%
of the value received by the holders of Common Stock consists of listed or
Nasdaq traded common stock (a Common Stock Fundamental Change, as defined
below), the foregoing adjustments are designed to provide in effect that (a)
where Common Stock is converted partly into such common stock and partly into
other securities, cash, or property, each Preferred Security will be convertible
solely into a number of shares of such common stock determined so that the
initial value of such shares (measured as described in the definition of
"Purchaser Stock Price" below) equals the value of the shares of Common Stock
into which such Preferred Security was convertible immediately before the
Transaction (measured as aforesaid) and (b) where Common Stock is converted
solely into such common stock, each Preferred Security will be convertible into
the same number of shares of such common stock receivable by a holder of the
number of shares of Common Stock into which such Preferred Security was
convertible immediately before such Transaction.
The term "Applicable Price" means (i) in the case of a Non-Stock Fundamental
Change in which the holders of the Common Stock received only cash, the amount
of cash received by the holder of one share of Common Stock and (ii) in the
event of any other Non-Stock Fundamental Change or any Common Stock Fundamental
Change, the average of the Closing Prices (as defined below) for the Common
Stock during the ten trading days prior to the record date for the determination
of the holders of Common Stock entitled to receive such securities, cash, or
other property in connection with such Non-Stock Fundamental Change or Common
Stock Fundamental Change or, if there is no such record date, the date upon
which the holders of the Common Stock shall have the right to receive such
securities, cash, or other property (such record date or distribution date being
hereinafter referred to as the "Entitlement Date"), in each case as adjusted in
good faith by the Company to appropriately reflect any of the events referred to
in clauses (i) through (vi) of the first paragraph under "--Conversion Price
Adjustments--General."
The term "Closing Price" means on any day the reported last sale price on
such day or in case no sale takes place on such day, the average of the reported
closing bid and asked prices in each case on Nasdaq or, if the stock is not
traded on Nasdaq, on the NYSE Consolidated Transactions Tape or, if the stock is
not listed or admitted to trading on the NYSE, on the principal national
securities exchange on which such
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stock is listed or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices as furnished by any NYSE member firm selected by the Debenture Trustee
for that purpose.
The term "Common Stock Fundamental Change" means any Fundamental Change in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consisted of common stock that for each of the ten consecutive trading
days prior to the Entitlement Date has been admitted for listing or admitted for
listing subject to notice of issuance on a national securities exchange or
quoted on Nasdaq; provided, however, that a Fundamental Change shall not be a
Common Stock Fundamental Change unless either (i) the Company continues to exist
after the occurrence of such Fundamental Change and the outstanding Preferred
Securities continue to exist as outstanding Preferred Securities or (ii) not
later than the occurrence of such Fundamental Change, the outstanding Preferred
Securities are converted into or exchanged for shares of convertible preferred
stock of an entity succeeding to the business of the Company or a subsidiary
thereof, which convertible preferred stock has powers, preferences, and
relative, participating, optional, or other rights, and qualifications,
limitations, and restrictions, substantially similar to those of the Preferred
Securities.
The term "Fundamental Change" means the occurrence of any Transaction or
event in connection with a plan pursuant to which all or substantially all of
the Common Stock is exchanged for, converted into or acquired for, or
constitutes solely the right to receive securities, cash, or other property
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization, or
otherwise), provided, that in the case of a plan involving more than one such
Transaction or event, for purposes of adjustment of the conversion price, such
Fundamental Change shall be deemed to have occurred when substantially all of
the Common Stock shall be exchanged for, converted into, or acquired for or
constitutes solely the right to receive securities, cash, or other property, but
the adjustment shall be based upon the consideration that a holder of Common
Stock received in such Transaction or event as a result of which more than 50%
of the Common Stock shall have been exchanged for, converted into, or acquired
for or constitute solely the right to receive securities, cash, or other
property. The term "Non-Stock Fundamental Change" means any Fundamental Change
other than a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any Common Stock
Fundamental Change, the average of the Closing Prices for the common stock
received in such Common Stock Fundamental Change for the ten consecutive trading
days prior to and including the Entitlement Date, as adjusted in good faith by
the Company to appropriately reflect any of the events referred to in clauses
(i) through (vi) of the first paragraph under "--Conversion Price
Adjustments--General."
The term "Reference Market Price" shall initially mean $ (which is an
amount equal to 66 2/3% of the reported last sale price for Class A Common Stock
on Nasdaq as set forth on the cover page of this Prospectus) and in the event of
any adjustment of the conversion price other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the conversion price after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial conversion price of the Preferred
Securities.
SPECIAL EVENT EXCHANGE OR REDEMPTION
At any time following the occurrence and the continuation of a Tax Event or
an Investment Company Event, the Property Trustees shall direct the Conversion
Agent to exchange all outstanding Preferred Securities for Debentures, provided,
that in the case of a Tax Event, the Company shall have the right to (a) direct
that less than all, or none, of the Preferred Securities be so exchanged if and
for so long as the Company shall have elected to pay any Additional Sums such
that the net amounts received by the holders
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of Preferred Securities not so exchanged in respect of Distributions and other
distributions are not reduced as a result of such Tax Event, and shall not have
revoked any such election or failed to make such payments or (b) redeem the
Preferred Securities in the manner set forth below.
If a Tax Event shall occur or be continuing, the Company shall have the
right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures, in whole or in part, for cash upon the later of (i) 90 days
following the occurrence of such Tax Event or (ii) , 2001. Promptly
following such redemption, Preferred Securities and Common Securities with an
aggregate liquidation preference equal to the aggregate principal amount of the
Debentures so redeemed will be redeemed by the Issuer at the liquidation
preference thereof plus accrued and unpaid Distributions thereon to the
redemption date on a PRO RATA basis. The Common Securities will be redeemed on a
PRO RATA basis with the Preferred Securities, except that if a Trust Agreement
Event of Default has occurred and is continuing, the Preferred Securities will
have a priority over the Common Securities with respect to the Redemption Price.
A "Special Event" means a Tax Event or an Investment Company Event. A "Tax
Event" means the receipt by the Property Trustee, on behalf of the Issuer, of an
opinion of counsel, rendered by a law firm having a national tax and securities
practice (which opinion shall not have been rescinded by such law firm), to the
effect that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, or as a result of any official administrative pronouncement
or judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or such pronouncement or decision is announced
on or after the date of issuance of the Preferred Securities under the Trust
Agreement and does not pertain to the use of the proceeds of the issuance of the
Debentures, there is more than an insubstantial risk in each case after the date
hereof that (i) the Issuer is, or will be within 90 days of the date thereof,
subject to United States Federal income tax with respect to income received or
accrued on the Debentures; (ii) interest payable by the Company on such
Debentures is not, or within 90 days of the date thereof will not be, deductible
by the Company, in whole or in part, for United States Federal income tax
purposes; or (iii) the Issuer is, or will be within 90 days of the date thereof,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges. "Investment Company Event" means the receipt by the
Property Trustee, on behalf of the Issuer, of an opinion of counsel, rendered by
a law firm having a national tax and securities practice (which opinion shall
not have been rescinded by such law firm), to the effect that, as a result of
the occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Issuer is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the Preferred
Securities.
Legislation has been introduced in the United States Congress in the past
that would, if enacted, deny an interest deduction to issuers of instruments
such as the Debentures. No such legislation has been enacted. There can be no
assurance, however, that similar legislation will not ultimately be enacted into
law, or that other developments will not occur after the date hereof that would
adversely affect the tax treatment of the Debentures and constitute a Tax Event,
which would permit the Issuer to exchange the Preferred Securities, in whole or
in part, for the Debentures or redeem, in whole or in part, the Preferred
Securities and corresponding Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer on the
outstanding Preferred Securities and Common Securities of the Issuer shall not
be reduced as a result of any additional taxes, duties and other governmental
charges to which the Issuer has become subject as a result of a Tax Event that
has occurred and is continuing.
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Holders of Preferred Securities, by purchasing such Preferred Securities,
will be deemed to have agreed to be bound by these exchange provisions in regard
to the exchange of such Preferred Securities for Debentures on the terms
described above.
DISTRIBUTION OF DEBENTURES
At any time, the Company will have the right to terminate the Issuer and,
after satisfaction of the liabilities of creditors of the Issuer as provided by
applicable law, cause the Debentures to be distributed to the holders of the
Preferred Securities in liquidation of the Issuer. Under current United States
Federal income tax law and interpretations and assuming, as expected, the Issuer
is not treated as an association taxable as a corporation for United States
Federal income tax purposes, a distribution of the Debentures should not be a
taxable event to the Issuer and holders of the Preferred Securities. Should
there be a change in law, a change in legal interpretation, a Special Event or
other circumstances, however, the distribution could be a taxable event to
holders of the Preferred Securities. See "Certain Federal Income Tax
Consequences--Redemption of Preferred Securities for Debentures or Cash Upon
Dissolution of the Issuer."
After the liquidation date fixed for any distribution of Debentures for
Preferred Securities (i) such Preferred Securities will no longer be deemed to
be outstanding, (ii) The Depository Trust Company ("DTC") or its nominee, as the
record holder of such Preferred Securities, will receive a registered global
certificate or certificates representing the Debentures to be delivered upon
such distribution and (iii) any certificates representing such Preferred
Securities not held by DTC or its nominee will be deemed to represent the
Debentures having a principal amount equal to the liquidation preference of such
Preferred Securities, and bearing accrued and unpaid interest in an amount equal
to the accrued and unpaid Distributions on such Preferred Securities until such
certificates are presented to the Property Trustee for transfer or reissuance.
OPTIONAL REDEMPTION
Except as provided under "--Mandatory Redemption" below, the Preferred
Securities may not be redeemed by the Issuer prior to , 2001.
On and after such date, upon any permitted redemption by the Company of
Debentures, the Preferred Securities are subject to redemption, in whole or in
part, at the following percentages of the liquidation preference thereof plus
accrued and unpaid Distributions, if any, to the date fixed for redemption if
redeemed during the twelve-month period commencing in each of the
following years indicated:
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------- ---------------------
<S> <C>
2001...................... %
2002......................
2003......................
2004......................
2005......................
2006......................
2007......................
2008 and thereafter.......
</TABLE>
The Issuer may not redeem the Preferred Securities in part unless all
accrued and unpaid Distributions have been paid in full on all outstanding
Preferred Securities for all quarterly distribution periods terminating on or
prior to the redemption date. If fewer than all the outstanding Preferred
Securities are to be redeemed, the Preferred Securities to be so redeemed will
be selected as described under "--Certain
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Book-Entry Procedures for Global Certificates--Transfer Agent, Registrar and
Paying, Conversion and Exchange Agent."
In the event the Company redeems the Debentures in certain circumstances
upon the occurrence of a Tax Event as described under "--Special Event Exchange
or Redemption," the appropriate amount of the Preferred Securities will be
redeemed at 100% of the principal amount thereof together with accrued and
unpaid Distributions to the redemption date.
MANDATORY REDEMPTION
Upon repayment at maturity or as a result of the acceleration of the
Debentures upon the occurrence of a "Debenture Event of Default" described under
"Description of the Debentures--Debenture Events of Default," the Debentures
shall be subject to mandatory redemption, in whole but not in part, by the
Company, and the proceeds from such repayment will be applied to redeem
Preferred Securities and Common Securities having an aggregate liquidation
preference equal to the aggregate principal amount of Debentures so repaid or
redeemed at a redemption price equal to the respective liquidation preference of
the Preferred Securities and Common Securities or, in the case of a redemption
of the Debentures, at the redemption price paid with respect to the Debentures,
as described below, together with accrued and unpaid distributions on the
Preferred Securities and Common Securities to the date of redemption. In the
case of acceleration of the Debentures, the Preferred Securities will be
redeemed only when repayment of the Debentures has actually been received by the
Issuer. In addition, as described above under "--Special Event Exchange or
Redemption," upon the occurrence of a Special Event, Preferred Securities shall
be exchanged for Debentures unless, in the case of a Tax Event, the Company
shall have elected to (a) pay any Additional Sums such that the net amounts of
Distributions received by the holders of any Preferred Securities not so
exchanged are not reduced as a result of such Tax Event and shall not have
revoked any such election or failed to make such payments or (b) redeem the
Preferred Securities as further set forth in "--Special Event Exchange or
Redemption."
REDEMPTION PROCEDURES
Preferred Securities redeemed on the date fixed for redemption shall be
redeemed at the redemption price with the applicable proceeds from the
contemporaneous redemption of the Debentures. Redemptions of the Preferred
Securities shall be made and the redemption price shall be payable on the
redemption date only to the extent that the Issuer has funds on hand available
for the payment of such redemption price. See also "--Subordination of Common
Securities."
Notice of any redemption (optional or mandatory) of Preferred Securities
(which notice will be irrevocable) will be mailed by the Property Trustee to
each record holder of Preferred Securities that are being redeemed not fewer
than 30 nor more than 60 days prior to the redemption date. If the Property
Trustee gives a notice of redemption in respect of the Preferred Securities,
then, by 12:00 noon, New York City time, on the redemption date, to the extent
funds are available, the Property Trustee will deposit irrevocably with DTC or
the Conversion Agent, as the case may be, funds sufficient to pay the applicable
redemption price and will give DTC or the Conversion Agent, as the case may be,
irrevocable instructions and authority to pay the redemption price to the
holders of such Preferred Securities. See "--Certain Book-Entry Procedures for
Global Certificates." If such Preferred Securities are no longer in book-entry
form, the Property Trustee, to the extent funds are available, will irrevocably
deposit with the Paying Agent funds sufficient to pay the applicable redemption
price and will give the Paying Agent irrevocable instructions and authority to
pay the redemption price to the holders thereof upon surrender of their
certificates evidencing such Preferred Securities. Notwithstanding the
foregoing, Distributions payable on or prior to the redemption date for any
Preferred Securities called for redemption shall be payable to the holders of
such Preferred Securities as of the relevant record dates for the related
distribution dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, all rights of the
holders of such Preferred Securities so called for redemption will cease, except
the
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right of the holders of such Preferred Securities to receive the redemption
price, but without interest on such redemption price, and such Preferred
Securities will cease to be outstanding. In the event that any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
redemption price on such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day. In the event
that payment of the redemption price in respect of Preferred Securities called
for redemption is improperly withheld or refused and not paid either by the
Issuer or by the Company pursuant to the Guarantee as described under
"Description of the Guarantee," Distributions on such Preferred Securities will
continue to accrue at the then applicable rate, from the redemption date
originally established by the Issuer to the date such redemption price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the redemption price.
Subject to applicable law (including, without limitation, United States
Federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by tender, in the
open market or by private agreement.
Payment of the redemption price on the Preferred Securities and any
distribution or exchange of Debentures to holders of Preferred Securities shall
be made to the applicable record holders thereof as they appear on the register
for such Preferred Securities on the relevant record date, which shall be the
fifteenth day (whether or not a Business Day) prior to the redemption date or
liquidation date, as applicable.
If less than all of the Preferred Securities and Common Securities issued by
the Issuer are to be redeemed on a redemption date, then the aggregate
liquidation preference of such Preferred Securities and Common Securities to be
redeemed shall be allocated PRO RATA among the Preferred Securities and the
Common Securities. The particular Preferred Securities to be redeemed shall be
selected not more than 60 days prior to the redemption date by the Property
Trustee from the outstanding Preferred Securities not previously called for
redemption, by lot or by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple of $25 in excess thereof) of the
liquidation preference of the Preferred Securities. The Property Trustee shall
promptly notify the Conversion Agent in writing of the Preferred Securities
selected for redemption and, in the case of any Preferred Securities selected
for partial redemption, the liquidation preference thereof to be redeemed; it
being understood that, in the case of Preferred Securities held by DTC (or any
successor) or its nominee, the distribution of the proceeds of such redemption
will be made in accordance with the procedures of DTC or its nominee. For all
purposes of the Trust Agreement, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Securities redeemed or to be redeemed only in part, to
the portion of the aggregate liquidation preference of Preferred Securities
which has been or is to be redeemed.
Notice of any redemption of Debentures will be mailed at least 30 days but
not more than 60 days before the redemption date to each holder of Debentures to
be redeemed at its registered address. Unless the Company defaults in payment of
the redemption price, on and after the redemption date interest ceases to accrue
on such Debentures or portions thereof called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the redemption price of, the Preferred
Securities and Common Securities, as applicable, shall be made PRO RATA based on
the liquidation preference of such Preferred Securities and Common Securities;
provided, however, that if on any distribution date or redemption date a Trust
Agreement Event of Default shall have occurred and be continuing, no payment of
any Distribution on, or redemption price of, any of the Common Securities, and
no other payment on account of the redemption, liquidation or other acquisition
of such Common Securities, shall be made unless payment in
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full in cash of all accumulated and unpaid Distributions on all of the
outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or in the case of payment of the redemption price the full amount
of such redemption price on all of the outstanding Preferred Securities then
called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or redemption price of, the Preferred
Securities then due and payable.
In the case of any Trust Agreement Event of Default, the Company as holder
of the Common Securities will be deemed to have waived any right to act with
respect to any such Trust Agreement Event of Default until all such Trust
Agreement Events of Default with respect to the Preferred Securities have been
cured, waived or otherwise eliminated. Until any such Trust Agreement Events of
Default with respect to the Preferred Securities have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
holders of the Preferred Securities and not on behalf of the Company as holder
of the Common Securities, and only the holders of the Preferred Securities will
have the right to direct the Property Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary liquidation, termination,
dissolution or winding up of the Issuer (each, a "Liquidation"), the holders of
the Preferred Securities at that time will be entitled to receive out of the
assets of the Issuer, after satisfaction of liabilities to creditors,
distributions in an amount equal to the aggregate of the stated liquidation
preference of $25 per Preferred Security plus accrued and unpaid Distributions
thereon to the date of payment (the "Liquidation Distribution"), unless, in
connection with such Liquidation, Debentures in an aggregate principal amount
equal to the aggregate stated liquidation preference of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on, the Preferred Securities, have been
distributed on a PRO RATA basis to the holders of Preferred Securities in
exchange for such Preferred Securities. See "--Distribution of Debentures."
If such Liquidation Distribution can be paid only in part because the Issuer
has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Issuer on the Preferred
Securities shall be paid on a PRO RATA basis. The holder(s) of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
liquidation PRO RATA with the holders of the Preferred Securities, except that
if a Debenture Event of Default has occurred and is continuing, the Preferred
Securities shall have a priority over the Common Securities.
Pursuant to the Trust Agreement, the Issuer shall automatically terminate
upon expiration of its term and shall terminate on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of the Company; (ii)
the distribution of Debentures to the holders of the Preferred Securities and
Common Securities, if the Company, as Depositor, has given written direction to
the Property Trustee to terminate the Issuer (which direction is optional and
wholly within the discretion of the Company, as Depositor); (iii) the
redemption, conversion, or exchange of all of the Preferred Securities and
Common Securities; (iv) the entry by a court of competent jurisdiction of an
order for the dissolution of the Issuer; and (v) the occurrence of a Special
Event, except in the case of a Tax Event following which the Company has elected
to pay any Additional Sums such that the net amount received by holders of
Preferred Securities in respect of Distributions is not reduced as a result of
such Tax Event and the Company has not revoked any such election or failed to
make such payment.
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TRUST AGREEMENT EVENTS OF DEFAULT; NOTICE
An event of default under the Indenture (a "Debenture Event of Default")
constitutes an event of default under the Trust Agreement with respect to the
Preferred Securities and the Common Securities (a "Trust Agreement Event of
Default"), whatever the reason for such Debenture Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
Within ten days after the occurrence of any Trust Agreement Event of Default
actually known to the Property Trustee, the Property Trustee shall transmit
notice of such Trust Agreement Event of Default to the holders of the Preferred
Securities, the Administrative Trustees and the Company, as Depositor, unless
such Trust Agreement Event of Default shall have been cured or waived. The
Company, as Depositor, and the Administrative Trustees, on behalf of the Issuer,
are required to file annually with the Property Trustee a certificate as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under the Trust Agreement.
If a Trust Agreement Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities upon
termination of the Issuer as described above. See "--Liquidation Distribution
Upon Termination." The existence of a Trust Agreement Event of Default does not
entitle the holders of Preferred Securities to accelerate the maturity thereof.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Trust Agreement Event of Default has occurred and is continuing, then
the holders of Preferred Securities would rely on the enforcement by the
Property Trustee of its rights as a holder of the Debentures against the
Company. In addition, the holders of a majority in aggregate liquidation
preference of the Preferred Securities will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Property Trustee or to direct the exercise of any trust or power conferred upon
the Property Trustee under the Trust Agreement, including the right to direct
the Property Trustee to exercise the remedies available to it as a holder of the
Debentures. If the Property Trustee fails to enforce its rights as holder of the
Debentures after a request therefor by a holder of Preferred Securities, such
holder may proceed to enforce such rights directly against the Company.
Notwithstanding the foregoing, if a Trust Agreement Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may directly institute a
Direct Action against the Company for enforcement of payment to such holder of
the principal of or interest on the Debentures having a principal amount equal
to the aggregate liquidation preference of the Preferred Securities of such
holder on or after the respective due date specified in the Debentures. In
connection with such Direct Action, the Company will be subrogated to the rights
of such holder of Preferred Securities under the Trust Agreement to the extent
of any payment made by the Company to such holder of Preferred Securities in
such Direct Action. The holders of Preferred Securities will not be able to
exercise directly against the Company any other remedy available to the Property
Trustee unless the Property Trustee first fails to do so.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such Issuer Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Issuer Trustee, shall be the successor of such Issuer
Trustee under the Trust Agreement, provided such corporation shall be otherwise
qualified and eligible.
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MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER
The Issuer may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described below. The Issuer may, at the request of the Company, with the consent
of the Administrative Trustees and without the consent of the Property Trustee,
the Delaware Trustee or the holders of the Preferred Securities, merge with or
into, consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided that (i) such successor entity either (a)
expressly assumes all of the obligations of the Issuer with respect to the
Preferred Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Preferred Securities and rank in priority with respect to Distributions and
payments upon liquidation, redemption and otherwise, (ii) the Company expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose identical to that of the Issuer, (vii) prior to such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, the
Company has received an opinion from independent counsel to the Issuer
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity)
and (b) following such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease, neither the Issuer nor such successor entity will
be required to register as an investment company under the Investment Company
Act, and (viii) the Company or any permitted successor or assignee owns all of
the Common Securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee. Notwithstanding the foregoing, the Issuer shall not,
except with the consent of holders of 100% in aggregate liquidation preference
of the Preferred Securities, consolidate, amalgamate, merge with or into, be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Issuer or the successor entity to be classified as other than a grantor trust
for United States Federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of the Guarantee--Amendments
and Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the Company and the
Issuer Trustees, without the consent of the holders of the Preferred Securities
(i) to cure any ambiguity, correct or supplement any provisions in the Trust
Agreement that may be inconsistent with any other provision, or to make any
other provisions with respect to matters or questions arising under the Trust
Agreement that shall not be inconsistent with the other provisions of the Trust
Agreement, (ii) to modify, eliminate or add to any provision of the Trust
Agreement to such extent as shall be necessary to ensure that the Issuer will
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be classified for United States Federal income tax purposes as a grantor trust
at all times that any Preferred Securities and Common Securities are outstanding
or to ensure that the Issuer will not be required to register as an "investment
company" under the Investment Company Act or be classified as other than a
grantor trust for United States Federal income tax purposes or (iii) to maintain
the qualification of the Trust Agreement under the Trust Indenture Act;
provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of any holder of
Preferred Securities or Common Securities, and any amendments of the Trust
Agreement shall become effective when notice thereof is given to the holders of
Preferred Securities and Common Securities. The Trust Agreement may be amended
by the Issuer Trustees and the Company with (i) the consent of holders
representing not less than a majority (based upon liquidation preferences) of
the outstanding Preferred Securities and Common Securities, acting as a single
class, and (ii) receipt by the Issuer Trustees of an opinion of counsel to the
effect that such amendment or the exercise of any power granted to the Issuer
Trustees in accordance with such amendment will not affect the Issuer's status
as a grantor trust for United States Federal income tax purposes or the Issuer's
exemption from the status of an "investment company" under the Investment
Company Act; provided further that (a) without the consent of each holder of
Preferred Securities and Common Securities, the Trust Agreement may not be
amended to (i) change the amount or timing of any Distribution on the Preferred
Securities and Common Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Preferred Securities and
Common Securities as of a specified date or (ii) restrict the right of a holder
of Preferred Securities and Common Securities to institute suit for the
enforcement of any such payment on or after such date.
If any proposed amendment of the Trust Agreement provides for, or the Issuer
Trustees otherwise propose to effect, the dissolution, winding-up or termination
of the Issuer, other than pursuant to the terms of the Trust Agreement, then the
holders of the then outstanding Preferred Securities, as a class, will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of the holders of the majority
in aggregate liquidation preference of the Preferred Securities.
The holders of a majority in aggregate liquidation preference of Preferred
Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee
under the Trust Agreement, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Debentures. So long as
any Debentures are held by the Property Trustee, the Issuer Trustees shall not
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee or executing any trust or power
conferred on the Debenture Trustee with respect to such Debentures, (ii) waive
any past default that is waivable under the Indenture, (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required, without in each case, obtaining the prior approval of the holders of a
majority in aggregate liquidation preference of all outstanding Preferred
Securities (except in the case of clause (iv), which consent, in the event that
no Trust Agreement Event of Default shall occur and be continuing, shall be of
the holders of Preferred Securities and Common Securities, voting together as a
single class); provided, however, that where a consent under the Indenture would
require the consent of each holder of Debentures affected thereby, no such
consent shall be given by the Property Trustee without the prior written consent
of each holder of the Preferred Securities. The Issuer Trustees shall not revoke
any action previously authorized or approved by a vote of the holders of the
Preferred Securities except by subsequent vote of the holders of the Preferred
Securities. The Property Trustee shall notify each holder of record of the
Preferred Securities of any notice of default with respect to the Debentures.
A waiver of a Debenture Event of Default will constitute a waiver of the
corresponding Trust Agreement Event of Default.
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Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of the Preferred Securities and the
Common Securities or pursuant to written consent. The Property Trustee will
cause a notice of any meeting at which holders of Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be given to each holder of record of Preferred
Securities in the manner set forth in the Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
for the Issuer to redeem and cancel the Preferred Securities in accordance with
the Trust Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company, the Issuer Trustees or
any affiliate of any Issuer Trustee shall, for purposes of such vote or consent,
be treated as if such Preferred Securities were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "--Certain Book-Entry Procedures for
Global Certificates."
Holders of the Preferred Securities will have no rights to appoint or remove
the Issuer Trustees, who may be appointed, removed or replaced solely by the
Company, as the direct or indirect holder of all the Common Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to DTC, which
shall credit the relevant accounts at DTC on the applicable distribution dates
or, if the Preferred Securities are not held by DTC, such payments shall be made
by check mailed to the address of the holder entitled thereto as such address
shall appear on the Securities Register. The paying agent (the "Paying Agent")
shall initially be the Property Trustee and any co-paying agent chosen by the
Property Trustee and acceptable to the Administrative Trustees and the Company.
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Property Trustee and the Company. In the event that the
Property Trustee shall no longer be the Paying Agent, the Administrative
Trustees shall appoint a successor (which shall be a bank or trust company
acceptable to the Administrative Trustees and the Company) to act as Paying
Agent.
CERTAIN BOOK-ENTRY PROCEDURES FOR GLOBAL CERTIFICATES
The description of book-entry procedures in this Prospectus includes
summaries of certain rules and operating procedures of DTC that affect transfers
of interests in the global certificate or certificates issued in connection with
sales of Preferred Securities made pursuant to this Prospectus. All of the
Preferred Securities will be issued as fully registered securities registered in
the name of Cede & Co. (as nominee for DTC). Preferred Securities will be
initially represented by one or more certificates in registered, global form
(collectively, the "Global Certificate"). The Global Certificates will be
deposited with DTC.
DTC has advised the Issuer and the Company as follows: DTC is a limited
purpose trust company organized under the laws of the State of New York, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "Clearing Agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its participants ("participants") and facilitate the
clearance and settlement of securities transactions between participants through
electronic book-entry changes in accounts of its participants, thereby
eliminating the need for physical transfer and delivery of certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations and may include certain other organizations. Indirect
access to the DTC system is available to other entities such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").
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DTC has advised the Issuer and the Company that its current practice, upon
the issuance of the Global Certificate, is to credit, on its internal system,
the respective principal amount of the individual beneficial interests
represented by such Global Certificate to the accounts with DTC of the
participants through which such interests are to be held. Ownership of
beneficial interests in the Global Certificate will be shown on, and the
transfer of that ownership will be effected only through, records maintained by
DTC or its nominees (with respect to interests of participants) and the records
of participants and indirect participants (with respect to interests of persons
other than participants).
As long as DTC, or its nominee, is the registered holder of a Global
Certificate, DTC or such nominee, as the case may be, will be considered the
sole owner and holder of the Preferred Securities represented by such Global
Certificate for all purposes under the Trust Agreement and the Preferred
Securities.
Except in the limited circumstances described above, owners of beneficial
interests in a Global Certificate will not be entitled to have any portions of
such Global Certificate registered in their names, will not receive or be
entitled to receive physical delivery of Preferred Securities in definitive form
and will not be considered the owners or holders of the Global Certificate (or
any Preferred Securities represented thereby) under the Trust Agreement or the
Preferred Securities.
Investors may hold their interests in the Global Certificate directly
through DTC, if they are participants in such system, or indirectly through
organizations which are participants in such system. All interests in a Global
Certificate, including those held through Euroclear or CEDEL, will be subject to
the procedures and requirements of DTC. Those interests held through Euroclear
and CEDEL will also be subject to the procedures and requirements of such
system.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own. Consequently, the ability to
transfer beneficial interests in a Global Certificate to such persons may be
limited to that extent. Because DTC can act only on behalf of its participants,
which in turn act on behalf of indirect participants and certain banks, the
ability of a person having beneficial interests in a Global Certificate to
pledge such interest to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interests, may be affected
by the lack of a physical certificate evidencing such interests.
Payments of Distributions on Global Certificates will be made to DTC or its
nominee as the registered owner thereof. Neither the Issuer, the Company, the
Property Trustee nor any of their respective agents will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests in the Global Certificate or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Issuer and the Company expect that DTC or its nominee, upon receipt of
any payment of Distributions in respect of a Global Certificate representing any
Preferred Securities held by it or its nominee, will immediately credit
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of such Global
Certificate for such Preferred Securities as shown on the records of DTC or its
nominee. The Issuer and the Company also expect that payments by participants to
owners of beneficial interests in such Global Certificate held through such
participants will be governed by standing instructions and customary practices,
as is the case with securities held for the accounts of customers registered in
"street name." Such payments will be the responsibility of such participants.
Interests in the Global Certificates will trade in DTC's settlement system
and secondary market trading activity in such interests will therefore settle in
immediately available funds, subject in all cases to the rules and procedures of
DTC and its participants. Transfers between participants in DTC will be effected
in accordance with DTC's procedures, and will be settled in same-day funds.
Transfers between
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participants in Euroclear and CEDEL will be effected in the ordinary way in
accordance with their respective rules and operating procedures.
DTC has advised the Issuer and the Company that it will take any action
permitted to be taken by a holder of certificates (including the presentation of
Preferred Securities for exchange as described below and the conversion of
Preferred Securities) only at the direction of one or more participants to whose
account with DTC interests in the Global Certificates are credited and only in
respect of such portion of the aggregate liquidation preference of the Preferred
Securities as to which such participant or participants has or have given such
direction. However, if there is a Trust Agreement Event of Default, DTC reserves
the right to exchange the Global Certificates for Preferred Securities in
certificated form, and to distribute such Preferred Securities to its
participants.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of beneficial ownership interests in the Global Certificate among
participants of DTC, it is under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any time. None of
the Issuer, the Company, the Property Trustee nor any of their respective agents
will have any responsibility for the performance by DTC, its participants or
indirect participants of its respective obligations under the rules and
procedures governing their operations, including maintaining, supervising or
reviewing the records relating to, or payments made on account of, beneficial
ownership interests in Global Certificates.
Redemption notices shall be sent to Cede & Co. as the registered holder of
the Preferred Securities. If less than all of the Preferred Securities are being
redeemed, DTC's current practice is to determine by lot the amount of the
interest of each Direct Participant to be redeemed.
Although voting with respect to the Preferred Securities is limited to the
holders of record of the Preferred Securities, in those instances in which a
vote is required, neither DTC nor Cede & Co. will itself consent or vote with
respect to Preferred Securities. Under its usual procedures, DTC would mail an
omnibus proxy (the "Omnibus Proxy") to the Property Trustee as soon as possible
after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or
voting rights to those Direct Participants to whose accounts such Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Conveyance of notices and other communications by DTC to participants, by
participants to indirect participants, and by participants and indirect
participants to beneficial owners of the Preferred Securities and the voting
rights of participants, indirect participants and beneficial owners of Preferred
Securities will be governed by arrangements among them, subject to any statutory
or regulatory requirements as may be in effect from time to time.
DTC may discontinue providing its services as securities depositary with
respect to the Preferred Securities at any time by giving reasonable notice to
the Property Trustee and the Company. In the event that a successor securities
depositary is not obtained, definitive Preferred Securities certificates
representing such Preferred Securities are required to be printed and delivered.
The Company, at its option, may decide to discontinue use of the system of
book-entry transfers through DTC (or a successor depositary). After a Debenture
Event of Default, the holders of a majority in liquidation preference of
Preferred Securities may determine to discontinue the system of book-entry
transfers through DTC. In any such event, definitive certificates for the
Preferred Securities will be printed and delivered.
TRANSFER AGENT, REGISTRAR AND PAYING, CONVERSION AND EXCHANGE AGENT
The Property Trustee presently acts as transfer agent, registrar and paying,
conversion and exchange agent for the Preferred Securities.
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Registration of transfers or exchanges of Preferred Securities will be
effected without charge by or on behalf of the Issuer, but upon payment of any
tax or other governmental charges that may be imposed in connection with any
transfer or exchange. The Issuer will not be required to register or cause to be
registered the transfer of the Preferred Securities after such Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Company and certain of its subsidiaries may maintain deposit accounts
and conduct other banking and corporate securities transactions and
relationships with the Property Trustee in the ordinary course of their
businesses. The Property Trustee, other than during the occurrence and
continuance of a Trust Agreement Event of Default, undertakes to perform only
such duties as are specifically set forth in the Trust Agreement and, after such
Trust Agreement Event of Default, must exercise the same degree of care and
skill as a prudent person would exercise or use in the conduct of his or her own
affairs. Subject to this provision, the Property Trustee is under no obligation
to exercise any of the powers vested in it by the Trust Agreement at the request
of any holder of Preferred Securities unless it is offered reasonable indemnity
against the costs, expenses and liabilities that might be incurred thereby. If
no Trust Agreement Event of Default has occurred and is continuing and the
Property Trustee is required to decide between alternative causes of action,
construe ambiguous provisions in the Trust Agreement or is unsure of the
application of any provision of the Trust Agreement, and the matter is not one
on which holders of Preferred Securities are entitled under the Trust Agreement
to vote, then the Property Trustee shall take such action as is directed by the
Company and, if not so directed, shall take such action as it deems advisable
and in the best interests of the holders of the Preferred Securities and the
Common Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Issuer in such a way that the Issuer will not be
deemed to be an "investment company" required to be registered under the
Investment Company Act or classified as an association taxable as a corporation
for United States Federal income tax purposes and so that the Debentures will be
treated as indebtedness of the Company for United States Federal income tax
purposes. In this connection, the Company and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Issuer or the Trust Agreement, that the Company and
the Administrative Trustees determine in their discretion to be necessary or
desirable for such purposes, as long as such action does not materially
adversely affect the interests of the holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer may not borrow money or issue debt or mortgage or pledge any of
its assets.
GOVERNING LAW
The Trust Agreement and the Preferred Securities are governed by, and
construed in accordance with, the internal laws of the State of Delaware without
regard to its conflict of laws principles and excluding sections 3540 and 3561
of Title 12 of the Delaware General Corporate Laws.
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DESCRIPTION OF THE GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance by the Issuer of the Preferred Securities for the benefit of
the holders from time to time of such Preferred Securities. The First National
Bank of Chicago will be appointed as trustee ("Guarantee Trustee") under the
Guarantee. This summary of certain provisions of the Guarantee does not purport
to be complete and is subject to, and qualified in its entirety by reference to,
all of the provisions of the Guarantee (the form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part).
The Guarantee Trustee holds the Guarantee for the benefit of the holders of the
Preferred Securities. As used in this section, the "Company" refers to Dura
Automotive Systems, Inc., exclusive of its subsidiaries.
GENERAL
Pursuant to and to the extent set forth in the Guarantee, the Company
irrevocably agreed to pay in full on a subordinated basis, to the extent set
forth herein, the Guarantee Payments (as defined below) to the holders of the
Preferred Securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert other than the
defense of payment. The following payments with respect to the Preferred
Securities, to the extent not paid by or on behalf of the Issuer (the "Guarantee
Payments"), are subject to the Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on the Preferred Securities, to the extent
that the Issuer has funds on hand available therefor at such time, (ii) the
redemption price with respect to any Preferred Securities called for redemption
to the extent that the Issuer has funds on hand available therefor at such time,
or (iii) upon a voluntary or involuntary dissolution, winding up or liquidation
of the Issuer (unless the Debentures are distributed to holders of the Preferred
Securities), the lesser of (a) the Liquidation Distribution, to the extent that
the Issuer has funds on hand available therefor at such time, and (b) the amount
of assets of the Issuer remaining available for distribution to holders of
Preferred Securities. The Company's obligation to make a Guarantee Payment may
be satisfied by direct payment of the required amounts by the Company to the
holders of the Preferred Securities or by causing the Issuer to pay such amounts
to such holders.
The Guarantee is an irrevocable guarantee on a subordinated basis of the
Issuer's obligations under the Preferred Securities, but applies only to the
extent that the Issuer has funds sufficient to make such payments, and is not a
guarantee of collection. If the Company does not make interest payments on the
Debentures held by the Issuer, the Issuer will not be able to pay Distributions
on the Preferred Securities and will not have funds legally available therefor.
The Company has, through the Guarantee, the Trust Agreement, the Debentures
and the Indenture, taken together, fully, irrevocably and unconditionally
guaranteed all of the Issuer's obligations under the Preferred Securities. No
single document standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only the combined
operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer's obligations under the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Debentures and the Guarantee."
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Issuer with respect to the Common Securities to
the same extent as the Guarantee, except that upon the occurrence and during the
continuation of a Trust Agreement Event of Default, holders of Preferred
Securities shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all other liabilities of
the Company and will rank PARI PASSU with most senior preferred stock, if any,
now or hereinafter issued by the Company with any guarantee now or hereinafter
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entered into by the Company in respect of any preferred or preference stock of
any affiliate of the Company. The terms of the Preferred Securities provide that
each holder by acceptance thereof consents and agrees to the subordination and
other provisions of the Guarantee.
The Guarantee constitutes a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee is held for the benefit of the holders of the Preferred Securities.
The Guarantee will not be discharged except by payment of the Guarantee Payments
in full to the extent not paid by the Issuer or upon distribution of the
Debentures to the holders of the Preferred Securities. The Guarantee does not
place a limitation on the amount of additional indebtedness that may be incurred
by the Company or any of its subsidiaries.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority in aggregate liquidation preference of such
outstanding Preferred Securities. The manner of obtaining any such approval will
be as set forth under "Description of the Preferred Securities--Voting Rights;
Amendment of the Trust Agreement." All guarantees and agreements contained in
the Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Preferred Securities then outstanding.
CERTAIN COVENANTS OF THE COMPANY
The Company covenanted in the Guarantee that if and so long as (i) the
Issuer is the holder of all the Debentures, (ii) a Tax Event in respect of the
Issuer has occurred and is continuing and (iii) the Company has elected, and has
not revoked such election, to pay Additional Sums in respect of the Preferred
Securities and Common Securities, the Company, subject to the subordination
provisions hereinafter referenced, will pay to the Issuer such Additional Sums.
The Company also covenanted that it will not, and it will not cause any of its
subsidiaries to, (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Company's capital stock or (ii) make any payment of principal of or,
interest or premium, if any, on or repay or repurchase or redeem any debt
securities (including guarantees of indebtedness for money borrowed) of the
Company that rank PARI PASSU with or junior to the Debentures (other than (a)
any dividend, redemption, liquidation, interest, principal or guarantee payment
by the Company where the payment is made by way of securities (including capital
stock) that rank PARI PASSU with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being made,
(b) redemptions or purchases of any rights issued pursuant to a rights agreement
and the declaration of a dividend of such rights or the issuance of preferred
stock under such plans in the future, (c) payments under the Guarantee, (d)
purchases of Common Stock related to the issuance of Common Stock under any of
the Company's benefit plans for its directors, officers or employees, (e) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one series or class of the Company's capital stock for another
series or class of the Company's capital stock and (f) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged) if at such time (i) there shall have occurred any event
of which the Company has actual knowledge that (a) with the giving of notice or
the lapse of time, or both, would constitute a Debenture Event of Default and
(b) in respect of which the Company shall not have taken reasonable steps to
cure, (ii) the Company shall be in default with respect to its payment of any
obligations under the Guarantee or (iii) the Company shall have given notice of
its election of an Extension Period as provided in the Indenture with respect to
the Debentures and shall not have rescinded such notice, or such Extension
Period, or any extension thereof, shall be continuing. The Company has also
covenanted (i) for
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so long as Preferred Securities are outstanding, not to convert Debentures
except pursuant to a notice of conversion delivered to the Conversion Agent by a
holder of Preferred Securities, (ii) to maintain directly or indirectly 100%
ownership of the Common Securities, provided that certain successors which are
permitted pursuant to the Indenture may succeed to the Company's ownership of
the Common Securities, (iii) not to voluntarily terminate, wind-up or liquidate
the Issuer, except (a) in connection with a distribution of the Debentures to
the holders of the Preferred Securities in liquidation of the Issuer or (b) in
connection with certain mergers, consolidations or amalgamations permitted by
the Trust Agreement, (iv) to maintain the reservation for issuance of the number
of shares of Common Stock that would be required from time to time upon the
conversion of all the Debentures then outstanding, (v) to use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement, to
cause the Issuer to remain classified as a grantor trust and not as an
association taxable as a corporation for United States Federal income tax
purposes and (vi) to deliver shares of Common Stock upon an election by the
holders of the Preferred Securities to convert such Preferred Securities into
Common Stock.
As part of the Guarantee, the Company has agreed that it will honor all
obligations described therein relating to the conversion or exchange of the
Preferred Securities into or for Common Stock or Debentures.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder. The
holders of a majority in aggregate liquidation preference of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of the
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under the Guarantee.
If the Guarantee Trustee fails to enforce the Guarantee, any holder of the
Preferred Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any other person
or entity. In addition, any record holder of Preferred Securities shall have the
right, which is absolute and unconditional, to proceed directly against the
Company to obtain Guarantee Payments, without first waiting to determine if the
Guarantee Trustee has enforced the Guarantee or instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other person or entity. The
Company has waived any right or remedy to require that any action be brought
just against the Issuer, or any other person or entity before proceeding
directly against the Company.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of a
default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after
default with respect to the Guarantee, must exercise the same degree of care and
skill as a prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder of Preferred Securities unless it is
offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon full
payment of the redemption price of the Preferred Securities, upon full payment
of the amounts payable upon liquidation
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of the Issuer, upon the distribution, if any, of Class A Common Stock to the
holders of Preferred Securities in respect of the conversion of all such
holders' Preferred Securities into Class A Common Stock or upon distribution of
Debentures to the holders of the Preferred Securities in exchange for all of the
Preferred Securities. The Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any holder of Preferred
Securities must restore payment of any sums paid under such Preferred Securities
or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the law
of the State of Illinois.
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DESCRIPTION OF THE DEBENTURES
The Debentures will be issued under a Junior Convertible Subordinated
Indenture, dated , 1998 between the Company and The First National Bank
of Chicago, as trustee (the "Debenture Trustee"), a form of which has been filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. This summary of certain terms and provisions of the Debentures and the
Indenture does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the Indenture. Whenever particular defined terms
of the Indenture are referred to herein, such defined terms are incorporated
herein or therein by reference. As used in this section, the Company refers to
Dura Automotive Systems, Inc., exclusive of its subsidiaries.
GENERAL
The Debentures are unsecured and rank junior and subordinate in right of
payment to all future Senior Debt of the Company. The Debentures are limited in
aggregate principal amount to approximately $ million (approximately $
million if the Underwriters' over-allotment option is exercised in full), such
amount being the sum of the aggregate stated liquidation preference of the
Preferred Securities and capital contributed by the Company in exchange for the
Common Securities. The Indenture does not limit the incurrence or issuance of
other secured or unsecured debt of the Company, whether under the Indenture or
any existing or other indenture that the Company may enter into in the future or
otherwise. See "--Subordination."
Concurrently with the issuance of the Preferred Securities, the Issuer
invested the proceeds thereof and the consideration paid by the Company for the
Common Securities in the Debentures. The Debentures are in the principal amount
equal to the aggregate stated liquidation preference of the Preferred Securities
plus the Company's concurrent investment in the Common Securities.
The Debentures are not subject to any sinking fund provision. The entire
principal amount of the Debentures will mature, and become due and payable,
together with any accrued and unpaid interest thereon, on , 2028.
INTEREST
The Debentures bear interest at the annual rate of % per annum, payable
quarterly in arrears on , , and , of each year,
commencing on , 1998 (each, an "Interest Payment Date"), to the person
in whose name each Debenture is registered at the close of business on the
Business Day next preceding such Interest Payment Date, subject to certain
exceptions. It is anticipated that, until the liquidation, if any, of the
Issuer, each Debenture will be held in the name of the Property Trustee in trust
for the benefit of the holders of the Preferred Securities and the Common
Securities. The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months. In the event that any date
on which interest is payable on the Debentures is not a Business Day, then
payment of the interest payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay). Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the stated rate per annum, compounded quarterly. The term
"interest" as used herein shall include quarterly interest payments, interest on
quarterly interest payments not paid on the applicable Interest Payment Date and
Additional Sums, as applicable.
GLOBAL SECURITIES
If distributed to holders of the Preferred Securities in connection with the
involuntary or voluntary dissolution, winding-up or liquidation of the Issuer as
a result of the occurrence of a Special Event, the Debentures will be issued in
the same form as the Preferred Securities which such Debentures replace. Any
Global Certificate will be replaced by one or more global certificates (each a
"Global Security")
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registered in the name of the depository or its nominee. Except under the
limited circumstances described below, the Debentures represented by the Global
Security will not be exchangeable for, and will not otherwise be issuable as,
Debentures in definitive form. The Global Securities described above may not be
transferred except by the depository to a nominee of the depository or by a
nominee of the depository to the depository or another nominee of the depository
or to a successor depository or its nominee.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of such securities in definitive form. Such laws may
impair the ability to transfer beneficial interests in such a Global Security.
Except as provided below, owners of beneficial interests in such a Global
Security are not entitled to receive physical delivery of Debentures in
definitive form and will not be considered the holders thereof for any purpose
under the Indenture, and no Global Security representing Debentures shall be
exchangeable, except for another Global Security of like denomination and tenor
to be registered in the name of the depository or its nominee or to a successor
depository or its nominee. Accordingly, each beneficial owner of Preferred
Securities must rely on the procedures of DTC or if such person is not a
participant, on the procedures of the participant through which such person owns
its interest to exercise any rights of a holder under the Indenture.
If Debentures are distributed to holders of Preferred Securities in
liquidation of such holders' interests in the Issuer and a Global Security is
issued, DTC will act as securities depository for the Debentures represented by
such Global Security. For a description of DTC and the specific terms of the
depository arrangements, see "Description of the Preferred Securities--Certain
Book-Entry Procedures for Global Certificates." As of the date of this
Prospectus, the description therein of DTC's book-entry system and DTC's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any debt
obligations represented by one or more Global Securities held by DTC. The
Company may appoint a successor to DTC or any successor depository in the event
DTC or such depository is unable or unwilling to continue as a depository for
the Global Securities.
None of the Company, the Debenture Trustee, any Paying Agent or the
Securities Registrar will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Security representing such Debentures or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
A Global Security is exchangeable for Debentures registered in the names of
persons other than DTC or its nominee only if (i) DTC notifies the Company that
it is unwilling or unable to continue as a depository for such Global Debenture
and no successor depositary shall have been appointed by the Company within 90
days, or if at any time DTC ceases to be a clearing agency registered under the
Exchange Act at a time when DTC is required to be so registered to act as such
depository, (ii) the Company in its sole discretion determines that such Global
Security shall be so exchangeable, or (iii) there shall have occurred and be
continuing an Event of Default with respect to such Global Security. Any Global
Security that is exchangeable pursuant to the preceding sentence shall be
exchangeable for definitive certificates registered in such names as DTC shall
direct. It is expected that such instructions will be based upon directions
received by DTC from its Participants with respect to ownership of beneficial
interests in such Global Security. In the event that Debentures are issued in
definitive form, such Debentures will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices described
in "--Payment and Paying Agents" below.
PAYMENT AND PAYING AGENTS
Payments on Debentures represented by a Global Security will be made to DTC,
as the depositary for the Debentures. In the event Debentures are issued in
definitive form, principal of and premium, if any, and any interest on
Debentures will be payable, the transfer of the Debentures will be registrable,
and the
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Debentures will be exchangeable for Debentures of other denominations of a like
aggregate principal amount at the corporate office of the Debenture Trustee in
the City of New York or at the office of such Paying Agent or Paying Agents as
the Company may designate, except that at the option of the Company payment of
any interest may be made (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register or (ii)
by wire transfer to an account maintained by the Person entitled thereto as
specified in the Securities Register, provided that proper transfer instructions
have been received by the Regular Record Date. Payment of any interest on
Debentures will be made to the Person in whose name such Debentures are
registered at the close of business on the Regular Record Date for such
interest, except in the case of Defaulted Interest. The Regular Record Date for
the interest payable on any Interest Payment Date shall be the fifteenth day
(whether or not a Business Day) next preceding such Interest Payment Date. The
Company may at any time designate additional Paying Agents or rescind the
designation of any Paying Agent.
Any monies deposited with the Debenture Trustee or any Paying Agent, or then
held by the Company in trust, for the payment of the principal of and premium,
if any, or interest on any Debentures and remaining unclaimed for two years
after such principal and premium, if any, or interest has become due and payable
shall, at the request of the Company, be repaid to the Company and the holder of
such Debentures shall thereafter look, as a general unsecured creditor, only to
the Company for payment thereof.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture to defer the payment
of interest (including any Liquidated Damages) on the Debentures at any time or
from time to time for a period not exceeding 20 consecutive quarters with
respect to each Extension Period, provided that no Extension Period may extend
beyond the stated maturity of the Debentures. At the end of such Extension
Period, the Company must pay all interest then accrued and unpaid (together with
interest thereon at the stated annual rate, compounded quarterly, to the extent
permitted by applicable law). During an Extension Period, interest will continue
to accrue and holders of Debentures (or holders of Preferred Securities while
the Preferred Securities are outstanding) will continue to be required to accrue
interest income for United States Federal income tax purposes. See "Certain
Federal Income Tax Consequences--Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not, and may not cause any
subsidiary to, (i) declare or pay any dividends or distributions on, or redeem,
purchase, acquire, or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees of indebtedness for money borrowed) of the Company that
rank PARI PASSU with or junior to the Debentures (other than (a) any dividend,
redemption, liquidation, interest, principal or guarantee payment by the Company
where the payment is made by way of securities (including capital stock) that
rank PARI PASSU with or junior to the securities on which such dividend,
redemption, interest, principal or guarantee payment is being made, (b)
redemptions or purchases of any rights pursuant to a rights agreement and the
declaration of a dividend of such rights or the issuance of preferred stock
under such plan in the future, (c) payments under the Guarantee, (d) purchases
of Common Stock related to the issuance of Common Stock under any of the
Company's benefit plans for its directors, officers or employees, (e) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one series or class of the Company's capital stock for another
series or class of the Company's capital stock, and (f) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged). Prior to the termination of any such Extension Period,
the Company may further extend the interest payment period, provided that no
Extension Period may exceed 20 consecutive quarters or extend beyond the stated
maturity of the Debentures. Upon the termination of any such Extension Period
and the payment of all amounts then due
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on any Interest Payment Date, the Company may elect to begin a new Extension
Period subject to the above requirements. No interest shall be due and payable
during an Extension Period, except at the end thereof. The Company shall give
the Property Trustee, the Administrative Trustees and the Debenture Trustee
notice of its election to begin any Extension Period at least one Business Day
prior to the earlier of (i) the record date for the date Distributions on the
Preferred Securities (or, if no Preferred Securities are outstanding, for the
date interest on the Debentures would have been payable except for the election
to begin such Extension Period) and (ii) the date the Property Trustee is (or,
if no Preferred Securities are outstanding, the Debenture Trustee is) required
to give notice to Nasdaq or other applicable self-regulatory organization or to
holders of such Preferred Securities (or, if no Preferred Securities are
outstanding, to the holders of such Debentures) of such record date. The
Debenture Trustee and the Property Trustee shall give notice of the Company's
election to begin an Extension Period to the holders of the Debentures and the
Preferred Securities, respectively.
MANDATORY REDEMPTION
Upon repayment at maturity or as a result of acceleration upon the
occurrence of a Debenture Event of Default, the Company will redeem the
Debentures, in whole but not in part, at a redemption price equal to 100% of the
principal amount thereof, together with any accrued and unpaid interest thereon.
Any payment pursuant to this provision shall be made prior to 12:00 noon, New
York City time, on the date of such repayment or acceleration or at such other
time on such earlier date as the parties thereto shall agree. The Debentures are
not entitled to the benefit of any sinking fund or, except as set forth above or
as a result of acceleration, any other provision for mandatory prepayment.
OPTIONAL REDEMPTION
On and after , 2001, the Company will have the right, at any time
and from time to time, to redeem the Debentures, in whole or in part, upon
notice given as provided below, during the twelve month periods beginning on
, in each of the following years and at the indicated redemption prices
(expressed as a percentage of the principal amount of the Debentures being
redeemed), together with any accrued but unpaid interest on the portion being
redeemed.
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- -------------------------- ---------------------
<S> <C>
2001...................... %
2002......................
2003......................
2004......................
2005......................
2006......................
2007......................
2008 and thereafter.......
</TABLE>
For so long as the Issuer is the holder of all the outstanding Debentures,
the proceeds of any such redemption will be used by the Issuer to redeem
Preferred Securities and Common Securities in accordance with their terms. The
Company may not redeem the Debentures in part unless all accrued and unpaid
interest has been paid in full on all outstanding Debentures. The Company may
not, in any case, redeem the Debentures unless all accrued and unpaid interest
thereon has been paid in full on all outstanding Debentures through the last
interest payment date prior to and including the date of redemption. See
"Description of the Preferred Securities--Optional Redemption."
The Company also shall have the right to redeem the Debentures at any time
after , 2001 upon the occurrence of a Tax Event as described in
"Description of the Preferred Securities--Special Event Exchange or Redemption"
at a redemption price equal to the principal amount thereof, plus any accrued
and unpaid interest.
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REDEMPTION PROCEDURES
Notices of any redemption of the Debentures and the procedures for such
redemption shall be as provided with respect to the Preferred Securities under
"Description of the Preferred Securities-- Redemption Procedures." Notice of any
redemption will be mailed at least 30 days but not more than 60 days before the
redemption date to each holder of Debentures to be redeemed at its registered
address. Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest ceases to accrue on such Debentures or
portions thereof called for redemption.
DISTRIBUTION OF DEBENTURES
At any time, the Company has the right to terminate the Issuer and cause the
Debentures to be distributed to the holders of the Preferred Securities in
liquidation of the Issuer after satisfaction of liabilities to creditors of the
Issuer as provided by applicable law. If distributed to holders of Preferred
Securities in liquidation, the Debentures will initially be issued in the form
of one or more Global Securities and DTC, or any successor depositary for the
Preferred Securities, will act as depositary for the Debentures. It is
anticipated that the depositary arrangements for the Debentures would be
substantially identical to those in effect for the Preferred Securities. There
can be no assurance as to the market price of any Debentures that may be
distributed to the holders of Preferred Securities. For a description of DTC and
the terms of the depositary matters, see "Description of the Preferred
Securities--Certain Book-Entry Procedures for Global Certificates."
CONVERSION OF THE DEBENTURES
The Debentures are convertible at the option of the holders of the
Debentures into Common Stock, at any time prior to redemption or maturity, at
the rate of shares of Class A Common Stock for each $25 in principal amount
of the Debentures (equivalent to a conversion price of per share of Class A
Common Stock), subject to the conversion price adjustments described under
"Description of the Preferred Securities--Conversion Rights." The Issuer
covenanted for so long as the Preferred Securities are outstanding not to
convert the Debentures except pursuant to a notice of conversion delivered to
the Conversion Agent by a holder of Preferred Securities. Upon surrender of such
Preferred Securities to the Conversion Agent for conversion, the Issuer will
distribute the commensurate principal amount of the Debentures to the Conversion
Agent on behalf of the holder of every Preferred Security so converted,
whereupon the Conversion Agent will convert such Debentures into Class A Common
on behalf of such holder. The Company's delivery to the holders of the
Debentures (through the Conversion Agent) of the fixed number of shares of
Common Stock into which the Debentures are convertible (together with the cash
payment, if any, in lieu of fractional shares) will be deemed to satisfy the
Company's obligation to pay the principal amount of the Debentures, and the
accrued and unpaid interest attributable to the period from the last date to
which interest has been paid or duly provided for.
MODIFICATION OF INDENTURE
From time to time, the Company and the Debenture Trustee may, without the
consent of the holders of Debentures, amend, waive or supplement the Indenture
for specified purposes, including, among other things, curing ambiguities,
defects or inconsistencies (provided that any such action does not materially
adversely affect the interest of the holders of the Debentures, or the holders
of the Preferred Securities so long as they remain outstanding) and qualifying,
or maintaining the qualification of, the Indenture under the Trust Indenture
Act. The Indenture contains provisions permitting the Company and the Debenture
Trustee, with the consent of the holders of not less than a majority in
principal amount of the outstanding Debentures, to modify the Indenture in a
manner affecting the rights of the holders of the Debentures; provided that no
such modification may, without the consent of the holder of each outstanding
Debentures so affected, (i) change the stated maturity of the Debentures, or
reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon (other than deferrals of the payments of interest as
described under "--Option to Extend Interest Payment Period") or reduce the
premiums
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payable upon the redemption thereof, impair any right to institute suit for the
enforcement of any such payment, or change the subordination provisions of the
Indenture or any right to convert any Debentures in a manner adverse to the
holders or (ii) reduce the percentage of principal amount of the Debentures, the
holders of which are required to consent to any such modification of the
Indenture, provided that, so long as any of the Preferred Securities remain
outstanding, (a) no such modification may be made that adversely affects the
holders of such Preferred Securities in any material respect, and no termination
of the Indenture may occur, and no waiver of any Debenture Event of Default or
compliance with any covenant under the Indenture may be effective, without the
prior consent of the holders of at least a majority in aggregate liquidation
preference of the Preferred Securities then outstanding unless and until the
principal of the Debentures and all accrued and unpaid interest thereon has been
paid in full and (b) where a consent under the Indenture would require the
consent of each holder of Debentures, no such consent will be given by the
Property Trustee without prior consent of each holder of the Preferred
Securities.
DEBENTURE EVENTS OF DEFAULT
The occurrence of any of the following events with respect to the Debentures
constitutes a "Debenture Event of Default" with respect to such Debentures:
(i) failure for 30 days to pay any interest on the Debentures, when due
(subject to the deferral of any due date in the case of an Extension
Period);
(ii) failure to pay any principal of or premium, if any, on the
Debentures when due whether at maturity, upon redemption by declaration or
otherwise;
(iii) failure by the Company to deliver shares of Common Stock upon an
appropriate election by holders of the Debentures to convert such
Debentures;
(iv) default for 90 days by the Company in the observance or performance
of any other covenant or agreement contained in the Indenture relating to
the Debentures after written notice thereof as provided in the Indenture; or
(v) certain events of bankruptcy, insolvency or reorganization relating
to the Company.
The holders of a majority in aggregate outstanding principal amount of the
Debentures have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee or exercising any
trust or power conferred on the Trustee consistent with the Indenture. The
Debenture Trustee or the holders of not less than 25% in aggregate principal
amount of the Debentures then outstanding may declare the principal due and
payable immediately upon a Debenture Event of Default, and, should the Debenture
Trustee or the holders of the Debentures fail to make such declaration, the
holders of at least 25% in aggregate liquidation preference of the Preferred
Securities then outstanding shall have such right. The holders of a majority in
aggregate outstanding principal amount of the Debentures may annul and rescind
such declaration if the default (other than the non-payment of the principal of
the Debentures which has become due solely by such acceleration) has been cured
or waived and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the
Debenture Trustee and, should the holders of the Debentures fail to annul and
rescind such declaration, the holders of a majority in aggregate liquidation
preference of the Preferred Securities then outstanding shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
Debentures affected thereby may, on behalf of the holders of all the Debentures,
waive any past default, except a default in the payment of principal or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding Debenture and, should the holders of
the Debentures fail to annul such declaration and waive such default, the
holders of a majority in aggregate liquidation preference of the Preferred
Securities shall have such right. The Company is
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required to file annually with the Debenture Trustee a certificate as to whether
or not the Company is in compliance with all the conditions and covenants
applicable to it under the Indenture.
In case a Debenture Event of Default shall occur and be continuing as to the
Debentures, the Property Trustee will have the right to declare the principal of
and the interest on the Debentures and any other amounts payable under the
Indenture to be forthwith due and payable and to enforce its other rights as a
creditor with respect to the Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable, a
holder of Preferred Securities may institute a Direct Action for payment after
the respective due date specified in the Debentures. The Company may not amend
the Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Preferred Securities.
Notwithstanding any payment made to such holder of Preferred Securities by the
Company in connection with a Direct Action, the Company shall remain obligated
to pay the principal of or interest on the Debentures held by the Issuer or the
Property Trustee and the Company shall be subrogated to the rights of the holder
of such Preferred Securities with respect to payments on the Preferred
Securities to the extent of any payments made by the Company to such holder in
any Direct Action.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, and no Person shall consolidate with
or merge into the Company or convey, transfer or lease its properties and assets
substantially or as an entirety to the Company, unless (i) in case the Company
consolidates with or merges into another Person or conveys, transfers or leases
its properties and assets substantially as an entirety to any Person, the
successor Person is organized under the laws of the United States or any state
or the District of Columbia, and such successor Person expressly assumes the
Company's obligations on the Debentures; (ii) immediately after giving effect
thereto, no Debenture Event of Default, and no event which, after notice or
lapse of time or both, would become a Debenture Event of Default, shall have
happened and be continuing; (iii) in the case of the Debentures, such
transaction is permitted under the Trust Agreement and Guarantee and does not
give rise to any breach or violation of the Trust Agreement or Guarantee; and
(iv) certain other conditions as prescribed in the Indenture are met.
The general provisions of the Indenture do not afford holders of the
Debentures protection in the event of a highly leveraged or other transaction
involving the Company that may adversely affect holders of the Debentures.
EXPENSES OF ISSUER
Pursuant to the Indenture, the Company will pay all of the costs, expenses
or liabilities of the Issuer, other than obligations of the Issuer to pay to the
holders of any Preferred Securities or Common Securities the amounts due such
holders pursuant to the terms of the Preferred Securities or Common Securities.
SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all Debentures not
previously delivered to the Debenture Trustee for cancellation (i) have become
due and payable or (ii) will become due and payable at their stated maturity
within one year or are to be property called for redemption within one year, and
the Company deposits or causes to be deposited with the Debenture Trustee trust
funds, in trust, for the purpose and in an amount in the currency or currencies
in which the Debentures are payable sufficient to pay and discharge the entire
indebtedness on the Debentures not previously delivered to the Debenture Trustee
for cancellation, for the principal and premium, if any, and interest to the
date of the deposit or to
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the stated maturity, as the case may be, then the Indenture will cease to be of
further effect (except as to the Company's obligations to pay all other sums due
pursuant to the Indenture and to provide the officers' certificates and opinions
of counsel described therein), and the Company will be deemed to have satisfied
and discharged the Indenture.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Debentures
issued thereunder will be subordinate and junior in right of payment to all
Senior Debt (as defined below) of the Company whether now existing or
hereinafter incurred. Upon any payment or distribution of assets of the Company
to creditors upon any liquidation, dissolution, winding-up, reorganization,
assignment for the benefit of creditors, marshaling of assets or any bankruptcy,
insolvency, debt restructuring or similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Company, the holders of Senior Debt
will first be entitled to receive payment in full of principal of and premium,
if any, and interest, if any, on such Senior Debt before the Property Trustee,
on behalf of the holders of the Debentures, will be entitled to receive or
retain any payment in respect of the principal of and premium, if any, or
interest, if any, on the Debentures.
In the event of the acceleration of the maturity of any Debentures, the
holders of all Senior Debt outstanding at the time of such acceleration will
first be entitled to receive payment in full of all amounts due thereon
(including any amounts due upon acceleration) before the holders of Debentures
will be entitled to receive or retain any payment in respect of the principal of
or premium, if any, or interest, if any, on the Debentures.
No payments on account of principal (or premium, if any) or interest, if
any, in respect of the Debentures may be made if there shall have occurred and
be continuing a default in any payment with respect to Senior Debt, or an event
of default with respect to any Senior Debt resulting in the acceleration of the
maturity thereof, or if any judicial proceeding shall be pending with respect to
any such default.
"Debt" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another person the payment of which, in either case, such
Person has guaranteed or for which such Person is responsible or liable,
directly or indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt of the
Company, whether incurred on or prior to the date of the Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Debentures or to other Debt which is PARI
PASSU with, or subordinated to, the Debentures; provided, however, that Senior
Debt shall not be deemed to include:
(i) any Debt of the Company which, when incurred and without respect to
any election under Section 1111(b) of the Bankruptcy Code, was without
recourse to the Company,
(ii) any Debt of the Company to any of its subsidiaries;
(iii) Debt to any employee of the Company,
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(iv) any liability for taxes,
(v) Debt or other monetary obligations to trade creditors or assumed by
the Company or any of its subsidiaries in the ordinary course of business in
connection with the obtaining of goods, materials or services, and
(v) the Debentures.
The Indenture places no limitation on the amount of additional Senior Debt
that may be incurred by the Company.
GOVERNING LAW
The Indenture and the Debentures will be governed by and construed in
accordance with the laws of the State of Illinois.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee is under no obligation to exercise any of the powers
vested in it by the Indenture at the request of any holder of the Debentures,
unless offered reasonable indemnity by such holder against the costs, expenses
and liabilities which might be incurred thereby. The Debenture Trustee is not
required to expend or risk its own funds or otherwise incur personal financial
liability in the performance of its duties if the Debenture Trustee reasonably
believes that repayment or adequate indemnity is not reasonably assured to it.
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RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE
As used in this section, the term the "Company" refers to Dura Automotive
Systems, Inc., exclusive of its subsidiaries.
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." Taken together, the Company's
obligations under the Debentures, the Indenture, the Trust Agreement and the
Guarantee provide, in the aggregate, a full, irrevocable and unconditional
guarantee of payments of Distributions and other amounts due on the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Issuer's obligations under the
Preferred Securities. If and to the extent that the Company does not make
payments on the Debentures, the Issuer will not pay Distributions or other
amounts due on the Preferred Securities. The Guarantee does not cover payment of
Distributions when the Issuer does not have sufficient funds to pay such
Distributions. In such event, a holder of Preferred Securities may institute a
Direct Action directly against the Company to enforce payment of such
Distributions to such holder after the respective due dates. All obligations of
the Company under the Guarantee are subordinate and junior in right of payment
to all future Senior Debt of the Company on substantially the same terms as
provided above with respect to the Debentures; and PARI PASSU with any unsecured
debt, now or hereafter incurred by the Company.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
Debentures, such payments will be sufficient to cover Distributions and other
payments due on the Preferred Securities, primarily because (i) the aggregate
principal amount of the Debentures will be equal to the sum of the aggregate
stated liquidation preference of the Preferred Securities and Common Securities;
(ii) the interest rate and interest and other payment dates on the Debentures
will match the Distribution rate and Distribution and other payment dates for
the Preferred Securities; (iii) the Company shall pay for all and any costs,
expenses and liabilities of the Issuer except the Issuer's obligations to
holders of the Preferred Securities under such Preferred Securities; and (iv)
the Trust Agreement further provides that the Issuer will not engage in any
activity that is not consistent with the limited purposes of the Issuer.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Securities may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
or any other person or entity.
