As filed with the Securities and Exchange Commission on April 17, 1996
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SOUTHDOWN, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 3241
(State or other jurisdiction of (Primary Standard Industrial
incorporation or organization) Classification Code Number)
72-0296500
(I.R.S. Employer
Identification No.)
1200 SMITH STREET, SUITE 2400
HOUSTON, TEXAS 77002-4486
(713) 650-6200
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
PATRICK S. BULLARD
VICE PRESIDENT AND GENERAL COUNSEL
SOUTHDOWN, INC.
1200 SMITH STREET, SUITE 2400
HOUSTON, TEXAS 77002-4486
(713) 650-6200
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
R. DANIEL WITSCHEY, JR.
BRACEWELL & PATTERSON, L.L.P.
2900 SOUTH TOWER PENNZOIL PLACE
HOUSTON, TEXAS 77002-2781
Approximate date of commencement of proposed sale of the
securities to the public: As soon as practicable after this
Registration Statement becomes effective.
If the only securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OFFERING AGGREGATE
OF SECURITIES TO BE AMOUNT TO BE PRICE PER OFFERING AMOUNT OF
REGISTERED REGISTERED UNIT (1) PRICE (1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10% Senior Subordinated Notes due
2006, Series B $125,000,000 100% $125,000,000 $43,104
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT 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.
<PAGE>
CROSS REFERENCE SHEET
Pursuant to Rule 404(a)
<TABLE>
<CAPTION>
ITEM IN FORM S-4 CAPTION IN PROSPECTUS
---------------- ---------------------
A. INFORMATION ABOUT THE TRANSACTION
<S> <C> <C>
1. Forepart of Registration Statement and Facing Page; Outside Front Cover Page of
Outside Front Cover Page of Prospectus. Prospectus.
2. Inside Front and Outside Back Cover Pages Inside Front Cover Page of Prospectus;
of Prospectus. Table of Contents; Available Information.
3. Risk Factors, Ratio of Earnings to Fixed Prospectus Summary; Risk Factors.
Charges and Other Information.
4. Terms of the Transaction. Prospectus Summary; The Exchange Offer;
Description of the Series B Notes.
5. Pro Forma Financial Information. Not applicable.
6. Material Contacts with the Company Being
Acquired. Not applicable.
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters. Not applicable.
8. Interests of Named Experts and Counsel. Validity of the Series B Notes.
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities. Not applicable.
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3 Registrants. Incorporation by Reference; Prospectus
Summary.
11. Incorporation of Certain Information by
Reference. Incorporation by Reference.
12. Information with Respect to S-2 or S-3 Not applicable.
Registrants.
13. Incorporation of Certain Information by
Reference. Not applicable.
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants. Not applicable.
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3 Companies. Not applicable.
16. Information with Respect to S-2 or S-3
Companies. Not applicable.
17. Information with Respect to Companies
Other Than S-3 or S-2 Companies. Not applicable.
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited. Not applicable.
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or in
an Exchange Offer. Incorporation by Reference.
</TABLE>
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED APRIL 17, 1996
SOUTHDOWN, INC.
OFFER TO EXCHANGE ITS
10% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
WHICH HAVE BEEN REGISTERED UNDER THE SECURITIES ACT
FOR ANY AND ALL OF ITS OUTSTANDING
10% SENIOR SUBORDINATED NOTES DUE 2006
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
____________________, 1996, UNLESS EXTENDED.
Southdown, Inc., a Louisiana corporation (the "Company"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus
("Prospectus") and the accompanying Letter of Transmittal (the "Letter of
Transmittal" and, together with the Prospectus, the "Exchange Offer"), to issue
$1,000 principal amount of the Company's 10% Senior Subordinated Notes due 2006,
Series B (the "Series B Notes"), in exchange for each outstanding $1,000
principal amount of its 10% Senior Subordinated Notes due 2006 (the "Original
Notes"), of which an aggregate principal amount of $125,000,000 are outstanding.
See "The Exchange Offer." The Series B Notes offered hereby are substantially
identical to the currently outstanding Original Notes, except that the Series B
Notes have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and hence will not bear legends restricting the transfer
thereof. The Series B Notes will evidence the same debt as the Original Notes
and will be entitled to the benefits of the same indenture (the "Indenture").
The Original Notes and the Series B Notes are sometimes referred to herein
collectively as the "Notes." See "The Exchange Offer" and "Description of the
Series B Notes."
The Company will accept for exchange any and all Original Notes validly
tendered and not withdrawn prior to 5:00 p.m., New York City time, on
_____________, 1996, unless extended (the "Expiration Date"). Tenders of
Original Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Offer is subject to certain customary
conditions. See "The Exchange Offer." Original Notes may be tendered only in
integral multiples of $1,000.
Interest on the Notes will be payable semi-annually on March 1 and
September 1 of each year, commencing September 1, 1996. The Notes will be
redeemable at the option of the Company, in whole or in part, at any time on or
after March 1, 2001, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. The Notes will not be
subject to any mandatory sinking fund. In the event of a Change of Control (as
defined), each holder of Notes will have the right, at the holder's option, to
require the Company to purchase such holder's Notes at a purchase price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of purchase. See "Description of the Series B Notes." The Notes will
be general unsecured obligations of the Company and will be subordinated in
right of payment to all existing and future Senior Indebtedness (as defined) of
the Company. As of March 31, 1996, the Company had approximately $78.6 million
of Senior Indebtedness outstanding.
Prior to this offering, there has been no public market for the Series B
Notes. The Company does not intend to list the Series B Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active market for the Series B Notes
will develop. The Original Notes have been eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market. The
Company has agreed to pay the expenses of the Exchange Offer.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH THE EXCHANGE OFFER AND AN INVESTMENT IN THE NOTES, SEE "RISK
FACTORS," BEGINNING ON PAGE 13.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRE-
SENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS __________, 1996.
***************************************************************************
* *
* 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. *
* *
***************************************************************************
Based on an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in several no-action letters to third
parties, the Company believes that, except as noted below, the Series B Notes
issued pursuant to the Exchange Offer in exchange for Original Notes may be
offered for resale, resold and otherwise transferred by holders thereof without
compliance with the registration and prospectus delivery provisions of the
Securities Act. However, any holder who is an "affiliate" of the Company or who
intends to participate in the Exchange Offer for the purpose of distributing the
Series B Notes (i) cannot rely on the interpretation by the staff of the
Commission set forth in the above referenced no-action letters, (ii) cannot
tender its Original Notes in the Exchange Offer, and (iii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any sale or transfer of the Original Notes, unless such sale or
transfer is made pursuant to an exemption from such requirements. See "Risk
Factors--Consequences to Non-Tendering Holders of Original Notes." In addition,
each broker-dealer that receives Series B Notes pursuant to the Exchange Offer
in exchange for Original Notes that such broker-dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Original Notes acquired directly from the Company or its affiliates)
must acknowledge that it will deliver a prospectus in connection with any resale
of such Series B Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
If the Company receives certain notices in the Letter of Transmittal, this
Prospectus, as it may be amended or supplemented from time to time, may be used
for the period described below by a broker-dealer in connection with resales of
Series B Notes received in exchange for Original Notes where such Original Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities and not acquired directly from the Company. The Company
has agreed that, if it receives certain notices in the Letter of Transmittal,
for a period of one year after the date on which the Registration Statement of
which this Prospectus is a part becomes effective, it will make this Prospectus
available to any such broker-dealer for use in connection with any such resale.
See "The Exchange Offer--Purpose and Effect of the Exchange Offer; Registration
Rights" and "Plan of Distribution." EXCEPT AS DESCRIBED IN THIS PARAGRAPH, THIS
PROSPECTUS MAY NOT BE USED FOR AN OFFER TO RESELL, RESALE OR OTHER TRANSFER OF
SERIES B NOTES.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Registration Statement") under the Securities Act, covering the Series
B Notes offered hereby.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Reports, proxy statements and other information filed by the Company
with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Commission's regional offices located at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, 13th Floor, New York, New York
10048. Copies of such material can be obtained from the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Such materials can also be inspected at the offices
of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005
or on the Internet at http://www.sec.gov.
This Prospectus does not contain all of the information set forth in the
Registration Statement, of which this Prospectus is a part, including the
exhibits and schedules to the Registration Statement. Statements contained
herein concerning the provisions of documents are necessarily summaries of such
documents, and each such statement is qualified in its entirety by reference to
the applicable documents filed with the Commission. For further information with
respect to the Company and the Series B Notes offered hereby, reference is made
to the Registration Statement, including the exhibits and schedules thereto,
which may be inspected at the public reference facilities of the Commission
referred to above, and copies of which may be obtained therefrom upon payment of
the Commission's customary charges.
INCORPORATION BY REFERENCE
This Prospectus incorporates by reference the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and all other documents
filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of this Prospectus and prior to the later of
(i) the termination of the Exchange Offer, or (ii) if this Prospectus is to be
delivered by certain broker-dealers in connection with resales of Series B Notes
as provided under "Plan of Distribution," the earlier of (a) one year from the
date the Registration Statement was declared effective and (b) the date on which
the offering of such Series B Notes for resale is terminated.
Any statement contained in this Prospectus or in a document incorporated
by reference in this Prospectus will be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which is also
incorporated by reference in this Prospectus modifies or supersedes such
statement. Any statement so modified or superseded will not be deemed, except as
modified or superseded, to constitute a part of this Prospectus.
THE COMPANY WILL PROVIDE, WITHOUT CHARGE, TO EACH PERSON, INCLUDING A
BENEFICIAL OWNER OF ORIGINAL NOTES, TO WHOM A PROSPECTUS IS DELIVERED, UPON
WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND ALL OF THE INFORMATION
THAT HAS BEEN INCORPORATED BY REFERENCE IN THIS PROSPECTUS, EXCLUDING EXHIBITS
TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE INTO THE DOCUMENTS SO INCORPORATED. REQUESTS FOR COPIES OF SUCH
DOCUMENTS SHOULD BE ADDRESSED TO THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES
AS FOLLOWS: MR. JAMES L. PERSKY, EXECUTIVE VICE PRESIDENT--FINANCE AND
ADMINISTRATION, SOUTHDOWN, INC., 1200 SMITH STREET, SUITE 2400, HOUSTON, TEXAS
77002-4486 (TELEPHONE (713) 650-6200). IN ORDER TO ENSURE TIMELY DELIVERY OF THE
DOCUMENTS, ANY SUCH REQUEST SHOULD BE MADE BY , 1996.
NO PERSON HAS BEEN AUTHORIZED, IN CONNECTION WITH THIS OFFERING, TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION THAT IS NOT CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED ON AS HAVING BEEN AUTHORIZED BY
THE COMPANY.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITY OTHER THAN THE SERIES B NOTES OR AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY THE SERIES B NOTES IN ANY JURISDICTION IN
WHICH SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. EXCEPT WHERE OTHERWISE
INDICATED HEREIN, THIS PROSPECTUS SPEAKS AS OF ITS DATE, AND NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE, UNDER ANY
CIRCUMSTANCES, AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary............................... 4
Risk Factors..................................... 13
Capitalization................................... 18
The Exchange Offer............................... 19
Certain Federal Income Tax Considerations........ 30
Description of Revolving Credit Facility......... 32
Description of the Series B Notes................ 33
Plan of Distribution ............................ 55
Validity of Series B Notes....................... 55
Experts.......................................... 56
Annex A - Form of Letter of Transmittal
-3-
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS INCLUDED ELSEWHERE OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS. AS USED HEREIN, THE TERMS "SOUTHDOWN" AND THE
"COMPANY" REFER TO SOUTHDOWN, INC. TOGETHER WITH ITS SUBSIDIARIES.
THE COMPANY
Southdown is one of the leading cement and ready-mixed concrete companies
in the United States. The Company's operations are strategically located in
various regions of the U.S., many of which the Company believes have attractive
prospects for long-term economic growth. The Company operates eight
manufacturing facilities and seven quarrying sites and utilizes a network of 19
cement storage and distribution terminals for the production, importation and
distribution of portland and masonry cements, primarily in the Ohio valley and
the southwestern and southeastern regions of the U.S. The Company is also
vertically integrated in the regional vicinity of its two largest cement plants,
with ready-mixed concrete operations serving markets in Florida and southern
California. In 1995, the Company had revenues of $596.1 million and net earnings
of $47.5 million. Southdown's principal executive offices are located at 1200
Smith Street, Suite 2400, Houston, Texas 77002-4486, and its telephone number is
(713) 650-6200.
CEMENT OPERATIONS. The Company is the third largest producer of cement in
the U.S. and produces cement at its plants located in California, Florida,
Kentucky, Ohio, Tennessee, Texas, Colorado and Pennsylvania, which have a
combined cement manufacturing capacity of approximately 6.5 million short tons
(6.2 million short tons, excluding the joint venture interests of others).
Management believes that the Company's network of eight cement plants is one of
the most modern and efficient of any large cement manufacturer in the U.S. Seven
of the Company's eight plants (approximately 95% of the Company's clinker
capacity) utilize variations of the "dry process" manufacturing technology which
is more fuel efficient compared to the older "wet process" manufacturing
technology. In contrast, as of December 31, 1994 (the most recent date for which
data are available), only approximately 72% of domestic industry capacity
utilized "dry process" technology, according to the Portland Cement Association
("PCA"), the industry's leading trade organization.
Cement is the binding agent for concrete, a primary construction material.
Because the cost of transporting cement is high relative to the value of the
product, cement markets are generally regional. The primary end-users of cement
in each of the Company's regional markets include numerous small and sometimes
one or more large ready-mixed concrete companies. Other principal customers
include manufacturers of concrete products such as blocks, roof tiles, pipes and
prefabricated building components. Sales are also made to building materials
dealers, other cement manufacturers, construction contractors and, in some
regions, oil well cementing companies. In 1995, the Company's cement segment had
$419.1 million in revenues and contributed $112.7 million to operating earnings
compared to $397.5 million and $91.2 million, respectively, in 1994. Cement
segment revenues and earnings increased in 1995 over 1994 primarily because of a
9% increase in the Company's weighted average sales price per ton over that
period.
CONCRETE PRODUCTS. The Company has vertically integrated its cement
operations with ready-mixed concrete and other concrete products operations in
the regional vicinity of its two largest cement plants which are located in
Florida and southern California. Management believes that this vertical
integration enhances the Company's competitive position in these markets, where
most cement producers are vertically integrated. Ready-mixed concrete is a
versatile, low-cost building material used in almost all construction
applications. Concrete is produced in batch plants by mixing stone, sand, water
and admixtures with cement,
-4-
the basic binding agent, and is transported to the customer's jobsite in mixer
trucks. The Company operates a combined total of approximately 600 ready-mixed
concrete trucks, approximately 80 batch plants, 13 concrete block plants and, in
California, two aggregate quarries, one of which is under a long-term lease. In
1995, the Company's concrete products segment had $219.2 million in revenues and
contributed $7.9 million to operating earnings.
INDUSTRY. Demand for cement is highly cyclical and derived from the demand
for concrete products which, in turn, is dependent on the demand for
construction. All industry and import percentages in this section are estimates
of the PCA as of December 31, 1994, the most recent date for which such data are
available. The three construction sectors that are the major components of
cement consumption are (i) public works or infrastructure construction, (ii)
commercial and industrial construction and (iii) residential construction, which
comprised 51%, 25% and 24%, respectively, of U.S. cement consumption for
construction. Construction spending and cement consumption have historically
fluctuated widely. The construction sector, and hence demand for cement and
concrete, is affected by the general condition of the economy and prevailing
interest rates, and can exhibit substantial variations in activity across the
country as a result of the differing structures and cycles of regional
economies. The impact on the Company of regional construction cycles may be
mitigated to some degree by its geographic diversification. Because of the high
fixed-cost nature of the business, however, overall profitability of cement
manufacturers, including the Company, is sensitive to minor variations in sales
volumes and small shifts in the balance between supply and demand. The cement
business is also seasonal to the extent that construction activity tends to
diminish during the winter months and other periods of inclement weather.
Historically, cement imports have increased during peak demand periods to
supplement U.S. production to meet customers' needs. However, during the 1980s,
competition from imported cement in most coastal and border areas grew
significantly. The large volume of low priced imported cement depressed cement
prices during a period of strong growth in cement consumption. Imports increased
from approximately 4% of U.S. consumption in 1982 to a peak of approximately 20%
in 1987. In response to the surge of unfairly priced imports, beginning in 1989,
groups of industry participants, including the Company, filed antidumping
petitions against cement producers in Mexico, Japan and Venezuela which resulted
in duties being imposed on imports of cement from Mexico and Japan and an
agreement with Venezuelan cement producers to revise their prices to eliminate
the dumping of cement. As a consequence, imports declined to 8% of total
consumption in 1992. Since then, U.S. cement consumption has increased and in
response, imports have increased to a PCA estimated 16% of total U.S. cement
consumption in 1995. During this recent period of strong demand, however, the
prices of cement imports have risen and, unlike imports during the 1980s,
imports are primarily playing a supplementary rather than a disruptive role.
Recent imports of foreign cement are primarily by domestic producers in response
to cement demand in excess of the domestic supply.
See "Risk Factors--Effects of Imports; Status of Certain Duties."
BUSINESS STRATEGY. To enhance profitability and return on investment, the
Company intends to continue its focus on its core business in the areas of
internal growth, improving productivity and enhancing the Company's market
positions. The Company plans to take advantage of opportunities for internal
growth through the modernization and expansion of its existing cement plants. A
capital project to upgrade the Company's Ohio cement plant is currently underway
and should be completed in 1997. This project is expected to modernize
manufacturing facilities, enhance productivity and efficiency, lower storage and
handling costs and add approximately 10% more cement capacity at the plant. In
the Company's two largest markets, Florida and southern California, the Company
has sought to improve its market position through the recent acquisition of
additional cement terminals and ready-mixed concrete operations in Florida and
additional ready-mixed concrete operations in southern California. The Company
also may evaluate other acquisitions that could improve the Company's
competitive position and increase profitability. Further, in
-5-
an effort to increase the demand for cement and concrete, the Company is taking
a leadership role in the industry's development of new promotional programs to
increase concrete's market share relative to other building products. In
addition, the Company will continue to pursue antidumping actions, if necessary,
to prevent unfairly priced foreign cement from adversely impacting the Company's
markets.
PRIVATE PLACEMENT OF ORIGINAL NOTES AND TENDER OFFER FOR 14% NOTES. On
February 14, 1996, the Company commenced a cash tender offer for all of its 14%
Senior Subordinated Notes Due 2001, Series B (the "14% Notes"), of which
$125,000,000 were outstanding, at a price of $1,096.62 per $1,000 principal
amount plus accrued interest to the payment date pursuant to the tender offer.
The tender offer expired on March 13, 1996, and $120,160,000 of 14% Notes were
tendered. On March 19, 1996, the Company sold the Original Notes to Lehman
Brothers Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Initial Purchasers"), which placed the Original Notes with institutional
investors. On the same date, the Company purchased all 14% Notes which were
tendered using the net proceeds of the private placement (approximately $121.1
million), borrowings of approximately $12.7 million under its Revolving Credit
Facility (as defined), and cash on hand of approximately $4.7 million. The
$4,840,000 in principal amount of 14% Notes which remain outstanding rank PARI
PASSU with the Notes. The Company may consider various alternatives, including,
but not limited to, acquiring additional 14% Notes in the open market or in
privately negotiated transactions or calling the remaining 14% Notes for
redemption when they become redeemable in October 1996. While the Company
currently anticipates that the 14% Notes remaining outstanding will be redeemed
or otherwise retired, there can be no assurance as to which, if any, of these
alternatives the Company may pursue.
THE EXCHANGE OFFER
<TABLE>
<CAPTION>
<S> <C>
Registration Rights
Agreement........................... The Original Notes were sold by the Company on March 19, 1996 to
the Initial Purchasers, which placed the Original Notes with
institutional investors. In connection therewith, the Company executed
and delivered for the benefit of the holders of the Original Notes a
Registration Rights Agreement dated March 19, 1996 with the Initial
Purchasers (the "Registration Rights Agreement") providing for the
Exchange Offer.
The Exchange Offer.................. $1,000 principal amount of Series B Notes in exchange for each
outstanding $1,000 principal amount of Original Notes. As of the date
hereof, $125,000,000 aggregate principal amount of Original Notes are
outstanding. Subject to the terms and conditions of the Exchange
Offer, promptly after the Expiration Date and after acceptance for
exchange of the tendered Original Notes, the Company will issue the
Series B Notes to holders who validly tender and do not withdraw
Original Notes.
Based on an interpretation by the staff of the Commission set forth in no-action
letters issued to third parties, the Company believes that, except as noted
below, Series B Notes issued pursuant to the Exchange Offer in exchange for
Original Notes may be offered for resale, resold and otherwise transferred by
any holder thereof (other than any such holder which is an "affiliate" of the
Company within the meaning of
-6-
Rule 405 under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that such Series
B Notes are acquired in the ordinary course of such holder's business and that
such holder has no arrangement or understanding with any person to participate
in the distribution of such Series B Notes. Any holder who is an "affiliate" of
the Company or who intends to participate in the Exchange Offer for the purpose
of distributing the Series B Notes (i) cannot rely on the interpretation by the
staff of the Commission set forth in the above referenced no-action letters,
(ii) cannot tender its Original Notes in the Exchange Offer and (iii) must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any sale or transfer of the Original Notes,
unless such sale or transfer is made pursuant to an exemption from such
requirements. See "Risk Factors--Consequences to Non-Tendering Holders of
Original Notes."
Each broker-dealer that receives Series B Notes pursuant to the Exchange Offer
in exchange for Original Notes that such broker-dealer acquired for its own
account as a result of market making activities or other trading activities
(other than Original Notes acquired directly from the Company or its affiliates)
must acknowledge that it will deliver a prospectus in connection with any resale
of such Series B Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.
If the Company receives certain notices in the Letter of Transmittal, this
Prospectus, as it may be amended or supplemented from time to time, may be used
for the period described below by a broker-dealer in connection with resales of
Series B Notes received in exchange for Original Notes where such Original Notes
were acquired by such broker-dealer as a result of market-making activities or
other trading activities and not acquired directly from the Company. The Company
has agreed that, if it receives certain notices in the Letter of Transmittal,
for a period of one year after the date on which the Registration Statement
becomes effective, it will make this Prospectus available to any such
broker-dealer for use in connection with any such resale. The Letter of
Transmittal requires broker-dealers tendering Original Notes in the Exchange
Offer to indicate whether such broker-dealer acquired such Original Notes for
its own account as a result of market making activities or other trading
activities (other than Original Notes acquired directly from the Company or any
of its affiliates), and if no broker-dealer indicates that such Original Notes
were so acquired, the Company has no obligation under the Registration Rights
Agreement to maintain the effectiveness of the Registration Statement past the
consummation of the Exchange Offer or to allow the use of this Prospectus for
such resales. See "The Exchange Offer--Purpose and Effect of the Exchange Offer;
Registration Rights" and "Plan of Distribution."
-7-
Expiration Date..................... 5:00 p.m., New York City time, on , 1996, unless the
--------------------
Exchange Offer is extended, in which case the term "Expiration Date"
means the latest date and time to which the Exchange Offer is
extended.
Conditions to the
Exchange Offer...................... The Exchange Offer is subject to certain customary conditions which
may be waived by the Company. See "The Exchange
Offer--Conditions."
Procedures for Tendering
Original Notes...................... Each holder of Original Notes wishing to accept the Exchange Offer
must complete, sign and date the Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions contained herein and
therein, and mail or otherwise deliver such Letter of Transmittal, or
such facsimile, together with the Original Notes and any other required
documentation to the Exchange Agent at the address set forth herein.
By executing the Letter of Transmittal, each holder will represent to
the Company that, among other things, the Series B Notes acquired
pursuant to the Exchange Offer are being obtained in the ordinary
course of business of the person receiving such Series B Notes,
whether or not such person is the holder, that neither the holder nor any
such other person has an arrangement or understanding with any
person to participate in the distribution of such Series B Notes and that
neither the holder nor any such other person is an "affiliate," as defined
under Rule 405 of the Securities Act, of the Company. See "The
Exchange Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners................... Any beneficial owner whose Original Notes are registered in the name
of a broker, dealer, commercial bank, trust company or other nominee
and who wishes to tender should contact such registered holder
promptly and instruct such registered holder to tender on such
beneficial owner's behalf. See "The Exchange Offer--Procedures for
Tendering."
Guaranteed Delivery
Procedures.......................... Holders of Original Notes who wish to tender their Original Notes and
whose Original Notes are not immediately available or who cannot
deliver their Original Notes, the Letter of Transmittal or any other
documents required by the Letter of Transmittal to the Exchange Agent
prior to the Expiration Date, must tender their Original Notes
according to the guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights................... Tenders may be withdrawn at any time prior to 5:00 p.m., New York
City time, on the Expiration Date.
-8-
Acceptance of Original
Notes and Delivery of
Series B Notes...................... Subject to the conditions set forth herein, the Company will accept for
exchange any and all Original Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on the
Expiration Date and not withdrawn. The Series B Notes issued
pursuant to the Exchange Offer will be delivered promptly following
the acceptance for exchange of the Original Notes by the Company.
See "The Exchange Offer--Terms of the Exchange Offer."
Certain Federal Income Tax
Consequences........................ The exchange pursuant to the Exchange Offer should not be treated as
a taxable exchange for federal income tax purposes. See "Certain
Federal Income Tax Considerations."
Exchange Agent...................... State Street Bank and Trust Company is serving as Exchange Agent in
connection with the Exchange Offer.
Shelf Registration.................. The Registration Rights Agreement requires the Company to file a
shelf registration statement relating to resales of certain Notes by
certain holders if within 20 Business Days after the consummation of
the Exchange Offer a Holder of Original Notes notifies the Company
that it was prohibited by law or Commission policy from participating
in the Exchange Offer and in certain other limited circumstances. See
"The Exchange Offer--Purpose and Effect of the Exchange Offer;
Registration Rights."
THE NOTES
Securities Offered.................. $125,000,000 principal amount of 10% Senior Subordinated Notes due
2006, Series B.
Maturity Date....................... March 1, 2006.
Interest Payment Dates.............. March 1 and September 1, commencing September 1, 1996.
Optional Redemption................. The Notes will be redeemable at the option of the Company, in whole
or in part, at any time on or after March 1, 2001 at the redemption
prices set forth herein, plus accrued and unpaid interest, if any, to the
date of redemption.
Sinking Fund........................ None.
Ranking............................. The Notes will be general unsecured obligations of the Company, will
be subordinated in right of payment to all existing and future Senior
Indebtedness (as defined) of the Company and will be senior in right
of payment to or PARI PASSU with all other indebtedness of the
Company. As of March 31, 1996, the Company had approximately
-9-
$78.6 million of Senior Indebtedness outstanding. See "Capitalization" and
"Description of the Series B Notes--Subordination."
Change of Control................... In the event of a Change of Control (as defined), each holder of Notes
will have the right, at the holder's option, to require the Company to
purchase such holder's Notes in whole or in part, at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of purchase. The Revolving Credit Facility
limits the Company's ability to make such a purchase, and the
Indenture requires the Company to repay or obtain all requisite
consents from certain holders of Senior Indebtedness before offering
to make such a purchase. See "Description of the Series B
Notes--Change of Control."
Certain Covenants................... The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its subsidiaries to (i) incur
additional indebtedness, (ii) pay dividends or make certain other
restricted payments, (iii) enter into transactions with affiliates,
(iv) create certain liens, (v) engage in certain sale and leaseback
transactions, (vi) make certain asset dispositions and (vii) merge or
consolidate with, or transfer substantially all of its assets to, another
person. The Indenture also limits the ability of the Company's
subsidiaries to issue preferred stock and to create restrictions on the
ability of such subsidiaries to pay dividends or make any other
distributions. In addition, the Company is obligated, under certain
circumstances, to offer to purchase the Notes with the net cash
proceeds of certain sales and other dispositions of assets at a purchase
price of 100% of the principal amount of the Notes, plus accrued and
unpaid interest, if any, to the date of purchase. The Company's ability
to make such a purchase is limited by the Revolving Credit Facility.
See "Description of the Series B Notes--Covenants."
</TABLE>
-10-
<PAGE>
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA
The following table sets forth selected historical financial and
operating data for the Company for each of the five fiscal years in the period
ended December 31, 1995. The selected historical financial information for the
Company for each of the three years in the period ended December 31, 1995 has
been derived from the consolidated financial statements of the Company audited
by Deloitte & Touche LLP, independent public accountants, as indicated in their
report thereon incorporated by reference herein. The selected historical
financial information for the Company for each of the two years in the period
ended December 31, 1992 has been derived from the audited consolidated financial
statements of the Company. This historical data should be read in conjunction
with the consolidated financial statements and notes thereto of the Company and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995. See "Incorporation by Reference." Certain data for
prior years have been reclassified for purposes of comparison.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ----------- ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues ......................................$ 596.1 $ 560.3 $ 507.7 $ 463.1 $ 468.2
Costs and expenses:
Operating................................... 408.3 399.3 364.8 350.8 366.9
Depreciation, depletion and amortization.... 40.3 39.4 38.5 41.8 42.5
Selling and marketing....................... 15.0 13.6 14.0 13.6 13.7
General and administrative.................. 34.6 37.8 40.1 43.9 51.6
Other expense (income), net................. (5.4) (5.6) 2.9 (5.1) 2.9
---------- ---------- ---------- --------- -----------
492.8 484.5 460.3 445.0 477.6
Minority interest in earnings of
consolidated joint venture............... 5.8 4.1 3.1 2.7 1.9
----------- ----------- ---------- ---------- -----------
498.6 488.6 463.4 447.7 479.5
Operating earnings (loss) .................. 97.5 71.7 44.3 15.4 (11.3)
Equity in net loss of unconsolidated
joint venture............................ - - - - (16.0)
Interest, net of amounts capitalized(1)..... (26.7) (27.7) (39.3) (45.0) (40.7)
---------- ---------- --------- --------- ----------
Earnings (loss) from continuing operations
before income taxes, extraordinary charge
and cumulative effect of a change in
accounting principle..................... 70.8 44.0 5.0 (29.6) (68.0)
Federal and state income tax (expense) benefit (23.3) (13.9) (1.4) 12.7 28.0
----------- ---------- --------- ---------- -----------
Earnings (loss) from continuing operations..... 47.5 30.1 3.6 (16.9) (40.0)
Loss from discontinued operations,
net of income taxes(2) ..................... - (5.9) (3.6) (24.5) (3.2)
Loss on disposition of discontinued operations,
net of income taxes(2)...................... - (21.6) - - -
Gain on disposition of discontinued oil and gas
operations, net of income taxes ............ - - - 0.8(3) -
Extraordinary charge, net of income taxes (4).. - - (1.0) - (1.4)
Cumulative effect of change in accounting
principle, net of income taxes (5).......... - - (48.5) - -
----------- ----------- --------- ---------- -----------
Net earnings (loss)............................ 47.5 2.6 (49.5) (40.6) (44.6)
Dividends on preferred stock................... 9.8 9.4 5.0 5.0 5.1
----------- ----------- ---------- ---------- -----------
Net earnings (loss) to common stockholders.....$ 37.7 $ (6.8) $ (54.5) $ (45.6) $ (49.7)
=========== ========== ========= ========= ==========
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ----------- ----------- --------
(DOLLARS IN MILLIONS, EXCEPT PER UNIT AMOUNTS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets...................................$ 875.5 $ 881.0 $ 907.0 $ 921.5 $ 986.1
Total debt..................................... 175.2 186.1 293.9 314.8 332.7
Shareholders' equity........................... 375.0 337.1 262.2 316.4 362.0
Ratio of total debt to total capitalization(6). 31.8% 35.6% 52.9% 49.9% 47.9%
OPERATING DATA:
Cement segment
Tons sold (in thousands).................... 6,058 6,218 6,196 5,788 5,340
Weighted average per ton data:
Sales price ...........................$ 60.69 $ 55.77 $ 51.59 $ 49.98 $ 52.26
Operating costs(7)..................... 41.97 40.95 38.57 39.70 43.72
--------- ---------- --------- --------- -----------
Margin ..............................$ 18.72 $ 14.82 $ 13.02 $ 10.28 $ 8.54
========= ========== ========= ========= ===========
Concrete segment
Cubic yards sold (in thousands) ............ 3,442 3,530 3,274 3,038 3,488
Weighted average per cubic yard data:
Sales price ...........................$ 51.34 $ 47.76 $ 43.86 $ 43.13 $ 42.97
Operating costs(8)..................... 50.75 47.32 45.48 46.66 46.69
--------- ---------- --------- --------- -----------
Margin ..............................$ 0.59 $ 0.44 $ (1.62) $ (3.53) $ (3.72)
========= ========== ========= ========= ===========
OTHER DATA:
EBITDA(9)......................................$ 137.8 $ 111.1 $82.8 $ 57.2 $ 31.2
EBITDA as a percent of revenue................. 23.1% 19.8% 16.3% 12.4% 6.7%
Capital expenditures...........................$ 32.9 $ 28.8 $13.4 $ 7.7 $ 20.6
EBITDA/interest expense(10).................... 4.9x 3.7x 2.1x 1.3x 0.8x
EBITDA less capital expenditures
/interest expense(10)....................... 3.7x 2.8x 1.7x 1.1x 0.3x
Ratio of total debt to EBITDA.................. 1.3x 1.7x 3.5x 5.5x 10.7x
Ratio of earnings to fixed charges(11)......... 3.1x 2.2x 1.1x 0.4x -
</TABLE>
- ---------------------
(1) Amounts capitalized were approximately $1.5 million, $2.0 million, $0.7
million, $0.0 million and $0.3 million in 1995, 1994, 1993, 1992 and 1991,
respectively.
(2) In November 1994, the Company decided to exit the environmental services
business and these business activities are presented as discontinued
operations for years 1991 through 1994.
(3) Represents the final portion of the Company's gain realized in conjunction
with the 1989 sale of the Company's oil and gas operations.
(4) Premiums on early extinguishment of debt.
(5) Cumulative after-tax effect of change in accounting for initial obligation
for estimated postretirement health care benefits as required by adoption
of Statement of Financial Accounting Standards No. 106 effective January 1,
1993.
(6) Total capitalization represents the sum of the book value of total debt and
shareholders' equity.
(7) Includes fixed and variable manufacturing costs, selling expenses, cost of
purchased cement, plant general and administrative costs, other plant
overhead and miscellaneous costs.
(8) Includes variable and fixed plant costs, delivery, selling, general and
administrative and miscellaneous operating costs, but excludes the $1.7
million gain realized on the sale of trucks during 1994.
(9) EBITDA is defined as the sum of (i) earnings (loss) from continuing
operations before income taxes, extraordinary charge and cumulative effect
of a change in accounting principle; (ii) interest, net of amounts
capitalized; and (iii) depreciation, depletion and amortization, as
reported on the Company's income statement. EBITDA is presented not as an
alternative measure of operating results or cash flow from operations (as
determined in accordance with generally accepted accounting principles),
but rather to provide additional information related to the debt servicing
ability of the Company. In 1991, EBITDA excludes $16.0 million of equity in
net loss of an unconsolidated joint venture.
(10) Interest expense before capitalization of interest. See Footnote (1)
above.
(11) For purposes of computing the ratio of earnings to fixed charges, earnings
are divided by fixed charges. "Earnings" represent the aggregate of (a) the
pre-tax income from continuing operations of the Company and (b) fixed
charges, net of interest capitalized. "Fixed charges" represent interest
(whether expensed or capitalized), the amortization of total debt discount
and expenses and that portion of rentals considered to be representative of
the interest factor (deemed to be one-third of rentals). In 1992 and 1991,
earnings were insufficient to cover fixed charges by $29.6 million and
$68.5 million, respectively. Had the consummation of the private placement
of the Original Notes and the tender offer for the 14% Notes and the
related borrowings under the Revolving Credit Facility described under
"Prospectus Summary - The Company - Private Placement of Original Notes and
Tender Offer for 14% Notes" occurred on January 1, 1995, the pro forma
ratio of earnings to fixed charges for 1995 would have been 3.5x.
-12-
RISK FACTORS
PROSPECTIVE PURCHASERS OF THE SERIES B NOTES OFFERED HEREBY SHOULD
CONSIDER THE FOLLOWING MATTERS, AS WELL AS THE OTHER INFORMATION IN THIS
PROSPECTUS AND THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE.
DEPENDENCE ON CONSTRUCTION INDUSTRY
GENERAL AND REGIONAL ECONOMIC CONDITIONS. Demand for cement is highly
cyclical and is derived from demand for concrete products which, in turn, is
dependent on the demand for construction. The construction sector is affected by
the general condition of the economy and a variety of other factors beyond the
control of the Company, including the amount of new public works or
infrastructure construction projects, commercial or industrial construction and
residential construction. These factors are affected by, among other things, the
availability of funds for public or infrastructure construction, the movement of
interest rates and the availability of short- and long-term financing. In
addition, the construction sector can exhibit substantial variations in activity
across the country as a result of the differing structures of regional
economies. New construction activity stagnated as the U.S. economy entered a
recession during the latter half of 1990, declined in 1991 in most areas and, in
California, continued to decline in 1992. As a consequence, the Company's sales
and earnings declined from the previous cyclical peak in 1989.
REGIONAL MARKETS; CYCLICAL INDUSTRY; SEASONALITY. Because
transportation costs are high relative to the value of the product, cement
markets are generally regional. However, access to water transport, which is
generally less expensive than overland shipping, can effectively expand the
market area of a particular production facility. Regional markets are highly
cyclical, experiencing peaks and valleys that correlate with regional
construction cycles. Although the impact of construction cycles on the Company's
operations in individual regions may be mitigated to some degree by the
geographic diversification of the Company, profitability and cash flows are
significantly affected by such construction cycles. Regional markets are also
seasonal to the extent that construction activity, and hence the demand for the
Company's products, tends to diminish during the winter months and other periods
of inclement weather. As a result, the Company has historically experienced its
lowest levels of revenue and operating income during the first quarter of its
fiscal year.
HIGH LEVELS OF COMPETITION; PROFIT AND CASH FLOW SENSITIVITY. The
cement and concrete products industries are highly competitive. The Company's
products are commodities and competition among suppliers is based primarily on
price, with consistency of quality and service to customers being of lesser
significance. Prices are often subject to material changes in response to
relatively minor fluctuations in supply and demand, general economic conditions
and market conditions, all of which are beyond the Company's control. Because of
the high fixed-cost nature of the business, however, the overall profitability
of cement manufacturers, including the Company, is sensitive to minor variations
in sales volumes and small shifts in the balance between supply and demand.
While the Company's ratio of total debt to total capitalization after giving pro
forma effect to the private placement of the Original Notes and certain other
matters set forth under "Capitalization" is approximately 35%, the cyclicality
of the Company's cash flows increases the risk associated with leverage. In
addition, the Indenture permits the Company to incur significant additional
indebtedness.
EFFECTS OF IMPORTS; STATUS OF CERTAIN DUTIES
During the 1980s, competition from low-priced imported cement in most
coastal and border areas of the U.S. grew significantly and materially impacted
the U.S. cement market. A group of domestic cement producers, including the
Company, filed antidumping petitions which resulted in the imposition of
significant antidumping duty cash deposit requirements in August 1990 on cement
and clinker imported from Mexico and in April 1991 on cement and clinker
imported from Japan. In addition, in February 1992 the U.S.
-13-
Department of Commerce signed an agreement with Venezuelan cement producers
which is designed to eliminate the dumping of gray portland cement and clinker
from Venezuela into Florida and the U.S. generally. The dumping margins and
resulting rates of antidumping duty cash deposits are subject to annual
administrative review by the Department of Commerce. In the case of Japan, the
dumping margins are subject to appeal to the U.S. Court of International Trade
(the "CIT") and the U.S. Court of Appeals for the Federal Circuit ("CAFC"). In
the case of Mexico, the dumping margins are subject to appeal either to the CIT
and CAFC or to bi-national dispute panels under the North American Free Trade
Agreement ("NAFTA"). The results of a number of the annual administrative
reviews regarding Japanese and Mexican cement and clinker are on appeal to the
CIT. The underlying injury determinations against Japan and Mexico have also
been appealed by the foreign producers. The determination against Japanese
cement and clinker remains in effect pending appeal before the CIT. While the
material injury determination against Mexican cement was affirmed by both the
CIT and the CAFC, a dispute resolution panel under the General Agreement on
Tariffs and Trade ("GATT") recommended in July 1992 that the antidumping order
be vacated and that all duties collected under the order be returned. Under GATT
rules, the Antidumping Code Committee, of which the U.S. is a member, must
unanimously adopt the panel's recommendation before it becomes a GATT
obligation. The U.S. has refused to endorse the GATT panel ruling.
Pursuant to the Uruguay Round Agreement, the GATT and the GATT
Antidumping Code were superseded on January 1, 1995 by a new GATT, which is
administered by the newly created World Trade Organization ("WTO"). The
antidumping orders outstanding against cement and clinker from Mexico and Japan
and the suspension agreement on cement and clinker from Venezuela remain in
force. However, new legislation passed by the U.S. Congress in December 1994
requires the initiation of "sunset" reviews of the antidumping orders against
Mexico and Japan and the suspension agreement with Venezuela prior to January
2000 to determine whether these antidumping orders and the suspension agreement
should terminate or remain in effect.
NAFTA has thus far had no material adverse effect on the antidumping
duty cash deposit rates imposed on gray portland cement and clinker imported
from Mexico. Certain appeals which previously would have been brought before the
CIT will now be heard by a bi-national panel of Mexican and U.S. citizens under
NAFTA. A severe economic crisis in Mexico resulted in devaluations of the
Mexican peso in late 1994 and early 1995. Because of the retroactive nature of
administrative reviews, the impact on the calculation of antidumping cash
deposit rates resulting from the devaluation of the peso, if any, will not be
realized until some future period.
A substantial reduction or elimination of the existing antidumping
duties as a result of GATT, NAFTA, currency devaluation or any other reason, or
an influx of low-priced cement from countries not subject to antidumping orders,
could materially adversely affect the Company's results of operations.
ENVIRONMENTAL RISKS
The Company is subject to extensive Federal, state and local air, water
and other environmental laws and regulations. These constantly changing laws
regulate the discharge of materials into the environment and may require the
Company to remove or mitigate the environmental effects of the disposal or
release of certain substances at the Company's various operating facilities and
elsewhere. Management believes that the Company's current procedures and
practices for handling and management of materials are generally consistent with
industry standards and legal requirements and that appropriate precautions are
taken to protect employees and others from harmful exposure to hazardous
materials. However, because of the complexity of operations and legal
requirements, there can be no assurance that past or future operations will not
result in operational errors, violations, remediation liabilities or claims by
employees or others alleging exposure to toxic or hazardous materials. Owners
and operators of industrial facilities may be subject to fines or other actions
imposed by the U.S. Environmental Protection Agency ("U.S. EPA") and
-14-
corresponding state regulatory agencies for violations of laws or regulations
relating to hazardous substances. The Company has incurred fines imposed by
various environmental regulatory agencies in the past.
Several of the Company's previously and currently owned facilities at
several locations have become the subject of various local, state and federal
environmental proceedings and inquiries, including the naming of the Company as
a potentially responsible party with regard to Superfund sites, primarily at
several locations to which the Company is alleged to have shipped materials for
disposal. While some of these Superfund matters have been settled for de minimis
amounts, others are in preliminary stages and final results may not be
determined for years. Based on the information the Company has developed to
date, the Company has no reason to believe it will be required to spend
significant sums with regard to these locations either individually or in the
aggregate. However, until it is determined what, if any, contribution the
Company made to these locations, and until all environmental studies,
investigations, remediation work and negotiations with or litigation against
potential sources of recovery have been completed, it is impossible to determine
the ultimate cost to the Company of resolving these environmental matters.
Industrial operations have been conducted at some of the Company's
cement manufacturing facilities for almost 100 years. In the past, the Company
disposed of various materials, including used refractory brick and other
products generally used in its cement manufacturing and concrete products
operations, in onsite and offsite facilities. Some of these materials, if
discarded today, might be classified as hazardous wastes and might be subject to
regulation under Federal and state environmental laws and regulations, which may
require the Company to undertake corrective action to remediate these sites.
In addition, many of the raw materials, products and by-products
currently associated with the operation of any industrial facility, including
those for the production of cement or concrete products, contain chemical
elements or compounds that are presently designated as hazardous substances.
Some examples of such materials are the trace metals present in cement kiln dust
("CKD"), chromium present in refractory brick formerly widely used to line
cement kilns and general purpose solvents. CKD is not classified as a hazardous
waste, except CKD that is produced by kilns burning hazardous waste derived
fuels and which fails to meet certain criteria. However, CKD that is infused
with water may produce a leachate with an alkalinity high enough to be
classified as hazardous and may also leach certain hazardous trace metals
present therein. Several of the Company's inactive CKD disposal sites around the
country have been under investigation by the Company to determine if remedial
action is required and, if so, the extent of remedial action required. The
Company has recorded charges totaling $13.3 million (approximately $12 million
of which has been expended through March 31, 1996) with respect to remediation
projects at one such site in Ohio, and on a voluntary basis is investigating two
other inactive CKD disposal sites in Ohio. No substantial investigative work has
been undertaken at the Company's other CKD sites in Ohio. Although data
necessary to enable the Company to estimate additional remediation costs are not
available, the Company acknowledges that it is at least reasonably possible that
the ultimate cost to remediate the CKD disposal problem in Ohio could be
significantly more than the amounts reserved.
Although CKD is at present generally exempt from management as a
hazardous waste, on January 31, 1995, the U.S. EPA issued its decision that
further regulation of CKD is necessary. The U.S. EPA has initiated a rulemaking
process, which is estimated to take at least until 1997, in order to develop
specifically tailored CKD management standards. A change in the status of CKD
may require the cement industry to develop new methods for handling this high
volume, low toxicity waste.
With regard to its discontinued environmental services business, the
Company has both given indemnification to and received indemnification from
others for properties previously owned, although some courts have held that
indemnification for such environmental liabilities is unenforceable. No estimate
of the extent of contamination, remediation cost or recoverability of cost from
prior owners, if any, is presently available regarding these discontinued
operations.
-15-
RANKING OF THE NOTES
The Notes are unsecured and subordinated in right of payment to all
existing and future Senior Indebtedness of the Company, including all
indebtedness under the Revolving Credit Facility. By reason of such
subordination, in the event of an insolvency, liquidation or other
reorganization of the Company, the Senior Indebtedness must be paid in full
before the principal of, premium, if any, or interest on, the Notes may be paid.
As of March 31, 1996 the Notes were subordinated to approximately $78.6 million
of Senior Indebtedness. The Indenture does not limit the amount of Senior
Indebtedness that may be incurred by the Company if certain fixed charge
coverage tests are met, and, whether or not such tests are met, allows the
Company to incur as Senior Indebtedness the entire available amount under the
Revolving Credit Facility and certain additional amounts. See "Capitalization,"
"Description of the Series B Notes--Covenants" and "Description of Revolving
Credit Facility."
The Company may not pay principal of, premium, if any, or interest on,
the Notes, or repurchase, redeem or otherwise retire the Notes if there is any
payment default on Senior Indebtedness unless the default has been cured or
waived in writing, or such Senior Indebtedness has been paid in full, unless the
right under the Indenture to prevent any such payment is waived by or on behalf
of the holders of such Senior Indebtedness. In addition, if any other default
exists with respect to certain Senior Indebtedness and certain other conditions
are satisfied, the Company may not make any payments on the Notes for a
designated period of time. The right of each holder of the Notes to require the
Company to repurchase the Notes at a premium upon the occurrence of a Change of
Control would be blocked by the foregoing subordination provisions to the extent
that the event constituting a Change of Control also causes a default (or if a
default otherwise exists) under the Revolving Credit Facility or other Senior
Indebtedness. Upon any payment or distribution of assets of the Company upon a
total or partial liquidation, dissolution, reorganization or similar proceeding,
the holders of Senior Indebtedness will be entitled to receive payment in full
before the holders of the Notes are entitled to receive any payment. See
"Description of the Series B Notes--Subordination" and "--Covenants."