A default or event of default under any Senior Debt of the Company will not
constitute a default under the Indenture or a Debenture Event of Default.
However, in the event of payment defaults under, or acceleration of, Senior Debt
of the Company, the subordination provisions of the Indenture provide that no
payments may be made in respect of the Debentures until such Senior Debt has
been paid in full or any payment default thereunder has been cured or waived.
Failure to make required payments on the Debentures would constitute a Debenture
Event of Default.
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LIMITED PURPOSE OF ISSUER
The Preferred Securities evidence a beneficial interest in the Issuer, and
the Issuer exists for the sole purpose of issuing the Preferred Securities and
Common Securities and investing the proceeds thereof in the Debentures. A
principal difference between the rights of a holder of Preferred Securities and
a holder of Debentures is that a holder of Debentures is entitled to receive
from the Company the principal amount of and interest accrued on Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions from the Issuer (or from the Company under the applicable
Guarantee) if and to the extent the Issuer has funds available for the payment
of such Distributions.
RIGHTS UPON LIQUIDATION
Upon any voluntary or involuntary termination, winding-up or liquidation of
the Issuer involving the liquidation of the Debentures, the holders of the
Preferred Securities will be entitled to receive, out of assets held by the
Issuer, the Liquidation Distribution in cash. See "Description of the Preferred
Securities--Liquidation Distribution Upon Dissolution." Upon any voluntary or
involuntary liquidation or bankruptcy of the Company, the Property Trustee, as
holder of the Debentures, would be a subordinated creditor of the Company,
subordinated in right of payment to all Senior Debt, but entitled to receive
payment in full of principal and interest before any stockholders of the Company
receive payments or distributions. Since the Company is the guarantor under the
Guarantee and has agreed to pay for all costs, expenses and liabilities of the
Issuer (other than the Issuer's obligations to the holders of the Preferred
Securities), the positions of a holder of such Preferred Securities and a holder
of such Debentures relative to other creditors and to stockholders of the
Company in the event of liquidation or bankruptcy of the Company would be
substantially the same.
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DESCRIPTION OF CAPITAL STOCK
GENERAL MATTERS
The total amount of authorized capital stock of the Company consists of
30,000,000 shares of Class A Common Stock, par value $0.01 per share, 10,000,000
shares of Class B Common Stock, par value $0.01 per share and 5,000,000 shares
of Preferred Stock, par value $1.00 per share (the "Preferred Stock"). As of
December 31, 1997, 4,161,657 shares of Class A Common Stock, 4,654,380 shares of
Class B Common Stock and no shares of Preferred Stock were issued and
outstanding. The following summary of certain provisions of the Company's
capital stock describes all material provisions of, but does not purport to be
complete and is subject to, and qualified in its entirety by, the Restated
Certificate and the By-laws of the Company that are included as exhibits to the
Registration Statement of which this Prospectus forms a part and by the
provisions of applicable law.
The Restated Certificate and By-laws contain certain provisions that are
intended to enhance the likelihood of continuity and stability in the
composition of the Board and which may have the effect of delaying, deferring or
preventing a future takeover or change in control of the Company unless such
takeover or change in control is approved by the Board.
CLASS A COMMON STOCK
All of the outstanding shares of Class A Common Stock are validly issued,
fully paid and nonassessable. Subject to the prior rights of the holders of any
Preferred Stock, the holders of outstanding shares of Class A Common Stock are
entitled to receive dividends out of assets legally available therefor at such
time and in such amounts as the Board may from time to time determine. See
"Dividend Policy." The shares of Class A Common Stock are not convertible and
the holders thereof have no preemptive or subscription rights to purchase any
securities of the Company. Upon liquidation, dissolution or winding up of the
Company, the holders of Class A Common Stock are entitled to receive PRO RATA
the assets of the Company which are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of Preferred Stock then outstanding. Each outstanding share of Class
A Common Stock is entitled to one vote on all matters submitted to a vote of
stockholders. Except as otherwise required by law or the Restated Certificate,
the Class A Common Stock and Class B Common Stock vote together on all matters
submitted to a vote of the stockholders, including the election of Directors.
The Class A Common Stock is traded on Nasdaq under the symbol "DRRA."
CLASS B COMMON STOCK
The issued and outstanding shares of Class B Common Stock generally have
identical rights to those of the Class A Common Stock except with respect to
voting power and conversion rights. Each share of Class B Common Stock is
entitled to ten votes on all matters submitted to a vote of stockholders, as
compared to one vote for each share of Class A Common Stock. Class B Common
Stock is convertible at the option of the holder, and mandatorily convertible
upon any transfer thereof (except to affiliates) and at any time that the MC
Stockholders and their affiliates, in the aggregate, do not beneficially own at
least 10% of the total outstanding shares of Common Stock, into Class A Common
Stock on a share-for-share basis. The Class B Common Stock is not registered
under the Securities Act and will not be listed for trading on any national
securities exchange or on Nasdaq.
PREFERRED STOCK
The Board may, without further action by the Company's stockholders, from
time to time, direct the issuance of shares of Preferred Stock in series and
may, at the time of issuance, determine the rights, preferences and limitations
of each series. Satisfaction of any dividend preferences of outstanding shares
of
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Preferred Stock would reduce the amount of funds available for the payment of
dividends on shares of Common Stock. Holders of shares of Preferred Stock may be
entitled to receive a preference payment in the event of any liquidation,
dissolution or winding-up of the Company before any payment is made to the
holders of shares of Common Stock. Under certain circumstances, the issuance of
shares of Preferred Stock may render more difficult or tend to discourage a
merger, tender offer or proxy contest, the assumption of control by a holder of
a large block of the Company's securities or the removal of incumbent
management. Upon the affirmative vote of a majority of the total number of
Directors then in office, the Board, without stockholder approval, may issue
shares of Preferred Stock with voting and conversion rights which could
adversely affect the holders of shares of Common Stock. Upon consummation of the
Offering, there will be no shares of Preferred Stock outstanding, and the
Company has no present intention to issue any shares of Preferred Stock. The
Stockholders Agreement provides that the affirmative vote of two-thirds of the
Board is required to issue any Preferred Stock.
CERTAIN PROVISIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION AND
BY-LAWS
The Restated Certificate provides that stockholder action can be taken only
at an annual or special meeting of stockholders and cannot be taken by written
consent in lieu of a meeting. The Restated Certificate and the By-laws provide
that, except as otherwise required by law, special meetings of the stockholders
can only be called by the Chairman of the Board or the President of the Company,
or pursuant to a resolution adopted by a majority of the Board. Stockholders are
not permitted to call a special meeting or to require the Board to call a
special meeting.
The By-laws establish an advance notice procedure for stockholder proposals
to be brought before an annual meeting of stockholders of the Company, including
proposed nominations of persons for election to the Board.
Stockholders at an annual meeting may only consider proposals or nominations
specified in the notice of meeting or brought before the meeting by or at the
direction of the Board or by a stockholder who was a stockholder of record on
the record date for the meeting, who is entitled to vote at the meeting and who
has given to the Company's Secretary timely written notice, in proper form, of
the stockholder's intention to bring that business before the meeting. Although
the By-laws do not give the Board the power to approve or disapprove stockholder
nominations of candidates or proposals regarding other business to be conducted
at a special or annual meeting, the By-laws may have the effect of precluding
the conduct of certain business at a meeting if the proper procedures are not
followed or may discourage or defer a potential acquiror from conducting a
solicitation of proxies to elect its own slate of Directors or otherwise
attempting to obtain control of the Company.
The Restated Certificate and By-laws provide that the affirmative vote of
holders of at least 80% of the total votes eligible to be cast in the election
of Directors will be required to amend, alter, change or repeal certain of their
provisions. This requirement of a super-majority vote to approve amendments to
the Restated Certificate and By-laws could enable a minority of the Company's
stockholders to exercise veto power over any such amendments. In addition, the
Class B Common Stock has ten votes, as compared to one vote for each share of
Class A Common Stock, on all matters, including the election of Directors, to
come before the stockholders. By virtue of such stock ownership, the holders of
the Class B Common Stock will be able to control the vote on all matters
submitted to a vote of the holders of Common Stock, including the election of
Directors, amendments to the Restated Certificate and By-laws and approval of
significant corporate transactions. Such concentration of ownership could also
have the effect of delaying, deterring or preventing a change in control of the
Company that might otherwise be beneficial to stockholders. See "Risk
Factors--Control by Certain Stockholders."
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CERTAIN PROVISIONS OF DELAWARE LAW
The Company is subject to the "business combination" provisions of the
Delaware General Corporation Law. In general, such provisions prohibit a
publicly held Delaware corporation from engaging in various "business
combination" transactions with any "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless (i) the transaction is approved by the Board of
Directors prior to the date the "interested stockholder" obtained such status,
(ii) upon consummation of the transaction which resulted in the stockholder
becoming an "interested stockholder," the "interested stockholder," owned at
least 85% of the voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the number of
shares outstanding those shares owned by (a) persons who are directors and also
officers and (b) employee stock plans in which employee participants do not have
the right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer, or (iii) on or subsequent to
such date the "business combination" is approved by the board of directors and
authorized at an annual or special meeting of stockholders by the affirmative
vote of at least 66 2/3% of the outstanding voting stock which is not owned by
the "interested stockholder." A "business combination" is defined to include
mergers, asset sales and other transactions resulting in financial benefit to a
stockholder. In general, an "interested stockholder" is a person who, together
with affiliates and associates, owns (or within three years, did own) 15% or
more of a corporation's voting stock. The statute could prohibit or delay
mergers or other takeover or change in control attempts with respect to the
Company and, accordingly, may discourage attempts to acquire the Company.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Restated Certificate limits the liability of Directors to the fullest
extent permitted by the Delaware General Corporation Law. In addition, the
Restated Certificate provides that the Company shall indemnify Directors and
officers of the Company to the fullest extent permitted by such law. The Company
has entered into indemnification agreements with its current Directors and
executive officers.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Class A Common Stock is Firstar
Trust Company.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Following is a summary of certain of the material United States Federal
income tax consequences of the purchase, ownership, disposition and conversion
of the Preferred Securities. Unless otherwise stated, this summary deals only
with Preferred Securities held as capital assets by holders who purchase the
Preferred Securities upon original issuance. This summary does not deal with
special classes of holders such as banks, thrifts, real estate investment
trusts, regulated investment companies, insurance companies, dealers in
securities or currencies, tax-exempt investors, foreign taxpayers (except to the
extent discussed under the heading "United States Alien Holders") or persons
that will hold the Preferred Securities as a position in a "straddle," as part
of a "synthetic security" or "hedge," as part of a "conversion transaction" or
other integrated investment or as other than a capital asset. This summary also
does not address the tax consequences to persons that have a functional currency
other than the United States Dollar. Further, it does not include any
description of any alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may be applicable to
the Preferred Securities. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury regulations thereunder and
administrative and judicial interpretations thereof, as of the date hereof, all
of which are subject to change, possibly on a retroactive basis.
INVESTORS ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF PREFERRED
SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE EFFECT OF
ANY STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
CLASSIFICATION OF THE DEBENTURES
The Company has taken the position that the Debentures will be classified
for United States Federal income tax purposes as indebtedness of the Company
under current law and, by acceptance of Preferred Securities, each holder
covenants to treat the Debentures as indebtedness and the Preferred Securities
as evidence of an indirect beneficial ownership interest in the Debentures. No
assurance can be given, however, that such position of the Company will not be
challenged by the Internal Revenue Service (the "IRS") or, if challenged, that
such a challenge will not be successful. A successful IRS challenge to the
classification of the Debentures as debt would prevent the Company from
deducting the interest paid or accrued on the Debentures for United States
Federal income tax purposes and could constitute a Tax Event. Additionally, if
the interest on the Debentures is not deductible it could adversely affect the
Company's ability to make payments on the Debentures. The remainder of this
discussion assumes that the Debentures will be classified as indebtedness of the
Company for United States Federal income tax purposes.
CLASSIFICATION OF THE ISSUER
In the opinion of Kirkland & Ellis, special United States tax counsel to the
Issuer and the Company, the Issuer will be classified as a grantor trust and
will not be classified as an association taxable as a corporation for United
States Federal income tax purposes. Accordingly, for United States Federal
income tax purposes, each holder of Preferred Securities generally will be
considered the owner of an undivided interest in the Debentures, and each holder
will be required to include in its gross income any interest with respect to its
allocable share of those Debentures.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under the Indenture, the Company has the option to defer the payment of
interest on the Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
provided that no Extension Period may extend beyond the stated maturity of the
Debentures. The Company's option to extend the interest period will cause the
Debentures to be subject to the OID rules for United States Federal income tax
purposes. Accordingly, regardless of a holder's regular
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method of accounting, a holder will recognize interest income (in the form of
OID) on a daily basis under a constant yield method over the term of the
Debentures (including during any Extension Period), regardless of the receipt of
cash with respect to the period to which such income is attributable and
regardless of whether the Company exercises its option to extend any interest
payment period. The amount of OID that will be recognized in any quarter will
approximately equal the amount of income that accrues on the Debentures in that
quarter at the stated interest rate.
As a result, holders will include interest (in the form of OID) in gross
income in advance of the receipt of cash, and any holders who dispose of
Preferred Securities or convert Preferred Securities into Class A Common Stock
prior to the record date for the payment of distributions will include interest
in gross income but will not receive any cash related thereto from the Issuer.
Because income on the Debentures will constitute interest, corporate holders
will not be entitled to a dividends-received deduction with respect to any
income recognized with respect to the Debentures.
DEDUCTIBILITY OF INTEREST BY THE COMPANY
The Company will take the position that interest paid or accrued on the
Debentures will be deductible by the Company in accordance with its normal
method of accounting. There is a risk that the IRS for United States Federal
income tax purposes may attempt to disallow all or a portion of such deductions
either (i) on the basis that the Debentures constitute "corporate acquisition
indebtedness" within the meaning of Section 279 of the Code or (ii) on the basis
that the Debentures constitute "disqualified debt instruments" within the
meaning of Section 163(l) of the Code. The Company does not believe that
deductions for interest paid or accrued on the Debentures should be disallowed
under either of such provisions, but there can be no assurance that such
position will not be challenged by the IRS or, if challenged, that such a
challenge will not be successful. A successful IRS challenge to the
deductibility of interest paid or accrued on the Debentures could constitute a
"Tax Event," as discussed above. Additionally, if the interest on the Debentures
is not deductible, it could adversely affect the Company's ability to make
payments on the Debentures.
REDEMPTION OF PREFERRED SECURITIES FOR DEBENTURES OR CASH UPON DISSOLUTION OF
THE ISSUER
Under certain circumstances, the Debentures may be distributed to holders in
exchange for the Preferred Securities. Assuming the treatment of the Issuer as a
grantor trust is respected, such a distribution to holders, for United States
Federal income tax purposes, would be treated as a nontaxable event to each
holder, and each holder would receive an aggregate tax basis in the Debentures
distributed equal to such holder's aggregate tax basis in its Preferred
Securities exchanged therefor. A holder's holding period in the Debentures so
received would include the period during which the Preferred Securities were
held by such holder. If, however, the exchange is caused by a Tax Event that has
occurred and is continuing, which results in the Issuer being treated as an
association taxable as a corporation, the distribution would likely constitute a
taxable event to the Issuer and holders of the Preferred Securities.
Under certain circumstances described herein (see "Description of the
Preferred Securities--Special Event Exchange or Redemption"), the Debentures may
be redeemed for cash and the proceeds of such redemption distributed to holders
in redemption of their Preferred Securities. Under current law, such a
redemption would, for United States Federal income tax purposes, constitute a
taxable disposition of the redeemed Preferred Securities, and a holder would
recognize gain or loss in the same manner as if it sold such redeemed Preferred
Securities for cash.
SALES OF PREFERRED SECURITIES
A holder that sells Preferred Securities will recognize gain or loss equal
to the difference between the amount realized on the sale of the Preferred
Securities and the holder's adjusted tax basis in such Preferred Securities. The
tax basis of a Preferred Security will be increased by the amount of any
interest (in the form of OID) that is included in income, and will be decreased
by the amount of any payment made by the Company on the Debentures. In general,
such gain or loss will be a capital gain or loss and will be a
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long-term capital gain or loss if the Preferred Securities have been held for
more than one year at the time of sale. Long-term capital gain of an individual
U.S. Holder is subject to a maximum United States Federal income tax rate of 28%
in respect of capital assets held for more than one year. The maximum tax rate
is reduced to 20% for capital assets held for more than 18 months. Capital gain
on the disposition of assets held for not more than one year is taxed at the
rates applicable for ordinary income (i.e., up to 39.6%).
The Preferred Securities may trade at a price that does not accurately
reflect the value of accrued but unpaid interest with respect to the underlying
Debentures. A holder who disposes of its Preferred Securities between record
dates for payments of distributions thereon will be required to include in
income as ordinary income any accrued but unpaid interest (in the form of OID)
on the Debentures to the date of disposition and to add such amount to its
adjusted tax basis in its PRO RATA share of the underlying Debentures deemed
disposed of. To the extent the selling price is less than the holder's adjusted
tax basis, such holder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States Federal income tax purposes.
CONVERSION OF PREFERRED SECURITIES INTO CLASS A COMMON STOCK
A holder of Preferred Securities generally will not recognize income, gain
or loss upon the conversion of the Preferred Securities into Class A Common
Stock through the Conversion Agent. A holder of Preferred Securities will,
however, recognize gain upon the receipt of cash in lieu of a fractional share
of Class A Common Stock generally equal to the amount of cash received less such
holder's tax basis in such fractional share. Such holder's tax basis in Class A
Common Stock received upon conversion should generally be equal to such holder's
tax basis in the Preferred Securities delivered to the Conversion Agent for
exchange (which will include any accrued but unpaid OID) less the basis
allocated to any fractional share for which cash is received, and such holder's
holding period in the Class A Common Stock received upon conversion should
generally begin on the date such holder acquired the Preferred Securities that
are subsequently delivered to the Conversion Agent for exchange.
ADJUSTMENT OF CONVERSION PRICE
Treasury Regulations promulgated under Section 305 of the Code would treat
holders of Preferred Securities as having received a constructive distribution
from the Company in the event the conversion ratio of the Debentures were
adjusted if (i) as a result of such adjustment, the proportionate interest
(measured by the quantum of Class A Common Stock into or for which the
Debentures are convertible or exchangeable) of the holders of the Preferred
Securities in the assets or earnings and profits of the Company were increased
and (ii) the adjustment was not made pursuant to a bona fide, reasonable
antidilution formula. An adjustment in the conversion ratio would not be
considered made pursuant to such a formula if the adjustment was made to
compensate for certain taxable distributions with respect to the Class A Common
Stock. Thus, under certain circumstances, a reduction in the conversion price
for the holders may result in deemed dividend income to holders to the extent of
the current or accumulated earnings and profits of the Company. Holders of the
Preferred Securities would be required to include their allocable share of such
deemed dividend income in gross income but would not receive any cash related
thereto.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership, or a foreign estate or trust.
Under present United States Federal income tax law:
(a) payments by the Issuer or any of its paying agents to any holder of a
Preferred Security who or which is a United States Alien Holder will not be
subject to United States Federal withholding tax; provided, that (i) the
beneficial owner of the Preferred Security does not actually or constructively
own
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10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote, (ii) the beneficial owner of the Preferred Security is
not a controlled foreign corporation that is related to the Company through
stock ownership, and (iii) either (A) the beneficial owner of the Preferred
Security certifies its status as a United States Alien Holder to the Issuer or
its agent, under penalties of perjury, and provides its name and address or (B)
(x) a securities clearing organization, bank or other financial institution that
holds customers' securities in the ordinary course of its trade or business (a
"Financial Institution"), and holds the Preferred Security in such capacity,
certifies to the Issuer or its agent, under penalties of perjury, that such
statement has been received from the beneficial owner by it or by a Financial
Institution holding such security for the beneficial owner and furnishes the
Issuer or its agent with a copy thereof; or (y) with respect to payments after
December 31, 1998, a "qualified intermediary" (which includes certain foreign
financial institutions, foreign clearing organizations or foreign branches of
United States financial institutions or clearing organizations which have
entered into withholding agreements with the Internal Revenue Service and have
received appropriate certification from the beneficial owner) provides the
Issuer or any of its paying agents with an intermediary withholding certificate;
(b) dividends paid with respect to Class A Common Stock to a United States
Alien Holder generally will be subject to withholding of United States Federal
income tax at a 30% rate (or such lower rate as may be specified by an
applicable income tax treaty), unless the dividend (i) is effectively connected
with the conduct of a trade or business of the United States Alien Holder within
the United States and certain certification requirements are satisfied, or (ii)
if an income tax treaty applies, is attributable to a United States permanent
establishment of the United States Alien Holder;
(c) except to the extent that an applicable treaty otherwise provides, a
United States Alien Holder generally will be taxed in the same manner as other
holders with respect to interest (in the form of OID) or dividends if the income
is effectively connected with a United States trade or business of the United
States Alien Holder (effectively connected interest (in the form of OID) or
dividends received by a corporate United States Alien Holder may also, under
certain circumstances, be subject to an additional "branch profits tax" at a 30%
rate or such lower rate as may be specified by an applicable income tax treaty);
(d) a United States Alien Holder of a Preferred Security or Class A Common
Stock generally will not be subject to United States Federal income or
withholding tax on any gain (other than that attributable to accrued but unpaid
interest (in the form of OID), which is taxable in the manner described above)
realized upon the sale or other disposition of a Preferred Security or Class A
Common Stock (including the receipt of cash in lieu of fractional shares upon
conversion of Preferred Securities into shares of Class A Common Stock), unless
(i) (A) the gain is effectively connected with the conduct of a trade or
business of the United States Alien Holder in the United States or (B) if a tax
treaty applies, the gain is attributable to a United States permanent
establishment of the United States Alien Holder; (ii) in the case of a United
States Alien Holder who is an individual and holds the Preferred Securities or
Class A Common Stock as a capital asset, such holder is present in the United
States for 183 or more days in the taxable year of the disposition and certain
other conditions are met; (iii) the United States Alien Holder is subject to tax
pursuant to the provisions of United States Federal income tax laws applicable
to certain United States expatriates; or (iv) (A) the Company is or has been a
"U.S. real property holding corporation" for United States Federal income tax
purposes at any time during the five-year period ending on the date of
disposition, or, if shorter, the period during which the United States Alien
Holder held the Preferred Securities or Class A Common Stock and (B) the
interest sold is not considered stock that is "regularly traded on an
established securities market" at any time during the year of disposition or the
United States Alien Holder meets certain minimum ownership requirements; and
(e) except to the extent that an applicable treaty otherwise provides, a
United States Alien Holder generally will be taxed in the same manner as other
holders with respect to gain on the sale or disposition of Preferred Securities
or Class A Common Stock if the gain is effectively connected with a United
States trade or business of the United States Alien Holder (effectively
connected gain realized by a corporate United States Alien holder may also,
under certain circumstances, be subject to an additional "branch profits tax" at
a 30% rate or such lower rate as may be specified by an applicable income tax
treaty).
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A United States Alien Holder who sells or otherwise disposes of Preferred
Securities or Class A Common Stock generally will recognize gain or loss that is
subject to United States Federal income tax if (i) the Company is or has been a
"U.S. real property holding corporation" during the period described in (d) (iv)
(A) above, and (ii) the interest sold is not considered stock that is "regularly
traded on an established securities market" at any time during the calendar year
of disposition or the United States Alien Holder meets certain minimum ownership
requirements. The Company does not believe that it is a U.S. real property
holding corporation as of the date hereof, although it has not determined or
established whether it will be a U.S. real property holding corporation in the
future. A United States Alien Holder that sells or otherwise disposes of
Preferred Securities or Class A Common Stock may request a statement from the
Company that the Company has not been a "U.S. real property holding corporation"
during the period described in (d)(iv)(A) above as of the date of such sale or
disposition. The Company will provide such a requested statement if the
requested statement would be accurate at the time given.
Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of such
regulations, for purposes of determining the applicability of an income tax
treaty rate. Recently published final Treasury Regulations (the "1997
Withholding Regulations"), generally effective for payments after December 31,
1998, provide certain presumptions which differ from the presumption described
above. Under the 1997 Withholding Regulations, a United States Alien Holder of
Class A Common Stock that wishes to claim the benefit of a treaty rate is
required to satisfy applicable certification requirements. In addition, the 1997
Withholding Regulations provide that dividend payments are generally subject to
information reporting and backup withholding unless applicable certification
requirements are satisfied. The 1997 Withholding Regulations also require, in
the case of interest or dividends with respect to Preferred Securities or Common
Stock held by a foreign partnership, that (x) the certification requirements
described above be provided by the partners rather than by the foreign
partnership and (y) the partnership provide certain information, which in
certain circumstances may include a United States taxpayer identification
number. A look-through rule would apply in the case of tiered partnerships.
INFORMATION REPORTING TO HOLDERS
Generally, income on the Preferred Securities will be reported to
noncorporate holders on Forms 1099, which forms will be mailed to holders of
record prior to January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, Preferred Securities may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's United States Federal income tax,
provided the required information is timely filed with the Internal Revenue
Service.
POSSIBLE TAX LEGISLATION
Prospective investors should be aware that legislation has been introduced
in the United States Congress in the past that would, if enacted, deny an
interest deduction to issuers of instruments such as the Debentures. No such
legislation has been enacted. There can be no assurance, however, that similar
legislation will not ultimately be enacted into law, or that other developments
will not occur after the date hereof that would adversely affect the tax
treatment of the Debentures and could result in the exchange of the Debentures
for Preferred Securities or, in certain limited circumstances, the redemption of
the Debentures by the Company and the distribution of the resulting cash in
redemption of the Preferred Securities. See "Description of the Preferred
Securities--Special Event Exchange or Redemption."
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Issuer and the Company have agreed to sell to each of the underwriters named
below (the "Underwriters"), and each of the Underwriters has severally agreed to
purchase from the Issuer and the Company, the respective number of Preferred
Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
PREFERRED
UNDERWRITERS SECURITIES
- -------------------------------------------------------------------------------- -----------
<S> <C>
Robert W. Baird & Co. Incorporated..............................................
Piper Jaffray Inc...............................................................
-----------
Total......................................................................... 2,000,000
-----------
-----------
</TABLE>
In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions set forth therein, to purchase all 2,000,000 Preferred
Securities offered hereby if any are purchased. In the event of a default by any
Underwriter, the Underwriting Agreement provides that, in certain circumstances,
purchase commitments of the non-defaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
The Issuer and the Company have been advised by the Underwriters that the
Underwriters propose to offer such Preferred Securities to the public at the
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $ per share.
The Underwriters may allow and such dealers may re-allow a concession not in
excess of $ per share to other dealers. After the Preferred Securities are
released for sale to the public, the offering price and other selling terms may
be changed by the Underwriters.
The Issuer and the Company have granted to the Underwriters an option,
expiring 30 days from the date of this Prospectus, to purchase up to 300,000
additional Preferred Securities at the public offering price set forth on the
cover page of this Prospectus. The Underwriters may exercise such option solely
to cover over-allotments, if any, made in connection with the sale of the
Preferred Securities that the Underwriters have agreed to purchase. To the
extent the Underwriters exercise such option, each of the Underwriters will be
committed, subject to certain conditions, to purchase a number of option shares
proportionate to such Underwriter's initial commitment.
The Issuer and the Company have agreed that, except with the prior written
consent of Robert W. Baird & Co. Incorporated, during the 45 days following the
date of this Prospectus, not to offer, sell, contract to sell or otherwise
dispose of any Preferred Securities, any preferred stock or any other securities
(including any backup undertakings of such preferred stock or other securities)
of the Company or of the Issuer, in each case that are substantially similar to
the Preferred Securities, or any securities convertible into or exchangeable for
the Preferred Securities or such substantially similar securities of either the
Issuer or the Company.
In view of the fact that the proceeds of the sale of the Preferred
Securities will ultimately be used to purchase the Debentures of the Company,
the Underwriting Agreement provides that the Company will pay as compensation to
the Underwriters for arranging the investment therein of such proceeds, $ per
Preferred Security ($ in the aggregate) for the accounts of the several
Underwriters (or $ in the aggregate if the Underwriters exercise the
over-allotment option in full).
In connection with the Offering, the Underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the Preferred
Securities. Specifically, the Underwriters may over-allot the Offering, creating
a syndicated short position. In addition, the Underwriters may bid for, and
purchase, shares of Preferred Securities and Class A Common Stock in the open
market to cover syndicate short positions or to stabilize the price of the
Preferred Securities or Class A Common Stock. Finally, the
102
<PAGE>
Underwriters may reclaim selling concessions allowed for distributing the
Preferred Securities or Class A Common Stock in the Offering, if the
Underwriters repurchase previously distributed Preferred Securities or Class A
Common Stock in syndicate covering transactions, in stabilization transfers or
otherwise. Any of these activities may stabilize or maintain the market price of
the Preferred Securities or the Class A Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.
The Underwriters and dealers may engage in passive market making
transactions in the Class A Common Stock in accordance with Rule 103 of
Regulation M promulgated by the Securities and Exchange Commission (the
"Commission"). In general, a passive market maker may not bid for, or purchase,
the Class A Common Stock at a price that exceeds the highest independent bid. In
addition, the net daily purchases made by any passive market maker generally may
not exceed 30% of its average daily trading volume in the Class A Common Stock
during a specified two-month prior period, or 200 shares, whichever is greater.
A passive market maker must identify passive market making bids as such on
Nasdaq electronic inter-dealer reporting system. Passive market making may
stabilize or maintain the market price of the Class A Common Stock above
independent market levels. Underwriters and dealers are not required to engage
in passive market making and may end passive market making activities at any
time.
Robert W. Baird & Co. Incorporated has performed investment banking services
for the Company in the past for which it has received customary compensation.
The Underwriting Agreement provides that the Company, Dura Operating Corp.
and the Issuer will indemnify the Underwriters against certain liabilities under
the Securities Act of 1933 or contribute to payments the Underwriters may be
required to make in respect thereof.
Application has been made to have the Preferred Securities listed on Nasdaq,
subject to official notice of issuance, under the symbol "DRRAP."
LEGAL MATTERS
Certain legal matters for the Company and the Issuer with respect to the
Debentures and the validity of the Guarantee will be passed upon for the Company
and the Issuer by Kirkland & Ellis, a partnership including professional
corporations, Chicago, Illinois. Certain matters of Delaware law relating to the
validity of the Preferred Securities, the enforceability of the Trust Agreement
and the formation of the Issuer will be passed upon by Richards, Layton &
Finger, P.A., special Delaware counsel to the Company and the Issuer. Certain
legal matters will be passed upon for the Underwriters by Gardner, Carton &
Douglas, Chicago, Illinois.
EXPERTS
The audited financial statements included in this Prospectus and
Registration Statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in giving
said reports.
AVAILABLE INFORMATION
The Company and the Issuer have filed with the Commission a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended, with respect to the securities offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement and
the exhibits and schedules thereto, to which reference is hereby made.
Statements made in this Prospectus as to the contents of any agreement or other
document are not necessarily complete; with respect to each such agreement or
other document filed as an exhibit to the Registration Statement,
103
<PAGE>
reference is 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
this reference.
The Company is subject to the information requirements of the Exchange Act
(Commission File No. 0-21139), and in accordance therewith files periodic
reports, proxy statements and other information with the Commission relating to
its business, financial statements and other matters. The Registration
Statement, as well as such reports, proxy statements and other information, may
be inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and should be available for inspection and copying at the regional
offices of the Commission located at 7 World Trade Center, Suite 1300, New York,
New York 10048 and at Citicorp Center, 500 West Madison Street, Chicago,
Illinois 60661. Copies of such material can be obtained at prescribed rates by
writing to the Commission Public Reference Section, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission also maintains a Web site that contains
reports, proxy statements and other information regarding registrants that file
electronically with the Commission. The address of such site is
http://www.sec.gov. Such material can also be inspected at the reading room of
the library of the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., 2nd Floor, Washington, D.C. 20006.
No separate financial statements of the Issuer have been included herein.
The Company does not consider that such financial statements would be material
to holders of Preferred Securities because (i) all of the voting securities of
the Issuer will be owned, directly or indirectly, by the Company, a reporting
company under the Exchange Act, (ii) the Issuer has no independent operations
and exists for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of the Issuer and investing the proceeds
thereof in the Debentures issued by the Company and (iii) the obligations of the
Issuer under the Preferred Securities are fully and unconditionally guaranteed
by the Company. See "Dura Automotive Systems Capital Trust," "Description of the
Guarantee" and "Description of the Debentures."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Preferred Securities shall be deemed
incorporated by reference in this Prospectus and a part hereof from the
respective date of filing each such document. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY UNDERTAKES TO PROVIDE, WITHOUT CHARGE, TO EACH PERSON TO WHOM A
COPY OF THIS PROSPECTUS HAS BEEN DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF
ANY SUCH PERSON, A COPY OF ANY OR ALL OF THE DOCUMENTS REFERRED TO ABOVE THAT
HAVE BEEN INCORPORATED IN THIS PROSPECTUS BY REFERENCE, OTHER THAN EXHIBITS TO
SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO DURA AUTOMOTIVE
SYSTEMS, INC., 4508 IDS CENTER, MINNEAPOLIS, MINNESOTA 55402, TELEPHONE (612)
342-2311.
The following document filed by the Company with the Commission under the
Exchange Act are incorporated herein by reference: (i) the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997; (ii) the
Company's Current Report on Form 8-K dated September 12, 1997, as amended by its
Current Report on Form 8-K/A dated November 11, 1997; and (iii) the description
of the Company's Class A Common Stock contained in the Company's registration
statement on Form 8-A filed under the Exchange Act.
104
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Public Accountants................................................................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997............................................... F-3
Consolidated Statements of Operations for the years ended December 31, 1995, 1996 and 1997................. F-4
Consolidated Statements of Stockholders' Investment for the years ended December 31, 1995, 1996 and 1997... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997................. F-6
Notes to Consolidated Financial Statements................................................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Dura Automotive Systems, Inc.:
We have audited the accompanying consolidated balance sheets of Dura
Automotive Systems, Inc. (a Delaware corporation) and Subsidiaries as of
December 31, 1996 and 1997 and the related consolidated statements of
operations, stockholders' investment and cash flows for each of the three years
in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Dura Automotive Systems,
Inc. and Subsidiaries as of December 31, 1996 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota,
January 30, 1998
F-2
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................. $ 1,667 $ 4,148
Accounts receivable................................................... 49,490 79,032
Inventories........................................................... 18,093 30,301
Other current assets.................................................. 14,678 24,800
--------- ---------
Total current assets.............................................. 83,928 138,281
--------- ---------
Property, Plant and Equipment:
Land and buildings.................................................... 16,926 44,553
Machinery and equipment............................................... 42,800 73,892
Construction in progress.............................................. 2,811 6,616
Less-accumulated depreciation......................................... (15,190) (23,523)
--------- ---------
Net property, plant and equipment................................. 47,347 101,538
--------- ---------
Goodwill, net of accumulated amortization of $2,415 and $5,653.......... 103,885 160,063
Other Assets, net of accumulated amortiztion of $556 and $918........... 10,969 19,382
--------- ---------
$ 246,129 $ 419,264
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' INVESTMENT
Current Liabilities:
Accounts payable...................................................... $ 30,230 $ 49,153
Accrued liabilities................................................... 26,090 36,583
Current maturities of long-term debt.................................. 80 2,241
--------- ---------
Total current liabilities......................................... 56,400 87,977
Long-Term Debt, net of current maturities............................... 77,376 178,081
Other Noncurrent Liabilities............................................ 24,986 51,498
--------- ---------
Commitments and Contingencies (Notes 3, 8, 9 and 10)
Stockholders' Investment:
Preferred stock, par value $1; 5,000,000 shares authorized; none
issued or outstanding............................................... -- --
Common stock, Class A; par value $.01; 30,000,000 shares authorized;
3,795,000 and 4,161,657 shares issued and outstanding............... 38 42
Common stock, Class B; par value $.01; 10,000,000 shares authorized;
4,998,254 and 4,654,380 shares issued and outstanding............... 50 46
Additional paid-in capital............................................ 62,893 63,402
Retained earnings..................................................... 24,386 41,028
Cumulative translation adjustment..................................... -- (2,810)
--------- ---------
Total stockholders' investment.................................... 87,367 101,708
--------- ---------
$ 246,129 $ 419,264
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated balance
sheets.
F-3
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Revenues...................................................... $ 253,726 $ 245,329 $ 449,111
Cost of sales................................................. 219,559 207,810 375,086
--------- --------- ---------
Gross profit............................................ 34,167 37,519 74,025
Selling, general and administrative expenses.................. 15,513 17,157 32,815
Amortization expense.......................................... 1,094 1,036 3,600
--------- --------- ---------
Operating income........................................ 17,560 19,326 37,610
Interest expense.............................................. 4,822 2,589 9,298
Gain on sale of window regulator business..................... 4,240 -- --
--------- --------- ---------
Income before income taxes.............................. 16,978 16,737 28,312
Provision for income taxes.................................... 6,852 6,609 11,670
--------- --------- ---------
Net income.............................................. $ 10,126 $ 10,128 $ 16,642
--------- --------- ---------
--------- --------- ---------
Basic earnings per share (Note 3)............................. $ 2.04 $ 1.57 $ 1.89
--------- --------- ---------
--------- --------- ---------
Diluted earnings per share (Note 3)........................... $ 2.03 $ 1.57 $ 1.88
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------------------------------
CLASS A CLASS B ADDITIONAL CUMULATIVE
----------------------- ----------------------- PAID-IN RETAINED TRANSLATION
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT
---------- ----------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, December 31, 1994................. -- $ -- 4,904,186 $ 49 $ 13,237 $ 4,132 $ --
Repurchase of common stock, net.......... -- -- (46,204) -- (136) -- --
Issuance of common stock................. -- -- 149,325 1 274 -- --
Net income............................... -- -- -- -- -- 10,126 --
---------- --- ---------- --- ----------- --------- -----------
BALANCE, December 31, 1995................. -- -- 5,007,307 50 13,375 14,258 --
Initial public offering of common stock,
net.................................... 3,795,000 38 -- -- 49,537 -- --
Repurchase of common stock, net.......... -- -- (9,053) -- (19) -- --
Net income............................... -- -- -- -- -- 10,128 --
---------- --- ---------- --- ----------- --------- -----------
BALANCE, December 31, 1996................. 3,795,000 38 4,998,254 50 62,893 24,386 --
Sale of stock under Employee Stock
Discount Purchase Plan................. 16,922 -- -- -- 383 -- --
Exercise of options...................... 5,861 -- -- -- 85 -- --
Collection of common stock subscriptions
receivable............................. -- -- -- -- 41 -- --
Conversion from Class B to Class A....... 343,874 4 (343,874) (4) -- -- --
Change in cumulative translation
adjustment............................. -- -- -- -- -- -- (2,810)
Net income............................... -- -- -- -- -- 16,642 --
---------- --- ---------- --- ----------- --------- -----------
BALANCE, December 31, 1997................. 4,161,657 $ 42 4,654,380 $ 46 $ 63,402 $ 41,028 $ (2,810)
---------- --- ---------- --- ----------- --------- -----------
---------- --- ---------- --- ----------- --------- -----------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-5
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income................................................ $ 10,126 $ 10,128 $ 16,642
Adjustments required to reconcile net income to net cash
provided by operating activities--
Depreciation and amortization......................... 5,578 6,079 12,303
Deferred income tax provision......................... 5,067 3,331 1,521
Gain on sale of window regulator business............. (4,240) -- --
Change in other operating items:
Accounts receivable................................. 11,772 (2,248) (12,841)
Inventories......................................... 2,167 458 2,512
Other current assets................................ (1,405) 3,038 (7,803)
Accounts payable and accrued liabilities............ (15,927) (994) 3,479
Other assets and liabilities........................ -- -- (7,297)
--------- --------- ---------
Net cash provided by operating activities......... 13,138 19,792 8,516
--------- --------- ---------
INVESTING ACTIVITIES:
Capital expenditures, net................................. (6,116) (6,260) (16,242)
Acquisitions, net......................................... -- (83,850) (70,481)
Net proceeds from sale of window regulator business....... 18,006 -- --
Investments in joint ventures and other................... (462) (4,983) (6,663)
--------- --------- ---------
Net cash provided by (used in) investing
activities........................................ 11,428 (95,093) (93,386)
--------- --------- ---------
FINANCING ACTIVITIES:
Borrowings under revolving credit facility................ 95,500 145,500 267,987
Repayments of revolving credit facility................... (105,750) (68,500) (174,869)
Repayments of debt........................................ (12,740) (51,320) (6,008)
Stock offering proceeds, net.............................. -- 49,575 --
Sale (repurchase) of common stock, net.................... 139 (19) 510
--------- --------- ---------
Net cash provided by (used in) financing
activities........................................ (22,851) 75,236 87,620
--------- --------- ---------
EFFECT OF EXCHANGE RATE ON CASH............................. -- -- (269)
--------- --------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS................... 1,715 (65) 2,481
CASH AND CASH EQUIVALENTS, beginning of period.............. 17 1,732 1,667
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period.................... $ 1,732 $ 1,667 $ 4,148
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for--
Interest................................................ $ 4,822 $ 3,195 $ 8,715
--------- --------- ---------
--------- --------- ---------
Income taxes............................................ $ 2,285 $ 2,087 $ 5,589
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
DURA AUTOMOTIVE SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION:
Dura Automotive Systems, Inc. (the Company) and subsidiaries designs and
manufactures driver control systems, engineered mechanical components and
cable-related systems for the global automotive industry. The Company has
manufacturing facilities located in Indiana, Michigan, Missouri, Australia,
Canada, France, Germany, Mexico and Spain, and in Brazil through its joint
venture in Pollone S.A. (See Note 4).
2. SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
accounts and transactions have been eliminated in consolidation.
FISCAL YEAR:
The Company reports its operating results based on a 52-/53-week fiscal
year. For presentation purposes, the Company uses December 31 as its fiscal
year-end.
CASH EQUIVALENTS:
Cash equivalents consist of money market instruments with original
maturities of three months or less and are stated at cost which approximates
fair value.
INVENTORIES:
Inventories are valued at the lower of first-in, first-out (FIFO) cost or
market.
Inventories consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Raw materials.............................................. $ 9,384 $ 15,562
Work in process............................................ 4,767 9,126
Finished goods............................................. 3,942 5,613
--------- ---------
$ 18,093 $ 30,301
--------- ---------
--------- ---------
</TABLE>
OTHER CURRENT ASSETS:
Other current assets consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Excess of cost over billings on uncompleted tooling
projects.................................................. $ 7,541 $ 12,603
Deferred income taxes...................................... 6,067 9,350
Prepaid expenses........................................... 1,070 2,847
--------- ---------
$ 14,678 $ 24,800
--------- ---------
--------- ---------
</TABLE>
F-7
<PAGE>
Excess of cost over billings on uncompleted tooling projects represents
costs incurred by the Company in the production of customer-owned tooling to be
used by the Company in the manufacture of its products. The Company receives a
specific purchase order for this tooling and is reimbursed by the customer
within one operating cycle. Costs are deferred until reimbursed by the customer.
Forecasted losses on incomplete projects are recognized currently.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment are stated at cost. For financial reporting
purposes, depreciation is provided on the straight-line method over the
following estimated useful lives:
<TABLE>
<S> <C>
Buildings 30 years
Machinery and equipment 3 to 20 years
</TABLE>
Accelerated depreciation methods are used for tax reporting purposes.
Maintenance and repairs are charged to expense as incurred. Major
betterments and improvements which extend the useful life of the item are
capitalized and depreciated. The cost and accumulated depreciation of property,
plant and equipment retired or otherwise disposed of are removed from the
related accounts, and any residual values are charged or credited to income.
OTHER ASSETS:
Goodwill represents the excess of the purchase price over the fair value of
the net assets acquired and is being amortized on a straight-line basis over 40
years. Other assets principally consist of transaction costs incurred related to
the acquisitions and are being amortized over five to seven years.
The Company periodically evaluates whether events and circumstances have
occurred which may affect the estimated useful life or the recoverability of the
remaining balance of its goodwill and other long-lived assets. If such events or
circumstances were to indicate that the carrying amount of these assets would
not be recoverable, the Company would estimate the future cash flows expected to
result from the use of the assets and their eventual disposition. If the sum of
the expected future cash flows (undiscounted and without interest charges) were
less than the carrying amount of goodwill, the Company would recognize an
impairment loss.
Certain tooling and design costs related to previously proven product
designs are reimbursed by the Company's customers as the related product is sold
through an incremental increase in each product's unit selling price. Such costs
are capitalized and amortized using the unit of production method over the life
of the related tool. Amounts capitalized and included in other assets were $2.9
million at December 31, 1996 and $4.2 million at December 31, 1997. If the
Company forecasts that the amount of capitalized tooling and design costs
exceeds the amount to be realized through the sale of product, a loss is
recognized currently. Research and development and start-up costs, which are not
material, are expensed as incurred.
ACCRUED LIABILITIES:
Accrued liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Compensation and benefits.................................. $ 9,663 $ 17,170
Medical insurance.......................................... 5,641 7,012
Other...................................................... 10,786 12,401
--------- ---------
$ 26,090 $ 36,583
--------- ---------
--------- ---------
</TABLE>
F-8
<PAGE>
OTHER NONCURRENT LIABILITIES:
Other noncurrent liabilities consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Plant closure and consolidation costs...................... $ 5,205 $ 23,724
Legal and environmental.................................... 8,477 7,496
Post-retirement medical benefits........................... 6,097 7,188
Other...................................................... 5,207 13,090
--------- ---------
$ 24,986 $ 51,498
--------- ---------
--------- ---------
</TABLE>
REVENUE RECOGNITION AND SALES COMMITMENTS:
The Company recognizes revenue as its products are shipped to its customers.
The Company enters into agreements with its customers at the beginning of a
given vehicle's life to produce products. Once such agreements are entered into
by the Company, fulfillment of the customers' purchasing requirements is
generally the obligation of the Company for the entire production life of the
vehicle, generally with terms of up to 7 years. In certain instances, the
Company may be committed under existing agreements to supply product to its
customers at selling prices which are not sufficient to cover the direct cost to
produce such product. In such situations, the Company records a liability for
the estimated future amount of such losses. Such losses are recognized at the
time that the loss is probable and reasonably estimable.
INCOME TAXES:
The Company accounts for income taxes under the liability method, which
requires recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax assets and
liabilities are determined based on the difference between the financial
statement and tax bases of assets and liabilities using currently enacted tax
rates.
COMMON STOCK:
The holder of each share of Class A common stock outstanding is entitled to
one vote per share and the holder of each share of Class B common stock
outstanding is entitled to ten votes per share.
STOCK OPTIONS:
The Company accounts for stock options under the provisions of Accounting
Principles Board Opinion (APB) No. 25, under which no compensation expense is
recognized when the stock options are granted. The pro forma effects had the
Company followed the provisions of Statement of Financial Accounting Standards
(SFAS) No. 123 are included in Note 3.
USE OF ESTIMATES:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The ultimate results could differ from those estimates.
F-9
<PAGE>
FOREIGN CURRENCY TRANSLATION:
Assets and liabilities of the Company's foreign operations are translated
using the year-end rates of exchange. Results of operations are translated using
the average rates prevailing throughout the period. Translation gains or losses
are accumulated as a separate component of stockholders' investment.
RECLASSIFICATIONS:
Certain amounts previously reported in the 1995 and 1996 consolidated
financial statements have been reclassified to conform to the 1997 presentation.
The reclassifications had no effect on previously reported net income or
stockholders' investment.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
During June 1997, the Financial Accounting Standards Board released SFAS No.
130, "Reporting Comprehensive Income," effective for fiscal years beginning
after December 15, 1997. SFAS No. 130 establishes standards for reporting and
display in the financial statements of total net income and the components of
all other nonowner changes in equity, referred to as comprehensive income. The
Company will adopt SFAS No. 130 in 1998 and is currently analyzing the impact it
will have on the disclosures in the financial statements.
During June 1997, the Financial Accounting Standards Board released SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information,"
effective for fiscal years beginning after December 15, 1997. SFAS No. 131
requires disclosure of business and geographic segments in the consolidated
financial statements of the Company. The Company will adopt SFAS No. 131 in 1998
and is currently analyzing the impact it will have on the disclosures in its
financial statements.
3. STOCKHOLDERS' INVESTMENT:
INITIAL PUBLIC OFFERING OF CLASS A COMMON STOCK:
On August 14, 1996, the Company completed an initial public offering of
3,795,000 shares of its Class A common stock at $14.50 per share (the
"Offering"). The Company received net proceeds of approximately $50 million from
the Offering. Net proceeds from the Offering were used to repay certain
outstanding indebtedness. Immediately prior to the completion of the Offering,
the Company's board of directors and stockholders approved an Amended and
Restated Certificate of Incorporation and a recapitalization pursuant to which
the outstanding shares of the Company's Class A, B and C common stock were
exchanged for 4,998,254 shares in the aggregate of the Company's new Class B
common stock (out of a total of 10,000,000 shares of Class B common stock
authorized for issuance under the Amended and Restated Certificate of
Incorporation). Immediately after the consummation of the recapitalization and
the Offering, the Company had 8,793,254 shares of common stock outstanding. In
addition, the Company has options outstanding to purchase 32,045 shares of Class
B common stock at an exercise price of $1.45 per share. The accompanying
consolidated financial statements have been retroactively restated to give
effect to the recapitalization as if it had occurred at the beginning of the
earliest period presented.
EARNINGS PER SHARE:
Basic earnings per share were computed by dividing net income by the
weighted average number of Class A and Class B common shares outstanding during
the year. Diluted earnings per share include the
F-10
<PAGE>
dilutive effects of outstanding stock options using the treasury stock method as
follows (in thousands, except per share data):
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Net income......................................... $ 10,126 $ 10,128 $ 16,642
--------- --------- ---------
--------- --------- ---------
Weighted average number of Class A common shares
outstanding....................................... -- 1,434 3,907
Weighted average number of Class B common shares
outstanding....................................... 4,967 5,000 4,901
Dilutive effect of outstanding stock options after
application of the treasury stock method.......... 22 28 61
--------- --------- ---------
Diluted shares outstanding......................... 4,989 6,462 8,869
--------- --------- ---------
--------- --------- ---------
Basic earnings per share........................... $ 2.04 $ 1.57 $ 1.89
--------- --------- ---------
--------- --------- ---------
Diluted earnings per share......................... $ 2.03 $ 1.57 $ 1.88
--------- --------- ---------
--------- --------- ---------
</TABLE>
The Company adopted SFAS No. 128, "Earnings per Share," effective December
15, 1997. As a result, the Company's reported earnings per share (EPS) for 1995
and 1996 have been restated as follows:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Primary EPS as reported........................................ $ 2.03 $ 1.57
Effect of SFAS No. 128......................................... 0.01 --
--------- ---------
Basic EPS as restated.......................................... $ 2.04 $ 1.57
--------- ---------
--------- ---------
Fully diluted EPS as reported.................................. $ 2.03 $ 1.57
Effect of SFAS No. 128......................................... -- --
--------- ---------
Diluted EPS as restated........................................ $ 2.03 $ 1.57
--------- ---------
--------- ---------
</TABLE>
STOCK OPTION PLAN:
Prior to consummation of the Offering, the board of directors and
stockholders of the Company approved the 1996 Key Employee Stock Option Plan
(the "Stock Option Plan"). Certain people who are full-time, salaried employees
of the Company are eligible to participate in the Stock Option Plan (an
"Employee Participant"). A committee of the board of directors selects the
Employee Participants and determines the terms and conditions of the options.
The Stock Option Plan provides for the issuance of options to Employee
Participants covering up to 600,000 shares of Class A common stock of the
Company,
F-11
<PAGE>
subject to certain adjustments reflecting changes in the Company's
capitalization. Information regarding the Stock Option Plan is as follows:
<TABLE>
<CAPTION>
Shares Exercise Weighted Average
Under Option Prices Exercise Price
------------- ----------- -------------------
<S> <C> <C> <C>
Outstanding, December 31, 1995............... -- $ -- $ --
Granted.............................. 108,134 14.50 14.50
Granted.............................. 76,100 20.75 20.75
Granted.............................. 3,500 23.50 23.50
------------- ----------- ------
Outstanding, December 31, 1996............... 187,734 14.50-23.50 17.20
Granted.............................. 20,000 28.00 28.00
Granted.............................. 80,000 24.50 24.50
Granted.............................. 44,300 25.75 25.75
Exercised............................ (5,861) 14.50-20.75 14.61
Forfeited............................ (9,500) 20.75 20.75
------------- ----------- ------
Outstanding, December 31, 1997............... 316,673 $14.50-28.00 $ 20.86
------------- ----------- ------
------------- ----------- ------
</TABLE>
Of the outstanding options at December 31, 1997, options covering 89,798
shares are currently exercisable with a weighted average exercise price of
$16.84 per share.
The weighted average fair value of options granted during 1996 was $8.92 and
during 1997 was $14.05.
As of December 31, 1997, the outstanding stock options granted in 1996 have
a remaining contractual life of 9 years and the outstanding stock options
granted in 1997 have a remaining contractual life of 10 years.
INDEPENDENT DIRECTOR STOCK OPTION PLAN:
Prior to consummation of the Offering, the board of directors and
stockholders of the Company approved the Dura Automotive Systems, Inc.
Independent Director Stock Option Plan (the "Director Option Plan") that
provides for the issuance of options to Independent Directors, as defined, to
acquire up to 100,000 shares of the Company's Class A common stock, subject to
certain adjustments reflecting changes in the Company's capitalization. The
option exercise price must be at least 100 percent of the fair value of the
Class A common stock at the time the option is issued. Such option grants vest
six months from the date of grant. As of December 31, 1997, the Company had
granted options under the Director Option Plan to acquire 21,000 shares of the
Company's Class A Common Stock at an exercise price of $24.50 to $25.50 per
share. As of December 31, 1997, 5,000 of these options were exercisable.
EMPLOYEE STOCK DISCOUNT PURCHASE PLAN:
Prior to consummation of the Offering, the board of directors and
stockholders of the Company approved the Dura Automotive Systems, Inc. Employee
Stock Discount Purchase Plan (the "Employee Stock Purchase Plan") which provides
for the sale of up to 500,000 shares of the Company's Class A common stock at
discounted purchase prices, subject to certain limitations. The cost per share
under this plan is 85% of the market value of the Company's Class A common stock
at the date of purchase, as defined. No shares of Class A common stock were
issued to employees pursuant to this plan during the year ended December 31,
1996 and 16,922 shares of Class A common stock were issued during the year ended
December 31, 1997. The weighted average fair value of shares sold in 1997 was
$22.63.
F-12
<PAGE>
STOCK-BASED COMPENSATION PLANS:
As discussed above, the Company has two stock option plans, the Stock Option
Plan and the Director Option Plan, and the Employee Stock Purchase Plan. The
Company has elected to continue to account for these plans under APB No. 25,
under which no compensation cost has been recognized. Had compensation cost for
these plans been determined as allowed under SFAS No. 123 the Company's pro
forma net income and pro forma earnings per share would have been as follows (in
thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C> <C>
Net income As Reported $ 10,126 $ 10,128 $ 16,642
Pro Forma 10,126 10,093 16,504
Basic earnings per share As Reported $ 2.04 $ 1.57 $ 1.89
Pro Forma 2.04 1.57 1.87
Diluted earnings per share As Reported $ 2.03 $ 1.57 $ 1.88
Pro Forma 2.03 1.56 1.86
</TABLE>
The effect of the stock offered under the Employee Stock Purchase Plan was
not material for 1996 and 1997.
The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model with the following weighted average
assumptions: risk free interest rates of 6.1% to 6.6% in 1996 and 5.7% to 6.5%
in 1997; expected life of seven years for 1996 and 1997; expected volatility of
19%, 24% and 28% in 1996 and 38% and 45% in 1997.
DIVIDENDS:
The Company has not declared or paid any cash dividends in the past. As
discussed in Note 5, the Company's debt agreement restricts the amount of
dividends the Company can declare or pay. As of December 31, 1997, under the
most restrictive debt covenants, the Company could not have paid any cash
dividends.
4. ACQUISITIONS AND DIVESTITURE:
In August 1996, the Company formed a joint venture with Excel Industries
Inc. (Excel) to participate equally in the acquisition of a 26 percent interest
in Pollone S.A. (Pollone), a manufacturer of automotive components and
mechanical assemblies headquartered in Brazil, for $5 million in total. The
Company has accounted for its portion of this investment using the cost method
of accounting. The joint venture has also loaned Pollone an additional $10.5
million pursuant to notes which bear interest at approximately 7% and mature
from August 1998 through August 2000. Certain of these notes are convertible
into equity of Pollone, at the joint venture's option. The investment and the
notes are included in other assets in the accompanying consolidated balance
sheets.
In October 1996, the Company acquired the parking brake business of Rockwell
Light Vehicle Systems France S.A. (the French Operations). The aggregate
purchase price was approximately $3.75 million. The parking brake business is
operated from a facility in Cluses, France. The pro forma effects of this
transaction are not material to the Company's results of operations for the year
ended December 31, 1997.
In December 1996, the Company acquired all of the outstanding common stock
of KPI Automotive Group (KPI) from Sparton Corporation for approximately $78.8
million in cash. KPI manufactures shifter systems, parking brake mechanisms,
brake pedals, underbody spare tire carriers and airbag components for the North
American automotive industry from facilities in Indiana and Michigan. The
acquisition was financed with proceeds from borrowings under the Company's
revolving credit facility.
F-13
<PAGE>
In January 1997, the Company acquired all of the outstanding common stock of
the VOFA Group (VOFA) for approximately $38 million in cash and assumed
indebtedness. The cash portion of the purchase price was financed with
borrowings under the Company's bank credit agreement. The Company will also make
additional payments of up to approximately $6 million if certain operating
targets are achieved by VOFA in the first three years following the acquisition.
VOFA manufactures shifter cables, brake cables and other light duty cables for
the European automotive and industrial markets from facilities in Dusseldorf,
Gehren and Daun, Germany and Barcelona, Spain.
In May 1997, the Company acquired the automotive parking brake business from
Excel for approximately $2.9 million. The pro forma effects of this transaction
are not material to the Company's results of operations for the year ended
December 31, 1997.
In August 1997, the Company acquired GT Automotive Systems, Inc. (GT
Automotive), headquartered in Livonia, Michigan. GT Automotive has manufacturing
facilities in Livonia and Warren, Michigan and Windsor and Brantford, Ontario,
Canada, with annual revenues of approximately $70 million. Initial consideration
for the acquisition of GT Automotive was $45 million in cash and assumed
indebtedness. The Company will also make additional payments of up to $15
million if certain operating targets are achieved by GT Automotive in the first
two years following the acquisition. The acquisition was financed with proceeds
from borrowings under the Company's bank credit agreement, as amended.
In December 1997, the Company acquired all of the outstanding common stock
of REOM Industries, an Australian designer and manufacturer of jacks and parking
brakes, for approximately $3.7 million. The pro forma effects of this
transaction are not material to the Company's results of operations for the year
ended December 31, 1997.
The acquisitions of the French Operations, KPI, VOFA, the Excel parking
brake business and GT Automotive have been accounted for using the purchase
method of accounting and, accordingly, the assets acquired and liabilities
assumed have been recorded at their fair values as of the dates of the
acquisitions. The excess of the purchase price over the fair value of the assets
acquired and liabilities assumed has been recorded as goodwill. The assets
acquired and liabilities assumed of the Excel parking brake business and GT
Automotive have been recorded based upon preliminary estimates of fair value as
of the dates of acquisition. The Company does not believe the final allocation
of purchase price will be materially different from preliminary allocations. Any
changes to the preliminary estimates will be reflected as an adjustment to
goodwill. Additional purchase liabilities recorded included approximately $13.6
million for costs associated with the shutdown and consolidation of certain
acquired facilities and $16.6 million for severance and related costs. At
December 31, 1997 liabilities for approximately $11.6 million for facility
related costs and $14.9 million in severance costs remain on the consolidated
balance sheet. Results of operations for these acquisitions have been included
in the accompanying consolidated financial statements since the dates of
acqusition.
On April 2, 1995, the Company sold the net assets of its window regulator
business to Rockwell International Corporation for approximately $18 million in
cash, resulting in a pretax gain of approximately $4.2 million. The results of
operations of the window regulator business have been included in the
accompanying consolidated financial statements through April 2, 1995, the date
of divestiture.
F-14
<PAGE>
Following are unaudited consolidated pro forma results of operations for the
year ended December 31, 1997 giving effect to the acquisition of GT Automotive
as if it were completed at the beginning of the period (in thousands, except per
share data):
<TABLE>
<CAPTION>
Pro Forma for
the Year Ended
Dec. 31, 1997
---------------
<S> <C>
Revenues.................................................... $ 489,752
---------------
---------------
Net income.................................................. $ 14,830
---------------
---------------
Basic earnings per share.................................... $ 1.68
---------------
---------------
Diluted earnings per share.................................. $ 1.67
---------------
---------------
</TABLE>
The unaudited pro forma consolidated financial information does not purport
to represent what the Company's financial position or results of operations
would actually have been if these transactions had occurred at such dates or to
project the Company's future results of operations.
5. DEBT:
Debt consisted of the following (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Revolving credit facility, due August 2002, interest at the lender's
prevailing reference rate plus 0.5% or the Eurocurrency rate plus 0.5%,
at the discretion of the Company (6.06% to 8.25% at December 31, 1996
and 3.94% to 8.50% at December 31, 1997)................................ $ 77,000 $ 165,158
Other.................................................................... 456 15,164
--------- ---------
77,456 180,322
Less--Current maturities................................................. (80) (2,241)
--------- ---------
$ 77,376 $ 178,081
--------- ---------
--------- ---------
</TABLE>
Future maturities of long-term debt as of December 31, 1997 are as follows
(in thousands):
<TABLE>
<CAPTION>
1998............................................................... $ 2,241
<S> <C>
1999............................................................... 5,006
2000............................................................... 2,004
2001............................................................... 1,156
2002............................................................... 169,915
---------
$ 180,322
---------
---------
</TABLE>
The Company's bank credit agreement, as amended, consists of a revolving
credit facility with a committed amount of $200 million and is collateralized by
substantially all assets of the Company. The agreement also provides the Company
with the ability to denominate a portion of its borrowings in foreign currencies
up to an amount equivalent to $50 million ($30 million sub-limit for Deutsche
Marks). As of December 31, 1997, $158.8 million of borrowings outstanding under
the revolving credit facility are denominated in U.S. dollars, $2.8 million of
borrowings are denominated in Canadian dollars and $3.6 million of borrowings
are denominated in Deutsche Marks. The bank credit agreement requires the
Company to pay a facility fee on the commitment amount of 0.25% and contains
various restrictive covenants, which, among other matters, require the Company
to maintain certain financial ratios, including
F-15
<PAGE>
minimum liquidity and interest coverage. The bank credit agreement also limits
additional indebtedness, investments, rental obligations and cash dividends. The
Company was in compliance with all such covenants at December 31, 1997. In
addition, the Company has outstanding letters of credit in the amount of
approximately $3 million expiring through July 2000.
6. INCOME TAXES:
The provision for income taxes consisted of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Current.......................................................... $ 1,785 $ 3,278 $ 10,149
Deferred......................................................... 5,067 3,331 1,521
--------- --------- ---------
Total............................................................ $ 6,852 $ 6,609 $ 11,670
--------- --------- ---------
--------- --------- ---------
</TABLE>
A reconciliation of the provision for income taxes at the statutory rates to
the reported income tax provision is as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Federal provision at statutory rates............................. $ 5,898 $ 5,858 $ 9,909
State taxes, net of federal benefit.............................. 685 652 990
Foreign provision in excess of U.S. tax rate..................... -- -- 444
Amortization of non-deductible goodwill.......................... 255 224 440
Foreign sales corporation benefit................................ -- (192) (260)
Other, net....................................................... 14 67 147
--------- --------- ---------
Total............................................................ $ 6,852 $ 6,609 $ 11,670
--------- --------- ---------
--------- --------- ---------
</TABLE>
A summary of deferred tax assets (liabilities) is as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Accrued legal and insurance costs........................................ $ 5,306 $ 6,150
Accrued plant closure and consolidation costs............................ 1,332 5,560
Depreciation and property basis differences.............................. (3,539) (4,100)
Deferred design costs.................................................... (1,251) (1,480)
Inventory valuation adjustments.......................................... 307 1,330
Postretirement benefit obligations....................................... 1,247 1,280
Accrued compensation costs............................................... 798 1,230
Other reserves and accruals not deductible for tax purposes.............. 1,867 568
Canadian net operating loss carryforwards................................ -- 1,475
Valuation allowance...................................................... -- (1,475)
--------- ---------
Net deferred income tax asset............................................ $ 6,067 $ 10,538
--------- ---------
--------- ---------
</TABLE>
The valuation allowance was established for the Canadian net operating
losses acquired in connection with the acquisition of GT Automotive as their
realization is not assured.
F-16
<PAGE>
7. MAJOR CUSTOMERS:
The Company sells its products directly to automobile manufacturers.
Following is a summary of customers that accounted for a significant portion of
consolidated revenues for each of the three years in the period ended December
31, 1997:
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Ford...................................................... 52% 49% 42%
GM........................................................ 35 36 25
Chrysler.................................................. 6 8 7
</TABLE>
As of December 31, 1996 and 1997, receivables from these customers
represented 89 percent and 71 percent of total accounts receivable.
8. EMPLOYEE BENEFIT PLANS:
PENSION PLANS:
The Company sponsors two defined benefit pension plans which cover certain
hourly and salary employees. The Company's policy is to make annual
contributions to the plans to fund the normal cost and the unfunded frozen
initial liability over 11.5 years. The salaried employee related plan was
curtailed during 1996. The Company agreed to provide certain additional benefits
to a defined group of individuals who were included in the salaried employee
plan under a separate defined contribution plan, and has accrued the present
value of such benefits. The net effect of the curtailment and the provision for
benefits under the separate defined contribution plan was not material.
Net pension expense consisted of the following (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Service cost-benefits earned during the year.......................... $ 413 $ 236 $ 185
Interest cost on projected benefit obligation......................... 277 243 252
Return on plan assets................................................. (150) (237) (232)
Net amortization and deferral......................................... 26 65 42
--------- --------- ---------
Net pension expense................................................. $ 566 $ 307 $ 247
--------- --------- ---------
--------- --------- ---------
</TABLE>
Pursuant to Statement of Financial Accounting Standards No. 87, "Employers'
Accounting for Pensions," the Company has recorded deferred pension costs of
$194,000, $393,000 and $347,000 at December 31, 1995, 1996 and 1997 related to
the minimum pension liability, which are classified as other assets in the
accompanying consolidated balance sheets.
F-17
<PAGE>
The funded status of the Company's plans is as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation.............................................. $ 2,825 $ 3,491
--------- ---------
--------- ---------
Accumulated benefit obligation......................................... $ 3,393 $ 4,157
--------- ---------
--------- ---------
Projected benefit obligation........................................... $ 3,393 $ 4,157
Plan assets at fair value................................................ 2,732 3,206
--------- ---------
Projected benefit obligation in excess of plan assets................ 661 951
Unrecognized net loss.................................................... (31) (527)
Prior service cost....................................................... (393) (347)
Adjustment to recognize minimum liability................................ 660 874
--------- ---------
Accrued pension costs.................................................. $ 897 $ 951
--------- ---------
--------- ---------
</TABLE>
The accumulated and projected benefit obligations were determined using an
assumed discount rate of 7.5 percent for the years ended December 31, 1996 and
1997. The assumed long-term rate of return on assets was 8.0 percent at December
31, 1996 and 1997. Plan assets consist principally of common stock, fixed income
securities and guaranteed investment contracts.
RETIREMENT SAVINGS PLANS:
The Company sponsors employee retirement savings plans which allow qualified
employees to provide for their retirement on a tax-deferred basis. In accordance
with the terms of the retirement savings plans, the Company is required to match
certain of the participants' contributions and/or provide employer contributions
based on the Company's performance and other factors. Such employer
contributions totaled $976,000, $1.6 million and $2.2 million during fiscal
1995, 1996 and 1997.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS:
The Company has various postretirement medical benefit plans for certain
employee groups and has recorded a liability for its estimated obligations under
these plans.