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The Original Notes have not been registered under the Securities Act,
and may not be resold by purchasers thereof unless the Original Notes are
subsequently registered or an exemption from the registration requirements of
the Securities Act is available. While the Original Notes are at present
eligible for trading in the PORTAL market, there can be no assurance, even
following registration or exchange of the Original Notes for Series B Notes,
that an active trading market for the Original Notes or the Series B Notes will
exist. At the time of the private placement of the Original Notes, the Initial
Purchasers advised the Company that they intended to make a market in the
Original Notes and, if issued, the Series B Notes. However, the Initial
Purchasers are not obligated to make a market in the Original Notes or the
Series B Notes, and any such market-making may be discontinued at any time at
the sole discretion of the Initial Purchasers. No assurance can be given as to
the liquidity of or trading market for the Original Notes or the Series B Notes.
CONSEQUENCES TO NON-TENDERING HOLDERS OF ORIGINAL NOTES
CONSEQUENCES OF FAILURE TO EXCHANGE. To the extent that Original Notes
are tendered and accepted for exchange pursuant to the Exchange Offer, the
trading market for Original Notes that remain outstanding may be significantly
more limited, which might adversely affect the liquidity of the Original Notes
not tendered for exchange. The extent of the market therefor and the
availability of price quotations would depend upon a number of factors,
including the number of holders of Original Notes remaining at such time and the
interest in maintaining a market in such Original Notes on the part of
securities firms. An issue of securities with a smaller outstanding market value
available for trading (the "float") may command a lower
-16-
price than would a comparable issue of securities with a greater float.
Therefore, the market price for Original Notes that are not exchanged in the
Exchange Offer may be affected adversely to the extent that the amount of
Original Notes exchanged pursuant to the Exchange Offer reduces the float. The
reduced float also may tend to make the trading price of the Original Notes that
are not exchanged more volatile.
CONSEQUENCES OF FAILURE TO PROPERLY TENDER. Issuance of the Series B
Notes in exchange for the Original Notes pursuant to the Exchange Offer will be
made following the prior satisfaction, or waiver, of the conditions set forth in
"The Exchange Offer--Conditions" and only after timely receipt by the Exchange
Agent of such Original Notes, a properly completed and duly executed Letter of
Transmittal and all other required documents. Therefore, holders of Original
Notes desiring to tender such Original Notes in exchange for Series B Notes
should allow sufficient time to ensure timely delivery of all required
documentation. Neither the Exchange Agent nor the Company is under any duty to
give notification of defects or irregularities with respect to the tenders of
Original Notes for exchange. Original Notes that may be tendered in the Exchange
Offer but which are not validly tendered will, following the consummation of the
Exchange Offer, remain outstanding and continue to be subject to the same
transfer restrictions currently applicable to such Original Notes.
-17-
<PAGE>
CAPITALIZATION
The table below sets forth the Company's capitalization at December 31,
1995, as adjusted to reflect (i) the repurchase and retirement of approximately
$120.2 million in aggregate principal amount of 14% Notes pursuant to the tender
offer at a price of $1,096.62 per $1,000 principal amount, plus accrued interest
up to, but not including, the purchase date for the tender offer with (ii) the
proceeds of the private placement of the Original Notes (assuming net proceeds
to the Company of $121.1 million), (iii) additional borrowings under the
Revolving Credit Facility of approximately $12.7 million, and (iv) cash on hand
of approximately $4.7 million for such purpose.
DECEMBER 31, 1995
------------------------
ACTUAL AS ADJUSTED
-------- --------
(DOLLARS IN MILLIONS)
Total debt:
Revolving Credit Facility(1) ............. $ 11.3 $ 24.0
14% Senior Subordinated Notes due 2001 ... 122.2(2) 4.7(2)
10% Senior Subordinated Notes due 2006 ... -- 125.0
Industrial development bonds ............. 39.3 39.3
Other .................................... 2.4 2.4
-------- --------
Total debt ............................. 175.2 195.4
-------- --------
Shareholders' equity:
Series A preferred stock ................. 19.9 19.9
Series B preferred stock ................. 45.7 45.7
Series D preferred stock ................. 86.3 86.3
Common shareholders' equity .............. 223.1 211.7(3)
-------- --------
Total shareholders' equity ............. 375.0 363.6
-------- --------
Total capitalization ................. $ 550.2 $ 559.0
======== ========
(1) Consists of a $200 million Revolving Credit Facility which matures in
October 2000, including a $95 million subfacility for standby letters of
credit. As of December 31, 1995, the Company had $60.5 million of letters
of credit outstanding and, on a pro forma basis after giving effect to the
private placement of the Original Notes, the tender offer for the 14%
Notes, the related borrowing under the Revolving Credit Facility of $12.7
million and the release in February 1996 of certain obligations to the U.S.
Maritime Administration, the Company would have had $115.5 million of
availability under the Revolving Credit Facility. The majority of the
outstanding letters of credit secure Senior Indebtedness, and the remainder
of such letters of credit, if drawn, would constitute Senior Indebtedness.
See "Description of Revolving Credit Facility." On March 31, 1996, the
Company had borrowings of approximately $37.0 million and letters of credit
of approximately $51.3 million outstanding under the Revolving Credit
Facility.
(2) Represents the principal amount of 14% Notes outstanding at December 31,
1995 ($125.0 million actual, $4.8 million as adjusted), net of unamortized
original issue discount at December 31, 1995 ($2.8 million actual, $0.1
million as adjusted).
(3) Gives effect to the extraordinary charge, net of income tax, of $11.4
million relating to the premium assumed above and debt issuance costs
associated with the repurchase and retirement prior to maturity of $120.2
million principal amount of 14% Notes pursuant to the tender offer for the
14% Notes.
-18-
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER; REGISTRATION RIGHTS
The Original Notes were sold by the Company on March 19, 1996 (the
"Issue Date") to the Initial Purchasers, which placed the Original Notes with
institutional investors. In connection therewith, the Company entered into the
Registration Rights Agreement, which required that, within 30 days following the
Issue Date, the Company file with the Commission a registration statement under
the Securities Act with respect to the Series B Notes to be offered in exchange
for the Original Notes, use its reasonable best efforts to cause such
registration statement to become effective under the Securities Act at the
earliest possible time, but in no event later than 90 days after the Issue Date,
and, upon the effectiveness of that registration statement, promptly commence
and cause the Exchange Offer to be consummated at the earliest possible time,
but in no event later than the later of 120 days following the Issue Date or 30
days following the effectiveness of the Registration Statement. The Company also
agreed to include in this Prospectus certain information necessary to allow a
broker-dealer who holds Original Notes that were acquired for its own account as
a result of market-making activities or other trading activities (other than
Original Notes acquired directly from the Company or any affiliate of the
Company) to exchange such Original Notes for Series B Notes pursuant to the
Exchange Offer and satisfy the prospectus delivery requirements in connection
with the Series B Notes received by such broker-dealer in the Exchange Offer as
described below.
In addition, the Company agreed, pursuant to the Registration Rights
Agreement, to file a shelf registration statement pursuant to Rule 415 under the
Securities Act (which may be an amendment to the Registration Statement of which
this Prospectus is a part) (the "Shelf Registration Statement"), registering for
resale (i) any Original Notes held by persons who are not permitted by law or
Commission policy to participate in the Exchange Offer and who satisfy certain
other conditions, (ii) any Series B Notes acquired in the Exchange Offer by any
holder who must comply with the prospectus delivery requirements of the
Securities Act in connection with the resales of such Series B Notes and this
Prospectus is not appropriate or available for such resales by such holder or
(iii) any Original Notes held by a broker-dealer which were acquired directly
from the Company or one of its affiliates. To participate in such a shelf
registration, any such holder of Notes must so notify the Company within 20
business days following consummation on the Exchange Offer and provide to the
Company the information reasonably requested by the Company within 20 days of
such request. The Company agreed to file with the Commission such a Shelf
Registration Statement (or an amendment to the Registration Statement of which
this Prospectus is a part) no later than 30 days after receipt of such a notice
from a holder described in (i), (ii) or (iii) above (the "Determination Date")
and to use its reasonable best efforts to cause the Shelf Registration Statement
(or amendment) to become effective on or prior to 90 days after the
Determination Date. In addition, the Company agreed to use its reasonable best
efforts to keep such Shelf Registration Statement continually effective,
supplemented and amended to the extent necessary to ensure that it is available
for resales of Notes for a period of at least three years following the Issue
Date (or one year in the case of a Shelf Registration Statement filed solely at
the request of the Initial Purchasers that hold Original Notes acquired directly
from the Company).
If the Company fails to comply with the above provisions, additional
interest (the "Additional Interest") shall be assessed on the Original Notes as
follows:
(i) if the Shelf Registration Statement is not filed within 30
days following the Determination Date, then commencing on the
31st day after such date Additional Interest shall be accrued
on the Original Notes over and above the accrued interest at a
rate of 0.50% per annum for the first 90 days immediately
following the 30th day after such date, such Additional
Interest rate increasing by an additional 0.25% per annum at
the beginning of each subsequent 90-day period;
-19-
(ii) if the Shelf Registration Statement is filed but is not
declared effective within 90 days following the Determination
Date, then commencing on the 91st day after the Determination
Date, Additional Interest shall be accrued on the Original
Notes over and above the accrued interest at a rate of 0.50%
per annum for the first 90 days immediately following the 90th
day after the Determination Date, such Additional Interest
rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period; and
(iii) if (A) the Exchange Offer is not consummated by the later of
120 days following the Issue Date or 30 days following the
effective date of this Registration Statement or (B) the Shelf
Registration Statement ceases to be effective or the
prospectus which is a part thereof cannot be used as a result
of a notice to the selling holders by the Company suspending,
for certain reasons, their use of such prospectus (a
"Suspension Event") for a period of more than 90 days prior to
three years from the Issue Date, then Additional Interest
shall be accrued on the Original Notes over and above the
accrued interest at a rate of 0.50% per annum for the first 60
days immediately following (x) the later of the 120th day
after the Issue Date or the 30th day after the effective date
of the Exchange Offer Registration Statement, in the case of
(A) above, or (y) the day such Shelf Registration Statement
ceases to be effective or a Suspension Event has lasted for
more than 90 days in the case of (B) above, such Additional
Interest rate increasing by an additional 0.25% per annum at
the beginning of each subsequent 60-day period;
PROVIDED, however, that the Additional Interest rate on the Original Notes may
not exceed 1.0% per annum; and, PROVIDED, FURTHER, that (1) upon the filing of
the Shelf Registration Statement (in the case of clause (i) above), (2) upon the
effectiveness of the Shelf Registration Statement (in the case of clause (ii)
above), or (3) upon the consummation of the Exchange Offer (in the case of
clause (iii) (A) above), or (4) upon the effectiveness of the Shelf Registration
Statement that had ceased to remain effective prior to three years from the
Issue Date or the end of the Suspension Event (in the case of clause (iii) (B)
above), Additional Interest on the Original Notes as a result of such clause
(i), (ii) or (iii) shall cease to accrue.
The summary herein of certain terms and provisions of the Registration
Rights Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Registration Rights Agreement, a copy of which has been filed as an exhibit to
the Registration Statement. The term "Holder" with respect to the Exchange Offer
means any person in whose name Original Notes are registered on the books of the
Company or any other person who has obtained a properly completed bond power
from the registered holder.
Based on an interpretation by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that, except as
noted below, Series B Notes issued pursuant to the Exchange Offer in exchange
for Original Notes may be offered for resale, resold and otherwise transferred
by a holder of such Series B Notes (other than any such holder which is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that such Series B Notes are acquired in the
ordinary course of such holder's business and such holder has no arrangement or
understanding with any person to participate in the distribution of such Series
B Notes. Any Holder who is an "affiliate" of the Company or who intends to
participate in the Exchange Offer for the purpose of participating in a
distribution of the Series B Notes (i) cannot rely on such interpretation by the
staff of the Commission, (ii) cannot tender Original Notes in the Exchange Offer
and (iii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction, unless
such sale or transfer is made pursuant to an exemption from such requirements.
By executing the Letter of Transmittal, each Holder will represent to the
Company that, among other things, the Series B Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving such
-20-
Series B Notes, whether or not such person is the Holder, that neither the
Holder nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such Series B Notes and that
neither the Holder nor any such other person is an "affiliate," as defined under
Rule 405 of the Securities Act, of the Company.
Broker-dealers meeting the requirements above who acquired Original
Notes for their own accounts as a part of market making or other trading
activities may participate in the Exchange Offer. However, such broker-dealers
may be statutory underwriters and must deliver a prospectus in connection with
any resale of Series B Notes received in the Exchange Offer. Each broker-dealer
that so receives Series B Notes for its own account pursuant to the Exchange
Offer must acknowledge in the Letter of Transmittal that it will deliver a
prospectus in connection with any resale of such Series B Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, such
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, generally may be used by a broker-dealer in
connection with resales of Series B Notes received in exchange for Original
Notes where such Original Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities and not acquired
directly from the Company or any of its affiliates. The Company has generally
agreed in the Registration Rights Agreement that for a period of one year after
the date on which the Registration Statement becomes effective, it will make
this Prospectus available to any such broker-dealer for use in connection with
any such resale. However, the Letter of Transmittal requires a broker-dealer
receiving Series B Notes in the Exchange Offer to indicate whether such
broker-dealer acquired its Original Notes for its own account as a result of
market making activities or other trading activities (other than Original Notes
acquired directly from the Company or any of its affiliates), and if no
broker-dealer indicates that such Original Notes were so acquired, the Company
has no obligation under the Registration Rights Agreement to maintain the
effectiveness of the Registration Statement past the consummation of the
Exchange Offer or to allow the use of this Prospectus for such resales.
Except as set forth above, after the consummation of the Exchange
Offer, holders of Notes have no registration or exchange rights under the
Registration Rights Agreement. See "--Consequences of Failure to Exchange," and
"Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
The Original Notes which are not exchanged for Series B Notes pursuant
to the Exchange Offer and are not included in a resale prospectus which, if
required, will be filed as part of the Shelf Registration Statement, will remain
restricted securities. Accordingly, such Original Notes, within three years
after the Issue Date, may be sold only (a) to the Company, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) for so long as the Notes are eligible for resale pursuant to Rule 144A
under the Securities Act, to a person the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A that purchases for
its own account or for the account of such a qualified institutional buyer and
to whom notice is given that the transfer is being made in reliance on Rule
144A, (d) inside the United States to an institutional accredited investor that,
prior to such transfer, furnishes to the Trustee a signed letter containing
certain representations and agreements relating to the restrictions on transfer
of such Original Notes (the form of which letter can be obtained from such
Trustee), (e) pursuant to offers and sales that occur outside the United States
in compliance with Rule 904 under the Securities Act, or (f) pursuant to any
other available exemption from the registration requirements of the Securities
Act; subject in the case of clauses (d), (e) or (f), that the Company and the
Trustee reserve the right to require the delivery to them of an opinion of
counsel, certifications and/or other information satisfactory to the Company and
the Trustee.
-21-
To the extent Original Notes are tendered and accepted in the Exchange
Offer, the principal amount of outstanding Original Notes will decrease with a
resulting decrease in the liquidity in the market therefor. Accordingly, the
liquidity of the market for the Original Notes could be adversely affected. See
"Risk Factors -- Consequences to Non-Tendering Holders of Original Notes."
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept any and all Original Notes validly tendered and not
withdrawn prior to 5:00 p.m., New York City time, on the Expiration Date. The
Company will issue $1,000 principal amount of Series B Notes in exchange for
each $1,000 principal amount of outstanding Original Notes accepted in the
Exchange Offer. Holders may tender some or all of their Original Notes pursuant
to the Exchange Offer. However, Original Notes may be tendered only in integral
multiples of $1,000.
The form and terms of the Series B Notes will be identical in all
material respects to the form and terms of the Original Notes except that the
Series B Notes have been registered under the Securities Act and hence will not
bear legends restricting the transfer thereof. The Series B Notes will evidence
the same debt as the Original Notes and will be entitled to the benefits of the
Indenture.
As of the date hereof, $125,000,000 aggregate principal amount at
maturity of the Original Notes are outstanding and there are ________ registered
Holders. This Prospectus, together with the Letter of Transmittal, is being sent
to all such registered Holders as of __________, 1996.
Holders of the Original Notes do not have any appraisal or dissenters'
rights under the Louisiana Business Corporation Law or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the Exchange
Offer in accordance with the applicable requirements of the Exchange Act and the
rules and regulations of the Commission thereunder.
The Company shall be deemed to have accepted Original Notes validly
tendered and not withdrawn when, as and if the Company has given oral or written
notice thereof to the Exchange Agent after the Expiration Date. The Exchange
Agent will act as agent for the tendering Holders for the purpose of receiving
the Series B Notes form the Company.
If any tendered Original Notes are not accepted for exchange because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Original Notes will be returned,
without expense, to the tendering Holder thereof (or, in the case of Original
Notes tendered by book-entry transfer, such Original Notes will be credited to
the account maintained at The Depository Trust Company ("DTC") from which such
Original Notes were delivered) as promptly as practicable after the Expiration
Date.
Holders who tender Original Notes in the Exchange Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions in
the Letter of Transmittal, transfer taxes with respect to the exchange of
Original Notes pursuant to the Exchange Offer. The Company will pay all charges
and expenses, other than certain applicable taxes, in connection with the
Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
_________, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
-22-
The Company expressly reserves the right, at any time or from time to
time, regardless of whether or not any of the events set forth under "Conditions
to the Exchange Offer" shall have occurred or shall have been determined by the
Company to have occurred, subject to applicable law, (i) to extend the period of
time during which the Exchange Offer is open and thereby delay acceptance of any
Original Notes, by giving oral or written notice of such extension to the
Exchange Agent and (ii) to amend the Exchange Offer in any respect by giving
oral or written notice of such amendment to the Exchange Agent. The rights
reserved by the Company in this paragraph are in addition to the Company's
rights described in below under "--Conditions." Any extension, amendment or
termination will be followed as promptly as practicable by public announcement
thereof, the announcement in the case of an extension to be issued no later than
9:00 a.m., New York City time, on the next business day after the previously
scheduled Expiration Date. Without limiting the manner in which the Company may
choose to make any public announcement, the Company shall have no obligation to
publish, advertise or otherwise communicate any such public announcement other
than by issuing a release to the Dow Jones News Service.
If the Company extends the Exchange Offer, or if (whether before or
after any Original Notes have been accepted for exchange) the exchange for
Series B Notes is delayed or the Company is unable to exchange Series B Notes
for Original Notes pursuant to the Exchange Offer for any reason, then, without
prejudice to the Company's rights under the Exchange Offer, the Exchange Agent
may retain tendered Original Notes on behalf of the Company, and such Original
Notes may not be withdrawn except to the extent tendering Holders are entitled
to withdrawal rights as described below under "--Withdrawal of Tenders."
However, the ability of the Company to delay the exchange of Original Notes that
the Company has accepted for exchange is limited by Rule 14e-l(c) under the
Exchange Act, which requires that a bidder pay the consideration Exchange
Offered or return the securities deposited by or on behalf of holders of
securities promptly after the termination or withdrawal of a tender offer.
PROCEDURES FOR TENDERING ORIGINAL NOTES
TENDERS OF ORIGINAL NOTES. The tender by a Holder of Original Notes
pursuant to any of the procedures set forth below will constitute the tendering
Holder's acceptance of the terms and conditions of the Exchange Offer. The
Company's acceptance for exchange of Original Notes tendered pursuant to any of
the procedures described below will constitute a binding agreement between such
tendering Holder and the Company in accordance with the terms and subject to the
conditions of the Exchange Offer. Only Holders are authorized to tender their
Original Notes. The procedures by which Original Notes may be tendered by
beneficial owners that are not Holders will depend upon the manner in which the
Original Notes are held.
The Depository Trust Company ("DTC") has authorized DTC participants
that are beneficial owners of Original Notes through DTC to tender their
Original Notes as if they were Holders. To effect a tender, DTC participants
should either (i) complete and sign the Letter of Transmittal or a facsimile
thereof, have the signature thereon guaranteed if required by Instruction 1 of
the Letter of Transmittal, and mail or deliver the Letter of Transmittal or such
facsimile pursuant to the procedures for book-entry transfer set forth below
under "--Book-Entry Delivery Procedures," or (ii) transmit their acceptance to
DTC through the DTC Automated Tender Offer Program ("ATOP"), for which the
transaction will be eligible, and follow the procedures for book-entry transfer
set forth below under "--Book-Entry Delivery Procedures."
TENDER OF ORIGINAL NOTES HELD IN PHYSICAL FORM. To tender effectively
Original Notes held in physical form pursuant to the Exchange Offer, a properly
completed Letter of Transmittal (or a facsimile thereof) duly executed by the
Holder thereof, and any other documents required by the Letter of Transmittal,
must be received by the Exchange Agent at one of its addresses set forth below,
and tendered Original Notes must be received by the Exchange Agent at such
address (or delivery effected through the deposit of Original Notes into the
Exchange Agent's account with DTC and making book-entry delivery as set forth
below) on
-23-
or prior to the Expiration Date, or the tendering holder must comply with the
guaranteed delivery procedure set forth below. LETTERS OF TRANSMITTAL OR
ORIGINAL NOTES SHOULD BE SENT ONLY TO THE EXCHANGE AGENT AND SHOULD NOT BE SENT
TO THE COMPANY.
TENDER OF ORIGINAL NOTES HELD THROUGH A CUSTODIAN. To tender
effectively Original Notes that are held of record by a custodian bank,
depository, broker, trust company or other nominee, the beneficial owner thereof
must instruct such Holder to tender the Original Notes on the beneficial owner's
behalf. A Letter of Instructions is included in the materials provided along
with this Prospectus which may be used by a beneficial owner in this process to
instruct the registered Holder of such owner's Original Notes to effect the
tender.
TENDER OF ORIGINAL NOTES HELD THROUGH DTC. To tender effectively
Original Notes that are held through DTC, DTC participants should either (i)
properly complete and duly execute the Letter of Transmittal (or a facsimile
thereof), and any other documents required by the Letter of Transmittal, and
mail or deliver the Letter of Transmittal or such facsimile pursuant to the
procedures for book-entry transfer set forth below or (ii) transmit their
acceptance through ATOP, for which the transaction will be eligible, and DTC
will then edit and verify the acceptance and send an Agent's Message to the
Exchange Agent for its acceptance. Delivery of tendered Original Notes held
through DTC must be made to the Exchange Agent pursuant to the book-entry
delivery procedures set forth below or the tendering DTC participant must comply
with the guaranteed delivery procedures set forth below.
THE METHOD OF DELIVERY OF ORIGINAL NOTES AND LETTERS OF TRANSMITTAL,
ANY REQUIRED SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING
DELIVERY THROUGH DTC AND ANY ACCEPTANCE OR AGENT'S MESSAGE TRANSMITTED THROUGH
ATOP, IS AT THE ELECTION AND RISK OF THE PERSON TENDERING ORIGINAL NOTES AND
DELIVERING LETTERS OF TRANSMITTAL AND, EXCEPT AS OTHERWISE PROVIDED IN THE
LETTER OF TRANSMITTAL, DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED
BY THE EXCHANGE AGENT. IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER
USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT
THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT
DELIVERY TO THE EXCHANGE AGENT PRIOR TO SUCH DATE.
Except as provided below, unless the Original Notes being tendered are
deposited with the Exchange Agent on or prior to the Expiration Date
(accompanied by a properly completed and duly executed Letter of Transmittal or
a properly transmitted Agent's Message), the Company may, at its option, reject
such tender. Exchange of Series B Notes for the Original Notes will be made only
against deposit of the tendered Original Notes and delivery of all other
required documents.
BOOK-ENTRY DELIVERY PROCEDURES. The Exchange Agent will establish
accounts with respect to the Original Notes at DTC for purposes of the Exchange
Offer within two business days after the date of this Prospectus, and any
financial institution that is a participant in DTC may make book-entry delivery
of the Original Notes by causing DTC to transfer such Original Notes into the
Exchange Agent's account in accordance with DTC's procedures for such transfer.
However, although delivery of Original Notes may be effected through book-entry
at DTC, the Letter of Transmittal (or facsimile thereof), with any required
signature guarantees or an Agent's Message in connection with a book-entry
transfer, and any other required documents, must, in any case, be transmitted to
and received by the Exchange Agent at one or more of its addresses set forth in
this Prospectus on or prior to the Expiration Date, or compliance must be made
with the guaranteed delivery procedures described below. Delivery of documents
to DTC does not constitute delivery to the Exchange Agent. The confirmation of a
book-entry transfer into the Exchange Agent's account at DTC as described above
is referred to herein as a "Book-Entry Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of the Book-Entry
Confirmation, which states that DTC has received
-24-
an express acknowledgment from each participant in DTC tendering the Original
Notes and that such participant has received the Letter of Transmittal and
agrees to be bound by the terms of the Letter of Transmittal and the Company may
enforce such agreement against such participant.
SIGNATURE GUARANTEES. Signatures on all Letters of Transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Original Notes tendered thereby are tendered
(i) by a registered Holder of Original Notes (or by a participant in DTC whose
name appears on a DTC security position listing as the owner of such Original
Notes) who has not completed either the box entitled "Special Issuance
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal,
or (ii) for the account of an Eligible Institution. See Instruction 1 of the
Letter of Transmittal. If the Original Notes are registered in the name of a
person other than the signer of the Letter of Transmittal or if Original Notes
not accepted for exchange or not tendered are to be returned to a person other
than the registered Holder, then the signatures on the Letters of Transmittal
accompanying the tendered Original Notes must be guaranteed by an Eligible
Institution as described above. See Instructions 1 and 5 of the Letter of
Transmittal.
GUARANTEED DELIVERY. If a Holder desires to tender Original Notes
pursuant to the Exchange Offer and time will not permit the Letter of
Transmittal, certificates representing such Original Notes and all other
required documents to reach the Exchange Agent, or the procedures for book-entry
transfer cannot be completed, on or prior to the Expiration Date, such Original
Notes may nevertheless be tendered if all the following conditions are
satisfied:
(i) the tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Company
herewith, or an Agent's Message with respect to guaranteed
delivery that is accepted by the Company, is received by the
Exchange Agent on or prior to the Expiration Date, as provided
below; and
(iii) the certificates for the tendered Original Notes, in proper
form for transfer (or a Book-Entry Confirmation of the
transfer of such Original Notes into the Exchange Agent's
account at DTC as described above), together with a Letter of
Transmittal (or facsimile thereof), properly completed and
duly executed, with any required signature guarantees and any
other documents required by the Letter of Transmittal or a
properly transmitted Agent's Message, are received by the
Exchange Agent within two business days after the date of
execution of the Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be sent by hand delivery,
telegram, facsimile transmission or mail to the Exchange Agent and must include
a guarantee by an Eligible Institution in the form set forth in the Notice of
Guaranteed Delivery.
Notwithstanding any other provision hereof, delivery of Series B Notes
by the Exchange Agent for Original Notes tendered and accepted for exchange
pursuant to the Exchange Offer will, in all cases, be made only after timely
receipt by the Exchange Agent of such Original Notes (or Book-Entry Confirmation
of the transfer of such Original Notes into the Exchange Agent's account at DTC
as described above), and a Letter of Transmittal (or facsimile thereof) with
respect to such Original Notes, properly completed and duly executed, with any
required signature guarantees and any other documents required by the Letter of
Transmittal, or a properly transmitted Agent's Message.
-25-
DETERMINATION OF VALIDITY. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tendered Original
Notes pursuant to any of the procedures described above will be determined by
the Company, in the Company's sole discretion, and its determination will be
final and binding. The Company reserves the absolute right to reject any or all
tenders of any Original Notes determined by the Company not to be in proper form
or if the acceptance for exchange of, or exchange for, such Original Notes may,
in the opinion of the Company's counsel, be unlawful. The Company also reserves
the absolute right, in the Company's sole discretion, to waive any of the
conditions of the Exchange Offer or any defect or irregularity in any tender
with respect to Original Notes of any particular Holder, whether or not similar
defects or irregularities are waived in the case of other Holders. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
Letter of Transmittal and the Instructions thereto) will be final and binding.
No tender of Original Notes will be deemed to have been validly made until all
defects or irregularities have been cured or expressly waived. Neither the
Company nor the Exchange Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification.
WITHDRAWAL OF TENDERS
Tenders of Original Notes made pursuant to the Exchange Offer are
irrevocable, except that Original Notes tendered may be withdrawn at any time
prior to the Expiration Date (but not thereafter). For a withdrawal of a tender
to be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must be timely received by the Exchange Agent at one of its addresses
set forth in this Prospectus. Any such notice of withdrawal must (i) specify the
name of the person who tendered the Original Notes to be withdrawn, (ii) contain
the description of the Original Notes to be withdrawn and identify the
certificate number or numbers shown on the particular certificates evidencing
such Original Notes (unless such Original Notes were tendered by book-entry
transfer) and the aggregate principal amount represented by such Original Notes,
and (iii) be signed by the Holder of such Original Notes in the same manner as
the original signature on the Letter of Transmittal by which such Original Notes
were tendered (including any required signature guarantees), or be accompanied
by documents of transfer sufficient to have the Trustee under the Indenture
register the transfer of the Original Notes into the name of the person
withdrawing such Original Notes. If Original Notes have been delivered pursuant
to the procedures for book-entry transfer set forth in "--Book- Entry Delivery
Procedures," any notice of withdrawal must specify the name and number of the
account at the appropriate book-entry transfer facility to be credited with such
withdrawn Original Notes and must otherwise comply with such book-entry transfer
facility's procedures. If the Original Notes to be withdrawn have been delivered
or otherwise identified to the Exchange Agent, a signed notice of withdrawal
meeting the requirements above is effective immediately upon written or
facsimile notice of withdrawal even if physical release is not yet effected. A
withdrawal of Original Notes can only be accomplished in accordance with the
foregoing procedures.
All questions as to the form and validity (including time of receipt)
of notices of withdrawal will be determined by the Company, in the Company's
sole discretion, and its determination will be final and binding. No withdrawal
of Original Notes will be deemed to have been properly made until all defects or
irregularities have been cured or expressly waived. Neither the Company nor the
Exchange Agent or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal or revocation or
incur any liability for failure to give any such notification.
Any Original Notes properly withdrawn will be deemed to be not validly
tendered for purposes of the Exchange Offer. Withdrawn Original Notes may be
retendered by following one of the procedures described in "Procedures for
Tendering Original Notes" at any time prior to the Expiration Date.
-26-
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall
not be required to accept for exchange, or exchange Series B Notes for, any
Original Notes, and may terminate the Exchange Offer as provided herein before
the acceptance of such Original Notes, if:
(a) any action or proceeding is instituted or threatened in
any court or by or before any governmental agency with respect to the
Exchange Offer which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the
Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company, or any material adverse development has
occurred in any existing action or proceeding with respect to the
Company or any of its subsidiaries; or
(b) any change, or any development involving a prospective
change, in the business or financial affairs of the Company or any of
its subsidiaries has occurred which, in the sole judgment of the
Company, might materially impair the ability of the Company to proceed
with the Exchange Offer or materially impair the contemplated benefits
of the Exchange Offer to the Company; or
(c) any law, statute, rule or regulation is proposed, adopted
or enacted, which, in the sole judgment of the Company, might
materially impair the ability of the Company to proceed with the
Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to the Company; or
(d) any governmental approval has not been obtained, which
approval the Company shall, in its sole discretion, deem necessary for
the consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Original
Notes and return all tendered Original Notes to the tendering Holders, (ii)
extend the Exchange Offer and retain all Original Notes tendered prior to the
expiration of the Exchange Offer, subject, however, to the rights of Holders to
withdraw such Original Notes (see "--Withdrawal of Tenders") or (iii) waive such
unsatisfied conditions with respect to the Exchange Offer and accept all
properly tendered Original Notes which have not been withdrawn. If such waiver
constitutes a material change to the Exchange Offer, the Company will promptly
disclose such waiver by means of a prospectus supplement that will be
distributed to the registered Holders, and the Company will extend the Exchange
Offer for a period of five to 10 business days, depending upon the significance
of the waiver and the manner of disclosure to the registered Holders, if the
Exchange Offer would otherwise expire during such five to 10 business day
period.
EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange
Agent for the Exchange Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery and other related documents should
be directed to the Exchange Agent addressed as follows:
-27-
STATE STREET BANK AND TRUST COMPANY
BY MAIL:
State Street Bank and
Trust Company
P.O. Box 778
Boston, Massachusetts 02102
Attention: Nancy Bowker
Corporate Trust Department
BY OVERNIGHT DELIVERY:
State Street Bank and
Trust Company
225 Franklin Street - IP4
Boston, Massachusetts 02110
Attention: Nancy Bowker
Corporate Trust Department
BY FACSIMILE TRANSMISSION:
(FOR ELIGIBLE INSTITUTIONS ONLY)
(617) 664-5784
CONFIRM BY TELEPHONE:
(617) 664-5539
BY HAND:
State Street Bank and
Trust Company
Two International Plaza-4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Window
or
State Street Bank and Trust
Company, National Association
61 Broadway
New York, New York 10006
Attention: Corporate Trust Window-
Concourse Level
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone or in person by officers and regular
employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
The expenses to be incurred in connection with the Exchange Offer will
be paid by the Company and are estimated in the aggregate to be approximately
$_______. Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Original Notes pursuant to the Exchange Offer. If, however,
certificates representing Series B Notes or Original Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
issued in the name of, any person other than the registered Holder of the
Original Notes tendered, or if tendered Original Notes are registered in the
name of any person other than the person signing the Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Original
Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered Holder or any other persons) will be payable
by the tendering Holder. If satisfactory evidence of payment of such taxes or
exemption therefrom is not submitted with the Letter of Transmittal, the amount
of such transfer taxes will be billed directly to such tendering Holder.
-28-
ACCOUNTING TREATMENT
The Series B Notes will be recorded at the same carrying value as the
Original Notes as reflected in the Company's accounting records on the date of
the exchange. Accordingly, no gain or loss for accounting purposes will be
recognized upon consummation of the Exchange Offer. The expenses of the Exchange
Offer will be amortized over the term of the Series B Notes.
-29-
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
SCOPE AND LIMITATIONS
The following discussion is a general summary of the principal federal
income tax matters of general application relating to the Exchange Offer and the
holding and disposing of the Original Notes and the Series B Notes and
constitutes the opinion of Bracewell & Patterson, L.L.P. ("Counsel"), counsel to
the Company, as to these matters. There can be no assurance that the Internal
Revenue Service will take a similar view as to any of the tax consequences
described below. The discussion is based on current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), existing Treasury regulations
promulgated thereunder and administrative and judicial interpretations thereof,
all of which are subject to change. The discussion does not purport to describe
all aspects of federal income taxation that may be relevant to a holder in light
of its particular tax status and its other income, deductions and credits and
does not discuss any state, local or foreign tax matters. Moreover, certain
holders (including insurance companies, tax-exempt organizations and foreign
persons) may be subject to special rules not discussed below. The discussion is
limited to investors who hold the Original Notes, and will hold any Series B
Notes acquired pursuant to the Exchange Offer, as capital assets (generally,
property held for investment).
Due to the individual nature of tax consequences, each holder of
Original Notes is urged to consult its own tax advisor as to the particular tax
consequences to it of the exchange of its Original Notes for Series B Notes, and
the ownership and disposition of Notes, including the effect of possible changes
in the tax laws.
EXCHANGE OF ORIGINAL NOTES FOR SERIES B NOTES
An exchange of Original Notes for Series B Notes pursuant to the
Exchange Offer will not be treated as an exchange for federal income tax
purposes. Rather, the issuance of Series B Notes in exchange for Original Notes
will be characterized as a continuation of the outstanding indebtedness
previously represented by the Original Notes. If so characterized, the issuance
of Series B Notes in exchange for the Original Notes would have no independent
tax significance and, therefore, an exchanging holder would not recognize income
or loss in connection with the exchange, its basis in the Series B Notes would
be the same as its basis in the Original Notes exchanged therefor, its holding
period in the Series B Notes would include its holding period in the Original
Notes exchanged therefor and interest accrued on the Original Notes as of the
date of the exchange would be recognized by a cash basis holder at the time it
is actually received.
The Company intends to treat the Exchange Offer as a transaction which
is not an exchange for federal income tax purposes. Therefore, the following
summary of federal income tax consequences of owning and disposing of the Series
B Notes also applies to holders of Original Notes who do not accept the Exchange
Offer. As used herein, the term "Notes" means both the Original Notes and the
Series B Notes.
THE NOTES
STATED INTEREST. A holder of a Note is required to report as ordinary
income the stated interest earned on the Note in accordance with such holder's
method of tax accounting.
AMORTIZABLE BOND PREMIUM. If a holder purchases a Note after issuance
and its tax basis in the Note as of the date of purchase exceeds the greater of
the principal amount or the amount payable on a call date prior to maturity, the
holder may be entitled to elect to treat such excess as bond premium which is
amortizable over the term of the Note in accordance with a constant yield to
maturity method that takes into account the compounding of interest. An election
to amortize bond premium applies to all debt obligations
-30-
acquired by the taxpayer in the taxable year of the election and all subsequent
years, unless revoked with the consent of the Internal Revenue Service ("IRS").
If amortizable bond premium for a holder is determined by reference to a call
price, and if the Note is not subsequently redeemed on the call date, then, for
purposes of determining future amounts of amortizable bond premium, the Note
will be considered to be reissued on such date for an amount equal to the
nonexercised call price. The amount of amortizable bond premium with respect to
a Note generally will be treated as a reduction in the holder's interest income
on the Note. The holder's tax basis in the Note will be reduced by any bond
premium it is allowed to amortize. Purchasers of Notes should consult their tax
advisors concerning the existence of amortizable bond premium and the effect of
the associated election.
DISPOSITION. In general, upon the sale, redemption or other disposition
of a Note, the holder will recognize (i) ordinary interest income to the extent
of any interest that has accrued while the holder held the Note but has not yet
been taken into income by the holder and (ii) gain or loss equal to the
difference between the amount realized from such disposition (exclusive of any
amounts treated as ordinary interest income under clause (i)) and the holder's
tax basis in the Note. Except as provided under "--Market Discount" below, the
gain or loss described in clause (ii) of the preceding sentence will be capital
gain or loss and will be long-term if the Note was held for more than one year.
MARKET DISCOUNT. If a holder purchases a Note after issuance, there
will be market discount equal to the excess, if any, of the principal amount of
the Note over the holder's tax basis in the Note at the time of acquisition,
unless such excess qualified for a DE MINIMIS exception. Under the market
discount rules, any gain recognized by a holder upon the sale or other
disposition of a Note with market discount will be taxable as ordinary interest
income to the extent of the portion of the market discount that accrued on a
straight-line basis (or, at the election of the holder, on a constant yield to
maturity basis) while the holder held the Note. Market discount income may be
recognized on a gift of a Note as if the Note had been sold for its fair market
value. A holder of a Note with market discount may be required to defer
deductions for a portion of such holder's interest expense on any indebtedness
incurred or maintained to purchase or carry the Note.
As an alternative to the foregoing, a holder of a Note with market
discount may elect under certain circumstances to accrue such market discount
income currently (in which case its tax basis in the Note will be increased by
such accrued market discount income and the deduction-deferral rule described in
the preceding paragraph will not apply to the Note). Any such election applies
to all obligations acquired by the holder in the taxable year of the election
and all subsequent years, unless revoked with the consent of the IRS.
BACKUP WITHHOLDING. A holder of a Note may be subject to backup
withholding of federal income tax at the rate of 31% of interest paid with
respect to the Note and on the proceeds of a sale or redemption of the Note.
Backup withholding will not apply, however, if the holder (i) provides a
taxpayer identification number under penalties of perjury and otherwise complies
with the requirements of the backup withholding rules or (ii) is an exempt
recipient or an exempt foreign person and demonstrates his qualifications for
such exemption.
-31-
DESCRIPTION OF REVOLVING CREDIT FACILITY
The Company has a Third Amended and Restated Credit Agreement, as
amended (the "Revolving Credit Facility") with certain financial institutions
("Banks") and Wells Fargo Bank, N.A., as Agent ("Agent") pursuant to which the
Banks have committed to provide the Company with a $200 million revolving credit
facility, including a $95 million subfacility for standby letters of credit. The
Revolving Credit Facility matures and must be paid in full on October 30, 2000,
and is secured by a first priority, perfected security interest in (i) five of
the Company's cement plants, not including the Florida cement plant, (ii) the
Company's partnership interest in Kosmos Cement, (iii) the Company's interest in
the stock of Mojave Northern Railroad Company, a wholly-owned subsidiary of the
Company and a California corporation ("Mojave"), and (iv) Mojave's equipment.
Interest on each loan under the Revolving Credit Facility accrues at either
LIBOR or the Agent's base "prime" rate plus an applicable margin, in each case
calculated upon the Company's ratio of funded debt to EBITDA. As of March 31,
1996, the applicable interest rate on the loans was 6.6% (LIBOR plus 1%).
The Revolving Credit Facility generally limits (in each case with
exceptions), among other things, the ability of the Company (i) to incur debt,
(ii) to grant liens, (iii) to make investments, (iv) to incur contingent
obligations out of the ordinary course of business, (v) to issue Preferred Stock
redeemable prior to October 30, 2002, (vi) to make fundamental changes to the
organization or capital structure of the Company, (vii) to enter into
sale-leaseback transactions, (viii) to sell the Florida cement plant or assets
consisting of the collateral securing the Revolving Credit Facility, (ix) to
enter into affiliate transactions not on an arm's length basis, (x) to engage in
a new business not substantially the same as an existing business, (xi) to amend
or waive certain debt documents, (xii) to use loan proceeds for purposes other
than general corporate purposes, (xiii) to agree to restrict any subsidiary's
ability to make payments to the Company, (xiv) to make principal payments on
subordinated debt other than certain permitted junior payments, (xv) to enter
into speculative hedge agreements, and (xvi) to make or declare certain
dividends or distributions on account of its capital stock. The Revolving Credit
Facility also subjects the Company to financial covenants relating to: (i) its
ratio of funded debt to EBITDA; (ii) its consolidated tangible net worth; (iii)
its ratio of current assets to current liabilities; and (iv) its ratio of EBITDA
minus capital expenditures to free cash flow, in each case as defined.
Events of Default under the Revolving Credit Facility include, among
other things: (i) the Company's failure to make principal payments and, within
applicable grace periods, to make payments of interest, fees or other amounts,
(ii) the Company's default of other monetary obligations on debt aggregating in
excess of $10.0 million, (iii) the Company's breach of certain covenants,
representations and warranties in the Revolving Credit Facility in any material
respect, (iv) an involuntary or a voluntary liquidation, reorganization or
bankruptcy proceeding against the Company, (v) the Company suffering a money
judgment or a writ or attachment or possession of assets by a judgment creditor
in excess of $7.5 million, (vi) the occurrence of certain ERISA events, (vii)
any cessation of the subordination provisions with respect to subordinated debt
of the Company, or (viii) upon a Change of Control of the Company, as defined.
Other than with respect to clauses (i) or (iii), an Event of Default is subject
to certain applicable grace periods.
-32-
DESCRIPTION OF THE SERIES B NOTES
The Original Notes are, and the Series B Notes are to be, issued under
the Indenture, which is dated as of March 19, 1996, between the Company and
State Street Bank and Trust Company, as Trustee (the "Trustee"). Upon the
issuance of Series B Notes, the Indenture will be subject to and governed by the
Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
following summary of certain terms and provisions of the Indenture does not
purport to be complete and is subject to, and is qualified in its entirety by
reference to, all of the provisions of the Indenture, including the definitions
of certain terms therein and those terms made a part of the Indenture by
reference to the Trust Indenture Act. In addition, definitions of certain
capitalized terms used in the following summary are set forth below under
"--Certain Definitions."
GENERAL
The aggregate principal amount of the Notes that may be issued will be
limited to $125 million. The Notes will mature on March 1, 2006 and will bear
interest from March 19, 1996 (or from the most recent date to which interest has
been paid), payable semi-annually on March 1 and September 1 of each year,
commencing on September 1, 1996, to holders of record at the close of business
on the February 15 or August 15 immediately preceding such interest payment
date. Interest on the Notes will be computed on the basis of a 360-day year of
twelve 30-day months. The interest rate on the Notes will be at the rate
specified on the cover page hereof and the interest rate on the Original Notes
is subject to increase, and such Additional Interest will be payable on the
payment dates set forth above, in certain circumstances described under "The
Exchange Offer--Purpose and Effect of the Exchange Offer; Registration Rights."
Principal of, premium, if any, and interest on the Notes will be
payable, and the Notes will be exchangeable and transferable (subject in the
case of the Original Notes to compliance with transfer restrictions imposed by
applicable securities laws for so long as the Original Notes are not registered
for resale under the Securities Act), at the office or agency of the Company
maintained for such purposes; PROVIDED, HOWEVER, that payment of interest may be
made at the option of the Company by check mailed to the holders of record as
shown on the security register. The Notes will be issued only in fully
registered form without coupons, in denominations of $1,000 and any integral
multiple thereof. No service charge will be made for any registration of
transfer, exchange or redemption of Notes, except in certain circumstances for
any tax or other governmental charge that may be imposed in connection
therewith.
Original Notes that remain outstanding after the consummation of the
Exchange Offer and Series B Notes will be entitled to vote or consent on all
matters as a single class of securities under the Indenture.
OPTIONAL REDEMPTION
The Notes will be subject to redemption, at the option of the Company,
in whole or in part, at any time on or after March 1, 2001, upon not less than
30 nor more than 60 days' prior notice in amounts of $1,000 or an integral
multiple thereof at the redemption prices (expressed as a percentage of the
principal amount) set forth below, if redeemed during the 12-month period
beginning March 1 of the years indicated below:
YEAR PERCENTAGE
---- ----------
2001........................ 105.000%
2002........................ 103.333%
2003........................ 101.667%
2004 and thereafter......... 100.000%
-33-
in each case together with accrued and unpaid interest to the redemption date.
If less than all the Notes are to be redeemed, the Trustee will select
the Notes to be redeemed by lot, pro rata or by any other method the Trustee
shall deem fair and reasonable. The Company will comply with all applicable
notice requirements regarding redemption as set forth in the Indenture.
SINKING FUND
The Notes are not subject to redemption through the operation of a
sinking fund, or other mandatory redemption provisions (except as described
under "--Change of Control" and "--Covenants--Limitations on Sale of Assets").
SUBORDINATION
The payment of the principal of, premium, if any, and interest on, the
Notes (including, without limitation, by any purchase of Notes referred to in
"--Change of Control" or in "--Limitations on Sale of Assets") and any other
Indebtedness, obligations or liabilities arising under or in connection with the
Indenture and the Notes, including all expenses, fees, interest and other
amounts payable thereunder, will be expressly subordinate and subject in right
of payment, as provided in the Indenture, to the prior payment in full of all
Senior Indebtedness. As of March 31, 1996, the aggregate amount of Senior
Indebtedness outstanding was approximately $78.6 million. Although the Indenture
contains limitations on the amount of additional Indebtedness that the Company
may incur, under certain circumstances the amount of such Indebtedness could be
substantial and, in any case, such Indebtedness may be Senior Indebtedness. See
"--Covenants--Limitation on Additional Indebtedness." The Notes will be general
unsecured obligations of the Company which will rank PARI PASSU with all
existing and future senior subordinated Indebtedness of the Company. The
Indenture provides that the Notes rank PARI PASSU with the 14% Notes.
"Senior Indebtedness" is defined as the principal of, premium, if any,
and interest (including interest accruing on or after the filing of a petition
initiating any proceeding under any state or federal bankruptcy law, whether or
not a claim for such interest is allowed or allowable in such proceeding) on,
and all fees, indemnities, reimbursement obligations in connection with letters
of credit and other monetary obligations of the Company in respect of, any Bank
Credit Facility or any other Indebtedness of the Company, whether outstanding on
the date of the Indenture or thereafter created, incurred or assumed, unless, in
the case of any particular Indebtedness, the instrument creating or evidencing,
or the agreement governing, such Indebtedness or pursuant to which such
Indebtedness is outstanding expressly provides that such Indebtedness shall not
be senior in right of payment to the Notes. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (i) Indebtedness evidenced by the
Original Notes or the Series B Notes; (ii) Indebtedness that by its contractual
terms is subordinate or junior in right of payment to any Indebtedness of the
Company; (iii) that portion of any Indebtedness that is incurred in violation of
the Indenture; (iv) Indebtedness of the Company to a Subsidiary; (v)
Indebtedness that is represented by Disqualified Stock; (vi) any liability for
federal, state, local or other taxes owed or owing by the Company; (vii)
accounts payable or other obligations to trade creditors created, incurred or
assumed in the ordinary course of business in connection with obtaining
materials or services; and (viii) amounts owing under leases (other than
Capitalized Lease Obligations).
"Designated Senior Indebtedness" means (i) Indebtedness of the Company
under any Bank Credit Facility and (ii) any other Senior Indebtedness which, at
either the date of creation thereof or the date of determination, has an
aggregate principal amount outstanding of, or under which at the date of
creation thereof or the date of determination, the holders thereof are committed
or have the option to lend, at least
-34-
$10 million and is specifically designated by the Company in any instrument
evidencing or governing such Senior Indebtedness as "Designated Senior
Indebtedness" for purposes of the Indenture.
During the continuance of any default in the payment of principal of,
reimbursement obligation under, premium, if any, or interest on, or any other
amounts payable with respect to, any Senior Indebtedness, including any payment
under a Hedging Obligation that constitutes Senior Indebtedness (a "Payment
Default"), no payment or distribution of any assets of the Company of any kind
or character may be made by the Company on account of the principal of, premium,
if any, interest on, or other amounts payable in respect of, the Notes or on
account of the purchase, redemption or other acquisition of or in respect of the
Notes (except in each case for payments or distributions made in certain
permitted equity interests or subordinated securities) unless and until such
Payment Default has been cured or waived in writing or such Senior Indebtedness
shall have been discharged or paid in full in cash or its equivalent or when the
right under the Indenture to prevent any such payment is waived in writing by or
on behalf of the holders of such Senior Indebtedness.
Further, during the continuance of any event (other than a Payment
Default) the occurrence of which entitles one or more Persons to accelerate the
maturity of any Designated Senior Indebtedness (a "Covenant Default") and upon
the receipt by the Trustee from the Senior Representative for such Designated
Senior Indebtedness of a written notice of such Covenant Default, no payment or
distribution of any assets of the Company of any kind or character may be made
by the Company on account of the principal of, premium, if any, or interest on,
or other amounts payable in respect of, the Notes or on account of the purchase,
redemption or other acquisition of or in respect of, the Notes (except in each
case for payments or distributions made in certain permitted equity interests or
subordinated securities) for the period specified below (the "Payment Blockage
Period").
The Payment Blockage Period shall commence upon the receipt by the
Trustee of such written notice from the Senior Representative for Designated
Senior Indebtedness of a Covenant Default and shall end on the earliest of (i)
179 days after the receipt of such notice; (ii) the date on which such Covenant
Default is cured or waived in writing or such Designated Senior Indebtedness is
discharged or paid in full in cash or its equivalent; or (iii) the date on which
such Payment Blockage Period shall have been terminated by written notice to the
Company and the Trustee from the Senior Representative initiating such Payment
Blockage Period, or the holders of at least the requisite principal amount of
such issue of Designated Senior Indebtedness as set forth in the agreements
relating thereto. After the end of a Payment Blockage Period, the Company shall
promptly resume making any and all required payments in respect of the Notes,
including any missed payments, unless such payment is prohibited because of a
Payment Default or by reason of insolvency, as described in the second
succeeding paragraph. In no event will a Payment Blockage Period extend beyond
179 days from the date of the receipt by the Trustee of the notice initiating
such Payment Blockage Period. Any number of notices of Covenant Defaults may be
given during a Payment Blockage Period; PROVIDED, that no such notice shall
extend such Payment Blockage Period beyond 179 days and only one Payment
Blockage Period may be commenced within any 360-day period. No Covenant Default
with respect to Designated Senior Indebtedness that existed or was continuing on
the date of the commencement of any Payment Blockage Period and that was known
to the holders of or the Senior Representative for such Designated Senior
Indebtedness will be, or can be, made the basis for the commencement of a second
Payment Blockage Period, whether or not within a period of 360 consecutive days,
unless such Covenant Default has been cured or waived for a period of not less
than 90 consecutive days. The Company shall deliver a notice to the Trustee
promptly after the date on which any Covenant Default is cured or waived or on
which the Designated Senior Indebtedness related thereto is discharged or paid
in full.
If the Company fails to make any payment on the Notes when due or
within any applicable grace period, whether or not on account of the provisions
referred to above, such failure would constitute an Event
-35-
of Default under the Indenture and, thereafter, the holders of Notes would have
the right to accelerate the maturity thereof in accordance with the Indenture.
See "--Events of Default."
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its assets, or any
liquidation, dissolution or other winding up of the Company, whether voluntary
or involuntary, or any assignment for the benefit of creditors or other
marshaling of assets or liabilities of the Company (except in connection with
the consolidation or merger of the Company or its liquidation or dissolution
following the conveyance, transfer or lease of its Properties substantially as
an entirety, upon the terms and conditions described under "--
Covenants--Limitation on Mergers, Consolidations and Sale of Assets"), all
Senior Indebtedness (including interest accruing on or after the commencement of
any such proceeding at the rate specified in the instrument evidencing the
applicable Senior Indebtedness, whether or not a claim therefor is allowed or
allowable in such proceeding, to the date of payment of such Senior
Indebtedness) must be paid in full in cash or its equivalent before any payment
or distribution of any assets of the Company of any kind or character (except in
each case for payments or distributions made in certain permitted equity
interests or subordinated securities) is made on account of principal of,
premium, if any, interest on, or other amounts payable in respect of, the Notes,
or on account of the purchase, redemption or other acquisition of, or in respect
of, the Notes.
By reason of such subordination, in the event of liquidation or
insolvency of the Company, creditors of the Company that are holders of Senior
Indebtedness or other indebtedness of the Company may recover more, ratably,
than the holders of Notes, funds and assets which would otherwise be payable or
distributable to holders of the Notes will be paid to the holders of Senior
Indebtedness to the extent necessary to pay the Senior Indebtedness in full, and
the Company may be unable to meet its obligations fully with respect to the
Notes.
CHANGE OF CONTROL
If a Change of Control shall occur at any time, each holder of Notes
shall have the right, at the holder's option, to require the Company to purchase
such holder's Notes, in whole or in part, in integral multiples of $1,000, at a
purchase price in cash in an amount equal to 101% of the principal amount of
such Notes plus accrued and unpaid interest, if any, to the date of purchase
(the "Purchase Date"), which date shall be no fewer than 30 days nor more than
60 days from the date the Company notifies the holders of the occurrence of the
Change of Control.
Under the Indenture, the Company is obligated to give notice to holders
of Notes and the Trustee within 30 days following a Change of Control
specifying, among other things, that a Change of Control has occurred and that
each holder of Notes has the right to require the Company to purchase such
holder's Notes for cash, a statement reasonably describing the material
circumstances and relevant material facts regarding such Change of Control event
(including, if applicable, but not limited to, such relevant pro forma financial
information with respect to the Company (or, if applicable, its successor) after
giving effect to such Change of Control event as is reasonably available to the
Company), the purchase price, the Purchase Date, that interest accrued to the
Purchase Date will be paid upon such purchase and that interest will cease to
accrue on Notes surrendered for purchase as of such Purchase Date, whether
tender will be irrevocable and instructions determined by the Company that a
holder must follow in order to have Notes purchased (including, but not limited
to, the place at which Notes shall be presented and surrendered for purchase)
and materials necessary to comply with applicable tender rules.
The Company will comply with all applicable laws, including, to the
extent applicable, section 14(e) of the Exchange Act and the rules thereunder,
in the event that it is required to offer to purchase (a "Change of Control
Offer") any Notes upon a Change of Control.
-36-
"Change of Control" means (i) any sale, lease or other transfer of
(other than the incurrence of a Lien on) all or substantially all of the assets
of the Company to any Person as an entirety or substantially as an entirety in
one transaction or a series of related transactions; (ii) the consolidation or
merger of the Company with or into another Person pursuant to a transaction in
which the outstanding Voting Stock of the Company is changed into or exchanged
for cash, securities or other Property, other than any such transaction where
(a) the outstanding Voting Stock of the Company is changed into or exchanged for
Voting Stock (other than Disqualified Stock) of the surviving corporation or its
parent and (b) the holders of the Voting Stock of the Company immediately prior
to such transaction own, directly or indirectly, not less than a majority of the
Voting Stock of the surviving corporation or its parent immediately after such
transaction; (iii) a "person" or "group" (within the meaning of Sections 13(d)
or 14(d)(2) of the Exchange Act) being or becoming the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of all
Voting Stock of the Company then outstanding, except in a merger or
consolidation which would not constitute a Change of Control under clause (ii)
above; (iv) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the shareholders of the Company was approved by
a vote of a majority of the directors then still in office who were directors at
the beginning of such period or whose election or nomination for election was
previously so approved) ceasing for any reason (other than death) to constitute
a majority of the Board of Directors of the Company then in office; or (v) the
approval by the shareholders of the Company of any plan or proposal for the
liquidation or dissolution of the Company.
With respect to the disposition of assets, the phrase "all or
substantially all" as used in the Indenture varies according to the facts and
circumstances of the subject transaction and is subject to judicial
interpretation. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of the Company, and
therefore it may be unclear whether a Change of Control has occurred and whether
the holders have the right to require the Company to purchase the Notes.
Prior to giving notice to holders, the Company shall, with respect to
all Designated Senior Indebtedness which would prohibit the making of a Change
of Control Offer or a purchase of Notes thereunder, or with respect to which the
making of a Change of Control Offer or a purchase of Notes thereunder would
constitute a default or event of default, either (i) repay in full in cash or
Cash Equivalents, or otherwise make arrangements satisfactory to the holders of
such Designated Senior Indebtedness (or their respective Senior Representatives)
for the repayment in full in cash or Cash Equivalents of, such Designated Senior
Indebtedness or offer to repay such Designated Senior Indebtedness in full in
cash or Cash Equivalents and have repaid in full in cash or Cash Equivalents, or
otherwise made arrangements satisfactory to the holders of such Designated
Senior Indebtedness (or their respective Senior Representatives) for the
repayment in full in cash or Cash Equivalents of, the Designated Senior
Indebtedness of such issue held by any lender who accepts such offer; or (ii)
obtain the requisite consents under any Bank Credit Facility and any other such
Designated Senior Indebtedness to make a Change of Control Offer and to purchase
Notes upon a Change of Control. The Company shall not make the Change of Control
Offer until all such Designated Senior Indebtedness has been repaid in full in
cash or Cash Equivalents and/or such requisite consents have been obtained.
The occurrence of certain of the events which would constitute a Change
of Control would constitute a default under the Bank Credit Facility. Future
Senior Indebtedness of the Company may contain prohibitions of certain events
which would constitute a Change of Control or require such Senior Indebtedness
to be paid or purchased upon a Change of Control. The Bank Credit Facility
contains, and future Senior Indebtedness may contain, restrictions or
prohibitions on the making of a Change of Control Offer or a purchase of Notes
thereunder. Moreover, the exercise by the holders of Notes of their right to
require the Company to purchase the Notes could cause a default under Senior
Indebtedness, even if the
-37-
Change of Control itself does not, due to the financial effect of such purchase
on the Company. Finally, the Company's ability to pay cash to the holders of
Notes upon a purchase may be limited by the Company's then existing financial
resources. There can be no assurance that sufficient funds will be available
when necessary to make any required purchases. Consequently, if the Company is
not able to prepay indebtedness outstanding under the Bank Credit Facility and
any other Senior Indebtedness containing similar restrictions or to obtain
requisite consents, or if the Company's funds are insufficient, the Company will
be unable to fulfill its repurchase obligations if holders of Notes exercise
their purchase rights following a Change of Control, thereby resulting in a
default under the Indenture. Furthermore, the Change of Control provisions may
in certain circumstances make more difficult or discourage a takeover of the
Company and the removal of incumbent management.
COVENANTS
LIMITATION ON ADDITIONAL INDEBTEDNESS. The Company and its Subsidiaries
will not, directly or indirectly, create, incur, assume, become liable for or
guarantee the payment of (collectively, "incur") any Indebtedness (including
Acquired Indebtedness), other than Permitted Indebtedness; PROVIDED, HOWEVER,
that the Company may incur Indebtedness (including Acquired Indebtedness) and
its Subsidiaries may incur Acquired Indebtedness if, at the time of such
incurrence and after giving effect thereto, on a pro forma basis, the
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding such incurrence (the "coverage period"), taken as one
period and calculated on a pro forma basis as if such Indebtedness had been
incurred and the proceeds therefrom applied and calculated using the assumptions
and adjustments set forth in the following two paragraphs, would have been
greater than 2.25 to 1.
The following assumptions, and any related adjustments, shall be used
in calculating the Consolidated Fixed Charge Coverage Ratio and the components
thereof for the coverage period giving rise to such determination: (i) the
Indebtedness (including Acquired Indebtedness) being incurred will be assumed to
have been incurred and the proceeds therefrom applied on the first day of such
coverage period; (ii) any other Indebtedness (including Acquired Indebtedness)
incurred since the beginning of such coverage period that remains outstanding
will be assumed to have been incurred on the first day of such coverage period,
except that, in making such computation, Indebtedness incurred under a revolving
credit or similar arrangement shall be computed on the average daily balance of
such Indebtedness during such coverage period unless such Indebtedness is
projected in the reasonable judgment of senior management of the Company to
remain outstanding for a period in excess of 12 months from the date of
incurrence of such Indebtedness, in which case such Indebtedness will be assumed
to have been incurred on the first day of such coverage period; (iii) with
respect to the incurrence of any Acquired Indebtedness since the beginning of
such coverage period, the related acquisition (whether by means of purchase,
merger or otherwise) and any related repayment of any Indebtedness will be
assumed to have occurred on the first day of such coverage period; (iv) with
respect to Indebtedness repaid (other than a repayment of revolving credit
Indebtedness, except for revolving credit Indebtedness that was not subject to
the exception in clause (ii) above and therefore was assumed to have been
incurred on the first day of such coverage period) during such coverage period
(or subsequent thereto) or being repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness, such Indebtedness will be
assumed to have been repaid on the first day of such coverage period; (v) any
permanent reduction in the committed amount of a revolving credit facility
during such coverage period (or subsequent thereto) will be deemed to have
occurred on the first day of such coverage period and interest paid on any
amounts drawn on such revolving credit facility during such coverage period in
excess of such reduced committed amount shall, for the period during which such
drawn amounts were actually outstanding, be excluded from such calculation; (vi)
if since the beginning of such coverage period the Company has made any Asset
Acquisition or Asset Sale, such Asset Acquisition or Asset Sale will be assumed
to have occurred on the first day of such coverage period; and (vii) effect
shall be given to the net amounts payable or receivable under agreements
described in the definition of Hedging Obligations.
-38-
For the purpose of determining compliance with the "Limitation on
Additional Indebtedness" covenant, (i) in the event that an item of Indebtedness
meets the criteria of more than one of the types of Indebtedness permitted by
this covenant, the Company in its sole discretion shall classify such item of
Indebtedness and only be required to include the amount and type of each class
of Indebtedness in the test specified in this covenant or in one of the clauses
of the definition of Permitted Indebtedness; (ii) the amount of Indebtedness
issued at a price which is less than the principal amount thereof shall be equal
to the amount of liability in respect thereof determined in accordance with
GAAP; and (iii) Indebtedness incurred in connection with, or in contemplation
of, any transaction described in the definition of Acquired Indebtedness shall
be deemed to have been incurred by the Company at the time an acquired Person
becomes a Subsidiary (or is merged into the Company or a Subsidiary) or at the
time of the acquisition of assets, as the case may be.
LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES. The Company will not
permit any Subsidiary to, directly or indirectly, issue any Preferred Stock
(other than to the Company or a Wholly-Owned Subsidiary).
LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not
permit any Subsidiary to, directly or indirectly, make any Restricted Payment
unless: (i) no Default or Event of Default shall have occurred and be continuing
at the time of and after giving effect to such Restricted Payment; (ii) the
Consolidated Fixed Charge Coverage Ratio for the four full fiscal quarters
immediately preceding the date of such Restricted Payment, taken as one period
and calculated on a pro forma basis as if such Restricted Payment had been made
on the first day of such period, using the assumptions and adjustments set forth
above under the final two paragraphs of "Limitation on Additional Indebtedness,"
would have been greater than 2.25 to 1; and (iii) immediately after giving
effect to such Restricted Payment, the aggregate amount of all Restricted
Payments (with the fair market value of any such Restricted Payment, if other
than in cash, being determined in good faith by the Company's Board of
Directors, as evidenced by a resolution of such Board) declared or made
subsequent to the Issue Date does not exceed the sum of (a) 50% of the
Consolidated Net Income (or in the event such Consolidated Net Income shall be a
deficit, minus 100% of such deficit) during the period (treated as one
accounting period) subsequent to March 31, 1996 and ending on the last day of
the fiscal quarter immediately preceding the date of such Restricted Payment;
plus (b) 100% of the aggregate net cash proceeds received by the Company from
any Person or Persons (other than a Subsidiary) as a capital contribution to the
Company or from the issue or sale (other than to a Subsidiary), after the Issue
Date, of Capital Stock (other than Disqualified Stock) of the Company; plus (c)
the amount by which Indebtedness of the Company is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a Subsidiary)
subsequent to the Issue Date of any Indebtedness of the Company into or for
Capital Stock (other than Disqualified Stock) of the Company; plus (d) in the
case of a cash return of capital or principal from an Investment constituting a
Restricted Payment made after the Issue Date, an amount equal to the lesser of
the cash proceeds of such return of capital or principal, or the amount of such
Restricted Payment; plus (e) $30 million.
Notwithstanding the foregoing, the above limitations will not prevent:
(a) the payment of any dividend within 60 days after the date of its declaration
if at the date of declaration such payment would have complied with the
provisions of the Indenture; (b) the purchase, redemption, acquisition or
retirement of any shares of Capital Stock of the Company in exchange for, or out
of the net proceeds of the substantially concurrent sale (other than to a
Subsidiary) of, other shares of Capital Stock (other than Disqualified Stock) of
the Company; (c) the purchase, redemption, defeasance or other acquisition or
retirement of Indebtedness of the Company which is subordinate in right of
payment to the Notes, in exchange for, by conversion into, or out of the net
proceeds of, a substantially concurrent (1) sale (other than to a Subsidiary) of
shares of Capital Stock (other than Disqualified Stock) of the Company or (2)
incurrence of Refinancing Indebtedness with respect to such subordinated
Indebtedness; (d) the purchase or redemption of shares of Capital Stock of the
Company (including stock appreciation rights and similar securities) held by
present or former directors, officers or employees of the Company or any
Subsidiary or by any employee stock ownership plan
-39-
or similar trust for the account of such present or former director, officer or
employee upon such person's death, disability, retirement or termination of
employment or under the terms of any such plan or trust or any other agreement
under which such shares or rights were issued; PROVIDED that the aggregate price
paid for all such repurchased, redeemed, acquired or retired Capital Stock
pursuant to this clause (d) shall not exceed in any twelve-month period,
$500,000 plus the aggregate cash proceeds received by the Company during such
twelve-month period from any reissuance of Capital Stock by the Company to
directors, officers or employees of the Company and its Subsidiaries; (e) an
exchange of shares of the Company's Series B Preferred Stock outstanding on the
Issue Date for 7 1/2% Convertible Subordinated Debentures Due 2013 of the
Company pursuant to the terms of such stock as in effect on the Issue Date; (f)
the payment of the regular preferred dividends on shares of the Existing
Preferred Stock; and (g) the payment of dividends on the Company's Capital Stock
(PROVIDED that any dividend paid pursuant to this clause (g) shall be subject to
clause (iii) of the immediately preceding paragraph, and that the aggregate
amount of all dividends paid pursuant to this clause (g) shall not exceed $10
million during any 12-month period); PROVIDED that (x) no Restricted Payment
described in clauses (b) through (g) of this sentence may be made if any Default
or Event of Default shall have occurred and shall be continuing at the time or
would occur as a result of such Restricted Payment and (y) each Restricted
Payment described in clauses (a), (b), (c)(1), (d), (f) and (g) (but not clauses
(c)(2) and (e)) of this sentence shall be taken into account for the purposes of
computing the aggregate amount of all Restricted Payments made pursuant to
clause (iii) of the immediately preceding paragraph.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES. The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Subsidiary to (i) pay dividends or make any other distributions on its
Capital Stock or any other interest or participation in or measured by its
profits owned by the Company or any Subsidiary; (ii) pay any Indebtedness owed
to the Company or any Subsidiary; (iii) make loans or advances to the Company or
any Subsidiary; or (iv) transfer any of its properties or assets to the Company
or any Subsidiary, except for (a) any encumbrances or restrictions existing
under written agreements (including the Indenture and the Notes) in effect on
the Issue Date, (b) encumbrances or restrictions binding upon any Person at the
time such Person becomes a Subsidiary (unless the agreement creating such
encumbrance or restriction was entered into in connection with, or in
contemplation of, such entity becoming a Subsidiary), PROVIDED that such
encumbrances or restrictions shall not encumber or restrict any assets of the
Company or its other Subsidiaries other than such Subsidiary, (c) any
encumbrances or restrictions under any agreement evidencing Acquired
Indebtedness incurred pursuant to the provisions of the "Limitation on
Additional Indebtedness" covenant; PROVIDED that such encumbrances or
restrictions shall apply only to such Person (if the Person is acquired) or the
acquired assets (if the assets are acquired directly), (d) any encumbrances or
restrictions existing under any Bank Credit Facility, (e) encumbrances or
restrictions under any agreement that refunds, rearranges, restructures,
refinances or replaces any agreement described in clauses (a) through (d) above,
PROVIDED that the terms and conditions of any such encumbrances or restrictions
are not materially less favorable to the holders of Notes than those under the
agreement so refunded, rearranged, restructured, refinanced or replaced, (f)
customary non-assignment provisions in leases and purchase money financings, (g)
any Lien or agreement restricting the sale or other disposition of Property
otherwise permitted under the Indenture, if such Lien or agreement does not
expressly restrict the ability of a Subsidiary to pay dividends or make or repay
loans or advances to the Company, (h) any encumbrance or restriction due to
applicable law and (i) encumbrances or restrictions contained in any agreement
with respect to a sale of assets or Capital Stock permitted under the Indenture
for the period from the date of the execution of such agreement until the date
of the closing thereunder or, if the Company or any Subsidiary retains title to
any such assets after closing, such later date as title is transferred.
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company will not, and
will not permit any Subsidiary to, directly or indirectly, enter into, renew or
extend any transaction (including, without
-40-
limitation, the purchase, sale, lease or exchange of any Properties or the
rendering of any service) or series of related transactions with any Affiliate
of the Company, any Affiliate of any Subsidiary or any holder of 10% or more of
any class of Capital Stock of the Company ("Affiliate Transaction"), on terms
that are less favorable to the Company or such Subsidiary, as the case may be,
than would be available in a comparable arm's length transaction with an
unrelated Person that is not an Affiliate of the Company or a Subsidiary or a
10% stockholder of the Company.
In addition, the Company will not, and will not permit any Subsidiary
to, enter into any Affiliate Transaction, unless the Company delivers to the
Trustee: (i) with respect to such Affiliate Transaction involving the aggregate
value, remuneration or other consideration of more than $5 million, an Officer's
Certificate certifying that such transaction complies with the preceding
paragraph; and (ii) with respect to such Affiliate Transaction involving the
aggregate value, remuneration or other consideration of more than $10 million,
either (a) an Officer's Certificate certifying that such transaction complies
with the preceding paragraph and has been approved by a majority of the Board of
Directors of the Company (including a majority of the disinterested directors)
or (b) a written opinion of an independent financial advisor to the effect that
such Affiliate Transaction is fair to the Company or such Subsidiary, as the
case may be, from a financial point of view.
Notwithstanding the foregoing limitations, the term "Affiliate
Transaction" shall not include: (i) any payment of money or issuance of
securities (or provision of benefits, including indemnification) by the Company
or any Subsidiary pursuant to employment agreements and arrangements and
employee benefit plans approved by the Board of Directors of the Company or the
applicable Subsidiary; (ii) reasonable payments and other benefits (including
indemnification) provided to directors for service on the Board of Directors of
the Company or any Subsidiary, including the reimbursement or advancement of
out-of-pocket expenses and directors' and officers' liability insurance; (iii)
any transaction the prohibition of which would constitute a violation of Section
4.15 of the Indenture dated as of October 15, 1991 between the Company and State
Street Bank and Trust Company of Connecticut, National Association, Trustee,
pursuant to which the 14% Notes were issued (the "14% Notes Indenture"), which
limits, among other things, the ability of Subsidiaries to create restrictions
on their ability to pay dividends or make distributions, or the similar covenant
in the Bank Credit Facility in effect on the Issue Date; (iv) any Restricted
Payment otherwise permitted under the "Limitation on Restricted Payments"
covenant, any payment or transaction which is not a Restricted Payment by virtue
of the parentheticals in clauses (i) and (ii) of the definition of Restricted
Payment, or any Permitted Investment; or (v) transactions between the Company
and a Subsidiary, or between any Subsidiary and another Subsidiary, in the
ordinary course of business.
LIMITATIONS ON SALE OF ASSETS. The Company will not, and will not
permit any Subsidiary to, make any Asset Sale unless: (i) the Company or such
Subsidiary, as the case may be, receives consideration at the time of such Asset
Sale at least equal to the fair market value thereof (as determined in good
faith by the Company's Board of Directors and evidenced by a resolution of such
Board); (ii) except as provided in the immediately following sentence, not less
than 75% of the consideration received by the Company or such Subsidiary, as the
case may be, consists of cash or Cash Equivalents (PROVIDED that (a) the amount
of any Senior Indebtedness of the Company or any Indebtedness of such Subsidiary
that is assumed or paid by the transferee in any such transaction and (b) the
fair market value as of the date of acquisition of any Exchanged Properties
received by the Company or such Subsidiary in any such transaction shall each be
deemed to be cash for purposes of this clause (ii) and the immediately following
sentence); and (iii) the Net Cash Proceeds, if any, received by the Company or
such Subsidiary, as the case may be, from such Asset Sale are applied in
accordance with the following paragraphs. The Company and its Subsidiaries will
not be required to comply with clause (ii) of the immediately preceding sentence
in connection with an Asset Sale if and to the extent that the sum of (a) the
aggregate non-cash consideration received in connection with such Asset Sale and
(b) the sum of all non-cash consideration received in connection with prior
Asset Sales that has not yet been converted into cash or cash equivalents does
not exceed $15 million; PROVIDED that if and when any
-41-
such non-cash consideration is converted into cash or cash equivalents, it shall
constitute receipt of Net Cash Proceeds.
The Company may, within 365 days following the receipt of Net Cash
Proceeds from any Asset Sale, apply such Net Cash Proceeds to (i) the repayment
of Senior Indebtedness of the Company or Indebtedness of the Company's
Subsidiaries, PROVIDED that any such repayment, if with respect to any revolving
credit, shall result in a permanent reduction in any revolving credit or other
commitment relating thereto in an amount equal to the principal amount so
repaid, unless such amount is used within such 365-day period for investments or
purchases described in clauses (ii) and (iii) of this sentence; (ii) make an
investment in capital expenditures in the cement, concrete products or building
products industries, or any other line of business in which the Company was
engaged on the Issue Date, or in working capital items or current assets related
thereto (other than cash or cash equivalents); or (iii) purchase Exchanged
Properties.
If, upon completion of the 365-day period, any portion of the Net Cash
Proceeds of any Asset Sale shall not have been applied by the Company as
described in clauses (i), (ii) or (iii) of the preceding paragraph and such
remaining Net Cash Proceeds, together with any remaining Net Cash Proceeds from
any prior Asset Sale (such aggregate constituting "Excess Proceeds") exceed $10
million, then the Company will be required to make an offer (a "Net Proceeds
Offer") to purchase from all Noteholders the maximum principal amount of Notes
that may be purchased out of the Excess Proceeds (on a pro rata basis if the
amount available for such purchase is less than the principal amount of Notes
tendered in such Net Proceeds Offer) at a purchase price in cash of 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase. To the extent that the aggregate amount of Notes tendered pursuant
to the Net Proceeds Offer is less than the Excess Proceeds, the Company may use
any remaining Excess Proceeds for general corporate purposes. Upon completion of
a Net Proceeds Offer, the amount of Excess Proceeds shall be reset to zero.
The Company will comply with all applicable laws, including, to the
extent applicable, section 14(e) of the Exchange Act and the rules thereunder,
in the event that it is required to make a Net Proceeds Offer.
The terms of the Bank Credit Facility will prohibit, subject to certain
exceptions, the Company's prepayment of Notes prior to their scheduled maturity.
Future Senior Indebtedness of the Company may contain similar provisions.
Moreover, the exercise by the holders of Notes of their right to require the
Company to purchase the Notes could cause a default under Senior Indebtedness,
even if the repurchase of Notes is not directly prohibited, due to the financial
effect of such purchase on the Company. Finally, the Company's ability to pay
cash to the holders of Notes upon a purchase may be limited by the Company's
then existing financial resources. There can be no assurance that sufficient
funds will be available when necessary to make any required purchases.
Consequently, if the Company is not able to prepay indebtedness outstanding
under the Bank Credit Facility and any other Senior Indebtedness containing
similar restrictions or to obtain requisite consents, or the Company's funds are
insufficient, the Company will be unable to make a Net Proceeds Offer or
purchase Notes thereunder, thereby resulting in a default under the Indenture.
LIMITATION ON LIENS. The Company will not, and will not permit any
Subsidiary to, create, incur or otherwise cause or suffer to exist or become
effective any Lien, other than Permitted Liens, upon any Property of the Company
or any Subsidiary (including Capital Stock or Indebtedness of any Subsidiary),
now owned or hereafter acquired, to secure any Indebtedness that is PARI PASSU
with or subordinate in right of payment to the Notes, unless (i) if such Lien
secures Indebtedness which is PARI PASSU with the Notes, then the Notes are
secured on an equal and ratable basis or (ii) if such Lien secures Indebtedness
which is junior to the Notes, any such Lien shall be junior to a Lien granted to
the holders of the Notes, in each case until such time as such Indebtedness is
no longer secured by a Lien, at which time such Lien securing the Notes shall
automatically cease to exist.
-42-
LIMITATION ON FUTURE SENIOR SUBORDINATED INDEBTEDNESS. The Company will
not incur any Indebtedness, other than the Notes, that is subordinated in right
of payment to any other Indebtedness of the Company unless such Indebtedness by
its terms is PARI PASSU with, or subordinated to, the Notes pursuant to
subordination provisions substantially similar to those contained in the
Indenture.
LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS. The Company will not,
and will not permit any Subsidiary to, enter into any sale and leaseback
transaction with respect to any Property (whether now owned or hereafter
acquired) unless (i) the Company or such Subsidiary, as the case may be, would
be entitled under the "Limitation on Additional Indebtedness" covenant to incur
any Capitalized Lease Obligations in respect of such sale and leaseback
transaction; and (ii) the Company or such Subsidiary receives proceeds from such
sale and leaseback transaction at least equal to the fair market value thereof
(as determined in good faith by the Company's Board of Directors and evidenced
by a resolution of such Board) and such proceeds are applied in accordance with
the "Limitations on Sale of Assets" covenant.
LIMITATION ON MERGERS, CONSOLIDATIONS AND SALE OF ASSETS. The Company
will not consolidate or merge with or into any other Person or entity, or permit
any other Person or entity to consolidate or merge with or into the Company
(except, in each case, a merger of the Company with a Wholly-Owned Subsidiary
which is organized and existing under the laws of the United States, any state
thereof, or the District of Columbia, for the purpose of redomesticating the
Company), nor will the Company sell, lease, convey or otherwise dispose of
(other than the incurrence of a Lien on) all or substantially all of its assets
unless (i) either (a) the Company shall be the surviving or continuing
corporation or (b) the entity formed by or surviving any such consolidation or
merger, or to which such sale, lease, conveyance or other sale shall have been
made (the "Surviving Entity"), is a corporation organized and existing under the
laws of the United States, any state thereof, or the District of Columbia; (ii)
the Surviving Entity assumes by supplemental indenture all of the obligations of
the Company under the Notes and the Indenture; (iii) immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; (iv) immediately after giving effect to such transaction, the
Consolidated Net Worth of the Company or the Surviving Entity, as the case may
be, would be at least equal to the Consolidated Net Worth of the Company
immediately prior to such transaction; and (v) immediately after giving effect
to such transaction, the Company or the Surviving Entity, as the case may be,
could incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the first paragraph of the "Limitation on Additional
Indebtedness" covenant.
CERTAIN PERMITTED TRANSACTIONS. Notwithstanding any of the foregoing
covenants, nothing in the Indenture shall prohibit any transaction the
prohibition of which would constitute a violation of Section 4.15 of the 14%
Notes Indenture, which limits, among other things, the ability of Subsidiaries
to create restrictions on their ability to pay dividends or make distributions,
or the similar covenant in the Bank Credit Facility as in effect on the Issue
Date.
REPORTS. The Indenture provides that, so long as the Company is subject
to the periodic reporting requirements of the Exchange Act, it shall furnish the
reports required to be filed with the Commission (excluding exhibits) to the
Trustee and the holders of Notes. The Indenture also provides that even if the
Company is entitled under the Exchange Act not to furnish such information to
the Commission, it will nonetheless continue to furnish such reports both to the
Commission and to the Trustee and the holders of Notes as if it were subject to
such periodic reporting requirements.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means, with respect to any Person, Indebtedness
of such Person (i) existing at the time such Person becomes a Subsidiary (or
such Person is merged into the Company or any Subsidiary) or (ii) assumed in
connection with the acquisition of assets from any such Person, and, in each
-43-
case, not incurred in connection with, or in the contemplation of, such Person
becoming a Subsidiary or such acquisition.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with such Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controls" and
"controlled"), when used with respect to any 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.
"Asset Acquisition" means (i) a transaction in which any other Person
shall become a Subsidiary or shall be merged with the Company or any Subsidiary;
or (ii) the acquisition by the Company or any Subsidiary of assets of any Person
which constitute substantially all of a cement plant or terminal, concrete batch
plant, aggregate quarry or operation, ready-mixed concrete operation or other
operating unit or business of such Person.
"Asset Sale" means any sale, lease, conveyance, transfer or other
disposition (or series of related sales, leases, conveyances, transfers or
dispositions) of any Capital Stock (including the issuance of shares of Capital
Stock) of a Subsidiary or Property, whether owned on the Issue Date or
thereafter acquired, in one or more related transactions, by the Company or any
Subsidiary, whether for cash or other consideration, other than (i) a
disposition by the Company or a Subsidiary to another Subsidiary or by a
Subsidiary to the Company; (ii) a disposition of Property in the ordinary course
of business; (iii) a disposition or abandonment of damaged, worn-out or obsolete
Property or Property no longer necessary for the conduct of the Company's
business, provided that the Net Cash Proceeds, if any, received from such
disposition or abandonment exceeding $250,000 will be applied in the manner set
forth in the "Limitation on Sale of Assets" covenant; (iv) any disposition
pursuant to a consolidation, merger or transfer of assets that is permitted by
the "Limitation on Mergers, Consolidations and Sale of Assets" covenant; (v)
Liens; (vi) any disposition which is a Restricted Payment made in accordance
with the "Limitation on Restricted Payments" covenant or which is not a
Restricted Payment by reason of the parenthetical in clause (i) of the
definition of Restricted Payment; (vii) any Permitted Investment described in
clause (v)(c) or (vii) of the definition of Permitted Investment; and (viii)
other disposition or dispositions during any 12-month period having in the
aggregate a fair market value of less than $2 million.
"Average Life" means, as of the date of determination, with reference
to any Indebtedness, the number of years obtained by dividing (i) the sum of the
products of the number of years from the date of determination to the dates of
each successive scheduled principal payment of such Indebtedness multiplied by
the amount of such principal payment by (ii) the sum of all such principal
payments.
"Bank Credit Facility" means the $200 million Third Amended and
Restated Credit Agreement dated as of November 3, 1995 among the Company, the
financial institutions signatory thereto and Wells Fargo Bank, N.A., as agent,
together with the documents related thereto (including, without limitation, any
letters of credit issued pursuant thereto, and any related guarantee agreements
and security documents), in each case as such agreements may be amended
(including any amendment and restatement thereof), supplemented or otherwise
modified or replaced (including with other lenders), from time to time and
including any agreement or agreements (which agreement or agreements state
therein that they represent a "Bank Credit Facility" for purposes of the
Indenture) extending or lessening the maturity of, refinancing, modifying,
increasing, substituting for, adding to (including by the creation of a new
agreement or agreements or facility unrelated to, and whether or not refinancing
or increasing any Indebtedness under, any then existing Bank Credit Facility) or
otherwise restructuring (including, but not limited to, the inclusion of
additional or different or substitute lenders or agents thereunder) all or any
portion of the Indebtedness, including changing the borrowing limits, under any
Bank Credit Facility, regardless of whether any Bank Credit Facility or any
portion thereof was outstanding or in effect at the time of such replacement,
refinancing,
-44-
increase, addition, substitution, extension, restructuring, supplement or
modification. There may at any time be multiple Bank Credit Facilities, and the
term "Bank Credit Facility" shall refer to all such Bank Credit Facilities.
"Capitalized Lease Obligation" means any obligation to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
real or personal property that is required to be classified and accounted for as
a capital lease obligation under GAAP, and, for the purposes of this definition,
the amount of such obligation at any date shall be the amount thereof at such
date, determined in accordance with GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights to purchase, warrants, options or other
equivalents (however designated) of such Person's capital stock, whether now
outstanding or issued after the Issue Date, including, without limitation, all
common stock and Preferred Stock.
"Cash Equivalents" means (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America; (ii) commercial paper rated "P-1" or
"P-2" or an equivalent or higher rating by Moody's Investors Service, Inc. or
"A-1" or "A-2" or an equivalent or higher rating by Standard & Poor's Ratings
Group and maturing not more than 180 days from the date of acquisition thereof;
(iii) demand and time deposits with, and certificates of deposit and banker's
acceptances issued by, any bank having capital surplus and undivided profits
aggregating at least $500 million and maturing not more than 180 days from the
date of acquisition thereof; (iv) repurchase agreements that are secured by a
perfected security interest in an obligation described in clause (i) and are
with any bank described in clause (iii); and (v) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof rated "Aa3" or an equivalent or higher rating by Moody's
Investors Service, Inc. or rated "AA-" or an equivalent or higher rating by
Standard & Poor's Ratings Group.
"Consolidated EBITDA" means, for any period, on a consolidated basis
for the Company and its Subsidiaries as determined in accordance with GAAP, (i)
the sum (without duplication) for such period of (a) Consolidated Net Income,
(b) federal and state income tax expense, (c) interest, net of amounts
capitalized, (d) depreciation, depletion and amortization expense (including
amortization of debt discount and debt issue costs) and (e) any other non-cash
charges to earnings relating to restructuring or other unusual charges (to the
extent deducted in determining Consolidated Net Income); less (ii) any cash
actually paid during such period related to any restructuring or other unusual
charges incurred after the Issue Date.
"Consolidated Fixed Charges" means, for any period, on a consolidated
basis for the Company and its Subsidiaries, the sum (without duplication) for
such period of (i) the aggregate amount of interest, whether expensed,
capitalized or accrued during such period (including any non-cash interest
payments or accruals and the interest portion of Capitalized Lease Obligations,
but excluding amortization of debt discount and debt issue costs) of the Company
and its Subsidiaries, determined on a consolidated basis in accordance with
GAAP; PROVIDED that, in making such computation, Consolidated Fixed Charges
attributable to interest on any Indebtedness computed on a pro forma basis and
bearing a floating interest rate shall be computed as if the rate in effect on
the date of computation was the applicable rate for the entire period; and (ii)
all dividends in respect of Disqualified Stock and Existing Preferred Stock to
the extent payable to Persons other than the Company or a Subsidiary.
"Consolidated Fixed Charge Coverage Ratio" means, as of the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio, the ratio of (i) Consolidated EBITDA for the relevant coverage
period to (ii) Consolidated Fixed Charges for the relevant coverage period.
-45-
"Consolidated Net Income" means, for any period, the net income or loss
of the Company and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, excluding, without duplication and
together with any related provisions for taxes, (i) extraordinary gains and
extraordinary losses; (ii) net gains or losses in respect of dispositions of
assets other than in the ordinary course of business; (iii) the net income of
any Person (other than a Subsidiary) in which any other Person other than the
Company or any Subsidiary has a joint equity interest, except to the extent of
the amount of dividends or other distributions actually paid to the Company or
any Subsidiary by such Person during such period; (iv) the net income of any
Person accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Company or any Subsidiary or that other Person's assets
are acquired by the Company or any Subsidiary, except to the extent includable
in Consolidated Net Income pursuant to clause (iii) above; (v) the net income of
any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is at the time
prohibited by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary; (vi) any gains or losses attributable to
write-ups or write-downs of assets other than in the ordinary course of
business; (vii) the cumulative effect of a change in accounting principles;
(viii) net income (loss) from discontinued operations; and (ix) the gains or
losses realized during such period resulting from the acquisition of securities,
or extinguishment of Indebtedness, of the Company or any Subsidiary.
"Consolidated Net Tangible Assets" means, as of any date of
determination, the total assets of the Company and its Subsidiaries determined
on a consolidated basis in accordance with GAAP (less applicable reserves and
other items properly deductible from total assets) and after deducting therefrom
(to the extent otherwise included therein): (i) goodwill, unamortized debt
discount and expense, and other intangible assets (other than permits and other
contractual rights used in the operation of the Company's business); and (ii)
appropriate deductions for any minority interests.
"Consolidated Net Worth" means, as of any date of determination, the
total assets of the Company and its Subsidiaries determined on a consolidated
basis in accordance with GAAP (less applicable reserves and other items properly
deductible from total assets) and after deducting therefrom (i) total
liabilities as of such date and (ii) appropriate deductions for any minority
interests.
"Default" means any event, occurrence or condition that, with the
passage of time, the giving of notice or both, would constitute an Event of
Default.
"Disqualified Stock" means any Capital Stock of any Person which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event or with the
passage of time, matures or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, in each case on or prior to the maturity date of
the Notes, or which is exchangeable or convertible into debt securities of such
Person, except to the extent that such exchange or conversion rights cannot be
exercised prior to the maturity date of the Notes.
"Exchanged Properties" means capital assets or other long-term assets
used in, or Capital Stock of a Person engaged primarily in, the cement, concrete
products or building products industries or any other line of business in which
the Company was engaged on the Issue Date, and working capital items or current
assets related thereto (other than cash or cash equivalents); PROVIDED in the
case of an acquisition of Capital Stock of a Person that after such purchase
such Person would be a Wholly-Owned Subsidiary.
"Existing Preferred Stock" means the Company's Series A Preferred
Stock, Series B Preferred Stock and Series D Preferred Stock outstanding on the
Issue Date.
-46-
"GAAP" means generally accepted accounting principles recognized as
such by the American Institute of Certified Public Accountants, as in effect on
the Issue Date.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements, foreign currency exchange
contracts, foreign currency swaps, commodities futures and any other agreement
designed to protect such Person against fluctuations in interest rates, currency
valuations or commodity prices.
"Indebtedness" means, with respect to any Person, (i) any liability of
such Person (a) for borrowed money, or under any reimbursement obligation
relating to a letter of credit, bankers' acceptance or note purchase facility;
(b) evidenced by a bond, note, debenture or similar debt instrument; (c) for the
balance deferred and unpaid of the purchase price for any Property (except for
trade payables arising in the ordinary course of business); (d) for the payment
of money relating to a lease that is required to be classified as a Capitalized
Lease Obligation; or (e) for the maximum fixed repurchase price of any
Disqualified Stock of such Person plus accrued and unpaid dividends thereon;
(ii) any obligation of others secured by a Lien on any asset of such Person,
whether or not any obligation secured thereby has been assumed, by such Person;
(iii) any obligations of such Person under any Hedging Obligation; and (iv) any
obligation of such Person which in economic effect is a guarantee with respect
to any Indebtedness of another Person.
For purposes of this definition, "maximum fixed repurchase price" of
any Disqualified Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to the Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified Stock, such
fair market value shall be determined in good faith by the board of directors of
the Person issuing such Disqualified Stock.
"Investment" means, with respect to any Person, (i) all investments by
such Person in any other Person in the form of loans (including guarantees of
loans), advances or capital contributions (including the contribution of
assets); (ii) all purchases (or other acquisitions for consideration) by such
Person of Indebtedness, Capital Stock or other securities of any other Person;
and (iii) all other items that would be classified as investments on a balance
sheet of such Person prepared in accordance with GAAP.
"Issue Date" means the date on which the Notes are first authenticated
and delivered under the Indenture, which was March 19, 1996.
"Lien" means, with respect to any Property, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this definition, a Person shall be deemed to own
subject to a Lien any Property that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"Net Cash Proceeds" means, with respect to any Asset Sale, the cash
payments or Cash Equivalents (including any cash received by way of deferred
payment pursuant to a note receivable or otherwise, but only as and when so
received) from such Asset Sale, net of (i) fees, commissions, expenses and other
direct costs of sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions) and, if applicable, any
relocation expenses and severance or shutdown costs incurred as a result of such
Asset Sale; (ii) taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions); (iii) amounts required to be
applied to the repayment of Indebtedness which is secured by a Lien on the asset
or assets that are the subject of such Asset Sale or Indebtedness which must by
its terms, or in order to obtain a necessary consent, or by applicable law, be
repaid out of the proceeds of such Asset Sale; (iv) any amount required to be
paid to any Person (other than the Company or any of its Subsidiaries) owning
-47-
a beneficial interest in the stock or other assets sold; and (v) reserves in
accordance with GAAP against any liabilities associated with such Asset Sale and
retained by the Company or any Subsidiary, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale. Further, with
respect to an Asset Sale by a Subsidiary which is not a Wholly-Owned Subsidiary,
Net Cash Proceeds shall be reduced pro rata for the portion of the equity of
such Subsidiary which is not owned by the Company.