Net periodic postretirement benefit cost is as follows (in thousands):
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Service cost-benefits earned during the year..................... $ 74 $ 84 $ 101
Interest cost on projected benefit obligation.................... 679 558 433
Net amortization and deferral.................................... 124 127 (97)
--------- --------- ---------
Net periodic postretirement benefit cost....................... $ 877 $ 769 $ 437
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-18
<PAGE>
The funded status of the Company's plans is as follows (in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
--------- ---------
<S> <C> <C>
Accumulated benefit obligation........................................... $ 4,544 $ 5,755
Plan assets at fair value................................................ -- --
--------- ---------
Projected benefit obligation in excess of plan assets.................. 4,544 5,755
Prior service cost....................................................... 97 89
Unrecognized net gain.................................................... 1,456.... 1,344....
--------- ---------
Accrued postretirement benefits........................................ $ 6,097 $ 7,188
--------- ---------
--------- ---------
</TABLE>
For measurement purposes, a 7 percent annual rate of increase for the
healthcare cost trend was assumed for 1997. The rate was assumed to decrease 1
percent annually to 5 percent and remain level thereafter. Increasing the
assumed healthcare cost trend assumption by one percentage point would increase
the accumulated postretirement benefit obligation by approximately $510,000 and
the net periodic postretirement expense by approximately $89,000 for the year
ended December 31, 1997.
9. COMMITMENTS AND CONTINGENCIES:
ALKIN SERVICE AND SUPPLY AGREEMENTS:
In connection with the 1994 acquisition of Alkin Co. (Alkin), the Company
entered into agreements with Alkin whereby the Company receives services related
to data processing, payroll and personnel administration, and other
administrative matters. Amounts paid under these service agreements were $1.8
million, $1.3 million and $1.1 million for the years ended December 31, 1995,
1996 and 1997. Future minimum commitments under the service agreements are
approximately $80,000 in 1998. In addition, the Company and Alkin have mutually
agreed to supply each other's operations with certain items necessary for the
manufacture of their products. These supply agreements are for periods of up to
five years and are at terms which the Company believes are no less favorable
than could be obtained from an independent party.
LEASES:
The Company leases office and manufacturing space and certain equipment
under operating lease agreements which require it to pay maintenance, insurance,
taxes and other expenses in addition to annual rentals. Future annual rental
commitments at December 31, 1997 under these operating leases are as follows (in
thousands):
<TABLE>
<CAPTION>
Year Amount
- --------------------------------------------- -----------
<S> <C>
1998 $ 1,306
1999 930
2000 631
2001 471
2002 353
Thereafter 869
-----------
$ 4,560
-----------
-----------
</TABLE>
LITIGATION:
The Company is party to certain claims arising in the ordinary course of
business. In the opinion of management, based upon the advice of legal counsel,
the outcomes of such claims are not expected to be material to the Company.
F-19
<PAGE>
10. RELATED PARTY TRANSACTIONS:
The Company paid fees to Hidden Creek Industries (HCI), an affiliate of the
Company, of approximately $250,000 in 1995 in connection with the divestiture,
$750,000 in 1996 in connection with the acquisitions and the Offering and
$850,000 in 1997 in connection with the acquisitions of VOFA and GT Automotive.
In addition, under the terms of a management agreement, which was terminated in
August 1996, the Company paid HCI monthly management fees for certain
administrative services. Total management fees of approximately $733,000 for the
year ended December 31, 1995 and $881,000 for the year ended December 31, 1996
are included in selling, general and administrative expenses in the accompanying
consolidated statements of operations. See Note 4 for discussion of acquisitions
and divestiture.
11. QUARTERLY FINANCIAL DATA (UNAUDITED):
The following is a condensed summary of actual quarterly results of
operations for 1996 and 1997 (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Basic Diluted
Gross Operating Net Earnings Per Earnings Per
Revenues Profit Income Income Share Share
----------- --------- ----------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
1996:
First...................... $ 59,303 $ 7,732 $ 3,336 $ 1,347 $ 0.27 $ 0.27
Second..................... 68,054 10,952 6,822 3,607 0.72 0.72
Third...................... 57,130 7,552 3,250 1,746 0.25 0.25
Fourth..................... 60,842 11,283 5,918 3,428 0.39 0.39
----------- --------- ----------- --------- ----- -----
----- -----
$ 245,329 $ 37,519 $ 19,326 $ 10,128 $ 1.57 $ 1.57
----------- --------- ----------- --------- ----- -----
----------- --------- ----------- --------- ----- -----
1997:
First...................... $ 107,367 $ 16,582 $ 7,803 $ 3,544 $ 0.40 $ 0.40
Second..................... 115,350 19,239 10,769 5,100 0.58 0.58
Third...................... 101,862 15,449 6,920 2,657 0.30 0.30
Fourth..................... 124,532 22,755 12,118 5,341 0.61 0.60
----------- --------- ----------- --------- ----- -----
----- -----
$ 449,111 $ 74,025 $ 37,610 $ 16,642 $ 1.89 $ 1.88
----------- --------- ----------- --------- ----- -----
----------- --------- ----------- --------- ----- -----
</TABLE>
The sum of per share amounts for the quarters does not necessarily equal the
total for the year due to the timing of the Offering and its effects on the
computation of weighted average number of shares outstanding.
F-20
<PAGE>
GRAPHIC APPENDIX
The inside front cover of the Prospectus contains a series of multi-colored
pictures of certain of the mechanical assemblies and systems manufactured by the
Company. The pictures depict and the captions read "Foot-Operated Parking Brake
System," "Console-Based Transmission Shifter System," "Hood Latch System,"
"Hand-Operated Parking Brake System," "License Plate Housing Assembly,"
"Underbody Tire Carrier," and "Accelerator and Brake Pedal System." In addition,
it contains a multi-colored, three-dimensional diagram of an automobile, with
several of the various mechanical assemblies and systems manufactured by the
Company graphically depicted within the automobile and labeled accordingly.
Specifically identified (with the following labels) are examples of (in
clockwise rotation) the "Primary & Secondary Hood Latch," "Dipstick Cable,"
"Shifter Cable," "Shift Mechanism," "Hand Brake," "Park Brake Cables," "Rear
Deck Latch," "Rear Deck Cable," "Suspension Arms," "Fuel Filler Door Cable,"
"Foot Brake," and "Hood Latch Cable." In the center of the inside front cover,
the "Dura" logo appears in red.
The inside back cover of the Prospectus contains a map of the World
highlighting the Company's manufacturing and product development locations.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY SECURITY OTHER THAN THE PREFERRED SECURITIES OFFERED HEREBY, NOR DOES
IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY, TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. 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 DATE
SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary........................................................ 5
Risk Factors.............................................................. 16
The Company............................................................... 25
Use of Proceeds........................................................... 27
Price Range of Common Stock............................................... 27
Dividend Policy........................................................... 27
Capitalization............................................................ 28
Accounting Treatment...................................................... 28
Unaudited Pro Forma Financial Statements.................................. 29
Selected Consolidated Financial Data...................................... 32
Management's Discussion and Analysis of Results of Operations and
Financial Condition..................................................... 34
Business.................................................................. 38
Management................................................................ 50
Security Ownership of Certain Beneficial Owners and Management............ 55
Certain Transactions...................................................... 57
Dura Automotive Systems Capital Trust..................................... 58
Description of the Preferred Securities................................... 60
Description of the Guarantee.............................................. 79
Description of the Debentures............................................. 83
Relationship Among the Preferred Securities, the Debentures and the
Guarantee............................................................... 92
Description of Capital Stock.............................................. 94
Certain Federal Income Tax Consequences................................... 97
Underwriting.............................................................. 102
Legal Matters............................................................. 103
Experts................................................................... 103
Available Information..................................................... 103
Incorporation of Certain Documents by Reference........................... 104
Index to Consolidated Financial Statements................................ F-1
</TABLE>
$50,000,000
[LOGO]
2,000,000
CONVERTIBLE TRUST
PREFERRED SECURITIES
DURA AUTOMOTIVE
SYSTEMS CAPITAL
TRUST
% CONVERTIBLE TRUST
PREFERRED SECURITIES
(LIQUIDATION PREFERENCE $25 PER
CONVERTIBLE TRUST PREFERRED SECURITY)
GUARANTEED TO THE EXTENT SET FORTH
HEREIN BY, AND CONVERTIBLE INTO
CLASS A COMMON STOCK OF,
DURA AUTOMOTIVE
SYSTEMS, INC.
----------------
P R O S P E C T U S
----------------
ROBERT W. BAIRD & CO.
INCORPORATED
PIPER JAFFRAY INC.
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Set forth below is an estimate of the approximate amount of fees and
expenses (other than underwriting commissions) payable by the Issuer and the
Company in connection with the issuance and distribution of the Preferred
Securities pursuant to the Prospectus contained in this Registration Statement.
The Company will pay all of these expenses.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 16,963
NASD Filing Fee................................................... 6,250
Nasdaq Listing Application Fee.................................... 43,000
Accounting Fees and Expenses...................................... 100,000
Legal Fees and Expenses........................................... 150,000
Blue Sky Fees and Expenses........................................ 3,000
Printing Expenses................................................. 150,000
Miscellaneous Expenses............................................ 30,787
---------
Total........................................................... $ 500,000
---------
---------
</TABLE>
All expenses other than the Securities and Exchange Commission Registration
Fee and NASD Filing Fee are estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware. Section
145 of the General Corporation Law of the State of Delaware ("Section 145")
provides that a Delaware corporation may indemnify any persons who are, or are
threatened to be made, parties to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the
fact that such person was an officer, director, employee or agent of such
corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such person acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was illegal. A
Delaware corporation may indemnify any persons who are, or are threatened to be
made, a party to any threatened, pending or completed action or suit by or in
the right of the corporation by reason of the fact that such person was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorney's fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit, provided such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the corporation's best interest except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director has actually and reasonably incurred.
The Company's Amended and Restated Certificate of Incorporation and Amended
and Restated By-laws provide for the indemnification of directors and officers
of the Company to the fullest extent permitted by the General Corporation Law of
the State of Delaware.
II-1
<PAGE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
In that regard, the Amended and Restated By-laws of the Company provide that
the Company shall indemnify any person who was or is a party or is threatened to
be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative by reason of the fact that he,
or a person of whom he is the legal representative, is or was a director or
officer of the Company, or is or was serving at the request of the Company as a
director, officer, employee, fiduciary, or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
liabilities and losses (including attorneys' fees actually and reasonably
incurred in connection with such proceeding); provided that the Company shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was authorized by
the Board of Directors of the Company.
Under the Trust Agreement, the Company will agree to indemnify each of the
Trustees of the Dura Automotive Systems Capital Trust or any predecessor Trustee
for the Dura Automotive Systems Capital Trust, and to hold each Trustee harmless
against, any loss, damage, claims, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the Trust Agreement, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties under the Trust
Agreement.
II-2
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBITS
- -----------
<C> <S> <C>
*1.1 Form of Underwriting Agreement between Dura Automotive Systems, Inc., Dura Operating Corp., Dura
Automotive Systems Capital Trust and Robert W. Baird & Co. Incorporated and Piper Jaffray, Inc.
3.1 Form of Amended and Restated Certificate of Incorporation of the Company incorporated by
reference to Exhibit 3.1 of the Registrant's Form S-1, Registration No. 333-06601 filed under
the Securities Act of 1933 (the "Form S-1").
3.2 Form of Amended and Restated By-laws of the Company, incorporated by reference to Exhibit 3.2 of
the Form S-1.
4.1 Stockholders Agreements, dated as of August 31, 1994, by and among the Company, Onex U.S.
Investments, Inc., J2R, Alkin, the HCI Stockholders (as defined therein) and the Management
Stockholders (as defined therein), incorporated by reference to Exhibit 4.1 of the Form S-1.
4.2 Amendment to Stockholders Agreement, dated May 17, 1995, by and between the Company, Onex DHC
LLC, J2R, Alkin, the HCI Stockholders (as defined therein) and the Management Stockholders (as
defined therein), incorporated by reference to Exhibit 4.2 of the Form S-1.
4.3 Registration Agreement, dated as of August 31, 1994, among the Company, Alkin and the MC
Stockholders (as defined therein), incorporated by reference to Exhibit 4.3 of the Form S-1.
4.4 Amendment to Registration Agreement, dated May 17, 1995, by and between the Company, the MC
Stockholders (as defined therein) and Alkin, incorporated by reference to Exhibit 4.4 of the
Form S-1.
4.5 Investor Stockholder Agreement, dated as of August 31, 1994, by and among the Company, Onex U.S.
Investments, Inc., J2R and certain other stockholders party thereto, incorporated by reference
to Exhibit 4.5 of the S-1.
4.6 Form of certificate representing Class A Common Stock of the Company, incorporated by reference
to Exhibit 4.6 of the Form S-1.
4.7 Amendment No. 1 to Amended and Restated Stockholders Agreement, dated August 13, 1996, by and
between the Company, Onex DHC LLC, J2R, Alkin Co. and the HCI Stockholders and Management
Stockholders listed therein, incorporated by reference to Exhibits 4.1 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1997.
*4.8 Certificate of Trust of Dura Automotive Systems Capital Trust.
*4.9 Form of Amended and Restated Trust Agreement of Dura Automotive Systems Capital Trust among Dura
Automotive Systems, Inc., as Sponsor, The First National Bank of Chicago, as Property Trustee,
First Chicago Delaware, Inc., as Delaware Trustee and the Administrative Trustees named therein.
*4.10 Form of Junior Convertible Subordinated Indenture between Dura Automotive Systems, Inc. and The
First National Bank of Chicago, as Indenture Trustee.
*4.11 Form of Preferred Security (included in Exhibit D to Exhibit 4.9 above).
*4.12 Form of Debenture (included in Sections 2.2 and 2.3 to Exhibit 4.10 above).
*4.13 Form of Guarantee Agreement between Dura Automotive Systems, Inc., as Guarantor, and The First
National Bank of Chicago, as Guarantee Trustee with respect to the Preferred Securities of Dura
Automotive Systems Capital Trust.
</TABLE>
II-3
<PAGE>
ITEM 16. EXHIBITS (CONTINUED)
<TABLE>
<CAPTION>
EXHIBITS
- -----------
<C> <S> <C>
*5.1 Opinion of Kirkland & Ellis as to the validity of the issuance of the Debentures and the
Guarantee to be issued by the Company (including consent).
*5.2 Opinion of Richards, Layton & Finger, special Delaware counsel, as to the validity of the
issuance of the Preferred Securities to be issued by Dura Automotive Systems Capital Trust
(including consent).
*8.1 Opinion of Kirkland & Ellis as to certain tax matters (including consent).
*12.1 Computation of ratio of earnings to fixed charges.
*23.1 Consent of Arthur Andersen LLP.
*23.4 Consent of Kirkland & Ellis (including in Exhibits 5.1 and 8.1).
*23.5 Consent of Richards, Layton & Finger (included in Exhibit 5.2).
24.1 Powers of Attorney.
*25.1 Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The
First National Bank of Chicago, as Trustee under the Indenture, Property Trustee under the Trust
Agreement, and Guarantee Trustee under the Guarantee.
</TABLE>
- ------------------------
* Filed herewith.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions referred to in Item 15 (other than the
insurance policies referred to therein), or otherwise, the Registrants have been
advised that, in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue. The undersigned Registrants hereby
undertake that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities Act,
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.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the 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 Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Rochester Hills, State of Michigan on the 13th
day of March, 1998.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS, INC.
By: /s/ DAVID R. BOVEE
------------------------------------------
David R. Bovee
VICE PRESIDENT
</TABLE>
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President, Chief Executive
* Officer and Director
- ------------------------------ (principal executive March 13, 1998
Karl F. Storrie officer)
Vice President and Chief
* Financial Officer
- ------------------------------ (principal financial and March 13, 1998
Stephen E.K. Graham accounting officer)
*
- ------------------------------ Chairman of the Board and March 13, 1998
S.A. Johnson Director
*
- ------------------------------ Director March 13, 1998
Neil C. Anderson
*
- ------------------------------ Director March 13, 1998
Robert E. Brooker, Jr.
*
- ------------------------------ Director March 13, 1998
William H. Clement
*
- ------------------------------ Director March 13, 1998
Jack K. Edwards
*
- ------------------------------ Vice President and March 13, 1998
Robert R. Hibbs Director
*
- ------------------------------ Director March 13, 1998
James O'Loughlin
*
- ------------------------------ Director March 13, 1998
William L. Orscheln
*
- ------------------------------ Director March 13, 1998
Eric J. Rosen
*
- ------------------------------ Director March 13, 1998
Barbara A. Westhues
</TABLE>
II-5
<PAGE>
* The undersigned, by signing his name hereto, does execute this Amendment No.
1 to Registration Statement on behalf of the above-named officers and/or
Directors of the Registrant pursuant to the Power of Attorney executed by
such officers and/or Directors and filed as an exhibit to this Registration
Statement.
<TABLE>
<S> <C> <C>
/s/ DAVID R. BOVEE
------------------------------------------
David R. Bovee
ATTORNEY-IN-FACT
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the 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 Amendment No. 1 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Rochester Hills, State of Michigan on the 13th
day of March, 1998.
<TABLE>
<S> <C> <C>
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
By: Dura Automotive Systems, Inc.
By: /s/ DAVID R. BOVEE
------------------------------------------
David R. Bovee
VICE PRESIDENT
</TABLE>
II-6
<PAGE>
DRAFT OF 3/13/98
2,000,000 CONVERTIBLE TRUST PREFERRED SECURITIES*
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
[______]% Convertible Trust Preferred Securities
(Liquidation Preference $25 per Convertible
Trust Preferred Security)
Guaranteed by and Convertible
into Class A Common Stock of
DURA AUTOMOTIVE SYSTEMS, INC.
UNDERWRITING AGREEMENT
March ___, 1998
ROBERT W. BAIRD & CO. INCORPORATED
PIPER JAFFRAY INC.
c/o Robert W. Baird & Co. Incorporated
227 West Monroe, Suite 2100
Chicago, Illinois 60606
Ladies and Gentlemen:
1. INTRODUCTORY.
Dura Automotive Systems Capital Trust (the "Trust"), a statutory business
trust created under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C. Section 3801
et seq.), proposes, upon the terms and conditions set forth herein, to issue
and sell 2,000,000 [____]% Convertible Trust Preferred Securities, liquidation
preference $25 per security (the "Firm Preferred Securities"), to the several
Underwriters named in Schedule I hereto (the "Underwriters"), who are acting
severally and not jointly. The Trust also proposes, upon the terms and
conditions set forth herein and
_______________________________
* Plus an option to acquire up to an aggregate of 300,000 additional _______
Convertible Preferred Trust Securities that may be issued to cover over-
allotments.
<PAGE>
solely for the purpose of covering over-allotments, to issue and sell to the
Underwriters up to an additional 300,000 [____]% Convertible Trust Preferred
Securities, liquidation preference $25 per security (the "Additional
Preferred Securities"). The Firm Preferred Securities and the Additional
Preferred Securities are hereinafter collectively referred to as the
"Preferred Securities."
Each Preferred Security is convertible at the option of the holder
thereof into shares of Class A Common Stock, par value $.01 per share (the
"Conversion Shares"), of Dura Automotive Systems, Inc. (the "Company" and
together with the Trust, the "Offerors") at a conversion rate of [_____]
Conversion Shares for each Preferred Security, subject to adjustment in
certain circumstances. The Preferred Securities will be guaranteed by the
Company, to the extent set forth in the Prospectus (as defined below), with
respect to distributions and amounts payable upon liquidation or redemption
(the "Preferred Securities Guarantee") pursuant to the Preferred Securities
Guarantee Agreement (the "Preferred Securities Guarantee Agreement") to be
dated as of the First Closing Date (as defined below) executed and delivered
by the Company and _______________________ (the "Guarantee Trustee"), a
_____________ banking corporation, not in its individual capacity but solely
as trustee, for the benefit of the holders from time to time of the Preferred
Securities. The entire proceeds from the sale of the Preferred Securities
will be combined with the entire proceeds from the sale by the Trust to the
Company of its common securities (the "Common Securities") which will be
guaranteed by the Company, to the extent set forth in the Prospectus, with
respect to distributions and amounts payable upon liquidation or redemption
(the "Common Securities Guarantee" and, together with the Preferred
Securities Guarantee, the "Guarantees") pursuant to the Common Securities
Guarantee Agreement (the "Common Securities Guarantee Agreement" and,
together with the Preferred Securities Guarantee Agreement, the "Guarantee
Agreements"), to be dated as of the Closing Date, executed and delivered by
the Company for the benefit of the holders from time to time of the Common
Securities, and will be used by the Trust to purchase the [______]%
Convertible Subordinated Debentures due 2028 (the "Convertible Debentures")
issued by the Company. The Preferred Securities and the Common Securities
will be issued pursuant to the Amended and Restated Trust Agreement of the
Trust, to be dated as of the Closing Date (the "Trust Agreement"), among the
Company, as Sponsor, _________________________ (Delaware), as Delaware
trustee (the "Delaware Trustee"), and _________________________, as
administrative trustees (the "Administrative Trustees," and together with the
Delaware Trustee, the "Trustees"), and the holders from time to time of
undivided beneficial interests in the assets of the Trust. The Convertible
Debentures will be issued pursuant to an Indenture, to be dated as of the
Closing Date (the "Indenture"), between the Company and
________________________, as trustee (the "Indenture Trustee"). The
Preferred Securities, the Preferred Securities Guarantee, the Convertible
Debentures and the Conversion Shares are collectively referred to herein as
the "Securities."
The Offerors wish to confirm as follows their agreement with you in
connection with the several purchases of the Preferred Securities by the
Underwriters.
2
<PAGE>
2. REPRESENTATIONS AND WARRANTIES OF THE OFFERORS. The Company and the
Trust, jointly and severally, represent and warrant to, and agree with, each
Underwriter, and shall be deemed to represent and warrant to each Underwriter
on each Closing Date (as hereinafter defined), that:
(a) The Offerors have prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions
of the Securities Act of 1933 as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Securities Act"), a
registration statement on Form S-3 (File No. 333-47273) under the
Securities Act (the "Registration Statement"), including a prospectus
subject to completion relating to the Securities. The term "Registration
Statement" as used in this Agreement means the registration statement
(including all financial schedules and exhibits), as amended at the time
it becomes effective, or, if the Registration Statement became effective
prior to the execution of this Agreement, as supplemented or amended prior
to the execution of this Agreement. If it is contemplated, at the time
this Agreement is executed, that a post-effective amendment to the
Registration Statement will be filed and must be declared effective before
the offering of the Preferred Securities may commence, the term
"Registration Statement" as used in this Agreement means the Registration
Statement as amended by said post-effective amendment. If an additional
registration statement is prepared and filed with the Commission in
accordance with Rule 462(b) under the Securities Act (an "Additional
Registration Statement"), the term "Registration Statement" as used in
this Agreement includes the Additional Registration Statement. The term
"Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement as supplemented by the addition of
Rule 430A information contained in the prospectus filed with the
Commission pursuant to Rule 424(b) under the Securities Act. The term
"Preliminary Prospectus" as used in this Agreement means the prospectus
subject to completion relating to the Preferred Securities in the form
included in the registration statement at the time of the initial filing
of the registration statement with the Commission, and as such prospectus
shall have been amended from time to time prior to the date of the
Prospectus. Any reference in this Agreement to the registration
statement, the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Form S-3 under the
Securities Act, as of the date of the registration statement, the
Registration Statement, such Preliminary Prospectus or the Prospectus, as
the case may be, and any reference to any amendment or supplement to the
registration statement, the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") which, upon filing, are incorporated by
reference therein, as required by Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the time are
incorporated by reference in the registration statement, the Registration
Statement, any Preliminary Prospectus, the Prospectus, or any amendment or
supplement thereto.
3
<PAGE>
(b) Each of the Offerors and the transactions contemplated by this
Agreement meet the requirements for using Form S-3 under the Securities
Act.
(c) The Incorporated Documents heretofore filed, when they were
filed (or, if any amendment with respect to any such document was filed,
when such amendment was filed), conformed in all material respects with
the requirements of the Exchange Act and the rules and regulations
thereunder, any further Incorporated Documents so filed will, when they
are filed, conform in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder; no such document
when it was filed (or, if an amendment with respect to any such document
was filed, when such amendment was filed), contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; and no such further document, when it is filed, will contain
an untrue statement of a material fact or will omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein not misleading.
(d) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or, to the
Offerors' knowledge, threatened by the Commission.
(e) (i) Each part of the Registration Statement, when such part
became effective, did not contain and each such part, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, (ii)
the Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with the
Act and (iii) the Prospectus does not contain and, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
set forth in this paragraph (e) do not apply to statements or omissions in
the Registration Statement or the Prospectus based upon information
relating to any Underwriter furnished to the Company in writing by such
Underwriter pursuant to Section 3 hereof.
(f) The Company and each of its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation and has the corporate power
and authority to carry on its business as it is currently being conducted
and to own, lease and operate its properties, and each is duly qualified
and is in good standing as a foreign corporation authorized to do business
in each jurisdiction in which the nature of its business or its ownership
or leasing of
4
<PAGE>
property requires such qualification, except where the failure to be so
qualified would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(g) The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Act with the power and
authority to own property and to conduct its business as described in the
Registration Statement and the Prospectus, and any amendment or supplement
thereto, and to enter into and perform its obligations under this
Agreement, the Preferred Securities, the Common Securities and the
Declaration; the Trust is duly qualified to transact business in each
jurisdiction in which such qualification is necessary, except to the
extent that the failure to so qualify would not have a material adverse
effect on the Trust; and the Trust is not a party to or otherwise bound by
any agreement, other than those described in the Prospectus, and any
amendment or supplement thereto.
(h) All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable, and,
except as otherwise set forth in the Prospectus and except for any liens
pursuant to the Bank Credit Agreement (as defined in the Prospectus), are
owned by the Company, free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature.
(i) All the outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable
and, as of the Closing Date, will not be subject to any preemptive or
similar rights.
(j) The Common Securities have been duly authorized by the
Declaration and, when issued and delivered by the Trust to the Company in
accordance with the terms of the Declaration and against payment therefore
as described in the Prospectus, will be validly issued undivided
beneficial interests in the assets of the Trust; the issuance of the
Common Securities is not subject to preemptive or other similar rights;
and at the First Closing Date, all of the issued and outstanding Common
Securities of the Trust will be directly owned by the Company free and
clear of any security interest, mortgage, pledge, lien, encumbrance, claim
or equity.
(k) The Declaration has been duly authorized by the Company and,
when validly executed and delivered by the Company and the Administrative
Trustees, and assuming the due authorization, execution and delivery of
the Declaration by the Delaware Trustee, the Declaration will be a valid
and legally binding obligation of the Company and the Administrative
Trustees, enforceable against the Company and the Administrative Trustees
in accordance with its terms, except as enforcement thereof may be limited
by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general
5
<PAGE>
principles of equity regardless of whether enforcement is considered a
proceeding in equity or at law; and the Declaration has been duly
qualified under the Trust Indenture Act of 1939 (the "1939 Act") and
conforms to the description thereof in the Registration Statement and
the Prospectus and any amendment or supplement thereto.
(l) The Administrative Trustees of the Trust are officers of the
Company and have been duly authorized by the Company to execute and
deliver the Declaration.
(m) The Preferred Securities Guarantee Agreement has been duly and
validly authorized by the Company and, when validly executed and delivered
by the Company, and assuming due authorization, execution and delivery of
the Preferred Securities Guarantee Agreement by the Guarantee Trustee,
will constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforcement
thereof may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to the fraudulent transfers),
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject
to general principles of equity regardless of whether enforcement is
considered a proceeding in equity or at law; and the Preferred Securities
Guarantee Agreement has been duly qualified under the 1939 Act and
conforms to the description thereof in the Registration Statement and the
Prospectus and any amendment or supplement thereto.
(n) The Preferred Securities have been duly authorized by the
Declaration and, when authenticated in the manner provided for in the
Declaration and issued and delivered pursuant to this Agreement against
payment of the consideration set forth herein, will be validly issued and
(subject to the terms of the Declaration) fully paid and nonassessable
undivided beneficial interests in the assets of the Trust; the issuance of
the Preferred Securities is not subject to preemptive or other similar
rights; and holders of Preferred Securities will be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit incorporated under the General Corporation Law of
the State of Delaware and the Preferred Securities have been registered
under the Exchange Act and authorized for listing on the Nasdaq National
Market, subject only to official notice of issuance.
(o) The Indenture has been duly authorized by the Company, and, when
validly executed and delivered by the Company, and assuming the due
authorization, execution and delivery of the Indenture by the Indenture
Trustee, will be a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or other similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject
to general principles of equity regardless of whether enforcement is
considered a proceeding in equity or at law; and the Indenture has
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<PAGE>
been (or will have been) duly qualified under the 1939 Act and conforms
to the description thereof in the Registration Statement and the
Prospectus, and any amendment or supplement thereto.
(p) The Convertible Debentures have been duly authorized by the
Company, and when validly executed, authenticated, issued and delivered in
the manner provided for in the Indenture and sold and paid for as provided
in this Agreement, the Convertible Debentures will be valid and binding
obligations of the Company entitled to the benefits of the Indenture and
enforceable against the Company in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject
to general principles of equity regardless of whether enforcement is
considered a proceeding in equity or at law; and the Indenture conforms to
the description thereof in the Registration Statement and the Prospectus,
and any amendment or supplement thereto.
(q) The Company's obligations under the Preferred Security Guarantee
are (i) subordinated and junior in right of payment to all other
liabilities of the Company, (ii) pari passu with the most senior preferred
stock of the Company, if any, and with any guarantee now or hereafter
entered into by the Company in respect of any preferred or preference
stock of any affiliate of the Company and (iii) senior to the Common
Stock.
(r) The Convertible Debentures are subordinate and junior in right
of payment to all existing and future Senior Debt (as defined in the
Indenture) of the Company.
(s) The authorized capital stock of the Company, including the Class
A Common Stock and Class B Common Stock (collectively, the "Common
Stock"), the Preferred Securities, the Common Securities, the Conversion
Shares, the Convertible Debentures, the Declaration, the Preferred
Securities Guarantee Agreement and the Indenture conform in all material
respects to the descriptions thereof in the Prospectus under the captions
"Description of the Preferred Securities", "Description of the Guarantee",
"Description of the Debentures", "Relationship Among the Preferred
Securities, the Debentures and the Guarantee" and "Description of Capital
Stock".
(t) Neither the Company nor any of its subsidiaries is in violation
of its respective charter or by-laws; the Trust is not in violation of the
Declaration or its Certificate of Trust filed with the State of Delaware
on March 2, 1998; and neither the Company, any subsidiary or the Trust is
in default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any other agreement, indenture or instrument material
to the conduct of the business of the Company and its subsidiaries, taken
as a whole, to which the Company, any of its subsidiaries or the Trust is
a party or by which the Company, any of
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<PAGE>
its subsidiaries or the Trust or their respective property is bound,
which default could reasonably be expected to result in a material
adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole, or of the Trust, as the case may be.
(u) The execution and delivery of, and the performance by the
Company and the Trust of their respective obligations under this
Agreement, compliance by the Company and the Trust with all the provisions
hereof and the consummation of the transactions contemplated hereby will
not require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental body
(except as such may be required under the Act, the Exchange Act, or the
securities or Blue Sky laws of the various states or the by-laws or rules
of the NASD) and will not conflict with or constitute a breach of any of
the terms or provisions of, or a default under, the charter or by-laws of
the Company or any of its subsidiaries or the Trust or any agreement,
indenture or other instrument to which the Company, any of its
subsidiaries or the Trust is a party or by which the Company, any of its
subsidiaries or the Trust, or their respective property is bound, or
violate or conflict with any laws, administrative regulations or rulings
or court decrees applicable to the Company, any of its subsidiaries, the
Trust or their respective property, other than conflicts or breaches that,
individually or in the aggregate, would not reasonably be expected to
result in a material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its subsidiaries,
taken as a whole, or of the Trust, as the case may be, or materially
impair the ability of the Company or the Trust to perform its obligations
under this Agreement.
(v) Except as otherwise set forth in the Prospectus, there are no
material legal or governmental proceedings pending to which the Company,
any of its subsidiaries or the Trust is a party or of which any of their
respective property is the subject, and, to the best of the Offerors'
knowledge, no such proceedings are threatened or contemplated. No
contract or document of a character required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement is not so described or filed as required.
(w) Except as otherwise set forth in the Prospectus, neither the
Company nor any of its subsidiaries has violated any foreign, federal,
state or local law or regulation relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), nor any federal
or state law relating to discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages and hours laws, nor
any provisions of the Employee Retirement Income Security Act or the rules
and regulations promulgated thereunder, which in any such case could
reasonably be expected to result in any material adverse change in the
business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
8
<PAGE>
(x) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits"), including, without limitation, under any
applicable Environmental Laws, as are necessary to own, lease and operate
its respective properties and to conduct its business, except for such
permits, licenses, franchises and authorizations the absence of which,
individually or in the aggregate, would not reasonably be expected to have
a material adverse effect on the business, prospects, financial condition
or results of operations of the Company and its subsidiaries, taken as a
whole; and the Company and each of its subsidiaries has fulfilled and
performed all of its material obligations with respect to such permits and
no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit.
(y) Except as otherwise set forth in the Prospectus or such as are
not material to the business, prospects, financial condition or results of
operation of the Company and its subsidiaries, taken as a whole, the
Company and each of its subsidiaries has good and marketable title, free
and clear of all liens, claims, encumbrances and restrictions except liens
for taxes not yet due and payable and liens that do not materially detract
from the value thereof or materially impair its use in the business of the
Company or such subsidiary, to all property and assets described in the
Registration Statement as being owned by it. No default has occurred or is
continuing under any material lease to which the Company or any of its
subsidiaries is a party which might result in any material adverse change
in the business, prospects, financial condition or results of operation of
the Company and its subsidiaries, taken as a whole.
(z) The Company and each of its subsidiaries maintain reasonably
adequate insurance.
(aa) To the Company's knowledge Arthur Andersen LLP are independent
public accountants with respect to the Company as required by the Act.
(bb) The financial statements, together with related schedules and
notes forming part of the Registration Statement and the Prospectus (and
any amendment or supplement thereto), present fairly the consolidated
financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated in the
Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein; and the other financial and statistical information and
data set forth in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) are, in all material respects, accurately
9
<PAGE>
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(cc) Neither the Company nor the Trust is, and upon the issuance and
sale of the Preferred Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectus
neither will be, an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
(dd) Except as otherwise set forth in the Prospectus, no holder of
any security of the Company has any right to require registration of
shares of Common Stock or any other security of the Company.
(ee) The Company has complied with all provisions of Section 517.075,
Florida Statutes (Chapter 92-198, Laws of Florida).
3. INFORMATION FURNISHED BY THE UNDERWRITERS. The information set forth
in the last paragraph on the outside front cover page of the Prospectus
concerning the terms of the offering by the Underwriters, the paragraphs on the
inside front cover page of the Prospectus relating to stabilization practices
and passive market making, and the paragraphs relating to stabilization
practices and passive market making and the concession and reallowance amounts
appearing under the caption "Underwriting" in the Prospectus constitute all of
the information furnished to the Company by and on behalf of the Underwriters
for use in connection with the preparation of the Registration Statement and
the Prospectus, as such information is referred to in this Agreement.
4. PURCHASE, SALE AND DELIVERY OF PREFERRED SECURITIES.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set
forth, the Trust agrees to sell to the Underwriters identified in Schedule
I annexed hereto an aggregate of 2,000,000 Firm Preferred Securities, and
each of the Underwriters agrees, severally and not jointly, to purchase
from the Trust the number of Firm Preferred Securities as hereinafter set
forth at the purchase price of $[_____] per Firm Preferred Security, plus
accrued distributions, if any from _____________, 1998. The obligation of
each Underwriter to the Company shall be to purchase from the Company that
number of full Firm Preferred Securities which bears the same proportion
to the number of Firm Preferred Shares to be sold by the Trust as the
number of shares set forth opposite the name of such Underwriter in
Schedule I annexed hereto bears to the total number of Firm Preferred
Shares to be purchased by all of the Underwriters under this Agreement.
(b) The Company agrees that, in view of the fact that the proceeds
of the sale of the Preferred Securities will be invested in the
Convertible Debentures, it shall pay to
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<PAGE>
the Underwriters as compensation ("Underwriters' Compensation") for
their arranging the investment of the proceeds therein, on the Closing
Date, $[______________] per Firm Preferred Security. The Underwriters
shall inform the Company in writing on the First Closing Date of the
aggregate number of Firm Preferred Securities so sold.
(c) On the First Closing Date (as hereinafter defined), the Trust
will deliver to the Underwriters, at the offices of Robert W. Baird & Co.
Incorporated, 777 East Wisconsin Avenue, Milwaukee, Wisconsin 53202, or
through the facilities of The Depository Trust Company, for the accounts
of the several Underwriters, certificates representing the Firm Preferred
Shares to be sold by it against payment in Milwaukee, Wisconsin of the
purchase price therefor by wire transfer of immediately available funds to
the Trust with respect to the Firm Preferred Shares being sold by the
Trust. As referred to in this Agreement, the "First Closing Date" shall
be on the third full business day after the date of the Prospectus, at
9:00 a.m., Milwaukee, Wisconsin time, or at such other date or time not
later than ten full business days after the date of the Prospectus as the
Underwriters and the Company may agree. The certificates for the Firm
Preferred Securities to be so delivered will be in denominations and
registered in such names as the Underwriters request by notice to the
Trust, prior to the First Closing Date, and such certificates will be made
available for checking and packaging at 9:00 a.m., Milwaukee, Wisconsin
time on the first full business day preceding the First Closing Date at a
location to be designated by the Underwriters.
(d) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions
herein set forth, the Trust hereby agrees to sell to the Underwriters, and
the Underwriters, severally and not jointly, shall have the right at any
time within thirty days after the date of the Prospectus to purchase up to
an aggregate of 300,000 Additional Preferred Securities from the Trust at
the purchase price per share to be paid for the Firm Preferred Securities,
for use solely in covering any over-allotments made by the Underwriters in
the sale and distribution of the Firm Preferred Securities. The option
granted hereunder may be exercised on one occasion upon written notice by
the Underwriters to the Offerors, within thirty days after the date of the
Prospectus setting forth the aggregate number of Additional Preferred
Securities to be purchased by the Underwriters and sold by the Trust, the
names and denominations in which the certificates are to be registered and
the date and place at which such certificates will be delivered. Such
date of delivery (the "Second Closing Date") shall be determined by the
Underwriters, provided that the Second Closing Date, which may be the same
as the First Closing Date, shall not be earlier than the First Closing
Date and, if after the First Closing Date, shall not be earlier than three
nor later than ten full business days after delivery of such notice to
exercise. As referred to in this Agreement, "Closing Date" shall mean
either the First Closing Date or the Second Closing Date. Certificates
for the Additional Preferred Securities will be made available for
checking and packaging at 9:00 a.m., Milwaukee, Wisconsin time, on the
first full business day preceding the Second Closing Date at a location to
be designated by the
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<PAGE>
Underwriters. The manner of payment for and delivery of (including the
denominations of and the names in which certificates are to be
registered) the Additional Preferred Securities shall be the same as for
the Firm Preferred Securities. If any Additional Preferred Securities
are to be purchased, each Underwriter agrees, severally and not jointly,
to purchase the number of Additional Preferred Securities that bears the
same proportion to the total number of Additional Preferred Securities
to be purchased as the number of Firm Preferred Securities in Schedule I
annexed hereto bears to the total number of Firm Preferred Securities.
5. COVENANTS OF THE COMPANY. The Company and the Trust, jointly and
severally, covenant and agree with the several Underwriters:
(a) To use their reasonable best efforts to cause the Registration
Statement to become effective at the earliest possible time.
(b) To advise you promptly after obtaining knowledge thereof and, if
requested by you, to confirm such advice in writing, (i) when the
Registration Statement has become effective and when any post-effective
amendment to it becomes effective, (ii) of any request by the Commission
for amendments to the Registration Statement or amendments or supplements
to the Prospectus or for additional information, (iii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Preferred Securities for offering or sale in any jurisdiction, or the
initiation of any proceeding for such purposes, and (iv) of the happening
of any event during the period referred to in paragraph (e) below which
makes any statement of a material fact made in the Registration Statement
or the Prospectus untrue or which requires the making of any additions to
or changes in the Registration Statement or the Prospectus in order to
make the statements therein not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, the Offerors will make every reasonable effort to
obtain the withdrawal or lifting of such order at the earliest possible
time.
(c) To furnish to you, without charge, three copies of the
Registration Statement as first filed with the Commission and of each
amendment to it, including all exhibits, and to furnish to you and each
Underwriter designated by you such number of conformed copies of the
Registration Statement as so filed and of each amendment to it, without
exhibits, as you may reasonably request.
(d) Not to file any amendment or supplement to the Registration
Statement, whether before or after the time when it becomes effective, or
to make any amendment or supplement to the Prospectus, of which you shall
not previously have been advised or to which you shall reasonably object;
and, at any time prior to the termination of the offering of the Preferred
Securities, to prepare and file with the Commission, promptly upon your
reasonable request, any amendment to the Registration Statement or
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<PAGE>
supplement to the Prospectus which may be necessary or advisable in
connection with the distribution of the Preferred Securities by you, and
to use its best efforts to cause the same to become promptly effective.
(e) Promptly after the Registration Statement becomes effective, and
from time to time thereafter at any time prior to the termination of the
offering of the Preferred Securities if in the opinion of counsel for the
Underwriters a prospectus is required by law to be delivered in connection
with sales by an Underwriter or a dealer, to furnish to each Underwriter
and dealer as many copies of the Prospectus (and of any amendment or
supplement to the Prospectus) as such Underwriter or dealer may reasonably
request.
(f) If during the period specified in paragraph (e) any event shall
occur as a result of which, in the opinion of counsel for the Underwriters
it becomes necessary to amend or supplement the Prospectus in order to
make the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Prospectus to comply with any law,
forthwith to prepare and file with the Commission an appropriate amendment
or supplement to the Prospectus so that the statements in the Prospectus,
as so amended or supplemented, will not in the light of the circumstances
when it is so delivered, be misleading, or so that the Prospectus will
comply with law, and to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as such Underwriter or
dealers may reasonably request.
(g) Prior to any public offering of the Preferred Securities, to
cooperate with you and counsel for the Underwriters in connection with the
registration or qualification of the Preferred Securities for offer and
sale by the several Underwriters and by dealers under the state securities
or Blue Sky laws of such jurisdictions as you may reasonably request, to
continue such qualification in effect so long as required for distribution
of the Preferred Securities and to file such other documents as may be
necessary in order to effect such registration or qualification; PROVIDED,
HOWEVER, that neither the Company nor any of its subsidiaries shall be
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
so subject.
(h) To make generally available to the Trust's security holders as
soon as reasonably practicable an earnings statement of the Company
covering a period of at least twelve months after the effective date of
the Registration Statement (but in no event commencing later than 90 days
after such date) which shall satisfy the provisions of Section 11(a) of
the Act.
(i) During the period of three years after the date of this
Agreement, the Company will furnish to you, (i) as soon as available a
copy of each report or other
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<PAGE>
publicly available information of the Company mailed to the holders of
Common Stock or filed with the Commission and such other publicly
available information concerning the Company and its subsidiaries as you
may reasonably request, and (ii) the Trust will furnish to you, upon
your request, a copy of each report of the Trust mailed to the holders
of Preferred Securities and Common Securities.
(j) To pay all costs, expenses, fees and taxes incident to (i) the
preparation, printing, filing and distribution under the Act of the
Registration Statement (including financial statements and exhibits), each
Preliminary Prospectus and all amendments and supplements to any of them
prior to or during the period specified in paragraph (e), (ii) the
printing and delivery of the Prospectus and all amendments or supplements
to it during the period specified in paragraph (e), (iii) the delivery of
this Agreement and all other agreements, memoranda, correspondence and
other documents delivered in connection with the offering of the Preferred
Securities (including in each case any reasonable disbursements of counsel
for the Underwriters relating to such delivery), (iv) the registration or
qualification of the Preferred Securities for offer and sale under the
securities or Blue Sky laws of the several states (including in each case
the reasonable fees and disbursements of counsel for the Underwriters
relating to such registration or qualification and memoranda relating
thereto), (v) filing fees relating to the clearance with the National
Association of Securities Dealers, Inc. ("NASD") in connection with the
offering, (vi) the listing of the Preferred Securities on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq")
National Market System, (vii) furnishing such copies of the Registration
Statement, the Prospectus and all amendments and supplements thereto as
may be requested for use in connection with the offering or sale of the
Preferred Securities by the Underwriters or by dealers to whom Preferred
Securities may be sold and (viii) the performance by the Company of its
other obligations under this Agreement.
(k) As long as the Common Stock is registered under Section 12(g) of
the Exchange Act, to use its reasonable best efforts to maintain the
inclusion of the Common Stock in the Nasdaq National Market System (or on
a national securities exchange) for a period of three years after the
effective date of the Registration Statement.
(l) To use its reasonable best efforts to do and perform all things
reasonably required or reasonably necessary to be done and performed under
this Agreement by the Company prior to the First Closing Date or the
Second Closing Date, as the case may be, and to satisfy all conditions
precedent to the delivery of the Preferred Securities.
(m) The Trust will apply the net proceeds from the sale of the
Preferred Securities, and the Company will apply the net proceeds from the
sale of the Convertible Debentures, substantially in accordance with the
description set forth in the Prospectus under "Use of Proceeds".
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<PAGE>
(n) Each of the Trust and the Company agree, during the period
beginning on the date of this Agreement and continuing to and including
the date that is 45 days after the Closing Date, not to offer, sell,
contract to offer, sell or otherwise dispose of any preferred securities,
any preferred stock, any common stock or any other securities (including
any backup undertakings for such preferred stock or other securities) of
the Company or of the Trust, in each case, that are substantially similar
to the Preferred Securities, or any securities convertible into or
exchangeable for the Preferred Securities or such substantially similar
securities of either the Trust or the Company, without the prior written
consent of Robert W. Baird & Co. Incorporated.
(o) Except as stated in this Agreement and in the Preliminary
Prospectus and Prospectus, the Company has not taken, nor will it take,
directly or indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the price
of the Preferred Securities to facilitate the sale or resale of the
Preferred Securities.
(p) The Company will use its reasonable best efforts to have the
Preferred Securities listed on the Nasdaq National Market System. If the
Convertible Debentures are distributed on the occurrence of a Tax Event
(as defined in the Prospectus), the Company will use its best efforts to
have such Convertible Debentures listed on Nasdaq National Market System
or such other exchange where the Preferred Securities are listed.
6. PAYMENT OF EXPENSES. Whether or not the transactions contemplated
hereunder are consummated or this Agreement becomes effective, or if this
Agreement is terminated for any reason, the Company will pay the costs, fees
and expenses incurred by it and by the Trust in connection with the performance
by the Company and the Trust of their obligations hereunder. Such costs, fees
and expenses to be paid by the Company include, without limitation:
(a) All costs, fees and expenses (excluding the expenses incurred by
the Underwriters and the legal fees and disbursements of counsel for the
Underwriters, but including such fees and disbursements described in
subsection (b) of this Section 6) incurred in connection with the
performance of the Company's obligations hereunder, including without
limiting the generality of the foregoing: the registration fees related to
the filing of the Registration Statement with the Commission; the fees and
expenses related to the registration of the Preferred Securities under the
Exchange Act and the quotation of the Preferred Securities on Nasdaq
National Market or other national securities exchange; the fees and
expenses of the Company's counsel, accountants, transfer agent and
registrar; the fees and expenses of the Delaware Trustee, the Guarantee
Trustee and the Indenture Trustee; the costs and expenses incurred in
connection with the preparation, printing, shipping and delivery of the
Registration Statement, each Preliminary Prospectus and the Prospectus
(including all exhibits and financial statements and documents
incorporated by reference therein) and all agreements and supplements
provided for herein and this Agreement including, without limitation,
shipping expenses
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via overnight delivery, and/or courier service to comply with applicable
prospectus delivery requirements; the costs and expenses incurred in
connection with the preparation of the Statement of Eligibility and
Qualification of each of the Guarantee Trustee and the Indenture
Trustee; and the costs and expenses associated with the production of
materials related to, and travel expenses incurred by the management of
the Offerors in connection with, the various meetings to be held between
the Offerors' management and prospective investors. The Underwriters
shall pay their own travel expenses related to such meetings.
(b) All registration fees and expenses, including reasonable legal
fees and disbursements of counsel for the Underwriters incurred in
connection with qualifying or registering all or any part of the Preferred
Securities for offer and sale under the Blue Sky Laws; provided, however,
that in no event shall such legal fees and disbursements exceed $3,000.
(c) All fees and expenses related to printing of the certificates
for the Preferred Securities, and all transfer taxes, if any, with respect
to the sale and delivery of the Preferred Securities.
7. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The obligations
of the several Underwriters under this Agreement shall be subject to the
accuracy of the representations and warranties on the part of the Offerors
herein set forth as of the date hereof and as of each Closing Date, to the
accuracy of the statements of the officers of the Company and the
Administrative Trustees of the Trust made pursuant to the provisions hereof, to
the performance by the Offerors of their obligations hereunder, and to the
following additional conditions, unless waived in writing by the Underwriters:
(a) The Registration Statement shall have been declared effective by
the Commission not later than 5:30 p.m., Washington, D. C. time, prior to
the date of this Agreement, or such later time as shall have been
consented to by you, which consent shall be deemed to have been given if
the Registration Statement shall have been declared effective on or before
the date and time requested in the acceleration request submitted on
behalf of the Underwriters pursuant to Rule 461 under the Act; all filings
required by Rules 424(b) and 430A under the Act shall have been timely
made; no stop order suspending the effectiveness of the Registration
Statement shall have been issued by the Commission or any state securities
commission nor, to the knowledge of the Company, shall any proceedings for
that purpose have been initiated or threatened; and any request of the
Commission or any state securities commission for inclusion of additional
information in the Registration Statement, or otherwise, shall have been
complied with to the reasonable satisfaction of the Underwriters.
(b) Since the dates as of which information is given in the
Registration Statement:
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(i) there shall not have occurred any change or development
involving, or which could be expected to involve, a material adverse
effect, whether or not arising from transactions in the ordinary
course of business;
(ii) the Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood, windstorm,
accident or other calamity (whether or not insured) or from any court
or governmental action, order or decree; and
(iii) there shall not have occurred any change in the long-
term debt or capital stock of the Company.
the effect of which on the Company, in any such case described in clause
(i), (ii) or (iii) above, is in the written opinion of the Underwriters so
material and adverse as to make it impracticable or inadvisable to proceed
with the public offering or the delivery of the Preferred Securities on
the terms and in the manner contemplated in the Registration Statement and
the Prospectus.
(c) The Underwriters shall not have advised the Company that the
Registration Statement or the Prospectus contains an untrue statement of
fact that, in the reasonable opinion of the Underwriters or counsel for
the Underwriters, is material, or omits to state a fact that, in the
reasonable opinion of the Underwriters or such counsel, is material and is
required to be stated therein or necessary to make the statements therein
not misleading.
(d) The Underwriters shall have received an opinion of Kirkland &
Ellis, counsel for the Company addressed to the Underwriters, and dated
the First Closing Date or the Second Closing Date, as the case may be, in
form and substance satisfactory to the Underwriters and counsel to the
Underwriters.
(e) The Underwriters shall have received an opinion of Richards,
Layton & Finger, special Delaware counsel to the Offerors, addressed to
the Underwriters and dated the First Closing Date or the Second Closing
Date, as the case may be, to the effect that:
(i) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act.
(ii) Under the Declaration and the Delaware Act, the Trust has
the trust power and authority to enter into and perform its
obligations under the Agreement, and under the Declaration and the
Delaware Act the Agreement has been duly authorized, executed and
delivered by all necessary trust action on the part of the Trust.
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(iii) The Declaration constitutes a valid and binding
obligation of the Company and the Delaware Trustee, and is
enforceable against the Company and the Delaware Trustee, in
accordance with its terms subject to the effect upon the Declaration
of (i) bankruptcy, insolvency, moratorium, receivership,
reorganization, liquidation, fraudulent conveyance or transfer and
other similar laws relating to or affecting the rights and remedies
of creditors generally, (ii) principles of equity, including
applicable law relating to fiduciary duties (regardless of whether
considered and applied in a proceeding in equity or at law), and
(iii) the effect of applicable public policy on the enforceability of
provisions relating to indemnification or contribution.
(iv) Under the Declaration and the Delaware Act, the Trust has
the trust power and authority to issue and sell and perform its
obligations under the Trust Securities and to purchase and hold the
Convertible Debentures.
(v) The Preferred Securities have been duly authorized for
issuance by the Declaration and, when issued, executed and
authenticated pursuant to the Declaration and delivered and paid for
in accordance with the Agreement, will be, subject to the
qualifications set forth herein, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust and will
entitle the holders thereof to the benefits of the Declaration
(subject to the terms of the Declaration), except to the extent that
the enforcement of the Declaration is subject to (i) bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation,
fraudulent conveyance or transfer and other similar laws relating to
or affecting the right and remedies of creditors generally,
(ii) principles of equity, including applicable law relating to
fiduciary duties (regardless of whether considered and applied in a
proceeding in equity or at law), and (iii) the effect of applicable
public policy on the enforceability of provisions relating to
indemnification or contribution. The holders of the Preferred
Securities, as beneficial owners of the Trust, will be entitled to
the same limitation of personal liability extended to stockholders of
private corporations for profit organized under the General
Corporation Law of the State of Delaware. Such counsel may note that
the holders of the Preferred Securities may be obligated, pursuant to
the Declaration, (A) to provide indemnity and/or security in
connection with and pay taxes or governmental charges arising from
transfers or exchanges of Preferred Security certificates and the
issuance of replacement Preferred Security certificates, and (B) to
provide security or indemnity in connection with requests of or
directions to the Institutional Trustee to exercise its rights and
powers under the Declaration.
(vi) The issuance and sale by the Trust of the Trust Securities,
the performance by the Trust of its obligations under the Trust
Securities and the Agreement and the purchase by the Trust of the
Convertible Debentures, do not violate the Declaration or any
applicable law of the State of Delaware or require any approval of
any governmental authority of the State of Delaware.
18
<PAGE>
(vii) The holders of the Preferred Securities (other than
those holders who reside or are domiciled in the State of Delaware)
will have no liability for income taxes imposed by the State of
Delaware solely as a result of their participation in the Trust, and
the Trust will not be liable for any income tax imposed by the State
of Delaware or any political subdivision or taxing authority thereof.
(f) The Underwriters shall have received an opinion of Pepper,
Hamilton & Scheetz LLP, counsel to the Delaware Trustee and the Property
Trustee, addressed to the Underwriters and dated the First Closing Date or
the Second Closing Date, as the case may be, to the effect that:
(i) The Trust Company is duly incorporated and is validly
existing in good standing as a banking corporation with trust powers
under the laws of the State of ___________.
(ii) The Indenture Trustee has the requisite power and authority
to execute, deliver and perform its obligations under the Indenture,
and has taken all necessary corporate action to authorize the
execution, delivery and performance by it of the Indenture.
(iii) The Preferred Securities Guarantee Trustee has the
requisite power and authority to execute, deliver and perform its
obligations under the Guarantee Agreement, and has taken all
necessary corporate action to authorize the execution, delivery and
performance by it of the Guarantee Agreement.
(iv) The Institutional Trustee has the requisite power and
authority to execute and deliver the Trust Agreement, and has taken
all necessary corporate action to authorize the execution and
delivery of the Trust Agreement.
(v) Each of the Indenture and the Preferred Securities
Guarantee Agreement has been duly executed and delivered by the
Indenture Trustee and the Preferred Securities Guarantee Trustee,
respectively, and constitutes a legal, valid and binding obligation
of the Indenture Trustee and the Preferred Securities Guarantee
Trustee, respectively, enforceable against the Indenture Trustee and
the Preferred Securities Guarantee Trustee, respectively in
accordance with its respective terms, except that certain payment
obligations may be enforceable solely against the assets of the Trust
and except that such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation, fraudulent
conveyance and transfer or other similar laws affecting the
19
<PAGE>
enforcement of creditors' rights generally, and by general principles
of equity, including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether
such enforceability is considered in a proceeding in equity or at
law), and by the effect of applicable public policy on the
enforceability of provisions relating to indemnification or
contribution.
(vi) The Convertible Subordinated Debentures delivered on the
date hereof have been duly authenticated by the Indenture Trustee in
accordance with the terms of the Indenture.
(g) The Underwriters shall have received an opinion of Gardner,
Carton & Douglas, counsel for the Underwriters, dated the First Closing
Date or the Second Closing Date, as the case may be, with respect to the
issuance and sale of the Preferred Securities by the Trust, the
Registration Statement and other related matters as the Underwriters may
require, and the Company shall have furnished to such counsel such
documents and shall have exhibited to them such papers and records as they
have reasonably requested for the purpose of enabling them to pass upon
such matters.
(h) The Underwriters shall have received on each Closing Date, a
certificate of each of the chief executive officer or the chief operating
officer and the chief financial officer of the Company and of one of the
Administrative Trustees of the Trust, to the effect that:
(i) The representations and warranties of the Company or the
Trust, as the case may be, set forth in Section 2 hereof are true and
correct as of the date of such certificate, and the Company or the
Trust, as the case may be, has complied with all the agreements and
satisfied all the conditions to be performed or satisfied by it at or
prior to the date of such certificate;
(ii) The Commission has not issued an order preventing or
suspending the use of the Prospectus or any Preliminary Prospectus or
any amendment or supplement thereto; no stop order suspending the
effectiveness of the Registration Statement has been issued; and to
the knowledge of the respective signatories, no proceedings for that
purpose have been initiated or are pending or contemplated under the
Act or under the Blue Sky Laws of any jurisdiction;
(iii) Each of the respective signatories has examined the
Registration Statement and the Prospectus, and any amendment or
supplement thereto, and such documents are true and correct in all
material respects; and
(iv) Since the date on which the Registration Statement was
declared effective with the Commission, there shall not have occurred
any change or development involving, or which could be expected to
involve, a material adverse
20
<PAGE>
effect, whether or not arising from transactions in the ordinary
course of business, except as disclosed in the Prospectus and the
Registration Statement as heretofore amended or (but only if the
Underwriters expressly consent thereto in writing) as disclosed in
an amendment or supplement thereto filed with the Commission and
delivered to the Underwriters after the execution of this
Agreement; since such date and except as so disclosed or in the
ordinary course of business, the Company has not incurred any
liability or obligation, direct or indirect, or entered into any
transaction which is material to the Company; since such date and
except as so disclosed, there has not been any change in the
outstanding capital stock of the Company, or any change that is
material to the Company in the short-term debt or long-term debt of
the Company; since such date and except as so disclosed, the
Company has not acquired any of the Common Stock or other capital
stock of the Company nor has the Company declared or paid any
dividend, or made any other distribution, upon its outstanding
Common Stock payable to stockholders of record on a date prior to
such Closing Date; since such date and except as so disclosed, the
Company has not incurred any material contingent obligations, and
no material litigation is pending or threatened against the
Company; and, since such date and except as so disclosed, the
Company has not sustained any material loss or interference from
any strike, fire, flood, windstorm, accident or other calamity
(whether or not insured) or from any court or governmental action,
order or decree.
The delivery of the certificate provided for in this subsection (h)
shall be and constitute a representation and warranty of the Company and
the Trust as to the facts required in the immediately foregoing clauses
(i), (ii), (iii) and (iv) to be set forth in said certificate.
(i) At the time this Agreement is executed and also on each Closing
Date, there shall be delivered to the Underwriters a letter addressed to
the Underwriters from Arthur Andersen LLP, the Company's independent
accountants, the first letter to be dated the date of this Agreement, the
second letter to be dated the First Closing Date and the third letter (if
applicable) to be dated the Second Closing Date, which shall be in form
and substance satisfactory to the Underwriters and shall contain
information as of a date within five days of the date of such letter.
There shall not have been any change or decrease set forth in any of the
letters referred to in this subsection (i) which makes it impracticable or
inadvisable in the judgment of the Underwriters to proceed with the public
offering or purchase of the Preferred Securities as contemplated hereby.
(j) The underwriting terms and arrangements for the offering shall
have been cleared by the NASD, and the Preferred Securities shall have
been designated for inclusion on the Nasdaq National Market Security on
the Nasdaq Stock Market.
21
<PAGE>
(k) Such further certificates and documents as the Underwriters may
reasonably request (including certificates of officers of the Company).
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are reasonably satisfactory
to the Underwriters and to Gardner, Carton & Douglas, counsel for the
Underwriters. The Company shall furnish the Underwriters with such manually
signed or conformed copies of such opinions, certificates, letters and
documents as the Underwriters may reasonably request.
If any condition to the Underwriters' obligations hereunder to be
satisfied prior to or at either Closing Date is not so satisfied, this
Agreement at the election of the Underwriters will terminate upon notification
to the Company without liability on the part of any Underwriter, or the Company
except for expenses to be paid by the Company pursuant to Section 6 hereof and
except to the extent provided in Section 10 hereof.
8. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company will
use its reasonable efforts to prevent the issuance of any stop order suspending
the effectiveness of the Registration Statement, and, if such stop order is
issued, to obtain as soon as possible the lifting thereof.
9. INDEMNIFICATION.
(a) Each of the Company, Dura Operating Corp. and the Trust (for
purposes of this Section 9, the term Company shall include the Operating
Subsidiaries and the Trust) agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and
judgments caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus
(as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any Preliminary Prospectus, or
caused by any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to any Underwriters furnished in writing to the Company by or on
behalf of any Underwriter through you expressly for use therein; PROVIDED,
HOWEVER, that the foregoing indemnity agreement with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter
from whom the person asserting any such losses, claims, damages and
liabilities and judgments purchased Preferred Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered,
at or prior to the
22
<PAGE>
written confirmation of the sale of the Preferred Securities to such
person, and if the Prospectus (as so amended and supplemented) would
have cured the defect giving rise to such loss, claim, damage,
liability or judgment.
(b) In case any action shall be brought against any Underwriter or
any person controlling such Underwriter, based upon any Preliminary
Prospectus, the Registration Statement or the Prospectus or any amendment
or supplement thereto and with respect to which indemnity may be sought
against the Company, such Underwriter shall promptly notify the Company in
writing and the Company shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to such indemnified party
and payment of all reasonable fees and expenses. Any Underwriter or any
such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the reasonable
fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the employment of such
counsel shall have been specifically authorized in writing by the Company,
(ii) the Company shall have failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any
impleaded parties) include both such Underwriter or such controlling
person and the Company and such Underwriter or such controlling person
shall have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or additional to
those available to the Company (in which case the Company shall not have
the right to assume the defense of such action on behalf of such
Underwriter or such controlling person, it being understood, however, that
the Company shall not, in connection with any one such action or separate
but substantially similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable
for the reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all such Underwriters and
controlling persons, which firm shall be designated in writing by
Robert W. Baird & Co. Incorporated and that all such reasonable fees and
expenses shall be reimbursed as they are incurred). The Company shall
not be liable for any settlement of any such action effected without its
written consent but if settled with the written consent of the Company,
the Company agrees to indemnify and hold harmless any Underwriter and any
such controlling person from and against any loss or liability by reason
of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld, effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could have been a party and
indemnity reasonably could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter
of such proceeding.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and any person controlling the Company within the
meaning of Section 15 of the Act or
23
<PAGE>
Section 20 of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to each Underwriter but only with reference
to information relating to such Underwriter furnished in writing by or
on behalf of such Underwriter through you expressly for use in the
Registration Statement, the Prospectus or any Preliminary Prospectus.
In case any action shall be brought against the Company, any of its
directors, any such officer or any person controlling the Company based
on the Registration Statement, the Prospectus or any preliminary
prospectus and in respect of which indemnity may be sought against any
Underwriter, the Underwriter shall have the rights and duties given to
the Company (except that if the Company shall have assumed the defense
thereof, such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof but the
fees and expenses of such counsel shall be at the expense of such
Underwriter), and the Company, its directors, any such officers and any
person controlling the Company shall have the rights and duties given to
the Underwriter, by Section 9(b) hereof.
(d) If the indemnification provided for in this Section 9 is
unavailable (other than as expressly provided above) to an indemnified
party in respect of any losses, claims, damages, liabilities or judgments
referred to therein, then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and
the Underwriters on the other hand from the offering of the Preferred
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company and the Underwriters in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Underwriters shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the
Company, and the total underwriting discounts and commissions received by
the Underwriters, bear to the total price to the public of the Preferred
Securities, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault of the Company and the Underwriters
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the Company or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9(d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately
24
<PAGE>
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 9, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Preferred
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9(d) are several in proportion to the respective
number of Preferred Securities purchased by each of the Underwriters
hereunder and not joint.
10. DEFAULT OF UNDERWRITERS. It shall be a condition to the
obligations of each Underwriter to purchase the Preferred Securities in the
manner as described herein, that, except as hereinafter provided in this
section, each of the Underwriters shall purchase and pay for all the
Preferred Securities agreed to be purchased by such Underwriter hereunder
upon tender to the Underwriters of all such Preferred Securities in
accordance with the terms hereof. If any Underwriter or Underwriters default
in their obligations to purchase Preferred Securities hereunder on either the
First Closing Date or the Second Closing Date and the aggregate number of
Preferred Securities which such defaulting Underwriter or Underwriters agreed
but failed to purchase does not exceed ten percent (10%) of the total number
of Preferred Securities which the Underwriters are obligated to purchase on
such Closing Date, the Underwriters may make arrangements for the purchase of
such Preferred Securities by other persons, including any of the
Underwriters, but if no such arrangements are made by such Closing Date the
nondefaulting Underwriters shall be obligated severally, in proportion to
their respective commitments hereunder, to purchase the Preferred Securities
which such defaulting Underwriters agreed but failed to purchase on such
Closing Date. If any Underwriter or Underwriters so default and the
aggregate number of Preferred Securities with respect to which such default
or defaults occur is greater than ten percent (10%) of the total number of
Preferred Securities which the Underwriters are obligated to purchase on such
Closing Date, and arrangements satisfactory to the Underwriters for the
purchase of such Preferred Securities by other persons are not made within
thirty-six hours after such default, this Agreement will terminate without
liability on the part of any nondefaulting Underwriter or the Company, except
for the expenses to be paid by the Company pursuant to Section 7 hereof and
except to the extent provided in Section 10 hereof.
In the event that Preferred Securities to which a default relates are to
be purchased by the nondefaulting Underwriters or by another party or
parties, the Underwriters shall have the right to postpone the First Closing
Date or the Second Closing Date, as the case may be, for not more than seven
business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As
25
<PAGE>
used in this Agreement, the term "Underwriter" includes any person
substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
11. EFFECTIVE DATE. This Agreement shall become effective upon the
execution and delivery of this Agreement by the parties hereto. Such
execution and delivery shall include an executed copy of this Agreement sent
by telecopier, facsimile transmission or other means of transmitting written
documents.
12. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Underwriters prior to or on the First Closing Date and the
over-allotment option from the Trust referred to in Section 4 hereof, if
exercised, may be canceled by the Underwriters at any time prior to or on the
Second Closing Date, if in the judgment of the Underwriters, payment for and
delivery of the Preferred Securities is rendered impracticable or inadvisable
because:
(a) additional governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or the American Stock Exchange,
or trading in securities generally shall have been suspended or materially
limited on either such exchange or on The Nasdaq Stock Market (other than
pursuant to so-called circuit breaker rules) or a general banking
moratorium shall have been established by either federal or state
authorities in New York or Wisconsin;
(b) any event shall have occurred or shall exist which makes untrue
or incorrect in any material respect any statement or information
contained in the Registration Statement or which is not reflected in the
Registration Statement but should be reflected therein to make the
statements or information contained therein not misleading in any material
respect; or
(c) an outbreak or escalation of hostilities in which the United
States is involved or other national or international calamity or any
substantial change in political, financial or economic conditions shall
have occurred or shall have accelerated to such extent, in the judgment of
the Underwriters, as to have a material adverse effect on the financial
markets of the United States, or to make it impracticable or inadvisable
to proceed with completion of the sale of and payment for the Preferred
Securities as provided in this Agreement.
Any termination pursuant to this Section shall be without liability on the
part of any Underwriter to the Company, or on the part of the Company to any
Underwriter, except for expenses to be paid by the Company pursuant to Section
7 hereof or except as to indemnification to the extent provided in Section 10
hereof.
26
<PAGE>
13. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants
and other statements of the Offerors, of officers or directors of the
Company, and of the several Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company, or the
Trust or any of its or their partners, officers, directors or any controlling
person, as the case may be, and will survive delivery of and payment for the
Preferred Securities sold hereunder.
14. NOTICES. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered, telecopied (with receipt
confirmed) or telegraphed and confirmed to Robert W. Baird & Co. Incorporated
at 227 West Monroe Street, Suite 2100, Chicago, Illinois 60606, Attention:
Samuel J. Tinaglia, with a copy to Dewey B. Crawford, Esq., Gardner, Carton &
Douglas, 321 N. Clark Street, Chicago, Illinois 60610; and if sent to the
Company, will be mailed, delivered, telecopied (with receipt confirmed) or
telegraphed and confirmed to the Company at 4508 IDS Center, Minneapolis,
Minnesota 55402, Attention: Scott D. Rued, Vice President, with a copy to
Dennis M. Myers, Esq., Kirkland & Ellis, 200 East Randolph Drive, Chicago,
Illinois 60601.
15. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in Section ___ hereof and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of the Preferred Securities as such from any of the
Underwriters merely by reason of such purchase.
16. PARTIAL UNENFORCEABILITY. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph clause or provision hereof.
17. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of Illinois
without reference to conflict of law principles thereunder. This Agreement
may be signed in various counterparts which together shall constitute one and
the same instrument, and shall be effective when at least one counterpart
hereof shall have been executed by or on behalf of each party hereto.
27
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the
several Underwriters, all in accordance with its terms.
Very truly yours,
DURA AUTOMOTIVE SYSTEMS
CAPITAL TRUST
By: DURA AUTOMOTIVE SYSTEMS,
INC., as Sponsor
By: ____________________________
Name:_______________________
Title:________________________
DURA AUTOMOTIVE SYSTEMS, INC.
By:______________________________
Name:_______________________
Title:________________________
DURA OPERATING CORP.
By:______________________________
Name:_______________________
Title:________________________
28
<PAGE>
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
ROBERT W. BAIRD & CO. INCORPORATED
By: ___________________________________
Its: ___________________________________
PIPER JAFFRAY INC.
By: ___________________________________
Its: ___________________________________
29
<PAGE>
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF FIRM
PREFERRED SECURITIES
NAME OF UNDERWRITER TO BE PURCAHSED
- ------------------- --------------------
<S> <C>
_______
________
Total ________
</TABLE>
30
<PAGE>
CERTIFICATE OF TRUST
OF
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
THIS Certificate of Trust of Dura Automotive Systems Capital Trust (the
"Trust") is being duly executed and filed by the undersigned, as trustees, to
form a business trust under the Delaware Business Trust Act (12 DEL. C. Section
3801, ET SEQ.).
1. NAME. The name of the business trust formed hereby is Dura Automotive
Systems Capital Trust.
2. DELAWARE TRUSTEE. The name and business address of the trustee of the
Trust with a principal place of business in the State of Delaware are First
Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 19801.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective upon
filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, has
executed this Certificate of Trust.
FIRST CHICAGO DELAWARE INC., not in its
individual capacity but solely as trustee of
the Trust
By: /s/ Steven M. Wagner
-----------------------------------
Name: Steven M. Wagner
Title: Vice President
/s/ David Bovee
-----------------------------------
DAVID BOVEE, not in his individual capacity
but solely as trustee of the Trust
<PAGE>
Draft--3/7/98
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AMENDED AND RESTATED
TRUST AGREEMENT
AMONG
DURA AUTOMOTIVE SYSTEMS, INC.
AS DEPOSITOR,
THE FIRST NATIONAL BANK OF CHICAGO
AS PROPERTY TRUSTEE,
FIRST CHICAGO DELAWARE INC.
AS DELAWARE TRUSTEE,
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF MARCH __, 1998
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINED TERMS
SECTION 1.1. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. NAME . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 2.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . .11
SECTION 2.3. ORGANIZATIONAL EXPENSES. . . . . . . . . . . . . . . . . . .11
SECTION 2.4. ISSUANCE OF THE PREFERRED SECURITIES . . . . . . . . . . . .11
SECTION 2.5. SUBSCRIPTION AND PURCHASE OF DEBENTURES;
ISSUANCE OF THE COMMON SECURITIES. . . . . . . . . . . . . .12
SECTION 2.6. DECLARATION OF TRUST . . . . . . . . . . . . . . . . . . . .12
SECTION 2.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS . . . . . .12
SECTION 2.8. ASSETS OF TRUST. . . . . . . . . . . . . . . . . . . . . . .16
SECTION 2.9. TITLE TO TRUST PROPERTY. . . . . . . . . . . . . . . . . . .16
ARTICLE 3
PAYMENT ACCOUNT
SECTION 3.1. PAYMENT ACCOUNT. . . . . . . . . . . . . . . . . . . . . . .16
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 4.2. REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . .17
SECTION 4.3. CONVERSION . . . . . . . . . . . . . . . . . . . . . . . . .20
SECTION 4.4. SPECIAL EVENT EXCHANGE OR REDEMPTION . . . . . . . . . . . .21
SECTION 4.5. SUBORDINATION OF COMMON SECURITIES . . . . . . . . . . . . .23
SECTION 4.6. PAYMENT PROCEDURES.. . . . . . . . . . . . . . . . . . . . .24
SECTION 4.7. TAX RETURNS AND REPORTS. . . . . . . . . . . . . . . . . . .24
SECTION 4.8. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST. . . . . . . . .24
SECTION 4.9. PAYMENTS UNDER INDENTURE . . . . . . . . . . . . . . . . . .24
ARTICLE 5
TRUST SECURITIES CERTIFICATES
SECTION 5.1. INITIAL OWNERSHIP. . . . . . . . . . . . . . . . . . . . . .24
SECTION 5.2. THE TRUST SECURITIES CERTIFICATES. . . . . . . . . . . . . .25
SECTION 5.3. DELIVERY OF TRUST SECURITIES CERTIFICATES. . . . . . . . . .25
SECTION 5.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . .25
SECTION 5.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . .26
SECTION 5.6. PERSONS DEEMED SECURITYHOLDERS . . . . . . . . . . . . . . .27
SECTION 5.7. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES . . .27
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SECTION 5.8. MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . . .27
SECTION 5.9. APPOINTMENT OF PAYING AGENT. . . . . . . . . . . . . . . . .27
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR. . . . . . . . .28
SECTION 5.11. GLOBAL SECURITIES; NON-GLOBAL SECURITIES;
COMMON SECURITIES CERTIFICATE. . . . . . . . . . . . . . . .28
SECTION 5.12. NOTICES TO CLEARING AGENCY . . . . . . . . . . . . . . . . .29
SECTION 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES . . . . . . . .29
SECTION 5.14. RIGHTS OF SECURITYHOLDERS. . . . . . . . . . . . . . . . . .30
ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.1. LIMITATIONS ON VOTING RIGHTS . . . . . . . . . . . . . . . .30
SECTION 6.2. NOTICE OF MEETINGS . . . . . . . . . . . . . . . . . . . . .32
SECTION 6.3. MEETINGS OF PREFERRED SECURITYHOLDERS. . . . . . . . . . . .32
SECTION 6.4. VOTING RIGHTS. . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 6.5. PROXIES, ETC.. . . . . . . . . . . . . . . . . . . . . . . .33
SECTION 6.6. SECURITYHOLDER ACTION BY WRITTEN CONSENT . . . . . . . . . .33
SECTION 6.7. RECORD DATE FOR VOTING AND OTHER PURPOSES. . . . . . . . . .33
SECTION 6.8. ACTS OF SECURITYHOLDERS. . . . . . . . . . . . . . . . . . .33
SECTION 6.9. INSPECTION OF RECORDS. . . . . . . . . . . . . . . . . . . .35
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE . . . . . . . . . . . . . . . . . .35
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. . . . . . . . .36
ARTICLE 8
THE TRUSTEES
SECTION 8.1. CERTAIN DUTIES AND RESPONSIBILITIES. . . . . . . . . . . . .36
SECTION 8.2. NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . .38
SECTION 8.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE . . . . . . . . . . . . .39
SECTION 8.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES . . .41
SECTION 8.5. MAY HOLD SECURITIES. . . . . . . . . . . . . . . . . . . . .42
SECTION 8.6. COMPENSATION; INDEMNITY; FEES. . . . . . . . . . . . . . . .42
SECTION 8.7. PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES . . . . .42
SECTION 8.8. CONFLICTING INTERESTS. . . . . . . . . . . . . . . . . . . .43
SECTION 8.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. . . . . .43
SECTION 8.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR . . . . . . . . . . .45
SECTION 8.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 8.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
SECTION 8.13. REPORTS BY PROPERTY TRUSTEE. . . . . . . . . . . . . . . . .45
SECTION 8.14. REPORTS TO THE PROPERTY TRUSTEE. . . . . . . . . . . . . . .46
SECTION 8.15. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT . . . . . .46
SECTION 8.16. NUMBER OF TRUSTEES . . . . . . . . . . . . . . . . . . . . .46
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SECTION 8.17. DELEGATION OF POWER. . . . . . . . . . . . . . . . . . . . .47
ARTICLE 9
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. DISSOLUTION UPON EXPIRATION DATE . . . . . . . . . . . . . .47
SECTION 9.2. EARLY DISSOLUTION. . . . . . . . . . . . . . . . . . . . . .47
SECTION 9.3. DISSOLUTION. . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 9.4. LIQUIDATION. . . . . . . . . . . . . . . . . . . . . . . . .48
SECTION 9.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR
REPLACEMENTS OF THE TRUST. . . . . . . . . . . . . . . . . .49
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. LIMITATION OF RIGHTS OF SECURITYHOLDERS. . . . . . . . . . .50
SECTION 10.2. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . . . . .50
SECTION 10.3. SEPARABILITY . . . . . . . . . . . . . . . . . . . . . . . .51
SECTION 10.4. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . .52
SECTION 10.5. PAYMENTS DUE ON NON-BUSINESS DAY . . . . . . . . . . . . . .52
SECTION 10.6. SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . .52
SECTION 10.7. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . .52
SECTION 10.8. REPORTS, NOTICES AND DEMANDS . . . . . . . . . . . . . . . .52
SECTION 10.9. AGREEMENT NOT TO PETITION. . . . . . . . . . . . . . . . . .52
SECTION 10.10. TRUST INDENTURE ACT; CONFLICT WITH TRUST
INDENTURE ACT. . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE
AND INDENTURE. . . . . . . . . . . . . . . . . . . . . . . .53
SECTION 10.12. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . .53
</TABLE>
EXHIBIT A -- Certificate of Trust of
Dura Automotive Systems Capital Trust
EXHIBIT B -- Form of Certificate
Depositary Agreement
EXHIBIT C -- Form of Common Securities of
Dura Automotive Systems Capital Trust
EXHIBIT D -- Form of Preferred Securities of
Dura Automotive Systems Capital Trust
EXHIBIT E -- Notice of Conversion
iii
<PAGE>
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
Certain Sections of this Trust Agreement
relating to Sections 310 through 318
of the Trust Indenture Act of 1939:
TRUST INDENTURE TRUST AGREEMENT
ACT SECTION SECTION
Section 310 (a)(1). . . . . . . . . . . . . . . . . . . .8.7
(a)(2). . . . . . . . . . . . . . . . . . . .8.7
(a)(3). . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(4). . . . . . . . . . . . . . . . . . . .2.7(a)(ii)
(b) . . . . . . . . . . . . . . . . . . . . .8.8
Section 311 (a) . . . . . . . . . . . . . . . . . . . . .8.12
(b) . . . . . . . . . . . . . . . . . . . . .8.12
Section 312 (a) . . . . . . . . . . . . . . . . . . . . .5.7
(b) . . . . . . . . . . . . . . . . . . . . .5.7
(c) . . . . . . . . . . . . . . . . . . . . .5.7
Section 313 (a) . . . . . . . . . . . . . . . . . . . . .8.13(a)
(c) . . . . . . . . . . . . . . . . . . . . .10.8
(d) . . . . . . . . . . . . . . . . . . . . .8.13(c)
(a)(4). . . . . . . . . . . . . . . . . . . .8.13(b)
(b) . . . . . . . . . . . . . . . . . . . . .8.13(b)
Section 314 (a) . . . . . . . . . . . . . . . . . . . . .8.14
(b) . . . . . . . . . . . . . . . . . . . . .Not Applicable
(c)(1). . . . . . . . . . . . . . . . . . . .8.15
(c)(2). . . . . . . . . . . . . . . . . . . .8.15
(c)(3). . . . . . . . . . . . . . . . . . . .Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . .Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . .1.1, 8.15
Section 315 (a) . . . . . . . . . . . . . . . . . . . . .8.1(a), 8.3(a)
(b) . . . . . . . . . . . . . . . . . . . . .8.2, 10.8
(c) . . . . . . . . . . . . . . . . . . . . .8.1(a)
(d) . . . . . . . . . . . . . . . . . . . . .8.1, 8.3
(e) . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 316 (a) . . . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(1)(A) . . . . . . . . . . . . . . . . . .Not Applicable
(a)(1)(B) . . . . . . . . . . . . . . . . . .Not Applicable
(a)(2). . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . .Not Applicable
(c) . . . . . . . . . . . . . . . . . . . . .6.7
Section 317 (a)(1). . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . .5.9
Section 318 (a) . . . . . . . . . . . . . . . . . . . . .10.10
- ---------------
* Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
iv
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AMENDED AND RESTATED TRUST AGREEMENT, dated as of March __, 1998
among: (i) Dura Automotive Systems, Inc., a Delaware corporation (including any
successors or assigns, the "Depositor"); (ii) The First National Bank of
Chicago, a national banking association, as property trustee (in such capacity,
the "Property Trustee" and, in its personal capacity and not in its capacity as
Property Trustee, the "Bank"); (iii) First Chicago Delaware Inc. a corporation
duly organized and existing under the laws of the State of Delaware, as Delaware
trustee (in such capacity, the "Delaware Trustee"); (iv) Karl F. Storrie,
Stephan E. K. Graham and David R. Bovee, each of whose address is c/o Dura
Automotive Systems, Inc., 2791 Research Drive, Rochester Hills, Michigan
48309-3575 (each, an "Administrative Trustee" and, collectively, the
"Administrative Trustees" and, collectively with the Property Trustee and
Delaware Trustee, the "Trustees") and (iv) the several Holders as hereinafter
defined.
W I T N E S S E T H:
WHEREAS, the Depositor and certain of the Trustees have heretofore
duly declared and created a business trust pursuant to the Delaware Business
Trust Act by the entering into of that certain Trust Agreement, dated as of
March 2, 1998 (the "Original Trust Agreement"), and by the execution and filing
by certain of the Trustees with the Secretary of State of the State of Delaware
of the Certificate of Trust, filed on March 2, 1998, attached as Exhibit A, for
the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in the Debentures (as defined herein); and
WHEREAS, the parties hereto desire to amend and restate the Original
Trust Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance and sale of the Common Securities (as defined herein)
by the Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Trust pursuant to the Underwriting Agreement (each as defined
herein) and (iii) the acquisition by the Trust from the Depositor of all of the
right, title and interest in the Debentures;
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Holders of the Preferred Securities, hereby amends
and restates the Original Trust Agreement in its entirety and agrees as follows:
ARTICLE 1
DEFINED TERMS
SECTION 1.1. DEFINITIONS. For all purposes of this Trust Agreement,
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
1
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(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Trust Agreement; and
(d) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
"ACT" has the meaning specified in Section 6.8.
"ADDITIONAL AMOUNT" means, with respect to the Trust Securities, the
amount of Additional Interest (as defined in the Indenture) paid by the
Depositor on the Debentures.
"ADDITIONAL SUMS" means, with respect to the Trust Securities, the
amount of Additional Sums (as defined in the Indenture) paid by the Depositor on
the Debentures.
"ADMINISTRATIVE TRUSTEE" means each of Karl F. Storrie, Stephen E. K.
Graham and David R. Bovee, each solely in his capacity as Administrative Trustee
of the Trust and not in his individual capacity, or such Administrative
Trustee's successor in interest in such capacity, or any successor in interest
in such capacity, or any successor administrative trustee appointed as herein
provided.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person, provided, however that an Affiliate of the
Depositor shall be deemed not to include the Trust. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and 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 to the foregoing.
"APPLICABLE PROCEDURES" means, with respect to any transfer or
transaction involving a Global Certificate or beneficial interest therein, the
rules and procedures of Euroclear and Cedel, and of the Clearing Agency for such
security, in each case to the extent applicable to such transaction and as in
effect from time to time.
"BANK" has the meaning specified in the preamble to this Trust
Agreement.
"BANKRUPTCY EVENT" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in
the premises judging such Person as bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement, adjudication
or composition of or in respect of such Person under any applicable Federal
or State bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or
other similar official) of such Person or of any substantial part of its
property or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period
of 60 consecutive days; or
2
<PAGE>
(b) the institution by such Person of proceedings to be adjudicated
as bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or similar official) of such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due and its willingness to be adjudicated a
bankrupt, or the taking of corporate action by such Person in furtherance
of any such action.
"BANKRUPTCY LAWS" has the meaning specified in Section 10.9.
"BOARD OF DIRECTORS" means either the board of directors of the
Depositor or any committee of that board duly authorized to act hereunder.
"BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES" means a beneficial
interest in the Preferred Securities Certificates, ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 5.11.
"BUSINESS DAY" means any day other than a Saturday or Sunday or a day
on which banking institutions in The City of Chicago are authorized or required
by law or executive order to remain closed or a day on which the Corporate Trust
Office of the Property Trustee or the corporate trust office of the Debenture
Trustee, is closed for business.
"CERTIFICATE DEPOSITORY AGREEMENT" means the agreement among the
Trust, the Depositor and The Depository Trust Company, as the initial Clearing
Agency, dated as of the Closing Date, relating to the Trust Securities
Certificates substantially in the form attached as Exhibit B, as the same may be
amended and supplemented from time to time.
"CERTIFICATED PREFERRED SECURITY" has the meaning specified in
Section 5.2.
"CLASS A COMMON STOCK" means the Class A Common Stock, $.01 par value
per share, of the Depositor.
"CLASS B COMMON STOCK" means the Class B Common Stock, $.01 par value
per share, of the Depositor.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The Depository Trust Company will be the initial Clearing Agency.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
3
<PAGE>
"CLOSING DATE" means the first Time of Delivery (as defined in the
Underwriting Agreement), which date is also the date of execution and delivery
of this Trust Agreement.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
"COMMON SECURITIES CERTIFICATE" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit C.
"COMMON SECURITY" means an undivided beneficial interest in the assets
of the Trust, having a Liquidation Amount with respect to the assets of the
Trust of $25 and having the rights provided therefor in this Trust Agreement,
including the right to receive Distributions and a Liquidation Distribution as
provided herein.
"COMMON STOCK" means the Class A Common Stock and Class B Common
Stock.
"CONVERSION AGENT" has the meaning specified in Section 4.3.
"CONVERSION DATE" has the meaning specified in Section 4.3.
"CONVERSION PRICE" has the meaning specified in Section 4.3.
"CORPORATE TRUST OFFICE" means the principal corporate trust office of
the Property Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date hereof is located at
The First National Bank of Chicago, Mail Suite 0129, Chicago, Illinois
60670-0129.
"CURRENT MARKET PRICE," with respect to Common Stock, means for any
day the last reported sale price, regular way, on such day, or, if no sale takes
place on such day, the average of the reported closing bid and asked prices on
such day, regular way, in either case as reported on the New York Stock Exchange
Composite Transactions Tape, or, if Common Stock is not listed or admitted to
trading on the New York Stock Exchange on such day, on the principal national
securities exchange on which Common Stock is listed or admitted to trading, if
Common Stock is listed on a national securities exchange, or the Nasdaq National
Market, or, if Common Stock is not quoted or admitted to trading on such
quotation system, on the principal quotation system on which Common Stock may be
listed or admitted to trading or quoted, or, if not listed or admitted to
trading or quoted on any national securities exchange or quotation system, the
average of the closing bid and asked prices of Common Stock in the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similar generally accepted reporting
service, or, if not so available in such manner, as furnished by any New York
Stock Exchange member firm selected from time to time by the Board of Directors
for that purpose or, if not so available in such manner, as otherwise determined
in good faith by the Board of Directors.
"DEBENTURE EVENT OF DEFAULT" means an "Event of Default" as defined in
the Indenture.
4
<PAGE>
"DEBENTURE REDEMPTION DATE" means, with respect to any Debentures to
be redeemed under the Indenture, the date fixed for redemption thereof under the
Indenture.
"DEBENTURE TRUSTEE" means The First National Bank of Chicago, a
national banking association, as trustee under the Indenture.
"DEBENTURES" means all of the Depositor's ___% junior convertible
subordinated debentures, $51.5 million principal amount, issued pursuant to the
Indenture ($59,225,000 principal amount of the Underwriters' over-allotment
option is exercised in full).
"DEFINITIVE PREFERRED SECURITIES CERTIFICATES" means either or both
(as the context requires) of (a) Preferred Securities Certificates issued in
certificated, fully registered form as provided in Section 5.11(a) and (b)
Preferred Securities Certificates issued in certificated, fully registered form
as provided in Section 5.13.
"DELAWARE BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. Section 3801, et. seq., as it may be amended from time
to time.
"DELAWARE TRUSTEE" means the Person identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Trust and not in its individual capacity, or its
successor in interest in such capacity, or any successor Delaware trustee
appointed as herein provided.
"DEPOSITOR" has the meaning specified in the preamble to this Trust
Agreement.
"DIRECT ACTION" has the meaning specified in Section 6.8.
"DISTRIBUTION DATE" has the meaning specified in Section 4.1(a).
"DISTRIBUTIONS" means amounts payable in respect of the Trust
Securities as provided in Section 4.1.
"DURA OPERATING CORP." means Dura Operating Corp, AN operating
subsidiary of the Company.
"EARLY DISSOLUTION EVENT" has the meaning specified in Section 9.2.
"EVENT OF DEFAULT" means the occurrence of a Debenture Event of
Default, whatever the reason for such Debenture Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body.
"EXCHANGE NOTICE" has the meaning specified in Section 4.4(b).
"EXPIRATION DATE" has the meaning specified in Section 9.1.
5
<PAGE>
"GLOBAL CERTIFICATE" means a Preferred Security that is registered in
the Securities Register in the name of a Clearing Agency or a nominee thereof.
"GUARANTEE" means the Guarantee Agreement executed and delivered by
the Depositor and The First National Bank of Chicago, a national banking
association, as guarantee trustee, contemporaneously with the execution and
delivery of this Trust Agreement, for the benefit of the Holders of the
Preferred Securities, as amended from time to time.
"HOLDER" means a Person in whose name a Trust Securities Certificate
representing a Trust Security is registered, such Person being a beneficial
owner within the meaning of the Delaware Business Trust Act.
"INDENTURE" means the Junior Convertible Subordinated Indenture, dated
as of March __, 1998 between the Depositor and the Debenture Trustee, as amended
or supplemented from time to time.
"INVESTMENT COMPANY EVENT" means the receipt by the Property Trustee,
on behalf of the Trust, of an Opinion of Counsel, rendered by a law firm having
a national tax and securities practice (which Opinion of Counsel shall not have
been rescinded by such law firm), to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Preferred Securities under this Trust Agreement.
"LIEN" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"LIQUIDATION AMOUNT" means an amount with respect to the assets of the
Trust equal to $25 per Trust Security.
"LIQUIDATION DATE" means each date on which Debentures or cash are to
be distributed to Holders of Trust Securities in connection with a dissolution
and liquidation of the Trust pursuant to Section 9.4(a).
"LIQUIDATION DISTRIBUTION" has the meaning specified in Section
9.4(d).
"1940 ACT" means the Investment Company Act of 1940, as amended.
"NOTICE OF CONVERSION" means the notice given by a Holder of Preferred
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Preferred Security for Debentures and to convert such Debentures into Class
A Common Stock on behalf of such holder. Such notice is substantially in the
form set forth in Exhibit E.
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"OFFICERS' CERTIFICATE" means a certificate signed by (i) the Chairman
of the Board, a Vice Chairman, the President or a Vice President, and by (ii)
the Treasurer, an Assistant Treasurer, the Controller, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the Trustee. One of the
officers signing an Officers' Certificate given pursuant to Section 8.15 shall
be the principal executive, financial or accounting officer of the Depositor.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant of condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
counsel for the Trust, the Property Trustee or the Depositor, and who may be an
employee of any thereof, and who shall be acceptable to the Property Trustee.
Any Opinion of Counsel delivered with respect to compliance with a condition or
covenant provided for in this Trust Agreement shall include:
(a) a statement that each individual signing the Opinion of Counsel
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each individual in rendering the Opinion of
Counsel;
(c) a statement that each individual has made such examination or
investigation as is necessary to enable such individual to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"OPTIONAL REDEMPTION PRICE" means with respect to the Preferred
Securities (except as set forth below with respect to redemption upon the
occurrence of a Tax Event), the following percentages of the Liquidation Amounts
thereof, plus accumulated and unpaid Distributions, if any, to the date fixed
for redemption if redeemed during the twelve-month period commencing March __ in
each of the following years indicated:
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Year Redemption Price Year Redemption Price
- ---- ---------------- ---- ----------------
In the event of a redemption of Trust Securities upon the occurrence
of a Tax Event, Trust Securities shall be redeemed at the redemption price of
$25 per Trust Security and all accumulated and unpaid Distributions, if any, to
the date fixed for redemption.
"ORIGINAL TRUST AGREEMENT" has the meaning specified in the recitals
to this Trust Agreement.
"OUTSTANDING," when used with respect to Trust Securities, means, as
of the date of determination, all Trust Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Securities Registrar
or delivered to the Securities Registrar for cancellation or tendered for
conversion;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Trust Securities; provided
that, if such Trust Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement;
(c) Trust Securities which have been exchanged for Debentures
pursuant to Section 4.4; and
(d) Trust Securities which have been paid or in exchange for or in
lieu of which other Trust Securities have been executed and delivered
pursuant to Section 5.5;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Trust Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, Trust
Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor
or any Trustee shall be disregarded and deemed not to be Outstanding, except
that (a) in determining whether any Trustee shall be fully protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Trust Securities that a Responsible Officer of the Property Trustee
or the Delaware Trustee, or an individual Administrative Trustee, as the case
may be, actually knows to be so owned shall be so disregarded and (b) the
foregoing shall not apply at any time when all of the Outstanding Trust
Securities are owned by the Depositor, one or more of the Trustees and/or any
such Affiliate. Trust Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
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of the Securities Registrar the pledgee's right so to act with respect to such
Trust Securities and that the pledgee is not the Depositor or any Affiliate of
the Depositor.
"OWNER" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"PAYING AGENT" means any paying agent or co-paying agent appointed
pursuant to Section 5.9.
"PAYMENT ACCOUNT" means a segregated non-interest bearing corporate
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Property Trustee shall
make payments to the Securityholders in accordance with Section 4.1.
"PERSON" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"PREFERRED SECURITIES CERTIFICATE" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as Exhibit
D.
"PREFERRED SECURITY" means an undivided beneficial interest in the
assets of the Trust, having a Liquidation Amount with respect to the assets of
the Trust of $25 and having the rights provided therefor in this Trust
Agreement, including the right to receive Distributions and a Liquidation
Distribution as provided herein.
"PROPERTY TRUSTEE" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"REDEMPTION DATE" means, with respect to any Trust Security to be
redeemed, each Debenture Redemption Date.
"REDEMPTION PRICE" means, with respect to any Trust Security, $25 per
Trust Security, plus accumulated and unpaid Distributions (including any
Additional Sums) to the date of redemption.
"RELEVANT TRUSTEE" has the meaning specified in Section 8.9.
"RESPONSIBLE OFFICER" means any officer assigned to the Corporate
Trust Office, including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Property Trustee or the Delaware Trustee customarily performing functions
similar to those performed by any of the above designated officers and having
direct responsibility for the administration of this Trust Agreement, and also,
with respect to a
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particular matter, any other officer, to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"SECURITIES REGISTER" and "SECURITIES REGISTRAR" have the respective
meanings specified in Section 5.4.
"SECURITYHOLDER" or "HOLDER" means a Person in whose name a Trust
Security or Securities is registered in the Securities Register; any such Person
shall be deemed to be a beneficial owner within the meaning of the Delaware
Business Trust Act.
"SPECIAL EVENT" means a Tax Event or an Investment Company Event.
"SUCCESSOR PROPERTY TRUSTEE" has the meaning specified in Section 8.9.
"SUCCESSOR DELAWARE TRUSTEE" has the meaning specified in Section 8.9.
"SUCCESSOR SECURITIES" has the meaning specified in Section 9.5.
"SUPER MAJORITY" has the meaning specified in Section 8.2.
"TAX EVENT" means the receipt by the Property Trustee, on behalf of
the Trust, of an Opinion of Counsel, rendered by a law firm having a national
tax and securities practice (which Opinion of Counsel shall not have been
rescinded by such law firm), to the effect that, as a result of any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under this Trust Agreement and does not pertain to the
use of the proceeds of the issuance of the Debentures, there is more than an
insubstantial risk in each case after the date thereof that (i) the Trust is, or
will be within 90 days after the date thereof, subject to United State Federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Depositor on the Debentures is not, or will not be,
within 90 days after the date thereof, deductible, in whole or in part, for
United States Federal income tax purposes or (iii) the Trust is, or will be
within 90 days after the date thereof, subject to more than DE MINIMIS amount of
other taxes, duties, assessments or other governmental charges.
"TRUST" means the Delaware business trust continued hereby and
identified on the cover page of this Trust Agreement.
"TRUST AGREEMENT" means this Amended and Restated Trust Agreement, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Trust Agreement any such modification, amendment or supplement,
the provisions of the Trust Indenture Act that are deemed to be a part of and
govern this Trust Agreement and any such modification, amendment or supplement,
respectively.
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"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"TRUST PROPERTY" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Payment Account and (c) all proceeds and rights in respect of
the foregoing to be held by the Property Trustee pursuant to the terms of this
Trust Agreement for the benefit of the Securityholders.
"TRUST SECURITY" means any one of the Common Securities or the
Preferred Securities.
"TRUST SECURITIES CERTIFICATE" means any one of the Common Securities
Certificates, the Global Certificates or the Certificated Preferred Securities.
"TRUSTEES" means, collectively, the Property Trustee, the Delaware
Trustee and the Administrative Trustees.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, date as of
March __, 1998 among the Trust, the Depositor, Dura Operating Corp. and the
Underwriters named therein.
ARTICLE 2
ESTABLISHMENT OF THE TRUST
SECTION 2.1. NAME. The Trust continued hereby shall be known as
"Dura Automotive Systems Capital Trust," as such name may be modified from time
to time by the Administrative Trustees following written notice to the Holders
of Trust Securities and the other Trustees, in which name the Trustees may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and sue and be sued.
SECTION 2.2. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF
BUSINESS. The address of the Delaware Trustee in the State of Delaware is 300
King Street, Wilmington, Delaware 19801, or such other address in the State of
Delaware as the Delaware Trustee may designate by written notice to the
Depositor. The principal executive office of the Trust is 4508 IDS Center,
Minneapolis, Minnesota 55402.
SECTION 2.3. ORGANIZATIONAL EXPENSES. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of any
Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.4. ISSUANCE OF THE PREFERRED SECURITIES. On March __,
1998, the Depositor on behalf of the Trust executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 5.2 and deliver to the Underwriters named in
the Underwriting Agreement Preferred Securities Certificates, in an aggregate
amount of 2,000,000 (2,300,000 if the Underwriters' over-allotment option is
exercised
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in full) Preferred Securities having an aggregate Liquidation Amount of
$50,000,000 ($57,500,000 if the Underwriters' over-allotment option is exercised
in full), against receipt of the aggregate purchase price of such Preferred
Securities of $50,000,000 ($57,500,000 if the Underwriters' over-allotment
option is exercised in full), which amount the Administrative Trustees shall
promptly deliver to the Property Trustee.
SECTION 2.5. SUBSCRIPTION AND PURCHASE OF DEBENTURES; ISSUANCE OF
THE COMMON SECURITIES. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
subscribe to and purchase from the Depositor Debentures, registered in the name
of the Property Trustee (in its capacity as such) and having an aggregate
principal amount equal to $50,000,000 ($57,500,000 if the Underwriters'
over-allotment option is exercised in full), and, in satisfaction of the
purchase price for such Debentures, the Property Trustee, on behalf of the
Trust, shall deliver to the Depositor the sum of $50,000,000 ($57,000,000 if the
Underwriters' over-allotment option is exercised in full). Contemporaneously
therewith, an Administrative Trustee, on behalf of the Trust, shall execute in
accordance with Section 5.2 and deliver to the Depositor Common Securities
Certificates registered in the name of the Depositor, in an aggregate amount of
60,000 (69,000 if the Underwriters' over-allotment option is exercised in full)
Common Securities having an aggregate Liquidation Amount of $1,500,000
($1,725,000 if the Underwriters' over-allotment option is exercised in full)
against receipt of the aggregate purchase price of such Common Securities from
the Depositor of [Debentures, registered in the name of the Property Trustee (in
its capacity as such) and having an aggregate principal amount equal to
$1,500,000 ($1,725,000 if the Underwriters' over-allotment option is exercised
in full)].
SECTION 2.6. DECLARATION OF TRUST. The exclusive purposes and
functions of the Trust are (a) to issue and sell Trust Securities and use the
proceeds from such sale to acquire the Debentures, (b) to distribute the Trust's
income as provided in this Trust Agreement and (c) to engage in only those other
activities necessary or incidental thereto. The Trust shall not borrow money,
issue debt or reinvest proceeds derived from investments, mortgage or pledge any
of its assets or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States Federal income
tax purposes as a grantor trust. The Depositor hereby appoints the Trustees as
trustees of the Trust, to have all the rights, powers and duties to the extent
set forth herein, and the Trustees hereby accept such appointment. The Property
Trustee hereby declares that it will hold the Trust Property upon and subject to
the conditions set forth herein for the benefit of the Trust and the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the other Trustees set forth herein. The
Delaware Trustee shall be one of the Trustees of the Trust for the sole and
limited purpose of fulfilling the requirements of Section 3807 of the Delaware
Business Trust Act.
SECTION 2.7. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS. (a)
The Trustees shall conduct the affairs of the Trust in accordance with the terms
of this Trust Agreement. Subject to the limitations set forth in Section 2.6
and paragraph (b) of this Section, and in accordance with the following
provisions (i) and (ii), the Trustees shall have the exclusive power, duty and
the authority to cause the Trust to engage in the following activities:
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(i) As among the Trustees, each Administrative Trustee shall have the
power and authority to act on behalf of the Trust with respect to the
following matters:
(A) to issue and sell the Trust Securities; provided, however,
that the Trust may issue no more than one series of Preferred
Securities and no more than one series of Common Securities; provided,
further, that there shall be no interests in the Trust other than the
Trust Securities, and the issuance of Trust Securities shall be
limited to simultaneous issuance of both Preferred Securities and
Common Securities on the Closing Date and any other date Preferred
Securities and Common Securities are sold pursuant to the
over-allotment option granted to the Underwriters named in the
Underwriting Agreement, subject to the issuance of Trust Securities
pursuant to Section 5.5 and Successor Securities pursuant to
Section 9.5;
(B) to cause the Trust to enter into, and to execute, deliver
and perform on behalf of the Trust, the Certificate Depository
Agreement and such other agreements as may be necessary or incidental
to the purposes and function of the Trust;
(C) to assist in the registration of the Preferred Securities
under the Securities Act of 1933, as amended, and under state
securities or blue sky laws, and the qualification of this Trust
Agreement as a trust indenture under the Trust Indenture Act;
(D) to assist in the listing of the Preferred Securities upon
such securities exchange or exchanges, if any, as shall be determined
by the Depositor and the registration of the Preferred Securities
under the Securities Exchange Act of 1934, as amended, and the
preparation and filing of all periodic and other reports and other
documents pursuant to the foregoing (only to the extent that such
listing or registration is requested by the Depositor);
(E) to appoint a Paying Agent, a Securities Registrar and an
authenticating agent in accordance with this Trust Agreement;
(F) to the extent provided in this Trust Agreement, to wind up
the affairs of and liquidate the Trust and prepare, execute and file
the certificate of cancellation with the Secretary of State of the
State of Delaware;
(G) unless otherwise required by the Delaware Business Trust Act
or the Trust Indenture Act, to execute on behalf of the Trust (either
acting alone or together with any other Administrative Trustees) any
documents that the Administrative Trustees have the power to execute
pursuant to this Trust Agreement; and
(H) to take any action incidental to the foregoing as the
Trustees may from time to time determine is necessary or advisable to
give effect to the terms of this Trust Agreement including, but not
limited to:
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(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the 1940 Act;
(ii) causing the Trust to be classified for United States
Federal income tax purposes as a grantor trust; and
(iii) cooperating with the Depositor to ensure that the
Debentures will be treated as indebtedness of the Depositor for
United States Federal income tax purposes;
provided that such action does not adversely affect in any material
respect the interests of Securityholders except as otherwise provided
in Section 10.2(a).
(iv) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Payment Account;
(B) the receipt of and taking title to the Debentures;
(C) the collection of interest, principal and any other payments
made in respect of the Debentures in the Payment Account;
(D) the distribution from the Trust Property of amounts owed to
the Securityholders in respect of the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of
a holder of the Debentures;
(F) the sending of notices of default, other notices and other
information regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with
the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust;
(I) after an Event of Default, the taking of any action
incidental to the foregoing as the Property Trustee may from time to
time determine is necessary or advisable to give effect to the terms
of this Trust Agreement and protect and conserve the Trust Property
for the benefit of the Securityholders (without consideration of the
effect of any such action on any particular Securityholder);
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(J) subject to this Section 2.7(a)(ii), the Property Trustee
shall have none of the duties, liabilities, powers or the authority of
the Administrative Trustees set forth in Section 2.7(a)(i); and
(K) to act as Paying Agent and/or Securities Registrar to the
extent appointed as such hereunder.
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trust shall not, and the Trustees shall not, cause
the Trust to (i) invest any proceeds received by the Trust from holding the
Debentures (rather, the Trustees shall distribute all such proceeds to the
Securityholders pursuant to the terms of this Trust Agreement and the Trust
Securities), acquire any investments or engage in any activities not authorized
by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage,
pledge, set-off or otherwise dispose of any of the Trust Property or interests
therein, including to Securityholders, except as expressly provided herein,
(iii) take any action that would cause the Trust to fail or cease to qualify as
a "grantor trust" for United States Federal income tax purposes, (iv) make any
loans or incur any indebtedness for borrowed money or issue any other debt, (v)
take or consent to any action that would result in the placement of a Lien on
any of the Trust Property, (vi) possess any power or otherwise act in such a way
as to vary the Trust assets or the terms of the Trust Securities in any way
whatsoever except as permitted by the terms of this Trust Agreement, or (vii)
issue any securities or other evidences of beneficial ownership of, or
beneficial interest in, the Trust other than the Trust Securities. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Preferred Securities, the
Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following actions (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(i) to file by the Trust with the Commission and to execute on
behalf of the Trust a registration statement on the appropriate form in
relation to the Preferred Securities, including any amendments thereto;
(ii) to determine the States and foreign jurisdictions in which to
take appropriate action to qualify or register for resale all or part of
the Preferred Securities and to do any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and advise the
Trustees of actions they must take on behalf of the Trust, and prepare for
execution and filing any documents to be executed and filed by the Trust or
on behalf of the Trust, as the Depositor deems necessary or advisable in
order to comply with the applicable laws of any such States and foreign
jurisdictions;
(iii) to the extent necessary, to prepare for filing by the Trust with
the Commission and to execute on behalf of the Trust a registration
statement on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) or 12(g) of the Securities Exchange Act of
1934, as amended, including any amendments thereto (it being understood
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that neither the Trust nor the Depositor has any obligation under the
Indenture, the Underwriting Agreement\ or the Trust Agreement to register
any Trust Securities under the Securities Exchange Act of 1934, as amended
or to list any Trust Securities on any securities exchange);
(iv) to negotiate, and to execute and deliver, on behalf of the Trust,
the Underwriting Agreement; and
(v) any other actions necessary or incidental to carry out any of the
foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust and to
operate the Trust so that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act, or taxed as a corporation
for United States Federal income tax purposes and so that the Debentures will be
treated as indebtedness of the Depositor for United States Federal income tax
purposes. In this connection, the Depositor and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
Certificate of Trust or this Trust Agreement, that each of the Depositor and the
Administrative Trustees determines in their discretion to be necessary or
desirable for such purposes, so long as such action does not adversely affect in
any material respect the interests of the Holders of the Preferred Securities
except as otherwise provided in Section 10.2(a).
SECTION 2.8. ASSETS OF TRUST. The assets of the Trust shall consist
of only the Trust Property.
SECTION 2.9. TITLE TO TRUST PROPERTY. Legal title to all Trust
Property shall be vested at all times in the Property Trustee (in its capacity
as such) and shall be held and administered by the Property Trustee for the
benefit of the Trust and the Securityholders in accordance with this Trust
Agreement. The Securityholders shall not have legal title to any part of the
assets of the Trust, but shall have an undivided beneficial interest in the
assets of the Trust.
ARTICLE 3
PAYMENT ACCOUNT
SECTION 3.1. PAYMENT ACCOUNT. (a) On or prior to the Closing Date,
the Property Trustee shall establish the Payment Account. The Property Trustee
and any agent of the Property Trustee shall have exclusive control and sole
right of withdrawal with respect to the Payment Account for the purpose of
making deposits in and withdrawals from the Payment Account in accordance with
this Trust Agreement. All monies and other property deposited or held from time
to time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the Securityholders and for
distribution as herein provided, including (and subject to) any priority of
payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the
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Debentures. Amounts held in the Payment Account shall not be invested by the
Property Trustee pending distribution thereof.
ARTICLE 4
DISTRIBUTIONS; REDEMPTION; EXCHANGE; CONVERSION
SECTION 4.1. DISTRIBUTIONS. (a) Distributions on the Trust
Securities shall be cumulative, and shall accrue from the date of original
issuance, or the most recent Distribution Date (as defined herein) and, except
in the event that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable quarterly
in arrears on __________ __, __________ __, __________ __, and __________ __ of
each year, commencing on March __, 1998 (which dates correspond to the interest
payment dates on the Debentures), when, as and if available for payment by the
Property Trustee, as further described in paragraph (c) of this Section 4.1. If
any date on which Distributions are otherwise payable on the Trust Securities is
not a Business Day, then the payment of such Distributions shall be made on the
next succeeding day which is a Business Day (and no interest shall accrue for
the period from and after such date until the next succeeding Business Day) with
the same force and effect as if made on such date (each date on which
Distributions are payable in accordance with this Section 4.1(a), a
"Distribution Date").
(b) The Trust Securities represent undivided beneficial interests in the
Trust Property, and the Distributions on the Trust Securities shall be payable
at a rate of ___% per annum of the Liquidation Amount of the Trust Securities,
such rate being the rate of interest payable on the Debentures to be held by the
Property Trustee. The amount of Distributions payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. For periods
less than a full month, Distributions shall reflect interest on Debentures
computed on the basis of the actual number of elapsed days based on a 360-day
year. The amount of Distributions payable for any period shall include the
Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee from the Payment Account and shall be payable on each Distribution Date
only to the extent that the Trust has funds then on hand and available in the
Payment Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant record date, which shall be
the date which is the fifteenth day (whether or not a Business Day) next
preceding such Distribution Date.
SECTION 4.2. REDEMPTION. (a) Upon an optional redemption (as set
forth in the Indenture) of Debentures, the proceeds from such redemption shall
be applied to redeem Trust Securities having an aggregate Liquidation Amount
equal to the aggregate principal amount of the Debentures so redeemed by the
Depositor, including pursuant to Section 4.4, at the Optional Redemption Price,
and upon a mandatory redemption (as set forth in the Indenture) of Debentures,
the proceeds from such redemption shall be applied to redeem Trust Securities,
having an aggregate Liquidation Amount equal to the aggregate principal amount
of the Debentures so redeemed by the Depositor, at the Redemption Price. The
Trust may not redeem fewer than all the Outstanding Trust
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Securities unless all accrued and unpaid Distributions have been paid on all
Trust Securities for all quarterly Distribution periods terminating on or prior
to the date of redemption.
(b) Notice of redemption (which notice will be irrevocable) shall be given
by the Property Trustee by first-class mail, postage prepaid, mailed not less
than 30 nor more than 60 days prior to the Redemption Date to the Depositor and
each Holder of Trust Securities to be redeemed, at such Holder's address as it
appears in the Securities Register. All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price or the Optional Redemption Price, as the
case may be;
(iii) the record date for the determination of Holders entitled to
receive payment of the Redemption Price or Optional Redemption Price, as
the case may be, as provided in Section 4.2(d);
(iv) the CUSIP number;
(v) if less than all of the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of the
particular Trust Securities to be redeemed;
(vi) the Conversion Price and that a Holder of Preferred Securities
who desires to convert such Preferred Securities called for redemption must
satisfy the requirements for conversion contained in Section 4.3 below;
(vii) that on the Redemption Date the Redemption Price or the Optional
Redemption Price, as the case may be, will become due and payable upon each
such Trust Security to be redeemed and that Distributions thereon will
cease to accrue on and after said date; and
(viii) the place or places where such Trust Securities are to be
surrendered for payment of the Redemption Price or the Optional Redemption
Price, as the case may be.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price or the Optional Redemption Price, as the case
may be, with the proceeds from the contemporaneous redemption of Debentures.
Redemptions of the Trust Securities shall be made and the Redemption Price or
the Optional Redemption Price, as the case may be, shall be payable on each
Redemption Date only to the extent that the Trust has funds then on hand and
available in the Payment Account for the payment of such Redemption Price or the
Optional Redemption Price, as the case may be.
(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 12:00 noon, Chicago time, on the Redemption Date,
subject to Section 4.2(c), the Property Trustee will, so long as and to the
extent the Preferred Securities are in book-entry-only form, irrevocably deposit
with the Clearing Agency for the Preferred Securities funds sufficient to
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pay the applicable Redemption Price. If the Preferred Securities are no longer
in book-entry-only form, the Property Trustee, subject to Section 4.2(c), will
irrevocably deposit with the Paying Agent funds sufficient to pay the applicable
Redemption Price or Optional Redemption Price, as the case may be, on such
Preferred Securities held in certificated form and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price or the
Optional Redemption Price, as the case may be, to the Holders thereof upon
surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Securities Register for the Trust
Securities on the relevant record dates for the related Distribution Dates. If
notice of redemption shall have been given and funds deposited as required,
then, upon the date of such deposit, all rights of Securityholders holding Trust
Securities so called for redemption will cease, except (i) the right of such
Securityholders to receive the Redemption Price or the Optional Redemption
Price, as the case may be, but without interest, and (ii) the right to convert
such Preferred Securities into Class A Common Stock in the manner provided in
Section 4.3 through the close of business on the Redemption Date; and such Trust
Securities will cease to be Outstanding. In the event that any date on which
any Redemption Price or the Optional Redemption Price, as the case may be, is
payable is not a Business Day, then payment of the Redemption Price or the
Optional Redemption Price, as the case may be, payable on such date will be made
on the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case, with the same force and effect
as if made on such date. Payment of the Redemption Price or the Optional
Redemption Price, as the case may be, shall be made to the Holders of such Trust
Securities as they appear on the Securities Register for the Trust Securities on
the relevant record date, which shall be the date which is the fifteenth day
(whether or not a Business Day) preceding such Redemption Date.
(e) If less than all the Outstanding Trust Securities are to be redeemed
on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities
to be redeemed shall be allocated on a PRO RATA basis (based on Liquidation
Amounts) among the Common Securities and the Preferred Securities that are to be
redeemed. The particular Preferred Securities to be redeemed shall be selected
not more than 60 days prior to the Redemption Date by the Property Trustee from
the Outstanding Preferred Securities not previously called for redemption, by
lot or by such other method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to $25 or an integral multiple of $25 in excess thereof) of the
Liquidation Amount of the Preferred Securities. The Property Trustee shall
promptly notify the Securities Registrar and the Conversion Agent in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed; it being understood that, in the case of Preferred
Securities registered in the name of and held of record by the Clearing Agency
(or any successor) or any nominee, the distribution of the proceeds of such
redemption will be made in accordance with the procedures of the Clearing Agency
or its nominee. For all purposes of this Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities shall relate, in the case of any Preferred Securities redeemed or to
be redeemed only in part, to the portion of the Liquidation Amount of Preferred
Securities which has been or is to be redeemed. In the event of any redemption
in part, the Trust shall not be required to (i) issue, register the transfer of
or exchange of any Preferred Security during a period beginning at the opening
of
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business 15 days before any selection for redemption of Preferred Securities and
ending at the close of business on the earliest date in which the relevant
notice of redemption is deemed to have been given to all Holders of Preferred
Securities to be so redeemed or (ii) register the transfer of or exchange of any
Preferred Securities so selected for redemption, in whole or in part, except for
the unredeemed portion of any Preferred Securities being redeemed in part.
(f) In the event of any redemption, the Trust shall not be required to
issue, register the transfer of or register the exchange of any Preferred
Security during a period beginning at the opening of business 15 days before any
Redemption Date and ending at the close of business on such Redemption Date.
SECTION 4.3. CONVERSION. The Holders of Trust Securities, subject
to the limitations set forth in this Section, shall have the right, at their
option, to cause the Conversion Agent to convert Trust Securities, on behalf of
the converting Holders, into shares of Class A Common Stock in the manner
described herein on and subject to the following terms and conditions:
(i) The Trust Securities will be convertible into fully paid and
nonassessable shares of Class A Common Stock pursuant to the Holder's
direction to the Conversion Agent to exchange such Trust Securities for a
portion of the Debentures having a principal amount equal to the aggregate
Liquidation Amount of such Trust Securities, and immediately convert such
amount of Debentures into fully paid and nonassessable shares of Class A
Common Stock at an initial rate of______ shares of Class A Common Stock for
each Trust Security (which is equivalent to a conversion price of
approximately $ _____ per $25 principal amount of Debentures), subject to
certain adjustments set forth in the Indenture (as so adjusted, "Conversion
Price").
(ii) In order to convert Trust Securities into Class A Common Stock,
the Holder of such Trust Securities shall submit to the Conversion Agent an
irrevocable Notice of Conversion to convert Trust Securities on behalf of
such Holder, together, if the Trust Securities are in certificated form,
with such certificates. The Notice of Conversion shall (i) set forth the
number of Trust Securities to be converted and the name or names, if other
than the Holder, in which the shares of Class A Common Stock should be
issued and (ii) direct the Conversion Agent (a) to exchange such Trust
Securities for a portion of the Debentures held by the Property Trustee (at
the rate of exchange specified in the preceding paragraph) and (b) to
immediately convert such Debentures, on behalf of such Holder, into Class A
Common Stock (at the conversion rate specified in the preceding paragraph).
The Conversion Agent shall notify the Property Trustee in writing of the
Holder's election to exchange Trust Securities for a portion of the
Debentures held by the Property Trustee and the Property Trustee shall,
upon receipt of such written notice, deliver to the Conversion Agent the
appropriate principal amount of Debentures for exchange in accordance with
this Section. The Conversion Agent shall thereupon notify the Depositor of
the Holder's election to convert such Debentures into shares of Class A
Common Stock. Holders of Trust Securities at the close of business on a
Distribution payment record date will be entitled to receive the
Distribution paid on such Trust Securities on the corresponding
Distribution Date notwithstanding the conversion of such Trust Securities
on or following such record date but prior to such Distribution Date.
Except as provided above, neither the Trust nor the Depositor will make, or
be required to make, any payment, allowance or adjustment upon
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any conversion on account of any accumulated and unpaid Distributions
whether or not in arrears accrued on the Trust Securities surrendered for
conversion, or on account of any accumulated and unpaid dividends on the
shares of Class A Common Stock issued upon such conversion. Trust
Securities submitted for conversion prior to the expiration of conversion
rights as provided in Section 4.3(iii) shall be deemed to have been
converted immediately prior to the close of business on the day on which an
irrevocable Notice of Conversion relating to such Trust Securities is
received by the Conversion Agent in accordance with the foregoing provision
(the "Conversion Date"). The Person or Persons entitled to receive the
Class A Common Stock issuable upon conversion of the Debentures shall be
treated for all purposes as the record holder or holders of such Class A
Common Stock on the date of conversion. As promptly as practicable on or
after the Conversion Date, the Depositor shall issue and deliver at the
office of the Conversion Agent a certificate or certificates for the number
of full shares of Class A Common Stock issuable upon such conversion,
together with the cash payment, if any, in lieu of any fraction of any
share to the Person or Persons entitled to receive the same, unless
otherwise directed by the Holder in the notice of conversion and the
Conversion Agent shall distribute such certificate or certificates to such
Person or Persons.
(iii) The conversion rights of holders of the Debentures and the
corresponding conversion rights of Holders of Trust Securities shall expire
at the close of business on the date set for redemption of the Trust
Securities upon the mandatory or optional redemption of the Debentures.
(iv) Each Holder of a Trust Security by its acceptance thereof
initially appoints The First National Bank of Chicago not in its individual
capacity but solely as conversion agent (the "Conversion Agent") for the
purpose of effecting the conversion of Trust Securities in accordance with
this Section. In effecting the conversion and transactions described in
this Section, the Conversion Agent shall be acting as agent of the Holders
of Trust Securities directing it to effect such conversion transactions.
The Conversion Agent is hereby authorized (i) to exchange Trust Securities
from time to time for Debentures held by the Trust in connection with the
conversion of such Trust Securities in accordance with this Section and
(ii) to convert all or a portion of the Debentures into Class A Common
Stock and thereupon to deliver such shares of Class A Common Stock in
accordance with the provisions of this Section and to deliver to the
Property Trustee any new Debenture or Debentures for any resulting
unconverted principal amount delivered to the Conversion Agent by the
Debenture Trustee.
(v) No fractional shares of Class A Common Stock will be issued as a
result of conversion, but, in lieu thereof, such fractional interest will
be paid in cash by the Depositor to the Conversion Agent in an amount equal
to the Current Market Price of the fractional share of the Class A Common
Stock, and the Conversion Agent will in turn make such payment to the
Holder or Holders of Trust Securities so converted.
(vi) Nothing in this Section 4.3 shall limit the requirement of the
Trust to withhold taxes pursuant to the terms of the Trust Securities or as
set forth in this Trust Agreement or otherwise required of the Property
Trustee or the Trust to pay any amounts on account of such withholdings.
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SECTION 4.4. SPECIAL EVENT EXCHANGE OR REDEMPTION. (a)If a Special
Event shall occur and be continuing, the Property Trustee shall direct the
Conversion Agent to exchange all Outstanding Trust Securities for Debentures
having a principal amount equal to the aggregate Liquidation Amount of the Trust
Securities to be exchanged and with accrued interest in an amount equal to any
unpaid Distribution (including any Additional Amounts) on the Trust Securities;
provided, however, that, in the case of a Tax Event, the Depositor shall have
the right to (i) direct that less than all, or none, as appropriate, of the
Trust Securities be so exchanged if and for so long as the Depositor shall have
elected to pay any Additional Sums (as defined in the Indenture) such that the
amount received by Holders of Trust Securities not so exchanged in respect of
Distributions and other distributions are not reduced as a result of such Tax
Event, and shall not have revoked any such election or failed to make such
payments or (ii) cause the Trust Securities to be redeemed in the manner set
forth below. If a Tax Event shall occur or be continuing, the Depositor shall
have the right, upon not less than 30 nor more than 60 days' notice, to redeem
the Debentures, in whole or in part, for cash upon the later of (i) 90 days
following the occurrence of such Tax Event or (ii) March __, 2028. Promptly
following such redemption, Trust Securities with an aggregate Liquidation Amount
equal to the aggregate principal amount of the Debentures so redeemed will be
redeemed by the Trust at the Optional Redemption Price applicable in the event
of a redemption upon the occurrence of a Tax Event on a pro rata basis.
(b) Notice of any exchange pursuant to this Section 4.4 (an "Exchange
Notice") of the Trust Securities, which Exchange Notice shall be irrevocable,
will be given by the Property Trustee by first-class mail to the Depositor and
to each record Holder of Trust Securities to be exchanged not fewer than 30 nor
more than 60 days prior to the date fixed for exchange thereof. For purposes of
the calculation of the date of exchange and the dates on which notices are given
pursuant to this paragraph (b), an Exchange Notice shall be deemed to be given
on the day such notice is first mailed by first-class mail, postage prepaid, to
each Holder. Each Exchange Notice shall be addressed to each Holder of Trust
Securities at the address of such Holder appearing in the books and records of
the Trust. Each Exchange Notice shall state: (A) the exchange date; (B) the
aggregate Liquidation Amount and any unpaid Distributions (including any
Additional Amounts) on the Trust Securities to be exchanged and the aggregate
principal amount and any accrued interest on the Debentures to be exchanged
therefor; (C) that on the exchange date the Trust Securities to be so exchanged
shall be exchanged for Debentures and that Distributions on the Trust Securities
so exchanged will cease to accumulate on and after said date; (D) the record
date for the determination of Holders of Trust Securities to be exchanged as
provided in Section 4.4(g); and (E) the identity of the Conversion Agent, if
any, and the place or places where each Trust Certificate to be exchanged is to
be surrendered in exchange for Debentures. No defect in the Exchange Notice or
in the mailing thereof with respect to any Trust Security shall affect the
validity of the exchange proceedings for any other Trust Security.
(c) In the event that fewer than all the Outstanding Preferred Securities
are to be exchanged, then, on the exchange date, (i) if all of the Outstanding
Preferred Securities are represented by Definitive Preferred Securities
Certificates, the particular Preferred Securities to be exchanged will be
selected by the Property Trustee from the Outstanding Preferred Securities not
previously called for redemption or exchange on a pro rata basis, (ii) if all of
the Outstanding Preferred Securities are represented by Book-Entry Preferred
Securities Certificates, the Property Trustee shall provide for the selection
for exchange of a portion of the Global Certificate representing the Book-Entry
Preferred Securities Certificates on a pro rata basis and (iii) if
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Outstanding Trust Securities are represented by both Definitive Preferred
Securities Certificates and Book-Entry Preferred Securities Certificates, the
Property Trustee shall select the portion of the Global Certificate representing
the Book-Entry Preferred Securities Certificates and the particular Outstanding
Preferred Securities represented by Definitive Preferred Securities Certificates
to be exchanged on a pro rata basis. In the case of clause (ii) or (iii) above,
the particular Book-Entry Preferred Securities Certificates to be exchanged
shall be selected in accordance with the applicable rules and procedures for the
Clearing Agency in whose name, or whose nominee's name, such global certificate
is then held. Any Preferred Securities Certificate that is to be exchanged only
in part shall be surrendered with due endorsement or by a written instrument of
transfer fully executed by the Holder thereof (or its attorney duly authorized
in writing) and the Trust shall prepare and deliver to such Holder, without
service charge, a new Preferred Securities Certificate or Certificates in
aggregate stated Liquidation Amount equal to, and in exchange for, the
unredeemed portion of the Preferred Securities Certificate so surrendered. The
Common Securities shall be exchanged in a similar manner.
(d) In the event of an exchange pursuant to this Section 4.4, on the date
fixed for any such exchange, (i) if the Preferred Securities are represented by
Book-Entry Preferred Securities Certificates, the Clearing Agency or its
nominee, as the record Holder of the Preferred Securities, will exchange through
the Conversion Agent the Global Certificate representing the Preferred
Securities to be exchanged for a registered Global Certificate or certificates
representing the Debentures to be delivered upon such exchange, (ii) if the
Preferred Securities are represented by Definitive Preferred Securities
Certificates, the certificates representing the Preferred Securities to be so
exchanged will be deemed to represent Debentures having a principal amount equal
to the aggregate stated Liquidation Amount of such Preferred Securities until
such certificates are presented to the Conversion Agent for exchange for
definitive certificates representing Debentures and (iii) all rights of the
Holders of the Preferred Securities so exchanged will cease, except for the
right of such Holders to receive Debentures. The Common Securities shall be
exchanged in a similar manner.
(e) Each Holder, by becoming a party to this Trust Agreement pursuant to
Section 10.11 of this Trust Agreement, will be deemed to have agreed to be bound
by these exchange provisions in regard to the exchange of Trust Securities for
Debentures pursuant to the terms described above.
(f) Nothing in this Section 4.4 shall limit the requirement of the Trust
to withhold taxes pursuant to the terms of the Trust Securities or as set forth
in this Trust Agreement or otherwise require the Property Trustee or the Trust
to pay any amounts on account of such withholdings.
(g) An exchange of Trust Securities for Debentures pursuant to this
Section 4.4 shall be made to Holders of Trust Securities as they appear on the
Securities Register for Trust Securities on the relevant record date, which
shall be the date which is the fifteenth day (whether or not a Business Day)
preceding the exchange date.
SECTION 4.5. SUBORDINATION OF COMMON SECURITIES. Payment of
Distributions (including Additional Amounts, if applicable) on, and the
Redemption Price of, the Trust Securities, as applicable, shall be made PRO RATA
based on the Liquidation Amount of the Trust Securities; provided, however, that
if on any Distribution Date or Redemption Date an Event of Default shall have
occurred and be continuing, no payment of any Distribution (including Additional
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Amounts, if applicable) on, or the Redemption Price of, any Common Security, and
no other payment on account of the redemption, liquidation or other acquisition
of Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all Outstanding Preferred
Securities, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions (including Additional Amounts, if applicable) on,
or the Redemption Price of, Preferred Securities then due and payable.
SECTION 4.6. PAYMENT PROCEDURES. Payments in respect of the
Preferred Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Securities Register or, if
the Preferred Securities are held by a Clearing Agency, such Distributions shall
be made to the Clearing Agency in immediately available funds, in accordance
with the Certificate Depositary Agreement on the applicable Distribution Dates.
Payments in respect of the Common Securities shall be made in such manner as
shall be mutually agreed between the Property Trustee and the Holder of the
Common Securities.
SECTION 4.7. TAX RETURNS AND REPORTS. The Administrative Trustees
shall prepare (or cause to be prepared), at the Depositor's expense, and file
all United States Federal, State and local tax and information returns and
reports required to be filed by or in respect of the Trust. In this regard, the
Administrative Trustees shall (a) prepare and file (or cause to be prepared or
filed) Form 1041 or the appropriate Internal Revenue Service form required to
be filed in respect of the Trust in each taxable year of the Trust and (b)
prepare and furnish (or cause to be prepared and furnished) to each
Securityholder a Form 1099 or the appropriate Internal Revenue Service form
required to be furnished to such Securityholder or the information required to
be provided on such form. The Administrative Trustees shall provide the
Depositor with a copy of all such returns, reports and schedules promptly after
such filing or furnishing. The Trustees shall comply with United States Federal
withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
SECTION 4.8. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST. Upon
receipt under the Debentures of Additional Sums, the Property Trustee, upon
receipt of written notice from the Depositor or the Administrative Trustees,
shall promptly pay from such Additional Sums any taxes, duties or governmental
charges of whatsoever nature (other than withholding taxes) imposed on the Trust
by the United States or any other taxing authority.
SECTION 4.9. PAYMENTS UNDER INDENTURE. Any amount payable hereunder
to any Holder of Preferred Securities shall be reduced by the amount of any
corresponding payment such Holder (or any Owner with respect thereto) has
directly received pursuant to Section 5.8 of the Indenture in accordance with
the terms of Section 6.8 hereof.
ARTICLE 5
TRUST SECURITIES CERTIFICATES
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SECTION 5.1. INITIAL OWNERSHIP. Upon the creation of the Trust and
until the issuance of the Trust Securities, and at any time during which no
Trust Securities are Outstanding, the Depositor shall be the sole beneficial
owner of the Trust.
SECTION 5.2. THE TRUST SECURITIES CERTIFICATES. The Preferred
Securities Certificates shall be issued in minimum denominations of $25
Liquidation Amount and integral multiples of $25 in excess thereof, and the
Common Securities Certificates shall be issued in denominations of $25
Liquidation Amount and integral multiples thereof. The consideration received
by the Trust for the issuance of the Trust Securities shall constitute a
contribution to the capital of the Trust and shall not constitute a loan to the
Trust. The Preferred Securities initially will be represented by one or more
certificates in registered, global form (collectively, the "Global
Certificate"). Preferred Securities initially transferred, in accordance with
Section 5.4, in a manner exempt from the registration requirements of the
Securities Act will be exchanged for Preferred Securities in registered,
certificated form (the "Certificated Preferred Securities"). The Trust
Securities Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of at least one Administrative Trustee and authenticated by
the Property Trustee. Trust Securities Certificates bearing the manual or
facsimile signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Trust, shall be
validly issued and entitled to the benefit of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate shall become a
Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.4.
SECTION 5.3. DELIVERY OF TRUST SECURITIES CERTIFICATES. On the
Closing Date, the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4 and
2.5, to be executed on behalf of the Trust and delivered to or upon the written
order of the Depositor, signed by its Chairman of the Board, any Vice Chairman,
its President, any Senior Vice President or any Vice President, Treasurer or
Assistant Treasurer or Controller without further corporate action by the
Depositor, in authorized denominations.
A Trust Security Certificate shall not be valid until authenticated by
the manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Trust Security Certificate has
been authenticated under this Trust Agreement. Upon a written order of the
Trust signed by one Administrative Trustee, the Property Trustee shall
authenticate the Trust Security Certificates for original issue.
The Property Trustee may appoint an authenticating agent acceptable to
the Administrative Trustees to authenticate Trust Security Certificates. An
authenticating agent may authenticate Trust Security Certificates whenever the
Property Trustee may do so. Each reference in this Trust Agreement to
authentication by the Property Trustee includes authentication by such agent.
An authenticating agent has the same rights as the Property Trustee to deal with
the Depositor or an Affiliate with respect to the authentication of Trust
Securities.
SECTION 5.4. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES. The Securities Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant
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to Section 5.8, a Securities Register in which, subject to such reasonable
regulations as it may prescribe, the Securities Registrar shall provide for the
registration of Preferred Securities Certificates and Common Securities
Certificates (subject to Section 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. The Property Trustee shall be the
initial Securities Registrar.
Subject to the other provisions of this Trust Agreement regarding
restrictions on transfer, upon surrender for registration of transfer of any
Preferred Security at an office or agency of the Securities Registrar designated
pursuant to Section 5.8 for such purpose, an Administrative Trustee shall
execute on behalf of the Trust by manual or facsimile signature, and the
Property Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Preferred Securities of any
authorized denominations and of a like aggregate principal amount and bearing
such restrictive legends as may be required by this Trust Agreement.
At the option of the Holder, and subject to the other provisions of
this Section 5.4, Preferred Securities may be exchanged for other Preferred
Securities of any authorized denomination and of a like Liquidation Amount, upon
surrender of the Preferred Securities to be exchanged at any such office or
agency. Whenever any Preferred Securities are so surrendered for exchange, an
Administrative Trustee shall execute on behalf of the Trust by manual or
facsimile signature, and the Property Trustee shall authenticate and deliver,
the Preferred Securities which the Holder making the exchange is entitled to
receive.
All Preferred Securities issued upon any registration of transfer or
exchange of Preferred Securities shall be entitled to the same benefits under
this Trust Agreement, as the Securities surrendered upon such registration of
transfer or exchange.
Every Preferred Security presented or surrendered for registration of
transfer or for exchange shall (if so requested by the Depositor or the
Securities Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Depositor and the Securities
Registrar duly executed, by the Holder thereof or his attorney duly authorized
in writing.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Preferred
Securities Certificates.
SECTION 5.5. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES. If (a) any mutilated Trust Securities Certificate shall be
surrendered to the Securities Registrar, or if the Securities Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft of any
Trust Securities Certificate and (b) there shall be delivered to the Securities
Registrar and the Administrative Trustees such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Securities Certificate shall have been acquired by a bona fide
purchaser, the Administrative Trustees, or any one of them, on behalf of the
Trust shall execute and make available for authentication and delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like denomination.
In connection with the issuance of any new Trust Securities Certificate under
this Section, the Securities Registrar may require the payment of a sum
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sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicative Trust Securities Certificate issued
pursuant to this Section shall constitute conclusive evidence of an undivided
beneficial interest in the assets of the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Trust Securities Certificate shall be found
at any time.