"Permitted Indebtedness" means (i) Indebtedness of the Company
evidenced by the Original Notes or the Series B Notes; (ii) Indebtedness of the
Company or any Subsidiary outstanding on the Issue Date (excluding any
Indebtedness that is repaid with the proceeds of the private placement of the
Original Notes); (iii) Indebtedness of the Company under any Bank Credit
Facility, PROVIDED that the aggregate amount of Permitted Indebtedness
outstanding under all Bank Credit Facilities shall at no time exceed $255
million; (iv) Indebtedness incurred by the Company or any Subsidiary consisting
of Purchase Money Obligations and Capitalized Lease Obligations in an amount not
to exceed $25 million at any one time outstanding; (v) Indebtedness of the
Company to any Subsidiary (PROVIDED that such Indebtedness is evidenced by a
note) and Indebtedness of a Subsidiary to the Company or another Subsidiary;
PROVIDED, HOWEVER, that any Indebtedness of any Subsidiary owed to any
Subsidiary that ceases to be such a Subsidiary shall be deemed to be incurred
and shall be treated as an incurrence for purposes of the first paragraph of the
covenant described under "Limitation on Additional Indebtedness" at the time the
Subsidiary in question ceases to be a Subsidiary; (vi) Indebtedness of the
Company or a Subsidiary under a guarantee of any Permitted Indebtedness incurred
by a Subsidiary and Indebtedness of any Subsidiary under a guarantee of any
Indebtedness of the Company; (vii) Indebtedness of the Company or any Subsidiary
in respect of bid, performance or advance payment bonds (or letters of credit in
lieu thereof), bankers' acceptances and surety or appeal bonds provided in the
ordinary course of business; (viii) Indebtedness under Hedging Obligations; (ix)
Indebtedness of the Company or any Subsidiary consisting of obligations in
respect of purchase price adjustments, guaranties or indemnities in connection
with any acquisition or disposition of assets permitted under the Indenture; (x)
Indebtedness of any Permitted Joint Venture with respect to which no recourse
may be had to the assets of the Company or any Subsidiary (other than such
Permitted Joint Venture or a Subsidiary the only material asset of which is an
interest in such Permitted Joint Venture); (xi) additional Indebtedness of the
Company or any Subsidiary, not to exceed $50 million in the aggregate at any one
time outstanding; and (xii) any Refinancing Indebtedness.
"Permitted Investments" means (i) Investments existing on the Issue
Date; (ii) Investments in Cash Equivalents; (iii) any Investment in a Subsidiary
or any Investment in any other Person if, as a result, such Person either (a)
becomes a Subsidiary or (b) is merged or consolidated with or into, or transfers
all or substantially all of its assets to, the Company or a Subsidiary; (iv)
loans or advances to employees or customers made in the ordinary course of
business and guaranties or similar obligations with respect to the foregoing;
(v) (a) negotiable instruments held for collection, (b) lease, utility and
similar deposits and (c) stock, obligations or securities received in settlement
or restructuring of obligations owing to the Company or a Subsidiary, in each
case as to obligations that arose in the ordinary course of business of the
Company or such Subsidiary; (vi) sales of goods on trade credit terms consistent
with industry practices; (vii) Investments in Permitted Joint Ventures; PROVIDED
that, after giving effect to such Investment, the ratio of (a)(1) the sum of the
aggregate amount of all such Investments made on or after the Issue Date
pursuant to this clause (vii) less (2) the aggregate amount of all cash
distributions, cash dividends or other cash returns received on or after the
Issue Date on Investments made pursuant to this clause (vii) to (b) the
Company's Consolidated Net Tangible Assets as of the end of the Company's most
recent fiscal quarter for which financial statements have been furnished to the
Trustee and the holders of Notes pursuant to the "Reports" covenant shall not
exceed 5%; (viii) any Investment in the Company by a Subsidiary; and (ix) in
addition to Investments described in clauses (i)-(viii) of this definition,
Investments with a fair market value
-48-
(determined for each such Investment when it is made) at any time not exceeding
$10 million in the aggregate.
"Permitted Joint Venture" means any Person (i) in which the Company
owns at least 25% of the outstanding equity interests and (ii) that does not
have or enter into any line of business other than the cement, concrete products
or building products industries, or any other line of business in which the
Company was engaged on the Issue Date.
"Permitted Liens" means (i) Liens existing on the Issue Date; (ii)
Liens on the Issue Date or thereafter securing any Hedging Obligations of the
Company or any Subsidiary; (iii) Liens securing Refinancing Indebtedness, the
proceeds of which are used to refinance Indebtedness of the Company or any
Subsidiary; PROVIDED that such Liens either extend to or cover only the Property
then securing the Indebtedness being refinanced or comply with the covenant set
forth under "Limitation on Liens;" (iv) Liens securing Acquired Indebtedness
incurred by the Company or any Subsidiary and permitted under the "Limitation on
Additional Indebtedness" covenant or Liens on Property at the time such Property
is acquired, PROVIDED that such Liens attach solely to the assets or Property
(or the assets of the Subsidiary) acquired and were in existence prior to the
contemplation of the acquisition; (v) Liens securing Indebtedness owing to the
Company by a Subsidiary; (vi) Liens securing Purchase Money Obligations incurred
in accordance with the Indenture; (vii) Liens securing Indebtedness of the
Company or any Subsidiary in respect of performance bonds, bankers' acceptances
and surety or appeal bonds provided in the ordinary course of business; (viii)
any interest or title of a lessor in assets or Property subject to Capitalized
Lease Obligations of the Company or any Subsidiary; (ix) rights of setoff; (x)
Liens imposed by law; (xi) other Liens (not securing Indebtedness for money
borrowed) incidental to the conduct of the business of the Company or any of its
Subsidiaries or the ownership of their assets, that do not materially detract
from the value of the property of the Company or Subsidiary subject thereto; or
(xii) Liens for taxes, assessments or governmental charges or claims that are
not yet delinquent or that are being contested in good faith by appropriate
proceedings promptly instituted and diligently concluded, PROVIDED that any
reserve or other appropriate provision as shall be required in conformity with
GAAP shall have been made therefor.
"Person" means any individual, corporation, limited or general
partnership, joint venture, limited liability company, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Preferred Stock" means, with respect to any Person, all Capital Stock
of such Person of any class or classes (however designated) that ranks prior, as
to distribution in profit or liquidation, to shares of Capital Stock of another
class of such Person.
"Property" means, with respect to any Person, all types of real,
personal, tangible, intangible or mixed property owned by such Person, whether
or not included in the most recent consolidated balance sheet of such Person.
"Purchase Money Obligations" means any Indebtedness of the Company or
any Subsidiary incurred to finance the acquisition or construction of any
Property or business (including Indebtedness incurred within 90 days following
such acquisition or construction), including Indebtedness of a Person existing
at the time such Person becomes a Subsidiary or assumed by the Company or a
Subsidiary in connection with the acquisition of any Property from such Person;
PROVIDED, HOWEVER, that any Lien securing such Indebtedness either (i) shall not
extend to any Property other than the Property so acquired or constructed or
(ii) shall comply with the covenant set forth under "Limitation on Liens."
"Refinancing Indebtedness" means Indebtedness that renews, rearranges,
refunds, refinances or extends any Indebtedness of the Company or any Subsidiary
outstanding on the Issue Date or other
-49-
Indebtedness permitted to be incurred by the Company or any Subsidiary pursuant
to the terms of the Indenture, but only to the extent that (except if the
Refinancing Indebtedness will be used to refinance all Notes outstanding) (i)
the Refinancing Indebtedness is subordinated to the Notes to at least the same
extent as the Indebtedness being renewed, rearranged, refunded, refinanced or
extended, if at all; (ii) the Refinancing Indebtedness is scheduled to mature
either (a) no earlier than the Indebtedness being renewed, rearranged, refunded,
refinanced or extended or (b) after the maturity date of the Notes; (iii) the
portion, if any, of the Refinancing Indebtedness that is scheduled to mature on
or prior to the maturity date of the Notes has an Average Life to maturity at
the time such Refinancing Indebtedness is incurred that is equal to or greater
than the Average Life to maturity of the portion of the Indebtedness being
renewed, rearranged, refunded, refinanced or extended that is scheduled to
mature on or prior to the maturity date of the Notes; (iv) such Refinancing
Indebtedness is in an aggregate principal amount that is equal to or less than
the sum of (x) the aggregate principal amount then outstanding under the
Indebtedness being renewed, rearranged, refunded, refinanced or extended, (y)
the amount of accrued and unpaid interest, if any, on such Indebtedness being
renewed, rearranged, refunded, refinanced or extended and (z) the amount of
customary fees, expenses and costs related to the incurrence of such Refinancing
Indebtedness; and (v) such Refinancing Indebtedness is incurred by the same
Person that initially incurred the Indebtedness being renewed, rearranged,
refunded, refinanced or extended, except that (a) the Company may incur
Refinancing Indebtedness to renew, rearrange, refund, refinance or extend
Indebtedness of any Subsidiary and (b) any Subsidiary may incur Refinancing
Indebtedness to renew, rearrange, refund, refinance or extend Indebtedness of
another Subsidiary.
"Restricted Investment" means any Investment (other than a Permitted
Investment) or guarantee of an Investment (other than a Permitted Investment) in
any Person.
"Restricted Payment" means any of the following: (i) any dividend or
other distribution in respect of the Capital Stock of the Company or any
Subsidiary (other than (a) dividends or distributions payable solely in Capital
Stock (other than Disqualified Stock), (b) any dividend or distribution in
respect of the equity interests in a Subsidiary in respect of the class of
equity interests owned by the Company or another Subsidiary, PROVIDED that such
dividend or distribution is made pro rata, or in accordance with the terms of
their interests, to all holders of such class of equity interests, and (c) any
dividends or distributions payable to the Company or a Subsidiary); (ii) the
purchase, redemption or other acquisition or retirement for value of any Capital
Stock of the Company (other than a purchase, redemption, acquisition or
retirement for other Capital Stock (other than Disqualified Stock)); (iii) the
making of any principal payment on, or the purchase, defeasance, repurchase,
redemption or other acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, of any
Indebtedness which is subordinated in right of payment to the Notes (other than
with Capital Stock (other than Disqualified Stock)); and (iv) the making of any
Restricted Investment.
"Senior Representative" means any trustee, agent or representative, if
any, for the holders of any Designated Senior Indebtedness or, if there is only
one holder of an issue of Designated Senior Indebtedness, such holder.
"Subsidiary" means any Person either (i) the majority of the Capital
Stock or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other governing body of which is directly
or indirectly owned by the Company or (ii) in the case of a Person without a
governing body, a majority of the outstanding common equity interests of which
is directly or indirectly owned by the Company.
"Voting Stock" means, with respect to any Person, securities of any
class or classes of Capital Stock in such Person entitling holders thereof
(whether at all times or only so long as no other class of stock has
-50-
voting power by reason of any contingency) to vote in the election of members of
the board of directors or other governing body of such Person.
"Wholly-Owned Subsidiary" means a Subsidiary of which all issued and
outstanding Capital Stock is owned beneficially and of record by one or more of
the Company and its Wholly-Owned Subsidiaries.
EVENTS OF DEFAULT AND REMEDIES
Events of Default shall include (i) failure by the Company to pay
interest on the Notes when due and continuance of such failure for 30 days,
whether or not prohibited by the subordination provisions of the Indenture; (ii)
failure by the Company to pay the principal on, or premium, if any, of, the
Notes when due and payable, whether at maturity, upon acceleration, redemption
or otherwise (including failure to make payments pursuant to a Change of Control
Offer or a Net Proceeds Offer), whether or not prohibited by the subordination
provisions of the Indenture; (iii) failure by the Company to comply with any
other covenant in the Indenture and continuance of such failure for 60 days
after written notice from the Trustee or holders of 25% in principal amount of
the Notes outstanding (except in the case of a default with respect to a Change
of Control Offer or a Net Proceeds Offer pursuant to the "Change of Control" and
"Limitation on Sale of Assets" covenants, and except in the case of a Default
with respect to the "Limitation on Mergers and Consolidations" covenant, which
will constitute Events of Default with such notice but without passage of time);
(iv) a default by the Company or any Subsidiary on any Indebtedness aggregating
in excess of $10 million, and the acceleration of the maturity of such
Indebtedness by reason of such default; (v) failure by the Company or any
Subsidiary to pay when due, after giving effect to any applicable grace periods,
any Indebtedness aggregating in excess of $10 million; (vi) a final judgment or
judgments against the Company or any Subsidiary (to the extent not covered by
insurance) aggregating in excess of $7.5 million which remains undischarged for
a period (during which execution shall not have been effectively stayed) of 60
days after the date on which any period for appeal has expired and all rights of
appeal have been denied; and (vii) certain events of bankruptcy, insolvency or
reorganization involving the Company.
If an Event of Default (other than an Event of Default specified in
clause (vii) of the prior paragraph) shall occur and be continuing, the Trustee
or the holders of not less than 25% in aggregate principal amount of the Notes
then outstanding may, and the Trustee upon the request of such holders shall,
declare by written notice to the Company (and, if any Designated Senior
Indebtedness is outstanding, to the holders thereof or their Senior
Representatives) the Notes due and payable immediately. Upon such acceleration,
the entire principal amount of and accrued and unpaid interest on the Notes (i)
shall become immediately due and payable; or (ii) if there is any Designated
Senior Indebtedness outstanding, shall become due and payable upon the first to
occur of an acceleration under such Designated Senior Indebtedness or five
business days after receipt by the Company and the Senior Representatives with
respect to such Designated Senior Indebtedness of such acceleration notice,
unless all Events of Default specified in such acceleration notice (other than
any Event of Default in respect of non-payment of principal of the Notes) shall
have been cured. Thereupon the Trustee may, at its discretion, proceed to
protect and enforce the rights of the holders of Notes by appropriate judicial
proceeding. However, if any Event of Default specified in clause (vii) of the
prior paragraph occurs and is continuing, then all the Notes shall IPSO FACTO
become and be immediately due and payable, without any declaration or other act
on the part of the Trustee or any holder.
The holders of a majority in principal amount of the Notes by written
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal or interest that has become
due solely because of the acceleration) have been cured or waived.
Notwithstanding the foregoing, any acceleration of payment of the Notes as a
result of the failure of the Company to make an interest payment on the Notes
during a Payment Blockage Period (an "Acceleration Due to Blockage")
automatically will be rescinded if and when the following conditions are
satisfied within five business days following the end of such Payment
-51-
Blockage Period: (i) the payment in respect of interest on the Notes, the
failure of which gave rise to such Event of Default, is made; and (ii) no other
Event of Default, other than an Event of Default which has occurred solely as a
result of the acceleration of the Notes or of other Indebtedness of the Company
or any Subsidiary prior to its express maturity that was caused solely by an
Acceleration Due to Blockage, shall have occurred and be continuing.
No holder will have any right to institute any proceeding with respect
to the Indenture or the Notes or for any remedy thereunder, unless (i) such
holder shall have previously given to the Trustee written notice of a continuing
Event of Default, (ii) the holders of not less than 25% in aggregate principal
amount of the Notes outstanding shall have made written request, and offered
reasonable indemnity, to the Trustee to institute such proceeding as trustee,
(iii) the Trustee shall not have received from the holders of a majority in
aggregate principal amount of the Notes outstanding a direction inconsistent
with such request and (iv) the Trustee shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a holder for enforcement of payment of the principal of and
premium of, if any, or interest on such holder's Note on or after the respective
due dates expressed in such Note.
The holders of more than 50% in aggregate principal amount of the Notes
outstanding may on behalf of the holders of all the Notes waive any past
defaults under the Indenture and their consequences, except a default in the
payment of the principal of, premium, if any, or interest on any Note, or in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without consent of the holder of each Note outstanding. For
information with respect to waiver of defaults, see "--Modification of the
Indenture; Waiver."
The Company will be required to furnish to the Trustee annually a
statement as to the performance by the Company of certain of its obligations
under the Indenture and as to any default in such performance. The Company is
required to notify the Trustee within five business days of becoming aware of
any Default.
SATISFACTION AND DISCHARGE OF THE INDENTURE; COVENANT DEFEASANCE
At the Company's option, at any time, the Indenture will cease to be of
further effect as to all outstanding Notes (except as to (i) rights of
registration of transfer and exchange and the Company's right of optional
redemption; (ii) the obligation of the Company to substitute apparently
mutilated, defaced, destroyed, lost or stolen Notes; (iii) rights of holders of
the Notes to receive payments of principal and interest on the Notes; (iv)
rights, obligations and immunities of the Trustee under the Indenture; and (v)
rights of the holders of the Notes as beneficiaries of the Indenture with
respect to the property so deposited with the Trustee payable to all or any of
them), if (a) the Company will have paid or caused to be paid the principal of
and interest on the Notes as and when the same will have become due and payable
or (b) all outstanding Notes (except lost, stolen or destroyed Notes which have
been replaced or paid) have been delivered to the Trustee for cancellation or
(c) (1) the Notes not previously delivered to the Trustee for cancellation will
have become due and payable or are by their terms to become due and payable
within one year or are to be called for redemption under arrangements
satisfactory to the Trustee upon delivery of notice and (2) the Company will
have irrevocably deposited with the Trustee, as trust funds, cash, in an amount
sufficient to pay principal of and interest on the outstanding Notes, to
maturity or redemption, as the case may be. Such trust may only be established
if such deposit will not result in a breach or violation of, or constitute a
default under, any agreement or instrument pursuant to which the Company is a
party or by which it is bound and the Company has delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that all
conditions related to such satisfaction and discharge have been complied with.
The Indenture will also cease to be in effect (except as described in
(i) through (v) in the immediately preceding paragraph) and the Indebtedness on
all outstanding Notes will be discharged on the 91st day after the irrevocable
deposit by the Company with the Trustee, in trust, specifically pledged as
security for, and
-52-
dedicated solely to, the benefit of the holders of the Notes, of cash, U.S.
Government Obligations, or a combination thereof, in an amount sufficient, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to pay
the principal of and interest on the Notes then outstanding to maturity or
redemption in accordance with the terms of the Indenture and the Notes. Such a
trust may only be established if (i) such deposit will not result in a breach or
violation of, or constitute a default under, any agreement or instrument to
which the Company is a party or by which it is bound; (ii) the Company has
delivered to the Trustee an opinion of counsel stating that (a) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (b) since the date of the Indenture there has been a change in the
applicable federal income tax law, in either case to the effect that, based
thereon such opinion shall confirm that, the holders of the Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income tax
on the same amount and in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not occurred; (iii)
the Company has delivered to the Trustee an opinion of counsel to the effect
that after the 91st day following the deposit, the trust funds will not be
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally; and (iv) the Company has
delivered to the Trustee an officer's certificate and an opinion of counsel,
each stating that all conditions related to the defeasance have been complied
with.
The Company may also be released from its obligations described under
"--Change of Control" and "--Covenants" and shall cease to be subject to clauses
(iii) through (vi) of the first paragraph under "Events of Default and
Remedies," with respect to the Notes outstanding on the 91st day after the
irrevocable deposit by the Company with the Trustee, in trust, specifically
pledged as security for, and dedicated solely to, the benefit of the holders of
the Notes, cash, U.S. Government Obligations, or a combination thereof, in an
amount sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, to pay the principal of and interest on the Notes then outstanding to
maturity or redemption in accordance with the terms of the Indenture and the
Notes ("covenant defeasance"). Such covenant defeasance may only be effected if
(i) such deposit will not result in a breach or violation of, or constitute a
default under, any agreement or instrument to which the Company is party or by
which it is bound; (ii) the Company delivers to the Trustee an officers'
certificate and an opinion of counsel to the effect that the holders of the
Notes will not recognize income, gain or loss for federal income tax purposes as
a result of such deposit and covenant defeasance and will be subject to federal
income tax on the same amount, in the same manner and at the same times as would
have been the case if such deposit and covenant defeasance had not occurred;
(iii) the Company has delivered to the Trustee an opinion of counsel to the
effect that after the 91st day following the deposit, the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; and (iv)
the Company has delivered to the Trustee an officers' certificate and an opinion
of counsel, each stating that all conditions related to the covenant defeasance
have been complied with. Following such covenant defeasance, the Company may
omit to comply with and will have no liability in respect of any term, condition
or limitation set forth in such sections of the Indenture, whether directly or
indirectly by reason of any reference elsewhere in the Indenture to such
sections or by reason of any reference in such sections to any other provision
in the Indenture or in any other document, and such omission will not constitute
an Event of Default.
MODIFICATION OF THE INDENTURE; WAIVER
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented with the consent of the holders of at least a
majority in aggregate principal amount of the Notes then outstanding, or
compliance by the Company with any provision of the Indenture or the Notes may
be waived; PROVIDED, HOWEVER, that without the consent of each holder affected
thereby, the Company may not (i) reduce the percentage of aggregate principal
amount of the Notes outstanding whose holders must consent to any
-53-
modification, amendment, supplement or waiver; (ii) reduce the rate or change
the time for payment of interest, including defaulted interest, on any Note;
(iii) reduce the principal amount of any Note or extend the maturity date of the
Notes; (iv) reduce the redemption price, including premium, if any, payable upon
redemption of any Note or change the time at which any Note may or shall be
redeemed; (v) reduce the repurchase price, including premium, if any, payable
upon the repurchase of any Note or change the time at which any Note shall be
repurchased as set forth above under "--Change of Control" or "--Limitations on
Sale of Assets;" (vi) change the currency of payment of principal of, premium,
if any, or interest on, any Note; (vii) impair the right to institute suit for
the enforcement of any payment of principal of, premium, if any, or interest on,
any Note; or (viii) waive a continuing Default or Event of Default in the
payment of principal of, premium, if any, or interest on, the Notes (except a
rescission of acceleration of the Notes as set forth under "--Events of Default
and Remedies" and a waiver of the payment default that resulted from such
acceleration).
Notwithstanding the foregoing, without the consent of any holder of
Notes, the Company and the Trustee may amend or supplement the Indenture or the
Notes to (i) cure an ambiguity, defect or inconsistency, (ii) provide for
uncertificated Notes in addition to or in place of certificated Notes, (iii)
provide for the assumption of the Company's obligations to holders of Notes in
the case of a transaction made in accordance with the "Limitation on Mergers,
Consolidations or Sale of Assets" covenant, (iv) make any change that would
provide any additional rights or benefits to holders of Notes or that does not
adversely affect the legal rights under the Indenture of any such holder, or (v)
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
REGARDING THE TRUSTEE
State Street Bank and Trust Company is the Trustee under the Indenture.
Subject to the provisions of the Indenture relating to the duties of the
Trustee, the Trustee is under no obligation to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
under the Indenture or in the exercise of any of its rights or powers if it has
reasonable grounds to believe that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. Subject to the
provisions of the Indenture and applicable law, the holders of a majority in
principal amount of outstanding Notes have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred on the Trustee.
The Indenture contains certain limitations on the rights of the
Trustee, should it become a creditor of the Company, to obtain payment of claims
in certain cases, or to realize certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in
transactions with the Company or any Affiliate of the Company other than acting
as Trustee under the Indenture; however, if it acquires any conflicting interest
(as defined in the Indenture), it must eliminate such conflict or resign. State
Street Bank and Trust Company of Connecticut, National Association, is the
trustee under the 14% Notes Indenture.
BOOK-ENTRY; DELIVERY AND FORM
The certificates representing the Series B Notes will be issued in
fully registered form, without coupons. The Series B Notes initially will be
represented by a single, permanent global certificate in definitive, fully
registered form (the "Global Note") and will be deposited with, or on behalf of,
The Depository Trust Company, New York, New York ("DTC"), and registered in the
name of Cede & Co., as DTC's nominee or will remain in the custody of the
Trustee pursuant to a FAST Balance Certificate Agreement between DTC and the
Trustee. Interests of beneficial owners in the Global Note may be transferred or
exchanged for physical Series B Notes in accordance with the provisions of the
Indenture and the procedures of DTC and the Trustee.
-54-
GOVERNING LAW
The Indenture and the Notes are governed by, and are to be construed in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed entirely within such State.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Series B Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Series B Notes. As noted below,
this Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Series B Notes received in
exchange for Original Notes where such Original Notes were acquired as a result
of market-making activities or other trading activities and not acquired
directly from the Company or any of its affiliates. The Company has generally
agreed that for a period of one year from the date the Registration Statement is
declared effective, it will make this Prospectus, as amended or supplemented,
available to any such broker-dealer for use in connection with any such resale.
See "The Exchange Offer -- Purpose and Effect of the Exchange Offer;
Registration Rights."
The Company will not receive any proceeds from any sale of Series B
Notes by broker-dealers. Series B Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Series B Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer and/or purchasers of any such Series B Notes. Any broker-dealer
that resells Series B Notes that were received by it for its own account
pursuant to the Exchange Offer and any broker or dealer that participates in a
distribution of such Series B Notes may be deemed to be an "underwriter" within
the meaning of the Securities Act, and any profit on any such resale of Series B
Notes and any commissions or concessions received by any such persons may be
deemed to be underwriting compensation under the Securities Act. The Letter of
Transmittal states that by acknowledging that it will deliver and by delivering
a prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of one year from the date the Registration Statement is
declared effective, the Company will promptly send additional copies of this
Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in the Letter of Transmittal. The
Company has agreed to indemnify broker-dealers permitted to use this Prospectus
in connection with their resales of Series B Notes as described above against
certain liabilities, including liabilities under the Securities Act, in
connection with such resales.
VALIDITY OF SERIES B NOTES
The validity of the Series B Notes offered hereby will be passed upon
for the Company by Bracewell & Patterson, L.L.P., Houston, Texas. Bracewell &
Patterson, L.L.P. will rely on the opinion of Stone, Pigman, Walther, Wittmann &
Hutchinson, L.L.P., New Orleans, Louisiana, as to matters of Louisiana law.
-55-
EXPERTS
The consolidated financial statements of the Company listed in the
Index to Financial Statements appearing in the Company's Annual Report on Form
10-K for the year ending December 31, 1995, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report included therein,
and such report is incorporated herein by reference. See "Incorporation by
Reference." The consolidated financial statements referred to above have been
incorporated herein by reference in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
-56-
ANNEX A
FORM OF LETTER OF TRANSMITTAL
-57-
LETTER OF TRANSMITTAL
TO TENDER FOR EXCHANGE
10% SENIOR SUBORDINATED NOTES DUE 2006
OF
SOUTHDOWN, INC.
PURSUANT TO THE PROSPECTUS
DATED ______________, 1996
THIS OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ______________,
1996, UNLESS EXTENDED. TENDERS OF NOTES MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
The Exchange Agent for the Exchange Offer is:
State Street Bank and Trust Company
BY MAIL:
State Street Bank and
Trust Company
P. O. Box 778
Boston, Massachusetts 02102
Attention: Nancy Bowker
Corporate Trust Department
BY OVERNIGHT DELIVERY:
State Street Bank and
Trust Company
225 Franklin Street - IP4
Boston, Massachusetts 02110
Attention: Nancy Bowker
Corporate Trust Department
BY FACSIMILE TRANSMISSION:
( FOR ELIGIBLE INSTITUTIONS ONLY)
(617) 664-5784
CONFIRM BY TELEPHONE:
(617) 664-5539
BY HAND:
State Street Bank and
Trust Company
Two International Plaza-4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Window
or
State Street Bank and Trust
Company, National Association
61 Broadway
New York, New York 10006
Attention: Corporate Trust Window-
Concourse Level
A-1
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE SERIES B NOTES PURSUANT TO THE
EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR ORIGINAL NOTES TO
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
__________, 1996, unless the Company extends the Exchange Offer, in which case
the term "Expiration Date" shall mean the latest date and time to which the
Exchange Offer is extended. All capitalized terms used herein and not defined
shall have the meanings ascribed to them in the Prospectus.
This Letter of Transmittal is to be used by holders ("Holders") of 10%
Senior Subordinated Notes due 2006 (the "Original Notes") of Southdown, Inc.
(the "Company") if: (i) certificates representing Original Notes are to be
physically delivered to the Exchange Agent herewith by such Holders; (ii) tender
of Original Notes is to be made by book-entry transfer to the Exchange Agent's
account at The Depository Trust Company ("DTC") pursuant to the procedures set
forth under the caption "Procedures for Tendering Original Notes--Book-Entry
Delivery Procedures" in the Prospectus dated _____________, 1996 (the
"Prospectus"); or (iii) tender of Original Notes is to be made according to the
guaranteed delivery procedures set forth under the caption "Procedures for
Tendering Original Notes--Guaranteed Delivery" in the Prospectus, and, in each
case, instructions are not being transmitted through the DTC Automated Tender
Offer Program ("ATOP").
Holders of Original Notes that are tendering by book-entry transfer to the
Exchange Agent's account at DTC can execute the tender through ATOP, for which
the transaction will be eligible. DTC participants that are accepting the
exchange offer as set forth in the Prospectus and this Letter of Transmittal
(together, the "Exchange Offer") must transmit their acceptance to DTC which
will edit and verify the acceptance and execute a book-entry delivery to the
Exchange Agent's account at DTC. DTC will then send an Agent's Message to the
Exchange Agent for its acceptance. Delivery of the Agent's Message by DTC will
satisfy the terms of the Offer as to execution and delivery of a Letter of
Transmittal by the participant identified in the Agent's Message. DTC
participants may also accept the Exchange Offer by submitting a notice of
guaranteed delivery through ATOP.
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, then such Holder must tender such Original Notes
according to the guaranteed delivery procedures set forth under the caption
"Procedures for Tendering Original Notes--Guaranteed Delivery" in the
Prospectus. See Instruction 2.
The undersigned should complete, execute and deliver this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer.
A-2
TENDER OF ORIGINAL NOTES
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number:
Transaction Code Number:
[ ] CHECK HERE IF TENDERED ORIGINAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
A-3
List below the Original Notes to which this Letter of Transmittal relates.
If the space provided is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this Letter
of Transmittal.
DESCRIPTION OF ORIGINAL NOTES
<TABLE>
<CAPTION>
Name(s) and Address(es) Aggregate Principal
of Registered Holder(s) Certificate Principal Amount Amount
(Please fill in if blank) Number(s)* Represented** Tendered**
<S> <C> <C> <C>
Total
Principal
Amount of
Original Notes
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless otherwise specified, the entire aggregate principal amount
represented by the Original Notes described above will be deemed to be
tendered. See Instruction 4.
The names and addresses of the registered Holders should be printed, if not
already printed above, exactly as they appear on the Original Notes tendered
hereby. The Original Notes and the principal amount of Original Notes that the
undersigned wishes to tender should be indicated in the appropriate boxes.
A-4
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Southdown, Inc. ("the Company"), upon the
terms and subject to the conditions set forth in its Prospectus dated
_______________, 1996 (the "Prospectus"), receipt of which is hereby
acknowledged, and in accordance with this Letter of Transmittal (which together
constitute the "Exchange Offer"), the principal amount of Original Notes
indicated in the table above entitled "Description of Original Notes" under the
column heading "Principal Amount Tendered." The undersigned represents that it
is duly authorized to tender all of the Original Notes tendered hereby which it
holds for the account of beneficial owners of such Original Notes ("Beneficial
Owner(s)") and to make the representations and statements set forth herein on
behalf of such Beneficial Owner(s).
Subject to, and effective upon, the acceptance for purchase of the
principal amount of Original Notes tendered herewith in accordance with the
terms and subject to the conditions of the Exchange Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company, all
right, title and interest in and to all of the Original Notes tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that the Exchange Agent also acts as the agent of the Company) with
respect to such Original Notes, with full powers of substitution and revocation
(such power of attorney being deemed to be an irrevocable power coupled with an
interest) to (i) present such Original Notes and all evidences of transfer and
authenticity to, or transfer ownership of, such Original Notes on the account
books maintained by DTC to, or upon the order of, the Company, (ii) present such
Original Notes for transfer of ownership on the books of the Company, and (iii)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Original Notes, all in accordance with the terms and conditions of the
Exchange Offer as described in the Prospectus.
By accepting the Exchange Offer, the undersigned hereby represents and
warrants that (i) the Series B Notes to be acquired by the undersigned and any
Beneficial Owner(s) in connection with the Exchange Offer are being acquired by
the undersigned and any Beneficial Owner(s) in the ordinary course of business
of the undersigned and any Beneficial Owner(s), (ii) the undersigned and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or understanding with any person to participate, in the
distribution of the Series B Notes, (iii) except as indicated below, neither the
undersigned nor any Beneficial Owner is an "affiliate," as defined in Rule 405
under the Securities Act of 1933, as amended (together with the rules and
regulations promulgated thereunder, the "Securities Act"), of the Company, and
(iv) the undersigned and each Beneficial Owner acknowledge and agree that (x)
any person participating in the Exchange Offer with the intention or for the
purpose of distributing the Series B Notes must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale of the Series B Notes acquired by such person and cannot rely
on the position of the Staff of the Securities and Exchange Commission (the
"Commission") set forth in the no-action letters that are noted in the section
of the Prospectus entitled "The Exchange Offer--Purpose and Effect of the
Exchange Offer; Registration Rights" and (y) any broker-dealer that pursuant to
the Exchange Offer receives Series B Notes for its own account in exchange for
Original Notes which it acquired for its own account as a result of
market-making activities or other trading activities must deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such Series B Notes. By so acknowledging and by delivering a prospectus, a
broker-dealer shall not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
The undersigned understands that tenders of Original Notes may be withdrawn
by written notice of withdrawal received by the Exchange Agent at any time prior
to the Expiration Date in accordance with the Prospectus. In the event of a
termination of the Exchange Offer, the Original Notes tendered pursuant to the
Exchange Offer will be returned to the tendering Holders promptly (or, in the
case of Original Notes tendered by book-entry transfer, such Original Notes will
be credited to the account maintained at DTC from which such Original Notes were
delivered). If the Company makes a material change in the terms of the Exchange
Offer or the information concerning the Exchange Offer or waives a material
condition of such Exchange Offer, the Company will disseminate additional
Exchange Offer materials and extend such Exchange Offer, if and to the extent
required by law.
The undersigned understands that the tender of Original Notes pursuant to
any of the procedures set forth in the Prospectus and in the instructions hereto
will constitute the undersigned's acceptance of the terms and conditions of the
A-5
Exchange Offer. The Company's acceptance for exchange of Original Notes tendered
pursuant to any of the procedures described in the Prospectus will constitute a
binding agreement between the undersigned and the Company in accordance with the
terms and subject to the conditions of the Exchange Offer. For purposes of the
Exchange Offer, the undersigned understands that validly tendered Original Notes
(or defectively tendered Original Notes with respect to which the Company has,
or has caused to be, waived such defect) will be deemed to have been accepted by
the Company if, as and when the Company gives oral or written notice thereof to
the Exchange Agent.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Original Notes
tendered hereby, and that when such tendered Original Notes are accepted for
purchase by the Company, the Company will acquire good title thereto, free and
clear of all liens, restrictions, charges and encumbrances and not subject to
any adverse claim or right. The undersigned and each Beneficial Owner will, upon
request, execute and deliver any additional documents deemed by the Exchange
Agent or by the Company to be necessary or desirable to complete the sale,
assignment and transfer of the Original Notes tendered hereby.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall not be affected by, and shall survive, the death or incapacity
of the undersigned and any Beneficial Owner(s), and any obligation of the
undersigned or any Beneficial Owner(s) hereunder shall be binding upon the
heirs, executors, administrators, trustees in bankruptcy, personal and legal
representatives, successors and assigns of the undersigned and such Beneficial
Owner(s).
The undersigned understands that the delivery and surrender of any Original
Notes is not effective, and the risk of loss of the Original Notes does not pass
to the Exchange Agent, until receipt by the Exchange Agent of this Letter of
Transmittal, or a manually signed facsimile hereof, properly completed and duly
executed, together with all accompanying evidences of authority and any other
required documents in form satisfactory to the Company. All questions as to form
of all documents and the validity (including time of receipt) and acceptance of
tenders and withdrawals of Original Notes will be determined by the Company, in
its sole discretion, which determination shall be final and binding.
Unless otherwise indicated herein under "Special Issuance Instructions,"
the undersigned hereby requests that any Original Notes representing principal
amounts not tendered or not accepted for exchange be issued in the name(s) of
the undersigned (and in the case of Original Notes tendered by book-entry
transfer, by credit to the account of DTC), and Series B Notes issued in
exchange for Original Notes pursuant to the Exchange Offer be issued to the
undersigned. Similarly, unless otherwise indicated herein under "Special
Delivery Instructions," the undersigned hereby requests that any Original Notes
representing principal amounts not tendered or not accepted for exchange and
Series B Notes issued in exchange for Original Notes pursuant to the Exchange
Offer be delivered to the undersigned at the address shown below the
undersigned's signature(s). In the event that the "Special Issuance
Instructions" box or the "Special Delivery Instructions" box is, or both are,
completed, the undersigned hereby requests that any Original Notes representing
principal amounts not tendered or not accepted for purchase be issued in the
name(s) of, certificates for such Original Notes be delivered to, and Series B
Notes issued in exchange for Original Notes pursuant to the Exchange Offer be
issued in the name(s) of, and be delivered to, the person(s) at the address(es)
so indicated, as applicable. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" box or "Special
Delivery Instructions" box to transfer any Original Notes from the name of the
registered Holder(s) thereof if the Company does not accept for exchange any of
the principal amount of such Original Notes so tendered.
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
IS AN AFFILIATE OF THE COMPANY.
[ ] CHECK HERE IF YOU OR ANY BENEFICIAL OWNER FOR WHOM YOU HOLD ORIGINAL NOTES
TENDERED HEREBY IS A BROKER-DEALER WHO ACQUIRED SUCH NOTES DIRECTLY FROM
THE COMPANY OR AN AFFILIATE OF THE COMPANY.
[ ] CHECK HERE AND COMPLETE THE LINES BELOW IF YOU OR ANY BENEFICIAL OWNER FOR
WHOM YOU HOLD ORIGINAL NOTES TENDERED HEREBY IS A BROKER-DEALER WHO
ACQUIRED SUCH NOTES IN MARKET-MAKING OR OTHER TRADING ACTIVITIES. IF THIS
BOX IS CHECKED, THE COMPANY WILL SEND 10 ADDITIONAL COPIES OF THE
PROSPECTUS AND
A-6
10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO TO YOU OR SUCH
BENEFICIAL OWNER AT THE ADDRESS SPECIFIED IN THE FOLLOWING LINES.
Name: ________________________________________________________
Address: ________________________________________________________
A-7
SPECIAL ISSUANCE INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not tendered
or not accepted for exchange are to be issued in the name of, or Series B Notes
are to be issued in the name of, someone other than the person or persons whose
signature(s) appear(s) within this Letter of Transmittal or issued to an address
different from that shown in the box entitled "Description of Original Notes"
within this Letter of Transmittal.
Issue: [ ] Original Notes
[ ] Series B Notes
(check as applicable)
Name
(Please Print)
Address
(Please Print)
(Zip Code)
(Tax Identification or Social Security Number)
(See Substitute Form W-9 herein)
SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Original Notes in a principal amount not tendered
or not accepted for exchange of Series B Notes are to be sent to someone other
than the person or persons whose signature(s) appear(s) within this Letter of
Transmittal or to an address different from that shown in the box entitled
"Description of Original Notes" within this Letter of Transmittal.
Delivery: [ ] Original Notes
[ ] Series B Notes
(check as applicable)
Name
(Please Print)
Address
(Please Print)
(Zip Code)
(Tax Identification or Social Security Number)
(See Substitute Form W-9 herein)
A-8
PLEASE SIGN HERE
(To be completed by all tendering
Holders of Original Notes regardless of whether Original Notes
are being physically delivered herewith)
This Letter of Transmittal must be signed by the registered Holder(s) exactly as
name(s) appear(s) on certificate(s) for Original Note(s) or, if tendered by a
participant in DTC exactly as such participant's name appears on a security
position listing as owner of Original Notes, or by person(s) authorized to
become registered Holder(s) by endorsements and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please set forth full title and see Instruction 5.
Signature(s) of Registered Holder(s) or Authorized Signatory
(SEE GUARANTEE REQUIREMENT BELOW)
Dated:................................. 1996
Name(s)
(Please Print)
Capacity (Full Title)
Address
(Including Zip Code)
Area Code and
Tel. Number
Tax Identification or
Social Security No.
(Complete Accompanying Substitute Form W-9)
SIGNATURE GUARANTEE
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
Name of Firm
[PLACE SEAL HERE]
A-9
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. SIGNATURE GUARANTEES. Signatures on this Letter of Transmittal must be
guaranteed by a recognized member of the Medallion Signature Guarantee Program
or by any other "eligible guarantor institution," as such term is defined in
Rule 17Ad-15 promulgated under the Exchange Act (each of the foregoing, an
"Eligible Institution"), unless the Original Notes tendered hereby are tendered
(i) by a registered Holder of Original Notes (or by a participant in DTC whose
name appears on a security position listing as the owner of such Original Notes)
that has not completed either the box entitled "Special Issuance Instructions"
or the box entitled "Special Delivery Instructions" on this Letter of
Transmittal, or (ii) for the account of an Eligible Institution. If the Original
Notes are registered in the name of a person other than the signer of this
Letter of Transmittal, if Original Notes not accepted for exchange or not
tendered are to be returned to a person other than the registered Holder or if
Series B Notes are to be issued in the name of or sent to a person other than
the registered Holder, then the signatures on this Letter of Transmittal
accompanying the tendered Original Notes must be guaranteed by an Eligible
Institution as described above. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND ORIGINAL NOTES. This Letter of
Transmittal is to be completed by Holders if (i) certificates representing
Original Notes are to be physically delivered to the Exchange Agent herewith by
such Holders; (ii) tender of Original Notes is to be made by book-entry transfer
to the Exchange Agent's account at DTC pursuant to the procedures set forth
under the caption "Procedures for Tendering Original Notes--Book-Entry Delivery
Procedures" in the Prospectus; or (iii) tender of Original Notes is to be made
according to the guaranteed delivery procedures set forth under the caption
"Procedures for Tendering Original Notes--Guaranteed Delivery" in the
Prospectus. All physically delivered Original Notes, or a confirmation of a
book-entry transfer into the Exchange Agent's account at DTC of all Original
Notes delivered electronically, as well as a properly completed and duly
executed Letter of Transmittal (or manually signed facsimile thereof), any
required signature guarantees and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at one of its addresses set
forth on the cover page hereto on or prior to the Expiration Date, or the
tendering Holder must comply with the guaranteed delivery procedures set forth
below. DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
If a Holder desires to tender Original Notes pursuant to the Exchange Offer
and time will not permit this Letter of Transmittal, certificates representing
such Original Notes and all other required documents to reach the Exchange
Agent, or the procedures for book-entry transfer cannot be completed, on or
prior to the Expiration Date, such Holder must tender such Original Notes
pursuant to the guaranteed delivery procedures set forth under the caption
"Procedures for Tendering Original Notes--Guaranteed Delivery" in the
Prospectus. Pursuant to such procedures, (i) such tender must be made by or
through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Company, or an Agent's Message with respect to guaranteed delivery that is
accepted by the Company, must be received by the Exchange Agent, either by hand
delivery, mail, telegram, or facsimile transmission, on or prior to the
Expiration Date; and (iii) the certificates for all tendered Original Notes, in
proper form for transfer (or confirmation of a book-entry transfer of all
Original Notes delivered electronically into the Exchange Agent's account at DTC
pursuant to the procedures for such transfer set forth in the Prospectus),
together with a properly completed and duly executed Letter of Transmittal (or
manually signed facsimile thereof) and any other documents required by this
Letter of Transmittal, or in the case of a book-entry transfer, a properly
transmitted Agent's Message, must be received by the Exchange Agent within two
business days after the date of the execution of the Notice of Guaranteed
Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE ORIGINAL NOTES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC AND ANY
ACCEPTANCE OR AGENT'S MESSAGE DELIVERED THROUGH ATOP, IS AT THE OPTION AND RISK
OF THE TENDERING HOLDER AND, EXCEPT AS OTHERWISE PROVIDED IN THIS INSTRUCTION 2,
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE AGENT.
IF DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE
SUFFICIENTLY IN ADVANCE OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE
EXCHANGE AGENT PRIOR TO SUCH DATE.
A-10
No alternative, conditional or contingent tenders will be accepted. All
tendering Holders, by execution of this Letter of Transmittal (or a facsimile
thereof), waive any right to receive any notice of the acceptance of their
Original Notes for exchange.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the principal amount represented by Original Notes
should be listed on a separate signed schedule attached hereto.
4. PARTIAL TENDERS. (Not applicable to Holders who tender by book-entry
transfer). If Holders wish to tender less than the entire principal amount
evidenced by any Original Note submitted, but only in integral multiples of
$1,000, such Holders must fill in the principal amount that is to be tendered in
the column entitled "Principal Amount Tendered." In the case of a partial tender
of Original Notes, as soon as practicable after the Expiration Date, new
certificates for the remainder of the Original Notes that were evidenced by such
Holder's old certificates will be sent to such Holder, unless otherwise provided
in the appropriate box on this Letter of Transmittal. The entire principal
amount that is represented by Original Notes delivered to the Exchange Agent
will be deemed to have been tendered, unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, INSTRUMENTS OF TRANSFER AND
ENDORSEMENTS. If this Letter of Transmittal is signed by the registered
Holder(s) of the Original Notes tendered hereby, the signatures must correspond
with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever. If this Letter of Transmittal
is signed by a participant in DTC whose name is shown as the owner of the
Original Notes tendered hereby, the signature must correspond with the name
shown on the security position listing as the owner of the Original Notes.
If any of the Original Notes tendered hereby are registered in the name of
two or more Holders, all such Holders must sign this Letter of Transmittal. If
any of the Original Notes tendered hereby are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any Original Note or instrument of
transfer is signed by a trustee, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person should so indicate when
signing, and proper evidence satisfactory to the Company of such person's
authority to so act must be submitted.
When this Letter of Transmittal is signed by the registered Holders of the
Original Notes listed herein and transmitted hereby, no endorsements of Original
Notes or separate instruments of transfer are required unless Series B Notes are
to be issued, or Original Notes not tendered or exchanged are to be issued, to a
person other than the registered Holders, in which case signatures on such
Original Notes or instruments of transfer must be guaranteed by an Eligible
Institution.
IF THIS LETTER OF TRANSMITTAL IS SIGNED OTHER THAN BY THE REGISTERED
HOLDERS OF THE ORIGINAL NOTES LISTED HEREIN, THE ORIGINAL NOTES MUST BE ENDORSED
OR ACCOMPANIED BY APPROPRIATE INSTRUMENTS OF TRANSFER, IN EITHER CASE SIGNED
EXACTLY AS THE NAME OR NAMES OF THE REGISTERED HOLDERS APPEAR ON THE ORIGINAL
NOTES AND SIGNATURES ON SUCH ORIGINAL NOTES OR INSTRUMENTS OF TRANSFER ARE
REQUIRED AND MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION, UNLESS THE SIGNATURE
IS THAT OF AN ELIGIBLE INSTITUTION.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If certificates for Series B
Notes or unexchanged or untendered Original Notes are to be issued in the name
of a person other than the signer of this Letter of Transmittal, or if Series B
Notes or such Original Notes are to be sent to someone other than the signer of
this Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed. All
Original Notes tendered by book-entry transfer and not accepted for payment will
be returned by crediting the account at DTC designated above as the account for
which such Original Notes were delivered.
7. TRANSFER TAXES. Except as set forth in this Instruction 7, the Company
will pay or cause to be paid any transfer taxes with respect to the transfer and
sale of Original Notes to it, or to its order, pursuant to the Exchange Offer.
If Series B Notes, or Original Notes not tendered or exchanged are to be
registered in the name of any persons other than
A-11
the registered owners, or if tendered Original Notes are registered in the name
of any persons other than the persons signing this Letter of Transmittal, the
amount of any transfer taxes (whether imposed on the registered Holder or such
other person) payable on account of the transfer to such other person must be
paid to the Company or the Exchange Agent (unless satisfactory evidence of the
payment of such taxes or exemption therefrom is submitted) before the Series B
Notes will be issued.
8. WAIVER OF CONDITIONS. The conditions of the Exchange Offer may be
amended or waived by the Company, in whole or in part, at any time and from time
to time in the Company's sole discretion, in the case of any Original Notes
tendered.