SECTION 5.6. PERSONS DEEMED SECURITYHOLDERS. The Property Trustee
and the Securities Registrar shall treat the Person in whose name any Trust
Securities Certificate shall be registered in the Securities Register as the
owner of such Trust Securities Certificate for the purpose of receiving
Distributions and for all other purposes whatsoever, and neither the Property
Trustee nor the Securities Registrar shall be bound by any notice to the
contrary.
SECTION 5.7. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.
The Administrative Trustees or the Depositor shall furnish or cause to be
furnished (unless the Property Trustee is acting as Securities Registrar with
respect to the Trust Securities under the Trust Agreement) a list, in such form
as the Property Trustee may reasonably require, of the names and addresses of
the Securityholders as of the most recent record date (a) to the Property
Trustee, quarterly at least 5 Business Days before each Distribution Date, and
(b) to the Property Trustee, promptly after receipt by the Depositor of a
written request therefor from the Property Trustee in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, in
each case to the extent such information is in the possession or control of the
Administrative Trustees or the Depositor and is not identical to a previously
supplied list or has not otherwise been received by the Property Trustee in its
capacity as Securities Registrar. The rights of Securityholders to communicate
with other Securityholders with respect to their rights under this Trust
Agreement or under the Trust Securities, and the corresponding rights of the
Trustee shall be as provided in the Trust Indenture Act, except to the extent
Section 3819 of the Delaware Business Trust Act would require greater access to
such information, in which case the latter shall apply. Each Holder, by
receiving and holding a Trust Securities Certificate, and each Owner shall be
deemed to have agreed not to hold the Depositor, the Property Trustee or the
Administrative Trustees accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 5.8. MAINTENANCE OF OFFICE OR AGENCY. The Securities
Registrar shall maintain in the City of Chicago an office or offices or agency
or agencies where Preferred Securities Certificates may be surrendered for
registration of transfer, exchange or conversion and where notices and demands
to or upon the Trustees in respect of the Trust Securities Certificates may be
served. The Securities Registrar initially designates The First National Bank
of Chicago, One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126,
as its principal corporate trust office for such purposes. The Securities
Registrar shall give prompt written notice to the Depositor and to the
Securityholders of any change in the location of the Securities Register or any
such office or agency.
SECTION 5.9. APPOINTMENT OF PAYING AGENT. In the event that the
Preferred Securities are not in book-entry form only, the Trust shall maintain
in The City of Chicago, an office or agency (the "Paying Agent") where the
Preferred Securities may be presented for payment. The Paying Agent shall make
Distributions to Securityholders from the Payment Account and shall report the
amounts of such Distributions to the Property Trustee and the Administrative
Trustees.
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Any Paying Agent shall have the revocable power to withdraw funds from the
Payment Account for the purpose of making the Distributions referred to above.
The Administrative Trustees may revoke such power and remove the Paying Agent if
such Trustees determine in their sole discretion that the Paying Agent shall
have failed to perform its obligations under this Trust Agreement in any
material respect. The Paying Agent shall initially be the Property Trustee, and
any co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Property Trustee and the Depositor. In the event that the Property Trustee
shall no longer be the Paying Agent or a successor Paying Agent shall resign or
its authority to act be revoked, the Administrative Trustees shall appoint a
successor that is acceptable to the Property Trustee and the Depositor to act as
Paying Agent (which shall be a bank or trust company). Each successor Paying
Agent or any additional Paying Agent shall agree with the Trustees that, as
Paying Agent, such successor Paying Agent or additional Paying Agent will hold
all sums, if any, held by it for payment to the Securityholders in trust for the
benefit of the Securityholders entitled thereto until such sums shall be paid to
each Securityholder. The Paying Agent shall return all unclaimed funds to the
Property Trustee and upon removal of a Paying Agent such Paying Agent shall also
return all funds in its possession to the Property Trustee. The provisions of
Sections 8.1, 8.3 and 8.6 shall apply to the Property Trustee also in its role
as Paying Agent, for so long as the Property Trustee shall act as Paying Agent
and, to the extent applicable, to any other paying agent appointed hereunder.
Any reference in this Agreement to the Paying Agent shall include any co-paying
agent unless the context requires otherwise.
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR. On the
Closing Date provided for in Section 2.5, the Depositor shall acquire beneficial
and record ownership of the Common Securities. The Depositor has covenanted in
the Indenture to maintain directly or indirectly 100% ownership of the Common
Securities; provided that any permitted successor of the Company under the
Indenture may succeed to the Company's ownership of the Common Securities. To
the fullest extent permitted by law, any attempted transfer of the Common
Securities in violation of that covenant shall be void. The Administrative
Trustees shall cause each Common Securities Certificate to contain a legend
stating, "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO AN ENTITY WHOLLY OWNED
BY DURA AUTOMOTIVE SYSTEMS, INC. OR TO CERTAIN SUCCESSORS OF DURA AUTOMOTIVE
SYSTEMS, INC."
SECTION 5.11. GLOBAL SECURITIES; NON-GLOBAL SECURITIES; COMMON
SECURITIES CERTIFICATE. (a) Each Global Certificate authenticated under this
Trust Agreement shall be registered in the name of the Clearing Agency
designated by the Depositor for such Global Certificate or a nominee thereof and
delivered to such Clearing Agency or a nominee thereof or custodian therefor,
and each such Global Certificate shall constitute a Preferred Security for all
purposes of this Trust Agreement.
(b) If a Global Certificate is to be exchanged for Certificated Preferred
Securities or canceled in whole, it shall be surrendered by or on behalf of the
Clearing Agency, its nominee or custodian to the Property Trustee, as Securities
Registrar, for exchange or cancellation as provided in this Article 5. If any
Global Certificate is to be exchanged for Certificated Preferred Securities or
canceled in part, or if another Preferred Security is to be exchanged in whole
or in part for a beneficial interest in any Global Certificate, in each case, as
provided in Section 5.4, then either (i) such Global Certificate shall be so
surrendered for exchange or cancellation as provided in this
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Article 5 or (ii) the principal amount thereof (or number of Preferred
Securities represented thereby) shall be reduced or increased by an amount equal
to the portion thereof to be so exchanged or canceled, or equal to the principal
amount of (or number of securities represented by) such Certificated Preferred
Security to be so exchanged for a beneficial interest therein, as the case may
be, by means of an appropriate adjustment made on the records of the Property
Trustee, as Securities Registrar, whereupon the Property Trustee, in accordance
with the Applicable Procedures, shall instruct the Clearing Agency or its
authorized representative to make a corresponding adjustment to its records.
Upon any such surrender or adjustment of a Global Certificate, an Administrative
Trustee shall execute on behalf of the Trust by manual or facsimile signature,
and the Property Trustee shall, subject to Section 5.4 and as otherwise provided
in this Article 5, authenticate and deliver any Preferred Securities issuable in
exchange for such Global Certificate (or any portion thereof) to or upon the
written order of, and registered in such names as may be directed by, the
Clearing Agency or its authorized representative. Upon the request of the
Property Trustee in connection with the occurrence of any of the events
specified in the preceding paragraph, the Depositor shall promptly make
available to the Property Trustee a reasonable supply of Preferred Securities
that are not in the form of Global Certificates. The Property Trustee shall be
entitled to conclusively rely upon any order, direction or request of the
Clearing Agency or its authorized representative which is given or made pursuant
to this Article 5 if such order, direction or request is given or made in
accordance with the Applicable Procedures.
(c) Every Preferred Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Certificate or any
portion thereof, whether pursuant to this Article 5 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global Certificate,
unless such Preferred Security is registered in the name of a Person other than
the Clearing Agency for such Global Certificate or a nominee thereof.
(d) The Clearing Agency or its nominee, as registered owner of a Global
Certificate, shall be the holder of such Global Certificate for all purposes
under this Trust Agreement and the Preferred Securities, and owners of
beneficial interests in a Global Certificate shall hold such interests pursuant
to the Applicable Procedures. Accordingly, any such Owner's beneficial interest
in a Global Certificate will be shown only on, and the transfer of such interest
shall be effected only through, records maintained by the Clearing Agency or its
nominee or its participants and such owners of beneficial interests in a Global
Certificate will not be considered the owners or holders of such Global
Certificate for any purpose of this Trust Agreement or the Preferred Securities.
(e) A single Common Securities Certificate representing the Common
Securities shall initially be issued to the Depositor in the form of a
definitive Common Securities Certificate.
SECTION 5.12. NOTICES TO CLEARING AGENCY. To the extent that a
notice or other communication to the Owners is required under this Trust
Agreement, unless and until Definitive Preferred Securities Certificates shall
have been issued to Owners pursuant to Section 5.13, the Trustees shall give all
such notices and communications specified herein to be given to Owners to the
Clearing Agency, and shall have no obligations to provide notices directly to
the Owners.
SECTION 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.
Notwithstanding any other provision in this Trust Agreement, no Global
Certificate may be exchanged in whole or
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in part for Preferred Securities registered, and no transfer of a Global
Certificate in whole or in part may be registered, in the name of any Person
other than the Clearing Agency for such Global Certificate or a nominee thereof
unless (i) such Clearing Agency (A) has notified the Trust and the Depositor
that it is unwilling or unable to continue as Clearing Agency for such Global
Certificate or (B) has ceased to be a clearing agency registered as such under
the Securities Exchange Act of 1934, as amended, and in either case the Trust
and the Depositor thereupon fail to appoint a successor Clearing Agency, (ii)
the Trust and the Depositor, at their option, notify the Property Trustee in
writing that it elects to cause the issuance of the Preferred Securities in
certificated form or (iii) there shall have occurred and be continuing an Event
of Default or any event which after notice or lapse of time or both would be an
Event of Default. In all cases, Certificated Preferred Securities delivered in
exchange for any Global Certificate or beneficial interests therein will be
registered in the names, and issued in any approved denominations, requested by
or on behalf of the Clearing Agency (in accordance with its customary
procedures).
SECTION 5.14. RIGHTS OF SECURITYHOLDERS. The legal title to the
Trust Property is vested exclusively in the Property Trustee (in its capacity as
such) in accordance with Section 2.9, and the Securityholders shall not have any
right or title therein other than the undivided beneficial interest in the
assets of the Trust conferred by their Trust Securities and they shall have no
right to call for any partition or division of property, profits or rights of
the Trust except as described below. The Trust Securities shall be personal
property giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or similar rights and,
when issued and delivered to Securityholders against payment of the purchase
price therefor, will be fully paid and nonassessable undivided beneficial
interests in the assets of the Trust. The Holders of the Trust Securities, in
their capacities as such, shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
ARTICLE 6
ACT OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.1. LIMITATIONS ON VOTING RIGHTS. (a) Except as provided in
this Section, in Section 8.2 and 10.2 and in the Indenture and as otherwise
required by law, no Holder of Preferred Securities shall have any right to vote
or in any manner otherwise control the administration, operation and management
of the Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) Subject to Section 8.2 hereof, if an Event of Default with respect to
the Preferred Securities has occurred and been subsequently cured, waived or
otherwise eliminated, the provisions of Section 6.1(b)(ii) hereof shall apply.
During (x) the period commencing on the date of the occurrence of an Event of
Default with respect to the Preferred Securities and ending on the date when
such Event of Default is cured, waived or otherwise eliminated, or (y) any
period not described in either the preceding sentence or the preceding clause
(x), the provisions of Section 6.1(b)(i) shall apply.
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(i) The Holders of a majority in aggregate Liquidation Amount of the
Preferred Securities will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Property
Trustee or to exercise any trust or power conferred upon the Property
Trustee under the Trust Agreement, including the right to direct the
Property Trustee to exercise the remedies available to it as a holder of
the Debentures but excluding the right to direct the Property Trustee to
consent to an amendment, modification or termination of the Indenture
(which shall be as provided below). So long as any Debentures are held by
the Property Trustee, the Trustees shall not (A) direct the time, method
and place of conducting any proceeding for any remedy available to the
Debenture Trustee, or executing any trust or power conferred on the
Debenture Trustee with respect to such Debentures, (B) waive any past
default which is waivable under Section 5.13 of the Indenture, (c) exercise
any right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment,
modification or termination of the Indenture or the Debentures, where such
consent shall be required, without, in each case, obtaining the prior
approval of the Holders of a majority in aggregate Liquidation Amount of
all Outstanding Preferred Securities (except in the case of clause (D),
which consent, in the event that no Event of Default shall occur and be
continuing, shall be of the Holders of a majority in aggregate Liquidation
Amount of all Trust Securities, voting together as a single class);
provided, however, that where a consent under the Indenture would require
the consent of each holder of Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior written consent of
each Holder of Preferred Securities. The Trustees shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities, except by a subsequent vote of the Holders of the
Preferred Securities. The Property Trustee shall notify all Holders of
record of the Preferred Securities of any notice of default received from
the Debenture Trustee with respect to the Debentures. In addition to
obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Trustees
shall, at the expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation or partnership for
United States Federal income tax purposes on account of such action.
(ii) Subject to Section 8.2 of this Trust Agreement and only after
the Event of Default with respect to the Preferred Securities has been
cured, waived, or otherwise eliminated the Holders of a majority in
aggregate Liquidation Amount of the Common Securities will have the
right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee or to exercise any
trust or power conferred upon the Property Trustee under the Trust
Agreement, including the right to direct the Property Trustee to
exercise the remedies available to it as a holder of the Debentures but
excluding the right to direct the Property Trustee to consent to an
amendment, modification or termination of the Indenture (which shall be
as provided below). So long as any Debentures are held by the Property
Trustee, the Trustees shall not (A) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture
Trustee, or executing any trust or power conferred on the Debenture
Trustee with respect to such Debentures, (B) waive any past default
which is waivable under Section 5.13 of the Indenture, (c) exercise any
right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable or (D) consent to any amendment,
modification or
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termination of the Indenture or the Debentures, where such consent shall
be required, without, in each case, obtaining the prior approval of the
Holders of a majority in aggregate Liquidation Amount of all Common
Securities (except in the case of clause (D), which consent, in the
event that no Event of Default shall occur and be continuing, shall be
of the Holders of a majority in aggregate Liquidation Amount of all
Trust Securities, voting together as a single class); provided,
however, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent
shall be given by the Property Trustee without the prior written consent
of each Holder of Common Securities. The Trustees shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Common Securities, except by a subsequent vote of the Holders of the
Common Securities. The Property Trustee shall notify all Holders of
record of the Common Securities of any notice of default received from
the Debenture Trustee with respect to the Debentures. In addition to
obtaining the foregoing approvals of the Holders of the Common
Securities, prior to taking any of the foregoing actions, the Trustees
shall, at the expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation or partnership for
United States Federal income tax purposes on account of such action.
(iii) The provisions of this Section 6.1(b) and Section 6.1(a) of this
Trust Agreement shall be in lieu of Section 316(a)(1)(A) of the Trust
Indenture Act, and such Section 316(a)(1)(A) is hereby expressly excluded
from this Trust Agreement and the Preferred Securities, as permitted by the
Trust Indenture Act.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect the dissolution, winding-up or termination
of the Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Preferred Securities as a class will be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of a majority in aggregate
Liquidation Amount of the Outstanding Preferred Securities.
SECTION 6.2. NOTICE OF MEETINGS. Notice of all meetings of the
Holders of the Preferred Securities, stating the time, place and purpose of the
meeting, shall be given by the Property Trustee pursuant to Section 10.8 to each
Preferred Securityholder of record, at its registered address, at least 15 days
and not more than 90 days before the meeting. At any such meeting, any business
properly before the meeting may be so considered whether or not stated in the
notice of the meeting. Any adjourned meeting may be held as adjourned without
further notice.
SECTION 6.3. MEETINGS OF PREFERRED SECURITYHOLDERS. No annual
meeting of Securityholders is required to be held. The Administrative Trustees,
however, shall call a meeting of Securityholders to vote on any matter upon the
written request of the Preferred Securityholders of record of 25% of the
Preferred Securities (based upon their Liquidation Amount), and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of the Holders of Preferred Securities to vote on any
matters as to which such Holders are entitled to vote.
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Holders of record of 50% of the Preferred Securities (based upon their
Liquidation Amount), present in person or by proxy, shall constitute a quorum at
any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by the
Holders of record of Preferred Securities present, in person or by proxy,
holding a majority of the Preferred Securities (based upon their Liquidation
Amount) held by Holders of record of Preferred Securities present, either in
person or by proxy, at such meeting shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 6.4. VOTING RIGHTS. Securityholders shall be entitled to
one vote for each $25 of Liquidation Amount represented by their Trust
Securities in respect of any matter as to which such Securityholders are
entitled to vote. Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Preferred Securities that are owned at such time by the Depositor, the
Trustees or any affiliate of any Trustee shall, for purposes of such vote or
consent, be treated as if such Preferred Securities were not outstanding.
SECTION 6.5. PROXIES, ETC. At any meeting of Securityholders, any
Securityholders entitled to vote thereat may vote by proxy; provided that no
proxy shall be voted at any meeting unless it shall have been placed on file
with the Administrative Trustees, or with such other officer or agent of the
Trust as the Administrative Trustees may direct, for verification prior to the
time at which such vote shall be taken. Pursuant to a resolution of the
Property Trustee, proxies may be solicited in the name of the Property Trustee
or one or more officers of the Property Trustee. Only Securityholders of record
shall be entitled to vote. When Trust Securities are held jointly by several
Persons, any one of them may vote at any meeting in person or represented by
proxy in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Securityholder shall be deemed valid unless challenged at
or prior to its exercise, and the burden of proving invalidity shall rest on the
challenger. No proxy shall be valid more than three years after its date of
execution.
SECTION 6.6. SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any action
which may be taken by Securityholders at a meeting may be taken without a
meeting if Securityholders holding a majority of all Outstanding Trust
Securities (based upon their Liquidation Amount) entitled to vote in respect of
such action (or such larger proportion thereof as shall be required by any
express provision of this Trust Agreement) shall consent to the action in
writing.
SECTION 6.7. RECORD DATE FOR VOTING AND OTHER PURPOSES. For the
purposes of determining the Securityholders who are entitled to notice of and to
vote at any meeting or by written consent, or to participate in any Distribution
on the Trust Securities in respect of which a record date is not otherwise
provided for in this Trust Agreement, or for the purpose of any other action,
the Property Trustee may from time to time fix a date, not more than 90 days
prior to the date of any meeting of Securityholders or the payment of
Distributions or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
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SECTION 6.8. ACTS OF SECURITYHOLDERS. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Securityholders
or Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders or Owners in person
or by an agent duly appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to an Administrative Trustee. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Securityholders or Owners signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Trust Agreement and (subject to Section 8.1) conclusive in favor of the
Trustees, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under this Article 6, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
Upon the occurrence and continuation of an Event of Default, the
Holders of Preferred Securities shall rely on the enforcement by the Property
Trustee of its rights as holder of the Debentures against the Depositor. If the
Property Trustee fails to enforce its rights as holder of the Debentures after a
request therefor by a Holder of Preferred Securities, such holder may, to the
extent permitted by applicable law, proceed to enforce such rights directly
against the Depositor.
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Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Depositor to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the Redemption Date),
then a Holder of Preferred Securities shall have the right to institute a
proceeding directly against the Depositor, for enforcement of payment to such
holder of the principal amount of or interest on Debentures having a principal
amount equal to the aggregate Liquidation Amount of the Preferred Securities of
such holder after the respective due date specified in the Debentures (a "Direct
Action"). In connection with any such Direct Action, the rights of the
Depositor will be subrogated to the rights of any Holder of the Preferred
Securities to the extent of any payment made by the Depositor to such Holder of
Preferred Securities as a result of such Direct Action.
SECTION 6.9. INSPECTION OF RECORDS. Upon reasonable notice to the
Administrative Trustees and the Property Trustee, the records of the Trust shall
be open to inspection by Securityholders during normal business hours for any
purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF THE PROPERTY TRUSTEE
AND THE DELAWARE TRUSTEE. The Property Trustee and the Delaware Trustee, each
severally on behalf of and as to itself, hereby represents and warrants for the
benefit of the Depositor and the Securityholders that (each such representation
and warranty made by the Property Trustee and the Delaware Trustee being made
only with respect to itself):
(a) the Property Trustee is a national banking association duly organized,
validly existing and in good standing under the laws of the United States;
(b) the Delaware Trustee is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(c) each of the Property Trustee and the Delaware Trustee has full
corporate and trust power, authority and legal right to execute, deliver and
perform its obligations under this Trust Agreement and has taken all necessary
action to authorize the execution, delivery and performance by it of this Trust
Agreement;
(d) this Trust Agreement has been duly authorized, executed and delivered
by each of the Property Trustee and the Delaware Trustee and constitutes the
valid and legally binding agreement of the Property Trustee and the Delaware
Trustee enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and
(e) the execution, delivery and performance by each of the Property
Trustee and the Delaware Trustee of this Trust Agreement have been duly
authorized by all necessary corporate or other action on the part of the
Property Trustee and the Delaware Trustee and do not require any
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approval of stockholders of the Property Trustee or the Delaware Trustee and
such execution, delivery and performance will not (i) violate either of the
Property Trustee's or the Delaware Trustee's charter or by-laws or (ii) violate
any law, governmental rule or regulation of the United States or the State of
Delaware, as the case may be, governing the banking, corporate, or trust powers
of the Property Trustee or the Delaware Trustee (as appropriate in context) or
any order, judgment or decree applicable to the Property Trustee or the Delaware
Trustee.
SECTION 7.2. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR. The
Depositor hereby represents and warrants for the benefit of the Securityholders
that:
(a) the Trust Securities Certificates issued on the Closing Date on behalf
of the Trust have been duly authorized and will have been duly and validly
executed, issued and delivered by the Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust Agreement
and the Securityholders will be, as of such date, entitled to the benefits of
this Trust Agreement; and
(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State of
Delaware or any political subdivision thereof in connection with the execution,
delivery and performance by the Property Trustee or the Delaware Trustee, as the
case may be, of this Trust Agreement.
ARTICLE 8
THE TRUSTEES
SECTION 8.1. CERTAIN DUTIES AND RESPONSIBILITIES. (a)The duties and
responsibilities of the Trustees shall be as provided by this Trust Agreement
and, in the case of the Property Trustee, by the Trust Indenture Act. The
Property Trustee, before the occurrence of any Event of Default and after the
curing or waiving of all Events of Default that may have occurred, shall
undertake to perform only such duties and obligations as are specifically set
forth in this Trust Agreement and the Trust Indenture Act and no implied
covenants shall be read into this Trust Agreement against the Property Trustee.
In case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 8.2) of which a Responsible Officer of the Property Trustee
has actual knowledge, the Property Trustee shall exercise such rights and powers
vested in it by this Trust Agreement and the Trust Indenture Act, and use the
same degree of care and skill in its exercise, as a prudent individual would
exercise or use under the circumstances in the conduct of his or her own
affairs. Notwithstanding the foregoing, no provision of this Trust Agreement
shall require the Trustees to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustees
shall be subject to the provisions of this Section. Nothing in this Trust
Agreement shall be construed to release the Administrative Trustees or Delaware
Trustees from liability for their own grossly negligent action, their own
grossly negligent failure to act, or their own willful misconduct. To the
extent that, at law or in equity, an Administrative Trustee or Delaware Trustee
has duties (including fiduciary duties) and liabilities
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relating thereto to the Trust or to the Securityholders, such Administrative
Trustee or Delaware Trustee shall not be liable to the Trust or to any
Securityholder for such Administrative Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Administrative
Trustees or Delaware Trustee otherwise existing at law or in equity, are agreed
by the Depositor and the Securityholders to replace such other duties and
liabilities of the Administrative Trustees or Delaware Trustee.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Property Trustee or a Paying
Agent to make payments in accordance with the terms hereof. Each
Securityholder, by its acceptance of a Trust Security, agrees that it will look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 8.1(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent
in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in aggregate Liquidation Amount
of the Trust Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safekeeping and physical preservation of the Debentures and the Payment
Account shall be to deal with such property as fiduciary assets, subject to
the protections and limitations on liability afforded to the Property
Trustee under this Trust Agreement and the Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest on any
money received by it except as it may otherwise agree with the Depositor
and money held by the Property Trustee need not be segregated from other
funds held by it except in relation to the Payment Account maintained by
the Property Trustee pursuant to Section 3.1 and except to the extent
otherwise required by law;
(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with their
respective duties under this Trust
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Agreement, nor shall the Property Trustee be liable for the default or
misconduct of the Administrative Trustees or the Depositor; and
(vi) the Property Trustee shall have no duty or liability with
respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments thereon or in
connection therewith.
SECTION 8.2. NOTICE OF DEFAULTS. (a) Within [sixty (60)] days after
the occurrence of any Event of Default actually known to a Responsible Officer
of the Property Trustee, the Property Trustee shall transmit, in the manner and
to the extent provided in Section 10.8, notice of such Event of Default to the
Holders of Preferred Securities, the Administrative Trustees and the Depositor,
unless such Event of Default shall have been cured or waived; provided that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Debentures, the Property Trustee shall be fully protected
in withholding such notice if and so long as the Board of Directors, the
executive committee, or a trust committee of directors and/or responsible
officers of the Property Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Preferred Securities.
(b) Within ten days after the receipt of notice of the Depositor's
exercise of its right to extend the interest payment period for the Debentures
pursuant to the Indenture, the Property Trustee shall transmit, in the manner
and to the extent provided in Section 10.8, notice of such exercise to the
Securityholders, unless such exercise shall have been revoked.
(c) The Holders of a majority in Liquidation Amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences; provided that, if the underlying Debenture
Event of Default:
(i) is not waivable under the Indenture, the Event of Default under
this Trust Agreement shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
principal amount of the holders of the Debentures, including the consent or
vote of all such holders, (a "Super Majority") to be waived under the
Indenture, the Event of Default under this Trust Agreement may only be
waived by the vote of the Holders of the same proportion in Liquidation
Amount of the Preferred Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
The provisions of Section 6.1(b) and this Section 8.2(c) shall be
in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Trust Agreement and the Preferred Securities, as permitted by the Trust
Indenture Act. Upon such waiver, any such default shall cease to exist, and
any Event of Default with respect to the Preferred Securities arising
therefrom shall be deemed to have been cured, for every purpose of this Trust
Agreement, but no such waiver shall extend to any subsequent or other default
or an Event of Default with respect to the Preferred Securities or impair any
right consequent thereon. Any waiver by the Holders of the Preferred
Securities of an Event of Default with respect to the Preferred Securities
shall also be deemed to constitute a waiver by the Holders
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of the Common Securities of any such Event of Default with respect to the
Common Securities for all purposes of this Trust Agreement without any
further act, vote, or consent of the Holders of the Common Securities.
(d) The Holders of a majority in Liquidation Amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences; provided that, if the underlying Debenture
Event of Default:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 8.2(d), the Event of
Default under this Trust Agreement shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under this Trust Agreement as provided below in this
Section 8.2(d), the Event of Default under this Trust Agreement may only be
waived by the vote of the Holders of the same proportion in Liquidation
Amount of the Common Securities that the relevant Super Majority represents
of the aggregate principal amount of the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with respect
to the Preferred Securities have been cured, waived or otherwise eliminated, and
until such Events of Default have been so cured, waived or otherwise eliminated,
the Property Trustee will be deemed to be acting solely on behalf of the Holders
of the Preferred Securities and only the Holders of the Preferred Securities
will have the right to direct the Property Trustee in accordance with the terms
of the Securities. The provisions of Section 6.1(b) and this Section 8.2(d)
shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such
Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded
from this Trust Agreement and the Preferred Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section
8.2(d), upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Trust Agreement, but no such waiver
shall extend to any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.
(e) A waiver of an Event of Default under the Indenture by the Property
Trustee at the direction of the Holders of the Preferred Securities, constitutes
a waiver of the corresponding Event of Default under this Trust Agreement. The
foregoing provisions of this Section 8.2(e) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Trust Agreement and
the Preferred Securities, as permitted by the Trust Indenture Act.
SECTION 8.3. CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to the
provisions of Section 8.1:
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(a) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting in good faith upon any resolution,
Opinion of Counsel, certificate, written representation of a Holder or
transferee such as of a certificate presented for transfer, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if no Event of Default has occurred and is continuing and, (i) in
performing its duties under this Trust Agreement the Property Trustee is
required to decide between alternative courses of action or (ii) in construing
any of the provisions in this Trust Agreement the Property Trustee finds the
same ambiguous or inconsistent with any other provisions contained herein or
(iii) the Property Trustee is unsure of the application of any provision of this
Trust Agreement, then, except as to any matter as to which the Holders of
Preferred Securities are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken and the Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Trust Agreement as
it shall deem advisable and in the best interests of the Securityholders, in
which event the Property Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before undertaking,
suffering or omitting any action hereunder, the Property Trustee (unless other
evidence is herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers' Certificate and an
Opinion of Counsel which, upon receipt of such request, shall be promptly
delivered by the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to accomplish any recording,
filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel at the Depositor's
expense (which counsel may be counsel to the Depositor or any of its Affiliates,
and may include any of its employees) and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon and in accordance with such advice; and the Property
Trustee shall have the right at any time to seek instructions concerning the
administration of this Trust Agreement from any court of competent jurisdiction;
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(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity satisfactory to it against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Property Trustee's agents,
custodians or nominees) and liabilities which might be incurred by it in
compliance with such request or direction;
(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolutions, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
but the Property Trustee may make such further inquiry or investigation into
such facts or custodian or nominee matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents,
custodians or nominees, attorneys or an Affiliate; provided that the Property
Trustee shall not be responsible for the negligence or recklessness on the part
of any agent, attorney, custodian or nominee appointed by it with due care
hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of the Trust Securities,
which instructions may only be given by the Holders of the same proportion in
Liquidation Amount of the Trust Securities as would be entitled to direct the
Property Trustee under the terms of the Trust Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received, and (iii) shall
be fully protected in conclusively relying on or acting in accordance with such
instructions;
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement;
(l) the Property Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Trust Agreement; and
(m) in the event that the Property Trustee is also acting as a Paying
Agent, Conversion Agent, and/or Securities Registrar hereunder, the rights and
protections afforded to the Property Trustee pursuant to this Article 8 shall
also be afforded to such Paying Agent, Conversion Agent, and/or Securities
Registrar.
No provision of this Trust Agreement shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform
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any such act or acts, or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Property Trustee shall be
construed to be a duty.
SECTION 8.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Trust Securities Certificates shall not
be taken as the statements of the Trustees, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures.
SECTION 8.5. MAY HOLD SECURITIES. Except as provided in the
definition of the term "Outstanding" in Article 1, any Trustee or any other
agent of any Trustee or the Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and, subject to Section 8.8 and
8.12, may otherwise deal with the Trust with the same rights it would have if it
were not a Trustee or such other agent.
SECTION 8.6. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a) to pay the Trustees from time to time reasonable compensation for all
services rendered by them hereunder (which compensation shall not be limited by
any provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith;
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Trustee, (ii) any Affiliate of any Trustee, (iii) any
officer, director, shareholder, employee, representative or agent of any
Trustee, and (iv) any employee or agent of the Trust or its Affiliates (referred
to herein as an "Indemnified Person") from and against any loss, damage,
liability, tax, penalty, expense or claim of any kind or nature whatsoever
incurred by such Indemnified Person by reason of the creation, operation,
dissolution or termination of the Trust or in connection with the administration
of the Trust or any act or omission performed or omitted by such Indemnified
Person in good faith on behalf of the Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on such
Indemnified Person by this Trust Agreement, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions;
(d) the indemnity provided to a Trustee under this Section 8.6 shall
survive any Trustee's resignation or removal or termination of this Trust
Agreement;
(e) no Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 8.6; and
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(f) the provisions of this Section 8.6 shall survive termination of this
Trust Agreement or the resignation of removal of any Trustee.
SECTION 8.7. PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES. (a)
There shall at all times be a Property Trustee hereunder with respect to the
Trust Securities. The Property Trustee shall be a Person that is eligible
pursuant to the Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000. If any such Person publishes reports of
condition at least annually, pursuant to law or to the requirements of its
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative Trustee
shall be either a natural person who is at least 21 years of age or a legal
entity that shall act through one or more persons authorized to bind that
entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural person who
is at least 21 years of age and a resident of the State of Delaware or (ii) a
legal entity with its principal place of business in the State of Delaware and
that otherwise meets the requirements of applicable Delaware law that shall act
through one or more persons authorized to bind such entity.
SECTION 8.8. CONFLICTING INTERESTS. If the Property Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Property Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to the provisions of, the
Trust Indenture Act and this Trust Agreement.
SECTION 8.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.(a)
Subject to Sections 8.9(b) and 8.9(c), Trustees (the "Relevant Trustee") may be
appointed or removed without cause at any time:
(i) until the issuance of any Trust Securities, by written instrument
executed by the Depositor; and
(ii) after the issuance of any Securities, by vote of the Holders of a
majority in Liquidation Amount of the Common Securities voting as a class.
(b) The Trustee that acts as Property Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as a Property Trustee under Section 8.7 (a "Successor Property Trustee")
has been appointed and has accepted such appointment by instrument executed by
such Successor Property Trustee and delivered to the Trust, the Depositor and
the removed Property Trustee.
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(c) The Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 8.9(a) until a successor possessing the qualifications
to act as Delaware Trustee under Section 8.7 (a "Successor Delaware Trustee")
has been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Depositor and
the removed Delaware Trustee.
(d) A Trustee appointed to office shall hold office until his, her or its
successor shall have been appointed or until his, her or its death, removal,
resignation, dissolution or liquidation. Any Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
signed by the Trustee and delivered to the Depositor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(a) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Depositor and the
resigning Property Trustee; or
(b) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders of the
Securities;
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Depositor and
the resigning Delaware Trustee; and
(iii) no appointment of a successor Property Trustee or Delaware
Trustee shall be effective until all fees, charges, and expenses of the
retiring Property Trustee or retiring Delaware Trustee, as the case may be,
have been paid.
(e) The Holders of the Common Securities shall use their best efforts to
promptly appoint a Successor Property Trustee or Successor Delaware Trustee, as
the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with Section 8.9(d).
(f) If no Successor Property Trustee or Successor Delaware Trustee shall
have been appointed and accepted appointment as provided in this Section 8.9
within 60 days after delivery pursuant to this Section 8.9 of an instrument of
resignation or removal, the Property Trustee or Delaware Trustee resigning or
being removed, as applicable, may petition any court of competent jurisdiction
for appointment of a Successor Property Trustee or Successor Delaware Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper and prescribe, appoint a Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
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(g) No Property Trustee or Delaware Trustee shall be liable for the acts
or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(h) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.8 and shall give notice to
the Depositor. Each notice shall include the name of the successor Relevant
Trustee and the address of its Corporate Trust Office if it is the Property
Trustee.
(i) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or a Delaware Trustee who is
a natural person dies or becomes, in the opinion of the Depositor, incompetent
or incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by (a) the unanimous act of the remaining Administrative Trustees
if there are at least two of them or (b) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirement
for Administrative Trustees or the Delaware Trustee, as the case may be, set
forth in Section 8.7).
SECTION 8.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In case of the
appointment hereunder of a successor Relevant Trustee, the retiring Relevant
Trustee and each successor Relevant Trustee shall execute and deliver an
amendment hereto wherein each successor Relevant Trustee shall accept such
appointment and which (a) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each successor Relevant
Trustee all the rights, powers, trusts and duties of the retiring Relevant
Trustee and (b) shall add to or change any of the provisions of this Trust
Agreement as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Relevant Trustee, it being understood
that nothing herein or in such amendment shall constitute such Relevant Trustees
co-trustees and upon the execution and delivery of such amendment the
resignation or removal of the retiring Relevant Trustee shall become effective
to the extent provided therein and each such successor Relevant Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee; but, on request of
the Trust or any successor Relevant Trustee, such retiring Relevant Trustee
shall duly assign, transfer and deliver to such successor Relevant Trustee all
Trust Property, all proceeds thereof and money held by such retiring Relevant
Trustee hereunder.
Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Relevant Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be qualified
and eligible under this Article.
SECTION 8.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any Person into which the Property Trustee, the Delaware Trustee or
any Administrative Trustee that is not a natural person may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Relevant Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Relevant Trustee, shall be the successor of such Relevant
Trustee hereunder; provided that such
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Person shall be otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto.
SECTION 8.12. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST. If and when the Property Trustee shall be or become a creditor of the
Depositor or the Trust (or any other obligor upon the Debentures or the Trust
Securities), the Property Trustee shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
SECTION 8.13. REPORTS BY PROPERTY TRUSTEE. (a) To the extent
required by the Trust Indenture Act, within 60 days after [May 15] of each
year commencing with [May 15, 1999] the Property Trustee shall transmit to
all Securityholders in accordance with Section 10.8 and to the Depositor, a
brief report dated as of such [May 15] with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said Section, a
written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of
its obligations under this Trust Agreement during the twelve-month period
(or, in the case of the initial report, the period since the Closing Date)
ending with such [May 15] or, if the Property Trustee has not complied in
any material respects with such obligations, a description of such
noncompliance;
(iii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken by
the Property Trustee in the performance of its duties hereunder which it
has not previously reported and which in its opinion materially affects the
Trust Securities; and
(iv) such other information as is required by Section 313(a) of the
Trust Indenture Act.
(b) In addition, the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto.
(c) A copy of such report shall, at the time of such transmissions to
Holders, be filed by the Property Trustee with each national securities exchange
or self-regulatory organization upon which the Trust Securities are listed, with
the Commission and with the Depositor.
SECTION 8.14. REPORTS TO THE PROPERTY TRUSTEE. The Depositor and the
Administrative Trustees on behalf of the Trust shall provide to the Property
Trustee such documents, reports and information as are required by Section 314
of the Trust Indenture Act (if any) and the compliance certificate required by
Section 314(a) of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
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SECTION 8.15. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. Each
of the Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers'
Certificate.
SECTION 8.16. NUMBER OF TRUSTEES. (a) The number of Trustees shall be
five; provided that the Holder of all of the Common Securities by written
instrument may increase or decrease the number of Administrative Trustees.
Provided that the Property Trustee meets the applicable requirements, the
Property Trustee and the Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 8.16(a), or if the
number of Trustees is increased pursuant to Section 8.16(a), a vacancy shall
occur.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 8.9, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Trust Agreement.
SECTION 8.17. DELEGATION OF POWER. (a) Any Administrative Trustee
may, by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 2.7(a), including any registration
statement or amendment thereof filed with the Commission, or making any other
governmental filing.
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
ARTICLE 9
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. DISSOLUTION UPON EXPIRATION DATE. Unless earlier
dissolved, the Trust shall automatically dissolve on __________ __, 2043 (the
"Expiration Date").
SECTION 9.2. EARLY DISSOLUTION. The first to occur of any of the
following events is an "Early Dissolution Event":
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(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) the occurrence of a Special Event except in the case of a Tax Event
following which the Depositor has elected (i) to pay any Additional Sums (in
accordance with Section 4.4) such that the net amount received by Holders of
Preferred Securities in respect of Distributions are not reduced as a result of
such Tax Event and the Depositor has not revoked any such election or failed to
make such payments or (ii) to redeem all or some of the Debentures pursuant to
Section 4.4(a);
(c) the redemption, conversion or exchange of all of the Trust Securities;
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction; and
(e) receipt by the Property Trustee of written notice from the Depositor
at any time (which direction is optional and wholly within the discretion of the
Depositor) of its intention to dissolve the Trust and distribute the Debentures
in exchange for the Preferred Securities.
SECTION 9.3. DISSOLUTION. The respective obligations and
responsibilities of the Trustees and the Trust created and continued hereby
shall terminate upon the latest to occur of the following: (a) the distribution
by the Property Trustee to Securityholders upon the liquidation of the Trust
pursuant to Section 9.4, or upon the redemption of all of the Trust Securities
pursuant to Section 4.2, of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (b) the payment of all expenses
owed by the Trust; (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders and (d) the filing
of a certificate of cancellation by the Trustees in accordance with Section 3810
of the Delaware Business Trust Act.
SECTION 9.4. LIQUIDATION. (a) If an Early Dissolution Event
specified in clause (a), (b), (d) or (e) of Section 9.2 occurs or upon the
Expiration Date, the Trust shall be liquidated by the Trustees as expeditiously
as the Trustees determine to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to each
Securityholder an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Trust Securities held by such Holder, subject to
Section 9.4(d). Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not later than 30 nor more than 60
days prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address as it appears in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent an aggregate principal amount of Debentures equal to the
aggregate Liquidation Amount of Preferred Securities held by such Holder;
and
(iii) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for Debentures, or, if
Section 9.4(d) applies,
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<PAGE>
receive a Liquidation Distribution, as the Administrative Trustees or the
Property Trustee shall deem appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to Securityholders,
the Property Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date and, unless the
Property Trustee determines otherwise, shall be the date which is the fifteenth
day (whether or not a Business Day) next preceding the Liquidation Date) and,
either itself acting as exchange agent or through the appointment of a separate
exchange agent, shall establish such procedures as it shall deem appropriate to
effect the distribution of Debentures in exchange for the Outstanding Trust
Securities Certificates.
(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
the Clearing Agency or its nominee, as the record holder of such Trust
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and (iii) any
Trust Securities Certificates not held by the Clearing Agency will be deemed to
represent an aggregate principal amount of Debentures equal to the aggregate
Liquidation Amount of Preferred Securities held by such Holders, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on such Trust Securities until such certificates are presented to
the Property Trustee for transfer or reissuance.
(d) In the event that, notwithstanding the other provisions of this
Section 9.4, whether because of an order for dissolution entered by a court of
competent jurisdiction or otherwise, distribution of the Debentures in the
manner provided herein is determined by the Property Trustee not to be
practicable, the Trust Property shall be liquidated, and the Trust shall be
wound-up or terminated, by the Property Trustee in such manner as the Property
Trustee determines, and an Administrative Trustee shall prepare, execute and
file the certificate of cancellation with the Secretary of State of the State of
Delaware. In such event, Securityholders will be entitled to receive out of the
assets of the Trust available for distribution to Securityholders, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, an amount equal to the Liquidation Amount per Trust Security plus accrued
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such winding-up or termination, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts payable
by the Trust on the Trust Securities shall be paid on a PRO RATA basis (based
upon Liquidation Amounts). The Holder of the Common Securities will be entitled
to receive Liquidation Distributions upon any such winding-up or termination PRO
RATA (determined as aforesaid) with Holders of Preferred Securities, except
that, if a Debenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common Securities.
SECTION 9.5. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS
OF THE TRUST. The Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except pursuant to this Section 9.5
or Section 9.4. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Property Trustee, the
Delaware Trustee or
49
<PAGE>
the Holders of the Preferred Securities, the Trust may merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized as such
under the laws of any State; provided, that (i) such successor entity either
9.6. expressly assumes all of the obligations of the Trust with respect to the
Preferred Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities rank the same as the
Preferred Securities rank in priority with respect to Distributions and payments
upon liquidation, redemption and otherwise, (ii) the Depositor expressly
appoints a trustee of such successor entity possessing the same powers and
duties as the Property Trustee as the holder of the Debentures, (iii) the
Successor Securities are listed, or any Successor Securities will be listed upon
notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then listed, if any, (iv)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect, (vi) such successor entity has a
purpose substantially identical to that of the Trust, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
the Depositor has received an Opinion of Counsel to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the Holders
of the Preferred Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the Holder's interest in the
new entity), (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease neither the Trust nor such successor
entity will be required to register as an investment company under the 1940 Act,
and (c) following such merger, consolidation, amalgamation or replacement, the
Trust or such successor entity will be treated as a grantor trust for United
States Federal income tax purposes and (viii) the Depositor or any permitted
successor or assignee owns, directly or indirectly, all of the common securities
of such successor entity and guarantees the obligations of such successor entity
under the Successor Securities at least to the extent provided by the Guarantee.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
Holders of 100% in aggregate Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into, be replaced by or convey, transfer
or lease its properties and assets substantially as an entirety to any other
entity or permit any other entity to consolidate, amalgamate, merge with or
into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity to
be classified as other than a grantor trust for United States Federal income tax
purposes.
ARTICLE 10
MISCELLANEOUS PROVISIONS
SECTION 10.1. LIMITATION OF RIGHTS OF SECURITYHOLDERS. Other than as
set forth in Section 9.1, the death, incapacity, dissolution, bankruptcy or
termination of any Person having an interest, beneficial or otherwise, in Trust
Securities shall not operate to dissolve the Trust or terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Securityholder for such Person to claim an accounting, take any action or bring
any proceeding in
50
<PAGE>
any court for a partition or winding-up of the arrangements contemplated hereby,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
SECTION 10.2. AMENDMENT. (a) This Trust Agreement may be amended from
time to time by the Trustees and the Depositor, without the consent of any
Securityholders, (i) to cure any ambiguity, correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make any
other provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for United States Federal income tax purposes as a grantor
trust at all times that any Trust Securities are Outstanding or to ensure that
the Trust will not be required to register as an "investment company" under the
1940 Act, or be classified as other than a grantor trust for United States
Federal income tax purposes, or (iii) to comply with the requirements of the
Commission in order to effect or maintain the qualification of this Trust
Agreement under the Trust Indenture Act; provided, however, that in the case of
clause (i), such action shall not adversely affect in any material respect the
interests of any Securityholder, and any such amendments of this Trust Agreement
shall become effective when notice thereof is given to the Securityholders.
(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Trustees and the Depositor with (i) the
consent of Holders representing not less than a majority (based upon Liquidation
Amounts) of the Trust Securities then Outstanding, acting as a single class, and
(ii) receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will not affect the Trustee's status as a grantor trust for
United States Federal income tax purposes or the Trust's exemption from the
status of an "investment company" under the 1940 Act; provided, however, if any
amendment or proposal that would adversely affect the powers, preferences or
special rights of the Trust Securities, whether by way of amendment or
otherwise, would adversely affect only the Preferred Securities or only the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in Liquidation Amount of such class of
Trust Securities.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such consent
being obtained in accordance with Section 6.3 or 6.6 hereof), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; notwithstanding
any other provision herein, without the unanimous consent of the Securityholders
(such consent being obtained in accordance with Section 6.3 or 6.6 hereof), this
paragraph (c) of this Section 10.2 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust Agreement
which would cause the Trust to fail or cease to qualify for the exemption from
the status of an "investment company" under the 1940 Act or be classified as
other than a grantor trust for United States Federal income tax purposes.
51
<PAGE>
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
SECTION 10.3. SEPARABILITY. In case any provision in this Trust
Agreement or in the Trust Securities Certificates shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
SECTION 10.4. GOVERNING LAW. THIS TRUST AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND TRUSTEES WITH RESPECT
TO THIS TRUST AGREEMENT IN THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES AND EXCLUDING SECTIONS 3540 AND 3561 OF TITLE 12
THEREOF.
SECTION 10.5. PAYMENTS DUE ON NON-BUSINESS DAY. If the date fixed
for any payment on any Trust Security shall be a day which is not a Business
Day, then such payment need not be made on such date but may be made on the next
succeeding day which is a Business Day except as otherwise provided in Section
4.1(a) and Section 4.2(d)), with the same force and effect as though made on the
date fixed for such payment, and no interest shall accrue thereon for the period
after such date.
SECTION 10.6. SUCCESSORS. This Trust Agreement shall be binding upon
and shall inure to the benefit of any successor to the Depositor, the Trust or
the Relevant Trustee, including any successor by operation of law. Except in
connection with a transaction that is permitted under Article 8 of the Indenture
and pursuant to which the assignee agrees in writing to perform the Depositor's
obligations hereunder, the Depositor shall not assign its obligations hereunder.
SECTION 10.7. HEADINGS. The Article and Section headings are for
convenience only and shall not affect the construction of this Trust Agreement.
SECTION 10.8. REPORTS, NOTICES AND DEMANDS. Any report, notice,
demand or other communications which by any provision of this Trust Agreement is
required or permitted to be given or served to or upon any Securityholder or the
Depositor may be given or served in writing by deposit thereof, first-class
postage prepaid, in the United States mail, hand delivery or facsimile
transmission, in each case, addressed, (a) in the case of a Holder of Preferred
Securities, to such Holder as such Holder's name and address may appear on the
Securities Register; and (b)
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in the case of the Holder of the Common Securities, to Dura Automotive Systems,
Inc., 2791 Research Drive, Rochester Hills, Michigan 48309-3575.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee, the Delaware Trustee or the Administrative
Trustees shall be given in writing addressed (until another address is published
by the Trust) as follows: (a) with respect to the Property Trustee, to The
First National Bank of Chicago, (b) with respect to the Delaware Trustee, to
First Chicago, Delaware Inc., with a copy of any such notice to the Property
Trustee at its address above, and (c) with respect to the Administrative
Trustees, to them at the address for notices to the Depositor, marked
"Attention: Vice President - Treasurer." Such notice, demand or other
communication to or upon the Trust or the Property Trustee shall be deemed to
have been sufficiently given or made only upon actual receipt of the writing by
the Trust or the Property Trustee.
SECTION 10.9. AGREEMENT NOT TO PETITION. Each of the Trustees and
the Depositor agrees for the benefit of the Securityholders that, until at least
one year and one day after the Trust has been dissolved in accordance with
Article 9, it shall not file, or join in the filing of, a petition against the
Trust under any bankruptcy, insolvency, reorganization or other similar law
(including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Securityholders, that, at the expense of the
Depositor, it shall file an answer with the bankruptcy court or otherwise
properly contest the filing of such petition by the Depositor against the Trust
or the commencement of such action and raise the defense that the Depositor has
agreed in writing not to take such action and should be stopped and precluded
therefrom and such other defenses, if any, as counsel for the Trustee or the
Trust may assert. The provisions of this Section 10.9 shall survive the
dissolution of this Trust Agreement.
SECTION 10.10. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust Indenture
Act that are required to be part of this Trust Agreement and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is the trustee
for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
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SECTION 10.11. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST
THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE
INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER
AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS THE AGREEMENT OF THE TRUST AND SUCH
SECURITYHOLDER AND SUCH OTHERS.
SECTION 10.12. COUNTERPARTS. This Trust Agreement may contain more
than one counterpart of the signature page and this Trust Agreement may be
executed by the affixing of the signature of each of the Trustees to one of such
counterpart signature pages. All of such counterpart signature pages shall be
read as though one, and they shall have the same force and effect as though all
of the signers had signed a single signature page.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed as of the day and year first above written.
DURA AUTOMOTIVE SYSTEMS, INC.,
as Depositor
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
FIRST CHICAGO DELAWARE INC.
as Delaware Trustee
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
---------------------------------
Karl F. Storrie
as Administrative Trustee
---------------------------------
David R. Bovee
as Administrative Trustee
---------------------------------
Stephen E.K. Graham
as Administrative Trustee
<PAGE>
EXHIBIT A -- Certificate of Trust of
Dura Automotive Systems Capital Trust
CERTIFICATE OF TRUST
OF
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
THIS Certificate of Trust of Dura Automotive Systems Capital Trust
(the "Trust"), dated as of March 2, 1998, is being duly executed and filed by
the undersigned, as trustees, to form a business trust under the Delaware
Business Trust Act (12 DEL. C. Section 3801 ET SEQ.).
1. NAME. The name of the business trust formed hereby is Dura
Automotive Systems Capital Trust.
2. DELAWARE TRUSTEE. The name and business address of the trustee
of the Trust with a principal place of business in the State of Delaware are
First Chicago Delaware Inc., 300 King Street, Wilmington, Delaware 1980.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective
upon filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust as of the date first-above written.
FIRST NATIONAL BANK OF CHICAGO, not in
its individual capacity but solely as
trustee of the Trust
By:
--------------------------
Name:
--------------------------
Title:
--------------------------
_______________, not in his individual
capacity but solely as trustee of the
Trust
-----------------------------------
A-1
<PAGE>
EXHIBIT B -- Form of Certificate
Depositary Agreement
B-1
<PAGE>
EXHIBIT C -- Form of Common Securities of
Dura Automotive Systems Capital Trust
THE SECURITIES EVIDENCED HEREBY AND THE CLASS A COMMON STOCK ISSUABLE UPON
THEIR CONVERSION AND THE DEBENTURES THAT MAY BE ISSUED IN EXCHANGE THEREFOR HAVE
NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE, IN COMPLIANCE WITH ALL APPLICABLE SECURITIES LAWS
OF THE STATES OF THE UNITED STATES AND OTHER JURISDICTIONS.
C-1
<PAGE>
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO AN
ENTITY WHOLLY OWNED BY DURA AUTOMOTIVE SYSTEMS, INC.
OR TO CERTAIN SUCCESSORS OF DURA AUTOMOTIVE SYSTEMS, INC.
Certificate Number ____ Number of Common Securities _____
Certificate Evidencing Common Securities
of
Dura Automotive Systems Capital Trust
Common Securities
(Liquidation Amount $25 per Common Security)
Dura Automotive Systems Capital Trust, a statutory business trust
created under the laws of the State of Delaware (the "Trust"), hereby certifies
that Dura Automotive Systems, Inc. (the "Holder") is the registered owner of
______________ common securities of the Trust representing undivided beneficial
interests in the assets of the Trust (the "Common Securities"). Except as set
forth in Section 5.10 of the Trust Agreement (as defined below), the Common
Securities are not transferable and any attempted transfer hereof shall be void.
The designations, rights, privileges, restrictions, preferences and other terms
and provisions of the Common Securities are set forth in, and this certificate
and the Common Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Trust dated as of March __, 1998, as the same may be
amended from time to time (the "Trust Agreement") including the designation of
the terms of the Common Securities as set forth therein. The Holder is entitled
to the benefits of the Common Securities Guarantee Agreement entered into by
Dura Automotive Systems, Inc., a Delaware corporation, and The First National
Bank of Chicago, as Guarantee Trustee, dated as of March __, 1998 (the
"Guarantee"), to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee to the Holder without charge upon written
request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
C-2
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust
has executed this certificate this ______ day of March, 1998.
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
By:
--------------------------------
Name:
--------------------------------
As Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the
within-mentioned Trust Agreement.
Dated:
-------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By:
--------------------------------
Name:
--------------------------------
Authorized Signatory
C-3
<PAGE>
EXHIBIT D -- Form of Preferred Securities of
Dura Automotive Systems Capital Trust
This Preferred Security is a Book-Entry Preferred Securities
Certificate within the meaning of the Trust Agreement hereinafter referred to
and is registered in the name of The Depository Trust Company ("DTC") or a
nominee of DTC. This Preferred Security is exchangeable for Preferred
Securities registered in the name of a person other than DTC or its nominee only
in the limited circumstances described in the Trust Agreement and no transfer of
this Preferred Security (other than a transfer of this Preferred Security as a
whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another
nominee of DTC) may be registered except in limited circumstances.
Unless this certificate is presented by an authorized representative
of DTC, to Issuer or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
D-1
<PAGE>
Certificate Number ____ Number of Preferred Securities ______
CUSIP NO. ____________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
____% Convertible Preferred Securities
(Liquidation Amount $25 per Preferred Security)
Dura Automotive Systems Capital Trust, a statutory business trust
created under the laws of the State of Delaware (the "Trust"), hereby certifies
that __________________ (the "Holder") is the registered owner of _______
preferred securities of the Trust representing an undivided beneficial interest
in the assets of the Trust and designated the Dura Automotive Systems Capital
Trust ____% Convertible Preferred Securities (Liquidation Amount $25 per
Preferred Security) (the "Preferred Securities"). Except to the extent set
forth in the Trust Agreement (as defined below), the Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.4 of the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of March, 1998 as the same may be
amended from time to time (the "Trust Agreement") including the designation of
the terms of Preferred Securities as set forth therein. The Holder is entitled
to the benefits of the Guarantee Agreement entered into by Dura Automotive
Systems, Inc., a Delaware corporation, and The First National Bank of Chicago,
as Guarantee Trustee, dated as of March __, 1998 (the "Guarantee"), to the
extent provided therein. The Trust will furnish a copy of the Trust Agreement
and the Guarantee to the Holder without charge upon written request to the Trust
at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
D-2
<PAGE>
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust
has executed this certificate this _____ day of March 1998.
DURA AUTOMOTIVE SYSTEMS CAPITAL TRUST
By:
--------------------------------
Name:
--------------------------------
An Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Trust Agreement.
Dated:
--------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By:
--------------------------------
Name:
--------------------------------
Authorized Signatory
D-3
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Securities Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
----------------------
Signature:
----------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
1
<PAGE>
TO BE ATTACHED TO GLOBAL CERTIFICATE
SCHEDULE A
The initial Liquidation Amount of this Global Certificate shall be
$__________. The following increases or decreases in the Liquidation Amount of
this Global Certificate have been made:
<TABLE>
<CAPTION>
Amount of increase in
Liquidation Amount of Liquidation Amount of
this Global Certificate Amount of decrease in this Global Certificate Signature of authorized
including upon exercise Liquidation Amount of following such decrease officer of Trustee or
Date Made of over-allotment option this Global Certificate or increase Securities Custodian
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
EXHIBIT E -- Notice of Conversion
NOTICE OF CONVERSION
To: The First National Bank of Chicago,
as Property Trustee of
Dura Automotive Systems, Inc.
The undersigned owner of these Preferred Securities hereby irrevocably
exercises the option to convert these Preferred Securities, or the portion below
designated, into Class A Common Stock of Dura Automotive Systems, Inc. (the
"Dura Class A Common Stock") in accordance with the terms of the Amended and
Restated Trust Agreement (as amended from time to time, the "Trust Agreement"),
dated as of March, 1998, by Karl F. Storrie, David R. Bovee and Stephen E. K.
Graham, as Administrative Trustees, First Chicago Delaware Inc., as Delaware
Trustee, The First National Bank of Chicago, as Property Trustee, Dura
Automotive Systems, Inc., as Depositor, and by the Holders, from time to time,
of undivided beneficial interests in the assets of the Trust to be issued
pursuant to the Trust Agreement. Pursuant to the aforementioned exercise of the
option to convert these Preferred Securities, the undersigned hereby directs the
Conversion Agent (as that term is defined in the Trust Agreement) to (i)
exchange such Preferred Securities for a portion of the Debentures (as that term
is defined in the Trust Agreement) held by the Trust (at the rate of exchange
specified in the terms of the Preferred Securities set forth in the Trust
Agreement) and (ii) immediately convert such Debentures on behalf of the
undersigned, into Dura Class A Common Stock (at the conversion rate specified in
the terms of the Preferred Securities set forth in the Trust Agreement).
The undersigned does also hereby direct the Conversion Agent that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
E-1
<PAGE>
Date:
--------------
in whole in part
----- -----
Number of Preferred Securities to be
converted:
-----------------------------------
If a name or names other than the
undersigned, please indicate in the spaces
below the name or names in which the shares
of Dura Class A Common Stock are to be
issued, along with the address or addresses
of such person or persons
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and Address,
Including Zip Code, and Social Security or
Other Identifying Number
-----------------------------------
-----------------------------------
-----------------------------------
Signature Guarantee: *
-----------------------------------
- ---------------
* (Signature must be guaranteed by an institution which is a member of the
following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP);
or (iv) in such other guarantee programs acceptable to the Trustee.
E-2
<PAGE>
Draft--3/7/98
- --------------------------------------------------------------------------------
DURA AUTOMOTIVE SYSTEMS, INC.
to
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
------------------------------
JUNIOR CONVERTIBLE SUBORDINATED INDENTURE
DATED AS OF MARCH __, 1998
------------------------------
____% CONVERTIBLE SUBORDINATED DEBENTURES
DUE MARCH __, 2028
- --------------------------------------------------------------------------------
<PAGE>
Reconciliation and tie between the Trust Indenture Act of 1939 (including
cross-references to provisions of Sections 310 to and including 317 which,
pursuant to Section 318(c) of the Trust Indenture Act of 1939, as amended by the
Trust Reform Act of 1990, are a part of and govern the Junior Convertible
Subordinated Indenture whether or not physically contained therein) and the
Junior Convertible Subordinated Indenture, dated as of March __, 1998.
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- ---------------- ---------
<S> <C>
Section 310(a)(1), (2) and (5). . . . . . . . . . . . . . . . . . . . . . . 6.9
(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(a)(4). . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8, 6.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 311(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.13
(b)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(a)
Section 312(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2(a), 7.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.2(c)
Section 313(a). . . . . . . . . . . . . . . . . . . . . . . . . .7.3(a), 7.3(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(a)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7.3(c)
Section 314(a)(1), (2),(3) and (4). . . . . . . . . . . . . . . . . . . . . 7.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(c)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(c)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
Section 315(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6.1(c)
(d)(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(a)(1)
(d)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c)(2)
(d)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1(c)(3)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.14
Section 316(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.12
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.13
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . .Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- ---------------- ---------
<S> <C>
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.4(f)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
(a)(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10.3
Section 318(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.7
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Convertible Subordinated Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 COMPLIANCE CERTIFICATE AND OPINIONS. . . . . . . . . . . 10
SECTION 1.3 FORMS OF DOCUMENTS DELIVERED TO TRUSTEE. . . . . . . . . 11
SECTION 1.4 ACTS OF HOLDERS. . . . . . . . . . . . . . . . . . . . . 11
SECTION 1.5 NOTICES, ETC. TO TRUSTEE AND COMPANY . . . . . . . . . . 12
SECTION 1.6 NOTICE TO HOLDERS; WAIVER. . . . . . . . . . . . . . . . 12
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT. . . . . . . . . . . . 13
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS . . . . . . . . 13
SECTION 1.9 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . 13
SECTION 1.10 SEPARABILITY CLAUSE. . . . . . . . . . . . . . . . . . . 13
SECTION 1.11 BENEFITS OF INDENTURE. . . . . . . . . . . . . . . . . . 13
SECTION 1.12 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . 13
SECTION 1.13 NON-BUSINESS DAYS. . . . . . . . . . . . . . . . . . . . 13
ARTICLE 2
DEBENTURE FORM
SECTION 2.1 FORMS GENERALLY. . . . . . . . . . . . . . . . . . . . . 14
SECTION 2.2 FORM OF FACE OF DEBENTURE. . . . . . . . . . . . . . . . 14
SECTION 2.3 FORM OF REVERSE OF DEBENTURE . . . . . . . . . . . . . . 15
SECTION 2.4 ADDITIONAL PROVISIONS REQUIRED IN GLOBAL DEBENTURE . . . 22
SECTION 2.5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. . . . . 22
SECTION 2.6 INITIAL ISSUANCE TO PROPERTY TRUSTEE . . . . . . . . . . 22
ARTICLE 3
THE DEBENTURES
SECTION 3.1 AMOUNT OF DEBENTURES . . . . . . . . . . . . . . . . . . 22
SECTION 3.2 DENOMINATIONS. . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING . . . . . 23
SECTION 3.4 TEMPORARY DEBENTURES . . . . . . . . . . . . . . . . . . 23
SECTION 3.5 REGISTRATION, TRANSFER AND EXCHANGE. . . . . . . . . . . 24
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES . . . . 25
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED . . . . . 26
SECTION 3.8 PERSONS DEEMED OWNERS. . . . . . . . . . . . . . . . . . 27
SECTION 3.9 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.10 COMPUTATION OF INTEREST. . . . . . . . . . . . . . . . . 27
SECTION 3.11 DEFERRALS OF INTEREST PAYMENT DATES. . . . . . . . . . . 27
SECTION 3.12 RIGHT OF SET-OFF . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.13 AGREED TAX TREATMENT . . . . . . . . . . . . . . . . . . 28
SECTION 3.14 CUSIP NUMBERS. . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.15 GLOBAL SECURITY. . . . . . . . . . . . . . . . . . . . . 29
i
<PAGE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. . . . . . . . . 30
SECTION 4.2 APPLICATION OF TRUST MONEY . . . . . . . . . . . . . . . 31
ARTICLE 5
REMEDIES
SECTION 5.1 DEBENTURE EVENTS OF DEFAULT. . . . . . . . . . . . . . . 32
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT . . . 33
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . 34
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF
DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 5.6 APPLICATION OF MONEY COLLECTED . . . . . . . . . . . . . 36
SECTION 5.7 LIMITATION ON SUITS. . . . . . . . . . . . . . . . . . . 36
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES . . . . . . . . . . . 37
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE . . . . . . . . . . . . . 37
SECTION 5.11 DELAY OR OMISSION NOT WAIVER . . . . . . . . . . . . . . 37
SECTION 5.12 CONTROL BY HOLDERS . . . . . . . . . . . . . . . . . . . 38
SECTION 5.13 WAIVER OF PAST DEFAULTS. . . . . . . . . . . . . . . . . 38
SECTION 5.14 UNDERTAKING FOR COSTS. . . . . . . . . . . . . . . . . . 39
SECTION 5.15 WAIVER OF USURY, STAY, OR EXTENSION LAWS . . . . . . . . 39
ARTICLE 6
THE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES. . . . . . . . . . . 40
SECTION 6.2 NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . 41
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE. . . . . . . . . . . . . . . . 41
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES . 42
SECTION 6.5 MAY HOLD DEBENTURES. . . . . . . . . . . . . . . . . . . 42
SECTION 6.6 MONEY HELD IN TRUST. . . . . . . . . . . . . . . . . . . 42
SECTION 6.7 COMPENSATION AND REIMBURSEMENT . . . . . . . . . . . . . 43
SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS. . . . . . . . . 43
SECTION 6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. . . . . . . . . 43
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. . . . 44
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR . . . . . . . . . 45
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. . . . 46
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. . . . . . . . . . . 46
ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 COMPANY TO FURNISH NAMES AND ADDRESSES OF HOLDERS. . . . 48
ii
<PAGE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 7.2 PRESERVATION OF INFORMATION: COMMUNICATIONS TO HOLDERS. 48
SECTION 7.3 REPORTS BY TRUSTEE . . . . . . . . . . . . . . . . . . . 48
SECTION 7.4 REPORTS BY COMPANY . . . . . . . . . . . . . . . . . . . 49
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS . . 49
SECTION 8.2 SUCCESSOR CORPORATION SUBSTITUTED. . . . . . . . . . . . 50
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS . . . 50
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. . . . . 51
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES . . . . . . . . . . 52
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES. . . . . . . . . . . . 53
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. . . . . . . . . . . 53
SECTION 9.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES . . . 53
ARTICLE 10
COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST . . . . . . . 53
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY. . . . . . . . . . . . . 53
SECTION 10.3 MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST . . . . 54
SECTION 10.4 PAYMENT OF TAXES AND OTHER CLAIMS. . . . . . . . . . . . 55
SECTION 10.5 STATEMENT AS TO COMPLIANCE . . . . . . . . . . . . . . . 55
SECTION 10.6 WAIVER OF CERTAIN COVENANTS. . . . . . . . . . . . . . . 55
SECTION 10.7 ADDITIONAL SUMS. . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.8 ADDITIONAL COVENANTS . . . . . . . . . . . . . . . . . . 56
SECTION 10.9 PAYMENT OF EXPENSES OF THE TRUST . . . . . . . . . . . . 57
ARTICLE 11
REDEMPTION OR EXCHANGE OF DEBENTURES
SECTION 11.1 ELECTION TO REDEEM; NOTICE TO TRUSTEE. . . . . . . . . . 57
SECTION 11.2 SELECTION OF DEBENTURES TO BE REDEEMED . . . . . . . . . 58
SECTION 11.3 NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . 58
SECTION 11.4 DEPOSIT OF REDEMPTION PRICE. . . . . . . . . . . . . . . 59
SECTION 11.5 DEBENTURES PAYABLE ON REDEMPTION DATE. . . . . . . . . . 59
SECTION 11.6 DEBENTURES REDEEMED IN PART. . . . . . . . . . . . . . . 60
SECTION 11.7 MANDATORY REDEMPTION . . . . . . . . . . . . . . . . . . 60
SECTION 11.8 OPTIONAL REDEMPTION. . . . . . . . . . . . . . . . . . . 60
SECTION 11.9 EXCHANGE OF TRUST SECURITIES FOR DEBENTURES. . . . . . . 61
ARTICLE 12
SUBORDINATION OF DEBENTURES
SECTION 12.1 DEBENTURES SUBORDINATE TO SENIOR DEBT. . . . . . . . . . 62
iii
<PAGE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC.. . . . . 62
SECTION 12.3 PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF
DEBENTURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 12.4 NO PAYMENT WHEN SENIOR DEBT IN DEFAULT . . . . . . . . . 63
SECTION 12.5 PAYMENT PERMITTED IF NO DEFAULT. . . . . . . . . . . . . 64
SECTION 12.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT. . . . . 64
SECTION 12.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. . . . . . . 65
SECTION 12.8 TRUSTEE TO EFFECTUATE SUBORDINATION. . . . . . . . . . . 65
SECTION 12.9 NO WAIVER OF SUBORDINATION PROVISIONS. . . . . . . . . . 65
SECTION 12.10 NOTICE TO TRUSTEE. . . . . . . . . . . . . . . . . . . . 65
SECTION 12.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 12.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT . . . . 66
SECTION 12.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT;
PRESERVATION OF TRUSTEE'S RIGHTS . . . . . . . . . . . . . . . . . 66
SECTION 12.14 ARTICLE APPLICABLE TO PAYING AGENTS. . . . . . . . . . . 66
SECTION 12.15 CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT. . . . . 66
ARTICLE 13
CONVERSION OF DEBENTURES
SECTION 13.1 CONVERSION RIGHTS. . . . . . . . . . . . . . . . . . . . 67
SECTION 13.2 CONVERSION PROCEDURES. . . . . . . . . . . . . . . . . . 67
SECTION 13.3 EXPIRATION OF CONVERSION RIGHTS. . . . . . . . . . . . . 70
SECTION 13.4 CONVERSION PRICE ADJUSTMENTS . . . . . . . . . . . . . . 70
SECTION 13.5 FUNDAMENTAL CHANGE . . . . . . . . . . . . . . . . . . . 74
SECTION 13.6 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. . . . . . . . 76
SECTION 13.7 PRIOR NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . 76
SECTION 13.8 CERTAIN ADDITIONAL RIGHTS. . . . . . . . . . . . . . . . 77
SECTION 13.9 RESTRICTIONS ON CLASS A COMMON STOCK
ISSUABLE UPON CONVERSION . . . . . . . . . . . . . . . . . . . . . 78
SECTION 13.10 TRUSTEE NOT RESPONSIBLE FOR DETERMINING
CONVERSION PRICE OR ADJUSTMENTS. . . . . . . . . . . . . . . . . . 78
</TABLE>
iv
<PAGE>
JUNIOR CONVERTIBLE SUBORDINATED INDENTURE, dated as of March __,1998
between DURA AUTOMOTIVE SYSTEMS, INC., a Delaware corporation (the "COMPANY")
having its principal office at 2791 Research Drive, Rochester Hills, Michigan
48309-3575, and THE FIRST NATIONAL BANK OF CHICAGO, an Illinois banking
corporation ("FIRST CHICAGO"), as Trustee (the "TRUSTEE").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance of its __% Convertible Subordinated
Debentures (the "DEBENTURES") of substantially the tenor hereinafter provided
which evidence loans made to the Company of the proceeds from the issuance by
Dura Automotive Systems Capital Trust, a Delaware business trust (the "TRUST"),
of preferred trust interests in the Trust (the "PREFERRED SECURITIES") and
common interests in the Trust (the "COMMON SECURITIES"), and to provide the
terms and conditions upon which the Debentures are to be authenticated, issued
and delivered.
All things necessary to make the Debentures, when executed by the Company
and authenticated and delivered hereunder and duly issued by the Company, the
valid obligations of the Company, and to make this Indenture a valid agreement
of the Company, in accordance with their and its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debentures
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Debentures, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS. For all purpose of this Indenture, except
as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles, and the term "GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" with
respect to any computation required or permitted hereunder shall mean such
accounting principles which are generally accepted at the date or time of
such computation; and
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(d) the words "HEREIN" and "HEREUNDER" and other words of similar
import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"ACT," when used with respect to any Holder, has the meaning specified in
Section 1.4.
"ADDITIONAL INTEREST" means the interest, if any, that shall accrue on any
interest on the Debentures that is in arrears for more than one interest payment
period or not paid during any Extension Period, which in either case (to the
extent permitted by law) shall accrue at the stated rate per annum specified or
determined as specified in such Debenture and compounded quarterly.
"ADDITIONAL SUMS" has the meaning specified in Section 10.7.
"ADDITIONAL TAXES" means the sum of any additional taxes, duties and other
governmental charges to which the Trust has become subject from time to time as
a result of a Tax Event.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; PROVIDED, HOWEVER, that an Affiliate of the
Company shall be deemed not to include the Trust to which Debentures have been
issued. For the purposes of this definition, "CONTROL" when used with respect
to any specified Person means the power to direct the management and 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 to the foregoing.
"APPLICABLE PRICE" means (c) in the case of a Non-Stock Fundamental Change
in which the holders of Common Stock receive only cash, the amount of cash
received by the holder of one share of Common Stock and (ii) in the event of any
other Non-Stock Fundamental Change or any Common Stock Fundamental Change, the
average of the Closing Prices for Common Stock during the ten trading days prior
to and including the record date for the determination of the holders of Common
Stock entitled to receive such securities, cash, or other property in connection
with such Non-Stock Fundamental Change or Common Stock Fundamental Change or, if
there is no such record date, the date upon which the holders of Common Stock
shall have the right to receive such securities, cash, or other property, in
each case as adjusted in good faith by the Company to appropriately reflect any
of the events referred to in Section 13.4.
"AUTHENTICATING AGENT" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Debentures.
"BOARD OF DIRECTORS" means either the board of directors of the Company or
any committee of that board duly authorized to act hereunder.
"BOARD RESOLUTION" means a copy of the resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors, or such committee of the Board of Directors or officers
of the Company to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
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"BUSINESS DAY" means any day other than a Saturday or Sunday or a day on
which banking institutions in the City of Chicago are authorized or required by
law or executive order to remain closed or a day on which the Corporate Trust
Office of the Trustee, or the principal office of the Property Trustee under the
Trust Agreement, is closed for business.
"CLASS A COMMON STOCK" means the Class A Common Stock, $.01 par value per
share, of the Depositor.
"CLASS B COMMON STOCK" means the Class B Common Stock, $.01 par value per
share, of the Depositor.
"CLOSING PRICE" means on any day the reported last sale price on such day
or, in case no sale takes place on such day, the average of the reported closing
bid and asked prices in each case on the NYSE Consolidated Transactions Tape,
the Nasdaq National Market or, if the stock is not listed or admitted to trading
on such Exchanges, on any other principal national securities exchange on which
such stock is listed or admitted to trading or, if not listed or admitted to
trading on any national securities exchange, the average of the closing bid and
asked prices as furnished by any NYSE member firm, selected by the Trustee for
that purpose.
"COMMISSION" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or if at
any time after the execution of this instrument such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties on such date.
"COMMON SECURITIES" has the meaning specified in the first recital of this
Indenture.
"COMMON STOCK" means the Class A Common Stock and the Class B Common Stock.
"COMMON STOCK FUNDAMENTAL CHANGE" means any Fundamental Change in which
more than 50% of the value (as determined in good faith by the Board of
Directors) of the consideration received by holders of Common Stock consists of
common stock that for each of the ten consecutive trading days prior to the
record date for the determination of the holders of Common Stock entitled to
receive such common stock or, if there is no such record date, the date on which
the holders of Common Stock shall have the right to receive such common stock,
has been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the Nasdaq National
Market; PROVIDED, HOWEVER, that a Fundamental Change shall not be a Common Stock
Fundamental Change unless either (i) the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding Preferred Securities
continue to exist as outstanding Preferred Securities or (ii) not later than the
occurrence of such Fundamental Change, the outstanding Preferred Securities are
converted into or exchanged for shares of convertible preferred stock of an
entity succeeding to the business of the Company or a subsidiary thereof, which
convertible preferred stock has powers, preferences, and relative,
participating, optional, or other rights, and qualifications, limitations, and
restrictions, substantially similar to those of the Preferred Securities.
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"COMPANY" means the Person named as the "Company" in the first paragraph of
this instrument until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"COMPANY REQUEST" and "COMPANY ORDER" means, respectively, the written
request or order signed in the name of the Company by its Chairman of the Board,
its Vice Chairman, its President or a Vice President, and by its Treasurer, an
Assistant Treasurer, its Controller, its Secretary or an Assistant Secretary,
and delivered to the Trustee.
"CONVERSION AGENT" has the meaning specified in Section 13.2.
"CONVERSION DATE" has the meaning specified in Section 13.2.
"CONVERSION PRICE" has the meaning specified in Section 13.1.
"CORPORATE TRUST OFFICE" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered which office at the date hereof is located at One First National
Plaza, Suite 126, Chicago, Illinois 60670-0126.
"CURRENT MARKET PRICE" means for any day the last reported sale price,
regular way, on such day of Common Stock, or, if no sale takes place on such
day, the average of the reported closing bid and asked prices on such day,
regular way, in either case as reported on the NYSE Consolidated Transactions
Tape, or, if Common Stock is not listed or admitted to trading on the NYSE on
such day, on the principal national securities exchange on which Common Stock is
listed or admitted to trading, if Common Stock is listed on a national
securities exchange, or the Nasdaq National Market, or, if Common Stock is not
quoted or admitted to trading on such quotation system, on the principal
quotation system on which Common Stock may be listed or admitted to trading or
quoted, or, if not listed or admitted to trading or quoted on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of Common Stock in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or, if not so available in such manner, as
furnished by any NYSE member firm selected from time to time by the Board of
Directors for that purpose or, if not so available in such manner, as otherwise
determined in good faith by the Board of Directors.
"DEBENTURES" OR "DEBENTURE" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"DEBT" means, with respect to any Person, whether recourse is to all or a
portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
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business); (v) every capital lease obligation of such Person, and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible for or liable, directly or indirectly,
as obligor or otherwise.
"DEFAULTED INTEREST" has the meaning specified in Section 3.7.
"DEPOSITARY" means, with respect to the Debentures issuable or issued in
whole or in part in the form of one or more Global Debentures, the Person
designated as Depositary by the Company (or any successor thereto).
"DOLLAR" means the currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts.
"DEBENTURE EVENTS OF DEFAULT" has the meaning specified in Article 5.
"EXPIRATION TIME" has the meaning specified in Section 13.4(e).
"EXTENSION PERIOD" has the meaning specified in Section 3.11.
"FUNDAMENTAL CHANGE" means the occurrence of any Transaction or event in
connection with a plan pursuant to which all or substantially all of Common
Stock shall be exchanged for, converted into, acquired for, or constitute solely
the right to receive securities, cash, or other property (whether by means of an
exchange offer, liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization, or otherwise); PROVIDED, HOWEVER, in the
case of a plan involving more than one such Transaction or event, for purposes
of adjustment of the conversion price, such Fundamental Change shall be deemed
to have occurred when substantially all of Common Stock shall be exchanged for,
converted into, or acquired for or constitute solely the right to receive
securities, cash, or other property, but the adjustment shall be based upon
consideration that a holder of Common Stock received in such Transaction or
event as a result of which more than 50% of Common Stock shall have been
exchanged for, converted into, or acquired for or constitute solely the right to
receive securities, cash, or other property.
"GLOBAL DEBENTURE" means a Debenture in the form prescribed in Section 2.4
evidencing all or part of the Debentures, issued to the Depositary or its
nominee, and registered in the name of such Depositary or its nominee.
"GUARANTEE" means the guarantee by the Company of distributions on the
Preferred Securities of the Trust to the extent provided in the Guarantee
Agreement, substantially in the form attached hereto as Annex C, as amended from
time to time.
"HOLDER" means a Person in whose name a Debenture is registered in the
Securities Register.
"INDENTURE" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
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"INTEREST PAYMENT DATE" means as to the Debentures the Stated Maturity of
an installment of interest on such Debentures.
"INTEREST RATE" means the rate of interest specified or determined as
specified in each Debenture as being the rate of interest payable on such
Debenture.
"INVESTMENT COMPANY EVENT" means, in respect of the Trust, the receipt by
the Property Trustee, on behalf of the Trust of an Opinion of Counsel, rendered
by a law firm having a national tax and securities practice (which opinion shall
not have been rescinded by such law firm), to the effect that, as a result of
the occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "CHANGE IN 1940 ACT LAW"), there is more than
an insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the 1940 Act, which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Preferred Securities of the Trust.
"JUNIOR SUBORDINATED PAYMENT" has the meaning specified in Section 12.2.
"MATURITY" when used with respect to the Debentures, means the date on
which the principal of the Debentures become due and payable as herein provided,
whether at the Stated Maturity or by declaration of acceleration, call or
redemption or otherwise.
"1940 ACT" means the Investment Company Act of 1940, as amended.
"NON BOOK-ENTRY PREFERRED SECURITIES" has the meaning specified in Section
3.15.
"NON-STOCK FUNDAMENTAL CHANGE" means any Fundamental Change other than a
Common Stock Fundamental Change.
"NOTICE OF CONVERSION" means the notice given by a Holder of Preferred
Securities to the Conversion Agent directing the Conversion Agent to exchange
such Preferred Securities for Debentures and to convert such Debentures into
Class A Common Stock on behalf of such holder.
"NOTICE OF DEFAULT" has the meaning specified in Section 5.1(c).
"NYSE" means the New York Stock Exchange.
"OFFICERS' CERTIFICATE" means a certificate signed by (i) the Chairman,
Chief Executive Officer, President or a Vice President, and by (ii) the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant
Secretary of the Company, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel
for the Company, the Trust, or the Trustee, but who may be an employee thereof,
and who shall be reasonably acceptable to the Trustee.
"OUTSTANDING" means, as of the date of determination, all Debentures
theretofore authenticated and delivered under this Indenture, except:
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(i) Debentures theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Debentures for whose payment money in the necessary amount has
been theretofore irrevocably deposited with the Trustee or any Paying Agent
in trust for the Holders of such Debentures; and
(iii) Debentures in substitution for or in lieu of which other
Debentures have been authenticated and delivered or which have been paid
pursuant to Section 3.6, or which have been converted into Class A Common
Stock pursuant to Section 13.1, unless proof satisfactory to the Trustee is
presented that any Debentures are held by Holders in whose hands such
Debentures are valid, binding and legal obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Debentures have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Debentures owned
by the Company or any other obligor upon the Debentures or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be fully
protected in conclusively relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Debentures which a Responsible
Officer of the Trustee actually knows to be so owned shall be so disregarded.
Debentures so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Debentures and that the pledgee
is not the Company or any other obligor upon the Debentures or any Affiliate of
the Company or such other obligor. Upon request of the Trustee, the Company
shall furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Debentures, if any, known by the Company to be owned or held by
or for the account of the Company, or any other obligor on the Debentures or any
Affiliate of the Company or such obligor, and, subject to the provisions of
Section 6.1, the Trustee shall be entitled to accept such Officers' Certificate
as conclusive evidence of the facts therein set forth and of the fact that all
Debentures not listed therein are Outstanding for the purpose of any such
determination.
"PAYING AGENT" means the Trustee or any Person authorized by the Company to
pay the principal of or interest on any Debentures on behalf of the Company.
"PERSON" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PREDECESSOR DEBENTURE" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture, and, for the purposes of this definition, any Debenture
authenticated and delivered under Section 3.6 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"PREFERRED SECURITIES" has the meaning specified in the first recital of
this Indenture.
"PROCEEDING" has the meaning specified in Section 12.2.
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"PROPERTY TRUSTEE" means, in respect of the Trust, the commercial bank or
trust company identified as the "Property Trustee" in the Trust Agreement,
solely in its capacity as Property Trustee of the Trust under the Trust
Agreement and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as therein provided.
"PURCHASED SHARES" has the meaning specified in Section 13.4(e).
"PURCHASER STOCK PRICE" means, with respect to any Common Stock Fundamental
Change the average of the Closing Prices for common stock received in such
Common Stock Fundamental Change for the ten consecutive trading days prior to
and including the record date for the determination of the holders of common
stock entitled to receive such common stock or if there is no such record date,
the date on which the holders of common stock shall have the right to receive
such common stock, as adjusted in good faith by the Company to appropriately
reflect any of the events referred to in Section 13.4.
"REDEMPTION DATE," when used with respect to any Debenture to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.
"REDEMPTION PRICE" has the meaning specified in Section 11.3(b).
"REFERENCE DATE" has the meaning specified in Section 13.4(c).
"REFERENCE MARKET PRICE" initially means $______ (which is an amount equal
to 66 2/3% of the reported last sale price for Class A Common Stock on March __,
1998), and in the event of any adjustment of the Conversion Price other than as
a result of a Non-Stock Fundamental Change, the Reference Market Price shall
also be adjusted so that the ratio of the Reference Market Price to the
Conversion Price after giving effect to any such adjustment shall always be the
same as the ratio of the initial Reference Market Price to the initial
Conversion Price of the Debentures.
"REGULAR RECORD DATE" means for the interest payable on any Interest
Payment Date the fifteenth day (whether or not a Business Day) next preceding
such Interest Payment Date.
"RESPONSIBLE OFFICER" when used with respect to the Trustee means any
officer assigned to the Trustee's Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Indenture, and also,
with respect to a particular matter, any other officer, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"RIGHTS" has the meaning specified in Section 13.2(g).
"SECURITIES REGISTER" AND "SECURITIES REGISTRAR" have the respective
meanings specified in Section 3.5.
"SENIOR DEBT" means the principal of (and premium, if any) and interest, if
any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to
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the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Debt of the Company, whether incurred on or prior to the
date of this Indenture or thereafter incurred, unless, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are not superior in right of payment to the
Debentures or to other Debt which is PARI PASSU with, or subordinated to, the
Debentures, PROVIDED, HOWEVER, that Senior Debt shall not be deemed to include
(a) any Debt of the Company which when incurred and, without respect to any
election under Section 1111(b) of the Bankruptcy Reform Act of 1978, was without
recourse to the Company, (b) any Debt of the Company to any of its Subsidiaries,
(c) Debt to any employee of the Company, (d) any liability for taxes, (e) Debt
or other monetary obligations to trade creditors created or assumed by the
Company or any of its Subsidiaries in the ordinary course of business in
connection with the obtaining of goods, materials or services and (f) the
Debentures.
"SPECIAL EVENT" means a Tax Event or an Investment Company Event.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.7.
"STATED MATURITY" when used with respect to the Debentures or any
installment of principal thereof or interest thereon means the date specified in
the Debentures as the fixed date on which the principal of the Debentures or
such installment of interest is due and payable.
"SUBSIDIARY" means any corporation of which at the time of determination
the Company and/or one or more Subsidiaries owns or controls directly or
indirectly more than 50% of the outstanding shares of voting stock. For
purposes of this definition, "VOTING STOCK" means stock which has voting power
for the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.
"TAX EVENT" means the receipt by the Property Trustee on behalf of the
Trust of an Opinion of Counsel, rendered by a law firm having a national tax and
securities practice (which opinion shall not have been rescinded by such law
firm), to the effect that, as a result of any amendment to, or change (including
any announced prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of issuance of the Preferred
Securities of the Trust and does not pertain to the use of the proceeds of the
issuance of the Debentures, there is more than an insubstantial risk that (i)
the Trust is, or will be within 90 days of the date thereof, subject to United
States Federal income tax with respect to income received or accrued on the
Debentures, (ii) interest payable by the Company on the Debentures is not, or
within 90 days of the date thereof, will not be, deductible, in whole or in
part, for United States Federal income tax purposes or (iii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a DE MINIMIS
amount of other taxes, duties or other governmental charges.
"TRANSACTION" has the meaning specified in Section 13.5(a).
"TRUST" has the meaning specified in the first recital of this Indenture.
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"TRUST AGREEMENT" means the Trust Agreement substantially in the form
attached hereto as Annex A, as amended by the form of Amended and Restated Trust
Agreement substantially in the form attached hereto as Annex B, as amended from
time to time.
"TRUSTEE" means the Person named as the "Trustee" in the first paragraph of
this instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder if at any time there is more
than one such Person.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939 (15
U.S.C.Sections 77aaa-77bbb), as amended and as in effect on the date as of this
Indenture.
"TRUST SECURITIES" means the Common Securities and Preferred Securities.
"UNDERWRITERS" with respect to the Preferred Securities, means Robert W.
Baird & Co. Incorporated and Piper Jaffray Inc.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement dated March __,
1998 by and among Dura Automotive Systems Capital Trust, Dura Automotive
Systems, Inc. and the Underwriters.
"VICE PRESIDENT" when used with respect to the Company, means any vice
president, whether or not designated by a number or a word or words added before
or after the title "VICE PRESIDENT."
SECTION 1.2 COMPLIANCE CERTIFICATE AND OPINIONS. Upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officers' Certificate stating that all conditions precedent (including
covenants, compliance with which constitutes a condition precedent), if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent (including covenants compliance with which
constitute a condition precedent), if any, have been complied with, except that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished. Every certificate or opinion with respect to
compliance with a condition or covenant provided for in this Indenture (other
than the certificates provided pursuant to Section 10.5) shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
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(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 1.3 FORMS OF DOCUMENTS DELIVERED TO TRUSTEE. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents. Any certificate or opinion of an
officer of the Company may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Where any Person is required to
make, give or execute two or more applications, requests, consents,
certificates, statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
SECTION 1.4 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given to or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments is or are delivered to the Trustee, and, where it is hereby
expressly required, to the Company. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "ACT" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 6.1) conclusive in favor of the Trustee
and the Company and any agent of the Trustee or the Company, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a Person acting in other
than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same,
may also be proved in any other
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<PAGE>
manner which the Trustee deems sufficient and in accordance with such
reasonable rules as the Trustee may determine.
(d) The ownership of Debentures shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Debenture shall bind every
future Holder of the same Debenture and the Holder of every Debenture
issued upon the transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made
upon such Debenture.
(f) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Holders entitled to take any action
under this Indenture by vote or consent. Except as otherwise provided
herein, such record date shall be the later of 30 days prior to the first
solicitation of such consent or vote or the date of the most recent list of
Holders furnished to the Trustee pursuant to Section 7.1 prior to such
solicitation. If a record date is fixed, those persons who were Holders at
such record date (or their duly designated proxies), and only those
persons, shall be entitled to take such action by vote or consent or to
revoke any vote or consent previously given, whether or not such persons
continue to be Holders after such record date.
(g) Without limiting the foregoing, a Holder entitled hereunder to
give or take any such action with regard to any particular Debenture may do
so with regard to all or any part of the principal amount of such Debenture
or by one or more duly appointed agents each of which may do so pursuant to
such appointment with regard to all or any different part of such principal
amount.
SECTION 1.5 NOTICES, ETC. TO TRUSTEE AND COMPANY. Any request,
demand, authorization, direction, notice, consent, waiver or Act of Holders or
other document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with
(a) the Trustee by any Holder or by the Company shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Trustee at its Corporate Trust Office, or
(b) the Company by the Trustee or by any Holder shall be sufficient
for every purpose (except as otherwise provided in Section 5.1 hereof)
hereunder if in writing and mailed, first class, postage prepaid, to the
Company addressed to it at the address of its principal office specified in
the first paragraph of this instrument or at any other address previously
furnished in writing to the Trustee by the Company.
SECTION 1.6 NOTICE TO HOLDERS; WAIVER. Where this Indenture
provides for notice to Holders of any event, such notice shall be sufficiently
given (unless otherwise herein expressly provided) if in writing and mailed,
first class postage prepaid, to each Holder affected by such event, at the
address of such Holder as it appears in the Securities Register on the date such
notice is mailed, which shall be not later than the latest date, and not earlier
than the earliest date, prescribed
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<PAGE>
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such waiver. In case by reason of the
suspension of regular mail service or by reason of any other cause it shall be
impracticable to give such notice by mail, then such notification as shall be
made with the approval of the Trustee shall constitute a sufficient notification
for every purpose hereunder.
SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT. If any provision of
this Indenture limits, qualifies or conflicts with a provision of the Trust
Indenture Act that is required under such act to be a part of and govern this
Indenture, the latter provision shall control. If any provision of this
Indenture modifies or excludes any provision of the Trust Indenture Act that may
be so modified or excluded, the former provision shall be deemed to apply.
SECTION 1.8 EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 1.9 SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Indenture by the Company shall bind its successors and assigns, whether
so expressed or not.
SECTION 1.10 SEPARABILITY CLAUSE. In case any provision in this
Indenture or in the Debentures shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 1.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in
the Debentures, express or implied, shall give to any Person, other than the
parties thereto, any Paying Agent and their successors and assigns and the
Holders of the Debentures, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 1.12 GOVERNING LAW. This Indenture and the Debentures shall
be governed by and construed in accordance with the laws of the State of
Illinois without regard to its principles of conflicts of laws.
SECTION 1.13 NON-BUSINESS DAYS. Except as otherwise provided in
Section 11.8, in any case where any Interest Payment Date, Redemption Date, or
Stated Maturity of any Debenture shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or the Debentures)
payment of interest or principal payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay) with the same force and effect as if made on the
Interest Payment Date or Redemption Date or at the Stated Maturity, PROVIDED,
HOWEVER, that no interest shall accrue for the period from and after such
Interest Payment Date or Redemption Date or Stated Maturity.
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ARTICLE 2
DEBENTURE FORM
SECTION 2.1 FORMS GENERALLY. The Debentures and the Trustee's
certificate of authentication shall be in substantially the forms sets forth in
this Article and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with applicable tax laws or the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Debentures,
as evidenced by their execution of the Debentures.
The definitive Debentures shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods, if required by any
securities exchange on which the Debentures may be listed, on a steel engraved
border or steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Debentures may be
listed, all as determined by the officers executing such Debentures, as
evidenced by their execution of such Debentures.
SECTION 2.2 FORM OF FACE OF DEBENTURE.
____% Convertible Subordinated Debenture due __________ __, 2028
No. 1 $
Dura Automotive Systems, Inc., a corporation organized and existing under
the laws of Delaware (the "COMPANY," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to _____________________, or registered assigns, the
principal sum of _______________ on __________ __, 2028 and to pay interest on
said principal sum from __________ __, 1998 or from the most recent interest
payment date (each such date, an "INTEREST PAYMENT DATE") on which interest has
been paid or duly provided for, quarterly plus Additional Interest, if any until
the principal hereof is paid or duly provided for or made available for payment
subject to deferral as set forth herein in arrears on (_____ 1, _____ 1, ______
1 and ______ 1) of each year, commencing March __, 1998 at the rate of __% per
annum, until the principal hereof shall have become due and payable.
Reference is hereby made to the further provisions of this Debenture set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Debenture
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
By:
------------------------
SECTION 2.3 FORM OF REVERSE OF DEBENTURE. This Debenture is one of
a duly authorized issue of Debentures of the Company (the "DEBENTURES") limited
to the aggregate principal amount of $51,500,000 ($59,225,000 if the
Underwriters' over-allotment option is exercised in full), issued and to be
issued under a Junior Convertible Subordinated Indenture, dated as of March __,
1998 (the "INDENTURE"), between the Company and The First National Bank of
Chicago, as Trustee (herein called the "TRUSTEE," which term includes any
successor trustee under the Indenture), to which the Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Debentures, and of the terms
upon which the Debentures are, and are to be, authenticated and delivered. All
terms used in this Debenture that are defined in the Indenture shall have the
meanings assigned to them in the Indenture.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months. For periods less than a full month,
interest shall be computed on the actual number of elapsed days over 360 days.
In the event that any date on which interest is payable on this Debenture is not
a Business Day, then payment of the interest on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made
on the date the payment was originally payable. The interest installment so
payable, and punctually paid or duly provided for, on any Interest Payment Date
will, as provided in the Indenture, be paid to the Person in whose name this
Debenture (or one or more Predecessor Debentures, as defined in the Indenture)
is registered at the close of business on the Regular Record Date, for such
interest installment which shall be the date which is the Business Day next
preceding such Interest Payment Date. Any such interest installment not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in whose
name this Debenture (or one or more Predecessor Debentures) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders of
Debentures not less than 10 days prior to such Special Record Date, or be paid
at any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture.
The Company shall have the right at any time during the term of this
Debenture, from time to time, to extend the interest payment period of such
Debenture for up to 20 consecutive quarters with respect to each deferral period
(each such deferral period, an "EXTENSION PERIOD"), during which periods the
Company shall have the right not to make payments of interest on any Interest
Payment Date, and at the end of which the Company shall pay all interest then
accrued and unpaid (together with Additional Interest, if any, thereon to the
extent permitted by applicable law); PROVIDED that during any such Extension
Period, the Company will not, and will not permit any Subsidiary to (a)
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declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any shares of the Company's
capital stock or (b) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities (including guarantees of
indebtedness for money borrowed) of the Company that rank PARI PASSU with or
junior to the Debentures (other than (i) any dividend, redemption, liquidation,
interest, principal or guarantee payment by the Company where the payment is
made by way of securities (including capital stock) that rank PARI PASSU with or
junior to the securities on which such dividend, redemption, interest, principal
or guarantee payment is being made, (ii) redemptions or purchases of any rights
pursuant to a stockholder rights agreement and the declaration of a dividend of
such rights or the issuance of preferred stock under such plan in the future,
(iii) payments under the Guarantee, (iv) purchases of Common Stock related to
the issuance of Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (v) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's capital
stock and (vi) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged). Prior to the termination
of any such Extension Period, the Company may further extend the interest
payment period, PROVIDED that no Extension Period shall exceed 20 consecutive
quarters or extend beyond the Stated Maturity of this Debenture. Upon the
termination of any such Extension Period and upon the payment of all accrued and
unpaid interest and any Additional Interest then due, the Company may elect to
begin a new Extension Period, subject to the above requirements. No interest
shall be due and payable during an Extension Period except at the end thereof.
The Company shall give the Trustee, the Property Trustee and the Administrative
Trustees notice of its selection of an Extension Period at least one Business
Day prior to the earlier of (i) the record date for the date the distributions
on the Preferred Securities (or if no Preferred Securities are outstanding, for
the date interest on the Debentures) would have been payable except for the
election to begin such Extension Period or (ii) the date the Property Trustee of
the Dura Automotive Systems Capital Trust is (or if no Preferred Securities are
outstanding, the Debenture Trustee is) required to give notice to NYSE or other
applicable self-regulatory organizations or to holders of such Preferred
Securities (or, if no Preferred Securities are outstanding, to the Holders of
such Debentures) of the record date.
Payment of the principal of (and premium, if any) and interest on this
Debenture will be made to the Depositary Trust Company or its nominee and in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts PROVIDED, HOWEVER, that
at the option of the Company payment of interest may be made (a) by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Securities Register or (b) by wire transfer in immediately available funds
at such place and to such account as may be designated by the Person entitled
thereto as specified in the Securities Register.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and subject in right of payments to the prior payment
in full of all Senior Debt (as defined in the Indenture), and this Debenture is
issued subject to the provisions of the Indenture with respect thereto. Each
Holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his behalf
to take such actions as may be necessary or appropriate to effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, waives
all notice of the acceptance of the subordination provisions contained herein
and in
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<PAGE>
the Indenture by each holder of Senior Debt, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
At any time on or after ___________ __, _____, the Company may, at its
option, subject to the terms and conditions of Article 11 of the Indenture,
redeem this Debenture in whole at any time or in part from time to time, at the
Redemption Prices set forth in Section 11.8 of the Indenture.
In the event of redemption of this Debenture in part only, a new Debenture
or Debentures for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.
If a Special Event shall occur and be continuing, this Debenture shall be
exchangeable for Preferred Securities in accordance with Section 11.9 of the
Indenture or, in certain circumstances, redeemable by the Company in accordance
with Section 11.8 of the Indenture.
Subject to the terms and conditions set forth in Article 13 of the
Indenture, this Debenture is convertible, at the option of the Holder, hereof
into shares of Class A Common Stock.
If a Debenture Event of Default shall occur and be continuing, the
principal of the Debentures may be declared due and payable in the manner, with
the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions for satisfaction, discharge and
defeasance of the entire indebtedness of this Debenture upon compliance by the
Company with certain conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures to be affected under the
Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in principal amount of the Debentures. The Indenture also
contains provisions permitting Holders of specified percentages in principal
amount of the Debentures at the time Outstanding, on behalf of the Holders of
all Debentures, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon
the Holder of this Debenture and upon all future Holders of this Debenture and
of any Debenture issued upon the registration of transfer hereof or in exchange
therefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Debenture.
As provided in and subject to the provisions of the Indenture, if a
Debenture Event of Default shall occur and be continuing, then and in every such
case the Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Debentures may declare the principal amount of all the Debentures to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), PROVIDED that, if a Debenture Event of Default
shall occur and be continuing, the Trustee or the Holders of not less than 25%
in principal amount of the Outstanding Debentures fail to declare the principal
of all the Debentures to be immediately due and payable, the holders of at least
25% in aggregate liquidation amount of the Preferred Securities then outstanding
shall have such right by a notice in writing to the Company and the Trustee; and
upon any such
17
<PAGE>
declaration such principal amount (or specified amount) of and the accrued
interest (including any Additional Interest) on all the Debentures shall become
immediately due and payable, PROVIDED that the payment of principal and interest
(including any Additional Interest) on such Debentures shall remain subordinated
to the extent provided in Article 12 of the Indenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Debenture at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Debenture is registrable in the Securities Register,
upon surrender of this Debenture for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Debentures, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Debenture for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Debenture is registered as the owner hereof for
all purposes, whether or not this Debenture be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
The Debentures are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, Debentures are
exchangeable for a like aggregate principal amount of Debentures of a different
authorized denomination, as requested by the Holder surrendering the same.
The Company and, by its acceptance of this Debenture or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Debenture agree that for United States Federal, state and
local tax purposes it is intended that this Debenture constitute indebtedness.
THE INDENTURE AND THIS DEBENTURE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT REGARD TO CONFLICTS OF
LAW PRINCIPLES THEREOF.
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ASSIGNMENT FORM
To assign this Debenture, fill in the form below:
(i) or (we) assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint --------------------------------------------------------
agent to transfer this Debenture on the books of the Company. The agent may
substitute another to act for him.
Your Signature:
------------------------------------------------------------
(Sign exactly as your name appears on the other side of
this Security)
Date:
------------------------------
Signature Guarantee: *
--------------------------------------------------
In connection with any transfer of any of the Debentures evidenced by this
certificate, the undersigned confirms that such Debentures are being:
- --------------------
* Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP);
or (iv) in such other guarantee programs acceptable to the Trustee.
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<PAGE>
CHECK ONE BOX BELOW
(1) / / exchanged for the undersigned's own account without transfer; or
(2) / / transferred pursuant to an available exemption from the
registration requirements of the Securities Act of 1933; or
(3) / / transferred pursuant to an effective Registration Statement under
the Securities Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to register any of
the Debentures evidenced by this certificate in the name of any person other
than the registered Holder thereof; PROVIDED, HOWEVER, that if box (3) is
checked, the Trustee may require, prior to registering any such transfer of the
Securities such legal opinions, certifications and other information as the
Company has reasonably requested in writing and directed the Trustee to require
confirmation that such transfer is being made pursuant to an exemption from, or
in a transaction not subject to, the registration requirements of the Securities
Act of 1933.
-----------------------------------
Signature
Signature Guarantee:*
- ------------------------------ ------------------------------
Signature must be guaranteed Signature
- --------------------------------------------------------------------------------
Dated:
------------------------ ------------------------------
NOTICE: To be executed by an executive
officer
- ----------------------
* Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP);
or (iv) in such other guarantee programs acceptable to the Trustee.
20
<PAGE>
NOTICE OF CONVERSION
To: Dura Automotive Systems, Inc.
The undersigned owner of this Debenture hereby irrevocably exercises
the option to convert this Debenture, or the portion below designated, into
Class A Common Stock of DURA AUTOMOTIVE SYSTEMS, INC. in accordance with the
terms of the Indenture referred to in this Debenture, and directs that the
shares issuable and deliverable upon conversion, together with any check in
payment for fractional shares, be issued in the name of and delivered to the
undersigned, unless a different name has been indicated in the assignment below.
If shares are to be issued in the name of a person other than the undersigned,
the undersigned will pay all transfer taxes payable with respect thereto.
Date:
------------, ----
in whole
--
Portions of Debenture to be
in part converted ($50 or integral multiples
-- thereof):
$
---------------------
---------------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and Social
Security or Other Identifying Number
---------------------------------------------
---------------------------------------------
---------------------------------------------
Signature Guarantee:*
---------
- ------------------------
* Signature must be guaranteed by an institution which is a member of one of
the following recognized Signature Guaranty Programs: (i) The Securities
Transfer Agent Medallion Program (STAMP); (ii) The New York Stock Exchange
Medallion Program (MSP); (iii) The Stock Exchange Medallion Program (SEMP);
or (iv) in such other guarantee programs acceptable to the Trustee.
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<PAGE>
SECTION 2.4 ADDITIONAL PROVISIONS REQUIRED IN GLOBAL DEBENTURE.
Any Global Debenture issued hereunder shall, in addition to the provisions
contained in Sections 2.2 and 2.3 bear a legend in substantially the following
form:
"This Debenture is a Global Debenture within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee of a Depositary. This Debenture is exchangeable for Debentures
registered in the name of a person other than the Depositary or its nominee only
in the limited circumstances described in the Indenture and may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary."
SECTION 2.5 FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The
form of Trustee's Certificate of Authentication shall be as follows:*
"This is one of the Debentures designated therein referred to in the within
mentioned Indenture.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
Authorized Signatory
Dated:
-----------------------"
SECTION 2.6 INITIAL ISSUANCE TO PROPERTY TRUSTEE. The Debentures
initially issued to the Property Trustee of the Trust shall be in the form of
one or more individual certificates in definitive, fully registered form without
distribution coupons.
ARTICLE 3
THE DEBENTURES
SECTION 3.1 AMOUNT OF DEBENTURES. The aggregate principal amount
of Debentures which may be authenticated and delivered under this Indenture is
$51,500,000 ($59,225,000 except if the Underwriters' over-allotment option is
exercised in full) for Debentures authenticated and delivered upon registration
of, transfer of, or in exchange for, or in lieu of, other Debentures pursuant to
Sections 3.4, 3.5 or 3.6.
SECTION 3.2 DENOMINATIONS. The Debentures shall be in registered
form without coupons and shall be issuable in denominations of $25 and any
integral multiple thereof.
- --------------------
* Or in the form provided in Section 6.14 in the event that a separate
Authenticating Agent is appointed pursuant thereto.
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<PAGE>
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING. The
Debentures shall be executed on behalf of the Company by its President or one of
its Vice Presidents under its corporate seal reproduced or impressed thereon and
attested by its Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Debentures may be manual or facsimile.
Debentures bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures. Upon the execution and
delivery of this Indenture, or from time to time thereafter, Debentures may be
executed by the Company and delivered to the Trustee for authentication, and the
Trustee shall thereupon authenticate and deliver said Securities to or upon
Company Order without any further action by the Company. Debentures may be
authenticated on original issuance from time to time and delivered pursuant to
such procedures acceptable to the Trustee ("PROCEDURES") as may be specified
from time to time by Company Order. Procedures may authorize authentication and
delivery pursuant to instructions of the Company or a duly authorized agent,
which instructions shall be promptly confirmed in writing.
Each Debenture shall be dated the date of its authentication.
No Debenture shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Debenture a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Debenture shall be conclusive evidence,
and the only evidence, that such Debenture has been duly authenticated and
delivered hereunder.
SECTION 3.4 TEMPORARY DEBENTURES. Pending the preparation of
definitive Debentures, the Company may execute, and upon Company Order the
Trustee shall authenticate and deliver, temporary Debentures which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
denomination, substantially of the tenor of the definitive Debentures in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Debentures may
determine, as evidenced by their execution of such Debentures.
If temporary Debentures are issued, the Company will cause definitive
Debentures to be prepared without unreasonable delay. After the preparation of
definitive Debentures, the temporary Debentures shall be exchangeable for
definitive Debentures upon surrender of the temporary Debentures at the office
or agency of the Company designated for the purpose without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Debentures, the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Debentures of
authorized denominations. Until so exchanged, the temporary Debentures shall in
all respects be entitled to the same benefits under this Indenture as definitive
Debentures.
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SECTION 3.5 REGISTRATION, TRANSFER AND EXCHANGE. The Company shall
cause to be kept at the Corporate Trust Office of the Trustee a register in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration of Debentures and of transfers of Debentures.
Such register is herein sometimes referred to as the "SECURITIES REGISTER." The
Trustee is hereby appointed "SECURITIES REGISTRAR" for the purpose of
registering Debentures and transfers of Debentures as herein provided.
Upon surrender for registration or transfer of any Debenture at the office
or agency of the Company designated for that purpose the Company shall execute,
and the Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Debentures of any authorized
denominations, of a like aggregate principal amount.
At the option of the Holder, Debentures may be exchanged for other
Debentures of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Debentures to be exchanged at such office or
agency. Whenever any Debentures are so surrendered for exchange, the Company
shall execute, and the Trustee shall authenticate and deliver, the Debentures
which the Holder making the exchange is entitled to receive.
All Debentures issued upon any transfer or exchange of Debentures shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Debentures surrendered upon such
transfer or exchange.
Every Debenture presented or surrendered for transfer or exchange shall (if
so required by the Company or the Securities Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Securities Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of
Debentures, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Debentures.
Notwithstanding any of the foregoing, the Global Debenture shall be
exchangeable pursuant to this Section 3.5 for Debentures registered in the names
of Persons other than the Depositary for such Debenture or its nominee only if
(a) such Depositary notifies the Company that it is unwilling or unable to
continue as Depositary for the Global Debenture, and the Company shall not have
appointed a successor depositary within 90 days after such notice, (b) at any
time such Depositary ceases to be a clearing agency registered under the
Securities Exchange Act of 1934, as amended, and the Company shall not have
appointed a successor depositary within 90 days, (c) the Company executes and
delivers to the Trustee a Company Order that the Global Debenture shall be so
exchangeable or (d) there shall have occurred and be continuing a Debenture
Event of Default. The Global Debenture shall be exchangeable for Debentures
registered in such names as such Depositary shall direct.
Notwithstanding any other provisions in this Indenture, the Global
Debenture may not be transferred except as a whole by the Depositary with
respect to the Global Debenture to a nominee
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of such Depositary or by a nominee of such Depositary to such Depositary or
another nominee of such Depositary.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (a) to issue, transfer or exchange any Debenture
during a period beginning at the opening of business 15 days before the day of
selection for redemption of Debentures pursuant to Article 11 and ending at the
close of business on the day of mailing of notice of redemption or (b) to
transfer or exchange any Debenture so selected for redemption in whole or in
part, except, in the case of any Debenture to be redeemed in part, any portion
thereof not to be redeemed.
Upon any distribution of the Debentures to the holders of the Preferred
Securities in accordance with the Trust Agreement, the Company and the Trustee
shall enter into a supplemental indenture pursuant to Section 9.1(h) to provide
for transfer procedures with respect to the Debentures substantially similar to
those contained in the Trust Agreement to the extent applicable in the
circumstances existing at the time of such distribution.
SECTION 3.6 MUTILATED, DESTROYED, LOST AND STOLEN DEBENTURES. If
any mutilated Debenture is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Debenture and bearing a
number not contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (a) evidence
to their satisfaction of the destruction, loss or theft of any Debenture, and
(b) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of actual notice to the Company or the Trustee
that such Debenture has been acquired by a bona fide purchaser, the Company
shall execute and upon the receipt of a Company Order requesting authentication
its request the Trustee shall authenticate and deliver, in lieu of any such
destroyed, lost or stolen Debenture, a new Debenture bearing a number not
contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Debenture has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Debenture, pay such Debenture.
Upon the issuance of any new Debenture under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Debenture issued pursuant to this Section in lieu of any
destroyed, lost or stolen Debenture shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Debenture shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Debentures duly issued hereunder.
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The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 3.7 PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Debenture which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date, shall be paid to the Person in whose
name that Debenture (or one or more Predecessor Debentures) is registered at the
close of business on the Regular Record Date, except that interest payable on
the Stated Maturity of the Debentures shall be paid to the Person to whom
principal is paid.
Any interest on the Debentures which is payable, but is not timely paid or
duly provided for, on an Interest Payment Date ("DEFAULTED INTEREST"), shall
forthwith cease to be payable to the registered Holder on the Regular Record
Date by virtue of having been such Holder, and such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in clause (a) or
(b) below:
(a) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Debentures (or their respective Predecessors
Debentures) are registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on the Debentures and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. Thereupon the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the expense of the Company,
shall cause notice of the proposed payment of such Defaulted Interest and
the Special Record Date therefor to be mailed, first class, postage
prepaid, to each Holder of the Debentures at the address of such Holder as
it appears in the Securities Register not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose
names the Debentures (or their respective Predecessor Debentures) are
registered on such Special Record Date and shall no longer be payable
pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed and, upon such
notice as may be required by such exchange (or by the Trustee if the
Debentures are not listed), if, after notice given by the Company to
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the Trustee of the proposed payment pursuant to this Clause, such payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Debenture shall carry the rights to interest accrued and unpaid, and
to accrue, which were carried by such other Debenture.
SECTION 3.8 PERSONS DEEMED OWNERS. The Company, the Trustee, the
Paying Agent and any agent of the Company or the Trustee or the Paying Agent may
treat the Person in whose name any Debenture is registered as the owner of such
Debenture for the purpose of receiving payment of principal of and (subject to
Section 3.7) interest or premium on such Debenture and for all other purposes
whatsoever, whether or not such Debenture be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
SECTION 3.9 CANCELLATION. All Debentures surrendered for payment,
redemption, conversion transfer or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee, and any such Debentures and
Debentures surrendered directly to the Trustee for any such purpose shall be
promptly canceled by it. The Company may at any time deliver or cause to be
delivered to the Trustee for cancellation any Debentures previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Debentures so delivered shall be promptly canceled by
the Trustee. No Debentures shall be authenticated in lieu of or in exchange for
any Debentures canceled as provided in this Section, except as expressly
permitted by this Indenture. All canceled Debentures shall be destroyed by the
Trustee and upon written request, the Trustee shall deliver to the Company a
certificate of such destruction.
SECTION 3.10 COMPUTATION OF INTEREST. Interest on the Debentures
shall be computed on the basis of a 360-day year of twelve 30-day months.
SECTION 3.11 DEFERRALS OF INTEREST PAYMENT DATES. The Company shall
have the right, at any time during the term of the Debentures, so long as no
Debenture Event of Default has occurred and is continuing, from time to time to
extend the interest payment period for the Debentures for up to 20 consecutive
quarters with respect to each deferral period (each, an "EXTENSION PERIOD")
during which periods the Company shall have the right to not make payments of
interest on any Interest Payment Date, and at the end of such Extension Period
the Company shall pay all interest then accrued and unpaid thereon (together
with Additional Interest thereon, if any, at the rate specified for the
Debentures, to the extent permitted by applicable law), PROVIDED, HOWEVER, that
during any such Extension Period, the Company shall not, and shall cause any
Subsidiary not to, (a) declare or pay any dividends or distributions on, or
redeem, purchase, acquire or make a liquidation payment with respect to, any
shares of the Company's capital stock or (b) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any debt
securities (including guarantees of indebtedness for money borrowed) of the
Company that rank PARI PASSU with or junior to the Debentures (other than (i)
any dividend, redemption, liquidation, interest, principal or guarantee payment
by the Company where the payment is made by way of securities (including capital
stock) that rank PARI PASSU with or junior to the securities on which such
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dividend, redemption, interest, principal or guarantee payment is being made,
(ii) redemptions or purchases of any rights pursuant to a stockholder rights
agreement and the declaration of a dividend of such rights or the issuance of
preferred stock under such plan in the future, (iii) payments under the
Guarantee, (iv) purchases of Common Stock related to the issuance of Common
Stock under any of the Company's benefit plans for its directors, officers or
employees, (v) as a result of a reclassification of the Company's capital stock
or the exchange or conversion of one series or class of the Company's capital
stock for another series or class of the Company's capital stock and (vi) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of such capital stock or the
security being converted or exchanged). Prior to the termination of any such
Extension Period, the Company may further extend the interest payment period,
PROVIDED that no such Extension Period shall exceed 20 consecutive quarters or
extend beyond the Stated Maturity of the Debentures. Upon termination of any
Extension Period and upon the payment of all accrued and unpaid interest and any
Additional Interest then due, the Company may select a new Extension Period,
subject to the above requirements. No interest, including Additional Interest,
if any, shall be due and payable during an Extension Period, except at the end
thereof. The Company shall give the Trustee, the Property Trustee and the
Administrative Trustees written notice of its selection of such Extension Period
at least one Business Day prior to the earlier of (i) the record date for the
date the distributions on the Preferred Securities of the Trust (or if no,
Preferred Securities are outstanding, for the date interest on the Debentures)
would have been payable except for the election to begin such Extension Period
and (ii) the date the Property Trustee (or, if no Preferred Securities are
outstanding, the Trustee) is required to give notice to NYSE or other applicable
self-regulatory organization or to holders of such Preferred Securities (or, if
no Preferred Securities are outstanding, to the Holders of such Debentures) of
such record date, but in any event not less than one Business Day prior to such
record date. Such notice shall specify the period selected.
The Trustee shall promptly give notice of the Company's selection of such
Extension Period to the Holders of the outstanding Debentures and Preferred
Securities.
SECTION 3.12 RIGHT OF SET-OFF. Notwithstanding anything to the
contrary in the Indenture, the Company shall have the right to set-off any
payment it is otherwise required to make thereunder in respect of the Debenture
to the extent the Company has theretofore made, or is concurrently on the date
of such payment making, a payment relating to the Debentures under the
Guarantee.
SECTION 3.13 AGREED TAX TREATMENT. Each Debenture issued hereunder
shall provide that the Company and, by its acceptance of a Debenture or a
beneficial interest therein, the Holder of, and any Person that acquires a
beneficial interest in, such Debenture agree that for United States Federal,
state and local tax purposes it is intended that such Debenture constitute
indebtedness.
SECTION 3.14 CUSIP NUMBERS. The Company in issuing the Debentures
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use such "CUSIP" number in notices of redemption as a convenience to
Holders; PROVIDED that any such notice may state that no representation is made
as to the correctness of such number either as printed on the Debentures
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or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Debentures, and any such
redemption shall not be affected by any defect in or omission of such numbers.
SECTION 3.15 GLOBAL SECURITY.
(a) In connection with distribution of Debentures to holders of the
Preferred Securities in connection with the involuntary or voluntary
dissolution of the Trust, including a dissolution following the occurrence
of a Special Event,
(i) the Debentures in certificated form may be presented to the
Trustee by the Property Trustee in exchange for a global certificate
in an aggregate principal amount equal to the aggregate principal
amount of all outstanding Debentures (a "GLOBAL DEBENTURE"), to be
registered in the name of the Depositary, or its nominee, and
delivered by the Trustee to the Depositary, or its custodian, for
crediting to the accounts of its participants pursuant to the
procedures of the Depositary. The Company upon any such presentation
shall execute a Global Debenture in such aggregate principal amount
and deliver the same to the Trustee for authentication and delivery in
accordance with this Indenture; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be
presented to the Trustee by the Property Trustee and any Preferred
Security certificate which represents Preferred Securities other than
Preferred Securities held by the Depositary or its nominee ("NON
BOOK-ENTRY PREFERRED SECURITIES") will be deemed to represent
beneficial interests in Debentures presented to the Trustee by the
Property Trustee having an aggregate principal amount equal to the
aggregate liquidation amount of the Non Book-Entry Preferred
Securities until such Preferred Security certificates are presented to
the Securities Registrar for transfer or reissuance at which time such
Non-Book Entry Preferred Security certificates will be canceled and a
Debenture, registered in the name of the holder of the Preferred
Security certificate or the transferee of the holder of such Preferred
Security certificate, as the case may be, with an aggregate principal
amount equal to the aggregate liquidation amount of the Preferred
Security certificate canceled, will be executed by the Company and
delivered to the Trustee for authentication and delivery in accordance
with this Indenture. On issue of such Debentures, Debentures with an
equivalent aggregate principal amount that were presented by the
Property Trustee to the Trustee will be deemed to have been canceled.
(b) A Global Debenture may be transferred, in whole but not in part,
only to another nominee of the Depositary, or to a nominee of such
successor Depositary.
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(c) If (a) the Depositary notifies the Company that it is unwilling
or unable to continue as a depositary for such Global Debenture and no
successor depositary shall have been appointed within 90 days by the
Company, (b) the Depositary, at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the Depositary is required
to be so registered to act as such depositary and no successor depositary
shall have been appointed within 90 days by the Company, (c) the Company,
in its sole discretion, determines that such Global Debenture shall be so
exchangeable or (d) there shall have occurred and be continuing a Debenture
Event of Default with respect to such Debentures, as the case may be, the
Company will execute, and, subject to Article 3 of this Indenture, the
Trustee, upon written notice from the Company and receipt of a Company
Order, will authenticate and deliver the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global
Debenture in exchange for such Global Debenture. In addition, upon a
Debenture Event of Default that has occurred and is continuing or in the
event the Company determines that the Debenture shall no longer be
represented by a Global Debenture, the Company will execute, and subject to
Section 3.5 of this Indenture, the Trustee, upon receipt of an Officers'
Certificate evidencing such determination by the Company and a Company
Order, will authenticate and make available for delivery, the Debentures in
definitive registered form without coupons, in authorized denominations,
and in an aggregate principal amount equal to the principal amount of the
Global Debenture in exchange for such Global Debenture. Upon the exchange
of the Global Debenture for such Debentures in definitive registered form
without coupons, in authorized denominations, the Global Debenture shall be
canceled by the Trustee. Such Debentures in definitive registered form
issued in exchange for the Global Debenture shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee in writing. The Trustee shall deliver such Debentures
to the Depositary for delivery to the Persons in whose names such
Debentures are so registered.
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 4.1 SATISFACTION AND DISCHARGE OF INDENTURE. This
Indenture shall cease to be of further effect (except as to (i) any surviving
rights of transfer, substitution and exchange of Debentures, (ii) rights
hereunder of Holders to receive payments of principal of (and premium, if any)
and interest (including Additional Interest, if any) on the Debentures and other
rights, duties and obligations of the Holders as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights and obligations of the Trustee hereunder), and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(a) either
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(i) all Debentures theretofore authenticated and delivered (other
than (i) Debentures which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 3.6 and (ii)
Debentures for whose payment money has theretofore been deposited in
trust or segregated and held in trust by the Company and thereafter
repaid to the Company or discharged from such trust, as provided in
Section 10.3) have been delivered to the Trustee for cancellation; or
(ii) all such Debentures not theretofore delivered to the Trustee
for cancellation:
(A) have become due and payable, or
(B) will become due and payable at their Stated Maturity
within one year of the date of deposit or are to be called for
redemption within one year under arrangements satisfactory to the
Trustee for the giving of written notice of redemption to the
Trustee in the name, and at the expense, of the Company, and the
Company has deposited or caused to be deposited with the Trustee
as trust funds in trust for such purpose an amount in the
currency or currencies in which the Debentures are payable
sufficient (without regard to investment of such amount
deposited) to pay and discharge the entire indebtedness on the
Debentures not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and interest
(including any Additional Interest) to the date of such deposit
or to the Stated Maturity; or
(c) have been redeemed or tendered for conversion; or
(b) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture
have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7 and, if money shall
have been deposited with the Trustee pursuant to subclause (ii) of clause (a) of
this Section, the obligations of the Trustee under Section 4.2 and the last
paragraph of Section 10.3 shall survive.
SECTION 4.2 APPLICATION OF TRUST MONEY. Subject to the provisions
of the last paragraph of Section 10.3, all money deposited with the Trustee
pursuant to Section 4.1 shall be held in trust and applied by it, in accordance
with the provisions of the Debentures and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money or
obligations have been
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deposited with or received by the Trustee; PROVIDED, HOWEVER, such moneys need
not be segregated from other funds except to the extent required by law.
ARTICLE 5
REMEDIES
SECTION 5.1 DEBENTURE EVENTS OF DEFAULT. "DEBENTURE EVENT OF
DEFAULT," wherever used herein with respect to the Debentures, means any one of
the following events that has occurred and is continuing (whatever the reason
for such Debenture Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) default in the payment of any interest upon the Debenture,
including any Additional Interest in respect thereof, when it becomes due
and payable, and continuance of such default for a period of 30 days
(subject to the deferral of any due date in the case of an Extension
Period);
(b) default in the payment of the principal of (or premium, if any,
on) the Debentures when due whether at Stated Maturity, upon redemption by
declaration or otherwise;
(c) failure on the part of the Company duly to observe or perform in
any material respect any other of the covenants or agreements on the part
of the Company contained in the Debentures or contained in this Indenture
(other than a covenant or agreement which has been expressly included in
this Indenture solely for the benefit of the Company) and continuance for
such failure for a period of 90 days after the date on which written notice
of such failure, requiring the same to be remedied and stating that such
notice is a "NOTICE OF DEFAULT" hereunder, shall have been given to the
Company by the Trustee, by registered or certified mail, or to the Company
and the Trustee by a Holder or Holders of at least 25% in aggregate
principal amount of the Debentures at the time Outstanding or the holder or
holders of at least 25% in aggregate liquidation amount of the Preferred
Securities;
(d) failure by the Company to issue Class A Common Stock upon an
appropriate election by the Holder or Holders of the Debentures to convert
the Debentures into shares of Class A Common Stock;
(e) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company as bankrupt or insolvent, or approving
as properly filed a petition seeking reorganization, arrangement,
adjudication or composition of or in respect of the Company under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law, or appointing a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of any
substantial part of its property or ordering the winding up or liquidation
of its affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days; or
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(f) the institution by the Company of proceedings to be adjudicated as
bankrupt or insolvent, or the consent by it to the institution of
bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under any
applicable Federal or State bankruptcy, insolvency, reorganization or other
similar law, or the consent by it to the filing of any such petition or to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Company or of any substantial part of
its property or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its
debts generally as they become due and its willingness to be adjudicated as
bankrupt, or the taking of corporate action by the Company in furtherance
of any such action.
SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If
a Debenture Event of Default occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Debentures may declare the principal amount of all the
Debentures to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), PROVIDED that, if a Debenture
Event of Default occurs and is continuing, the Trustee or the Holders of not
less than 25% in aggregate principal amount of the Outstanding Debentures fail
to declare the principal of all the Debentures to be immediately due and
payable, the holders of at least 25% in aggregate liquidation amount of the
Preferred Securities then outstanding shall have such right by a notice in
writing to the Company and the Trustee, and upon any such declaration such
principal amount (or specified amount) of and the accrued interest (including
any Additional Interest) on all the Debentures shall become immediately due and
payable, PROVIDED that the payment of principal and interest (including any
Additional Interest) on the Debentures shall remain subordinated to the extent
provided in Article 12.
At any time after such a declaration of acceleration with respect to
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Debentures, by written notice to the Company and the Trustee may
rescind and annul such declaration and its consequences if:
(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(i) all overdue installments of interest (including any
Additional Interest) on the Debentures;
(ii) the principal of (and premium, if any, on) the Debentures
which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures;
(iii) to the extent that payment of such interest is lawful,
interest (including any Additional Interest) upon overdue installments
of interest at the rate borne by the Debentures; and
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(iv) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; or
(b) all Debenture Events of Default that shall have occurred and been
continuing with respect to Debentures, other than the non-payment of the
principal of the Debentures which has become due solely by such
acceleration, have been cured or waived as provided in Section 5.13. If
the holders of a majority in aggregate principal amount of the Outstanding
Debentures fail to rescind and annul such declaration and its consequences,
the holders of a majority in liquidation amount of the Preferred Securities
then outstanding shall have such right.
SECTION 5.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE. The Company covenants that if:
(a) default is made in the payment of any installment of interest
(including any Additional Interest) on the Debentures when such interest
becomes due and payable and such default continues for a period of 30 days,
or
(b) default is made in the payment of the principal of (and premium,
if any, on) the Debentures whether at the Stated Maturity thereof upon
redemption by declaration or otherwise, the Company will, upon demand of
the Trustee, pay to it, for the benefit of the Holders of the Debentures,
the whole amount then due and payable on the Debentures for principal (and
premium, if any) and interest (including any Additional Interest),
including, to the extent that payment of such interest shall be lawful,
interest on any overdue principal (and premium, if any) and on any overdue
installments of interest (including any Additional Interest) at the rate
borne by the Debentures, and, in addition thereto, all amounts owing the
Trustee under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgement or final decree, and may enforce the same
against the Company or any other obligor upon the Debentures and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Debentures, wherever
situated.
If a Debenture Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders of the Debentures by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment,
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composition or other judicial proceeding relative to the Company or any other
obligor upon the Debentures or the property of the Company or of such other
obligor or their creditors:
(a) the Trustee (irrespective of whether the principal of the
Debentures shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal (or
premium, if any) or interest (including any Additional Interest)) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim (including a claim for reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) for the whole amount of principal (and premium, if
any) and interest (including any Additional Interest) owing and unpaid
in respect to the Debentures and to file such other papers or
documents as may be necessary or advisable and to take any and all
actions as are authorized under the Trust Indenture Act in order to
have the claims of the Holders and any predecessor to the Trustee
under Section 6.7 and, of the Holders allowed in any such judicial
proceedings; and
(ii) in particular, to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute
the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator,
sequestrator (or other similar official) in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee for
distribution in accordance with Section 5.6, and in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it and any predecessor
Trustee under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; PROVIDED, HOWEVER,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5 TRUSTEE MAY ENFORCE CLAIM WITHOUT POSSESSION OF
DEBENTURES. All rights of action and claims under this Indenture or the
Debentures may be prosecuted and enforced by the Trustee without the possession
of any of the Debentures or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgement
shall, after provision for the payment of all the amounts owing the Trustee and
any predecessor Trustee under Section 6.7, its agents and counsel, be for the
ratable benefit of the Holders of the Debentures in respect of which such
judgement has been recovered.
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SECTION 5.6 APPLICATION OF MONEY COLLECTED. Any money or property
collected or to be applied by the Trustee with respect to the Debentures
pursuant to this Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of such money or
property on account of principal (or premium, if any) or interest (including any
Additional Interest), upon presentation of the Debentures and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: to the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7,
SECOND: to the payment of the amounts then due and unpaid upon the
Debentures for principal (and premium, if any) and interest (including any
Additional Interest), in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Debentures for principal (and
premium, if any) and interest (including any Additional Interest), respectively;
and
THIRD: the balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7 LIMITATION ON SUITS. No Holder of the Debentures,
including a holder of Preferred Securities acting to enforce the rights of the
Property Trustee as a Holder of the Debentures pursuant to Section 5.8 of the
Trust Agreement, shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Indenture or for the appointment of a receiver,
assignee, trustee, liquidator, sequestrator (or other similar official) or for
any other remedy hereunder, unless:
(a) such Holder has previously given written notice to the Trustee of
a continuing Debenture Event of Default;
(b) if the Trust is not the sole holder of the Outstanding Debentures,
the Holders of not less than 25% in principal amount of the Outstanding
Debentures shall have made written request to the Trustee to institute
proceedings in respect of such Debenture Event of Default in its own name
as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(d) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(e) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Debentures;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of any provision
of this Indenture to affect, disturb or
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prejudice the rights of any other Holders of the Debentures, or to obtain or to
seek to obtain priority or preference over any other of such Holders or to
enforce any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all such Holders.
SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST. Notwithstanding any other provision in this Indenture,
the Holder of any Debenture shall have the right which is absolute and
unconditional to receive payment of the principal of (and premium, if any) and
(subject to Section 3.7) interest (including any Additional Interest) on such
Debenture on the Maturity or to convert such Debenture in accordance with
Article 13 and to institute suit for the enforcement of any such payment and
right to convert, and such right shall not be impaired without the consent of
such Holder. For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Indenture and
the Trust Agreement, upon a Debenture Event of Default that has occurred and is
continuing specified in Sections 5.1(a) or 5.1(b), any holder of Preferred
Securities shall have the right to institute a proceeding directly against the
Company, for enforcement of payment to such holder of the principal amount of
(or premium, if any) or interest on Debentures having a principal amount equal
to the liquidation amount of the Preferred Securities of such holder (a "DIRECT
ACTION"). Notwithstanding any payment made to such holder of Preferred
Securities by the Company in connection with a Direct Action, the Company shall
remain obligated to pay the principal of (or premium, if any) or interest on the
Debentures held by the Trust or the Property Trustee. In connection with any
such Direct Action, the rights of the Company will be subrogated to the rights
of any holder of the Preferred Securities to the extent of any payment made by
the Company to such holder of Preferred Securities as a result of such Direct
Action. Except as set forth in this Section, the holders of Preferred
Securities shall have no right to execute any right or remedy available to the
Holders of or in respect of, the Debentures.
SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or
any Holder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to such Holder, then
and in every such case the Company, the Trustee and the Holder shall, subject to
any determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and the Holders shall continue as though no such proceeding had been
instituted.
SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise
provided in the last paragraph of Section 3.6, no right or remedy herein
conferred upon or reserved to the Trustee or to the Holders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.11 DELAY OR OMISSION NOT WAIVER. No delay or omission
of the Trustee or of any Holder of the Debentures to exercise any right or
remedy accruing upon any Debenture
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Event of Default that shall have occurred and be continuing shall impair any
such right or remedy, or constitute a waiver of any such Debenture Event of
Default or an acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 5.12 CONTROL BY HOLDERS. The Holders of a majority in
aggregate principal amount of the Outstanding Debentures shall have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or exercising any trust or power conferred on
the Trustee, with respect to the Debentures, PROVIDED that:
(a) such direction shall not be in conflict with any rule of law or
with this Indenture,
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(c) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if the Trustee in good faith
shall, by a Responsible Officer or Officers of the Trustee, determine that
the proceeding so directed would be unjustly prejudicial to the Holders not
joining in any such direction or would involve the Trustee in personal
liability.
Upon receipt by the Trustee of any written notice directing the time,
method or place of conducting any such proceeding or exercising any such trust
or power, with respect to the Debentures and, if all or part of the Debentures
is represented by a Global Security, a record date shall be established for
determining Holders of Outstanding Debentures entitled to join in such notice,
which record date shall be at the close of business on the day the Trustee
receives such notice. The Holders on such record date, or their duly designated
proxies, and only such Persons, shall be entitled to join in such notice,
whether or not such Holders remain Holders after such record date, PROVIDED,
that, unless the Holders of a majority in principal amount of the Outstanding
Debentures shall have joined in such notice prior to the day which is 90 days
after such record date, such notice shall automatically and without further
action by any Holder be canceled and of no further effect. Nothing in this
paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after
expiration of such 90-day period, a new notice identical to a notice which has
been canceled pursuant to the proviso to the preceding sentence, in which event
a new record date shall be established pursuant to the provisions of this
Section 5.12.
SECTION 5.13 WAIVER OF PAST DEFAULTS. Subject to Section 9.2
hereof, the Holders of not less than a majority in aggregate principal amount
of the Outstanding Debentures affected by any past default may on behalf of
the Holders of all the Debentures waive any past default hereunder with
respect to Debentures and its consequences, except a default:
(a) in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Debentures (unless such
default has been cured or waived and a
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sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the Trustee), or
(b) in respect of a covenant or provision hereof which under Article 9
cannot be modified or amended without the consent of the Holder of each
Outstanding Debenture;
PROVIDED, HOWEVER, that if the Debentures are held by the Trust or a trustee of
the Trust, such waiver shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such waiver;
PROVIDED, FURTHER, that if the consent of the Holder of each outstanding
Debenture is required, such waiver shall not be effective until each holder of
the Trust Securities shall have consented to such waiver.
Upon any such waiver, such default shall cease to exist, and any Debenture
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture, but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon. If the Holders of a
majority in aggregate principal amount of the Outstanding Debentures fail to
waive such Debenture Event of Default, the holders of a majority in aggregate
liquidation amount of Preferred Securities shall have such right. No such
rescission shall affect any subsequent default or impair any right consequent
thereon. The provisions of this Section 5.13 shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act, and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Indenture and the
Debentures, as permitted by the Trust Indenture Act.
SECTION 5.14 UNDERTAKING FOR COSTS. All parties to this
Indenture agree, and each Holder of any Debenture by his acceptance thereof
shall be deemed to have agreed, that any court may in its discretion require,
in any suit for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken or omitted by it as
Trustee the filing by any party litigant in such suit of an undertaking to
pay the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees and expenses, against
any party litigant in such suit, having due regard to the merits and good
faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding
in the aggregate more than 10% in principal amount of the Outstanding
Debentures, or to any suit instituted by any Holder for the enforcement of
the payment of the principal of (or premium, if any) or interest (including
any Additional Interest) on the Debentures on or after the Maturity of the
Debentures or to convert a Debenture in accordance with Article 13. The
provisions of this Section 5.14 shall be in lieu of Section 315(e) of the
Trust Indenture Act, and such Section 315(e) of the Trust Indenture Act is
hereby expressly excluded from this Indenture and the Debentures, as
permitted by the Trust Indenture Act.