9. SUBSTITUTE FORM W-9. Each tendering owner of a Note (or other payee) is
required to provide the Exchange Agent with a correct taxpayer identification
number ("TIN"), generally the owner's social security or federal employer
identification number, and with certain other information, on Substitute Form
W-9, which is provided under "Important Tax Information" below, and to certify
that the owner (or other payee) is not subject to backup withholding. Failure to
provide the information on the Substitute Form W-9 may subject the tendering
owner (or other payee) to a $50 penalty imposed by the Internal Revenue Service
and 31% federal income tax withholding on the payment of the Purchase Price. The
box in Part 3 of the Substitute Form W-9 may be checked if the tendering owner
(or other payee) has not been issued a TIN and has applied for a TIN or intends
to apply for a TIN in the near future. If the box in Part 3 is checked and the
Exchange Agent is not provided with a TIN by the time of payment, the Exchange
Agent will withhold 31% on all such payments of the Purchase Price until a TIN
is provided to the Exchange Agent.
10. BROKER-DEALERS PARTICIPATING IN THE EXCHANGE OFFER. If no broker-dealer
checks the last box on page 6 of this Letter of Transmittal, the Company has no
obligation under the Registration Rights Agreement allow the use of the
Prospectus for resales of the Series B Notes by broker-dealers or to maintain
the effectiveness of the Registration Statement of which the Prospectus is a
part after the consummation of the Exchange Offer.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance or additional copies of the Prospectus, this Letter of
Transmittal or the Notice of Guaranteed Delivery may be directed to the Exchange
Agent at the telephone numbers and location listed above. A Holder or owner may
also contact such Holder's or owner's broker, dealer, commercial bank or trust
company or nominee for assistance concerning the Exchange Offer.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES REPRESENTING THE ORIGINAL NOTES AND ALL OTHER REQUIRED
DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE EXCHANGE
AGENT ON OR PRIOR TO THE EXPIRATION DATE.
A-12
IMPORTANT TAX INFORMATION
Under federal income tax law, an owner of Original Notes whose tendered
Original Notes are accepted for exchange is required to provide the Exchange
Agent with such owner's current TIN on Substitute Form W-9 below. If such owner
is an individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the owner or other recipient of
Series B Notes may be subject to a $50 penalty imposed by the Internal Revenue
Service. In addition, any interest on Series B Notes paid to such owner or other
recipient may be subject to 31% backup withholding tax.
Certain owners of Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. In order for a foreign individual to qualify as an
exempt recipient, that owner must submit to the Exchange Agent a properly
completed Internal Revenue Service Form W-8 (a "Form W-8"), signed under
penalties of perjury, attesting to that individual's exempt status. A Form W-8
can be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions.
Backup withholding is not an additional tax. Rather, the federal income tax
liability of persons subject to backup withholding will be reduced by the amount
of tax withheld. If withholding results in an overpayment of taxes, a refund may
be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding, the owner is required to notify the Exchange
Agent of the owner's current TIN (or the TIN of any other payee) by completing
the form below, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such owner is awaiting a TIN), and that (i) the owner has not
been notified by the Internal Revenue Service that the owner is subject to
backup withholding as a result of failure to report all interest or dividends or
(ii) the Internal Revenue Service has notified the owner that the owner is no
longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the owner of the Original
Notes. If the Original Notes are registered in more than one name or are not
registered in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9,"for
additional guidance on which number to report.
A-13
SUBSTITUTE FORM W-9
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER ("TIN")
PAYER'S NAME: STATE STREET BANK AND TRUST COMPANY
Part 1--PLEASE PROVIDE YOUR TIN IN Social security number(s) or
THE BOX AT RIGHT AND CERTIFY BY Employer Identification Number(s)
SIGNING AND DATING BELOW.
Part 2--Certification--Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct taxpayer identification number
(or I am waiting for a number to be issued for me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding. CERTIFICATION
INSTRUCTIONS--You must cross out item (2) above if you have been notified
by the IRS that you are currently subject to backup withholding because of
under reporting interest or dividends on your tax return.
SIGNATURE
DATE
Part 3--
Awaiting TIN [ ]
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN A $50 PENALTY
IMPOSED BY THE INTERNAL REVENUE SERVICE AND BACKUP WITHHOLDING OF 31%.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
reportable cash payments made to me thereafter will be withheld until I provide
a taxpayer identification number.
Signature Date
A-14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
LOUISIANA BUSINESS CORPORATION LAW
The Louisiana Business Corporation Law ("LBCL") generally gives a
corporation the power to indemnify any of its directors or officers against
certain expenses, judgments, fines and amounts paid in settlement in connection
with certain actions, suits or proceedings, provided generally that such person
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the interests of the corporation and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. In the case of an action by, or in the right of, the corporation, the
corporation may indemnify such person against expenses, including attorneys'
fees and amounts paid in settlement not exceeding, in the judgment of the board
of directors, the estimated expense of litigating the action to conclusion,
actually and reasonably incurred in connection with the defense or settlement of
such action, and no indemnification shall be made in respect of any claim,
issue, or matter as to which such person shall have been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
for willful or intentional misconduct in the performance of his duty to the
corporation, unless, and only to the extent that the court shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, he is fairly and reasonably entitled to indemnity for
such expenses which the court shall deem proper.
Indemnification provided pursuant to the foregoing provisions is
not, under the LBCL, deemed exclusive of any other rights to which the person
indemnified is entitled under any bylaw, agreement, authorization of
shareholders or directors; however, no such other indemnification measure shall
permit indemnification of any person for the results of such person's willful or
intentional misconduct. In addition, the LBCL contains provisions to the general
effect that any director shall in the performance of his duties be fully
protected in relying in good faith upon the records of the corporation and upon
such information, opinions, reports or statements presented to the corporation,
the board of directors, or any committee thereof by any of the corporation's
officers or employees, or by any committee of the board of directors, or by any
counsel, appraiser, engineer (including a petroleum reservoir engineer), or
independent or certified public accountant selected by the board of directors or
any committee thereof with reasonable care, or by any other person as to matters
the director reasonably believes are within such other person's professional or
expert competence and which person is selected by the board of directors or any
committee thereof with reasonable care. A director shall not be liable for the
commission of a prohibited act if his dissent was either noted in the minutes of
the meetings or filed promptly thereafter in the registered office of the
Registrant.
ARTICLES OF INCORPORATION
As permitted under Section 24(C)(4) of the LBCL, Article XIII of
the Restated Articles of Incorporation of the Registrant eliminates the personal
liability of any director or officer to the Registrant or its shareholders for
monetary damages for breach of fiduciary duty in such capacity, except for (i)
any breach of the duty of loyalty to the Registrant or its shareholders; (ii)
acts or omissions not in good faith or involving intentional misconduct or a
knowing violation of law; (iii) unlawful payment of dividends or unlawful stock
purchases or redemptions; or (iv) any transaction from which the director or
officer derived an improper personal benefit.
II-1
BYLAWS OF THE COMPANY
Article VI, Section 6 of the Registrant's Bylaws contemplate that
the Registrant shall indemnify its directors and officers to the maximum extent
permitted by Louisiana law.
DIRECTORS' AND OFFICERS' INSURANCE
In addition, the Registrant has purchased a liability insurance
policy under which its directors and officers are indemnified against certain
losses arising from certain claims that may be made against them by reason of
their serving in such capacity.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) EXHIBITS. The following documents are filed as exhibits to
this Registration Statement.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- -----------------------
4.1 Indenture dated as of March 19, 1996, between the Registrant and State
Street Bank and Trust Company, as Trustee, relating to the Registrant's
10% Senior Subordinated Notes due 2006 and 10% Senior Subordinated Notes
due 2006, Series B.
4.2 Registration Rights Agreement dated as of March 19, 1996, among the
Registrant, Lehman Brothers Inc., and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
*5 Opinions of Bracewell & Patterson, L.L.P. and Stone, Pigman, Walther,
Wittmann & Hutchinson, L.L.P. as to the validity of the securities being
registered.
*8 Opinion of Bracewell & Patterson, L.L.P. with respect to certain federal
income tax matters.
12 Statement regarding computation of ratios.
23.1 Consent of Deloitte & Touche LLP, independent auditors for the
Registrant (See page II-7).
23.2 Consents of Bracewell & Patterson, L.L.P. (included in their opinions to
be filed as Exhibit 5 and 8 to this Registration Statement) and Stone,
Pigman, Walther, Wittmann & Hutchinson, L.L.P. (included in their
opinion filed as Exhibit 5 to this Registration Statement).
24 Powers of Attorney (See page II-5).
25 Statement of Eligibility Under the Trust Indenture Act on Form T-1 of
State Street Bank and Trust Company, as Trustee.
II-2
99.1 Third Amended and Restated Credit Agreement as of November 3, 1995 among
the Registrant; Wells Fargo Bank, N.A.; Societe Generale, Southwest
Agency; Credit Suisse; Caisse National De Credit Agricole; Banque
Paribas; CIBC Inc.; The Bank of Nova Scotia; and The First National Bank
of Boston (incorporated by reference from Exhibit 99.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995).
99.2 Letter Agreement dated February 29, 1996, amending the Third Amended and
Restated Credit Agreement as of November 3, 1995, among the Registrant
and the banks party thereto.
99.3 Indenture dated as of October 15, 1991, between the Registrant and State
Street Bank and Trust Company of Connecticut, National Association, as
Trustee, as amended by First Supplemental Indenture dated as of December
10, 1993, relating to the Registrant's 14% Senior Subordinated Notes Due
2001, Series B (incorporated by reference from Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated December 21, 1993).
- ----------------------
* To be filed by amendment.
(b) FINANCIAL STATEMENT SCHEDULES.
None.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a) That, for the purpose of determining any liability under the Securities
Act of 1933 (the "Act"), each filing of the Registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to
the securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or other wise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that
a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director,
officer, or controlling person of the Registrant in the successful
defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question
II-3
whether such indemnification by it is against public policy as expressed
in the Act and will be governed by the final adjudication of such issue.
(c) To respond to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form,
within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt
means. This includes information contained in documents filed subsequent
to the effective date of the Registration Statement through the date of
responding to such request.
(d) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved
therein, that was not the subject of and included in the Registration
Statement when it became effective.
II-4
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on the 17th day of April, 1996.
SOUTHDOWN, INC.
By: /s/ CLARENCE C. COMER
Clarence C. Comer
President and Chief
Executive Officer
Each person whose signature appears below hereby constitutes and
appoints each of Clarence C. Comer, James L. Persky and Patrick S. Bullard, with
full power to act without the others, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities (until revoked in writing) to
sign any and all amendments (including post-effective amendments) to this
Registration Statement on Form S-4 of the Registrant, and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents or any of them or their or his substitute or substitutes, full power and
authority to do and perform each and every act and thing requisite and necessary
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES POSITIONS DATE
- ---------- --------- ----
CLARENCE C. COMER President, Chief Executive Officer April 17, 1996
Clarence C. Comer Officer and Director (Principal
Executive Officer)
JAMES L. PERSKY Executive Vice President - Finance April 17, 1996
James L. Persky and Administration (Principal
Financial Officer)
ALLAN KORSAKOV Corporate Controller (Principal April 17, 1996
Allan Korsakov Accounting Officer)
W. J. CONWAY Director April 17, 1996
W. J. Conway
II-5
KILLIAN L. HUGER JR. Director April 17, 1996
Killian L. Huger Jr.
MICHAEL A. NICOLAIS Director April 17, 1996
Michael A. Nicolais
FRANK J. RYAN Director April 17, 1996
Frank J. Ryan
ROBERT J. SLATER Director April 17, 1996
Robert J. Slater
DAVID J. TIPPECONNIC Director April 17, 1996
David J. Tippeconnic
RONALD N. TUTOR Director April 17, 1996
Ronald N. Tutor
V. H. VAN HORN III Director April 10, 1996
V. H. Van Horn III
STEVEN B. WOLITZER Director April 17, 1996
Steven B. Wolitzer
II-6
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement on
Form S-4 of Southdown, Inc. of our report dated February 14, 1996 appearing in
the Annual Report on Form 10-K for the year ended December 31, 1995 of
Southdown, Inc., and to the references to us appearing under the captions
"Prospectus Summary--Selected Historical Financial and Operating Data" and
"Experts" in such Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
April 17, 1996
II-7
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ----
4.1 Indenture dated as of March 19, 1996, between the Registrant
and State Street Bank and Trust Company, as Trustee, relating
to the Registrant's 10% Senior Subordinated Notes due 2006 and
10% Senior Subordinated Notes due 2006, Series B.
4.2 Registration Rights Agreement dated as of March 19, 1996,
among the Registrant, Lehman Brothers Inc., and Merrill Lynch,
Pierce, Fenner & Smith Incorporated.
*5 Opinions of Bracewell & Patterson, L.L.P. and Stone, Pigman,
Walther, Wittmann & Hutchinson, L.L.P. as to the validity of
the securities being registered.
*8 Opinion of Bracewell & Patterson, L.L.P. with respect to
certain federal income tax matters.
12 Statement regarding computation of ratios.
23.1 Consent of Deloitte & Touche LLP, independent auditors for the
Registrant (See page II-7).
23.2 Consents of Bracewell & Patterson, L.L.P. (included in their
opinions to be filed as Exhibit 5 and 8 to this Registration
Statement) and Stone, Pigman, Walther, Wittmann & Hutchinson,
L.L.P. (included in their opinion filed as Exhibit 5 to this
Registration Statement).
24 Powers of Attorney (See page II-5).
25 Statement of Eligibility Under the Trust Indenture Act on Form
T-1 of State Street Bank and Trust Company, as Trustee.
99.1 Third Amended and Restated Credit Agreement as of November 3,
1995 among the Registrant; Wells Fargo Bank, N.A.; Societe
Generale, Southwest Agency; Credit Suisse; Caisse National De
Credit Agricole; Banque Paribas; CIBC Inc.; The Bank of Nova
Scotia; and The First National Bank of Boston (incorporated by
reference from Exhibit 99.1 to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1995).
99.2 Letter Agreement dated February 29, 1996, amending the Third
Amended and Restated Credit Agreement as of November 3, 1995,
among the Registrant and the banks party thereto.
99.3 Indenture dated as of October 15, 1991, between the Registrant
and State Street Bank and Trust Company of Connecticut,
National Association, as Trustee, as amended by First
Supplemental Indenture dated as of December 10, 1993, relating
to the Registrant's 14% Senior Subordinated Notes Due 2001,
Series B (incorporated by reference from Exhibit 4.3 to the
Registrant's Current Report on Form 8-K dated December 21,
1993).
- ----------------------
* To be filed by amendment.
EXHIBIT 4.1
SOUTHDOWN, INC.
$125,000,000
10% Senior Subordinated Notes due 2006
10% Senior Subordinated Notes due 2006, Series B
--------------------
INDENTURE
Dated as of March 19, 1996
--------------------
STATE STREET BANK AND TRUST COMPANY
as Trustee
CROSS-REFERENCE TABLE*
TRUST INDENTURE INDENTURE
ACT SECTION SECTION
- --------------- ---------
310(a)(1)..................................................... 7.10
(a)(2).................................................... 7.10
(a)(3).................................................... N.A.
(a)(4).................................................... N.A.
(b)....................................................... 7.10
(c)....................................................... N.A.
311(a)........................................................ 7.11
(b)....................................................... 7.11
(c)....................................................... N.A.
312(a)........................................................ 2.5
(b)....................................................... 12.3
(c)....................................................... 12.3
313(a)........................................................ 7.6
(b)(1).................................................... N.A.
(b)(2).................................................... 7.6
(c)....................................................... 7.6; 12.2
(d)....................................................... 7.6
314(a)........................................................ 4.4; 4.8; 12.2
(b)....................................................... N.A.
(c)(1).................................................... 12.4
(c)(2).................................................... 12.4
(c)(3).................................................... N.A.
(d)....................................................... N.A.
(e)....................................................... 12.5
(f)....................................................... N.A.
315(a)........................................................ 7.1
(b)....................................................... 7.5
(c)....................................................... 7.1
(d)....................................................... 7.1
(e)....................................................... 6.11
316(a)(last sentence)......................................... 2.9
(a)(1)(A)................................................. 6.5
(a)(1)(B)................................................. 6.4
(a)(2).................................................... N.A.
(b)....................................................... 6.7
317(a)(1)..................................................... 6.8
- ------------
* This Cross-Reference Table is not part of the Indenture.
(a)(2).................................................... 6.9
(b)....................................................... 2.4
318(a)........................................................ 12.1
318(c)........................................................ 12.1
N.A. means not applicable.
TABLE OF CONTENTS**
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE......................................................1
Section 1.1. Definitions............................................................................1
Section 1.2. Other Definitions.....................................................................14
Section 1.3. Incorporation by Reference of Trust Indenture Act.....................................15
Section 1.4. Rules of Construction.................................................................15
Section 1.5. Acts of Holders.......................................................................15
ARTICLE 2 THE SECURITIES.................................................................................16
Section 2.1. Form and Dating.......................................................................16
Section 2.2. Execution and Authentication..........................................................17
Section 2.3. Registrar and Paying Agent............................................................18
Section 2.4. Paying Agent to Hold Money in Trust...................................................18
Section 2.5. Securityholder Lists..................................................................19
Section 2.6. Transfer and Exchange.................................................................19
Section 2.7. Replacement Securities................................................................20
Section 2.8. Outstanding Securities................................................................20
Section 2.9. Treasury Securities...................................................................21
Section 2.10. Temporary Securities.........................................................21
Section 2.11. Cancellation.................................................................21
Section 2.12. Defaulted Interest...........................................................21
Section 2.13. Persons Deemed Owners........................................................22
Section 2.14. CUSIP Number.................................................................22
Section 2.15. Book-Entry Provisions for Global Securities..................................22
Section 2.16. Special Transfer Provisions..................................................23
ARTICLE 3 REDEMPTION.....................................................................................25
Section 3.1. Notices to Trustee....................................................................25
Section 3.2. Selection of Securities to Be Redeemed................................................26
Section 3.3. Notice of Redemption..................................................................26
Section 3.4. Effect of Notice of Redemption........................................................27
Section 3.5. Deposit of Redemption Price...........................................................27
Section 3.6. Securities Redeemed in Part...........................................................28
- ------------
** This Table of Contents shall not, for any purpose, be deemed a part of
the Indenture.
-i-
Section 3.7. Optional Redemption...................................................................28
Section 3.8. Offer to Purchase by Application of Excess Proceeds...................................28
ARTICLE 4 COVENANTS......................................................................................29
Section 4.1. Payment of Principal and Interest.....................................................30
Section 4.2. Maintenance of Office or Agency for Notices and Demands...............................30
Section 4.3. Insurance Matters.....................................................................30
Section 4.4. Compliance Certificate; Notice of Default.............................................31
Section 4.5. Corporate Existence...................................................................31
Section 4.6. Maintenance of Property...............................................................31
Section 4.7. Payment of Taxes and Other Claims.....................................................32
Section 4.8. Reports to the Commission.............................................................32
Section 4.9. Waiver of Stay, Extension or Usury Laws...............................................33
Section 4.10. Limitation on Additional Indebtedness........................................33
Section 4.11. Limitation on Preferred Stock of Subsidiaries................................34
Section 4.12. Limitation on Restricted Payments............................................35
Section 4.13. Limitation on Liens..........................................................36
Section 4.14. Limitation on Transactions with Affiliates...................................36
Section 4.15. Limitation on Sale of Assets.................................................37
Section 4.16. Limitation on Dividends and Other Payment Restrictions
Affecting Subsidiaries................................................................38
Section 4.17. Limitation on Future Senior Subordinated Indebtedness........................39
Section 4.18. Limitations on Sale and Leaseback Transactions...............................39
Section 4.19. Change of Control............................................................39
Section 4.20. Registration Rights Agreement................................................42
Section 4.21. Certain Permitted Transactions...............................................42
ARTICLE 5 SUCCESSORS.....................................................................................42
Section 5.1. Limitation on Mergers and Consolidations..............................................42
Section 5.2. Successor Corporation Substituted.....................................................43
ARTICLE 6 DEFAULTS AND REMEDIES..........................................................................43
Section 6.1. Events of Default.....................................................................43
Section 6.2. Acceleration..........................................................................44
Section 6.3. Other Remedies........................................................................45
Section 6.4. Waiver of Past Defaults...............................................................46
Section 6.5. Control by Majority...................................................................46
Section 6.6. Limitation on Suits...................................................................46
Section 6.7. Rights of Holders to Receive Payment..................................................47
Section 6.8. Collection Suit by Trustee............................................................47
Section 6.9. Trustee may File Proofs of Claim......................................................47
Section 6.10. Priorities...................................................................48
Section 6.11. Undertaking for Costs........................................................48
-ii-
ARTICLE 7 TRUSTEE........................................................................................49
Section 7.1. Duties of Trustee.....................................................................49
Section 7.2. Rights of Trustee.....................................................................50
Section 7.3. Individual Rights of Trustee..........................................................50
Section 7.4. Trustee's Disclaimer..................................................................50
Section 7.5. Notice of Defaults....................................................................51
Section 7.6. Reports by Trustee to Holders.........................................................51
Section 7.7. Compensation and Indemnity............................................................51
Section 7.8. Replacement of Trustee................................................................52
Section 7.9. Successor Trustee by Merger, etc......................................................53
Section 7.11. Preferential Collection of Claims Against Company............................54
ARTICLE 8 DISCHARGE OF INDENTURE.........................................................................54
Section 8.1. Legal Defeasance and Covenant Defeasance of the Securities............................54
Section 8.2. Termination of Obligations upon Cancellation of the Securities........................57
Section 8.3. Survival of Certain Obligations.......................................................57
Section 8.4. Acknowledgment of Discharge by Trustee................................................58
Section 8.5. Application of Trust Assets...........................................................58
Section 8.6. Repayment to the Company; Unclaimed Money.............................................58
Section 8.7. Reinstatement.........................................................................59
ARTICLE 9 AMENDMENTS.....................................................................................59
Section 9.1. Without Consent of Holders............................................................59
Section 9.2. With Consent of Holders...............................................................60
Section 9.3. Compliance with Trust Indenture Act...................................................61
Section 9.4. Revocation and Effect of Consents.....................................................61
Section 9.5. Notation on or Exchange of Securities.................................................62
Section 9.6. Trustee to Sign Amendments, etc.......................................................62
ARTICLE 10 MEETINGS OF SECURITYHOLDERS...........................................................63
Section 10.1. Purposes for Which Meetings May Be Called....................................63
Section 10.2. Manner of Calling Meetings...................................................63
Section 10.3. Call of Meetings by Company or Holders.......................................63
Section 10.4. Who May Attend and Vote at Meetings..........................................64
-iii-
Section 10.5. Regulations May Be Made by Trustee; Conduct of the
Meeting; Voting Rights; Adjournment...................................................64
Section 10.6. Voting at the Meeting and Record to Be Kept..................................65
Section 10.7. Exercise of Rights of Trustee or Securityholders May Not Be
Hindered or Delayed by Call of Meeting................................................65
Section 10.8. Procedures Not Exclusive.....................................................66
ARTICLE 11 SUBORDINATION.........................................................................66
Section 11.1. Securities Subordinated to Senior Indebtedness...............................66
Section 11.2. Priority and Payment Over of Proceeds in Certain Events......................66
Section 11.3. Payments May Be Made Prior to Dissolution....................................69
Section 11.4. Rights of Holders of Senior Indebtedness Not to Be Impaired..................70
Section 11.5. Authorization to Trustee to Take Action to Effectuate Subordination..........70
Section 11.6. Subrogation..................................................................70
Section 11.7. Obligations of Company Unconditional.........................................71
Section 11.8. The Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.....................................................................71
Section 11.9. Right of Trustee to Hold Senior Indebtedness.................................72
Section 11.10. No Implied Covenants by or Obligations of the Trustee........................72
Section 11.11. Existing Senior Subordinated Indebtedness....................................72
ARTICLE 12 MISCELLANEOUS.........................................................................72
Section 12.1. Trust Indenture Act Controls.................................................72
Section 12.2. Notices......................................................................72
Section 12.3. Communication by Holders with Other Holders..................................74
Section 12.4. Certificate and Opinion as to Conditions Precedent...........................74
Section 12.5. Statements Required in Certificate or Opinion................................75
Section 12.6. Rules by Trustee and Agents..................................................75
Section 12.7. Legal Holidays...............................................................75
Section 12.8. No Recourse Against Others...................................................75
Section 12.9. Governing Law................................................................75
Section 12.10. No Adverse Interpretation of Other Agreements................................76
Section 12.11. Successors...................................................................76
Section 12.12. Severability.................................................................76
Section 12.13. Counterpart Originals........................................................76
Section 12.14. Variable Provisions..........................................................76
Section 12.15. Qualification of Indenture...................................................76
Section 12.16. Table of Contents, Headings, etc.............................................76
</TABLE>
-iv-
INDENTURE dated as of March 19, 1996 between Southdown, Inc., a
Louisiana corporation (the "Company"), and State Street Bank and Trust Company,
a Massachusetts trust company, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders (as defined below) of the Company's
10% Senior Subordinated Notes due 2006 (the "Notes") and 10% Senior Subordinated
Notes due 2006, Series B (the "Exchange Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. DEFINITIONS.
"ACQUIRED INDEBTEDNESS" shall mean, with respect to any Person,
Indebtedness of such Person (i) existing at the time such Person becomes a
Subsidiary (or such Person is merged into the Company or any Subsidiary) or (ii)
assumed in connection with the acquisition of assets from any such Person, and,
in each case, not incurred in connection with, or in the contemplation of, such
Person becoming a Subsidiary or such acquisition.
"AFFILIATE" shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with such Person. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controls" and
"controlled"), when used with respect to any 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.
"AGENT" shall mean any Registrar or Paying Agent or authenticating
agent or co-registrar or co-paying agent.
"ASSET ACQUISITION" shall mean (i) a transaction in which any other
Person shall become a Subsidiary or shall be merged with the Company or any
Subsidiary; or (ii) the acquisition by the Company or any Subsidiary of assets
of any Person which constitute substantially all of a cement plant or terminal,
concrete batch plant, aggregate quarry or operation, ready-mixed concrete
operation or other operating unit or business of such Person.
"ASSET SALE" shall mean any sale, lease, conveyance, transfer or other
disposition (or series of related sales, leases, conveyances, transfers or
dispositions) of any Capital Stock (including the issuance of shares of Capital
Stock) of a Subsidiary or Property, whether owned on the date hereof or
hereafter acquired, in one or more related transactions, by the Company or any
Subsidiary, whether for cash or other consideration, other than (i) a
disposition by the Company or a Subsidiary to another Subsidiary or by a
Subsidiary to the Company; (ii) a disposition of Property in the ordinary course
of business; (iii) a disposition or abandonment of damaged, worn-out or obsolete
-1-
Property or Property no longer necessary for the conduct of the Company's
business, PROVIDED that the Net Cash Proceeds, if any, received from such
disposition or abandonment exceeding $250,000 will be applied in accordance with
Section 4.15 hereof; (iv) any disposition pursuant to a consolidation, merger or
transfer of assets that is permitted by Article 5 hereof; (v) Liens; (vi) any
disposition which is a Restricted Payment made in accordance with Section 4.12
hereof or which is not a Restricted Payment by reason of the parenthetical in
clause (i) of the definition of Restricted Payment; (vii) any Permitted
Investment described in clause (v)(c) or (vii) of the definition of Permitted
Investment; and (viii) other disposition or dispositions during any 12-month
period having in the aggregate a fair market value of less than $2 million.
"AVERAGE LIFE" shall mean, as of the date of determination, with
reference to any Indebtedness, the number of years obtained by dividing (i) the
sum of the products of the number of years from the date of determination to the
dates of each successive scheduled principal payment of such Indebtedness
multiplied by the amount of such principal payment by (ii) the sum of all such
principal payments.
"BANK CREDIT FACILITY" shall mean the $200 million Third Amended and
Restated Credit Agreement dated as of November 3, 1995 among the Company, the
financial institutions signatory thereto and Wells Fargo Bank, N.A., as agent,
together with the documents related thereto (including, without limitation, any
letters of credit issued pursuant thereto, and any related guarantee agreements
and security documents), in each case as such agreements may be amended
(including any amendment and restatement thereof), supplemented or otherwise
modified or replaced (including with other lenders), from time to time and
including any agreement or agreements (which agreement or agreements state
therein that they represent a "Bank Credit Facility" for purposes of this
Indenture) extending or lessening the maturity of, refinancing, modifying,
increasing, substituting for, adding to (including by the creation of a new
agreement or agreements or facility unrelated to, and whether or not refinancing
or increasing any Indebtedness under, any then existing Bank Credit Facility) or
otherwise restructuring (including, but not limited to, the inclusion of
additional or different or substitute lenders or agents thereunder) all or any
portion of the Indebtedness, including changing the borrowing limits, under any
Bank Credit Facility, regardless of whether any Bank Credit Facility or any
portion thereof was outstanding or in effect at the time of such replacement,
refinancing, increase, addition, substitution, extension, restructuring,
supplement or modification. There may be multiple Bank Credit Facilities and the
term "Bank Credit Facility" shall refer to all such Bank Credit Facilities.
"BANKRUPTCY LAW" shall mean Title 11, United States Code or any similar
Federal or state law for the relief of debtors.
"BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors of
the Company or any committee thereof duly authorized, with respect to any
particular matter, to act by or on behalf of the Board.
-2-
"BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a legal holiday for banking institutions in the City of New
York.
"CAPITALIZED LEASE OBLIGATION" shall mean any obligation to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
real or personal property that is required to be classified and accounted for as
a capital lease obligation under GAAP, and, for the purposes of this definition,
the amount of such obligation at any date shall be the amount thereof at such
date, determined in accordance with GAAP.
"CAPITAL STOCK" shall mean, with respect to any Person, any and all
shares, interests, participations, rights to purchase, warrants, options or
other equivalents (however designated) of such Person's capital stock whether
now outstanding or issued after the Issue Date, including, without limitation,
all common stock and Preferred Stock.
"CASH EQUIVALENTS" shall mean (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or obligations
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States of America; (ii) commercial paper rated "P-1" or
"P-2" or an equivalent or higher rating by Moody's Investors Service, Inc. or
"A-1" or "A-2" or an equivalent or higher rating by Standard & Poor's Ratings
Group and maturing not more than 180 days from the date of acquisition thereof;
(iii) demand and time deposits with, and certificates of deposit and banker's
acceptances issued by, any bank having capital surplus and undivided profits
aggregating at least $500 million and maturing not more than 180 days from the
date of acquisition thereof; (iv) repurchase agreements that are secured by a
perfected security interest in an obligation described in clause (i) and are
with any bank described in clause (iii); and (v) readily marketable direct
obligations issued by any state of the United States of America or any political
subdivision thereof rated "Aa3" or an equivalent or higher rating by Moody's
Investors Service, Inc. or rated "AA-" or an equivalent or higher rating by
Standard & Poor's Ratings Group.
"CHANGE OF CONTROL" shall mean (i) any sale, lease or other transfer of
(other than the incurrence of a Lien on) all or substantially all of the assets
of the Company to any Person as an entirety or substantially as an entirety in
one transaction or a series of related transactions; (ii) the consolidation or
merger of the Company with or into another Person pursuant to a transaction in
which the outstanding Voting Stock of the Company is changed into or exchanged
for cash, securities or other Property, other than any such transaction where
(a) the outstanding Voting Stock of the Company is changed into or exchanged for
Voting Stock (other than Disqualified Stock) of the surviving corporation or its
parent and (b) the holders of the Voting Stock of the Company immediately prior
to such transaction own, directly or indirectly, not less than a majority of the
Voting Stock of the surviving corporation or its parent immediately after such
transaction; (iii) a "person" or "group" (within the meaning of Sections 13(d)
or 14(d)(2) of the Exchange Act) being or becoming the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act) of more than 50% of the
Voting Stock of the Company then outstanding, except in a merger or
consolidation which would not constitute a Change of Control under clause (ii)
above; (iv) during
-3-
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors then still in office who were directors at the beginning of such
period or whose election or nomination for election was previously so approved)
cease for any reason (other than death) to constitute a majority of the Board of
Directors then in office; or (v) the approval by the shareholders of any plan or
proposal for the liquidation or dissolution of the Company.
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"COMPANY" shall mean Southdown, Inc., a Louisiana corporation, until a
successor replaces it in accordance with Article 5 and thereafter means the
successor.
"CONSOLIDATED EBITDA" shall mean, for any period, on a consolidated
basis for the Company and its Subsidiaries as determined in accordance with
GAAP, (i) the sum (without duplication) for such period of (a) Consolidated Net
Income, (b) federal and state income tax expense, (c) interest, net of amounts
capitalized, (d) depreciation, depletion and amortization expense (including
amortization of debt discount and debt issue costs) and (e) any other non-cash
charges to earnings relating to restructuring or other unusual charges (to the
extent deducted in determining Consolidated Net Income); less (ii) any cash
actually paid during such period related to any such restructuring or other
unusual charges incurred after the Issue Date.
"CONSOLIDATED FIXED CHARGES" shall mean, for any period, on a
consolidated basis for the Company and its Subsidiaries, the sum (without
duplication) for such period of (i) the aggregate amount of interest, whether
expensed, capitalized or accrued during such period (including any non-cash
interest payments or accruals and the interest portion of Capitalized Lease
Obligations, but excluding amortization of debt discount and debt issue costs)
of the Company and its Subsidiaries, determined on a consolidated basis in
accordance with GAAP; PROVIDED that, in making such computation, Consolidated
Fixed Charges attributable to interest on any Indebtedness computed on a pro
forma basis and bearing a floating interest rate shall be computed as if the
rate in effect on the date of computation was the applicable rate for the entire
period; and (ii) dividends in respect of Disqualified Stock and Existing
Preferred Stock to the extent payable to Persons other than the Company or a
Subsidiary.
"CONSOLIDATED FIXED CHARGE COVERAGE RATIO" shall mean, as of the date
of the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio, the ratio of (i) Consolidated EBITDA for the relevant
coverage period to (ii) Consolidated Fixed Charges for the relevant coverage
period.
"CONSOLIDATED NET INCOME" shall mean, for any period, the net income or
loss of the Company and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP, excluding, without duplication and
together with any related provisions for taxes, (i) extraordinary gains and
extraordinary losses; (ii) net gains or losses in respect of dispositions of
-4-
assets other than in the ordinary course of business; (iii) the net income of
any Person (other than a Subsidiary) in which any other Person other than the
Company or any Subsidiary has a joint equity interest, except to the extent of
the amount of dividends or other distributions actually paid to the Company or
any Subsidiary by such Person during such period; (iv) the net income of any
Person accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Company or any Subsidiary or that other Person's assets
are acquired by the Company or any Subsidiary, except to the extent includable
in Consolidated Net Income pursuant to clause (iii) above; (v) the net income of
any Subsidiary to the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is at the time
prohibited by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary; (vi) any gains or losses attributable to
write-ups or write-downs of assets other than in the ordinary course of
business; (vii) the cumulative effect of a change in accounting principles;
(viii) net income (loss) from discontinued operations; and (ix) the gains or
losses realized during such period resulting from the acquisition of securities,
or extinguishment of Indebtedness, of the Company or any Subsidiary.
"CONSOLIDATED NET TANGIBLE ASSETS" shall mean, as of any date of
determination, the total assets of the Company and its Subsidiaries determined
on a consolidated basis in accordance with GAAP (less applicable reserves and
other items properly deductible from total assets) and after deducting therefrom
(to the extent otherwise included therein): (i) goodwill, unamortized debt
discount and expense, and other intangible assets (other than permits and other
contractual rights used in the operation of the Company's business); and (ii)
appropriate deductions for any minority interests.
"CONSOLIDATED NET WORTH" shall mean, as of any date of determination,
the total assets of the Company and its Subsidiaries determined on a
consolidated basis in accordance with GAAP (less applicable reserves and other
items properly deductible from total assets) and after deducting therefrom (i)
total liabilities as of such date and (ii) appropriate deductions for any
minority interests.
"DEFAULT" shall mean any event, occurrence or condition that, with the
passage of time, the giving of notice or both, would constitute an Event of
Default.
"DEPOSITORY" shall mean The Depository Trust Company, New York, New
York, or its nominee or successors and assigns, or such other depository
institution hereinafter appointed by the Company.
"DESIGNATED SENIOR INDEBTEDNESS" shall mean (i) Indebtedness of the
Company under any Bank Credit Facility and (ii) any other Senior Indebtedness
which, at the date of creation thereof or the date of determination, has an
aggregate principal amount outstanding of, or under which at the date of
creation thereof or the date of determination, the holders thereof are committed
or have the option to lend, at least $10 million and is specifically designated
by the Company in any instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
-5-
"DISQUALIFIED STOCK" shall mean any Capital Stock of any Person which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event or with the
passage of time, matures or is mandatorily redeemable, pursuant to a sinking
fund obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, in each case on or prior to the maturity date of
the Securities, or which is exchangeable or convertible into debt securities of
such Person, except to the extent that such exchange or conversion rights cannot
be exercised prior to the maturity date of the Securities.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE NOTES" shall have the meaning set forth in the recitals to
this Indenture.
"EXCHANGED PROPERTIES" shall mean capital assets or other long-term
assets used in, or Capital Stock of a Person engaged primarily in, the cement,
concrete products or building products industries or any other line of business
in which the Company was engaged on the Issue Date, and working capital items or
current assets related thereto (other than cash or Cash Equivalents); PROVIDED
in the case of an acquisition of Capital Stock of a Person that after such
purchase such Person would be a Wholly-Owned Subsidiary.
"EXISTING PREFERRED STOCK" shall mean the Company's Preferred Stock,
$.70 Cumulative Convertible Series A, Preferred Stock, $3.75 Convertible
Exchangeable Series B, and Preferred Stock, $2.875 Cumulative Convertible Series
D outstanding on the Issue Date.
"14% NOTES INDENTURE" shall mean the Indenture dated as of October 15,
1991 between the Company and State Street Bank and Trust Company of Connecticut,
National Association, Trustee, as amended, pursuant to which the Company's 14%
Senior Subordinated Notes due 2001, Series B, were issued.
"GAAP" shall mean generally accepted accounting principles recognized
as such by the American Institute of Certified Public Accountants, as in effect
on the Issue Date.
"HEDGING OBLIGATIONS" shall mean, with respect to any Person, the
obligations of such Person under interest rate swap agreements, interest rate
cap agreements, interest rate collar agreements, foreign currency exchange
contracts, foreign currency swaps, commodities futures and any other agreement
designed to protect such Person against fluctuations in interest rates, currency
valuations or commodity prices.
"HOLDER," "HOLDER OF SECURITIES" or other similar terms, shall mean the
person in whose name a particular Security shall be registered on the books of
the Registrar kept for that purpose in accordance with the terms hereof, and the
word "majority," used in connection with the terms "Holder," "Holder of
Securities," or other similar terms, shall signify the "majority in principal
amount" then outstanding, whether or not so expressed.
-6-
"INDEBTEDNESS" shall mean, with respect to any Person, (i) any
liability of such Person (a) for borrowed money, or under any reimbursement
obligation relating to a letter of credit, bankers' acceptance or note purchase
facility; (b) evidenced by a bond, note, debenture or similar debt instrument;
(c) for the balance deferred and unpaid of the purchase price for any Property
(except for trade payables arising in the ordinary course of business); (d) for
the payment of money relating to a lease that is required to be classified as a
Capitalized Lease Obligation; or (e) for the maximum fixed repurchase price of
any Disqualified Stock of such Person plus accrued and unpaid dividends thereon;
(ii) any obligation of others secured by a Lien on any asset of such Person,
whether or not any obligation secured thereby has been assumed, by such Person;
(iii) any obligations of such Person under any Hedging Obligation; and (iv) any
obligation of such Person which in economic effect is a guarantee with respect
to any Indebtedness of another Person.
For purposes of this definition, "maximum fixed repurchase price" of
any Disqualified Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, and if such price is based
upon, or measured by, the fair market value of such Disqualified Stock, such
fair market value shall be determined in good faith by the board of directors of
the Person issuing such Disqualified Stock.
"INDENTURE" shall mean this Indenture as it may be amended from time to
time in accordance with Article 9 hereof.
"INTERNAL REVENUE CODE" shall mean the Internal Revenue Code of 1986,
as amended from time to time hereafter, or any successor federal income tax
laws.
"INVESTMENT" shall mean, with respect to any Person, (i) all
investments by such Person in any other Person in the form of loans (including
guarantees of loans), advances or capital contributions (including the
contribution of assets); (ii) all purchases (or other acquisitions for
consideration) by such Person of Indebtedness, Capital Stock or other securities
of any other Person; and (iii) all other items that would be classified as
investments on a balance sheet of such Person prepared in accordance with GAAP.
"ISSUE DATE" shall mean the date on which the Securities are first
authenticated and delivered under this Indenture.
"LIEN" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this definition, a Person shall be deemed to own
subject to a Lien any Property that it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Property.
"MATURITY" when used with respect to any Security, shall mean the date
on which the principal of such Security or an installment of principal becomes
due and payable as therein or
-7-
herein provided, whether at Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
"NET CASH PROCEEDS" shall mean, with respect to any Asset Sale, the
cash payments or Cash Equivalents (including any cash received by way of
deferred payment pursuant to a note receivable or otherwise, but only as and
when so received) from such Asset Sale, net of (i) fees, commissions, expenses
and other direct costs of sale (including, without limitation, legal, accounting
and investment banking fees and sales commissions) and, if applicable, any
relocation expenses and severance or shutdown costs incurred as a result of such
Asset Sale; (ii) taxes paid or payable as a result thereof (after taking into
account any available tax credits or deductions); (iii) amounts required to be
applied to the repayment of Indebtedness which is secured by a Lien on the asset
or assets that are the subject of such Asset Sale or Indebtedness which must by
its terms, or in order to obtain a necessary consent, or by applicable law, be
repaid out of the proceeds of such Asset Sale; (iv) any amount required to be
paid to any Person (other than the Company or any of its Subsidiaries) owning a
beneficial interest in the stock or other assets sold; and (v) reserves in
accordance with GAAP against any liabilities associated with such Asset Sale and
retained by the Company or any Subsidiary, after such Asset Sale, including,
without limitation, pension and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale. Further, with
respect to an Asset Sale by a Subsidiary which is not a Wholly Owned Subsidiary,
Net Cash Proceeds shall be reduced pro rata for the portion of the equity of
such Subsidiary which is not owned by the Company.
"NOTES" shall have the meaning set forth in the recitals of this
Indenture.
"OFFICER" shall mean any of the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President, the Controller, the
Treasurer, the Secretary, any Assistant Secretary or the Chief Financial Officer
of the Company or any other obligor upon the Securities.
"OFFICERS' CERTIFICATE" shall mean a certificate signed by two Officers
of the Company which shall comply with applicable provisions of Sections 12.4
and 12.5 hereof.
"OPINION OF COUNSEL" shall mean, with respect to any Person, an opinion
in writing signed by legal counsel (who may be an employee of or counsel to such
Person) who is reasonably acceptable to the Trustee which shall comply with
applicable provisions of Sections 12.4 and 12.5 hereof.
"PERMITTED INDEBTEDNESS" shall mean (i) Indebtedness of the Company
evidenced by the Securities; (ii) Indebtedness of the Company or any Subsidiary
outstanding on the Issue Date (excluding any Indebtedness that is repaid with
the proceeds of the offering of the Notes as described in the Offering
Memorandum dated March 13, 1996); (iii) Indebtedness of the Company under any
Bank Credit Facility, PROVIDED that the aggregate amount of Permitted
Indebtedness outstanding under all Bank Credit Facilities shall at no time
exceed $255 million; (iv) Indebtedness incurred by the Company or any Subsidiary
consisting of Purchase Money Obligations and Capitalized Lease
-8-
Obligations in an amount not to exceed $25 million at any one time outstanding;
(v) Indebtedness of the Company to any Subsidiary (PROVIDED that such
Indebtedness is evidenced by a note) and Indebtedness of a Subsidiary to the
Company or another Subsidiary; PROVIDED, HOWEVER, that any Indebtedness of any
Subsidiary owed to any Subsidiary that ceases to be such a Subsidiary shall be
deemed to be incurred and shall be treated as an incurrence for purposes of the
first paragraph of Section 4.10 hereof at the time the Subsidiary in question
ceases to be a Subsidiary; (vi) Indebtedness of the Company or a Subsidiary
under a guarantee of any Permitted Indebtedness incurred by a Subsidiary and
Indebtedness of any Subsidiary under a guarantee of any Indebtedness of the
Company; (vii) Indebtedness of the Company or any Subsidiary in respect of bid,
performance or advance payment bonds (or letters of credit in lieu thereof),
bankers' acceptances and surety or appeal bonds provided in the ordinary course
of business; (viii) Indebtedness under Hedging Obligations; (ix) Indebtedness of
the Company or any Subsidiary consisting of obligations in respect of purchase
price adjustments, guaranties or indemnities in connection with any acquisition
or disposition of assets permitted under this Indenture; (x) Indebtedness of any
Permitted Joint Venture with respect to which no recourse may be had to the
assets of the Company or any Subsidiary (other than such Permitted Joint Venture
or a Subsidiary the only material asset of which is an interest in such
Permitted Joint Venture); (xi) additional Indebtedness of the Company or any
Subsidiary, not to exceed $50 million in the aggregate at any one time
outstanding; and (xii) any Refinancing Indebtedness.
"PERMITTED INVESTMENTS" shall mean (i) Investments existing on the
Issue Date; (ii) Investments in Cash Equivalents; (iii) any Investment in a
Subsidiary or any Investment in any other Person if, as a result, such Person
either (a) becomes a Subsidiary or (b) is merged or consolidated with or into,
or transfers all or substantially all of its assets to, the Company or a
Subsidiary; (iv) loans or advances to employees or customers made in the
ordinary course of business and guaranties or similar obligations with respect
to the foregoing; (v) (a) negotiable instruments held for collection, (b) lease,
utility and similar deposits and (c) stock, obligations or securities received
in settlement or restructuring of obligations owing to the Company or a
Subsidiary, in each case as to obligations that arose in the ordinary course of
business of the Company or such Subsidiary; (vi) sales of goods on trade credit
terms consistent with industry practices; (vii) Investments in Permitted Joint
Ventures; PROVIDED that, after giving effect to such Investment, the ratio of
(a)(1) the sum of the aggregate amount of all such Investments made on or after
the Issue Date pursuant to this clause (vii) less (2) the aggregate amount of
all cash distributions, cash dividends or other cash returns received on or
after the Issue Date on Investments made pursuant to this clause (vii) to (b)
the Company's Consolidated Net Tangible Assets as of the end of the Company's
most recent fiscal quarter for which financial statements have been furnished to
the Trustee and the holders of Securities pursuant to Section 4.8 hereof shall
not exceed 5%; (viii) any Investment in the Company by a Subsidiary; and (ix) in
addition to Investments described in clauses (i)-(viii) of this definition,
Investments with a fair market value (determined for each such Investment when
it is made) at any time not exceeding $10 million in the aggregate.
"PERMITTED JOINT VENTURE" shall mean any Person (i) in which the
Company owns at least 25% of the outstanding equity interests and (ii) that does
not have or enter into any line of business
-9-
other than the cement, concrete products or building products industries, or any
other line of business in which the Company was engaged on the Issue Date.
"PERMITTED LIENS" shall mean (i) Liens existing on the Issue Date; (ii)
Liens now or hereafter securing any Hedging Obligations of the Company or any
Subsidiary; (iii) Liens securing Refinancing Indebtedness, the proceeds of which
are used to refinance Indebtedness of the Company or any Subsidiary; PROVIDED
that such Liens either extend to or cover only the Property then securing the
Indebtedness being refinanced or comply with Section 4.13 hereof; (iv) Liens
securing Acquired Indebtedness incurred by the Company or any Subsidiary and
permitted under Section 4.10 hereof or Liens on Property at the time such
Property is acquired, PROVIDED that such Liens attach solely to the assets or
Property (or the assets of the Subsidiary) acquired and were in existence prior
to the contemplation of the acquisition; (v) Liens securing Indebtedness owing
to the Company by a Subsidiary; (vi) Liens securing Purchase Money Obligations
incurred in accordance with this Indenture; (vii) Liens securing Indebtedness of
the Company or any Subsidiary in respect of performance bonds, bankers'
acceptances and surety or appeal bonds provided in the ordinary course of
business; (viii) any interest or title of a lessor in assets or Property subject
to Capitalized Lease Obligations of the Company or any Subsidiary; (ix) rights
of setoff; (x) Liens imposed by law; (xi) other Liens (not securing Indebtedness
for money borrowed) incidental to the conduct of the business of the Company or
any of its Subsidiaries or the ownership of their assets, that do not materially
detract from the value of the property of the Company or Subsidiary subject
thereto; or (xii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, PROVIDED
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor.
"PERSON" shall mean any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"PREFERRED STOCK" shall mean, with respect to any Person, all Capital
Stock of such Person of any class or classes (however designated) that ranks
prior, as to distribution in profit or liquidation, to shares of Capital Stock
of any other class of such Person.
"PROPERTY" shall mean, with respect to any Person, all types of real,
personal, tangible, intangible or mixed property owned by such Person whether or
not included in the most recent consolidated balance sheet of such Person.
"PURCHASE MONEY OBLIGATIONS" shall mean any Indebtedness of the Company
or any Subsidiary incurred to finance the acquisition or construction of any
Property or business (including Indebtedness incurred within 90 days following
such acquisition or construction), including Indebtedness of a Person existing
at the time such Person becomes a Subsidiary or assumed by the Company or a
Subsidiary in connection with the acquisition of any Property from such Person;
PROVIDED, HOWEVER, that any Lien securing such Indebtedness either (i) shall not
extend to any
-10-
Property other than the Property so acquired or constructed or (ii) shall comply
with Section 4.13 hereof.
"REDEMPTION DATE" when used with respect to any Security to be
redeemed, shall mean the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE" shall mean the amount payable for the redemption of
any Security on the Redemption Date, and shall always include interest accrued
and unpaid to the Redemption Date, unless otherwise specifically provided.
"REFINANCING INDEBTEDNESS" shall mean Indebtedness that renews,
rearranges, refunds, refinances or extends any Indebtedness of the Company or
any Subsidiary outstanding on the Issue Date or other Indebtedness permitted to
be incurred by the Company or any Subsidiary pursuant to the terms of this
Indenture, but only to the extent that (except if the Refinancing Indebtedness
will be used to refinance all Securities outstanding) (i) the Refinancing
Indebtedness is subordinated to the Securities to at least the same extent as
the Indebtedness being renewed, rearranged, refunded, refinanced or extended, if
at all; (ii) the Refinancing Indebtedness is scheduled to mature either (a) no
earlier than the Indebtedness being renewed, rearranged, refunded, refinanced or
extended or (b) after the Stated Maturity of the principal of the Securities;
(iii) the portion, if any, of the Refinancing Indebtedness that is scheduled to
mature on or prior to the Stated Maturity of the principal of the Securities has
an Average Life to maturity at the time such Refinancing Indebtedness is
incurred that is equal to or greater than the Average Life to maturity of the
portion of the Indebtedness being renewed, rearranged, refunded, refinanced or
extended that is scheduled to mature on or prior to the Stated Maturity of the
principal of the Securities; (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (x) the
aggregate principal amount then outstanding under the Indebtedness being
renewed, rearranged, refunded, refinanced or extended, (y) the amount of accrued
and unpaid interest, if any, on such Indebtedness being renewed, rearranged,
refunded, refinanced or extended and (z) the amount of customary fees, expenses
and costs related to the incurrence of such Refinancing Indebtedness; and (v)
such Refinancing Indebtedness is incurred by the same Person that initially
incurred the Indebtedness being renewed, rearranged, refunded, refinanced or
extended, except that (a) the Company may incur Refinancing Indebtedness to
renew, rearrange, refund, refinance or extend Indebtedness of any Subsidiary and
(b) any Subsidiary may incur Refinancing Indebtedness to renew, rearrange,
refund, refinance or extend Indebtedness of another Subsidiary.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement dated as of the Issue Date between the Company and the initial
purchasers of the Notes.
"RESPONSIBLE OFFICER" when used with respect to the Trustee, shall mean
any officer in the corporate trust department of the Trustee or any officer of
the Trustee customarily performing functions similar to those performed by any
officer in the corporate trust department of the Trustee with respect to a
particular corporate matter or any other officer to whom any corporate trust
matter is referred because of his knowledge of and familiarity with the
particular subject.
-11-
"RESTRICTED INVESTMENT" shall mean any Investment (other than a
Permitted Investment) or guarantee of an Investment (other than a Permitted
Investment) in any Person.
"RESTRICTED PAYMENT" shall mean any of the following: (i) any dividend
or other distribution in respect of the Capital Stock of the Company or any
Subsidiary (other than (a) dividends or distributions payable solely in Capital
Stock (other than Disqualified Stock), (b) any dividend or distribution in
respect of the equity interests in a Subsidiary in respect of the class of
equity interests owned by the Company or another Subsidiary, PROVIDED that such
dividend or distribution is made pro rata, or in accordance with the terms of
their interests, to all holders of such class of equity interests, and (c) any
dividends or distributions payable to the Company or a Subsidiary); (ii) the
purchase, redemption or other acquisition or retirement for value of any Capital
Stock of the Company (other than a purchase, redemption, acquisition or
retirement for other Capital Stock (other than Disqualified Stock)); (iii) the
making of any principal payment on, or the purchase, defeasance, repurchase,
redemption or other acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, of any
Indebtedness which is subordinated in right of payment to the Securities (other
than with Capital Stock (other than Disqualified Stock)); and (iv) the making of
any Restricted Investment.
"SECURITIES" shall mean the Notes and the Exchange Notes, treated as,
and voting together for all purposes as, a single class of securities.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITYHOLDER" means a Holder of one or more Securities.
"SENIOR INDEBTEDNESS" shall mean the principal of, premium, if any, and
interest (including interest accruing on or after the filing of a petition
initiating any proceeding under any state or federal bankruptcy law, whether or
not a claim for such interest is allowed or allowable in such proceeding) on,
and all fees, indemnities, reimbursement obligations in connection with letters
of credit and other monetary obligations of the Company in respect of, any Bank
Credit Facility or any other Indebtedness of the Company, whether outstanding on
the date of this Indenture or thereafter created, incurred or assumed, unless,
in the case of any particular Indebtedness, the instrument creating or
evidencing, or the agreement governing, such Indebtedness or pursuant to which
such Indebtedness is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Securities. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness evidenced by
the Securities; (ii) Indebtedness that by its contractual terms is subordinate
or junior in right of payment to any Indebtedness of the Company; (iii) that
portion of any Indebtedness that is incurred in violation of this Indenture;
(iv) Indebtedness of the Company to a Subsidiary; (v) Indebtedness that is
represented by Disqualified Stock; (vi) any liability for federal, state, local
or other taxes owed or owing by the Company; (vii) accounts payable or other
obligations to trade creditors created, incurred or assumed in the ordinary
course of business in connection with obtaining materials or services; and
(viii) amounts owing under leases (other than Capitalized Lease Obligations).
-12-
"SENIOR REPRESENTATIVE" shall mean any trustee, agent or
representative, if any, for the holders of any Designated Senior Indebtedness
or, if there is only one holder of an issue of Designated Senior Indebtedness,
such holder.
"STATED MATURITY" when used with respect to any security or
Indebtedness, or any installment of interest thereon, shall mean the date
specified in such security or the instrument relating to such Indebtedness as
the fixed date on which the principal of such security or Indebtedness or such
installment of interest is due and payable.
"SUBSIDIARY" shall mean any Person either (i) the majority of the
Capital Stock or other ownership interests having ordinary voting power to elect
a majority of the board of directors or other governing body of which is
directly or indirectly owned by the Company or (ii) in the case of a Person
without a governing body, a majority of the outstanding common equity interests
of which is directly or indirectly owned by the Company.
"TIA" or "TRUST INDENTURE ACT" shall mean the Trust Indenture Act of
1939 (15 U.S.C. ss.ss. 77aaa-77bbbb) as in effect on the date on which this
Indenture is qualified under the TIA, except as provided in Section 9.3 hereof.
"TRANSFER AGENT" shall mean any Person, which may be the Company,
authorized by the Company to exchange or register the transfer of Securities.
"TRUSTEE" shall mean the Person identified as the Trustee in the
recitals of this Indenture, or any successor appointed pursuant to this
Indenture.
"U.S. GOVERNMENT OBLIGATIONS" shall mean securities which are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank or trust Company as custodian with
respect to any such U.S. Government Obligations or a specific payment of
interest on or principal of any such U.S. Government Obligations held by such
custodian for the account of the holder of a depository receipt; PROVIDED that
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt from
any amount received by the custodian in respect of the U.S. Government
Obligations or the specific payment of interest on or principal of the U.S.
Government Obligations evidenced by such depository receipt.
"VOTING STOCK" shall mean, with respect to any Person, securities of
any class or classes of Capital Stock in such Person entitling holders thereof
(whether at all times or only so long as no other class of stock has voting
power by reason of any contingency) to vote in the election of members of the
board of directors or other governing body of such Person.
-13-
"WHOLLY OWNED SUBSIDIARY" shall mean a Subsidiary of which all issued
and outstanding Capital Stock is owned beneficially and of record by one or more
of the Company and its Wholly Owned Subsidiaries.
SECTION 1.2. OTHER DEFINITIONS.
Defined in
TERM SECTION
---- ----------
"Acceleration Due to Blockage" .................. 6.2
"Act" ........................................ 1.5
"Affiliate Transaction".......................... 4.14
"Agent Members" ................................. 2.15
"Change of Control Offer" ....................... 4.19
"Covenant Default" .............................. 11.2
"covenant defeasance"............................ 8.1
"coverage period"................................ 4.9
"Excess Proceeds"................................ 4.15
"Events of Default".............................. 6.1
"Global Securities".............................. 2.2
"incur".......................................... 4.9
"Institutional Accredited Investors"............. 2.16
"legal defeasance"............................... 8.1
"Legal Holiday".................................. 12.7
"Net Proceeds Offer"............................. 4.15
"Non-U.S. Person"................................ 2.16
"QIB" ........................................ 2.16
"paid in full"................................... 11.1
"paid in full in cash"........................... 11.1
"Paying Agent"................................... 2.3
"Payment Blockage Period"........................ 11.2
"Payment Default"................................ 11.2
"payment in full"................................ 11.1
"Physical Securities............................. 2.2
"Private Placement Legend"....................... 2.2
"Registrar"...................................... 2.3
"Restricted Security"............................ 2.16
"Subordinated Obligations"....................... 11.1
"Surviving Entity"............................... 5.1
"Voidable Transfer".............................. 11.4
-14-
SECTION 1.3. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"INDENTURE SECURITIES" means the Securities;
"INDENTURE SECURITY HOLDER" means a Securityholder;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the
Trustee; and
"OBLIGOR" on the Securities means the Company, any other
obligor upon the Securities or any successor obligor upon the Securities.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
SECTION 1.4. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and
transactions.
SECTION 1.5. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given 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
-15-
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
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 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 7.1) conclusive in favor of
the Trustee and 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 or her the execution thereof.
Where such execution is by an officer of a corporation or a member of a
partnership, on behalf of such corporation or partnership, such certificate or
affidavit shall also constitute sufficient proof of his or her authority.
(c) The ownership of Securities shall be proved by the
register maintained by the Registrar.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or suffered or omitted to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
ARTICLE 2
THE SECURITIES
SECTION 2.1. FORM AND DATING.
The Securities and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A. The Securities may have
notations, legends or endorsements required by law, securities exchange rule,
agreements to which the Company is subject or usage, in addition to those set
forth in Exhibit A. The Company and the Trustee shall approve any notation,
legend or endorsement on the Securities. Each Security shall be dated the date
of its authentication. The Securities shall be in denominations of $1,000 and
any integral multiple thereof.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
-16-
SECTION 2.2. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature. The Company's seal shall be reproduced on the
Securities.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
The Trustee shall from time to time authenticate Securities
for original issue up to the aggregate principal amount stated in paragraph 4 of
the Securities upon a written order of the Company in the form of an Officers'
Certificate. In addition, on or prior to the date of the consummation of the
exchange offer contemplated by the Registration Rights Agreement, the Trustee or
an authenticating agent shall authenticate Securities to be issued at the time
of such exchange offer up to the aggregate principal amount stated in paragraph
4 of the Securities upon receipt of a written order of the Company signed by an
Officer of the Company. In each case, the Officers' Certificate shall specify
the amount of Securities to be authenticated, whether such Securities shall be
Notes or Exchange Notes and the date on which the Securities are to be
authenticated. The aggregate principal amount of Securities outstanding at any
time may not exceed the amount set forth in paragraph 4 of the Securities except
as provided in Section 2.7.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate Securities. An authenticating agent
may authenticate Securities whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company or any Affiliate of the Company.
The Securities shall be issuable only in registered form
without coupons in denominations of $1,000 and any integral multiple thereof.
Securities offered and sold in reliance on Rule 144A shall be,
and Securities offered and sold to Institutional Accredited Investors (excluding
Non-U.S. Persons) and held through Agent Members may be, issued initially in the
form of one or more permanent Global Securities in registered form,
substantially in the form set forth in Exhibit A ("Global Securities"),
deposited with the Trustee, as custodian for the Depository, and shall bear the
legend set forth on Exhibit B. The aggregate principal amount of any Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for the Depository, as hereinafter
provided.
-17-
Securities offered and sold in offshore transactions in
reliance on Regulation S shall be issued in the form of certificated Securities
in registered form set forth in Exhibit A and shall bear the legend regarding
transfer restrictions applicable to certificated Securities (the "Private
Placement Legend") set forth on Exhibit A-1. Securities offered and sold in
reliance on any other exemption from registration under the Securities Act other
than as described in the preceding paragraph shall be issued, and Securities
offered and sold in reliance on Rule 144A or to Institutional Accredited
Investors (excluding Non-U.S. Persons) may be issued, in the form of
certificated Securities in registered form in substantially the form set forth
in Exhibit A and shall bear the Private Placement Legend set forth on Exhibit
A-1. Such certificated Securities are herein referred to as the "Physical
Securities."
SECTION 2.3. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where (a) Securities may be presented or
surrendered to a Person ("Registrar") for registration of transfer or for
exchange, (b) Securities may be presented or surrendered to a Person ("Paying
Agent") for payment and (c) notices and demands in respect of the Securities and
this Indenture may be served. The Company may serve as the Agent for purposes of
clause (a) or (b) above. The Registrar shall keep a register of the Securities
and of their transfer and exchange. The Company, upon notice to the Trustee, may
appoint one or more additional Agents. The term "Paying Agent" includes any
additional paying agent reasonably acceptable to the Trustee. The term
"Registrar" includes any appointed co-registrar. The Company initially appoints
the Trustee as Registrar and Paying Agent and agent to receive notices and
demands in respect of the Securities until such time as the Trustee has resigned
or a successor has been appointed. The Company may change any Paying Agent,
Registrar, co-paying agent or co-registrar without notice to any Holder.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
notify the Trustee, in advance, of the name and address of any such Agent not a
party to this Indenture. If the Company fails to appoint or maintain another
entity as Registrar or Paying Agent, the Trustee shall act as such.
SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Securityholders or the Trustee all money held by the Paying Agent for
the payment of principal of, premium, if any, or interest on, the Securities
(whether such money has been distributed to it by the Company or any other
obligor on the Securities), and will notify the Trustee of any Default by the
Company (or any other obligor upon the Securities) in making any such payment.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate such
money and hold it as a separate trust fund. While any such Default continues,
the Trustee may require a Paying Agent to pay all money held by it to the
Trustee. The Company (or any other obligor upon the Securities) at any time may
require a Paying Agent to pay all money
-18-
held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent
(if other than the Company, a Subsidiary or any other obligor upon the
Securities) shall have no further liability for the money.
SECTION 2.5. SECURITYHOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders and shall otherwise comply with TIA ss. 312(a). If
the Trustee is not the Registrar, the Company (or any other obligor upon the
Securities) shall furnish to the Trustee at least seven Business Days before
each interest payment date (and in all events at intervals of not more than six
months) and at such other times as the Trustee may request in writing a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of Securityholders, and the Company shall otherwise comply with
TIA ss. 312(a).
SECTION 2.6. TRANSFER AND EXCHANGE.
Subject to the applicable provisions of Sections 2.15 and 2.16
hereof and of the following paragraph, where Physical Securities are presented
to the Registrar or a co-registrar with a request to register the transfer of
such Securities or exchange them for an equal principal amount of Securities of
other authorized denominations, the Registrar or co-registrar shall register the
transfer or make the exchange if its requirements for such transactions are met;
PROVIDED that any Security presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar or co-registrar and the Trustee,
duly executed by the Holder thereof or his attorney duly authorized in writing.
To permit registrations of transfer and exchanges, the Company shall issue and
the Trustee shall authenticate Securities at the Registrar's or co-registrar's
request.
The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of any Security (i) during a period
beginning at the opening of business on a Business Day 15 days before the
mailing of a notice of redemption of Securities and ending at the close of
business on the day of such mailing, (ii) selected for redemption in whole or in
part pursuant to Article 3, except the unredeemed portion of any Security being
redeemed in part, or (iii) during the period between a record date and the next
succeeding interest payment date.
No service charge shall be made for any registration of
transfer or exchange; PROVIDED, HOWEVER, that the Company may require payment of
a sum sufficient to pay any taxes or similar governmental charges that may be
imposed in connection with the transfer or exchange of Securities from the
Securityholder requesting such transfer or exchange (other than any such
transfer taxes or similar governmental charges arising under the laws of the
United States or of any State thereof payable upon transfers or exchanges
pursuant to Sections 2.7, 2.10, 3.6, 3.8, 4.19 or 9.5).
-19-
SECTION 2.7. REPLACEMENT SECURITIES.
If any mutilated Security is surrendered to the Trustee or if
the Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, and the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Security, the Company
shall issue and the Trustee, upon the written order of the Company signed by two
Officers, shall authenticate a replacement Security if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent or any
authenticating agent from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge the Holder for their reasonable
out-of-pocket expenses in replacing a Security.
Every replacement Security shall be an additional obligation
of the Company.
SECTION 2.8. OUTSTANDING SECURITIES.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those canceled or those delivered to it
for cancellation, those reductions in the interest in a Global Security effected
by the Trustee hereunder and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.7 (other than
a mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be outstanding
upon surrender of such Security and replacement thereof pursuant to Section 2.7.
If the entire principal of, and premium, if any, and accrued
interest on any Security is considered paid under Section 4.1, or an amount of
money necessary to pay the purchase price pursuant to a Change of Control Offer
or a Net Proceeds Offer or redeem any Security has been deposited in trust with
the Trustee or a Paying Agent (and in the case of a Security which is to be
redeemed or repurchased prior to the Stated Maturity thereof, notice of such
redemption or repurchase has been duly given or provision satisfactory to the
Trustee has been made for giving such notice), it ceases to be outstanding and
interest on it ceases to accrue on and after the payment date or the Redemption
Date.
If a Security is cancelled by the Trustee or delivered to the
Trustee for cancellation, it ceases to be outstanding and interest on it ceases
to accrue.
A Security does not cease to be outstanding because the
Company or an Affiliate of the Company holds the Security, except as otherwise
provided in Section 2.9 hereof.
-20-
SECTION 2.9. TREASURY SECURITIES.
In determining whether the Holders of the required principal
amount of Securities have concurred in any direction, waiver or consent,
Securities owned by the Company, any other obligor upon the Securities or an
Affiliate of the Company or such other obligor shall be considered as though not
outstanding, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY SECURITIES.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities upon
receipt of a written order of the Company in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of temporary
Securities to be authenticated and the date on which the temporary securities
are to be authenticated. Temporary Securities shall be substantially in the form
of definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable delay, the Company
shall prepare and the Trustee, upon receipt of the written order of the Company
pursuant to Section 2.2, shall authenticate definitive Securities in exchange
for temporary Securities. Until such exchange, temporary Securities shall be
entitled to the same rights, benefits and privileges as definitive Securities.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee, or at the direction of the Trustee, the Registrar or the
Paying Agent (other than the Company or a Subsidiary), and no one else, shall
cancel all Securities surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy cancelled Securities in
accordance with the usual destruction procedures of the Trustee, unless the
Company directs them to be returned to it by written order signed by two
Officers of the Company, and a record of their destruction shall be maintained
by the Trustee. Subject to Section 2.7, the Company may not issue new Securities
to replace Securities that it has paid or that have been delivered to the
Trustee for cancellation. If the Company shall acquire any of the Securities,
such acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest plus, to the extent lawful,
interest payable on the defaulted interest, in each case at the rate provided in
the Securities and in Section 4.1 hereof, to the Persons who are Holders on
-21-
a subsequent special record date. The Company shall, by written notice to the
Trustee, fix each such special record date and payment date. At least 15 days
before the special record date, the Company (or the Trustee, in the name of and
at the expense of the Company) shall mail to each Holder, with a copy to the
Trustee if mailed by the Company, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.1(a) shall be paid to Holders of Securities as of
the record date for the interest payment date for which interest has not been
paid.
SECTION 2.13. PERSONS DEEMED OWNERS.
The Company, the Trustee, any Paying Agent, any co-registrar
and any Registrar shall deem and treat the person in whose name any Security
shall be registered upon the register of Securities kept by the Registrar as the
absolute owner of such Security (whether or not such Security shall be overdue
and notwithstanding any notation of the ownership or other writing thereon made
by anyone other than the Company, any co-registrar or any Registrar) for the
purpose of receiving payments of principal of, premium, if any, or interest on,
such Security and for all other purposes; and none of the Company, the Trustee,
any Paying Agent, any co-registrar or any Registrar shall be affected by any
notice to the contrary.
SECTION 2.14. CUSIP NUMBER.
The Company in issuing the Securities may use a "CUSIP"
number, and if so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number printed in the notice or on the Securities, and
that reliance may be placed only on the other identification numbers printed on
the Securities.
SECTION 2.15. BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITIES.
(a) The Global Securities initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit B.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Security.
-22-
(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in the Global Securities may
be transferred or exchanged for Physical Securities, in each case in
denominations of $1,000 or any integral multiple thereof, in accordance with the
rules and procedures of the Depository and the provisions of Section 2.16. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Securities.
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Security to beneficial owners pursuant
to paragraph (b), the Registrar shall (if one or more Physical Securities are to
be issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred or
exchanged, and the Company shall execute and the Trustee shall authenticate and
deliver, one or more Physical Securities of like tenor and amount.
(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of authorized denominations.
(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to paragraph
(b) or (c) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 2.16, bear the Private Placement Legend in Exhibit A-1.
(f) The Holder of any Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16. SPECIAL TRANSFER PROVISIONS.
(a) TRANSFERS TO NON-QIB INSTITUTIONAL ACCREDITED INVESTORS
AND NON-U.S. PERSONS. The following provisions shall apply with respect to the
registration of any proposed transfer of a Security constituting a restricted
security as defined in Rule 144(a)(3) under the Securities Act (a "Restricted
Security") to any accredited investor as defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act ("Institutional Accredited Investors") which is not
a qualified institutional buyer ("QIB") as defined in Rule 144A under the
Securities Act or to any person who
-23-
is not a U.S. Person as defined under Regulation S promulgated under the
Securities Act (a "Non-U.S. Person"):
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears
the Private Placement Legend, if (x) the requested transfer is after
March 19, 1999 or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons),
the proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto and the transferor has
delivered to the Trustee and the Company such certifications, legal
opinions and other information as the Trustee and the Company may
reasonably request to confirm that such transfer is being made pursuant
to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and, if such transfer
is made by a Non-U.S. Person, such transfer is made after April 28,
1996 or (2) in the case of a transfer to a Non-U.S. Person, the
proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit E hereto and such certifications,
legal opinions and other information as the Trustee or the Company may
reasonably request; and
(ii) if the proposed transferor is the Depository or an Agent
Member holding a beneficial interest in a Global Security, upon receipt
by the Registrar of (x) the certificate, if any, required by paragraph
(i) above and (y) instructions given in accordance with the
Depository's and the Registrar's procedures,
whereupon the Registrar shall reflect on its books and records the date and (if
the transfer does not involve a transfer of outstanding Physical Securities) a
decrease in the principal amount of a Global Security in an amount equal to the
principal amount of the beneficial interest in a Global Security to be
transferred, and the Company shall execute and the Trustee shall authenticate
and deliver one or more Physical Securities of like tenor and amount.
(b) TRANSFERS TO QIBS. The following provisions shall
apply with respect to the registration of any proposed transfer of a Security
constituting a Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such transfer
is being made by a proposed transferor who has checked the box and
signed the certification provided for on the form of Security (or, if
such transfer is of a beneficial interest in a Global Security in
exchange for a Physical Security, on Exhibit C hereto) stating, or has
otherwise advised the Company and the Registrar in writing, that the
sale has been made in compliance with the provisions of Rule 144A to a
transferee who is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and, if such
transfer is made by a Non-U.S. Person, such transfer is made after
April 28, 1996;
-24-
(ii) if the proposed transferee is the Depository or an Agent
Member, and the Securities to be transferred consist of Physical
Securities which after transfer are to be evidenced by an interest in
the Global Security, upon receipt by the Registrar of instructions
given in accordance with the Depository's and the Registrar's
procedures, the Registrar shall reflect on its books and records the
date and an increase in the principal amount of the Global Security in
an amount equal to the principal amount of the Physical Securities to
be transferred, and the Trustee shall cancel the Physical Securities so
transferred.
(c) PRIVATE PLACEMENT LEGEND. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the circumstances contemplated by
paragraph (a)(i)(x) of this Section 2.16 exist, (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Security has been sold pursuant to an effective
registration statement under the Securities Act.
(d) GENERAL. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and
other written communications received pursuant to Section 2.15 or this Section
2.16. The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon the
giving of reasonable written notice to the Registrar.
ARTICLE 3
REDEMPTION
SECTION 3.1. NOTICES TO TRUSTEE.
If the Company elects to redeem Securities pursuant to the
optional redemption provisions of Section 3.7 hereof, it shall furnish to the
Trustee, at least 45 days (or such shorter period as may be reasonably
acceptable to the Trustee) but not more than 60 days before a Redemption Date,
an Officers' Certificate setting forth the Section of this Indenture pursuant to
which the redemption shall occur, the Redemption Date, the principal amount of
Securities to be redeemed and the Redemption Price.
-25-
If the Registrar is not the Trustee, the Company shall,
concurrently with each notice of redemption, cause the Registrar to deliver to
the Trustee a certificate (upon which the Trustee may rely) setting forth the
principal amounts of Securities held by each Holder.
SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all of the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Securities are listed or, if the Securities are not listed on a national
securities exchange, on a PRO RATA basis, by lot or by such method as the
Trustee shall deem fair and reasonable. In the event of partial redemption by
lot, the particular Securities to be redeemed shall be selected, unless
otherwise provided herein, not less than 30 nor more than 60 days prior to the
Redemption Date by the Trustee from the outstanding Securities not previously
called for redemption.
The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Security selected
for partial redemption, the principal amount thereof to be redeemed. Securities
and portions of them selected shall be in amounts of $1,000 or integral
multiples of $1,000; except that if all of the Securities of a Holder are to be
redeemed, the entire outstanding amount of Securities held by such Holder, even
if not a multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called for redemption.
SECTION 3.3. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a Redemption
Date, the Company shall mail a notice of redemption to each Holder whose
Securities are to be redeemed, with a copy to the Trustee.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if any Security is being redeemed in part, the
portion of the principal amount of such Security to be redeemed and
that, after the Redemption Date, upon surrender of such Security, a
new Security or Securities in principal amount equal to the unredeemed
portion will be issued;
(4) the name and address of the Paying Agent;
-26-
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption Price;
(6) that, unless the Company defaults in making the
redemption payment, interest on Securities called for redemption
ceases to accrue on and after the Redemption Date, and the only
remaining right of the Holders of such Securities is to receive
payment of the Redemption Price upon surrender to the Paying Agent of
the Securities redeemed;
(7) if fewer than all the outstanding Securities are to be
redeemed, the identification of the particular Securities (or portion
thereof) to be redeemed, as well as the aggregate principal amount of
securities to be redeemed and the aggregate principal amount of
Securities to be outstanding after such partial redemption; and
(8) the paragraph of the Securities pursuant to which the
Securities called for redemption are being redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED that the Company
shall deliver to the Trustee, at least 45 days (or such shorter period as may be
reasonably satisfactory to the Trustee) prior to the Redemption Date, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date at the Redemption
Price. Upon surrender to any Paying Agent, such Securities shall be paid at the
Redemption Price, plus accrued interest to the Redemption Date; PROVIDED,
HOWEVER, that installments of interest whose Stated Maturity is on or prior to
the Redemption Date shall be payable to the Holders of such Securities,
registered as such, at the close of business on the relevant record date for the
payment of such installment of interest.
SECTION 3.5. DEPOSIT OF REDEMPTION PRICE.
On or prior to the Redemption Date, the Company shall
irrevocably deposit with the Trustee or with the Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in trust) money
sufficient to pay the Redemption Price of and accrued interest on all Securities
to be redeemed on that date. The Trustee or the Paying Agent shall return to the
Company any money not required for that purpose.
If the Company complies with the preceding paragraph, unless
the Company defaults in the payment of such Redemption Price, interest on the
Securities to be redeemed will cease to accrue on the applicable Redemption
Date, whether or not such Securities are presented for payment. If any Security
called for redemption shall not be so paid upon surrender for redemption because
of
-27-
the failure of the Company to comply with the preceding paragraph, interest will
be paid on the unpaid principal, from the Redemption Date until such principal
is paid, and on any interest not paid on such unpaid principal, in each case at
the rate provided in the Securities and in Section 4.1 hereof.
SECTION 3.6. SECURITIES REDEEMED IN PART.
Upon surrender of a Security that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
SECTION 3.7. OPTIONAL REDEMPTION.
The Company may redeem all or any of the Securities at any
time on or after March 1, 2001 at the Redemption Prices set forth in the
Securities. Any redemption pursuant to this Section 3.7 shall be made pursuant
to the provisions of Section 3.1 through 3.6 hereof.
SECTION 3.8. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
Within 30 days after the date that Excess Proceeds exceeds
$10.0 million, and a Net Proceeds Offer is required under Section 4.15, the
Company shall mail or cause the Trustee to mail (in the Company's name and at
its expense and pursuant to an Officers' Certificate) an offer to purchase (the
"Net Proceeds Notice") to each Holder of Securities pursuant to the terms of
this Section 3.8. The purchase price shall be equal to 100% of the principal
amount thereof plus accrued and unpaid interest thereon to the purchase date, if
any.
The Net Proceeds Notice shall be mailed by the Company (or the
Trustee, upon five Business Days notice, unless a shorter period is acceptable)
to Holders of Securities at their last registered address with a copy to the
Trustee and the Paying Agent and shall set forth (a) notice that the Company is
making a Net Proceeds Offer (as defined in Section 4.15) pursuant to this
Section, and that each Holder of Securities then outstanding has the right to
require the Company to repurchase, for cash, such Holder's Securities at a price
equal to 100% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon to the payment date for such Net Proceeds Offer, which date
will be no fewer than 30 days nor more than 60 days from the date of the Net
Proceeds Notice (the "Net Proceeds Payment Date"); (b) the purchase price and
the Net Proceeds Payment Date; (c) the maximum amount of Excess Proceeds
required to be applied to such Net Proceeds Offer; (d) any Securities properly
tendered pursuant to the Net Proceeds Offer will be accepted for payment
(subject to pro rata reduction as set forth below) and any Security not properly
tendered will remain outstanding and continue to accrue interest; (e) that
unless the Company defaults in the payment of the purchase price under the Net
Proceeds Offer, all Securities accepted for payment pursuant to the Net Proceeds
Offer shall cease to accrue interest on and after the Net Proceeds Payment Date;
(f) Holders electing to have any Securities purchased pursuant to a Net Proceeds
Offer will be required to surrender the Securities, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Securities completed,
to the Paying Agent specified in the
-28-
notice at the address specified in the notice prior to the close of business on
the third Business Day preceding the Net Proceeds Payment Date; (g) Holders will
be entitled to withdraw their tendered Securities and their election to require
the Company to purchase the Securities provided that the Paying Agent receives,
not later than the close of business on the third Business Day preceding the Net
Proceeds Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Securities
tendered for purchase, and a statement that such Holder is withdrawing his
tendered Securities and his election to have such Securities purchased; and (h)
that Holders whose Securities are being purchased only in part will be issued
new Securities equal in principal amount to be the unpurchased portion of the
Securities surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof. If the Net Proceeds Payment
Date for a Net Proceeds Offer is on or after an interest payment record date and
on or before the related interest payment date, any accrued interest to the Net
Proceeds Payment Date will be paid to the Person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender a Security pursuant to the Net
Proceeds Offer.
In the event the Company is required to make a Net Proceeds
Offer to repurchase Securities pursuant to Section 4.15 hereof and the amount of
the Excess Proceeds is not evenly divisible by $1,000, then the Trustee shall
promptly refund to the Company any Excess Proceeds remaining with the Trustee
after the repurchase of such Securities.
On the Net Proceeds Payment Date, the Company shall, (x)
accept for payment Securities or portions thereof properly tendered pursuant to
the Net Proceeds Offer, (y) deposit with the Paying Agent the amount of money
equal to the Excess Proceeds required under Section 4.15 to be applied to such
Net Proceeds Offer and (z) deliver or cause to be delivered to the Trustee
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof tendered to the Company. If the aggregate
purchase price of all Securities properly tendered exceeds the amount of Excess
Proceeds required to be applied to such Net Proceeds Offer, the Securities or
portions thereof to be purchased shall be purchased as nearly as practicable on
a pro rata basis. The Paying Agent shall promptly mail to each Holder of
Securities so accepted for payment a check in an amount equal to the aggregate
purchase price of the Securities purchased by the Company from such Holder and
the Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered, if any; PROVIDED, that each such new Security shall be in a
principal amount of $1,000 at maturity or an integral multiple thereof.
ARTICLE 4
COVENANTS
Subject to the provisions of Article 8, so long as Securities
are outstanding hereunder, the Company covenants for the benefit of the Holders
that:
-29-
SECTION 4.1. PAYMENT OF PRINCIPAL AND INTEREST.
The Company will punctually pay the principal, premium, if
any, and interest to become due in respect of the Securities according to the
terms of the Securities and this Indenture. On or prior to any Stated Maturity,
the Company shall irrevocably deposit with the Trustee or with the Paying Agent
money sufficient to pay such principal, premium, if any, and interest. Principal
and interest shall be considered paid on the due date if the Paying Agent (if
other than the Company or a Subsidiary) holds on that date money deposited by
the Company in immediately available funds and designated for and sufficient to
pay all principal and interest then due. The Trustee or the Paying Agent shall
return to the Company any money not required for that purpose. Such interest on
the Securities shall be payable without presentation of such Securities only to
or upon the written order of the Holders of such Securities. Payments of
interest shall be made either, at the option of the Company, by check mailed to
the address of the Person entitled thereto as such address shall appear on the
register of Securities or at the office or agency of the Company maintained in
accordance with Section 4.2.
The Company shall pay interest on overdue principal and
premium, if any, and interest on overdue installments of interest, to the extent
lawful, at the rate per annum set forth in the Securities.
SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY FOR NOTICES AND DEMANDS.
The Company will maintain in the Borough of Manhattan, The
City of New York, an office or agency where the Securities may be presented for
payment, an office or agency where the Securities may be presented for
registration of transfer and for exchange as provided in this Indenture and an
office or agency where notices and demands to or upon the Company in respect of
such Securities or of this Indenture may be served. The Company will give prompt
written notice to the Trustee of the location, and any change in the location,
of such office or agency. Until otherwise designated by the Company in a written
notice to the Trustee, such office or agency in the City of New York shall be,
until further notice to the Company by the Trustee, at the Trustee, c/o State
Street Bank and Trust Company, N.A., 61 Broadway, New York, New York 10006.
SECTION 4.3. INSURANCE MATTERS.
The Company shall provide or cause to be provided, for itself
and each of its Subsidiaries, insurance (including self-insurance) against loss
or damage of the kinds that, in the reasonable, good faith opinion of the
Company are appropriate for the conduct of the business of the Company and
Subsidiaries in a prudent manner, with insurers believed by the Company to be
reputable or with the government of the United States of America or an agency or
instrumentality thereof (or self-insurance), in such amounts, with such
deductibles or retentions, and by such methods as shall be either (i) consistent
with past practices of the Company or the applicable Subsidiary or (ii)
customary, in the reasonable, good faith opinion of the Company, for
corporations similarly situated, unless the Company believes in good faith that
the failure to provide such
-30-
insurance (together with all other such failures to provide insurance) would not
have a material adverse effect on the financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole.
SECTION 4.4. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of the Company's fiscal year, an Officers' Certificate stating
that a review of its activities and the activities of its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether it has kept, observed, performed and
fulfilled its obligations under this Indenture and further stating, as to each
such Officer signing such certificate, that to the best of his or her knowledge
the Company during such preceding fiscal year has kept, observed, performed and
fulfilled each and every of its covenants contained in this Indenture and no
Default or Event of Default occurred during such year or, if such signers do
know of any Default or Event of Default, the certificate shall describe such
Default or Event of Default and its status with particularity.
(b) The Company shall deliver to the Trustee, within five (5)
Business Days of becoming aware of any Default or Event of Default contained in
this Indenture a notice identifying in reasonable detail the circumstances
relating to such Default or Event of Default.
SECTION 4.5. CORPORATE EXISTENCE.
Subject to Article 5, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its corporate
existence and the corporate, partnership and other existence of each of its
Subsidiaries and will use its good faith efforts to preserve and keep in full
force and effect all material rights (charter and statutory) and franchises of
the Company and its Subsidiaries; PROVIDED, HOWEVER, that the Company shall not
be required to preserve any such material right or franchise, or the corporate,
partnership or other existence of any Subsidiary, if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and its Subsidiaries, taken as a whole,
and that the loss thereof is not disadvantageous in any material respect to the
Holders of the Securities.
SECTION 4.6. MAINTENANCE OF PROPERTY.
The Company shall cause all material properties owned by the
Company or any Subsidiary of the Company or used or held for use in the conduct
of its business or the business of any such Subsidiary to be maintained and kept
in good condition, repair and working order (reasonable wear and tear excepted)
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company may
be necessary so that the business carried on in connection therewith may be
properly conducted at all times; PROVIDED, that nothing in this Section 4.6
shall prevent the Company from discontinuing the operation or maintenance of any
such properties if such discontinuance is, in the judgment of the
-31-
Company, desirable in the conduct of its business or the business of any such
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 4.7. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or
discharged, before any material penalty accrues thereon, (1) all material 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 (2) 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 (i) whose amount, applicability or validity is being contested in good
faith by appropriate proceedings or (ii) if the failure to so pay or discharge
would not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
SECTION 4.8. REPORTS TO THE COMMISSION.
(a) The Company (at its own expense) shall file with the
Trustee within 15 days after it files with the Commission definitive copies of
the annual reports and of the information, documents, and other reports (or
copies of such portions of any of the foregoing as the Commission may by rules
and regulations prescribe) to be filed pursuant to Sections 13 or 15(d) of the
Exchange Act (without exhibits). In the event that the Company is not subject to
the requirements of such Section 13 or 15(d) of the Exchange Act, the Company
(at its own expense) shall file with the Trustee, within 15 days after it would
have been required to file the same with the Commission, such reports,
information and other documents that would have been filed with the Trustee
pursuant to the preceding sentence had the Company been subject to such
reporting requirements of such Sections. Upon qualification of this Indenture
under the TIA, the Company shall also comply with the provisions of TIA ss.
314(a). Notwithstanding anything contrary herein, the Trustee shall have no duty
to review such documents for purposes of determining compliance with any
provisions of this Indenture.
(b) At the Company's expense, the Company shall cause
definitive copies (without exhibits) of any annual report if furnished by it to
stockholders generally and any quarterly report if furnished by it to
stockholders generally to be mailed to the Holders at their addresses appearing
in the register of Securities maintained by the Registrar at or about the time
of such mailing or furnishing to stockholders. If the Company is not required to
furnish annual reports to its stockholders pursuant to the Exchange Act, the
Company (at its own expense) shall cause such information that would have been
required to be included in an annual report pursuant to the Exchange Act to be
mailed to the Holders at their addresses appearing in the register of Securities
maintained by the Registrar within 15 days after it would have been required to
mail or furnish such information to stockholders. If the Trustee (at the
Company's request and expense) is to mail the foregoing information to the
Holders, the Trustee shall have not more than five Business Days after its
receipt thereof from the Company to complete such mailing. Notwithstanding
anything contrary
-32-
herein, the Trustee shall have no duty to review such documents for purposes of
determining compliance with any provisions of this Indenture.
(c) The Company, will upon request, provide to any Holder of
Securities that are not subject to an effective registration statement under the
Securities Act or any prospective transferee of any such holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer such Securities in compliance with Rule
144A under the Securities Act.
(d) The Company shall provide to the Trustee with a sufficient
number of copies of all reports and other documents and information that the
Trustee may be required to deliver to Holders under this Section 4.8.
SECTION 4.9. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do
so) that it will not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury law or other similar law that would prohibit or forgive the Company from
paying all or any portion of the principal of, premium, if any, or interest on,
the Securities as contemplated herein, wherever enacted, now or at any time
hereafter in force; and (to the extent that it may lawfully do so) the Company
hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not, by resort to any such law, 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.
SECTION 4.10. LIMITATION ON ADDITIONAL INDEBTEDNESS.
The Company and its Subsidiaries will not, directly or
indirectly, create, incur, assume, become liable for or guarantee the payment of
(collectively, "incur") any Indebtedness (including Acquired Indebtedness),
other than Permitted Indebtedness; PROVIDED, HOWEVER, that the Company may incur
Indebtedness (including Acquired Indebtedness) and its Subsidiaries may incur
Acquired Indebtedness if, at the time of such incurrence and after giving effect
thereto, on a pro forma basis, the Consolidated Fixed Charge Coverage Ratio for
the four full fiscal quarters immediately preceding such incurrence (the
"coverage period"), taken as one period and calculated on a pro forma basis as
if such Indebtedness had been incurred and the proceeds therefrom applied and
calculated using the assumptions and adjustments set forth in the following two
paragraphs, would have been greater than 2.25 to 1.
The following assumptions, and any related adjustments, shall
be used in calculating the Consolidated Fixed Charge Coverage Ratio and the
components thereof for the coverage period giving rise to such determination:
(i) the Indebtedness (including Acquired Indebtedness) being incurred will be
assumed to have been incurred and the proceeds therefrom applied on the first
day of such coverage period; (ii) any other Indebtedness (including Acquired
Indebtedness) incurred
-33-
since the beginning of such coverage period that remains outstanding will be
assumed to have been incurred on the first day of such coverage period, except
that, in making such computation, Indebtedness incurred under a revolving credit
or similar arrangement shall be computed on the average daily balance of such
Indebtedness during such coverage period unless such Indebtedness is projected
in the reasonable judgment of senior management of the Company to remain
outstanding for a period in excess of 12 months from the date of incurrence of
such Indebtedness, in which case such Indebtedness will be assumed to have been
incurred on the first day of such coverage period; (iii) with respect to the
incurrence of any Acquired Indebtedness since the beginning of such coverage
period, the related acquisition (whether by means of purchase, merger or
otherwise) and any related repayment of any Indebtedness will be assumed to have
occurred on the first day of such coverage period; (iv) with respect to
Indebtedness repaid (other than a repayment of revolving credit Indebtedness,
except for revolving credit Indebtedness that was not subject to the exception
in clause (ii) above and therefore was assumed to have been incurred on the
first day of such coverage period) during such coverage period (or subsequent
thereto) or being repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Indebtedness, such Indebtedness will be assumed to have
been repaid on the first day of such coverage period; (v) any permanent
reduction in the committed amount of a revolving credit facility during such
coverage period (or subsequent thereto) will be deemed to have occurred on the
first day of such coverage period and interest paid on any amounts drawn on such
revolving credit facility during such coverage period in excess of such reduced
committed amount shall, for the period during which such drawn amounts were
actually outstanding, be excluded from such calculation; (vi) if since the
beginning of such coverage period the Company has made any Asset Acquisition or
Asset Sale, such Asset Acquisition or Asset Sale will be assumed to have
occurred on the first day of such coverage period; and (vii) effect shall be
given to the net amounts payable or receivable under agreements described in the
definition of Hedging Obligations.
For the purpose of determining compliance with this Section
4.10, (i) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness permitted by this covenant, the Company in
its sole discretion shall classify such item of Indebtedness and only be
required to include the amount and type of each class of Indebtedness in the
test specified in this covenant or in one of the clauses of the definition of
Permitted Indebtedness; (ii) the amount of Indebtedness issued at a price which
is less than the principal amount thereof shall be equal to the amount of
liability in respect thereof determined in accordance with GAAP; and (iii)
Indebtedness incurred in connection with, or in contemplation of, any
transaction described in the definition of Acquired Indebtedness shall be deemed
to have been incurred by the Company at the time an acquired Person becomes a
Subsidiary (or is merged into the Company or any Subsidiary) or at the time of
the acquisition of assets, as the case may be.
SECTION 4.11. LIMITATION ON PREFERRED STOCK OF SUBSIDIARIES.
The Company will not permit any Subsidiary to, directly or
indirectly, issue any Preferred Stock (other than to the Company or a Wholly
Owned Subsidiary).
-34-
SECTION 4.12. LIMITATION ON RESTRICTED PAYMENTS.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, make any Restricted Payment unless: (i) no Default or
Event of Default shall have occurred and be continuing at the time of and after
giving effect to such Restricted Payment; (ii) the Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately preceding the date
of such Restricted Payment, taken as one period and calculated on a pro forma
basis as if such Restricted Payment had been made on the first day of such
period, using the assumptions and adjustments set forth above under the final
two paragraphs of Section 4.10 hereof, would have been greater than 2.25 to 1;
and (iii) immediately after giving effect to such Restricted Payment, the
aggregate amount of all Restricted Payments (with the fair market value of any
such Restricted Payment, if other than in cash, being determined in good faith
by the Board of Directors as evidenced by a resolution of such Board) declared
or made subsequent to the Issue Date does not exceed the sum of (a) 50% of the
Consolidated Net Income (or in the event such Consolidated Net Income shall be a
deficit, minus 100% of such deficit) during the period (treated as one
accounting period) subsequent to March 31, 1996 and ending on the last day of
the fiscal quarter immediately preceding the date of such Restricted Payment;
plus (b) 100% of the aggregate net cash proceeds received by the Company from
any Person or Persons (other than a Subsidiary) as a capital contribution to the
Company or from the issue or sale (other than to a Subsidiary), after the Issue
Date, of Capital Stock (other than Disqualified Stock) of the Company; plus (c)
the amount by which Indebtedness of the Company is reduced on the Company's
balance sheet upon the conversion or exchange (other than by a Subsidiary)
subsequent to the Issue Date of any Indebtedness of the Company into or for
Capital Stock (other than Disqualified Stock) of the Company; plus (d) in the
case of a cash return of capital or principal from an Investment constituting a
Restricted Payment made after the Issue Date, an amount equal to the lesser of
the cash proceeds of such return of capital or principal, or the amount of such
Restricted Payment; plus (e) $30 million.