SECTION 5.15 WAIVER OF USURY, STAY, OR EXTENSION LAWS. The
Company covenants (to the extent that it may lawfully do so) that it will not
at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby
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expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE 6
THE TRUSTEE
SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of a Debenture Event of Default,
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture, but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.
(b) In case a Debenture Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use under the circumstances
in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct except that:
(i) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of Holders pursuant to Section 5.12 relating to the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture.
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(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if there shall be reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 6.2 NOTICE OF DEFAULTS. Within 90 days after actual
knowledge by a Responsible Officer of the Trustee of the occurrence of any
default hereunder, the Trustee shall transmit by mail to all Holders of
Debentures, as their names and addresses appear in the Securities Register,
notice of such default hereunder known to the Trustee, unless such default shall
have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a
default in the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on Debenture, the Trustee shall be fully
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of Debentures; and PROVIDED, FURTHER,
that, except in the case of any default of the character specified in Section
5.1(c), no such notice to Holders of the Debentures shall be given until at
least 30 days after the occurrence thereof For the purpose of this Section, the
term "DEFAULT" means any event which is, or after notice or lapse of time or
both would become, a Debenture Event of Default.
SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE. Subject to the provisions
of Section 6.1:
(a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, Debenture or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad
faith on its part, conclusively rely upon an Officers' Certificate and an
Opinion of Counsel;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it in compliance
with such request or direction;
(f) the Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its
duties if the Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it;
(g) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, indenture, Debenture or other paper or document, but the Trustee in
its discretion may make such inquiry or investigation into such facts or
matters as it may see fit, and, if the Trustee shall determine to make such
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or attorney;
(h) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
attorneys, custodians or nominees and the Trustee shall not be responsible
for any misconduct or negligence on any part of any agent, custodian,
nominee or attorney appointed with due care by it hereunder; and
(i) in the event that the Trustee is also acting as a Paying Agent,
Authenticating Agent, Conversion Agent, and/or Securities Registrar
hereunder, the rights and protections afforded to the Trustee pursuant to
this Article 6 shall also be afforded to such Paying Agent, Authenticating
Agent, Conversion Agent, and/or Securities Registrar.
SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF DEBENTURES.
The recitals contained herein and in the Debentures, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representations as to the validity or sufficiency of this Indenture or
of the Debentures. The Trustee shall not be accountable for the use or
application by the Company of the Debentures or the proceeds thereof.
SECTION 6.5 MAY HOLD DEBENTURES. The Trustee, any Paying Agent,
Securities Registrar or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Debentures and, subject to
Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Paying Agent, Securities Registrar or such
other agent.
SECTION 6.6 MONEY HELD IN TRUST. Money held by the Trustee in
trust hereunder need not be segregated from other funds except to the extent
required by law. The Trustee shall be under no liability of interest on any
money received by it hereunder except as otherwise agreed with the Company.
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SECTION 6.7 COMPENSATION AND REIMBURSEMENT. The Company agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder in such amounts as the Company
and the Trustee shall agree from time to time (which compensation shall not
be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and counsel);
and
(c) to indemnify the Trustee and its officers, directors and employees
for, and to hold it harmless against, any loss, liability or expense
(including the reasonable compensation and the expenses and disbursements
of its agents and counsel) incurred without negligence or bad faith,
arising out of or in connection with the acceptance or administration of
this trust or the performance of its duties hereunder, including the costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. This Indemnification shall survive the termination of this
Agreement or the earlier resignation or removal of the Trustee.
To secure the Company's payment obligations in this Section, the Company
and the Holders agree that the Trustee shall have a lien prior to the Debentures
on all money or property held or collected by the Trustee except assets held in
trust to pay principal and premium, if any, or interest on particular Debentures
pursuant to Section 4.1(a)(ii)(B), or pursuant to any redemption pursuant to
Article 11 hereof if monies have been deposited for such redemption and notice
has been given and the Redemption Date has passed. Such lien shall survive the
satisfaction and discharge of this Indenture or the earlier resignation or
removal of the Trustee.
When the Trustee incurs expenses or renders services after a Debenture
Event of Default specified in Section 5.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Reform Act of 1978 or a successor statute.
SECTION 6.8 DISQUALIFICATION; CONFLICTING INTERESTS. The Trustee
shall be subject to the provisions of Section 310(b) of the Trust Indenture Act.
Nothing herein shall prevent the Trustee from filing with the Commission the
application referred to in the second to last paragraph of Section 310(b) of the
Trustee Indenture Act. The Trust Agreement and the Guarantee shall be deemed to
be specifically described in this Indenture for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 6.9 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY. There shall
at all times be a Trustee hereunder which shall be:
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(a) a corporation organized and doing business under the laws of the
United States of America or of any State, Territory or the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority, or
(b) a corporation or other Person organized and doing business under
the laws of a foreign government that is permitted to act as Trustee
pursuant to a rule, regulation or order of the Commission, authorized under
such laws to exercise corporate trust powers, and subject to supervision or
examination by authority of such foreign government or a political
subdivision thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees,
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
to the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article. Neither the Company nor any Person directly or indirectly
controlling, controlled by or under common control with the Company shall serve
as Trustee hereunder.
SECTION 6.10 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor
Trustee shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of a
majority in principal amount of the Outstanding Debentures, delivered to
the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall fail to comply with Section 6.8 after
written request therefor by the Company or by any Holder who has been
a bona fide Holder of a Debenture for at least six months, or
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(ii) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
(iii) the Trustee shall become incapable of acting or shall be
adjudged as bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then, in any
such case, (A) the Company by Board Resolution may remove the Trustee,
or (B) subject to Section 5.14, any Holder who has been a bona fide
Holder of a Debenture for at least six months may, on behalf of
himself and all other similarly situated Holders, petition any court
of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause
with respect to the Debentures, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Debentures shall be appointed by Act
of the Holders of a majority in principal amount of the Outstanding
Debentures delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor
Trustee appointed by the Company. If no successor Trustee shall have been
so appointed by the Company or the Holders and accepted appointment in the
manner hereinafter provided, any Holder who has been a bona fide Holder of
a Debenture for at least six months may, subject to Section 5.14, on behalf
of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal
of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of the Debentures as their name and addresses appear in the
Securities Register. Each notice shall include the name of the successor
Trustee and the address of its Corporate Trust Office.
SECTION 6.11 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee, every
such successor Trustee so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee, but, on the written
request of the Company or the Successor Trustee, such retiring Trustee
shall, upon payment of its charges, execute and deliver an instrument
transferring to such successor, Trustee all the rights, powers and trusts
of the retiring Trustee and shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring Trustee
hereunder.
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(b) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all rights, power and trusts referred
to in paragraph (a) of this Section.
(c) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 6.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS. Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act
on the part of any of the parties hereto. In case any Debentures shall have
been authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating
Trustee may adopt such authentication and deliver the Debentures so
authenticated, and in case any Debentures shall not have been authenticated,
any successor to the Trustee may authenticate such Debentures either in the
name of any predecessor Trustee or in the name of such successor Trustee, and
in all cases the certificate of authentication shall have the full force
which it is provided anywhere in the Debentures or in this Indenture that the
certificate of the Trustee shall have.
SECTION 6.13 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee shall be or become a creditor of the Company (or any
other obligor upon the Debentures), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 6.14 APPOINTMENT OF AUTHENTICATING AGENT. The Trustee
may appoint an Authenticating Agent or Agents, as described and with the
powers and obligations conferred by this Section 6.14 ("AUTHENTICATING AGENT
OR AGENTS"), with respect to the Debentures which shall be authorized to act
on behalf of the Trustee to authenticate the Debentures issued upon exchange,
registration of transfer or partial redemption thereof, and Debentures so
authenticated shall be entitled to the benefits of this Indenture and shall
be valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Debentures by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company and
shall at all times be a corporation organized and doing business under the
laws of the United States of America, or of any State, Territory or the
District of Columbia, authorized under such laws to act as Authenticating
Agent, having a combined capital and surplus of not less than $50,000,000 and
subject to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time an
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Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent shall be the successor
Authenticating Agent hereunder, PROVIDED such corporation shall be otherwise
eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice
of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of the
Debentures. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provision of this Section.
The Trustee agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payments, subject to the provisions
of Section 6.7.
If an appointment is made pursuant to this Section, the Debentures may have
endorsed thereon, in addition to the Trustee's certificate of authentication, an
alternative certificate of authentication in the following form:
This is one of the Debentures referred to in the within mentioned
indenture.
---------------------------
---------------------------
As Trustee
By:
------------------------
As Authenticating Agent
By:
------------------------
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Authorized Officer
ARTICLE 7
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 7.1 COMPANY TO FURNISH NAMES AND ADDRESSES OF HOLDERS. The
Company will furnish or cause to be furnished to the Trustee (unless the Trustee
is acting as the Securities Registrar):
(a) quarterly at least five Business Days before each Interest Payment
Date, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders as of each such date; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the
time such list is furnished.
SECTION 7.2 PRESERVATION OF INFORMATION: COMMUNICATIONS TO
HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as
Securities Registrar. The Trustee may destroy any list furnished to it as
provided in Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Debentures, and
the corresponding rights and privileges of the Trustee, shall be as
provided in the Trust Indenture Act.
(c) Every Holder of Debentures, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any agent of either of them shall be held accountable by reason
of the disclosure of information as to the names and addresses of the
Holders made pursuant to the Trust Indenture Act.
SECTION 7.3 REPORTS BY TRUSTEE.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act, at the times and in the manner provided pursuant
thereto.
(b) Reports so required to be transmitted at stated intervals of not
more than 12 months shall be transmitted within 60 days after December 31
in each calendar year, commencing with December 31, 1998.
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(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange or self
regulatory organization of which the Trustee has received notice by the
Company upon which the Debentures are listed and also with the Commission.
The Company will notify the Trustee in writing whenever the Debentures are
listed on any stock exchange or self-regulatory organization.
SECTION 7.4 REPORTS BY COMPANY. The Company shall file with the
Trustee and with the Commission, and transmit to Holders, such information,
documents and other reports, and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided in
the Trust Indenture Act, PROVIDED that any such information, documents or
reports required to be filed with the Commission pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 shall be filed with the
Trustee within 15 days after the same is required to be filed with the
Commission. Notwithstanding that the Company may not be required to remain
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company shall continue to file with the Commission and
provide the Trustee and Holders with the annual reports and the information,
documents and other reports which are specified in Sections 13 and 15(d) of the
Securities Exchange Act of 1934. The Company also shall comply with the other
provisions of Trust Indenture Act Section 314(a).
ARTICLE 8
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other Person or convey,
transfer or lease its properties and assets substantially as an entirety to any
Person, and no Person shall consolidate with or merge into the Company or
convey, transfer or lease its properties and assets substantially as an entirety
to the Company, unless:
(a) in case the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, the Person formed by such consolidation or
into which the Company is merged or the Person which acquires by conveyance
or transfer, or which leases, the properties and assets of the Company
substantially as an entirety shall be a Person organized and existing under
the laws of the United States of America or any State or the District of
Columbia, and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee,
the due and punctual payment of the principal of (and premium, if any) and
interest (including any Additional Interest) on all the Debentures and the
performance of every covenant of this Indenture on the part of the Company
to be performed or observed and shall have provided for conversion rights
in accordance with Article 13;
(b) immediately after giving effect to such transaction, no Debenture
Event of Default, and no event which, after notice or lapse of time, or
both, would become a Debenture Event of Default, shall have happened and be
continuing;
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(c) such consolidation, merger, conveyance, transfer or lease is
permitted under the Trust Agreement and Guarantee and does not give rise to
any breach or violation of the Trust Agreement or Guarantee; and
(d) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel each stating that such consolidation, merger,
conveyance, transfer or lease and any such supplemental indenture complies
with this Article and that all conditions precedent herein provided for
relating to such transaction have been complied with, and the Trustee,
subject to Section 6.1, may rely upon such Officers' Certificate and
Opinion of Counsel as conclusive evidence that such transaction complies
with this Section 8.1.
SECTION 8.2 SUCCESSOR CORPORATION SUBSTITUTED. Upon any
consolidation or merger by the Company with or into any other corporation, or
any conveyance, transfer or lease by the Company of its properties and assets
substantially as an entirety to any Person in accordance with Section 8.1, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such conveyance, transfer or lease is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Company
under this Indenture with the same effect as if such successor corporation had
been named as the Company herein; and in the event of any such conveyance,
transfer or lease the Company shall be discharged from all obligations and
covenants under the Indenture and the Debentures and may be dissolved and
liquidated.
Such successor corporation may cause to be signed, and may issue either in
its own name or in the name of the Company, any or all of the Debentures
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee, and, upon the Company Order of such successor
corporation instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee shall authenticate and
shall deliver any Debentures which previously shall have been signed and
delivered by the officers of the Company to the Trustee for authentication
pursuant to a Company Order such provisions and any Debentures which such
successor corporation thereafter shall cause to be signed and delivered to the
Trustee on its behalf for the purpose pursuant to such provisions. All the
Debentures so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Debentures theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Debentures thereafter to be
issued as may be appropriate.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 9.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of or notice to any Holder, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
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(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Debentures contained;
(b) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee or to surrender any right or power herein conferred upon
the Company;
(c) to add to covenants of the Company for the benefit of the Holders
of the Debentures or to surrender any right or power herein conferred upon
the Company;
(d) to make provision with respect to the conversion rights of Holders
pursuant to the requirements of Article 13;
(e) to add any additional Debenture Events of Default;
(f) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture, PROVIDED that such action pursuant to this clause
shall not materially adversely affect the interest of the Holders of
Debentures and for so long as any of the Preferred Securities shall remain
outstanding, the holders of such Preferred Securities;
(g) to evidence and provide for the acceptance of appointment
hereunder by successor Trustee and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the Trust hereunder by more than one
Trustee, pursuant to the requirements of Section 6.11(b);
(h) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(i) to make provision for transfer procedures, certification,
book-entry provisions, the form of restricted securities legends, if any,
to be placed on Debentures, and all other matters required pursuant to
Section 3.5 or otherwise necessary, desirable or appropriate in connection
with the issuance of Debentures to holders of Preferred Securities in the
event of a distribution of Debentures by the Trust if a Special Event
occurs and is continuing.
SECTION 9.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With
the consent of the Holders of not less than a majority in principal amount of
the Outstanding Debentures, by Act of said Holders delivered to the Company and
the Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of the Debentures under this Indenture; PROVIDED, HOWEVER, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Debenture affected thereby,
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(a) except to the extent permitted by Section 3.11 with respect to the
extension of the interest payment period of the Debentures, change the
Stated Maturity of the principal of, or any installment of interest
(including any Additional Interest) on, the Debentures, or reduce the
principal amount thereof or the rate of interest thereon or reduce any
premium payable upon the redemption thereof, or change the place of payment
where, or the coin or currency in which, any Debenture or interest thereon
is payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Maturity thereof (or, in the case of
redemption, on or after the date fixed for redemption thereof);
(b) adversely affect any right to convert or exchange any Debenture or
modify the provisions of this Indenture with respect to the subordination
of the Debentures in a manner adverse to such Holder;
(c) reduce the percentage in principal amount of the Outstanding
Debentures, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture;
(d) modify any of the provisions of this Section, Section 4.1, Section
5.8, Section 5.13 or Section 10.6, except to increase any such percentage
or to provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each Debenture
affected thereby, or the consent of the holders of all the Preferred
Securities as the case may be; or
(e) modify the provisions in Article 12 of this Indenture with respect
to the subordination of Outstanding Debentures in a manner adverse to the
Holders thereof;
PROVIDED that, so long as any Preferred Securities remain outstanding (i) no
such modification may be made that adversely affects the holders of such
Preferred Securities in any material respect, no termination of this Indenture
shall occur, and no waiver of any Debenture Event of Default or compliance with
any covenant under this Indenture shall be effective, without the prior consent
of the holders of at least a majority of the aggregate liquidation amount of
such Preferred Securities then outstanding unless and until the principal (and
premium, if any) of the Debentures and all accrued and unpaid interest
(including any Additional Interest) thereon have been paid in full and (ii)
where a consent under this Indenture would require the consent of each Holder of
Debentures, no such consent will be given by the Property Trustee without the
prior consent of each holder of the Preferred Securities.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 9.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing or
accepting the additional trusts created by any supplemental indenture permitted
by this Article or the
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modifications thereby of the trust created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Section 6.1) shall be fully protected in
conclusively relying upon, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture, and that all conditions precedent have been
complied with. The Trustee may, but shall not be obligated to, enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
SECTION 9.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution
of any supplemental indenture under this Article, this Indenture shall be
modified in accordance therewith, and such supplemental indenture shall form a
part of this Indenture for all purposes, and every Holder of the Debentures
theretofore or thereafter authenticated and delivered hereunder shall be bound
thereby.
SECTION 9.5 CONFORMITY WITH TRUST INDENTURE ACT. Every
supplemental indenture executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
SECTION 9.6 REFERENCE IN DEBENTURES TO SUPPLEMENTAL INDENTURES.
Debentures authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company shall so determine, new Debentures
so modified as to conform, in the opinion of the Trustee and the Board of
Directors, to any such supplemental indenture may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Debentures presented to the Trustee.
ARTICLE 10
COVENANTS
SECTION 10.1 PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST. The
Company covenants and agrees for the benefit of the Debentures that it will duly
and punctually pay the principal of (and premium, if any) and interest on the
Debentures in accordance with the terms of the Debentures and this Indenture.
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will
maintain in the United States, an office or agency where Debentures may be
presented or surrendered for payment and an office or agency where Debentures
may be surrendered for transfer or exchange and where notices and demands to or
upon the Company in respect of the Debentures and this Indenture may be served.
The Company initially appoints the Trustee, acting through its Corporate Trust
Office, as its agent for said purposes. The Company will give prompt written
notice to the Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain such office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office
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of the Trustee, and the Company hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Debentures may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations; PROVIDED,
HOWEVER, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the United States
for such purposes. The Company will give prompt written notice to the Trustee
of any such designation and any change in the location of any such office or
agency.
SECTION 10.3 MONEY FOR DEBENTURE PAYMENTS TO BE HELD IN TRUST. If
the Company shall at any time act as its own Paying Agent with respect to the
Debentures, it will, on or before each due date of the principal of (or premium,
if any) or interest on any of the Debentures, segregate and hold in trust for
the benefit of the Persons entitled thereto a sum sufficient to pay the
principal (or premium, if any) or interest so becoming due until such sums shall
be paid to such Persons or otherwise disposed of as herein provided, and will
promptly notify the Trustee of its failure so to act. Whenever the Company
shall have one or more Paying Agents, it will, on or before each due date of the
principal of or interest on the Debentures, deposit with a Paying Agent a sum
sufficient to pay the principal (or premium, if any) or interest so becoming
due, such sum to be held in trust for the benefit of the Persons entitled to
such principal and premium (if any) or interest, and (unless such Paying Agent
is the Trustee) the Company will promptly notify the Trustee of its failure so
to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(a) hold all sums held by it for the payment of the principal of (or
premium, if any) or interest on Debentures in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(b) give the Trustee notice of any default by the Company (or any
other obligor upon the Debentures) in the making of any payment of
principal (or premium, if any) or interest;
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent; and
(d) comply with the provisions of the Trust Indenture Act applicable
to it as a Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company
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or such Paying Agent, and, upon such payment by the Company or any Paying Agent
to the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (or premium, if any)
or interest on any Debenture and remaining unclaimed for two years after such
principal (or premium, if any) or interest has become due and payable shall
(unless otherwise required by mandatory provision of applicable escheat or
abandoned or unclaimed property law) be paid on Company Request, after all
payments owing the Trustee have been paid, to the Company, or (if then held by
the Company) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) be discharged from
such trust; and the Holder of such Debenture shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease.
SECTION 10.4 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will
pay or discharge or cause to be paid or discharged, before the same shall become
delinquent, (a) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Subsidiary or upon the income, profits or
property of the Company or any Subsidiary, and (b) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien upon the
property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the Company
shall not be required to pay or discharge or cause to be paid or discharged any
such tax, assessment, charge or claim whose amount, applicability or validity is
being contested in good faith by appropriate proceedings.
SECTION 10.5 STATEMENT AS TO COMPLIANCE. The Company shall deliver
to the Trustee, within 120 days after the end of each calendar year of the
Company an Officers' Certificate (signed by at least one of the officers
referred to in Section 314(a)(4) of the Trust Indenture Act) covering the
preceding calendar year, stating whether or not to the best knowledge of the
signers thereof the Company is in default in the performance, observance or
fulfillment of or compliance with any of the terms, provisions, covenants and
conditions of this Indenture, and if the Company shall be in default, specifying
all such defaults and the nature and status thereof of which they may have
knowledge. For the purpose of this Section 10.5, compliance shall be determined
without regard to any grace period or requirement of notice provided pursuant to
the terms of this Indenture.
SECTION 10.6 WAIVER OF CERTAIN COVENANTS. The Company may omit in
any particular instance to comply with any covenant or condition set forth in
this Article 10, if before or after the time for such compliance the Holders of
at least a majority in principal amount of the Outstanding Debentures, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company in
respect of any such covenant or condition shall remain in full force and effect.
SECTION 10.7 ADDITIONAL SUMS. In the event that (a) the Property
Trustee is the Holder of all of the Outstanding Debentures, (b) a Tax Event in
respect of the Trust shall have
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occurred and be continuing and (c) the Company shall not have (i) redeemed the
Debentures pursuant to Section 11.7 or 11.8 or (ii) dissolved the Trust pursuant
to Section 9.2(b) of the Trust Agreement, the Company shall pay to the Trust
(and its permitted successors or assigns under the Trust Agreement) for so long
as the Trust (or its permitted successor or assignee) is the registered Holder
of the Debentures, such additional amounts as may be necessary in order that the
amount of distributions (including any Additional Amounts (as defined in the
Trust Agreement)) then due and payable by the Trust on the Preferred Securities
and Common Securities that at any time remain outstanding in accord with the
terms thereof shall not be reduced as a result of any Additional Taxes (the
"ADDITIONAL SUMS"). Whenever in this Indenture or the Debentures there is a
reference in any context to the payment of principal of (or premium, if any) or
interest on the Debentures, such mention shall be deemed to include mention of
the payments of the Additional Sums provided for in this paragraph to the extent
that, in such context, Additional Sums are, were or would be payable in respect
thereof pursuant to the provisions of this paragraph and express mention of the
payment of Additional Sums (if applicable) in any provisions hereof shall not be
construed as excluding Additional Sums in those provisions hereof where such
express mention is not made, PROVIDED, however, that the extension of an
interest payment period pursuant to Section 3.11 or the Debentures shall not
extend the payment of any Additional Sums that may be due and payable during
such interest payment period.
SECTION 10.8 ADDITIONAL COVENANTS. The Company covenants and agrees
with each Holder of Debentures that so long as the Debentures are outstanding,
if (i) there shall have occurred any event of which the Company has actual
knowledge that (A) with the giving of notice or the lapse of time or both, would
constitute a Debenture Event of Default hereunder and (B) in respect of which
the Company shall not have taken reasonable steps to cure, (ii) the Company
shall be in default with respect to its payment of any obligations under the
Guarantee or (iii) the Company shall have given notice of its selection of an
Extension Period as provided herein and shall not have rescinded such notice, or
such period, or any extension thereof, shall be continuing, then the Company
shall not, and shall cause any Subsidiary not to, (x) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any shares of the Company's capital stock
or (y) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities (including guarantees of indebtedness
for money borrowed) of the Company that rank PARI PASSU with or junior to the
Debentures (other than (1) any dividend, redemption, liquidation, interest,
principal or guarantee payment by the Company where the payment is made by way
of securities (including capital stock) that rank PARI PASSU with or junior to
the securities on which such dividend, redemption, interest, principal or
guarantee payment is being made, (2) redemptions or purchases of any rights
pursuant to a stockholder rights agreement and the declaration of a dividend of
such rights or the issuance of preferred stock under such plans in the future,
(3) payments under the Guarantee, (4) purchases of Common Stock related to the
issuance of Common Stock under any of the Company's benefit plans for its
directors, officers or employees, (5) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one series or class of
the Company's capital stock for another series or class of the Company's capital
stock and (6) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged).
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The Company also covenants with each Holder of the Debentures (i) that for
so long as Preferred Securities are outstanding not to convert the Debentures
except pursuant to a notice of conversion delivered to the Conversion Agent by a
holder of Preferred Securities and (ii) to maintain directly or indirectly 100%
ownership of the Common Securities of the Trust; PROVIDED, HOWEVER, that any
permitted successor of the Company hereunder may succeed to the Company's
ownership of such Common Securities, (iii) not to voluntarily terminate,
wind-up, liquidate or dissolve the Trust, except (a) in connection with a
distribution of the Debentures to the holders of Preferred Securities in
dissolution of the Trust or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement and (iv) to use
its reasonable efforts, consistent with the terms and provisions of the Trust
Agreement to cause the Trust to remain a business trust and not to be classified
as an association taxable as a corporation for United States Federal income tax
purposes.
SECTION 10.9 PAYMENT OF EXPENSES OF THE TRUST. In connection with
the offering, sale and issuance of the Debentures to the Property Trustee and in
connection with the sale of the Preferred Securities by the Trust, the Company
shall:
(a) pay for all costs, fees and expenses relating to the offering,
sale and issuance of the Securities (as defined in the Purchase Agreement),
including commissions, discounts and expenses payable pursuant to the
Purchase Agreement and compensation of the Trustee under the Indenture in
accordance with the provisions of Section 6.7 of the Indenture;
(b) be responsible for and pay for all debts and obligations (other
than with respect to the Preferred Securities) of the Trust, pay for all
costs and expenses of the Trust (including, but not limited to, costs and
expenses relating to the organization of the Trust, the offering, sale and
issuance of the Preferred Securities (including commissions, discounts and
expenses in connection therewith), the fees and expenses of the Property
Trustee and the Delaware Trustee, the costs and expenses relating to the
operation of the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying
agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and disposition of
Trust assets); and
(c) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
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ARTICLE 11
REDEMPTION OR EXCHANGE OF DEBENTURES
SECTION 11.1 ELECTION TO REDEEM; NOTICE TO TRUSTEE. The election of
the Company to redeem any Debentures shall be evidenced by or pursuant to a
Board Resolution. In case of any redemption at the election of the Company, the
Company shall, not less than 45 days prior to the date fixed for redemption
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee in writing of such date and of the principal amount of Debentures to be
redeemed.
SECTION 11.2 SELECTION OF DEBENTURES TO BE REDEEMED. If less than
all the Debentures are to be redeemed, the particular Debentures to be redeemed
shall be selected not more than 45 days prior to the Redemption Date by the
Trustee from the Outstanding Debentures not previously called for redemption, by
lot or by such other method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the principal
amount of the Debentures Outstanding, PROVIDED that the unredeemed portion of
the principal amount of the Debentures be in an authorized denomination (which
shall not be less than the minimum authorized denomination) for the Debentures.
The Trustee shall promptly notify the Company in writing of the Debentures
selected for partial redemption and the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all
provisions relating to the redemption of Debentures shall relate, in the case of
any Debenture redeemed or to be redeemed only in part, to the portion of the
principal amount of such Debenture which has been or is to be redeemed. If the
Company shall so direct, Debentures registered in the name of the Company, any
Affiliate or any Subsidiary thereof shall not be included in the Debentures
selected for redemption.
SECTION 11.3 NOTICE OF REDEMPTION. Notice of redemption shall be
given by first-class mail, postage prepaid, mailed not later than the thirtieth
(30th) day, and not earlier than the sixtieth (60th) day, prior to the date
fixed for redemption, to each Holder of Debentures to be redeemed, at the
address of such Holder as it appears in the Securities Register.
With respect to Debentures to be redeemed, each notice of redemption shall
state:
(a) the Redemption Date;
(b) the redemption price at which the Debentures are to be redeemed
(the "REDEMPTION PRICE");
(c) if less than all Outstanding Debentures are to be redeemed, the
identification (and, in the case of partial redemption, the respective
principal amounts) of the particular Debentures to be redeemed (including,
if relevant, the CUSIP or ISIN number);
(d) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debenture or portion thereof, and that upon
deposit with the Paying Agent interest thereon, if any, shall cease to
accrue on and after the Redemption Date;
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(e) the place or places where the Debentures are to be surrendered for
payment of the redemption price at which the Debentures are to be redeemed;
(f) that a Holder of Debentures who desires to convert Debentures
called for redemption must satisfy the requirements for conversion
contained in the Debentures, the then existing Conversion Price, and the
date and time when the option to convert shall expire; and
(g) the record date for the determination of holders entitled to
receive payment of the Redemption Price, as provided in Section 11.5.
Notice of redemption of Debentures to be redeemed at the election of the
Company shall be given by the Company or, at the Company's written request, by
the Trustee in the name and at the expense of the Company and shall be
irrevocable. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the Holder
receives such notice. In any case, a failure to give such notice by mail or any
defect in the notice to the Holder of any Debenture designated for redemption as
a whole or in part shall not affect the validity of the proceedings for the
redemption of any other Debenture.
SECTION 11.4 DEPOSIT OF REDEMPTION PRICE. Prior to 12:00 noon,
Chicago time, on the Redemption Date specified in the notice of redemption given
as provided in Section 11.3, the Company will deposit with the Trustee or with
one or more Paying Agents (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 4.2) an amount of money
sufficient to redeem on the Redemption Date all the Debentures so called for
redemption at the applicable Redemption Price.
If any Debenture called for redemption has been converted, any money
deposited with the Trustee or with any Paying Agent or so segregated and held in
trust for the redemption of such Debenture shall (subject to any right of the
Holder of such Debenture or any Predecessor Debenture to receive interest as
provided in the last paragraph of Section 3.7) be paid to the Company upon
Company Request or, if then held by the Company, shall be discharged from such
trust.
SECTION 11.5 DEBENTURES PAYABLE ON REDEMPTION DATE. If notice of
redemption has been given as provided in Section 11.3, the Debentures so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, including any accrued interest (and any Additional
Interest) thereon, and from and after such date (unless the Company shall
default in the payment of the Redemption Price or any accrued interest on
(including any Additional Interest)) such Debentures shall cease to bear
interest. Upon surrender of any such Debenture for redemption in accordance
with said notice, such Debenture shall be paid by the Company at the Redemption
Price, including any accrued interest (and any Additional Interest) to the
Redemption Date, PROVIDED, HOWEVER, that installments of interest on Debentures
whose Stated Maturity is on or prior to the Redemption Date shall be payable to
the Holders of such Debentures, or one of more Predecessor Debentures,
registered as such at the close of business on the relevant Regular Record Dates
or Special Record Dates, as the case may be, according to their terms and the
provisions of Section 3.7. In the event that any date on which any Redemption
Price is payable is
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not a Business Day, then payment of the Redemption Price payable on such date
will be made on the next succeeding day which is a Business Day (and without any
interest or other payment in respect of any such delay), except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, with the same force and effect as if
made on such date. Payment of the Redemption Price shall be made to the Holders
of such Debentures as they appear on the Securities Register for the Debentures
on the relevant record date, which shall be the date which is the fifteenth
(15th) day (whether or not a Business Day) preceding such Redemption Date.
If any Debenture called for redemption shall not be so paid upon surrender
thereof for redemption, the principal and any premium shall, until paid, bear
interest from the Redemption Date at the rate prescribed therefor in the
Debenture.
SECTION 11.6 DEBENTURES REDEEMED IN PART. In the event of any
redemption in part, the Company shall not be required to (i) issue, register the
transfer of or exchange any Debenture during a period beginning at 9:00 a.m.
(Chicago time) 15 Business Days before any selection for redemption of
Debentures and ending at 5:00 p.m. (Chicago time) on the earliest date in which
the relevant notice of redemption is deemed to have been given to all Holders of
Debentures to be so redeemed and (ii) register the transfer of or exchange any
Debentures so selected for redemption, in whole or in part, except for the
unredeemed portion of any Debentures being redeemed in part.
Any Debenture which is to be redeemed only in part shall be surrendered at
the place of payment therefor (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form satisfactory to
the Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and make available for delivery to the Holder of such
Debenture without service charge, a new Debenture or Debentures, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Debenture so surrendered. Each Debenture shall be subject to partial
redemption only in the amount of $25 or integral multiples thereof.
The Debentures are not entitled to the benefit of any Sinking or like fund.
SECTION 11.7 MANDATORY REDEMPTION. Upon (i) repayment at maturity
or (ii) as a result of acceleration upon the occurrence and continuation of a
Debenture Event of Default, the Company shall redeem the Outstanding Debentures,
in whole but not in part, at a redemption price equal to 100% of the principal
amount of such Debentures plus any accrued and unpaid interest, including any
Additional Interest, to the date fixed for redemption.
SECTION 11.8 OPTIONAL REDEMPTION. Except as set forth below, on and
after __________ __, 2001 and subject to the next succeeding sentence, the
Company shall have the right, at any time and from time to time, to redeem the
Debentures, in whole or in part, upon notice given as set forth in Section 11.3
during the twelve month periods beginning on _________ __ in each of the
following years at the indicated Redemption Price (expressed as a percentage of
the principal
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amount of the Debentures being redeemed), together with any accrued but unpaid
interest on the portion being redeemed:
<TABLE>
<CAPTION>
Year Redemption Price Year Redemption Price
- ---- (%) of principal amount) ---- (%) of principal amount)
------------------------ ------------------------
<S> <C> <C> <C>
</TABLE>
The Company may not redeem the Debentures in part unless all accrued and
unpaid interest has been paid in full on all outstanding Debentures for all
quarterly interest periods terminating on or prior to the giving of notice of
the Redemption Date.
If a Tax Event shall occur and be continuing, the Company shall have the
right, upon not less than 30 nor more than 60 days' notice, to redeem the
Debentures in whole or in part, for cash upon the later of (i) 90 days following
the occurrence of such Tax Event or (ii) __________ __, ____, at a Redemption
Price equal to the principal amount of such Debentures plus any accrued and
unpaid interest, including Additional Interest, to the date fixed for such
redemption.
SECTION 11.9 EXCHANGE OF TRUST SECURITIES FOR DEBENTURES.
(a) At any time, the Company shall have the right to dissolve the
Trust and cause the Debentures to be distributed to the holders of the
Preferred Securities in dissolution of the Trust after satisfaction of
liabilities to creditors of the Trust as provided by applicable law.
(b) If a Special Event in respect of the Trust shall occur and be
continuing, the Company shall give the Property Trustee notice of the same.
If a Special Event in respect of the Trust shall occur and be continuing,
the Trust Agreement requires the Property Trustee to direct the Conversion
Agent (as defined in the Trust Agreement) to exchange all outstanding Trust
Securities for the Debentures having a principal amount equal to the
aggregate liquidation amount of the Trust Securities to be exchanged with
accrued interest in an amount equal to any unpaid distributions (including
any Additional Amounts) on the Trust Securities PROVIDED that, in the case
of a Tax Event that shall have occurred and be continuing, the Company
shall have the right to direct the Property Trustee that less than all, or
none, of the Trust Securities be so exchanged (i) if and for so long as the
Company shall have elected to pay any Additional Sums such that the amounts
received by holders of the Trust Securities that remain outstanding are not
reduced as a result of such Tax Event, and shall not have revoked any such
election or failed to make such payments or (ii) if the
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Company shall instead elect to redeem the Debentures, in whole or in part,
in the manner set forth in Section 11.8.
ARTICLE 12
SUBORDINATION OF DEBENTURES
SECTION 12.1 DEBENTURES SUBORDINATE TO SENIOR DEBT. The Company
covenants and agrees, and each Holder of a Debenture, by its acceptance thereof,
likewise covenants and agrees, that, to the extent and in the manner hereinafter
set forth in this Article, the payment of the principal of (and premium, if any)
and interest (including any Additional Interest) on each and all of the
Debentures are hereby expressly made junior and subordinate and subject in right
of payment to the prior payment in full of all amounts then due and payable in
respect of all Senior Debt (whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed), and that the subordination is for the
benefit of the holders of Senior Debt. Notwithstanding the foregoing, any and
all amounts payable to the Trustee pursuant to Section 6.7 are not subject to
the provisions of Article 12.
SECTION 12.2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION, ETC. Upon
any payment or distribution of assets of the Company to creditors upon any
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceeding in connection with any insolvency or
bankruptcy proceeding of the Company (each such event, if any, herein sometimes
referred to as a "PROCEEDING"), then the holders of Senior Debt shall be
entitled to receive payment in full of principal of (and premium, if any) and
interest (including interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Debt), if any, on such Senior Debt,
or provision shall be made for such payment in cash or cash equivalents or
otherwise in a manner satisfactory to the holders of Senior Debt, before the
Holders of the Debentures, are entitled to receive or retain any payment or
distribution of any kind or character, whether in cash, property or Debentures
(including any payment or distribution which may be payable or deliverable by
reason of the payment of any other Debt of the Company (including the
Debentures) subordinated to the payment of the Debentures, but not including any
payments that are made from funds on deposit pursuant to Section 4.1(a)(ii)(B)
or funds on deposit for the redemption of Debentures for which notice of
Redemption has been given and the applicable Redemption Date has passed, such
payment or distribution being hereinafter referred to as a "JUNIOR SUBORDINATED
PAYMENT"), in respect of principal of (or premium, if any) or interest
(including any Additional Interest, if any) on the Debentures or on account of
the purchase or other acquisition of Debentures by the Company or any Subsidiary
and to that end the holders of Senior Debt shall be entitled to receive, for
application to the payment thereof any payment or distribution of any kind of
character, whether in cash, property or Debentures, including any Junior
Subordinated Payment, which may be payable or deliverable in respect of the
Debentures in any such Proceeding.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Debenture shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or Debentures, including any Junior Subordinated
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Payment, before all Senior Debt is paid in full or payment thereof is provided
for in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, and if such fact shall, at or prior to the time of such
payment or distribution, have been made known to the Trustee or, as the case may
be, such Holder, then and in such event such payment or distribution shall be
paid over or delivered forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making payment
or distribution of assets of the Company for application to the payment of all
Senior Debt remaining unpaid, to the extent necessary to pay all Senior Debt in
full, after giving effect to any concurrent payment or distribution to or for
the holders of Senior Debt.
For the purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or securities"
shall not be deemed to include shares of stock of the Company, as reorganized or
readjusted, or securities of the Company or any other corporation provided for
by a plan of reorganization or readjustment which securities are subordinated in
right of payment to all then outstanding Senior Debt to substantially the same
extent as the Debentures are so subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person or the liquidation or dissolution of the Company following the sale of
all or substantially all of its properties and assets as an entirety to another
Person upon the terms and conditions set forth in Article 8 shall not be deemed
a Proceeding for the purposes of this Section, if the Person formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale such properties and assets as an entirety, as the case may be, shall, as
a part of such consolidation, merger, or sale comply with the conditions set
forth in Article 8.
SECTION 12.3 PRIOR PAYMENT TO SENIOR DEBT UPON ACCELERATION OF
DEBENTURES. In the event that the Debentures are declared due and payable
before their Maturity, then and in such event the holders of the Senior Debt
outstanding at the time the Debentures so become due and payable shall be
entitled to receive payment in full of all amounts due on or in respect of such
Senior Debt (including any amounts due upon acceleration), or provision shall be
made for such payment in cash or cash equivalents or otherwise in a manner
satisfactory to the holders of Senior Debt, before the Holders of the Debentures
are entitled to receive any payment or distribution of any kind or character,
whether in cash, properties or securities (including any Junior Subordinated
Payment) by the Company on account of the principal of (or premium, if any) or
interest (including any Additional Interest) on the Debentures or on account of
the purchase or other acquisition of Debentures by the Company or any
Subsidiary.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of the Debentures prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known, as set forth in Section 12.10, to a
Responsible Officer of the Trustee or, as the case may be, such Holder, then and
in such event such payment shall be paid over and delivered forthwith to the
Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.2 would be applicable.
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SECTION 12.4 NO PAYMENT WHEN SENIOR DEBT IN DEFAULT.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior
Debt, or in the event that any event of default with respect to any Senior
Debt shall have occurred and be continuing and shall have resulted in such
Senior Debt becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable, unless and until such
event of default shall have been cured or waived or shall have ceased to
exist and such acceleration shall have been rescinded or annulled, or (b)
in the event any judicial proceeding shall be pending with respect to any
such default in payment or such event or default, then no payment or
distribution of any kind or character, whether in cash, properties or
Debentures (including any Junior Subordinated Payment) shall be made by the
Company on account of principal of (or premium, if any) or interest
(including any Additional Interest), if any, on the Debentures or on
account of the purchase or other acquisition of Debentures by the Company
or any Subsidiary other than payments made from funds on deposit pursuant
to Section 4.1(a)(ii)(B) or from funds on deposit for the redemption of
Debentures for which notice of redemption has been given and the Redemption
Date has passed.
In the event that, notwithstanding the foregoing, the Company shall make
any payment to the Trustee or the Holder of the Debentures prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to the
time of such payment, have been made known as set forth in Section 12.10, to a
Responsible Officer of the Trustee or, as the case may be, such Holder, then and
in such event such payment shall be paid over and delivered forthwith to the
Company.
The provisions of this Section shall not apply to any payment with respect
to which Section 12.2 would be applicable.
SECTION 12.5 PAYMENT PERMITTED IF NO DEFAULT. Nothing contained in
this Article or elsewhere in this Indenture or in any of the Debentures shall
prevent (a) the Company, at any time except during the pendency of any
Proceeding referred to in Section 12.2 or under the conditions described in
Sections 12.3 and 12.4, from making payments at any time of principal of (or
premium, if any) or interest on the Debentures, or (b) the application by the
Trustee of any money deposited with it hereunder to the payment of or on account
of the principal of (or premium, if any) or interest (including any Additional
Interest) on the Debentures or the retention of such payment by the Holders, if,
at the time of such application by the Trustee, a Responsible Officer of the
Trustee did not have actual knowledge that such payment would have been
prohibited by the provisions of this Article.
SECTION 12.6 SUBROGATION TO RIGHTS OF HOLDERS OF SENIOR DEBT.
Subject to the payment in full of all Senior Debt, or the provision for such
payment in cash or cash equivalents or otherwise in a manner satisfactory to the
holders of Senior Debt, the Holders of the Debentures shall be subrogated to the
extent of the payments or distributions made to the holders of such Senior Debt
pursuant to the provisions of this Article (equally and ratably with the holders
of all indebtedness of the Company which by its express terms is subordinated to
Senior Debt of the Company to substantially the same extent as the Debentures
are subordinated to the Senior Debt and is entitled
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to like rights of subrogation by reason of any payments or distributions made to
holders of such Senior Debt) to the rights of the holders of such Senior Debt to
receive payments and distributions of cash, property and securities applicable
to the Senior Debt until the principal of (and premium, if any) and interest on
the Debentures shall be paid in full. For purposes of such subrogation, no
payments or distributions to the holders of the Senior Debt of any cash,
property or securities to which the Holders of the Debentures or the Trustee
would be entitled except for the provisions of this Article, and no payments
pursuant to the provisions of this Article to the holders of Senior Debt by
Holders of the Debentures or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Debt, and the Holders of the Debentures,
be deemed to be a payment or distribution by the Company to or on account of the
Senior Debt.
SECTION 12.7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders of the Debentures on the one hand
and the holders of Senior Debt on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Debentures is intended to or
shall (a) impair, as between the Company and the Holders of the Debentures, the
obligations of the Company, which are absolute and unconditional, to pay to the
Holders of the Debentures the principal of (and premium, if any) and interest
(including any Additional Interest) on the Debentures as and when the same shall
become due and payable in accordance with their terms, or (b) affect the
relative rights against the Company of the Holders of the Debentures and
creditors of the Company other than their rights in relation to the holders of
Senior Debt, or (c) prevent the Trustee or the Holder of any Debenture from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture including, without limitation, filing and voting claims in any
Proceeding, subject to the rights, if any, under this Article of the holders of
Senior Debt to receive cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder.
SECTION 12.8 TRUSTEE TO EFFECTUATE SUBORDINATION. Each Holder of a
Debenture by his or her acceptance thereof authorizes and directs the Trustee on
his or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination provided in this Article and
appoints the Trustee his or her attorney-in-fact for any and all such purposes.
SECTION 12.9 NO WAIVER OF SUBORDINATION PROVISIONS. No right of any
present or future holder of any Senior Debt to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof that any such holder may have or be otherwise charged with.
SECTION 12.10 NOTICE TO TRUSTEE. The Company shall give prompt
written notice to the Trustee of any fact known to the Company which would
prohibit the making of any payment to or by the Trustee in respect of the
Debentures. Notwithstanding the provisions of this Article or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Debentures, unless and until the Trustee shall
have received written notice thereof from the
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Company or a person representing itself as a holder of Senior Debt or from any
trustee, agent or representative therefor (whether or not the facts contained in
such notice are true).
SECTION 12.11 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets of the Company
referred to in this Article, the Trustee, subject to the provisions of Article
6, and the Holders of the Debentures shall be entitled to conclusively rely upon
any order or decree entered by any court of competent jurisdiction in which a
Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or to
the Holders of Debentures, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of the Senior Debt
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
SECTION 12.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR DEBT. With
respect to the holders of the Senior Debt of the Company, the Trustee undertakes
to perform or observe only such of its obligations and covenants as are set
forth in this Article 12, and no implied covenants or obligations with respect
to the holders of such Senior Debt shall be read into this Indenture against
First Chicago and/or the Trustee. First Chicago and/or the Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Debt and, subject
to the provisions of Section 6.3, neither the Trustee (nor First Chicago) shall
be liable to the holder of any Senior Debt if it shall pay over or deliver to
Holders, the Company, or any other person, money or assets to which any holder
of such Senior Debt shall be entitled to by virtue of this Article 12 or
otherwise.
SECTION 12.13 RIGHTS OF TRUSTEE AS HOLDER OF SENIOR DEBT;
PRESERVATION OF TRUSTEE'S RIGHTS. The Trustee in its individual capacity shall
be entitled to all the rights set forth in this Article with respect to any
Senior Debt which may at any time be held by it, to the same extent as any other
holder of Senior Debt, and, subject to the requirements of the Trust Indenture
Act, nothing in this Indenture shall deprive the Trustee of any of its rights as
such holder.
SECTION 12.14 ARTICLE APPLICABLE TO PAYING AGENTS. In case at any
time any Paying Agent other than the Trustee shall have been appointed by the
Company and be then acting hereunder, the term "TRUSTEE" as used in this Article
shall in such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning as fully for all
intent and purposes as if such Paying Agent were named in this Article in
addition to or in place of the Trustee.
SECTION 12.15 CERTAIN CONVERSIONS OR EXCHANGES DEEMED PAYMENT. For
the purpose of this Article only, (a) the issuance and delivery of junior
securities upon conversion or exchange of Debentures shall not be deemed to
constitute a payment or distribution on account of the principal of (or premium,
if any) or interest (including any Additional Interest) on the Debentures or on
account of the purchase or other acquisition of Debentures, and (b) the payment,
issuance or delivery of cash (including any payments for fractional shares),
property or securities (other than junior securities) upon conversion or
exchange of a Debenture shall be deemed to constitute payment on account of the
principal of such security. For the purpose of this Section, the term "JUNIOR
SECURITIES"
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means (i) shares of any stock of any class of the Company and (ii) securities of
the Company which are subordinated in right of payment to all Senior Debt which
may be outstanding at the time of issuance or delivery of such securities to
substantially the same extent as, or to a greater extent than, the Debentures
are so subordinated as provided in this Article.
ARTICLE 13
CONVERSION OF DEBENTURES
SECTION 13.1 CONVERSION RIGHTS. Subject to and upon compliance with
the provisions of this Article, the Debentures are convertible, at the option of
the Holder, at any time prior to the redemption or maturity, into fully paid and
nonassessable shares of Class A Common Stock at an initial conversion rate of
______ shares of Class A Common Stock for each $25 in aggregate principal amount
of Debentures (equal to a conversion price of approximately $_____ per share of
Class A Common Stock), subject to adjustment as described in this Article 13 (as
adjusted, the "CONVERSION PRICE"). A Holder of Debentures may convert any
portion of the principal amount of the Debentures into that number of fully paid
and nonassessable shares of Class A Common Stock (calculated as to each
conversion to the nearest 1/100th of a share) obtained by dividing the principal
amount of the Debentures to be converted by the Conversion Price. In case a
Debenture or portion thereof is called for redemption, such conversion right in
respect of the Debenture or portion so called shall expire at the close of
business on the Redemption Date, unless the Company defaults in making the
payment due upon redemption.
SECTION 13.2 CONVERSION PROCEDURES.
(a) In order to convert all or a portion of the Debentures, the Holder
thereof shall deliver to the Property Trustee, as conversion agent or to
such other agent appointed for such purposes (the "CONVERSION AGENT") an
irrevocable Notice of Conversion setting forth the principal amount of
Debentures to be converted, together with the name or names, if other than
the Holder, in which the shares of Class A Common Stock should be issued
upon conversion and, if such Debentures are definitive Debentures,
surrender to the Conversion Agent the Debentures to be converted, duly
endorsed or assigned to the Company or in blank. In addition, a holder of
Preferred Securities may exercise its right under the Trust Agreement to
convert such Preferred Securities into Class A Common Stock by delivering
to the Conversion Agent an irrevocable Notice of Conversion setting forth
the information called for by the preceding sentence and directing the
Conversion Agent (i) to exchange such Preferred Security for a portion of
the Debentures held by the Trust (at an exchange rate of $25 principal
amount of Debentures for each Preferred Security) and (ii) to immediately
convert such Debentures, on behalf of such holder, into Class A Common
Stock pursuant to this Article 13 and, if such Preferred Securities are in
definitive form, surrendering such Preferred Securities, duly endorsed or
assigned to the Company or in blank. So long as any Preferred Securities
are outstanding, the Trust shall not convert any Debentures except pursuant
to a Notice of Conversion delivered to the Conversion Agent by a holder of
Preferred Securities.
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If a Notice of Conversion is delivered on or after the Regular Record
Date and prior to the subsequent Interest Payment Date, the Holder of
record on the Regular Record Date will be entitled to receive the interest
paid on the subsequent Interest Payment Date on the portion of Debentures
to be converted notwithstanding the conversion thereof prior to such
Interest Payment Date. Except as otherwise provided in the immediately
preceding sentence, in the case of any Debenture which is converted,
interest whose Stated Maturity is on or after the date of conversion of
such Debenture shall not be payable, and the Company shall not make nor be
required to make any other payment, adjustment or allowance with respect to
accrued but unpaid interest on the Debentures being converted, which shall
be deemed to be paid in full. Debentures submitted for conversion prior to
the expiration of conversion rights as provided in Section 13.3 shall be
deemed to have been effected immediately prior to the close of business on
the day on which the Notice of Conversion was received (the "CONVERSION
DATE") by the Conversion Agent from the Holder or from a holder of the
Preferred Securities effecting a conversion thereof pursuant to its
conversion rights under the Trust Agreement, as the case may be. The
Person or Persons entitled to receive Class A Common Stock issuable upon
such conversion shall be treated for all purposes as the record holder or
holders of such Class A Common Stock as of the Conversion Date and such
Person or Persons will cease to be a record Holder or record Holders of the
Debentures on that date. As promptly as practicable on or after the
Conversion Date, the Company shall issue and deliver at the office of the
Conversion Agent, unless otherwise directed by the Holder or holder in the
Notice of Conversion, a certificate or certificates for the number of full
shares of Class A Common Stock issuable upon such conversion, together with
the cash payment, if any, in lieu of any fraction of any share to the
Person or Persons entitled to receive the same. The Conversion Agent shall
deliver such certificate or certificates to such Person or Persons.
(b) The Company's delivery upon conversion of the fixed number of
shares of Class A Common Stock into which the Debentures are convertible
(together with the cash payment, if any, in lieu of fractional shares)
shall be deemed to satisfy the Company's obligation to pay the principal
amount at Maturity of the portion of Debentures so converted and any unpaid
interest (including Additional Interest) accrued on such Debentures at the
time of such conversion.
(c) No fractional shares of Class A Common Stock will be issued as a
result of conversion, but in lieu thereof, the Company shall pay to the
Conversion Agent a cash adjustment in an amount equal to the same fraction
of the Current Market Price with respect to such fractional interest on the
date on which the Debentures or Preferred Securities, as the case may be,
were duly surrendered to the Conversion Agent for conversion, and the
Conversion Agent in turn will make such payment, if any, to the Holder of
the Securities or the holder of the Preferred Securities so converted.
(d) In the event of the conversion of any Debenture in part only, a
new Debenture or Debentures for the unconverted portion thereof will be
issued in the name of the Holder thereof upon the cancellation of the
Debenture converted in part in accordance with Section 3.5.
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(e) In effecting the conversion transactions described in this
Section, the Conversion Agent is acting as agent of the holders of
Preferred Securities (in the exchange of Preferred Securities for
Debentures) and as agent of the Holders of Debentures (in the conversion of
Debentures into Class A Common Stock), as the case may be, directing it to
effect such conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Debentures held by the Trust from time to time
for Preferred Securities in connection with the conversion of such
Preferred Securities in accordance with this Article 13 and (ii) to convert
all or a portion of the Debentures into Class A Common Stock and thereupon
to deliver such shares of Class A Common Stock in accordance with the
provisions of this Article 13 and to deliver to the Trust a new Debenture
or Debentures for any resulting unconverted principal amount.
(f) Except as provided in Section 2.6, all shares of Class A Common
Stock delivered upon any conversion of Debentures shall bear a legend
substantially in the form of the legend set forth in Exhibit C to the Trust
Agreement. Neither the Trustee nor the Conversion Agent shall have any
responsibility for the inclusion or content of any such legend on such
Class A Common Stock.
(g) The Company shall at all times reserve and keep available out of
its authorized and unissued Class A Common Stock, solely for issuance upon
the conversion of the Debentures, such number of shares of Class A Common
Stock as shall from time to time be issuable upon the conversion of all the
Debentures then outstanding. Notwithstanding the foregoing, the Company
shall be entitled to deliver upon conversion of Debentures shares of Class
A Common Stock reacquired and held in the treasury of the Company (in lieu
of the issuance of authorized and unissued shares of Class A Common Stock)
so long as any such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Whenever the Company issues
shares of Class A Common Stock upon conversion of Debentures, and the
Company has in effect at such time a stock purchase rights agreement under
which holders of Common Stock are issued rights ("RIGHTS") entitling the
holders under certain circumstances to purchase an additional share or
shares of stock, the Company will issue, together with each such share of
Class A Common Stock, such number of Rights (which number may be a
fraction) as shall at that time be issuable with a share of Common Stock
pursuant to such stock purchase rights agreement. Any shares of Class A
Common Stock issued upon conversion of the Debentures shall be duly
authorized, validly issued and fully paid and nonassessable. The
Conversion Agent shall deliver the shares of Class A Common Stock received
upon conversion of the Debentures to the converting Holder free and clear
of all liens, charges, security interests and encumbrances, except for
United States withholding taxes. The Company shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all
applicable requirements as to registration or qualification of Common Stock
(and all requirements to list Class A Common Stock issuable upon conversion
of Debentures that are at the time applicable), in order to enable the
Company to lawfully issue Class A Common Stock upon conversion of the
Debentures and to lawfully deliver Class A Common Stock to each Holder upon
conversion of the Debentures.
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(h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Class A Common Stock on
conversion of Debentures. The Company shall not, however, be required to
pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of shares of Class A Common Stock in a name other than
that in which the Debentures so converted were registered, and no such
issue or delivery shall be made unless and until the Person requesting such
issue has paid to the Conversion Agent the amount of any such tax, or has
established to the satisfaction of the Conversion Agent that such tax has
been paid.
(i) Nothing in this Article 13 shall limit the requirement of the
Company to withhold taxes pursuant to the terms of the Debentures or as set
forth in this Agreement or otherwise require the Trustee or the Company to
pay any amounts on account of such withholdings.
SECTION 13.3 EXPIRATION OF CONVERSION RIGHTS. The conversion rights
of Holders of Debentures shall expire at the close of business on the date set
for redemption of the Debentures upon the redemption or Stated Maturity of the
Debentures.
SECTION 13.4 CONVERSION PRICE ADJUSTMENTS. The conversion price
shall be subject to adjustment (without duplication) from time to time as
follows:
(a) In case the Company shall, while any of the Debentures are
outstanding, (i) pay a dividend or make a distribution with respect to its
Common Stock exclusively in shares of Common Stock, (ii) subdivide its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares or (iv) issue by
reclassification of its shares of Common Stock any shares of capital stock
of the Company, the conversion privilege and the Conversion Price in effect
immediately prior to such action shall be adjusted so that the Holder of
any Debentures thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the Company which he would
have owned immediately following such action had such Debentures been
converted immediately prior thereto. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in
the case of a dividend or other distribution and shall become effective
immediately after the effective date in case of a subdivision, combination
or reclassification (or immediately after the record date if a record date
shall have been established for such event). If, as a result of an
adjustment made pursuant to this subsection (a), the Holder of any
Debenture thereafter surrendered for conversion shall become entitled to
receive shares of two or more classes or series of capital stock of the
Company, the Board of Directors (whose determination shall be conclusive
and shall be described in a Board Resolution filed with the Trustee) shall
determine the allocation of the adjusted Conversion Price between or among
shares of such classes or series of capital stock. In the event that such
dividend, distribution, subdivision, combination or issuance is not so paid
or made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such record date had not been fixed.
(b) In case the Company shall, while any of the Debentures are
Outstanding, issue rights or warrants to all holders of its Common Stock
entitling them (for a period expiring
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within 45 days after the record date for the determination of stockholders
entitled to receive such rights or warrants) to subscribe for or purchase
shares of Common Stock at a price per share less than the Current Market
Price per share of Common Stock on such record date, the Conversion Price
for the Debentures shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the date of issuance of such rights or warrants by a fraction of which
the numerator shall be the number of shares of Common Stock outstanding on
the date of issuance of such rights or warrants plus the number of shares
which the aggregate offering price of the total number of shares so offered
for subscription or purchase would purchase at such Current Market Price,
and of which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the
number of additional shares of Common Stock offered for subscription or
purchase. Such adjustment shall become effective immediately after the
record date for the determination of stockholders entitled to receive such
rights or warrants. For the purposes of this subsection, the number of
shares of Common Stock at any time outstanding shall not include shares
held in the treasury of the Company. The Company shall not issue any
rights or warrants in respect of shares of Common Stock held in the
treasury of the Company. In case any rights or warrants referred to in
this subsection in respect of which an adjustment shall have been made
shall expire unexercised within 45 days after the same shall have been
distributed or issued by the Company, the Conversion Price shall be
readjusted at the time of such expiration to the Conversion Price that
would have been in effect if no adjustment had been made on account of the
distribution or issuance of such expired rights or warrants.
(c) Subject to the last sentence of this subparagraph, in case the
Company shall, by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any class or series
of capital stock, cash or assets (including securities, but excluding any
rights or warrants referred to in subparagraph (b), any dividend or
distribution paid exclusively in cash and any dividend or distribution
referred to in subparagraph (a) of this Section 13.4), the Conversion Price
shall be reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
subparagraph (c) by a fraction of which the numerator shall be the Current
Market Price per share of Class A Common Stock on the date fixed for the
payment of such distribution (the "REFERENCE DATE") less the fair market
value (as determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors), on the Reference Date, of the portion of the evidences
of indebtedness, shares of capital stock, cash and assets so distributed
applicable to one share of Class A Common Stock and the denominator shall
be such Current Market Price per share of Class A Common Stock, such
reduction to become effective immediately prior to the opening of business
on the day following the Reference Date. In the event that such dividend
or distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not occurred. For purposes of this
subparagraph (c), any dividend or distribution that includes shares of
Class A Common Stock or rights or warrants to subscribe for or purchase
shares of Class A Common Stock shall be deemed instead to be (i) a dividend
or distribution of the
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evidences of indebtedness, shares of capital stock, cash or assets other
than such shares of Class A Common Stock or such rights or warrants (making
any Conversion Price reduction required by this subparagraph (c))
immediately followed by (ii) a dividend or distribution of such shares of
Class A Common Stock or such rights or warrants (making any further
conversion price reduction required by subparagraph (a) or (b)), except (A)
the Reference Date of such dividend or distribution as defined in this
subparagraph shall be substituted as (x) "the record date in the case of a
dividend or other distribution," and (y) "the record date for the
determination of stockholders entitled to receive such rights or warrants"
and (z) "the date fixed for such determination" within the meaning of
subparagraphs (a) and (b) and (B) any shares of Common Stock included in
such dividend or distribution shall not be deemed outstanding for purposes
of computing any adjustment of the conversion price in subparagraph (a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock exclusively in cash (excluding (i) all
cash dividends, if the amount thereof does not exceed the per share amount
of the immediately preceding regular cash dividend (as adjusted to reflect
any of the events referred to in subparagraphs (a), (b), (c), (d) or (e) of
this Section and (ii) all cash dividends, if the annualized amount thereof
per share of Common Stock does not exceed 12.5% of the Current Market Price
per share of Common Stock on the trading day immediately preceding the date
of declaration of such dividend), the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph (d) by a
fraction of which the numerator shall be the Current Market Price per share
of Common Stock on the date fixed for the payment of such distribution less
the amount of cash so distributed (excluding that portion of such
distribution that does not exceed 12.5% of the Current Market Price per
share, determined as provided above) applicable to one share of Common
Stock and the denominator shall be such Current Market Price per share of
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following the date fixed for the payment of
such distribution; PROVIDED, HOWEVER, that in the event the portion of the
cash so distributed applicable to one share of Common Stock is equal to or
greater than the Current Market Price per share of Common Stock on the
record date mentioned above (excluding that portion of such distribution
that does not exceed 12.5% of the Current Market Price per share,
determined as provided above), in lieu of the foregoing adjustment,
adequate provision shall be made so that each Holder of shares of
Debentures shall have the right to receive upon conversion the amount of
cash such Holder would have received had such Holder converted each share
of the Debentures immediately prior to the record date for the distribution
of the cash (less that portion of such distribution that does not exceed
12.5% of the Current Market Price per share, determined as provided above).
In the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the conversion price which
would then be in effect if such record date had not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any portion
of Common Stock shall
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expire and such tender or exchange offer shall involve the payment by the
Company or such Subsidiary of consideration per share of Common Stock
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) at the last time (the "EXPIRATION
TIME") tenders or exchanges may be made pursuant to such tender or exchange
offer (as it shall have been amended) that exceeds 110% of the Current
Market Price per share of Common Stock on the trading day next succeeding
the Expiration Time, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the effectiveness of the Conversion Price
reduction contemplated by this subparagraph (e) by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding
(including any tendered or exchanged shares) at the Expiration Time
(including the Purchased Shares) (as defined below) multiplied by the
Current Market Price per share of Common Stock on the Trading Day next
succeeding the Expiration Time and the denominator shall be the sum of (x)
the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the acceptance (up to any
maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred
to as the "PURCHASED SHARES") (excluding that portion of such consideration
that does not exceed 110% of the Current Market Price per share) and (y)
the product of the number of shares of Common Stock outstanding (less any
Purchased Shares) at the Expiration Time and the Current Market Price per
share of Common Stock on the trading day next succeeding the Expiration
Time, such reduction to become effective immediately prior to the opening
of business on the day following the Expiration Time. In the event that
such tender or exchange offer is not so made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect
if such record date had not been fixed.
(f) If the distribution date for the Rights of the Company provided in
the Stockholder Rights Agreement occurs prior to the Conversion Date, and a
Holder of the Debentures who converts such Debentures after such
distribution date is not entitled to receive the Rights that would
otherwise be attached (but for the date of conversion) to the shares of
Class A Common Stock received upon such conversion, then an adjustment
shall be made to the Conversion Price pursuant to clause (ii) of Section
13.4(a) as if the Rights were being distributed to Common Stockholders of
the Company immediately prior to such conversion. If such an adjustment is
made and the Rights are later redeemed, invalidated or terminated, then a
corresponding reversing adjustment shall be made to the Conversion Price,
on an equitable basis, to take account of such event.
(g) The Company shall have the right to reduce from time to time the
Conversion Price by any amount selected by the Company for any period of at
least 30 days, PROVIDED, that Company shall give at least 15 days' written
notice of such reduction to the Trustee and the Property Trustee. The
Company may, at its option, make such reductions in the Conversion Price,
in addition to those set forth above in Section 13.4(a), as the Board of
Directors deems advisable to avoid or diminish any income tax to holders of
Common Stock
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resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for United States Federal income
tax purposes.
(h) Notwithstanding anything to the contrary in this Section 13.4, no
adjustment of the Conversion Price will be made upon the issuance of any
shares of Common Stock (or securities convertible or exchangeable for
Common Stock), except as specifically provided above, including pursuant to
any present or future plan providing for the reinvestment of dividends or
interest payable on securities of the Company and the investment of
additional optional amounts in shares of Common Stock under any such plan,
or the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any present or future employee benefit
plan or program of the Company or pursuant to any option, warrant, right,
or exercisable, exchangeable or convertible security which does not
constitute an issuance to all holders of Common Stock of rights or warrants
entitling holders of such rights or warrants to subscribe for or purchase
Common Stock at less than the Current Market Price. Further, such
issuances shall not be deemed to constitute an issuance of Common Stock or
exercisable, exchangeable or convertible securities by the Company to which
any of the adjustment provisions described above applies. There shall also
be no adjustment of the Conversion Price in case of the issuance of any
stock (or securities convertible into or exchangeable for stock) of the
Company except as specifically described in this Article 13. No adjustment
in the Conversion Price will be required unless such adjustment would
require an increase or decrease of at least 1% of the Conversion Price, but
any adjustment that would otherwise be required to be made shall be carried
forward and taken into account in a subsequent adjustment.
(i) If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to the Holder of the
Debentures.
SECTION 13.5 FUNDAMENTAL CHANGE.
(a) In the event that the Company is a party to any transaction
(including, without limitation, a merger other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of
Common Stock), consolidation, sale of all or substantially all of the
assets of the Company, recapitalization or reclassification of Common Stock
(other than a change in par value, or from par value to no par value, or
from no par value to par value or as a result of a subdivision or
combination of Common Stock) or any compulsory share exchange (each of the
foregoing being referred to as a "TRANSACTION"), in each case, as a result
of which shares of Common Stock shall be converted into the right to
receive, or shall be exchanged for, (i) in the case of any Transaction
other than a Transaction involving a Common Stock Fundamental Change (and
subject to funds being legally available for such purpose under applicable
law and the time of such conversion), securities, cash or other property,
each Debenture shall thereafter be convertible into the kind and, in the
case of a Transaction which does not involve a Fundamental Change, amount
of securities, cash and other property receivable upon the consummation of
such Transaction by a holder of that
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number of shares of Class A Common Stock into which a Debenture was
convertible immediately prior to such Transaction, or (ii) in the case of
a Transaction involving a Common Stock Fundamental Change, common stock,
each Debenture shall thereafter be convertible (in the manner described
herein) into common stock of the kind received by holders of Common Stock
(but in each case after giving effect to any adjustment discussed in
paragraphs (b) and (c) relating to a Fundamental Change if such Transaction
constitutes a Fundamental Change). The holders of Debentures or Preferred
Securities will have no voting rights with respect to any Transaction.
(b) If any Fundamental Change occurs, then the Conversion Price in
effect will be adjusted immediately after such Fundamental Change as
described in paragraph (c) below. In addition, in the event of a Common
Stock Fundamental Change, each Debenture shall be convertible solely into
common stock of the kind received by holders of Common Stock as a result of
such Common Stock Fundamental Change.