Notwithstanding the foregoing, the above limitations will not
prevent: (a) the payment of any dividend within 60 days after the date of its
declaration if at the date of declaration such payment would have complied with
the provisions of this Indenture; (b) the purchase, redemption, acquisition or
retirement of any shares of Capital Stock of the Company in exchange for, or out
of the net proceeds of the substantially concurrent sale (other than to a
Subsidiary) of, other shares of Capital Stock (other than Disqualified Stock) of
the Company; (c) the purchase, redemption, defeasance or other acquisition or
retirement of Indebtedness of the Company which is subordinate in right of
payment to the Securities, in exchange for, by conversion into, or out of the
net proceeds of, a substantially concurrent (1) sale (other than to a
Subsidiary) of shares of Capital Stock (other than Disqualified Stock) of the
Company or (2) incurrence of Refinancing Indebtedness with respect to such
subordinated Indebtedness; (d) the purchase or redemption of shares of Capital
Stock of the Company (including stock appreciation rights and similar
securities) held by present or former directors, officers or employees of the
Company or any Subsidiary or by any employee stock ownership plan or similar
trust for the account of such present or former director, officer or employee
upon such person's death, disability, retirement or termination of employment or
under the terms of any such plan or trust or any other agreement under which
such
-35-
shares or rights were issued; PROVIDED that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Capital Stock pursuant to this
clause (d) shall not exceed in any 12- month period $500,000 plus the aggregate
cash proceeds received by the Company during such 12- month period from any
reissuance of Capital Stock by the Company to directors, officers or employees
of the Company and its Subsidiaries; (e) an exchange of shares of the Company's
Series B Preferred Stock outstanding on the Issue Date for 7 1/2% Convertible
Subordinated Debentures Due 2013 of the Company pursuant to the terms of such
stock as in effect on the Issue Date; (f) the payment of the regular preferred
dividends on shares of the Existing Preferred Stock; and (g) the payment of
dividends on the Company's Capital Stock (PROVIDED that any dividend paid
pursuant to this clause (g) shall be subject to clause (iii) of the immediately
preceding paragraph, and that the aggregate amount of all dividends paid
pursuant to this clause (g) shall not exceed $10 million during any 12-month
period); PROVIDED that (x) no Restricted Payment described in clauses (b)
through (g) of this sentence may be made if any Default or Event of Default
shall have occurred and shall be continuing at the time or would occur as a
result of such Restricted Payment and (y) each Restricted Payment described in
clauses (a), (b), (c)(1), (d), (f) and (g) (but not clauses (c)(2) and (e)) of
this sentence shall be taken into account for the purposes of computing the
aggregate amount of all Restricted Payments made pursuant to clause (iii) of the
immediately preceding paragraph.
SECTION 4.13. LIMITATION ON LIENS.
The Company will not, and will not permit any Subsidiary to,
create, incur or otherwise cause or suffer to exist or become effective any
Lien, other than Permitted Liens, upon any Property of the Company or any
Subsidiary (including Capital Stock of any Subsidiary), now owned or hereafter
acquired, to secure any Indebtedness that is PARI PASSU with or subordinate in
right of payment to the Securities, unless (i) if such Lien secures Indebtedness
which is PARI PASSU with the Securities, then the Securities are secured on an
equal and ratable basis or (ii) if such Lien secures Indebtedness which is
junior to the Securities, any such Lien shall be junior to a Lien granted to the
holders of the Securities, in each case until such time as such Indebtedness is
no longer secured by a Lien, at which time such Lien securing the Securities
shall automatically cease to exist. This covenant does not restrict Liens which
secure Senior Indebtedness of the Company or Indebtedness of Subsidiaries.
SECTION 4.14. LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of any Properties or
the rendering of any service) or series of related transactions with any
Affiliate of the Company, any Affiliate of any Subsidiary or any holder of 10%
or more of any class of Capital Stock of the Company ("Affiliate Transaction"),
on terms that are less favorable to the Company or such Subsidiary, as the case
may be, than would be available in a comparable arm's length transaction with an
unrelated Person that is not an Affiliate of the Company or a Subsidiary or a
10% stockholder of the Company.
-36-
In addition, the Company will not, and will not permit any
Subsidiary to, enter into any Affiliate Transaction, unless the Company delivers
to the Trustee: (i) with respect to such Affiliate Transaction involving the
aggregate value, remuneration or other consideration of more than $5 million, an
Officer's Certificate certifying that such transaction complies with the
preceding paragraph; and (ii) with respect to such Affiliate Transaction
involving the aggregate value, remuneration or other consideration of more than
$10 million, either (a) an Officer's Certificate certifying that such
transaction complies with the preceding paragraph and has been approved by a
majority of the Board of Directors (including a majority of the disinterested
directors) or (b) a written opinion of an independent financial advisor to the
effect that such Affiliate Transaction is fair to the Company or such
Subsidiary, as the case may be, from a financial point of view.
Notwithstanding the foregoing limitations, the term "Affiliate
Transaction" shall not include: (i) any payment of money or issuance of
securities (or provision of benefits, including indemnification) by the Company
or any Subsidiary pursuant to employment agreements and arrangements and
employee benefit plans approved by the Board of Directors or the board of
directors (or similar body) of the applicable Subsidiary; (ii) reasonable
payments and other benefits (including indemnification) provided to directors
for service on the Board of Directors or the board of directors of any
Subsidiary, including the reimbursement or advancement of out-of-pocket expenses
and directors' and officers' liability insurance; (iii) any transaction the
prohibition of which would constitute a violation of Section 4.15 of the 14%
Notes Indenture or the similar covenant in the Bank Credit Facility as in effect
on the Issue Date; (iv) any Restricted Payment otherwise permitted under Section
4.12 hereof, any payment or transaction which is not a Restricted Payment by
virtue of the parentheticals in clauses (i) and (ii) of the definition of
Restricted Payment, or any Permitted Investment; or (v) transactions between the
Company and a Subsidiary, or between any Subsidiary and another Subsidiary, in
the ordinary course of business.
SECTION 4.15. LIMITATION ON SALE OF ASSETS.
The Company will not, and will not permit any Subsidiary to,
make any Asset Sale unless: (i) the Company or such Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
fair market value thereof (as determined in good faith by the Board of Directors
and evidenced by a resolution of such Board); (ii) except as provided in the
immediately following sentence, not less than 75% of the consideration received
by the Company or such Subsidiary, as the case may be, consists of cash or Cash
Equivalents (PROVIDED that (a) the amount of any Senior Indebtedness of the
Company or any Indebtedness of such Subsidiary that is assumed or paid by the
transferee in any such transaction and (b) the fair market value as of the date
of acquisition of any Exchanged Properties received by the Company or such
Subsidiary in any such transaction shall each be deemed to be cash for purposes
of this clause (ii) and the immediately following sentence); and (iii) the Net
Cash Proceeds, if any, received by the Company or such Subsidiary, as the case
may be, from such Asset Sale are applied in accordance with the following
paragraphs of this Section 4.15. The Company and its Subsidiaries will not be
required to comply with clause (ii) of the immediately preceding sentence in
connection with an Asset Sale if and to the extent that the sum of (a) the
aggregate non-cash consideration received in connection with such
-37-
Asset Sale and (b) the sum of all non-cash consideration received in connection
with prior Asset Sales that has not yet been converted into cash or Cash
Equivalents does not exceed $15 million; PROVIDED that if and when any such
non-cash consideration is converted into cash or Cash Equivalents, it shall
constitute receipt of Net Cash Proceeds.
The Company may, within 365 days following the receipt of Net
Cash Proceeds from any Asset Sale, apply such Net Cash Proceeds to (i) the
repayment of Senior Indebtedness of the Company or Indebtedness of the Company's
Subsidiaries, PROVIDED that any such repayment, if with respect to any revolving
credit, shall result in a permanent reduction in any revolving credit or other
commitment relating thereto in an amount equal to the principal amount so
repaid, unless such amount is used within such 365-day period for investments or
purchases described in clauses (ii) and (iii) of this sentence; (ii) make an
investment in capital expenditures in the cement, concrete products or building
products industries, or any other line of business in which the Company was
engaged on the Issue Date, or in working capital items or current assets related
thereto (other than cash or Cash Equivalents); or (iii) purchase Exchanged
Properties.
If, upon completion of the 365-day period, any portion of the
Net Cash Proceeds of any Asset Sale shall not have been applied by the Company
as described in clauses (i), (ii) or (iii) of the preceding paragraph and such
remaining Net Cash Proceeds, together with any remaining Net Cash Proceeds from
any prior Asset Sale (such aggregate constituting "Excess Proceeds") exceed $10
million, then the Company will be required to make an offer (a "Net Proceeds
Offer") to purchase from all Holders the maximum principal amount of Securities
that may be purchased out of the Excess Proceeds (on a pro rata basis if the
amount available for such purchase is less than the principal amount of
Securities tendered in such Net Proceeds Offer) at a purchase price of 100% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase. Any such purchase of Securities pursuant to this Section 4.15
shall be made in accordance with Section 3.8 hereof. To the extent that the
aggregate amount of Securities tendered pursuant to the Net Proceeds Offer is
less than the Excess Proceeds, the Company may use any remaining Excess Proceeds
for general corporate purposes. Upon completion of a Net Proceeds Offer, the
amount of Excess Proceeds shall be reset to zero.
SECTION 4.16. LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING SUBSIDIARIES.
The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or consensual restriction on the ability of
any Subsidiary to (i) pay dividends or make any other distributions on its
Capital Stock or any other interest or participation in or measured by its
profits, owned by the Company or any Subsidiary; (ii) pay any Indebtedness owed
to the Company or any Subsidiary; (iii) make loans or advances to the Company or
any Subsidiary; or (iv) transfer any of its properties or assets to the Company
or any Subsidiary, except for (a) any encumbrances or restrictions existing
under written agreements (including this Indenture and the Securities) in effect
on the Issue Date, (b) encumbrances or restrictions binding upon any Person at
the time such Person becomes a Subsidiary (unless the agreement creating such
encumbrance or restriction was entered
-38-
into in connection with, or in contemplation of, such entity becoming a
Subsidiary), PROVIDED that such encumbrances or restrictions shall not encumber
or restrict any assets of the Company or its other Subsidiaries other than such
Subsidiary, (c) any encumbrances or restrictions under any agreement evidencing
Acquired Indebtedness incurred pursuant to the provisions of Section 4.10
hereof; PROVIDED that such encumbrances or restrictions shall apply only to such
Person (if the Person is acquired) or the acquired assets (if the assets are
acquired directly), (d) any encumbrances or restrictions existing under any Bank
Credit Facility, (e) encumbrances or restrictions under any agreement that
refunds, rearranges, restructures, refinances or replaces any agreement
described in clauses (a) through (d) above, PROVIDED that the terms and
conditions of any such encumbrances or restrictions are not materially less
favorable to the Holders of Securities than those under the agreement so
refunded, rearranged, restructured, refinanced or replaced, (f) customary
nonassignment provisions in leases and purchase money financings, (g) any Lien
or agreement restricting the sale or other disposition of Property otherwise
permitted under this Indenture, if such Lien or agreement does not expressly
restrict the ability of a Subsidiary to pay dividends or make or repay loans or
advances to the Company, (h) any encumbrance or restriction due to applicable
law and (i) encumbrances or restrictions contained in any agreement with respect
to a sale of assets or Capital Stock permitted under this Indenture for the
period from the date of the execution of such agreement until the date of the
closing thereunder or, if the Company or any Subsidiary retains title to any
such assets after closing, such later date as title is transferred.
SECTION 4.17. LIMITATION ON FUTURE SENIOR SUBORDINATED INDEBTEDNESS.
The Company will not incur any Indebtedness, other than the
Securities, that is subordinated in right of payment to any other Indebtedness
of the Company unless such Indebtedness, by its terms, is PARI PASSU with, or
subordinated to, the Securities pursuant to subordination provisions
substantially similar to those contained in this Indenture.
SECTION 4.18. LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS.
The Company will not, and will not permit any Subsidiary to,
enter into any sale and leaseback transaction with respect to any Property
(whether now owned or hereafter acquired) unless (i) the Company or such
Subsidiary, as the case may be, would be entitled under Section 4.10 hereof to
incur any Capitalized Lease Obligations in respect of such sale and leaseback
transaction; and (ii) the Company or such Subsidiary receives proceeds from such
sale and leaseback transaction at least equal to the fair market value thereof
(as determined in good faith by the Board of Directors and evidenced by a
resolution of such Board) and such proceeds are applied in accordance with
Section 4.15 hereof.
SECTION 4.19. CHANGE OF CONTROL.
(a) If a Change of Control shall occur at any time (the
date of occurrence of such Change of Control being the "Change of Control
Date"), each Holder of Securities shall have the right, at the Holder's option,
to require the Company to purchase such Holder's Securities, in whole
-39-
or in part (by means of a redemption made in accordance with Article 3 hereof),
in integral multiples of $1,000, at a purchase price in cash in an amount equal
to 101% of the principal amount of such Securities plus accrued and unpaid
interest, if any, to the date of repurchase of such Securities ("Control
Purchase Date"), which date shall be no fewer than 30 days nor more than 60 days
from the date the Company notifies the holders of the occurrence of the Change
of Control.
(b) Within 30 days following any Change of Control Date,
the Company (with notice to the Trustee), or the Trustee at the Company's
request, shall send by first class mail, postage prepaid, to each Holder of the
Securities, at his address appearing in the Security register, a notice stating:
(i) that a Change of Control has occurred and that such
Holder has the right to require the Company to repurchase such Holder's
Securities at the purchase price in cash;
(ii) the material circumstances and relevant material
facts regarding such Change of Control event (including, if applicable, but not
limited to, such relevant pro forma financial information with respect to the
Company (or, if applicable, its successor) after giving effect to such Change of
Control event, as is reasonably available to the Company);
(iii) a Control Purchase Date which shall be no fewer than
30 days nor more than 60 days from the date such notice is mailed or if not a
Business Day, the next following Business Day;
(iv) the purchase price;
(v) the place at which Securities are to be presented and
surrendered;
(vi) that interest accrued to the Control Purchase Date
will be paid as specified in such notice and that, unless the Company shall
default in payment of the purchase price, after said Control Purchase Date
interest thereon will cease to accrue with respect to any Securities surrendered
for purchase;
(vii) that any Security not tendered will continue to
accrue interest;
(viii) that Holders of Securities electing to have any
Security or portion thereof purchased pursuant to the Change of Control
Offer will be required to surrender such Security, together with the
form entitled "Election of Holder to Require Repurchase" on the reverse
of such Security completed, to the Paying Agent no later than the time
and date set forth in such notice;
(ix) that Holders of Securities whose Securities are being
purchased only in part will be issued new Securities equal in principal
amount to the unpurchased portion of the Securities surrendered;
PROVIDED that each Security purchased and each such new Security
-40-
issued by the Company shall be in a principal amount of $1,000 or
integral multiples thereof; and
(x) that Holders will be entitled to withdraw their
election if the Company or Paying Agent, as the case may be, receives,
not later than the date set forth in clause (viii) above, or such
later date as may be required by law, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
principal amount of the Security the Holder delivered for purchase and
identifying such Security and a statement that such Holder is
withdrawing his election to have the Security purchased.
(c) Holders electing to have Securities purchased will be
required to surrender such Securities, together with the form entitled "Election
of Holder to Require Repurchase" on the reverse of such Security completed, to
the Paying Agent at the address specified in the notice by the time and date set
forth in the notice. No such Securities shall be deemed to have been presented
and surrendered until such Securities are actually received by the Paying Agent.
Holders whose Securities are purchased only in part will be issued new
Securities equal in principal amount to the unpurchased portion of the
Securities surrendered.
(d) If the Control Purchase Date is on or after an
interest payment record date and on or before the related interest payment date,
any accrued interest to the Control Purchase Date will be paid to the Person in
whose name a Security is registered at the close of business on such record
date, and no additional interest will be payable to Holders who tender
Securities pursuant to the Change of Control Offer.
(e) On the Control Purchase Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
notice specified in paragraph (b) above, (ii) if the Company appoints a Paying
Agent, deposit with such Paying Agent money sufficient to pay the purchase price
of all Securities or portions thereof so tendered and (iii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate stating
the Securities or portions thereof tendered to the Company. The Company or the
Paying Agent, as the case may be, shall promptly mail to the Holder of
Securities so accepted payment in an amount equal to the Redemption Price, and
the Trustee shall, upon the written request of the Company, promptly
authenticate and mail to such Holders a new Security equal in principal amount
to any unpurchased portion of the Security surrendered. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Control Purchase Date.
(f) Prior to giving notice to Holders pursuant to
paragraph (b) above, the Company shall with respect to all Designated Senior
Indebtedness which would prohibit the making of a Change of Control Offer or a
purchase of Securities thereunder, or with respect to which the making of a
Change of Control Offer or a purchase of Securities thereunder would constitute
a default or event of default, either (i) repay in full in cash or Cash
Equivalents, or otherwise make arrangements satisfactory to the holders of such
Designated Senior Indebtedness (or their respective Senior Representatives) for
the repayment in full in cash or Cash Equivalents of, such Designated
-41-
Senior Indebtedness or offer to repay such Designated Senior Indebtedness in
full in cash or Cash Equivalents and have repaid in full in cash or Cash
Equivalents, or otherwise made arrangements satisfactory to the holders of such
Designated Senior Indebtedness (or their respective Senior Representatives) for
the repayment in full in cash or Cash Equivalents of, the Designated Senior
Indebtedness of such issue held by any lender who accepts such offer; or (ii)
obtain the requisite consents under any Bank Credit Facility and any other such
Designated Senior Indebtedness to make a Change of Control Offer and to purchase
Securities upon a Change of Control. The Company shall not make the Change of
Control Offer until all such Designated Senior Indebtedness has been repaid in
full in cash or Cash Equivalents and/or such requisite consents have been
obtained.
SECTION 4.20. REGISTRATION RIGHTS AGREEMENT.
To the extent required under the Registration Rights
Agreement, the Company will pay Additional Interest (as defined in the
Registration Rights Agreement) on the Notes.
SECTION 4.21. CERTAIN PERMITTED TRANSACTIONS.
Notwithstanding any of the foregoing covenants, nothing in
this Indenture shall prohibit any transaction the prohibition of which would
constitute a violation of Section 4.15 of the 14% Notes Indenture, or the
similar covenant in the Bank Credit Facility as in effect on the Issue Date.
ARTICLE 5
SUCCESSORS
SECTION 5.1. LIMITATION ON MERGERS AND CONSOLIDATIONS
The Company will not consolidate or merge with or into any
other Person or entity, or permit any other Person or entity to consolidate or
merge with or into the Company (except, in each case, a merger of the Company
with a Wholly Owned Subsidiary which is organized and existing under the laws of
the United States, any state thereof, or the District of Columbia, for the
purpose of redomesticating the Company), nor will the Company sell, lease,
convey or otherwise dispose of (other than the incurrence of a Lien on) all or
substantially all of its assets unless (i) either (a) the Company shall be the
surviving or continuing corporation or (b) the entity formed by or surviving any
such consolidation or merger, or to which such sale, lease, conveyance or other
sale shall have been made (the "Surviving Entity"), is a corporation organized
and existing under the laws of the United States, any state thereof, or the
District of Columbia; (ii) the Surviving Entity assumes by supplemental
indenture all of the obligations of the Company under the Securities and this
Indenture; (iii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; (iv) immediately
after giving effect to such transaction, the Consolidated Net Worth of the
Company or the Surviving Entity, as the case may be, would be at least equal to
the Consolidated Net Worth of the Company immediately prior to such
-42-
transaction; and (v) immediately after giving effect to such transaction, the
Company or the Surviving Entity, as the case may be, could incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) pursuant to the
first paragraph of Section 4.10 hereof.
The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel stating that the proposed transaction
and any such supplemental indenture comply with this Indenture.
SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.1 hereof, the Surviving Entity 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 Surviving
Entity has been named as the Company herein, and, except in the case of a lease
of all or substantially all of its assets, the predecessor corporation shall be
relieved of all obligations and covenants under this Indenture and the
Securities.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" occurs if:
(a) the Company defaults in the payment of interest on
any Securities when the same becomes due and payable and the default
continues for a period of 30 days, whether or not prohibited by
Article 11 hereof;
(b) the Company defaults in the payment of the principal
or premium, if any, of any Securities when the same becomes due and
payable at maturity, upon acceleration, redemption or otherwise
(including the failure to make payments pursuant to a Change of
Control Offer or a Net Proceeds Offer), whether or not prohibited by
Article 11 hereof;
(c) the Company fails to comply with any other covenants
or agreements contained in the Securities or this Indenture and
(except as provided in the last paragraph of this Section 6.1) such
failure continues for a period of 60 days after the notice specified
below;
(d) there shall occur (i) a default by the Company or any
Subsidiary on any Indebtedness aggregating in excess of $10 million,
and the acceleration of the maturity of such Indebtedness by reason of
such default; or (ii) a failure by the Company or any
-43-
Subsidiary to pay when due, after giving effect to any applicable grace
periods, any Indebtedness aggregating in excess of $10 million;
(e) the Company (A) admits in writing its inability to
pay its debts generally as they become due, (B) commences a voluntary
case or proceeding under any Bankruptcy Law with respect to itself,
(C) consents to the entry of a judgment, decree or order for relief
against it in an involuntary case or proceeding under any Bankruptcy
Law, (D) consents to the appointment of a custodian of it or for
substantially all of its property, or (E) makes a general assignment
for the benefit of its creditors;
(f) a court of competent jurisdiction enters a judgment,
decree or order for relief in respect of the Company in an involuntary
case or proceeding under any Bankruptcy Law, which shall (A) approve as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition in respect of the Company, (B) appoint a
custodian of the Company or for substantially all of its property or
(C) order the winding-up or liquidation of its affairs; and such
judgment, decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or
(g) final judgment or judgments for the payment of money
which in the aggregate continuously exceeds $7,500,000 (to the extent
not covered by insurance) shall be rendered against the Company or any
Subsidiary by a court of competent jurisdiction and shall not have
been vacated, discharged, satisfied or effectively stayed within a
period of 60 days after the date on which any period for appeal has
expired and all rights of appeal have been denied.
An Event of Default shall not be deemed to have occurred under
clause (c) above (other than in the case of any Default with respect to a Change
of Control Offer or a Net Proceeds Offer pursuant to Sections 4.15 and 4.19
hereof, and except in the case of a Default with respect to Article 5 hereof,
which Defaults shall be Events of Default with the notice specified in this
paragraph but without the passage of time specified in this paragraph) until the
Trustee notifies the Company, or the Holders of at least 25% in principal amount
of the outstanding Securities notify the Company and the Trustee, of the
Default, and the Company does not cure the Default within 60 days after receipt
of the notice. The notice must specify the Default, demand that it be remedied
and state that the notice is a "Notice of Default." Such notice shall be given
by the Trustee if so requested by the Holders of at least 25% in principal
amount of the Securities then outstanding. When a Default is cured or waived, it
ceases.
SECTION 6.2. ACCELERATION.
(a) If an Event of Default (other than an Event of Default
specified in Section 6.1(e) or 6.1(f)) occurs and is continuing, the Trustee
may, by written notice to the Company (and, if any Designated Senior
Indebtedness is outstanding to the holders thereof or their Senior
Representatives), or the Holders of at least 25% in principal amount of the
Securities then
-44-
outstanding may, by written notice to the Company and the Trustee (and, if any
Designated Senior Indebtedness is outstanding, to the holders thereof or their
Senior Representatives), and the Trustee shall (with notice to the holders
thereof or their Senior Representatives if any Designated Senior Indebtedness is
outstanding), upon the request of such Holders, by the written notice to the
Company, declare the aggregate principal amount of the Securities outstanding,
together with accrued but unpaid interest thereon to the date of payment, to be
due and payable and, upon any such declaration, the same (i) shall become and be
due and payable immediately; or (ii) if there is any Designated Senior
Indebtedness outstanding, shall become due and payable upon the first to occur
of an acceleration under such Designated Senior Indebtedness or five Business
Days after receipt by the Company and the Senior Representatives with respect to
such Designated Senior Indebtedness of such acceleration notice, unless all
Events of Default specified in such acceleration notice (other than any Event of
Default in respect of non-payment of principal of the Securities) shall have
been cured; thereupon the Trustee may, at its discretion, proceed to protect and
enforce the rights of the Holders of Securities by appropriate judicial
proceeding. However, the Trustee shall be under no obligation to follow any
request of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred by it in compliance with such request, order
or direction. If an Event of Default specified in Section 6.1(e) or 6.1(f)
occurs and is continuing, all unpaid principal of, and accrued interest on, the
Securities then outstanding shall IPSO FACTO become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
(b) The Holders of a majority in principal amount of the
Securities by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived. Notwithstanding the foregoing, any acceleration of payment of the
Securities as a result of the failure of the Company to make an interest payment
on the Securities during a Payment Blockage Period (an "Acceleration Due to
Blockage") automatically will be rescinded if and when the following conditions
are satisfied within five Business Days following the end of such Payment
Blockage Period: (i) the payment in respect of interest on the Securities, the
failure of which gave rise to such Event of Default, is made; and (ii) no other
Event of Default, other than an Event of Default which has occurred solely as a
result of the acceleration of the Securities or other Indebtedness of the
Company or any Subsidiary prior to its express maturity that was caused solely
by an Acceleration Due to Blockage, shall have occurred and be continuing.
SECTION 6.3. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, premium, if any, or interest on the Securities or to
enforce the performance of any provision of the Securities or this Indenture.
-45-
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.4. WAIVER OF PAST DEFAULTS.
Subject to Sections 6.7 and 9.2, the Holders of more than 50%
in aggregate principal amount of the Securities outstanding may on behalf of the
Holders of all the Securities waive any Defaults or Events of Default under this
Indenture and their consequences, except a default in the payment of the
principal of, premium, if any, or interest on any Security, or in respect of a
covenant or provision which under this Indenture cannot be modified or amended
without the consent of the holder of each Security outstanding. Upon any such
waiver, such Default shall cease to exist and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; PROVIDED that no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.5. CONTROL BY MAJORITY.
The Holders of a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it including, without limitation, any remedies provided for
in Section 6.3. Subject to Section 7.1, however, the Trustee may refuse to
follow any direction that conflicts with any law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of another Holder, or
that may involve the Trustee in personal liability; PROVIDED that the Trustee
may take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.6. LIMITATION ON SUITS.
Subject to Section 6.7 hereof, a Securityholder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holder or Holders of not less than 25% in
aggregate principal amount of the outstanding Securities make a written
request to the Trustee to institute such proceeding as trustee;
-46-
(c) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense to
be incurred in compliance with such request;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of satisfactory
indemnity; and
(e) during such 60-day period the Holder or Holders of a
majority in aggregate principal amount of the outstanding Securities do
not give the Trustee a direction which, in the opinion of the Trustee,
is inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
SECTION 6.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal of, premium, if any, and
interest on, a Security, on or after the respective due dates expressed in such
Security, or to bring suit for the enforcement of any such payment on or after
such respective dates, shall not be impaired or affected without the consent of
the Holder.
SECTION 6.8. COLLECTION SUIT BY TRUSTEE.
If an Event of Default in payment of principal, premium, if
any, or interest specified in clause (a) or (b) of Section 6.1 occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any other obligor on the Securities for
the whole amount of principal, premium, if any, and accrued interest due and
remaining unpaid, together with interest on overdue principal and, to the extent
that payment of such interest is lawful, interest on overdue installments of
interest, in each case at the rate per annum borne by the Securities and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.9. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relating to the Company or any other
obligor upon the Securities, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the
-47-
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.7. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Securityholder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights of
any Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Securityholder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article
Six, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: to Holders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Securities for principal, premium, if any, and
interest, respectively; and
Third: to the Company.
The Trustee, upon prior notice to the Company, may fix a
record date and payment date for any payment to Holders pursuant to this Section
6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.7, or a suit by a Holder or Holders of more than
10% in principal amount of the outstanding Securities.
-48-
ARTICLE 7
TRUSTEE
SECTION 7.1. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is
continuing, the Trustee, subject to subparagraph (e) below, 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 or her own affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee.
(2) 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. However, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph
(b) of this Section.
(2) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(3) The Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section and the first sentence of paragraph
(e) of this Section.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The Trustee may
refuse to perform any duty or exercise any right or power unless it receives
indemnity satisfactory to it against any loss, liability or expense including,
without limitation, reasonable attorney fees.
-49-
(f) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law. All money received by the Trustee
shall, until applied as herein provided, be held in trust for the payment of the
principal of and interest on the Securities.
SECTION 7.2. RIGHTS OF TRUSTEE.
(a) The Trustee may rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel or both. The
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of Counsel. The
Trustee may consult with counsel and the written 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.
(c) The Trustee may act through agents or attorneys and
shall not be responsible for the misconduct or negligence of any agent or
attorney appointed with due care.
(d) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities and may otherwise deal with the Company or an
Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Paying Agent may do the same with like rights. However, the Trustee
is subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Securities, it shall not be accountable for
the Company's use of the proceeds from the Securities or any money paid to the
Company or upon the Company's direction under any provision hereof, it shall not
be responsible for the use or application of any money received by any Paying
-50-
Agent other than the Trustee and it shall not be responsible for any statement
or recital herein or any statement in the Securities other than its certificate
of authentication.
SECTION 7.5. NOTICE OF DEFAULTS.
If a Default occurs and is continuing and if it is known to
the Trustee, the Trustee shall mail to Securityholders a notice of the Default
within 90 days after it occurs. Except in the case of a Default in payment on
any Security (including the failure to make a mandatory repurchase pursuant
hereto), the Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice is
in the interests of Holders.
SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to Holders a brief
report dated as of such reporting date that complies with TIA ss. 313(a), if
such a report is required pursuant to TIA ss. 313(a). The Trustee also shall
comply with TIA ss. 313(b). The Trustee shall also transmit by mail all reports
as required by TIA ss.ss. 313(c) and 313(d).
Commencing at the time this Indenture is qualified under the
TIA, a copy of each report at the time of its mailing to Securityholders shall
be filed with the Commission and each stock exchange, if any, on which the
Securities are listed. The Company or any other obligor upon the Securities
shall notify the Trustee when the Securities are listed on any stock exchange.
SECTION 7.7. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable disbursements, advances and expenses
incurred by it. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against any loss,
liability or expense incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, except as set
forth in the next two paragraphs. The Trustee shall notify the Company promptly
of any claim for which it may seek indemnity. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
-51-
The obligations of the Company under this Section 7.7 to
compensate and indemnify the Trustee and its agents and to reimburse the Trustee
for its reasonable expenses shall survive the resignation or replacement of the
Trustee or the termination of the Company's obligations hereunder and the
satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through the Trustee's
negligence or willful misconduct.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee, except that held in trust to pay principal,
premium, if any, and interest on particular Securities. Such Lien shall survive
the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.8. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company. The Holders of a majority in principal
amount of the then outstanding Securities may remove the Trustee by so notifying
the Trustee and the Company. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent or
an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(3) a custodian or public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company and any other obligor upon the
Securities shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount of
the then outstanding Securities may appoint a successor Trustee to replace the
successor Trustee appointed by the Company.
-52-
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least a majority in principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders. The retiring Trustee shall promptly transfer all property
held by it as Trustee to the successor Trustee, subject to the Lien provided for
in Section 7.7 hereof, and all duties and obligations of the retiring Trustee
hereunder shall cease.
SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.
Subject to Section 7.10 hereof, if the Trustee consolidates,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation, the successor corporation without any
further act shall be the successor Trustee; PROVIDED, HOWEVER, that in the case
of a transfer of all or substantially all of its corporate trust business to
another corporation, the transferee corporation expressly assumes all of the
Trustee's liabilities hereunder.
In case any Securities 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 Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Securities either in the name of any predecessor hereunder or
in the name of the successor to the Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Securities or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder which shall be
a corporation organized and doing business under the laws of the United States
of America or of any state thereof authorized under such laws to exercise
corporate trust power, shall be subject to supervision or examination by Federal
or state authority and shall have a combined capital and surplus of at least
$100,000,000 as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss.ss. 310(a)(1), 310(a)(2) and 310(a)(5). The Trustee is
subject to and shall comply with the provisions of TIA ss. 310(b) regarding
disqualification of a trustee upon acquiring any conflicting
-53-
interest; PROVIDED, HOWEVER, that there shall be excluded from the operation of
TIA ss. 310(b)(1), (a) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding, if the requirements of such exclusion set forth in TIA ss.
310(b)(1) are met, and (b) the Indenture dated as of October 15, 1991, as
amended, between the Company and State Street Bank and Trust Company of
Connecticut, National Association, as trustee, under which the 14% Notes have
been issued.
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to and shall comply with the provisions
of TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b).
A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated therein.
ARTICLE 8
DISCHARGE OF INDENTURE
SECTION 8.1. LEGAL DEFEASANCE AND COVENANT DEFEASANCE OF THE SECURITIES.
(a) The Company may, at its option by Board resolution,
at any time, with respect to the Securities, elect to have either paragraph (b)
or paragraph (c) below be applied to the outstanding Securities upon compliance
with the conditions set forth in paragraph (d); PROVIDED, HOWEVER, that the
Company may elect to apply paragraph (b) notwithstanding its prior election to
apply paragraph (c).
(b) Upon the Company's exercise under paragraph (a) of
the option applicable to this paragraph (b), the Company shall be deemed to have
been released and discharged from its obligations with respect to the
outstanding Securities on the date the conditions set forth below are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance means
that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of the Sections of and
matters under this Indenture referred to in (i) and (ii) below, and to have
satisfied all its other obligations under such Securities and this Indenture
insofar as such Securities are concerned, except for the following which shall
survive until otherwise terminated or discharged hereunder: (i) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in paragraph (d) below and as more fully set forth in such paragraph,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due and (ii) obligations listed in Section
8.3.
(c) Upon the Company's exercise under paragraph (a) of
the option applicable to this paragraph (c), the Company shall be released and
discharged from its obligations under any covenant contained in Article 5 and in
Section 3.8 and Sections 4.3 through 4.19 with respect to the outstanding
Securities on and after the date the conditions set forth below are satisfied
(hereinafter,
-54-
"covenant defeasance"), and the Securities shall thereafter be deemed to be not
"outstanding" for the purpose of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the outstanding Securities, the Company may omit to comply with and shall
have no liability in respect of any term, condition or limitation set forth in
any such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply shall not constitute a Default or an Event of Default under
Section 6.1(c), nor shall any event referred to in Section 6.1(d) or 6.1(g)
thereafter constitute a Default or an Event of Default thereunder but, except as
specified above, the remainder of this Indenture and such Securities shall be
unaffected thereby.
(d) The following shall be the conditions to application
of either paragraph (b) or paragraph (c) above to the outstanding Securities:
(1) The Company shall have irrevocably deposited in trust
with the Trustee, pursuant to an irrevocable trust and security
agreement in form and substance satisfactory to the Trustee, cash or
U.S. Government Obligations maturing as to principal and interest at
such times, or a combination thereof, in such amounts as are
sufficient, without consideration of the reinvestment of such interest
and after payment of all Federal, state and local taxes or other
charges or assessments in respect thereof payable by the Trustee, in
the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof (in form and
substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of, premium, if any, and interest on the
outstanding Securities on the dates on which any such payments are due
and payable to maturity or redemption in accordance with the terms of
this Indenture and of the Securities;
(2) (i) No Event of Default shall have occurred or be
continuing on the date of such deposit, and (ii) no Default or Event of
Default under Section 6.1(e) or 6.1(f) shall occur on or before the
91st day after the date of such deposit;
(3) Such deposit will not result in a Default under this
Indenture or a breach or violation of, or constitute a default under,
any other instrument or agreement to which the Company is a party or by
which it is bound;
(4) In the case of a legal defeasance under paragraph (b)
above, the Company has delivered to the Trustee an Opinion of Counsel
stating that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (b) since the
date of this Indenture there has been a change in the applicable
federal income tax law, in either case to the effect that, and based
thereon such opinion shall confirm that, the Holders of the Securities
will not recognize income, gain or loss for federal income tax purposes
as a result of such deposit, defeasance and discharge and will be
subject to federal income tax
-55-
on the same amounts and in the same manner and at the same times as
would have been the case if such deposit, defeasance and discharge had
not occurred; and, in the case of a covenant defeasance under paragraph
(c) above, the Company shall deliver to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee,
to the effect that Holders of the Securities will not recognize income,
gain or loss for federal income tax purposes as a result of such
deposit and defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such deposit and defeasance had not occurred;
(5) The trust agreement shall state (A) that the cash and
U.S. Government Obligations deposited pursuant to Section 8.1(d)(1)
above are held in the name of the Trustee as trustee for the Holders,
(B) that the Trustee shall exercise dominion and control over such
cash and U.S. Government Obligations and (C) that the Holders shall
have a security interest in such cash and U.S. Government Obligations.
(6) The Company shall have delivered to the Trustee an
Opinion of Counsel, in form and substance reasonably satisfactory to
the Trustee, to the effect that, after the passage of 91 days
following the deposit, the trust funds will not be subject to the
effect of any applicable bankruptcy, insolvency, reorganization or
similar law affecting creditors' rights generally; and
(7) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by
this Section 8.1 have been complied with; PROVIDED, HOWEVER, that with
respect to the Opinion of Counsel relating to the satisfaction of
Section 8.1(d)(3) above, such counsel shall opine that such deposit
will not result in a Default under this Indenture or a breach or
violation of, or constitute a default under, any other material
instrument or agreement known to such counsel after due inquiry to
which the Company is a party, or by which it is bound; and PROVIDED,
FURTHER, that no deposit under clause (1) above shall be effective to
terminate the obligations of the Company under the Securities or this
Indenture prior to 91 days following any such deposit.
In connection with the issuance of debt securities the
proceeds of which will be used to redeem all the Securities then outstanding,
none of Sections 4.10, 4.11 and 4.12 shall be violated by the issuance of such
debt securities to the extent the Company complies with all of the provisions of
this Section 8.1(d) other than Section 8.1(d)(2)(ii). The Company and the
Trustee shall use all reasonable efforts to ensure that the deposit referred to
in Section 8.1(d)(1) does not result in the Company, the Trustee or the trust
becoming or being deemed an investment company under the Investment Company Act
of 1940. In the event that such deposit does result in the Company, the Trustee
or the trust becoming or being deemed an investment company, the Company shall
bear all related expenses of registration and reporting under the Investment
Company Act of 1940 for the duration of the trust.
-56-
SECTION 8.2. TERMINATION OF OBLIGATIONS UPON CANCELLATION OF THE
SECURITIES.
In addition to the Company's rights under Section 8.1, the
Company, at its option, at any time, may terminate all of its obligations under
this Indenture (subject to Section 8.3) when:
(a) (1) all Securities theretofore authenticated and
delivered (other than Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
2.7) have been delivered to the Trustee for cancellation or the
Company has paid or caused to be paid the principal of, premium, if
any, and interest on the Notes as and when the same has become due and
payable; (2) the Company has paid or caused to be paid all other sums
payable hereunder and under the Securities by the Company; and (3) the
Company has delivered to the Trustee an Officers' Certificate, stating
that all conditions precedent specified herein relating to the
satisfaction and discharge of this Indenture have been complied with;
or
(b) (1) the Securities not previously delivered to the
Trustee for cancellation will have become due and payable or are by
their terms to become due and payable within one year or are to be
called for redemption under arrangements satisfactory to the Trustee
upon delivery of notice; (2) the Company will have irrevocably
deposited with the Trustee, as trust funds, cash, in an amount
sufficient to pay principal of and interest on the outstanding
Securities, to maturity or redemption, as the case may be; (3) such
deposit will not result in a breach or violation of, or constitute a
default under, any agreement or instrument pursuant to which the
Company is a party or by which it is bound; and (4) and the Company
has delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel, each stating that all conditions related to the
satisfaction and discharge of this Indenture have been complied with;
PROVIDED, HOWEVER, that with respect to such Opinion of Counsel
relating to the satisfaction of Section 8.2(b)(3) above, such counsel
shall opine that such deposit will not result in a breach or violation
of, or constitute a default under, any material agreement or
instrument known to such Counsel after due inquiry pursuant to which
the Company is a party or by which it is bound.
SECTION 8.3. SURVIVAL OF CERTAIN OBLIGATIONS.
Notwithstanding the satisfaction and discharge of this
Indenture and of the Securities referred to in Section 8.1 or 8.2, the
respective obligations of the Company, and the Trustee under Sections 2.3, 2.4,
2.5, 2.6, 2.7, 7.7, 7.8, 8.5, 8.6 and 8.7 and shall survive until the Securities
are no longer outstanding (which shall be determined without reference to
Section 8.1(c)), and thereafter the obligations of the Company and the Trustee
under Sections 7.7, 8.5, 8.6 and 8.7 shall survive. Nothing contained in this
Article Eight shall abrogate any of the obligations or duties of the Trustee
under this Indenture.
-57-
SECTION 8.4. ACKNOWLEDGMENT OF DISCHARGE BY TRUSTEE.
Subject to Section 8.7, after (i) the conditions of Section
8.1 or 8.2 have been satisfied, (ii) the Company has paid or caused to be paid
all other sums payable hereunder by the Company and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent referred to in clause (i) above
relating to the satisfaction and discharge of this Indenture have been complied
with, the Trustee upon written request shall acknowledge in writing the
discharge of the Company's obligations under this Indenture except for those
surviving obligations specified in Section 8.3.
SECTION 8.5. APPLICATION OF TRUST ASSETS.
The Trustee shall hold any cash or U.S. Government Obligations
deposited with it in the irrevocable trust established pursuant to Section 8.1
or 8.2, as the case may be. The Trustee shall apply the deposited cash or the
U.S. Government Obligations, together with earnings thereon, through the Paying
Agent, in accordance with this Indenture and the terms of the irrevocable trust
agreement established pursuant to Section 8.1 or 8.2, as the case may be, to the
payment of principal of, premium, if any, and interest on the Securities. The
cash or U.S. Government Obligations so held in trust and deposited with the
Trustee in compliance with Section 8.1 or 8.2, as the case may be, shall not be
subject to Article 11 and shall not be part of the trust estate under this
Indenture, but shall constitute a separate trust fund for the benefit of all
Holders entitled thereto.
SECTION 8.6. REPAYMENT TO THE COMPANY; UNCLAIMED MONEY.
The Trustee and the Paying Agent shall promptly pay to the
Company upon request cash or U.S. Government Obligations held by them at any
time in excess of the amounts then required to pay principal or interest on the
Securities.
The Trustee and the Paying Agent shall pay to the Company upon
request, and, if applicable, in accordance with the irrevocable trust
established pursuant to Section 8.1 or 8.2, any cash or U.S. Government
Obligations held by them for the payment of principal of, premium, if any, or
interest on the Securities that remain unclaimed for two years after the date on
which such payment shall have become due; PROVIDED, HOWEVER, that the Company
shall have either caused notice of such payment to be mailed to each Holder
entitled thereto no less than 30 days prior to such repayment or within such
period shall have published such notice in a financial newspaper of widespread
circulation published in the City of New York. After payment to the Company,
Holders entitled to such payment must look to the Company for such payment as
general creditors unless an applicable abandoned property law designates another
person, and all liability of the Trustee and such Paying Agents with respect to
such money shall cease.
-58-
SECTION 8.7. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any cash or
U.S. Government Obligations in accordance with Article 8 by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 8.1 or 8.2
until such time as the Trustee or Paying Agent is permitted to apply all such
cash or U.S. Government Obligations in accordance with Article 8; PROVIDED that
if the Company makes any payment of principal of, premium, if any, or interest
on any Securities following the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such Securities to receive
such payment from the cash or U.S. Government Obligations held by the Trustee or
the Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.1. WITHOUT CONSENT OF HOLDERS.
The Company, when authorized by a Board resolution, and the
Trustee, together, may amend or supplement this Indenture or the Securities
without the consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for the assumption of the Company's
obligations to Holders of Securities in the case of a transaction made
in accordance with Article 5 hereof;
(3) to comply with any requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA as then in effect;
(4) to provide for uncertificated Securities in addition
to or in place of certificated Securities;
(5) to make any change that would provide any additional
rights or benefits to Holders of Securities or that does not adversely
affect the legal rights hereunder of any Securityholder;
(6) to evidence or to provide for a replacement Trustee
under Section 7.8; or
(7) to add to the covenants and agreements of the Company
for the benefit of the Holders and to surrender any right or power
herein reserved to the Company,
-59-
PROVIDED that, in the case of clause (5) above, the Company has delivered to the
Trustee an Opinion of Counsel and an Officers' Certificate, each stating that
such amendment or supplement complies with the provisions of this Section 9.1.
Upon the written request of the Company, accompanied by a
resolution of the Board of Directors authorizing the execution of any
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.6 hereof, the Trustee shall join with the Company in the
execution of any supplemental Indenture authorized or permitted by the terms of
this Indenture and to make any further appropriate agreements and stipulations
which may be therein contained, but the Trustee shall not be obligated to enter
into such supplemental Indenture which affects its own rights, duties or
immunities under this Indenture or otherwise. After an amendment, supplement or
waiver under this Section 9.1 becomes effective, the Company shall mail to the
Holders of each Security affected thereby a notice briefly describing the
amendment, supplement or waiver. Any failure of the Company to mail such notice,
or any defect therein, shall not, however, in any way impair or affect the
validity of any such supplemental Indenture or waiver.
SECTION 9.2. WITH CONSENT OF HOLDERS.
The Company, when authorized by a Board resolution, and the
Trustee, together, may modify, amend or supplement this Indenture or the
Securities with the written consent of the Holders of at least a majority in
aggregate principal amount of the then outstanding Securities. The Holders of a
majority in principal amount of the Securities then outstanding may, or the
Trustee with the written consent of the Holders of at least a majority in
principal amount of the then outstanding Securities may, waive compliance in a
particular instance by the Company with any provision of this Indenture or the
Securities.
Upon the written request of the Company, accompanied by a
resolution of the Board of Directors authorizing the execution of any such
supplemental Indenture, and upon the filing with the Trustee of evidence of the
consent of the Holders as aforesaid, and upon receipt by the Trustee of the
documents described in Section 9.6 hereof, the Trustee shall join with the
Company in the execution of such supplemental Indenture but the Trustee shall
not be obligated to enter into such supplemental Indenture which affects its own
rights, duties or immunities under this Indenture or otherwise.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
After an amendment or waiver under this Section becomes
effective, the Company shall mail to the Holders of each Security affected
thereby a notice briefly describing the amendment or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental Indenture or waiver.
-60-
Notwithstanding the first paragraph of this Section 9.2,
without the consent of each Holder affected, an amendment or waiver under this
Section may not:
(1) reduce the percentage of aggregate principal amount
of the Securities outstanding whose Holders must consent to any
modification, amendment, supplement or waiver;
(2) reduce the rate or change the time for payment of
interest, including defaulted interest, on any Security;
(3) reduce the principal amount of any Security or extend
the maturity date of the Securities;
(4) reduce the Redemption Price, including premium, if
any, payable upon redemption of any Security or change the time at
which any Security may or shall be redeemed;
(5) reduce the repurchase price, including premium, if
any, payable upon the repurchase of any Security under, or change the
time at which Securities must be repurchased pursuant to, a Change of
Control Offer or a Net Proceeds Offer;
(6) change the currency of payment of principal of,
premium, if any, or interest on, any Security;
(7) impair the right to institute suit for the
enforcement of any payment of principal of, premium, if any, or
interest on, any Security; or
(8) waive a continuing Default or Event of Default in the
payment of principal of, premium, if any, or interest on, the
Securities (except a rescission of acceleration of the Securities set
forth under Section 6.2(b) hereof and a waiver of the payment default
that resulted from such acceleration).