(c) The Conversion Price in the case of any Transaction involving a
Fundamental Change will be adjusted immediately after such Fundamental
Change:
(i) in the case of a Non-Stock Fundamental Change, the Conversion
Price of the Debentures will thereupon become the lower of (A) the
Conversion Price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to the preceding paragraphs, and (B) the
result obtained by multiplying the greater of the Applicable Price or
the then applicable Reference Market Price by a fraction of which the
numerator will be $25 and the denominator will be (x) the amount of
the Redemption Price for one Debenture if the Redemption Date were the
date of such Non-Stock Fundamental Change (or, for the period
commencing on the first date of original issuance of the Debentures
and through _________ __, ____, and the twelve-month periods
commencing __________ __, ____, __________ __, ____ and __________ __,
____, the product of ______%, ______%, ______% and ______%,
respectively, multiplied by $25) plus (y) any then-accrued and unpaid
interest on one Debenture; and
(ii) in the case of a Common Stock Fundamental Change, the
Conversion Price of the Debentures in effect immediately prior to such
Common Stock Fundamental Change, but after giving effect to any other
prior adjustments effected pursuant to the preceding paragraphs, will
thereupon be adjusted by multiplying such Conversion Price by a
fraction of which the numerator will be the Purchaser Stock Price and
the denominator will be the Applicable Price; PROVIDED, HOWEVER, that
in the event of a Common Stock Fundamental Change in which (A) 100% of
the value of the consideration received by a holder of common stock is
common stock of the successor, acquiror, or other third party (and
cash, if any, is paid only with respect to any fractional interests in
such common stock resulting from such Common Stock Fundamental Change)
and (B) all of common stock will have been exchanged for, converted
into, or acquired for common stock (and cash with respect to
fractional
75
<PAGE>
interests) of the successor, acquiror, or other third party, the
Conversion Price of the Debentures in effect immediately prior to such
Common Stock Fundamental Change will thereupon be adjusted by
multiplying such Conversion Price by a fraction of which the numerator
will be one and the denominator will be the number of shares of common
stock of the successor, acquiror, or other third party received by a
holder of one share of common stock as a result of such Common Stock
Fundamental Change.
SECTION 13.6 NOTICE OF ADJUSTMENTS OF CONVERSION PRICE. Whenever
the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted conversion price and shall
prepare a certificate signed by the Chief Financial Officer or the
Treasurer of the Company setting forth the adjusted conversion price and
showing in reasonable detail the facts upon which such adjustment is based,
and such certificate shall forthwith be filed with the Trustee, the
Conversion Agent and the transfer agent for the Preferred Securities and
the Debentures; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as practicable be
mailed by the Company to all record holders of Preferred Securities and the
Debentures at their last addresses as they appear upon the stock transfer
books of the Company and the Trust and the Securities Registrar.
SECTION 13.7 PRIOR NOTICE OF CERTAIN EVENTS. In case:
(a) the Company shall (i) declare any dividend (or any other
distribution) on its Common Stock, other than (A) a dividend payable in
shares of Common Stock or (B) a dividend payable in cash that would not
require an adjustment pursuant to Section 13.4(c) or (d) or (ii) authorize
a tender or exchange offer that would require an adjustment pursuant to
Section 13.4(e);
(b) the Company shall authorize the granting to all holders of Common
Stock of rights or warrants to subscribe for or purchase any shares of
stock of any class or series or of any other rights or warrants;
(c) of any reclassification of Common Stock (other than a subdivision
or combination of the outstanding Common Stock, or a change in par value,
or from par value to no par value, or from no par value to par value), or
of any consolidation or merger to which the Company is a party and for
which approval of stockholders of the Company shall be required, or of the
sale or transfer of all or substantially all of the assets of the Company
or of any compulsory share exchange whereby Common Stock is converted into
other securities, cash or other property; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
76
<PAGE>
then the Company shall (A) if any Preferred Securities are outstanding under the
Trust Agreement, cause to be filed with the transfer agent for the Preferred
Securities, and shall cause to be mailed to the holders of record of the
Preferred Securities, at their last addresses as they shall appear upon the
stock transfer books of the Trust or (B) shall cause to be mailed to all Holders
at their last addresses as they shall appear in the Security Register, at least
15 days prior to the applicable record or effective date hereinafter specified,
a notice stating (x) the date on which a record (if any) is to be taken for the
purpose of such dividend, distribution, rights or warrants or, if a record is
not to be taken, the date as of which the holders of Common Stock of record to
be entitled to such dividend, distribution, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, share exchange, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares of
Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, share exchange,
dissolution, liquidation or winding up (but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
corporate action required to be specified in such notice).
SECTION 13.8 CERTAIN ADDITIONAL RIGHTS. In case the Company shall,
by dividend or otherwise, declare or make a distribution on its Common Stock
referred to in Section 13.4(c) or 13.4(d) (including, without limitation,
dividends or distributions referred to in the last sentence of Section 13.4(c)),
the Holders of the Debentures, upon the conversion thereof subsequent to the
close of business on the date fixed for the determination of stockholders
entitled to receive such distribution and prior to the effectiveness of the
Conversion Price adjustment in respect of such distribution, shall also be
entitled to receive for each share of Class A Common Stock into which the
Debentures are converted, the portion of the shares of Class A Common Stock,
rights, warrants, evidences of indebtedness, shares of capital stock, cash and
assets so distributed applicable to one share of Class A Common Stock; PROVIDED,
HOWEVER, that, at the election of the Company (whose election shall be evidenced
by a resolution of the Board of Directors) with respect to all Holders so
converting, the Company may, in lieu of distributing to such Holder any portion
of such distribution not consisting of cash or securities of the Company, pay
such Holder an amount in cash equal to the fair market value thereof (as
determined in good faith by the Board of Directors, whose determination shall be
conclusive and described in a resolution of the Board of Directors). If any
conversion of Debentures described in the immediately preceding sentence occurs
prior to the payment date for a distribution to holders of Common Stock which
the Holder of Debentures so converted is entitled to receive in accordance with
the immediately preceding sentence, the Company may elect (such election to be
evidenced by a resolution of the Board of Directors) to distribute to such
Holder a due bill for the shares of Class A Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash or assets to which such
Holder is so entitled, PROVIDED, that such due bill (i) meets any applicable
requirements of the principal national securities exchange or other market on
which Class A Common Stock is then traded and (ii) requires payment or delivery
of such shares of Class A Common Stock, rights, warrants, evidences of
indebtedness, shares of capital stock, cash or assets no later than the date of
payment or delivery thereof to holders of shares of Class A Common Stock
receiving such distribution.
77
<PAGE>
SECTION 13.9 RESTRICTIONS ON CLASS A COMMON STOCK ISSUABLE UPON
CONVERSION.
(a) Shares of Class A Common Stock to be issued upon conversion of a
Debenture in respect of Preferred Securities shall bear such restrictive
legends as the Company may provide in accordance with applicable law.
(b) If shares of Class A Common Stock to be issued upon conversion of
a Debenture in respect of Preferred Securities are to be registered in a
name other than that of the Holder of such Preferred Security, then the
Person in whose name such shares of Class A Common Stock are to be
registered must deliver to the Conversion Agent a certificate satisfactory
to the Company and signed by such Person, as to compliance with the
restrictions on transfer applicable to such Preferred Security. Neither
the Trustee nor any Conversion Agent or Registrar shall be required to
register in a name other than that of the Holder shares of Class A Common
Stock issued upon conversion of any such Debenture in respect of such
Preferred Securities not so accompanied by a properly completed
certificate.
SECTION 13.10 TRUSTEE NOT RESPONSIBLE FOR DETERMINING CONVERSION
PRICE OR ADJUSTMENTS.
Neither the Trustee nor any Conversion Agent shall at any time be under any
duty or responsibility to any Holder of any Debenture or to any holder of a
Preferred Security to determine whether any facts exist which may require any
adjustment of the Conversion Price, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed, or herein
or in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any Conversion Agent shall be accountable with respect
to the validity or value (or the kind of account) of any shares of Class A
Common Stock or of any securities or property, which may at any time be issued
or delivered upon the conversion of any Debenture; and neither the Trustee nor
any Conversion Agent makes any representation with respect thereto. Neither the
Trustee nor any Conversion Agent shall be responsible for any failure of the
Company to make any cash payment or to issue, transfer or deliver any shares of
Class A Common Stock or stock certificates or other securities or property upon
the surrender of any Debenture for the purpose of conversion, or, except as
expressly herein provided, to comply with any of the covenants of the Company
contained in Article 10 or this Article 13.
* * * *
78
<PAGE>
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
DURA AUTOMOTIVE SYSTEMS, INC.
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
79
<PAGE>
Draft--3/7/98
---------------------------------------------------------
GUARANTEE AGREEMENT
Dura Automotive Systems, Inc.
and
The First National Bank of Chicago
Relating to the Preferred Securities of
Dura Automotive Systems Capital Trust
Dated as of March __, 1998
---------------------------------------------------------
<PAGE>
CROSS REFERENCE TABLE*
<TABLE>
<CAPTION>
SECTION OF TRUST SECTION OF
INDENTURE ACT OF GUARANTEE
1939, AS AMENDED AGREEMENT
- ---------------- ----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1(c), 2.8
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2(b)
313. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.4
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.5
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1, 2.5, 3.2
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.2
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.7
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1, 2.6, 5.4
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.3
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.1
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(a)
</TABLE>
- --------------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE 2
TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION . . . . . . . . . . . . . . . . .4
SECTION 2.2 LIST OF HOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . .5
SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE. . . . . . . . . . . . . . .5
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT . . . . . . . . .5
SECTION 2.6 EVENTS OF DEFAULT; WAIVER. . . . . . . . . . . . . . . . . . . . .5
SECTION 2.7 EVENT OF DEFAULT; NOTICE . . . . . . . . . . . . . . . . . . . . .5
SECTION 2.8 CONFLICTING INTERESTS. . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE. . . . . . . . . . . . . . .6
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE . . . . . . . . . . . .6
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE. . . . . . . . . . . . . . . .7
SECTION 3.3 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 4
GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY . . . . . . . . . . . . . . . . . .9
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE. . 10
ARTICLE 5
GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.1 GUARANTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.2 WAIVER OF NOTICE AND DEMAND. . . . . . . . . . . . . . . . . . . 11
SECTION 5.3 OBLIGATIONS NOT AFFECTED . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.4 RIGHTS OF HOLDERS. . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.5 GUARANTEE OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.6 SUBROGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.7 INDEPENDENT OBLIGATIONS. . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 6
COVENANTS AND SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.1 SUBORDINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 13
i
<PAGE>
SECTION 6.2 CERTAIN COVENANTS OF THE GUARANTOR . . . . . . . . . . . . . . . 13
ARTICLE 7 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.1 TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE 8
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.1 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.2 AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.3 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.4 BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.5 INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 8.6 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
ii
<PAGE>
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of March __, 1998, is executed and
delivered by Dura Automotive Systems, Inc., a Delaware corporation (the
"Guarantor"), and The First National Bank of Chicago, a national banking
association, as trustee (the "Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Preferred Securities (as
defined herein) of Dura Automotive Systems Capital Trust, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust
Agreement"), dated as of March __, 1998, among the Trustees named therein, the
Guarantor, as Depositor, and the Holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing
2,000,000 (2,300,000 if the over-allotment option is exercised in full) of its
__% Convertible Trust Preferred Securities (liquidation preference $25 per
preferred security) (the "Preferred Securities") representing preferred
undivided beneficial interests in the assets of the Issuer and having the terms
set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined herein), will be used to purchase the Debentures
(as defined in the Trust Agreement) of the Guarantor which will be deposited
with The First National Bank of Chicago, as Property Trustee under the Trust
Agreement, as trust assets;
WHEREAS, as incentive for the Holders to purchase Preferred Securities, the
Guarantor desires irrevocably and unconditionally to agree, to the extent set
forth herein, to pay to the Holders of the Preferred Securities the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Guarantee for the benefit of the holders of the Common Securities (as
defined herein), except that if an event of default (as defined in the Indenture
(as defined herein)), has occurred and is continuing, the rights of holders of
the Common Securities to receive Guarantee Payments (as defined in the Common
Securities Guarantee) under the Common Securities Guarantee shall be
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments (as defined herein) under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
1
<PAGE>
ARTICLE 1
DEFINITIONS
SECTION 1.1 DEFINITIONS. As used in this Guarantee Agreement, the terms
set forth below shall, unless the context otherwise requires, have the following
meanings. Capitalized or otherwise defined terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Trust Agreement as
in effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct common control with such
specified Person, provided, however, that an Affiliate of the Guarantor shall
not be deemed to include the Issuer. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and 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 to the
foregoing.
"Class A Common Stock" shall mean the Class A Common Stock, par value $0.01
per share, of the Guarantor.
"Class B Common Stock" shall mean the Class B Common Stock, par value $0.01
per share, of the Guarantor.
"Common Securities" means the securities representing common beneficial
interests in the assets of the Issuer.
"Common Stock" shall mean the Class A Common Stock and the Class B Common
Stock.
"Event of Default" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee Agreement; provided, however, that
except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received written notice of default and shall not have cured
such default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions, without
duplication, with respect to the Preferred Securities, to the extent not paid or
made by or on behalf of the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer shall have funds on hand
available therefor at such time, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price"), with respect to the Preferred Securities called for redemption by the
Issuer to the extent the Issuer shall have funds on hand available therefor, and
(iii) upon a voluntary or involuntary dissolution of the Issuer, unless
Debentures are distributed to the Holders, the lesser of (a) the aggregate of
the liquidation preference of $25 per Preferred Security plus accrued and unpaid
Distributions on the Preferred Securities to the date of payment to the extent
the Issuer shall have funds on hand available to make such payment and (b) the
amount of assets of the
2
<PAGE>
Issuer remaining available for distribution to Holders in dissolution of the
Issuer (in either case, the "Stockholder Distribution").
"Guarantee Trustee" means The First National Bank of Chicago, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of the
Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor
or the Guarantee Trustee.
"Indenture" means the Junior Convertible Subordinated Indenture, dated as
of March __, 1998, as supplemented and amended between the Guarantor and The
First National Bank of Chicago, as trustee.
"List of Holders" has the meaning specified in Section 2.2 (a).
"Majority in Liquidation Preference of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the liquidation preference of all the
outstanding Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by (i) the Chairman, Chief Executive Officer, President or a Vice
President, and by (ii) the Treasurer, an Assistant Treasurer, the Controller,
the Secretary or an Assistant Secretary of such Person, and delivered to the
Guarantee Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated
3
<PAGE>
association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer assigned to the Trustee's Corporate Trust Office, including any managing
director, vice president, assistant vice president, assistant treasurer,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
having direct responsibility for the administration of this Guarantee Agreement,
and also, with respect to a particular matter, any other officer, to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
ARTICLE 2
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 2.2 LIST OF HOLDERS.
(a) The Guarantor shall furnish or cause to be furnished to the
Guarantee Trustee (unless the Guarantee Trustee is acting as Securities
Registrar with respect to the Debentures under the Indenture) (i)
semi-annually, on or before January 15 and July 15 of each year, a list, in
such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of a date not more than 15
days prior to the delivery thereof, and (ii) at such other times as the
Guarantee Trustee may request in writing, within 30 days after the receipt
by the Guarantor of any such written request, a List of Holders as of a
date not more than 15 days prior to the time such list is furnished, in
each case to the extent such information is in the possession or control of
the Guarantor and is not identical to a previously supplied list of Holders
or has not otherwise been received by the Guarantee Trustee.
Notwithstanding the foregoing, the Guarantor shall not be obligated to
provide such List of Holders at any time the Preferred Securities are
represented by one or
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more Global Certificates (as defined in the Indenture). The Guarantee
Trustee may destroy any List of Holders previously given to it on receipt
of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), Section 311(b) and Section 312(b) of the Trust Indenture
Act.
SECTION 2.3 REPORTS BY THE GUARANTEE TRUSTEE. Within 60 days after May
15, 1999 in each calendar year, commencing with May 15, 1999, the Guarantee
Trustee shall provide to the Holders such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO GUARANTEE TRUSTEE. The Guarantor shall
provide to the Guarantee Trustee, the Securities and Exchange Commission and the
Holders such documents, reports and information, if any, as required by Section
314 of the Trust Indenture Act and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act; and such compliance
certificate of the Guarantor shall be delivered on or before 120 days after the
end of each calendar year.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with such conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
Liquidation Preference of the Securities may, by vote, on behalf of the Holders,
waive any past Event of Default and its consequences. Upon such waiver, any
such Event of Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent therefrom.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to
the Holders, notices of all Events of Default actually known to a
Responsible Officer of the Guarantee Trustee, unless such defaults have
been cured before the giving of such notice, provided, that, except in the
case of a default in the payment of a Guarantee Payment, the Guarantee
Trustee shall be fully protected in withholding such notice if and so long
as the Board of Directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of
the Holders.
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(b) The Guarantee Trustee shall not be deemed to have actual knowledge
of any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration of
the Trust Agreement shall have obtained written notice, of such Event of
Default.
SECTION 2.8 CONFLICTING INTERESTS. The Trust Agreement and the Indenture
shall be deemed to be specifically described in this Guarantee Agreement for the
purposes of clause (i) of the first proviso contained in Section 310(b) of the
Trust Indenture Act.
ARTICLE 3
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement to any Person except a Holder exercising
his or her rights pursuant to Section 5.4(iv) or to a Successor Guarantee
Trustee on acceptance by such Successor Guarantee Trustee of its
appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of
its appointment hereunder, and such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically
set forth in this Guarantee Agreement, and no implied covenants shall be
read into this Guarantee Agreement against the Guarantee Trustee. In case
an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6) and is actually known to the Responsible Officer
of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the
same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her
own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except
that:
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(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred;
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be
liable except for the performance of such duties and obligations
as are specifically set forth in this Guarantee Agreement, and no
implied covenants or obligations shall be read into this
Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Guarantee Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment
was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Preference of the Securities relating to the
time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement;
and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or indemnity satisfactory to it
against such risk or liability is not reasonably assured to it.
SECTION 3.2 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.1:
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(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, proxy, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter
be proved or established before taking, suffering or omitting to take
any action hereunder, the Guarantee Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and conclusively rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee Trustee, shall
be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the written advice or opinion of such legal counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such advice or opinion.
Such legal counsel may be legal counsel to the Guarantor or any of its
Affiliates and may be one of its employees. The Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee
Agreement at the request or direction of any Holder, unless such
Holder shall have provided to the Guarantee Trustee and its officers,
directors and agents such adequate security and indemnity as would
satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses)
and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided that, nothing contained
in this Section 3.2(a)(v) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee
Agreement and use the same degree of care and skill in the exercise
thereof as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument,
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opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through its agents, custodians, nominees or attorneys or any
Affiliate, and the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or attorney
appointed with due care by it hereunder.
(viii) Whenever in the administration of this Guarantee Agreement
the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Guarantee Trustee (A) may request written
instructions from the Holders of a Majority in Liquidation Preference
of the Securities, (B) may refrain from enforcing such remedy or right
or taking such other action until such instructions are received, and
(c) shall be fully protected in acting in accordance with such
instructions.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Guarantee Trustee to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Guarantee Trustee shall be construed to be a duty to act in accordance with
such power and authority.
SECTION 3.3 INDEMNITY. The Guarantor agrees to indemnify the Guarantee
Trustee for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Guarantee Trustee,
arising out of or in connection with the acceptance or administration of this
Guarantee Agreement, including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The Guarantee Trustee
will not claim or exact any lien or charge on any Guarantee Payment as a result
of any amount due to it under this Guarantee Agreement. Guarantor's
indemnification obligations set forth in this Section 3.3 shall survive
termination of this Guarantee Agreement or resignation or removal of the
Guarantee Trustee.
ARTICLE 4
GUARANTEE TRUSTEE
SECTION 4.1 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which shall:
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(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust Indenture
Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of
Section 310(a) of the Trust Indenture Act. If such corporation
publishes reports of condition at least annually, pursuant to law or
to the requirements of the supervising or examining authority, then,
for the purposes of this Section and to the extent permitted by the
Trust Indenture Act, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible to
so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act,
the Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF THE GUARANTEE TRUSTEE.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a Successor
Guarantee Trustee has been appointed and has accepted such appointment by
written instrument executed by such Successor Guarantee Trustee and
delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold office until
a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by an instrument in
writing executed by such Successor Guarantee Trustee and delivered to the
Guarantor and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition, at the expense of the Guarantor, any court
of competent jurisdiction for appointment of a Successor Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may
deem proper, appoint a Successor Guarantee Trustee.
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(e) No Guarantee Trustee shall be liable for the acts or omissions of
any successor Guarantor Trustee.
(f) Upon the removal or resignation of the Guarantee Trustee, the
Guarantor shall pay all amounts due and owing to such Guarantee Trustee.
ARTICLE 5
GUARANTEE
SECTION 5.1 GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Issuer), as and when due,
regardless of any defense, right of set-off or counterclaim which the Issuer may
have or assert other than the defense of payment. The Guarantor's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Issuer to pay such
amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives
notice of acceptance of the Guarantee Agreement and of any liability to which it
applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Guarantee Trustee, Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement shall in
no way be affected or impaired by reason of the happening from time to time of
any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred Securities
to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from the extension of any interest payment
period on the Debentures as so provided in the Indenture), Redemption
Price, Liquidation Distribution or any other sums payable under the terms
of the Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
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(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Issuer
or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or the Guarantee Trustee to
give notice to, or obtain the consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 5.4 RIGHTS OF HOLDERS. The Guarantor expressly acknowledges that:
(i) this Guarantee Agreement will be deposited with the Guarantee Trustee to be
held for the benefit of the Holders; (ii) the Guarantee Trustee has the right to
enforce this Guarantee Agreement on behalf of the Holders; (iii) the Holders of
a Majority in Liquidation Preference of the Securities have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee in respect of this Guarantee Agreement or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under this
Guarantee Agreement; and (iv) if the Guarantee Trustee fails to enforce the
Guarantee, any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee Agreement, without first
instituting a legal proceeding against the Guarantee Trustee, the Issuer or any
other Person.
SECTION 5.5 GUARANTEE OF PAYMENT. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not
be discharged except by payment of the Guarantee Payments in full (without
duplication of amounts theretofore paid by the Issuer) or upon distribution of
Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6 SUBROGATION. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Issuer in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement and shall have the
right to waive payment by the Issuer pursuant to Section 5.1; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts are due and unpaid under this
Guarantee Agreement. If any amount shall be paid to the Guarantor in violation
of the preceding sentence, the Guarantor agrees to hold such amount in trust for
the Holders and to pay over such amount to the Holders.
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SECTION 5.7 INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its
obligations hereunder are independent of the obligations of the Issuer with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE 6
COVENANTS AND SUBORDINATION
SECTION 6.1 SUBORDINATION. The Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank subordinate and junior in
right of payment to all liabilities of the Guarantor and PARI PASSU with the
most senior preferred stock of the Guarantor, if any, now or hereafter issued by
the Company and with any guarantee now or hereafter entered into by the Company
in respect of any preferred or preference stock of any affiliate of the
Guarantor.
SECTION 6.2 CERTAIN COVENANTS OF THE GUARANTOR.
(a) Guarantor covenants and agrees that if and so long as (i) the
Issuer is the holder of all the Debentures, (ii) a Tax Event (as defined in
the Trust Agreement) in respect of the Issuer has occurred and is
continuing and (iii) the Guarantor has elected, and has not revoked such
election, to pay Additional Sums (as defined in the Trust Agreement) in
respect of the Preferred Securities and Common Securities, the Guarantor
will pay to the Issuer such Additional Sums.
(b) The Guarantor covenants and agrees that it will not, and will not
cause any subsidiary of the Guarantor to, (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Guarantor's capital stock or (ii) make
any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities (including guarantees of
indebtedness for money borrowed) of the Guarantor that rank PARI PASSU with
or junior to the Debentures (other than (a) any dividend, redemption,
liquidation, interest, principal or guarantee payment by the Guarantor
where the payment is made by way of securities (including capital stock)
that rank PARI PASSU with or junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is being
made, (b) redemptions or purchases of any rights pursuant to a stockholder
rights agreement, and the declaration of a dividend of such rights or the
issuance of preferred stock under such a plan in the future, (c) payments
under this Agreement, (d) purchases of Common Stock related to the issuance
of Common Stock under any of the Guarantor's benefit plans for its
directors, officers or employees, (e) as a result of a reclassification of
the Guarantor's capital stock or the exchange or conversion of one series
or class of the Guarantor's capital stock for another series or class of
the Guarantor's capital stock and (f) the purchase of fractional interests
in shares of the Guarantor's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted
or exchanged) if at such time (i) there shall
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have occurred any event of which the Guarantor has actual knowledge that
(a) with the giving of notice or the lapse of time, or both, would
constitute an "Event of Default" under the Indenture with respect to the
Debentures and (b) in respect of which the Guarantor shall not have taken
reasonable steps to cure, (ii) the Guarantor shall be in default with
respect to its payment of any obligations under the Guarantee or (iii) the
Guarantor shall have given notice of its selection of an Extension Period
(as defined in the Indenture) with respect to the Debentures and shall not
have rescinded such notice, or such Extension Period, or any extension
thereof, shall be continuing.
(c) The Guarantor covenants and agrees (i) to maintain directly or
indirectly 100% ownership of the Common Securities, provided that certain
successors which are permitted by the Indenture may succeed to the
Guarantor's ownership of the Common Securities, (ii) not to voluntarily
dissolve the Issuer, except (a) in connection with a distribution of the
Debentures to the holders of the Preferred Securities in dissolution of the
Issuer or (b) in connection with certain mergers, consolidations or
amalgamations permitted by the Trust Agreement, (iii) to use its reasonable
efforts, consistent with the terms and provisions of the Trust Agreement,
to cause the Issuer to remain classified as a grantor trust and not as an
association taxable as a corporation for United States Federal income tax
purposes, (iv) for so long as Preferred Securities are outstanding, not to
convert Debentures except pursuant to a notice of conversion delivered to
the Conversion Agent (as defined in the Trust Agreement) by a Holder, (v)
to maintain the reservation for issuance of the number of shares of Class A
Common Stock that would be required from time to time upon the conversion
of all the Debentures then outstanding, (vi) to deliver shares of Class A
Common Stock upon an election by the Holders to convert such Preferred
Securities into Class A Common Stock and (vii) to honor all obligations
described herein relating to the conversion or exchange of the Preferred
Securities into or for Class A Common Stock or Debentures.
ARTICLE 7
TERMINATION
SECTION 7.1 TERMINATION. This Guarantee Agreement shall terminate and be
of no further force and effect upon (i) full payment of the Redemption Price of
all Preferred Securities, (ii) the distribution of Debentures to the Holders in
exchange for all of the Preferred Securities, (iii) full payment of the amounts
payable in accordance with the Trust Agreement upon dissolution of the Issuer or
(iv) upon the distribution, if any, of Class A Common Stock to the holders of
the Preferred Securities in respect of the conversion of all such holders'
Preferred Securities into Class A Common Stock. Notwithstanding the foregoing,
this Guarantee Agreement will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder must restore payment of any sums paid
with respect to Preferred Securities or this Guarantee Agreement.
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ARTICLE 8
MISCELLANEOUS
SECTION 8.1 SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger or sale involving the Guarantor that is
permitted under Article 8 of the Indenture and pursuant to which the assignee
agrees in writing to perform the Guarantor's obligations hereunder, the
Guarantor shall not assign its obligations hereunder.
SECTION 8.2 AMENDMENTS. Except with respect to any changes which do not
adversely affect the rights of the Holders in any material respect (in which
case no consent of the Holders will be required), this Guarantee Agreement may
only be amended with the prior approval of the Holders of not less than a
Majority in Liquidation Preference of the Securities. The provisions of Article
6 of the Trust Agreement concerning meetings of the Holders shall apply to the
giving of such approval. The Guarantor shall furnish the Guarantee Trustee with
an Officers' Certificate and an Opinion of Counsel to the effect that any
amendment of this Agreement is authorized and permitted.
SECTION 8.3 NOTICES. Any notice, request or other communication required
or permitted to be given hereunder shall be in writing, duly signed by the party
giving such notice, and delivered, telecopied or mailed by first class mail as
follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Holders:
Dura Automotive Systems, Inc.
2791 Research Drive
Rochester Hills, Michigan 48309-3575
Phone No.: (248) 299-7500
Facsimile No.: (248) 299-7501
Attention: Vice President and Chief Financial Officer
(b) if given to the Issuer, in care of the Guarantee Trustee, at the
Issuer's (and the Guarantee Trustee's) address set forth below or such
other address as the Guarantee Trustee on behalf of the Issuer may give
notice of to the Holders:
Dura Automotive Systems Capital Trust
4508 IDS Center
Minneapolis, Minnesota 55402
Phone No.: (612) 342-2311
Facsimile No.: (612) 332-2012
Attention: Vice President and Controller
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with a copy to:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, Illinois 60670-0126
Phone No.: (312) 407-1819
Facsimile No.: (312) 407-4656
Attention: Corporate Trust Services Division
(c) if given to any Holder, at the address set forth on the books and
records of the Issuer.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4 BENEFIT. This Guarantee Agreement is solely for the benefit
of the Holders and is not separately transferable from the Preferred Securities.
SECTION 8.5 INTERPRETATION. In this Guarantee Agreement, unless the
context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to
them in Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
16
<PAGE>
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 8.6 GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ILLINOIS WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
* * * * * *
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
DURA AUTOMOTIVE SYSTEMS, INC.
By:
---------------------------------------------
Name:
--------------------------------------------
Title:
-------------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
as Guarantee Trustee
By:
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
<PAGE>
KIRKLAND & ELLIS
PARTNERSHIPS INCLUDING PROFESSIONAL CORPORATIONS
200 East Randolph Drive
Chicago, Illinois 60601
To Call Writer Direct: 312 861-2000 Facsimile:
312 861-2000 312 861-2200
EXHIBIT 5.1
March 16, 1998
Dura Automotive Systems Capital Trust
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
Re: Dura Automotive Systems Capital Trust; Dura Automotive Systems, Inc.
Registration Statement on Form S-3 (Registration No. 333-47273)
--------------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Dura Automotive Systems Capital Trust,
a statutory business trust created under the Business Trust Act of the State of
Delaware (Del. Code Ann., tit. 12, Section 3810) (the "Trust"), and Dura
Automotive Systems, Inc., a Delaware corporation (the "Company"), in connection
with the preparation of the Registration Statement (as defined below) for the
registration under the Securities Act of 1933, as amended (the "Act"), of:
(i) 2,300,000 shares of ___% Convertible Trust Preferred Securities (the
"Preferred Securities") (liquidation amount $25 per Preferred Security) of the
Trust; (ii) $57,500,000 aggregate principal amount of ___% Convertible
Subordinated Debentures due 2028 of the Company (the "Debentures"); (iii) shares
of Class A Common Stock, par value $0.01 per share (the "Class A Common Stock"),
of the Company initially issuable upon conversion of the Debentures and the
Preferred Securities (the "Conversion Shares") and (iv) the rights of holders of
the Preferred Securities under a guarantee (the "Preferred Securities
Guarantee") by the Company.
The Preferred Securities are to be issued pursuant to an Amended and
Restated Trust Agreement (the "Trust Agreement"), among the Company, as sponsor
and as the issuer of the Debentures to be held by the Property Trustee (as
defined below) of the Trust, First Chicago Delaware, Inc., as Delaware trustee,
The First National Bank of Chicago, as property trustee (the "Property
Trustee"), and the administrative trustees named therein. The Preferred
Securities Guarantee will be issued pursuant to a Preferred Securities Guarantee
Agreement (the "Guarantee Agreement") by the Company, as guarantor. In
connection with any conversion of a Preferred Security by the holder thereof,
such Preferred Security will be exchanged for the appropriate
<PAGE>
Dura Automotive Systems Capital Trust
Dura Automotive Systems, Inc.
March 16, 1998
Page 2
principal amount of Debentures held by the Trust, which will, in turn, be
immediately converted into shares of Class A Common Stock at the then applicable
rate, as further described in the Trust Agreement and the Indenture (as defined
below).
This opinion is being delivered in accordance with the requirements of Item
601(b)(5) of Regulation S-K under the Act. Capitalized terms used but not
otherwise defined herein have the meanings ascribed to them in the Registration
Statement.
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of: (i) the Registration
Statement on Form S-3 (Registration No. 333-47273) filed by the Company and the
Trust with the Securities and Exchange Commission (the "Commission") on March 3,
1998 under the Act and Amendment No. 1 thereto filed with the Commission on
March 16, 1998 (such Registration Statement, as so amended, being hereinafter
referred to as the "Registration Statement"); (ii) the Certificate of Trust of
the Trust filed with the Secretary of State of the State of Delaware on March 2,
1998; (iii) the form of the Trust Agreement (including the designations of the
terms of the Preferred Securities annexed thereto); (iv) the form of the
Preferred Securities and specimen certificates thereof; (v) the form of the
Guarantee Agreement; (vi) the form of the junior convertible subordinated
indenture (the "Indenture"), between the Company and The First National Bank of
Chicago, as indenture trustee, pursuant to which the Debentures will be issued;
(vii) a specimen Debenture; (viii) a specimen certificate representing the
Class A Common Stock; (ix) the form of the Underwriting Agreement (the
"Underwriting Agreement") proposed to be entered into among the Company, Dura
Operating Corp., the Trust and Robert W. Baird & Co. Incorporated and Piper
Jaffray Inc. (collectively, the "Underwriters") relating to, among other things,
the sale of the Preferred Securities; (x) the Amended and Restated Certificate
of Incorporation of the Company, as presently in effect; (xi) the Amended and
Restated By-Laws of the Company, as presently in effect; and (xii) certain
resolutions of the Board of Directors of the Company relating to the issuance
and sale of the Debentures and the Preferred Securities and related matters. We
have also examined originals or copies, certified or otherwise identified to our
satisfaction, of such other documents, certificates and records as we have
deemed necessary or appropriate as a basis for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. In making our examination of
documents
<PAGE>
Dura Automotive Systems Capital Trust
Dura Automotive Systems, Inc.
March 16, 1998
Page 3
executed by parties other than the Company and the Trust, we have assumed that
such parties had the power, corporate or other, to enter into and perform all
obligations thereunder and have also assumed the due authorization by all
requisite action, corporate or other, and execution and delivery by such parties
of such documents and that such documents constitute valid and binding
obligations of such parties. In addition, we have assumed that the Trust
Agreement, the Preferred Securities, the Guarantee Agreement, the Indenture, the
Debentures and the Underwriting Agreement when executed will be in substantially
the forms reviewed by us. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied upon
oral or written statements and representations of officers, trustees and other
representatives of the Company, the Trust and others.
Members of our firm are admitted to the bar in the State of Illinois, and
we do not express any opinion as to the laws of any jurisdiction other than the
laws of the State of Illinois, the General Corporation Law of the State of
Delaware and the federal laws of the United States to the extent set forth
herein.
Based on and subject to the foregoing and to the other qualifications and
limitations set forth herein, we are of the opinion that when: (i) the
Registration Statement becomes effective; (ii) the price at which the Preferred
Securities are to be sold to the Underwriters pursuant to the Underwriting
Agreement and other matters relating to the issuance and sale of the Preferred
Securities and the Debentures have been duly adopted by the Preferred Securities
Committee of the Board of Directors of the Company; (iii) the Trust Agreement,
the Underwriting Agreement, the Guarantee Agreement and the Indenture have been
duly executed and delivered by the parties thereto; (iv) the Preferred
Securities have been duly executed and authenticated in accordance with the
terms of the Trust Agreement and delivered to and paid for by the Underwriters
as contemplated by the Underwriting Agreement; and (v) the Debentures have been
duly executed and authenticated in accordance with the terms of the Indenture
and delivered to and paid for by the Trust as contemplated by the Trust
Agreement:
1. The Guarantee Agreement will be a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
2. The issuance and sale of the Debentures will have been duly authorized
and the Debentures will be valid and binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable against the Company in
accordance with their terms.
<PAGE>
Dura Automotive Systems Capital Trust
Dura Automotive Systems, Inc.
March 16, 1998
Page 4
3. The Conversion Shares will have been duly authorized and reserved for
issuance upon conversion of the Debenture and, when certificates representing
the Conversion Shares in the form of the specimen certificates examined by us
have been manually signed by an authorized officer of the transfer agent and
registrar for the Class A Common Stock and registered by such transfer agent and
registrar and delivered to the holders of the Preferred Securities upon
conversion thereof in accordance with the terms of the Trust Agreement and the
Indenture, such Conversion Shares will be validly issued, fully paid and
nonassessable.
Each opinion (an "enforceability opinion") in this letter that any
particular contract is a valid and binding obligation or is enforceable in
accordance with its terms is subject to: (i) the effect of bankruptcy,
insolvency, fraudulent conveyance and other similar laws and judicially
developed doctrines in this area such as substantive consolidation and equitable
subordination; (ii) the effect of general principles of equity; and (iii) other
commonly recognized statutory and judicial constraints on enforceability
including statutes of limitations. "General principles of equity" include but
are not limited to: principles limiting the availability of specific performance
and injunctive relief; principles which limit the availability of a remedy under
certain circumstances where another remedy has been elected; principles
requiring reasonableness, good faith and fair dealing in the performance and
enforcement of an agreement by the party seeking enforcement; principles which
may permit a party to cure a material failure to perform its obligations; and
principles affording equitable defenses such as waiver, laches and estoppel. It
is possible that terms in a particular contract covered by our enforceability
opinion may not prove enforceable for reasons other than those explicitly cited
in this letter should an actual enforcement action be brought, but (subject to
all the exceptions, qualifications, exclusions and other limitations contained
in this letter) such unenforceability would not in our opinion prevent the party
entitled to enforce that contract from realizing the principal benefits
purported to be provided to that party by the terms in that contract which are
covered by our enforceability opinion.
We hereby consent to the use of our name under the heading "Legal Matters"
in the prospectus which forms a part of the Registration Statement. We also
hereby consent to the filing of this opinion with the Commission as an exhibit
to the Registration Statement. In giving this consent, we do not thereby admit
that we are within the category of persons whose consent is
<PAGE>
Dura Automotive Systems Capital Trust
Dura Automotive Systems, Inc.
March 16, 1998
Page 5
required under Section 7 of the Act or the rules and regulations of the
Commission promulgated thereunder. This opinion is expressed as of the date
hereof unless otherwise expressly stated and we disclaim any undertaking to
advise you of the facts stated or assumed herein or any subsequent changes in
applicable law.
Very truly yours,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE>
Exhibit 5.2
[Richards, Layton & Finger, P.A.]
March 13, 1998
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
Re: Dura Automotive Systems Capital Trust
-------------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Dura Automotive Systems,
Inc., a Delaware corporation (the "Company") and Dura Automotive Systems Capital
Trust, a Delaware business trust (the "Trust") in connection with the matters
set forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, as filed with the office
of the Secretary of State of the State of Delaware (the "Secretary of State") on
March 2, 1998;
(b) The Trust Agreement of the Trust, dated as of March 2, 1998,
among the Company and the trustees named therein;
(c) The Registration Statement (the "Registration Statement") on
Form S-3, including a preliminary prospectus with respect to the Trust (the
"Prospectus"), relating to the Preferred Securities of the Trust representing
preferred undivided beneficial interests in the assets of the Trust (each, a
"Preferred Security" and collectively, the "Preferred Securities"), as filed
by the Company and the Trust with the Securities and Exchange Commission on
March 3, 1998;
(d) A form of Amended and Restated Trust Agreement of the Trust, to
be entered into between the Company, the trustees of the Trust named therein,
and the holders, from
<PAGE>
Dura Automotive Systems, Inc.
March 13, 1998
Page 2
time to time, of the undivided beneficial interests in the assets of the Trust
(including Exhibits C and D thereto) (the "Trust Agreement"), attached as an
exhibit to the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated March 13,
1998, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement will constitute the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the applicable Trust, and that the Trust Agreement
and the Certificate of Trust will be in full force and effect and will not be
amended, (ii) except to the extent provided in paragraph 1 below, the due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its organization or formation, (iii) the legal capacity
of natural persons who are parties to the documents examined by us, (iv) that
each of the parties to the documents examined by us has the power and authority
to execute and deliver, and to perform its obligations under, such documents,
(v) the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom a Preferred
Security is to be issued by the Trust (collectively, the "Preferred Security
Holders") of a Preferred Security Certificate for such Preferred Security and
the payment for such Preferred Security, in accordance with the Trust Agreement
and the Registration Statement, and (vii) that the Preferred Securities are
authenticated, issued and sold to the Preferred Security Holders in accordance
with the Trust Agreement and the Registration
<PAGE>
Dura Automotive Systems, Inc.
March 13, 1998
Page 3
Statement. We have not participated in the preparation of the Registration
Statement or the Prospectus and assume no responsibility for their contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities of the Trust will represent valid and,
subject to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. We hereby
consent to the use of our name under the heading "Legal Matters" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
-----------------------------------
Richards, Layton & Finger
<PAGE>
EXHIBIT 8.1
KIRKLAND & ELLIS
PARTNERSHIPS INCLUDING PROFESSIONAL CORPORATIONS
200 East Randolph Drive
Chicago, Illinois 60601
To Call Writer Direct: 312 861-2000 Facsimile:
312 861-2000 312 861-2200
March 16, 1998
Dura Automotive Systems Capital Trust
Dura Automotive Systems, Inc.
4508 IDS Center
Minneapolis, Minnesota 55402
Re: Dura Automotive Systems Capital Trust; Dura Automotive Systems, Inc.
REGISTRATION STATEMENT ON FORM S-3 (REGISTRATION NO. 333-47273)
--------------------------------------------------------------------
Ladies and Gentlemen:
In connection with the preparation of the Registration Statement (as
defined below) for the registration under the Securities Act of 1933, as
amended (the "Act"), of: (i) 2,300,000 shares of ___% Convertible Trust
Preferred Securities (the "Preferred Securities") (liquidation amount $25 per
Preferred Security) of Dura Automotive Systems Capital Trust; (ii)
$57,500,000 aggregate principal amount of ___% Convertible Subordinated
Debentures due 2028 (the "Debentures") of Dura Automotive Systems, Inc. (the
"Company"); (iii) shares of Class A Common Stock, par value $0.01 per share
(the "Class A Common Stock"), of the Company initially issuable upon
conversion of the Debentures and the Preferred Securities and (iv) the rights
of holders of the Preferred Securities under a guarantee by the Company, you
have requested our opinion concerning certain statements set forth in
Amendment No.1 to the Form S-3 Registration Statement filed with the
Securities and Exchange Commission under the Act (the "Registration
Statement").
Based on the foregoing, in our opinion, under the law in effect on the
date hereof, the statements made in the Registration Statement under the
caption "Certain Federal Income Tax Consequences," insofar as such statements
purport to constitute summaries of matters of United States federal tax law
and regulations or legal conclusions with respect thereto, constitute
accurate summaries of the matters described therein in all material respects.
<PAGE>
Dura Automotive Systems Capital Trust
Dura Automotive Systems, Inc.
March 16, 1998
Page 2
The opinions set forth herein are based on the applicable provisions of
the Internal Revenue Code of 1986, as amended; the Treasury Regulations
promulgated or proposed thereunder; current positions of the Internal Revenue
Service (the "IRS") contained in published revenue rulings, revenue
procedures and announcements; existing judicial decisions; and other
applicable authorities.
In conclusion, we should note that unlike a ruling from the IRS,
opinions of counsel are not binding on the IRS. Hence, no assurance can be
given that the opinion stated in this letter will not be successfully
challenged by the IRS or rejected by a court. We express no opinion
concerning any federal income tax matter other than that discussed herein.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement.
Very truly yours,
/s/ Kirkland & Ellis
KIRKLAND & ELLIS
<PAGE>
EXHIBIT 12.1
DURA AUTOMOTIVE SYSTEMS, INC.
STATEMENT AND COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------------------------------------
Pro Forma
1993 1994 1995 1996 1997 1997
--------- -------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
EARNINGS:
Income before income taxes and $ 2,054 $ 4,402 $ 12,738 $ 16,737 $ 28,312 $ 29,121
extraordinary item
Fixed charges 1,764 3,716 5,229 3,097 10,167 12,720
--------- -------- ---------- --------- --------- ---------
EARNINGS $ 3,818 $ 8,118 $ 17,967 $ 19,834 $ 38,479 $ 41,841
========= ======== ========= ========= ========= =========
FIXED CHARGES:
Interest expense $ 1,533 $ 3,473 $ 4,822 $ 2,589 $ 9,298 $ 8,101
Minority interest - - - - - 3,750
Interest factor of rental expense 231 243 407 508 869 869
--------- -------- ---------- --------- --------- ---------
TOTAL FIXED CHARGES $ 1,764 $ 3,716 $ 5,229 $ 3,097 $ 10,167 $ 12,720
========= ======== ========= ========= ========= =========
EARNINGS TO FIXED CHARGES 2.2 2.2 3.4 6.4 3.8 3.3
========= ======== ========= ========= ========= =========
</TABLE>
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
report and to all references to our Firm included in or made a part of this
registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
March 13, 1998
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) _____
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
---------------------------------------
DURA AUTOMOTIVE CAPITAL TRUST
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS TRUST AGREEMENT)
DELAWARE 41-1908709
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
CONVERTIBLE TRUST PREFERRED SECURITIES OF DURA AUTOMOTIVE CAPITAL TRUST
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate
trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the
United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto
duly authorized, all in the City of Chicago and State of Illinois, on
the 4th day of March, 1998.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /s/ Steven M. Wagner
--------------------------------------------
STEVEN M. WAGNER
VICE PRESIDENT
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER
25, 1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
March 4, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of the Amended and Restated Declaration of
Trust of Dura Automotive Systems Capital Trust the undersigned, in accordance
with Section 321(b) of the Trust Indenture Act of 1939, as amended, hereby
consents that the reports of examinations of the undersigned, made by Federal or
State authorities authorized to make such examinations, may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /s/ Steven M. Wagner
--------------------------------------------
STEVEN M. WAGNER
VICE PRESIDENT
4
<PAGE>
EXHIBIT 7
<TABLE>
<CAPTION>
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 12/31/97 ST-BK: 17-1630 FFIEC 031
ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-1
CITY, STATE ZIP: CHICAGO, IL 60670
FDIC CERTIFICATE NO.: 0/3/6/1/8
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31,1997
ALL SCHEDULES ARE TO BE REPORTED IN THOUSANDS OF DOLLARS. UNLESS OTHERWISE INDICATED, REPORT THE AMOUNT
OUTSTANDING AS OF THE LAST BUSINESS DAY OF THE QUARTER.
SCHEDULE RC--BALANCE SHEET
C400
DOLLAR AMOUNTS IN ----
THOUSANDS RCFD BIL MIL THOU
------------------ ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS (FROM SCHEDULE
RC-A):
a. NONINTEREST-BEARING BALANCES AND CURRENCY AND COIN(1). . . . . 0081 4,267,336 1.a.
b. INTEREST-BEARING BALANCES(2) . . . . . . . . . . . . . . . . . 0071 6,893,837 1.b.
2. SECURITIES
a. HELD-TO-MATURITY SECURITIES(FROM SCHEDULE RC-B, COLUMN A). . . 1754 0 2.a.
b. AVAILABLE-FOR-SALE SECURITIES (FROM SCHEDULE RC-B, COLUMN D) 1773 5,691,722 2.b.
3. FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENTS TO
RESELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1350 6,339,940 3.
4. LOANS AND LEASE FINANCING RECEIVABLES:
a. LOANS AND LEASES, NET OF UNEARNED INCOME (FROM SCHEDULE
RC-C) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 25,202,984 4.a.
b. LESS: ALLOWANCE FOR LOAN AND LEASE LOSSES. . . . . . . . . . . RCFD 3123 419,121 4.b.
c. LESS: ALLOCATED TRANSFER RISK RESERVE. . . . . . . . . . . . . RCFD 3128 0 4.c.
d. LOANS AND LEASES, NET OF UNEARNED INCOME, ALLOWANCE, AND
RESERVE (ITEM 4.A MINUS 4.B AND 4.C) . . . . . . . . . . . . . 2125 24,783,863 4.d.
5. TRADING ASSETS (FROM SCHEDULE RD-D) . . . . . . . . . . . . . . . 3545 6,703,332 5.
6. PREMISES AND FIXED ASSETS (INCLUDING CAPITALIZED LEASES). . . . . 2145 743,426 6.
7. OTHER REAL ESTATE OWNED (FROM SCHEDULE RC-M). . . . . . . . . . . 2150 7,727 7.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
COMPANIES (FROM SCHEDULE RC-M). . . . . . . . . . . . . . . . . . 2130 134,959 8.
9. CUSTOMERS' LIABILITY TO THIS BANK ON ACCEPTANCES OUTSTANDING. . . 2155 644,340 9.
10. INTANGIBLE ASSETS (FROM SCHEDULE RC-M). . . . . . . . . . . . . . 2143 268,501 10.
11. OTHER ASSETS (FROM SCHEDULE RC-F) . . . . . . . . . . . . . . . . 2160 2,004,432 11.
12. TOTAL ASSETS (SUM OF ITEMS 1 THROUGH 11). . . . . . . . . . . . . 2170 58,483,415 12.
- -----------------
(1) INCLUDES CASH ITEMS IN PROCESS OF COLLECTION AND UNPOSTED DEBITS.
(2) INCLUDES TIME CERTIFICATES OF DEPOSIT NOT HELD FOR TRADING.
<PAGE>
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 09/30/97 ST-BK: 17-1630 FFIEC 031
ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-2
CITY, STATE ZIP: CHICAGO, IL 60670
FDIC CERTIFICATE NO.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
DOLLAR AMOUNTS IN
THOUSANDS BIL MIL THOU
------------------ ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. DEPOSITS:
a. IN DOMESTIC OFFICES (SUM OF TOTALS OF COLUMNS A AND C
FROM SCHEDULE RC-E, PART 1). . . . . . . . . . . . . . . . . . RCON 2200 21,756,846 13.a
(1) NONINTEREST-BEARING(1) . . . . . . . . . . . . . . . . . . RCON 6631 9,197,227 13.a.1
(2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . RCON 6636 559,619 13.a.2
b. IN FOREIGN OFFICES, EDGE AND AGREEMENT SUBSIDIARIES, AND
IBFS (FROM SCHEDULE RC-E, PART II) . . . . . . . . . . . . . . RCFN 2200 14,811,410 13.b.
(1) NONINTEREST BEARING. . . . . . . . . . . . . . . . . . . . RCFN 6631 332,801 13.b.1
(2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . RCFN 6636 14,478,609 13.b.2
14. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS
TO REPURCHASE: RCFD 2800 4,535,422 14
15. a. DEMAND NOTES ISSUED TO THE U.S. TREASURY . . . . . . . . . . . RCON 2840 43,763 15.a
v. TRADING LIABILITIES(FROM SCHEDULE RC-D). . . . . . . . . . . . RCFD 3548 6,523,239 15.b
16. OTHER BORROWED MONEY:
a. WITH A REMAINING MATURITY OF ONE YEAR OR LESS. . . . . . . . . RCFD 2332 1,360,165 16.a
b. WITH A REMAINING MATURITY OF THAN ONE YEAR THROUGH THREE YEARS A547 576,492 16.b
c. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS . . . . . . A548 703,981 16.c
17. NOT APPLICABLE
18. BANK'S LIABILITY ON ACCEPTANCE EXECUTED AND OUTSTANDING . . . . . RCFD 2920 644,341 18
19. SUBORDINATED NOTES AND DEBENTURES (2) . . . . . . . . . . . . . . RCFD 3200 1,700,000 19
20. OTHER LIABILITIES (FROM SCHEDULE RC-G). . . . . . . . . . . . . . RCFD 2930 1,322,077 20
21. TOTAL LIABILITIES (SUM OF ITEMS 13 THROUGH 20). . . . . . . . . . RCFD 2948 53,987,736 21
22. Not applicable
EQUITY CAPITAL
23. PERPETUAL PREFERRED STOCK AND RELATED SURPLUS . . . . . . . . . . RCFD 3838 0 23
24. COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24
25. SURPLUS (EXCLUDE ALL SURPLUS RELATED TO PREFERRED STOCK). . . . . RCFD 3839 2,999,001 25
26. a. UNDIVIDED PROFITS AND CAPITAL RESERVES. . . . . . . . . . . . . RCFD 3632 1,273,239 26.a.
b. NET UNREALIZED HOLDING GAINS (LOSSES) ON AVAILABLE-FOR-SALE
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 24,096 26.b.
27. CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENTS . . . . . . . RCFD 3284 (1,515) 27
28. TOTAL EQUITY CAPITAL (SUM OF ITEMS 23 THROUGH 27) . . . . . . . . RCFD 3210 4,495,679 28
29. TOTAL LIABILITIES AND EQUITY CAPITAL (SUM OF ITEMS 21 AND 28) . . RCFD 3300 58,483,415 29
</TABLE>
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. INDICATE IN THE BOX AT THE RIGHT THE NUMBER OF THE STATEMENT BELOW THAT
BEST DESCRIBES THE MOST COMPREHENSIVE LEVEL OF AUDITING WORK PERFORMED FOR
THE BANK BY INDEPENDENT EXTERNAL
NUMBER
AUDITORS AS OF ANY DATE DURING 1996 . . . . . .RCFD 6724.../ N/A./ M.1
1 = INDEPENDENT AUDIT OF THE BANK CONDUCTED IN ACCORDANCE
WITH GENERALLY ACCEPTED AUDITING STANDARDS BY A CERTIFIED
PUBLIC ACCOUNTING FIRM WHICH SUBMITS A REPORT ON THE BANK
2 = INDEPENDENT AUDIT OF THE BANK'S PARENT HOLDING COMPANY
CONDUCTED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING
STANDARDS BY A CERTIFIED PUBLIC ACCOUNTING FIRM WHICH
SUBMITS A REPORT ON THE CONSOLIDATED HOLDING COMPANY
(BUT NOT ON THE BANK SEPARATELY)
3 = DIRECTORS' EXAMINATION OF THE BANK CONDUCTED IN
ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS
BY A CERTIFIED PUBLIC ACCOUNTING FIRM (MAY BE REQUIRED BY
STATE CHARTERING AUTHORITY)
4. = DIRECTORS' EXAMINATION OF THE BANK PERFORMED BY OTHER
EXTERNAL AUDITORS (MAY BE REQUIRED BY STATE CHARTERING
AUTHORITY)
5 = REVIEW OF THE BANK'S FINANCIAL STATEMENTS BY EXTERNAL
AUDITORS
6 = COMPILATION OF THE BANK'S FINANCIAL STATEMENTS BY EXTERNAL
AUDITORS
7 = OTHER AUDIT PROCEDURES (EXCLUDING TAX PREPARATION WORK)
8 = NO EXTERNAL AUDIT WORK
- --------------------
(1) INCLUDES TOTAL DEMAND DEPOSITS AND NONINTEREST-BEARING TIME AND SAVINGS
DEPOSITS.
(2) INCLUDES LIMITED-LIFE PREFERRED STOCK AND RELATED SURPLUS.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) -----
----------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
A NATIONAL BANKING ASSOCIATION 36-0899825
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
ONE FIRST NATIONAL PLAZA, CHICAGO, ILLINOIS 60670-0126
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES (ZIP CODE)
THE FIRST NATIONAL BANK OF CHICAGO
ONE FIRST NATIONAL PLAZA, SUITE 0286
CHICAGO, ILLINOIS 60670-0286
ATTN: LYNN A. GOLDSTEIN, LAW DEPARTMENT (312) 732-6919
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
-----------------------------------
DURA AUTOMOTIVE SYSTEMS, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
DELAWARE 38-3185711
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
4508 IDS CENTER
MINNEAPOLIS, MINNESOTA 55402
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
GUARANTEE OF CONVERTIBLE TRUST PREFERRED SECURITIES OF DURA AUTOMOTIVE SYSTEMS
CAPITAL TRUST
CONVERTIBLE SUBORDINATED DEBENTURES
(TITLE OF INDENTURE SECURITIES)
<PAGE>
ITEM 1. GENERAL INFORMATION. FURNISH THE FOLLOWING
INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR
SUPERVISING AUTHORITY TO WHICH IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.,
Federal Deposit Insurance Corporation,
Washington, D.C., The Board of Governors of
the Federal Reserve System, Washington D.C.
(b) WHETHER IT IS AUTHORIZED TO EXERCISE
CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate
trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR. IF THE OBLIGOR
IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH
SUCH AFFILIATION.
No such affiliation exists with the trustee.
ITEM 16. LIST OF EXHIBITS. LIST BELOW ALL EXHIBITS FILED AS A
PART OF THIS STATEMENT OF ELIGIBILITY.
1. A copy of the articles of association of the
trustee now in effect.*
2. A copy of the certificates of authority of the
trustee to commence business.*
3. A copy of the authorization of the trustee to
exercise corporate trust powers.*
4. A copy of the existing by-laws of the trustee.*
5. Not Applicable.
6. The consent of the trustee required by
Section 321(b) of the Act.
2
<PAGE>
7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
8. Not Applicable.
9. Not Applicable.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, The First National Bank of Chicago, a national
banking association organized and existing under the laws of the
United States of America, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto
duly authorized, all in the City of Chicago and State of Illinois, on
the 4th day of March, 1998.
THE FIRST NATIONAL BANK OF CHICAGO,
TRUSTEE
BY /s/ Steven M. Wagner
------------------------------------------
STEVEN M. WAGNER
VICE PRESIDENT
* EXHIBIT 1, 2, 3 AND 4 ARE HEREIN INCORPORATED BY REFERENCE TO EXHIBITS
BEARING IDENTICAL NUMBERS IN ITEM 16 OF THE FORM T-1 OF THE FIRST NATIONAL BANK
OF CHICAGO, FILED AS EXHIBIT 25.1 TO THE REGISTRATION STATEMENT ON FORM S-3 OF
SUNAMERICA INC., FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER
25, 1996 (REGISTRATION NO. 333-14201).
3
<PAGE>
EXHIBIT 6
THE CONSENT OF THE TRUSTEE REQUIRED
BY SECTION 321(b) OF THE ACT
March 4, 1998
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In connection with the qualification of (i) a Guarantee Agreement of the
Convertible Trust Preferred Securities of Dura Automotive Capital Trust, and
(ii) an Indenture creating the Convertible Subordinated Debenture, each of Dura
Automotive, Inc., the undersigned, in accordance with Section 321(b) of the
Trust Indenture Act of 1939, as amended, hereby consents that the reports of
examinations of the undersigned, made by Federal or State authorities authorized
to make such examinations, may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
THE FIRST NATIONAL BANK OF CHICAGO
BY: /s/ Steven M. Wagner
------------------------------------------
STEVEN M. WAGNER
VICE PRESIDENT
4
<PAGE>
EXHIBIT 7
<TABLE>
<S><C>
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 12/31/97 ST-BK: 17-1630 FFIEC 031
ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-1
CITY, STATE ZIP: CHICAGO, IL 60670
FDIC CERTIFICATE NO.: 0/3/6/1/8
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS FOR DECEMBER 31,1997
ALL SCHEDULES ARE TO BE REPORTED IN THOUSANDS OF DOLLARS. UNLESS OTHERWISE INDICATED, REPORT THE AMOUNT
OUTSTANDING AS OF THE LAST BUSINESS DAY OF THE QUARTER.
SCHEDULE RC--BALANCE SHEET
<CAPTION>
DOLLAR AMOUNTS IN C400
THOUSANDS RCFD BIL MIL THOU
----------------- ---- ------------
<S> <C> <C> <C> <C>
ASSETS
1. CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS (FROM SCHEDULE
RC-A):
a. Noninterest-bearing balances and currency and coin(1). . . . . . . . . 0081 4,267,336 1.a.
b. INTEREST-BEARING BALANCES(2) . . . . . . . . . . . . . . . . . . . . . 0071 6,893,837 1.b.
2. SECURITIES
a. HELD-TO-MATURITY SECURITIES(FROM SCHEDULE RC-B, COLUMN A). . . . . . . 1754 0 2.a.
b. AVAILABLE-FOR-SALE SECURITIES (FROM SCHEDULE RC-B, COLUMN D) . . . . . 1773 5,691,722 2.b.
3. FEDERAL FUNDS SOLD AND SECURITIES PURCHASED UNDER AGREEMENTS TO
RESELL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1350 6,339,940 3.
4. LOANS AND LEASE FINANCING RECEIVABLES:
a. LOANS AND LEASES, NET OF UNEARNED INCOME (FROM SCHEDULE
RC-C). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2122 25,202,984 4.a.
b. LESS: ALLOWANCE FOR LOAN AND LEASE LOSSES. . . . . . . . . . . . . . . RCFD 3123 419,121 4.b.
c. LESS: ALLOCATED TRANSFER RISK RESERVE. . . . . . . . . . . . . . . . . RCFD 3128 0 4.c.
d. LOANS AND LEASES, NET OF UNEARNED INCOME, ALLOWANCE, AND
RESERVE (ITEM 4.a MINUS 4.b AND 4.c) . . . . . . . . . . . . . . . . . 2125 24,783,863 4.d.
5. TRADING ASSETS (FROM SCHEDULE RD-D) . . . . . . . . . . . . . . . . . . . 3545 6,703,332 5.
6. PREMISES AND FIXED ASSETS (INCLUDING CAPITALIZED LEASES). . . . . . . . . 2145 743,426 6.
7. OTHER REAL ESTATE OWNED (FROM SCHEDULE RC-M). . . . . . . . . . . . . . . 2150 7,727 7.
8. INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES AND ASSOCIATED
COMPANIES (FROM SCHEDULE RC-M). . . . . . . . . . . . . . . . . . . . . . 2130 134,959 8.
9. CUSTOMERS' LIABILITY TO THIS BANK ON ACCEPTANCES OUTSTANDING. . . . . . . 2155 644,340 9.
10. INTANGIBLE ASSETS (FROM SCHEDULE RC-M). . . . . . . . . . . . . . . . . . 2143 268,501 10.
11. OTHER ASSETS (FROM SCHEDULE RC-F) . . . . . . . . . . . . . . . . . . . . 2160 2,004,432 11.
12. TOTAL ASSETS (SUM OF ITEMS 1 THROUGH 11). . . . . . . . . . . . . . . . . 2170 58,483,415 12.
</TABLE>
__________________
(1) INCLUDES CASH ITEMS IN PROCESS OF COLLECTION AND UNPOSTED DEBITS.
(2) INCLUDES TIME CERTIFICATES OF DEPOSIT NOT HELD FOR TRADING.
<PAGE>
<TABLE>
<S><C>
LEGAL TITLE OF BANK: THE FIRST NATIONAL BANK OF CHICAGO CALL DATE: 09/30/97 ST-BK: 17-1630 FFIEC 031
ADDRESS: ONE FIRST NATIONAL PLAZA, STE 0303 PAGE RC-2
CITY, STATE ZIP: CHICAGO, IL 60670
FDIC CERTIFICATE NO.: 0/3/6/1/8
SCHEDULE RC-CONTINUED
<CAPTION>
DOLLAR AMOUNTS IN
THOUSANDS BIL MIL THOU
----------------- ------------
<S> <C> <C> <C> <C>
LIABILITIES
13. DEPOSITS:
a. IN DOMESTIC OFFICES (SUM OF TOTALS OF COLUMNS A AND C
FROM SCHEDULE RC-E, PART 1). . . . . . . . . . . . . . . . . . . . . RCON 2200 21,756,846 13.A
(1) NONINTEREST-BEARING(1) . . . . . . . . . . . . . . . . . . . . . RCON 6631 9,197,227 13.A.1
(2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . . . . RCON 6636 559,619 13.A.2
b. IN FOREIGN OFFICES, EDGE AND AGREEMENT SUBSIDIARIES, AND
IBFS (FROM SCHEDULE RC-E, PART II) . . . . . . . . . . . . . . . . . RCFN 2200 14,811,410 13.B.
(1) NONINTEREST BEARING. . . . . . . . . . . . . . . . . . . . . . . RCFN 6631 332,801 13.B.1
(2) INTEREST-BEARING . . . . . . . . . . . . . . . . . . . . . . . . RCFN 6636 14,478,609 13.B.2
14. FEDERAL FUNDS PURCHASED AND SECURITIES SOLD UNDER AGREEMENTS
TO REPURCHASE:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 2800 4,535,422 14
15. a. DEMAND NOTES ISSUED TO THE U.S. TREASURY . . . . . . . . . . . . . . RCON 2840 43,763 15.A
b. TRADING LIABILITIES(FROM SCHEDULE RC-D). . . . . . . . . . . . . . . RCFD 3548 6,523,239 15.B
16. OTHER BORROWED MONEY:
a. WITH A REMAINING MATURITY OF ONE YEAR OR LESS . . . . . . . . . . . RCFD 2332 1,360,165 16.A
b. WITH A REMAINING MATURITY OF THAN ONE YEAR THROUGH THREE YEARS. . . A547 576,492 16.B
c. WITH A REMAINING MATURITY OF MORE THAN THREE YEARS. . . . . . . . . A548 703,981 16.C
17. NOT APPLICABLE
18. BANK'S LIABILITY ON ACCEPTANCE EXECUTED AND OUTSTANDING . . . . . . . . RCFD 2920 644,341 18
19. SUBORDINATED NOTES AND DEBENTURES (2) . . . . . . . . . . . . . . . . . RCFD 3200 1,700,000 19
20. OTHER LIABILITIES (FROM SCHEDULE RC-G). . . . . . . . . . . . . . . . . RCFD 2930 1,322,077 20
21. TOTAL LIABILITIES (SUM OF ITEMS 13 THROUGH 20). . . . . . . . . . . . . RCFD 2948 53,987,736 21
22. NOT APPLICABLE
EQUITY CAPITAL
23. PERPETUAL PREFERRED STOCK AND RELATED SURPLUS . . . . . . . . . . . . . RCFD 3838 0 23
24. COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 3230 200,858 24
25. SURPLUS (EXCLUDE ALL SURPLUS RELATED TO PREFERRED STOCK). . . . . . . . RCFD 3839 2,999,001 25
26. a. UNDIVIDED PROFITS AND CAPITAL RESERVES . . . . . . . . . . . . . . . RCFD 3632 1,273,239 26.A.
b. NET UNREALIZED HOLDING GAINS (LOSSES) ON AVAILABLE-FOR-SALE
SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RCFD 8434 24,096 26.B.
27. CUMULATIVE FOREIGN CURRENCY TRANSLATION ADJUSTMENTS . . . . . . . . . . RCFD 3284 (1,515) 27
28. TOTAL EQUITY CAPITAL (SUM OF ITEMS 23 THROUGH 27) . . . . . . . . . . . RCFD 3210 4,495,679 28
29. TOTAL LIABILITIES AND EQUITY CAPITAL (SUM OF ITEMS 21 AND 28) . . . . . RCFD 3300 58,483,415 29
</TABLE>
<TABLE>
<S><C>
MEMORANDUM
TO BE REPORTED ONLY WITH THE MARCH REPORT OF CONDITION.
1. INDICATE IN THE BOX AT THE RIGHT THE NUMBER OF THE STATEMENT BELOW THAT BEST DESCRIBES THE MOST
COMPREHENSIVE LEVEL OF AUDITING WORK PERFORMED FOR THE BANK BY INDEPENDENT EXTERNAL NUMBER
AUDITORS AS OF ANY DATE DURING 1996 . . . . . . . . . . . . . . . . . . . . .. . . . RCFD 6724 . . . / N/A. / M.1
1 = INDEPENDENT AUDIT OF THE BANK CONDUCTED IN ACCORDANCE 4. = DIRECTORS' EXAMINATION OF THE BANK PERFORMED BY OTHER
WITH GENERALLY ACCEPTED AUDITING STANDARDS BY A CERTIFIED EXTERNAL AUDITORS (MAY BE REQUIRED BY STATE CHARTERING
PUBLIC ACCOUNTING FIRM WHICH SUBMITS A REPORT ON THE BANK AUTHORITY)
2 = INDEPENDENT AUDIT OF THE BANK'S PARENT HOLDING COMPANY 5 = REVIEW OF THE BANK'S FINANCIAL STATEMENTS BY EXTERNAL
CONDUCTED IN ACCORDANCE WITH GENERALLY ACCEPTED AUDITING AUDITORS
STANDARDS BY A CERTIFIED PUBLIC ACCOUNTING FIRM WHICH 6 = COMPILATION OF THE BANK'S FINANCIAL STATEMENTS BY
SUBMITS A REPORT ON THE CONSOLIDATED HOLDING COMPANY EXTERNAL AUDITORS
(BUT NOT ON THE BANK SEPARATELY) 7 = OTHER AUDIT PROCEDURES (EXCLUDING TAX PREPARATION WORK)
3 = DIRECTORS' EXAMINATION OF THE BANK CONDUCTED IN 8 = NO EXTERNAL AUDIT WORK
ACCORDANCE WITH GENERALLY ACCEPTED AUDITING STANDARDS
BY A CERTIFIED PUBLIC ACCOUNTING FIRM (MAY BE REQUIRED BY
STATE CHARTERING AUTHORITY)
___________________
(1) INCLUDES TOTAL DEMAND DEPOSITS AND NONINTEREST-BEARING TIME AND SAVINGS DEPOSITS.
(2) INCLUDES LIMITED-LIFE PREFERRED STOCK AND RELATED SURPLUS.
</TABLE>