SECTION 9.3. COMPLIANCE WITH TRUST INDENTURE ACT.
If at the time this Indenture shall be qualified under the
TIA, every amendment to this Indenture or the Securities shall be set forth in a
supplemental Indenture that complies with the TIA as then in effect.
SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of
-61-
the consent is not made on any Security. However, any such Holder or subsequent
Holder may revoke the consent as to his Security or portion of a Security if the
Trustee receives written notice of revocation before the date the amendment or
waiver becomes effective.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then notwithstanding
the provisions of the immediately preceding paragraph, those persons who were
Holders at such record date (or their duly designated proxies), and only those
persons, shall be entitled to consent to such amendment, supplement or waiver or
to revoke any consent previously given, whether or not such persons continue to
be Holders after such record date. No such consent shall be valid or effective
for more than 90 days after such record date unless consents from Holders of the
principal amount of Securities required hereunder for such amendment or waiver
to be effective shall have also been given and not revoked within such 90-day
period. An amendment, supplement or waiver becomes effective in accordance with
its terms. After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.2, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; PROVIDED that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 9.5. NOTATION ON OR EXCHANGE OF SECURITIES.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation about an amendment or
waiver on any Security thereafter authenticated. Alternatively, the Company in
exchange for all Securities may issue and the Trustee shall authenticate new
Securities that reflect the amendment or waiver. Failure to make an appropriate
notation or to issue a new security shall not affect the validity of such
amendment.
SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment, waiver or supplemental
indenture authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, waiver or supplemental Indenture, the Trustee shall be
entitled to receive and, subject to Section 7.1, shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that such amendment, waiver or supplemental Indenture is authorized or
permitted by this Indenture, that it is not inconsistent herewith, and that it
will be valid and binding upon the Company in accordance with its terms.
-62-
ARTICLE 10
MEETINGS OF SECURITYHOLDERS
SECTION 10.1. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Securityholders may be called at any time and
from time to time pursuant to the provisions of this Article 10 for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee,
or to give any directions to the Trustee, or to waive or to consent to
the waiving of any Default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by
Securityholders pursuant to any of the provisions of Article 6;
(b) to remove the Trustee or appoint a successor Trustee
pursuant to the provisions of Article 7;
(c) to consent to an amendment, supplement or waiver
pursuant to the provisions of Section 9.2; or
(d) to take any other action authorized or permitted to
be taken by or on behalf of the Holders of any specified aggregate
principal amount of the Securities under any other provision of this
Indenture, or authorized or permitted by law.
SECTION 10.2. MANNER OF CALLING MEETINGS.
The Trustee may at any time call a meeting of Securityholders
to take any action specified in Section 10.1, to be held at such time and at
such place in The City of New York, New York or elsewhere as the Trustee shall
determine. Notice of every meeting of Securityholders, setting forth the time
and place of such meeting and in general terms the action proposed to be taken
at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to
the Company and to the Holders at their last addresses as they shall appear on
the registration books of the Registrar not less than 10 nor more than 60 days
prior to the date fixed for a meeting.
Any meeting of Securityholders shall be valid without notice
if the Holders of all Securities then outstanding are present in person or by
proxy, or if notice is waived before or after the meeting by the Holders of all
Securities outstanding, and if the Company and the Trustee are either present by
duly authorized representatives or have, before or after the meeting, waived
notice.
SECTION 10.3. CALL OF MEETINGS BY COMPANY OR HOLDERS.
In case at any time the Company, pursuant to a Board
resolution, or the Holders of not less than 10% in aggregate principal amount of
the Securities then outstanding shall have requested the Trustee to call a
meeting of Securityholders to take any action specified in Section
-63-
10.1, by written request setting forth in reasonable detail the action proposed
to be taken at the meeting, and the Trustee shall not have mailed the notice of
such meeting within 20 days after receipt of such request, then the Company or
the Holders of securities in the amount above specified may determine the time
and place in The City of New York, New York or elsewhere for such meeting and
may call such meeting for the purpose of taking such action, by mailing or
causing to be mailed notice thereof as provided in Section 10.2, or by causing
notice thereof to be published at least once in each of two successive calendar
weeks (on any Business Day during such week) in a newspaper or newspapers
printed in the English language, customarily published at least five days a week
of a general circulation in The City of New York, State of New York, the first
such publication to be not less than 10 nor more than 60 days prior to the date
fixed for the meeting.
SECTION 10.4. WHO MAY ATTEND AND VOTE AT MEETINGS.
To be entitled to vote at any meeting of Securityholders, a
person shall (a) be a registered Holder of one or more Securities, or (b) be a
person appointed by an instrument in writing as proxy for the registered Holder
or Holders of Securities. The only persons who shall be entitled to be present
or to speak at any meeting of Securityholders shall be the persons entitled to
vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
SECTION 10.5. REGULATIONS MAY BE MADE BY TRUSTEE; CONDUCT OF THE MEETING;
VOTING RIGHTS; ADJOURNMENT.
Notwithstanding any other provision of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
action by or any meeting of Securityholders, in regard to proof of the holding
of Securities and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, and submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall deem appropriate. Such
regulations may fix a record date and time for determining the Holders of record
of Securities entitled to vote at such meeting, in which case those and only
those persons who are Holders of Securities at the record date and time so
fixed, or their proxies, shall be entitled to vote at such meeting whether or
not they shall be such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 10.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the Holders of a majority
in principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Securityholder or proxy shall, subject to
the provisions of Section 10.4 hereof, be entitled to one vote for each $1,000
principal amount of Securities held or
-64-
represented by him; PROVIDED, HOWEVER, that no vote shall be cast or counted at
any meeting in respect of any Securities challenged as not outstanding and ruled
by the chairman of the meeting to be not outstanding. The chairman may adjourn
any such meeting if he is unable to determine whether any Holder or proxy shall
be entitled to vote at such meeting. The chairman of the meeting shall have no
right to vote other than by virtue of Securities held by him or instruments in
writing as aforesaid duly designating him as the proxy to vote on behalf of
other Securityholders. Any meeting of Securityholders duly called pursuant to
the provisions of Section 10.2 or Section 10.3 may be adjourned from time to
time by vote of the Holders of a majority in aggregate principal amount of the
Securities represented at the meeting and entitled to vote, and the meeting may
be held as so adjourned without further notice.
SECTION 10.6. VOTING AT THE MEETING AND RECORD TO BE KEPT.
The vote upon any resolution submitted to any meeting of
Securityholders shall be by written ballots on which shall be subscribed the
signatures of the Holders of Securities or of their representatives by proxy and
the principal amount of the Securities voted by the ballot. The permanent
chairman of the meeting shall appoint two inspectors of votes, who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Securityholders shall be prepared by the
secretary of the meeting and there shall be attached to such record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more persons having knowledge of the facts, setting forth a
copy of the notice of the meeting and showing that such notice was mailed as
provided in Section 10.2. The record shall be signed and verified by the
affidavits of the permanent chairman and the secretary of the meeting and one of
the duplicates shall be delivered to the Company and the other to the Trustee to
be preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting.
Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 10.7. EXERCISE OF RIGHTS OF TRUSTEE OR SECURITYHOLDERS MAY NOT BE
HINDERED OR DELAYED BY CALL OF MEETING.
Nothing contained in this Article 10 shall be deemed or
construed to authorize or permit, by reason of any call of a meeting of
Securityholders or any rights expressly or impliedly conferred hereunder to make
such call, any hindrance or delay in the exercise of any right or rights
conferred upon or reserved to the Trustee or to the Securityholders under any of
the provisions of this Indenture or of the Securities.
-65-
SECTION 10.8. PROCEDURES NOT EXCLUSIVE.
The procedures set forth in this Article 10 are not exclusive
and the rights and obligations of the Company, the Trustee and the Holders under
other Articles of this Indenture (including, without limitation, Articles 6, 7,
8 and 9) shall in no way be limited by the provisions of this Article 10.
ARTICLE 11
SUBORDINATION
SECTION 11.1. SECURITIES SUBORDINATED TO SENIOR INDEBTEDNESS.
Notwithstanding the provisions of Sections 6.2 and 6.3 but
subject to Section 11.3 hereto, the Company covenants and agrees, and the
Trustee and each Holder of the Securities by his acceptance thereof likewise
covenants and agrees, that all payments of the principal of, premium, if any,
and interest on the Securities (including, without limitation any purchase of
Securities pursuant to Sections 4.15 or 4.19 hereof) by the Company and any
other Indebtedness, obligations, or liabilities, now existing or hereafter
created, arising under or in connection with this Indenture and the Securities,
including all expenses, fees, interest, and other amounts now or hereafter
payable hereunder or thereunder (the "Subordinated Obligations") shall be
subordinated in accordance with the provisions of this Article 11 to the prior
payment in full in cash of all Senior Indebtedness of the Company.
The expressions "payment in full," "paid in full," or "paid in
full in cash" or any similar term or phrase when used in this Section 11 with
respect to Senior Indebtedness shall mean the payment in full of all such Senior
Indebtedness in cash or Cash Equivalents, or, in the case of contingent
obligations in respect of letters of credit or other reimbursement obligations
that constitute Senior Indebtedness, the making of provisions to assure the
payment thereof that are reasonably acceptable to the Senior Representative for
such Senior Indebtedness.
SECTION 11.2. PRIORITY AND PAYMENT OVER OF PROCEEDS IN CERTAIN EVENTS.
(a) SUBORDINATION ON DISSOLUTION, LIQUIDATION OR
REORGANIZATION OF THE COMPANY. In the event of any insolvency or bankruptcy case
or proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding in connection therewith, relative to the Company or to its
assets, or any liquidation, dissolution or other winding up of the Company,
whether voluntary or involuntary, or any assignment for the benefit of creditors
or other marshaling of assets or liabilities of the Company (except in
connection with the consolidation or merger of the Company or its liquidation or
dissolution following the conveyance, transfer or lease of its Properties
substantially as an entirety, upon the terms and conditions described under
Article 5 hereof), all Senior Indebtedness (including interest accruing on or
after the commencement of any such proceeding at the rate specified in the
instrument evidencing the applicable Senior Indebtedness,
-66-
whether or not a claim therefor is allowed or allowable in such proceeding, to
the date of payment of such Senior Indebtedness) must be paid in full in cash
before any payment or distribution of any assets of the Company of any kind or
character (except in each case for payments or distributions made in equity
interests or in subordinated securities which are subordinated and junior to the
payment of Senior Indebtedness then outstanding at least to the extent provided
in this Article 11, the principal payments with respect to which shall not begin
earlier than one year following the final maturity date of the Designated Senior
Indebtedness at the time outstanding, which contain covenants that are not
materially more restrictive than the covenants contained herein and do not
contain greater defaults than are contained herein, and that which bear interest
at a rate per annum less than or equal to the overdue rate applicable to past
due amounts owed under the Securities (collectively, "Junior Securities")) is
made on account of the Subordinated Obligations or on account of the purchase,
redemption or other acquisition of, or in respect of, the Securities. Upon any
such insolvency or bankruptcy case or proceeding, receivership, liquidation,
reorganization, or other similar case or proceeding in connection therewith, or
any such liquidation, dissolution, or other winding up, or any such assignment
for the benefit of creditors or other marshaling of assets or liabilities,
before any payment may be made by the Company of the Subordinated Obligations,
any payment or distribution of assets or securities of the Company of any kind
or character, whether in cash, property or securities, (except payments or
distributions made in Junior Securities), to which the Holders or the Trustee on
their behalf would be entitled, except for the provisions of this Article 11,
shall be made by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other person making such payment or distribution,
directly to the holders of the Senior Indebtedness of the Company or any Senior
Representatives thereof to the extent necessary to pay all such Senior
Indebtedness in full in cash after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness.
(b) SUBORDINATION ON DEFAULT IN SENIOR INDEBTEDNESS.
During the continuance of any default in the payment of principal of,
reimbursement obligation under, premium, if any, interest on, or any other
amounts payable with respect to, any Senior Indebtedness, including any payment
under a Hedging Obligation that constitutes Senior Indebtedness (a "Payment
Default"), no payment or distribution of any assets of the Company of any kind
or character may be made by the Company on account of the Subordinated
Obligations or on account of the purchase, redemption or other acquisition of or
in respect of the Securities (except in each case for payments or distributions
made in Junior Securities) unless and until such Payment Default has been cured
or waived in writing or such Senior Indebtedness shall have been discharged or
paid in full in cash or when the right under this Indenture to prevent any such
payment is waived in writing by or on behalf of the holders of such Senior
Indebtedness.
Further, during the continuance of any event (other than a
Payment Default) the occurrence of which entitles one or more Persons to
accelerate the maturity of any Designated Senior Indebtedness (a "Covenant
Default") and upon the receipt by the Trustee from the Senior Representative for
such Designated Senior Indebtedness of a written notice of such Covenant
Default, no payment or distribution of any assets of the Company of any kind or
character may be made by the Company on account of the Subordinated Obligations
or on account of the purchase,
-67-
redemption or other acquisition of or in respect of the Securities (except in
each case for payments or distributions made in Junior Securities) for the
period specified below (the "Payment Blockage Period").
The Payment Blockage Period shall commence upon the receipt by
the Trustee of such written notice from the Senior Representative for Designated
Senior Indebtedness of a Covenant Default and shall end on the earliest of (i)
179 days after the receipt of such notice; (ii) the date on which such Covenant
Default is cured or waived in writing or such Designated Senior Indebtedness is
discharged or paid in full in cash; or (iii) the date on which such Payment
Blockage Period shall have been terminated by written notice to the Company and
the Trustee from the Senior Representative initiating such Payment Blockage
Period, or the holders of at least the requisite principal amount of such issue
of Designated Senior Indebtedness as set forth in the agreements relating
thereto. After the end of a Payment Blockage Period, the Company shall promptly
resume making any and all required payments in respect of the Subordinated
Obligations, including any missed payments, unless such payment is prohibited
because of a Payment Default or by reason of insolvency or other circumstance
described in Section 11.2(a) hereof. In no event will a Payment Blockage Period
extend beyond 179 days from the date of the receipt by the Trustee of the notice
initiating such Payment Blockage Period. Any number of notices of Covenant
Defaults may be given during a Payment Blockage Period; PROVIDED, that no such
notice shall extend such Payment Blockage Period beyond 179 days and only one
Payment Blockage Period may be commenced within any 360-day period. No Covenant
Default with respect to Designated Senior Indebtedness that existed or was
continuing on the date of the commencement of any Payment Blockage Period and
that was known to the holders of or the Senior Representative for such
Designated Senior Indebtedness will be, or can be, made the basis for the
commencement of a second Payment Blockage Period, whether or not within a period
of 360 consecutive days, unless such Covenant Default has been cured or waived
for a period of not less than 90 consecutive days. The Company shall deliver a
notice to the Trustee promptly after the date on which any Covenant Default is
cured or waived or on which the Designated Senior Indebtedness related thereto
is discharged or paid in full.
(c) RIGHTS AND OBLIGATIONS OF HOLDERS OF SECURITIES AND
TRUSTEE. In the event that, notwithstanding the foregoing provisions prohibiting
such payment or distribution, the Trustee or any Holder shall have received any
payment on account of the Subordinated Obligations (other than in Junior
Securities) at a time when such payment is prohibited by this Section 11.2 and
before the Senior Indebtedness is paid in full in cash, then and in such event
(subject to the provisions of Section 11.8) such payment or distribution shall
be received and held in trust for the holders of Senior Indebtedness and shall
be paid over or delivered to the holders of the Senior Indebtedness remaining
unpaid at their written direction to the extent necessary to pay in full in cash
such Senior Indebtedness in accordance with its terms after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness.
Nothing contained in this Article 11 will limit the right of
the Trustee or the Holders of Securities to take any action to accelerate the
maturity of the Securities pursuant to Section 6.2
-68-
or to pursue any rights or remedies hereunder against the Company; PROVIDED
that, to the extent provided in this Article 11, all Senior Indebtedness of the
Company then or thereafter due or declared to be due shall first be paid in full
in cash before the Holders or the Trustee are entitled to receive any payment
from the Company of principal of the Subordinated Obligations.
Upon any payment or distribution of assets or securities
referred to in this Article 11, the Trustee and the Holders shall be entitled to
rely upon any order or decree of a court of competent jurisdiction in which such
insolvency, bankruptcy, dissolution, winding up, liquidation or reorganization
proceedings are pending, and upon a certificate of the receiver, trustee in
bankruptcy, liquidating trustee, agent or other person making any such payment
or distribution, in each case stating that they are giving effect to the
provisions of this Article 11, delivered to the Trustee for the purpose of
ascertaining the persons entitled to participate in such distribution, the
holders of Senior Indebtedness and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 11.
If the Trustee or the Holders of the Securities do not file a
proper claim or proof of debt or other document or amendment thereof in the form
required in any insolvency, bankruptcy, dissolution, winding up, liquidation, or
reorganization proceedings prior to 30 days before the expiration of time to
file such claim, then the Senior Representative shall have the right (but not
the obligation) in such proceeding, and hereby irrevocably is appointed lawful
attorney of the Holders of the Securities for the purpose of enabling the Senior
Representative (a) to file such proof of claim and (b) to demand, sue for,
collect, receive and give receipt for the payments and distributions in respect
of the Subordinated Indebtedness that are made in such proceeding and to prove
all claims therefor and to execute and deliver all documents in such proceeding
in the name of the Holders of the Securities or as the Senior Representative
reasonably may determine to be necessary or appropriate; PROVIDED, HOWEVER, that
the Senior Representative's powers under clause (b) of this sentence shall be
suspended so long as the Trustee or the Holders of the Securities are pursuing
the claims of the Holders of the Securities in such proceeding.
SECTION 11.3. PAYMENTS MAY BE MADE PRIOR TO DISSOLUTION.
Nothing contained in this Article 11 or elsewhere in this
Indenture shall prevent (i) the Company, except under the conditions described
in Section 11.2, from making payments at any time for the purpose of making such
payments of principal of, premium, if any, and interest on the Securities, or
from depositing with the Trustee any monies for such payments or (ii) the
application by the Trustee of any monies deposited with it for the purpose of
making such payments of principal of, premium, if any, and interest on, the
Securities, to the Holders entitled thereto unless, in the case of payments by
the Trustee, at least three Business Days prior to the date upon which such
payment would otherwise (except for the prohibitions contained in Section 11.2)
become due and payable, the Trustee shall have received the written notice
provided for in Section 11.2(b) (or there shall have been an acceleration of the
Securities prior to such application) or in Section 11.8).
-69-
SECTION 11.4. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT TO BE IMPAIRED.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act by any such
holder, or by any noncompliance by the Company, with the terms and provisions
and covenants herein regardless of any knowledge thereof any such holder may
have or otherwise be charged with.
If a claim is made upon any holder or holders of Senior
Indebtedness for repayment or recovery of any amount (a "Voidable Transfer") on
account of any Senior Indebtedness under any state or federal law, whether by
reason of preference, fraudulent conveyance, or otherwise and if such holder or
holders of Senior Indebtedness repay all or a portion of such amounts by reason
of (a) any judgment, decree, or order of any court or administrative body having
jurisdiction over such holder or holders, or (b) any settlement or compromise of
any claim effected by such holder or holders based upon the reasonable advice of
counsel, then, as to the amount that has been repaid, the provisions of this
Article 11 automatically shall be reinstated and restored and the amount so
repaid shall constitute Senior Indebtedness entitled to the benefits of this
Article 11 as if such Voidable Transfer never had been made.
The provisions of this Article 11 are intended to be for the
benefit of, and shall be enforceable directly by, the present and future holders
of Senior Indebtedness.
SECTION 11.5. AUTHORIZATION TO TRUSTEE TO TAKE ACTION TO EFFECTUATE
SUBORDINATION.
Each Holder of Securities by his acceptance thereof authorizes
and directs the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate, as between the holders of Senior Indebtedness and the
Holders, the subordination as provided in this Article 11 and appoints the
Trustee his attorney-in-fact for any and all such purposes. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness,
the distribution or notice may be made to the representatives and agents of such
holders of Senior Indebtedness as such agents or representatives are identified
by such holders in writing to the Trustee.
SECTION 11.6. SUBROGATION.
Subject to the payment in full of all amounts payable under or
in respect of Senior Indebtedness, the Holders shall be subrogated to the rights
of the holders of such Senior Indebtedness to receive payments or distributions
of assets of the Company made on such Senior Indebtedness until the Securities
shall be paid in full in cash; and for the purposes of such subrogation, no
payments or distributions to holders of such Senior Indebtedness of any cash,
property or securities to which Holders of the Securities would be entitled
except for the provisions of this Article 11, and no payment pursuant to the
provisions of this Article 11 to holders of such Senior Indebtedness by the
Holders, shall, as between the Company, its creditors other than holders of such
Senior Indebtedness and the Holders, be deemed to be a payment by the Company to
or on
-70-
account of such Senior Indebtedness, it being understood that the provisions of
this Article 11 are solely for the purpose of defining the relative rights of
the holders of such Senior Indebtedness, on the one hand, and the Holders, on
the other hand.
If any payment or distribution to which the Holders would
otherwise have been entitled but for the provisions of this Article 11 shall
have been applied, pursuant to the provisions of this Article 11, to the payment
in full of all amounts payable under the Senior Indebtedness, and if a surplus
remains after such payment, then and in such case, the Holders shall be entitled
to receive from the holders of such Senior Indebtedness at the time outstanding
any payments or distributions received by such holders of Senior Indebtedness in
excess of the amount sufficient to pay in full all amounts payable under or in
respect of such Senior Indebtedness.
SECTION 11.7. OBLIGATIONS OF COMPANY UNCONDITIONAL.
Nothing contained in this Article 11 or elsewhere in this
Indenture or in any Security is intended to or shall impair, as between the
Company and the Holders, the obligations of the Company, which are absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon Default under this Indenture, subject to the rights, if any, under this
Article 11 of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company received upon the exercise of any such
remedy.
The failure to make a payment on account of principal of,
premium, if any, or interest on, the Securities by reason of any provision of
this Article 11 shall not be construed as preventing the occurrence of an Event
of Default under Section 6.1.
SECTION 11.8. THE TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED IN
ABSENCE OF NOTICE.
The Trustee or Paying Agent shall not at any time be charged
with the knowledge of the existence of any facts which would prohibit the making
of any payment to or by the Trustee or Paying Agent, unless and until the
Trustee or Paying Agent shall have received written notice thereof from the
Company or one or more holders of Senior Indebtedness or from any trustee or
agent therefor; and, prior to the receipt of any such written notice, the
Trustee or Paying Agent shall be entitled to assume conclusively that no such
facts exist. Unless at least three Business Days prior to the date on which by
the terms of this Indenture any monies are to be deposited by the Company with
the Trustee or any Paying Agent (whether or not in trust) for any purpose
(including, without limitation, the payment of the principal of, premium, if
any, or the interest on, any Security), the Trustee or Paying Agent shall have
received with respect to such monies the notice provided for in the preceding
sentence, the Trustee or Paying Agent shall have full power and authority to
receive such monies and to apply the same to the purpose for which they were
received, and shall not be
-71-
affected by any notice to the contrary which may be received by it on or after
such date, except for an acceleration of the Securities prior to such
application. The foregoing shall not apply to the Paying Agent if the Company is
acting as Paying Agent. Nothing contained in this Section 11.8 shall limit the
right of the holders of Senior Indebtedness to recover payments as contemplated
by Section 11.2. The Trustee shall be entitled to rely on the delivery to it of
a written notice by a person representing himself, herself or itself to be a
holder of such Senior Indebtedness (or a trustee on behalf of, or other
representative of, such holder) to establish that such notice has been given by
a holder of such Senior Indebtedness or a trustee on behalf of any such holder.
Nothing in this Article 11 shall apply to amounts due the Trustee pursuant to
Section 7.7 herein.
SECTION 11.9. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee and any agent for the holders of Senior
Indebtedness shall be entitled to all of the rights set forth in this Article 11
in respect of any Senior Indebtedness at any time held by it to the same extent
as any other holder of such Senior Indebtedness, and nothing in this Indenture
shall be construed to deprive the Trustee or any agent for the holders of Senior
Indebtedness of any of its rights as such holder.
SECTION 11.10. NO IMPLIED COVENANTS BY OR OBLIGATIONS OF THE TRUSTEE.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article 11, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Article 11 against the Trustee. The Trustee shall not be
deemed to have any fiduciary duty to the holders of the Senior Indebtedness.
SECTION 11.11. EXISTING SENIOR SUBORDINATED INDEBTEDNESS.
The Securities shall rank, as to all matters, PARI PASSU with
the Company's outstanding 14% Senior Subordinated Notes due 2001, Series B.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by operation of subsection (c) of Section 318
of the TIA, the imposed duties shall control.
SECTION 12.2. NOTICES.
Any notice or communication by the Company, the Trustee or any
Senior Representative to the others is duly given if in writing and delivered in
person or mailed by first-
-72-
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:
If to the Company:
Southdown, Inc.
1200 Smith Street, Suite 2400
Houston, Texas 77002
Attention: Chief Financial Officer
Telephone No.: (713) 650-6200
Telecopier No.: (713) 653-8010
If to the Trustee:
By Mail:
State Street Bank and Trust Company
P. O. Box 778
Boston, Massachusetts 02102
Attention: Corporate Trust Department
By Hand:
State Street Bank and Trust Company
Two International Place -- 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Window
Telephone No.: (617) 664-5667
Telecopier No.: (617) 664-5371
With a copy to:
State Street Bank and Trust Company
c/o State Street Bank and Trust Company, N.A.
61 Broadway
New York, New York 10006
If to any Senior Representative, to such address as such
Senior Representative may by notice to the others designate.
-73-
The Company, any other obligor upon the Securities or the
Trustee or any Senior Representative by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to
Securityholders) shall be deemed to have been duly given: at the time delivered
by hand, if personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; when answered back, if telexed; when
receipt acknowledged, if telecopied; and the next Business Day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication to a Securityholder shall be
mailed by first-class mail to his address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company (or any other obligor upon the Securities)
mails a notice or communication to Securityholders, it shall mail a copy to the
Trustee and each Agent at the same time.
SECTION 12.3. COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.
Securityholders may communicate pursuant to TIA ss. 312(b)
with other Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA ss. 312(c).
SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company (or any other
obligor upon the Securities) to the Trustee to take any action under this
Indenture, the Company (or such other obligor) shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 12.5 hereof) stating that, in the
opinion of the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an opinion of Counsel (which shall include the
statements set forth in Section 12.5 hereof) stating that, in the
opinion of such counsel, all such conditions precedent and covenants
have been complied with.
-74-
SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA ss. 314(a)(4)) shall include:
(1) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements contained in
such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with.
SECTION 12.6. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Securityholders. The Registrar or Paying Agent may make reasonable
rules and set reasonable requirements for its functions.
SECTION 12.7. LEGAL HOLIDAYS.
If any specified date for making payment is not a Business
Day, payment may be made on the next succeeding Business Day without any accrual
of interest for the intervening period and without penalty of any kind.
SECTION 12.8. NO RECOURSE AGAINST OTHERS.
No past, present or future director, officer, employee or
stockholder of the Company, as such, shall have any liability for any
obligations of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Securityholder by accepting a Security waives and releases all
such liability. This waiver and release is part of the consideration for the
issuance of the Securities.
SECTION 12.9. GOVERNING LAW.
The laws of the State of New York (applicable to contracts
made and to be performed entirely within such State) shall govern and be used to
construe this Indenture and the Securities.
-75-
SECTION 12.10. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or a Subsidiary. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 12.11. SUCCESSORS.
All agreements of the Company in this Indenture and the
Securities shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 12.12. SEVERABILITY.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 12.13. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement. One signed copy is enough to prove this Indenture.
SECTION 12.14. VARIABLE PROVISIONS.
The Company initially appoints the Trustee as Paying Agent and
Registrar and custodian with respect to any Global Securities.
SECTION 12.15. QUALIFICATION OF INDENTURE.
The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all reasonable costs and expenses (including attorneys' fees for
the Company and the Trustee) incurred in connection therewith, including, but
not limited to, costs and expenses of qualification of this Indenture and the
Securities and printing this Indenture and the Securities. The Trustee shall be
entitled to receive from the Company any such Officers' Certificates, Opinions
of Counsel or other documentation as it may reasonably request in connection
with any such qualification of this Indenture under the TIA.
SECTION 12.16. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
-76-
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written above.
SOUTHDOWN, INC.
By: ___________________________
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
TRUSTEE
By: ___________________________
Name:
Title:
-76-
EXHIBIT A
FORM OF SECURITY
[FRONT SIDE]
SOUTHDOWN, INC.
10% SENIOR SUBORDINATED NOTES[, SERIES B1]
DUE 2006
CUSIP _________
No. $__________
SOUTHDOWN, INC., a Louisiana corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received promises to pay to______________________________________
_______ or registered assigns, the principal sum of ____________________________
_____________ Dollars [or such lesser amount as indicated on the schedule of
exchanges of definitive Securities,2] on March 1, 2006.
Reference is made to the further provisions of this Security
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Interest Payment Dates: March 1 and September 1
Record Dates: February 15 and August 15
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers and its
corporate seal or a facsimile thereof to be affixed hereto or imprinted hereon.
Dated:___________ , 19__
[SEAL] SOUTHDOWN, INC.
By:______________________________
By:______________________________
- ------------
1 To be included on Exchange Notes only.
2 This phrase to be included only if the Security is in Global form.
A-1
Certificate of Authentication:
STATE STREET BANK AND TRUST COMPANY, as Trustee certifies that this is one of
the Securities referred to in the within-mentioned Indenture:
By:__________________________
Authorized Signature
A-2
[REVERSE SIDE]
SOUTHDOWN, INC.
10% SENIOR SUBORDINATED NOTES
DUE 2006[, SERIES B3]
This Security is one of a duly authorized issue of 10% Senior
Subordinated Notes due 2006[, Series B3] of Southdown, Inc., a Louisiana
corporation.
1. INTEREST. The Company promises to pay interest on the
principal amount of this Security at the rate per annum shown above. The Company
will pay interest semi-annually on March 1 and September 1 of each year, or if
any such date is not a Business Day, the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 19, 1996; PROVIDED, that the first interest payment date shall be
September 1, 1996. The Company shall pay interest on overdue principal and on
overdue installments of interest at the rate stated above, to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
2. METHOD OF PAYMENT. On or prior to an Interest Payment
Date, the Company shall irrevocably deposit with the Trustee or the Paying Agent
money sufficient to pay such interest. The Paying Agent will pay from such
monies interest on the Securities (except defaulted interest) to the Persons who
are registered Holders of Securities at the close of business on the record date
next preceding the Interest Payment Date, even if such Securities are canceled
after such record date and on or before such Interest Payment Date, except as
provided in the Indenture. Subject to the foregoing, each Security delivered
under the Indenture upon registration of transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security. The Holder
must surrender this Security to a Paying Agent to collect principal payments.
The Company will pay principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose in the City of New York in
money of the United States that at the time of payment is legal tender for
payment of public and private debts. The Company, at its option, may pay
interest by check payable in such money mailed to a Holder's registered address.
3. PAYING AGENT AND REGISTRAR. Initially, State Street
Bank and Trust Company, as Trustee ("Trustee," which term shall include any
successor trustee under the Indenture hereinafter referred to), will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-registrar without notice to any Securityholder, and the Company and any of
its subsidiaries may act in any such capacity.
- ------------
3 To be included on Exchange Notes only.
A-3
4. INDENTURE. The Company issued the Securities under an
Indenture dated as of March 19, 1996 (as it may be amended from time to time in
accordance with the terms thereof, the "Indenture") between the Company and the
Trustee. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the TIA. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
such Act for a statement of such terms. Unless otherwise defined herein, all
terms used in this Security which are defined in the Indenture shall have the
meanings assigned to them in the Indenture. The Securities are unsecured general
obligations of the Company limited to $125,000,000 in aggregate principal
amount.
5. OPTIONAL REDEMPTION. The Company may redeem all or
any of the Securities at any time on or after March 1, 2001, at the Redemption
Prices (expressed as a percentage of the principal amount) set forth below, if
redeemed during the 12-month period beginning March 1 of the years indicated
below:
YEAR PERCENTAGE
----- ----------
2001........................................................... 105.000%
2002........................................................... 103.333%
2003........................................................... 101.667%
2004 and thereafter............................................ 100.000%
in each case together with accrued and unpaid interest to the Redemption Date.
6. NOTICE OF REDEMPTION. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the Redemption Date to
each Holder of Securities to be redeemed at its registered address. Securities
in denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000, unless all of the Securities held by a Holder are to be
redeemed. On and after the Redemption Date interest ceases to accrue on
Securities or portions of them called for redemption.
7. NO MANDATORY REDEMPTION. There is no sinking fund
with respect to the Securities.
8. REPURCHASE OF SECURITIES AT THE OPTION OF THE HOLDER.
Subject to the terms and conditions of the Indenture, (a) if any Change of
Control occurs, the Company will be required, subject to its prior compliance
with certain covenants in respect of Senior Indebtedness, to offer to purchase
each Holder's Securities as provided in the Indenture for a purchase price equal
to 101% of the principal amount thereof plus accrued and unpaid interest to the
purchase date, and (b) if the Company consummates any Asset Sale, the Company
may be required to utilize a certain portion of the proceeds received from such
Asset Sale to offer to repurchase Securities at a price equal to 100% of the
principal amount plus accrued and unpaid interest to the purchase date.
9. SUBORDINATION. The Securities are subordinated to
Senior Indebtedness which includes (with certain exceptions) the principal of,
and premium, if any, and interest on (including
A-4
interest accruing after the filing of a petition initiating any proceeding under
any state or federal bankruptcy law, whether or not a claim for such interest is
allowed or allowable in such proceeding) on, and all fees, indemnities,
reimbursement obligations in connection with letters of credit and other
monetary obligations of the Company in respect of, any Indebtedness of the
Company, whether outstanding on the date of the Indenture or thereafter created,
incurred or assumed, unless, in the case of any particular Indebtedness, the
instrument creating or evidencing, or the agreement governing, such Indebtedness
or pursuant to which such Indebtedness is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to the Securities. To
the extent provided in the Indenture, Senior Indebtedness must be paid before
the Securities may be paid. The Company agrees, and each Securityholder by
accepting a Security agrees, to the subordination and authorizes the Trustee to
give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are
in registered form without coupons in denominations of $1,000 and in integral
multiples of $1,000. The transfer of Securities may be registered and Securities
may be exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not exchange or register the transfer of any
Security or portion of a Security selected for redemption. Also, it need not
exchange or register the transfer of any Securities during a period beginning at
the opening of business on a Business Day 15 days before the mailing of a notice
of redemption of Securities and ending at the close of business on the day of
such mailing or during the period between a record date and the next succeeding
interest payment date.
11. PERSONS DEEMED OWNERS. The registered Holder of a
Security shall be treated as its owner for all purposes and neither the Company,
the Trustee nor any agent shall be affected by any notice to the contrary.
12. AMENDMENTS AND WAIVERS. Subject to certain
exceptions, the Indenture or the Securities may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
Securities then outstanding, or compliance by the Company with any provision of
the Indenture or the Securities may be waived with the consent of the Holders of
at least a majority in principal amount of the Securities then outstanding;
PROVIDED, HOWEVER, that without the consent of each Holder affected thereby, the
Company may not (i) reduce the percentage of aggregate principal amount of the
Securities outstanding whose Holders must consent to any modification,
amendment, supplement or waiver; (ii) reduce the rate or change the time for
payment of interest, including defaulted interest, on any Security; (iii) reduce
the principal amount of any Security or extend the maturity date of the
Securities; (iv) reduce the Redemption Price, including premium, if any, payable
upon redemption of any Security or change the time at which any Security may be
redeemed; (v) reduce the repurchase price, including premium, if any, payable
upon the repurchase of any Security under, or change the time at which
Securities must be repurchased pursuant to, a Change of Control Offer or a Net
Proceeds Offer; (vi) change the currency of payment of principal of, premium, if
any, or interest on, any Security; (vii) impair the right to institute suit for
the enforcement of any payment of principal of, premium, if any, or interest on,
any Security; or (viii) waive a continuing Default or Event of Default in the
payment of principal of, premium, if
A-5
any, or interest on, the Securities (except a recision of acceleration of the
Securities set forth under Section 6.2(b) of the Indenture and a waiver of the
payment default that resulted from such acceleration).
Notwithstanding the foregoing, without the consent of any
Holder of Securities, the Company and the Trustee may amend or supplement the
Indenture or the Securities to (i) cure any ambiguity, defect or inconsistency,
(ii) provide for the assumption of the Company's obligations to Holders of
Securities in the case of a transaction made in accordance with Article 5 of the
Indenture, (iii) comply with any requirements of the Commission in order to
effect or maintain the qualification of the Indenture under the TIA, (iv)
provide for uncertificated Securities in addition to or in place of certificated
Securities, (v) make any change that would provide any additional rights or
benefits to Holders of Securities or that does not adversely affect the legal
rights under the Indenture of any such Holder, (vi) evidence or to provide for a
replacement Trustee under Section 7.8 of the Indenture, or (vii) to add to the
covenants and agreements of the Company for the benefit of the Holders and to
surrender any right or power reserved in the Indenture to the Company.
13. DEFAULTS AND REMEDIES. Events of Default include:
Default in payment of interest on the Securities for 30 days; Default in payment
of principal and premium, if any, on the Securities; failure by the Company to
comply with any of its other agreements in the Indenture or the Securities
(generally, for 60 days after written notice); certain payment defaults under
and accelerations of other indebtedness; certain final judgments which remain
undischarged; and certain events of bankruptcy or insolvency. If an Event of
Default occurs and is continuing, the Trustee or the Holders of not less than
25% in principal amount of the then outstanding Securities may declare all the
Securities to be due and payable as provided in the Indenture, except that in
the case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Securities become due and payable immediately
without declaration or other act. The Trustee may require indemnity satisfactory
to it before it enforces the Indenture or the Securities. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Securities may direct the Trustee in its exercise of any trust or power. The
Company must furnish an annual compliance certificate to the Trustee.
14. TRUSTEE DEALINGS WITH COMPANY. Subject to certain
limitations, the Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates, as if it were not Trustee.
15. NO RECOURSE AGAINST OTHERS. No past, present or
future director, officer, employee, agent or stockholder, as such, of the
Company shall have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Securityholder by accepting a
Security waives and releases all such liability. The waiver and release are part
of the consideration for the issuance of the Securities.
16. AUTHENTICATION. This Security shall not be valid
until authenticated by the manual signature of the Trustee or an authenticating
agent.
A-6
17. ABBREVIATIONS. Customary abbreviations may be used in
the name of a Securityholder or an assignee, such as: TEN COM (= tenants in
common), TENANT (= tenants by the entireties), JT TEN (= joint tenants with
right of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
18. UNCLAIMED MONEY. If money for the payment of
principal or interest remains unclaimed for certain periods, the Trustee or
Paying Agent will pay the money back to the Company. After that, Holders
entitled to such money must look to the Company for payment.
19. DISCHARGE PRIOR TO MATURITY. If the Company at any
time deposits with the Trustee or Paying Agent cash or U.S. Government
Obligations sufficient to pay the principal of and interest on the Securities to
maturity and satisfies certain conditions specified in the Indenture, the
Company will be discharged from the Indenture and the Securities, or may
terminate some or all of its obligations thereunder, except for certain Sections
thereof.
20. SUCCESSOR. When a successor to the Company assumes
all the obligations of its predecessor under the Securities and the Indenture as
provided in the Indenture, such predecessor shall be released from those
obligations.
21. GOVERNING LAW. This Security shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
The Company will furnish to any Securityholder upon written
request and without charge a copy of the Indenture. Request may be made to:
Southdown, Inc.
Attention: Chief Financial Officer
1200 Smith Street, Suite 2400
Houston, Texas 77002
A-7
ASSIGNMENT FORM
To assign this Security, 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_________________________________________________________
_______________________________________as agent to transfer this Security on the
books of the Company. The agent may substitute another to act for him.
Date:_________________
Your Signature:________________________________
(Sign exactly as your name
appears on the face of this
Security)
Signature Guarantee:____________________________________________________________
(Participant in recognized Signature Guarantee Medallion
Program)
A-8
[[4]CERTIFICATE TO BE DELIVERED UPON [ ] EXCHANGE OF A BENEFICIAL INTEREST IN
THE GLOBAL SECURITY FOR PHYSICAL SECURITIES OR [ ] EXCHANGE OR REGISTRATION OF
TRANSFER OF PHYSICAL SECURITIES
Re: 10% Senior Subordinated Notes due 2006 ("Notes") of Southdown, Inc.
This Certificate relates to $_____________ principal amount of
Securities currently registered in ________ book-entry or ____________
definitive form in the name of __________________________ (the "Transferor").
The Transferor:
[ ] has requested the Trustee by written order to deliver
in exchange for its beneficial interest in the Global Security held by the
Depository or the Trustee a Physical Security or Securities of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to
exchange or register the transfer of a Physical Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the Securities and as provided in such Indenture
the transfer of this Security does not require registration under the Securities
Act because:
(1) [ ] Such Security is being transferred to
Southdown, Inc.
(2) [ ] Such Security is being acquired for its own
account, without transfer.
(3) [ ] Such Security is being transferred pursuant to
an effective registration statement under the Securities Act.
(4) [ ] Such Security is being transferred to a
qualified institutional buyer (as defined in Rule 144A under the Securities Act)
in accordance with Rule 144A under the Securities Act.
(5) [ ] Such Security is being transferred pursuant to
the exemption from the registration requirements of the Securities Act provided
by Regulation S thereunder.*
- ------------
[4] This certificate to be included on Notes only.
A-9
(6) [ ] Such Security is being transferred to an
Institutional Accredited Investor that has furnished to the Trustee a signed
letter containing certain representations and agreements (the form of which can
be obtained from the Trustee).*
(7) [ ] Such Security is being transferred pursuant to
another available exemption from the registration requirements of the Securities
Act.*
* If box (5), (6) or (7) is checked, such transfer is subject
to the Transferor's having previously furnished to the Company and the Trustee
such certifications, legal opinions or other information requested to confirm
that such transfer is being made pursuant to an exemption from, or not in a
transaction subject to, the registration requirements of the Securities Act,
such as the exemption provided by Rule 144 thereunder.
___________________________
(Insert name of Transferor)
By:________________________
Date:_______________________________
To be dated the date of
presentation or surrender]
A-10
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to elect to have all or any portion of this
Security purchased by the Company pursuant to Section 4.19 ("Change of Control
Offer") or Section 4.15 ("Net Proceeds Offer") of the Indenture, check the
applicable boxes:
[ ] Change of Control Offer: [ ] Net Proceeds Offer:
in whole [ ] in whole [ ]
in part [ ] in part [ ]
Amount to be Amount to be
purchased: $__________ purchased: $___________
Dated:________________________ Signature:________________________
(Sign exactly as your
name appears on the
other side of this
Security)
Signature
Guarantee:______________________________________________________________________
(Participant in recognized Signature Guarantee Medallion Program)
Social Security Number or
Taxpayer Identification Number:_________________________________________________
A-11
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES[5]
The following exchanges of a part of this Global Security for
Physical Securities have been made:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Principal Amount Signature of
Amount of decrease Amount of increase of this Global authorized officer
in Principal in Principal Security following of Trustee or
Amount of this Amount of this such decrease (or Securities
Date of Exchange Global Security Global Security increase) Custodian
________________________________________________________________________________________________________________
</TABLE>
- ------------
[5] This is to be included only if the Security is in global form.
A-12
EXHIBIT A-1
Private Placement Legend for Restricted Securities
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS
NOT A U.S. PERSON AND HAS ACQUIRED THE NOTE EVIDENCED HEREBY IN AN OFFSHORE
TRANSACTION PURSUANT TO REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT
IT WILL NOT WITHIN THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THE NOTE EVIDENCED
HEREBY RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY, EXCEPT (A) TO
SOUTHDOWN, INC. (THE "COMPANY"), (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (D) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO STATE STREET BANK AND TRUST
COMPANY, AS TRUSTEE, A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE EVIDENCED HEREBY
(THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH TRUSTEE), (E) PURSUANT TO
OFFERS OR SALES THAT OCCUR OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904
UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY TO THEM OF AN OPINION OF
COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM,
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY WITHIN THREE YEARS
AFTER THE ORIGINAL ISSUANCE OF SUCH NOTE, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO STATE STREET BANK AND TRUST COMPANY, AS TRANSFER
AGENT. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR AND IN
CERTAIN OTHER CASES NOTED ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE COMPANY AND STATE STREET BANK
A-13
AND TRUST COMPANY, AS TRANSFER AGENT, SUCH CERTIFICATIONS, LEGAL OPINIONS OR
OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED
AFTER THE EXPIRATION OF THREE YEARS FROM THE ORIGINAL ISSUANCE OF THE NOTE
EVIDENCED HEREBY. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM IN
REGULATION S UNDER THE SECURITIES ACT.
A-14
EXHIBIT B
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder
shall bear a legend (which would be in addition to any other legends required in
the case of a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS
SECURITY IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS
SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE 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) MAY
BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("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.
B-1
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON [ ] EXCHANGE OF A BENEFICIAL INTEREST IN THE
GLOBAL SECURITY FOR PHYSICAL SECURITIES OR [ ] EXCHANGE OR REGISTRATION OF
TRANSFER OF PHYSICAL SECURITIES
Re: 10% Senior Subordinated Notes Due 2006 ("Notes") of Southdown, Inc.
This Certificate relates to $_____________ principal amount of
Securities currently registered in ________ book-entry or ____________
definitive form in the name of __________________________ (the "Transferor").
The Transferor:
[ ] has requested the Trustee by written order to deliver
in exchange for its beneficial interest in the Global Security held by the
Depository or the Trustee a Physical Security or Securities of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
[ ] has requested the Trustee by written order to
exchange or register the transfer of a Physical Security or Securities.
In connection with such request and in respect of each such
Security, the Transferor does hereby certify that the Transferor is familiar
with the Indenture relating to the Securities and as provided in such Indenture
the transfer of this Security does not require registration under the Securities
Act because:
(1) [ ] Such Security is being transferred to
Southdown, Inc.
(2) [ ] Such Security is being acquired for its own
account, without transfer.
(3) [ ] Such Security is being transferred pursuant to
an effective registration statement under the Securities Act.
(4) [ ] Such Security is being transferred to a
qualified institutional buyer (as defined in Rule 144A under the Securities Act)
in accordance with Rule 144A under the Securities Act.
(5) [ ] Such Security is being transferred pursuant to
the exemption from the registration requirements of the Securities Act provided
by Regulation S thereunder.*
C-1
(6) [ ] Such Security is being transferred to an
Institutional Accredited Investor that has furnished to the Trustee a signed
letter containing certain representations and agreements (the form of which can
be obtained from the Trustee).*
(7) [ ] Such Security is being transferred pursuant to
another available exemption from the registration requirements of the Securities
Act.*
* If box (5), (6) or (7) is checked, such transfer is subject
to the Transferor's having previously furnished to the Company and the Trustee
such certifications, legal opinions or other information requested to confirm
that such transfer is being made pursuant to an exemption from, or not in a
transaction subject to, the registration requirements of the Securities Act,
such as the exemption provided by Rule 144 thereunder.
___________________________
(Insert name of Transferor)
By:________________________
Date:_______________________________
To be dated the date of
presentation or surrender
C-2
EXHIBIT D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
State Street Bank and Trust Company _____________,_______
c/o State Street Bank and Trust Company, N.A.
61 Broadway
New York, New York 10006
Attention: Corporate Trust Department
State Street Bank and Trust Company
Two International Place -- 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Window
Re: SOUTHDOWN, INC. (THE "COMPANY")
10% SENIOR SUBORDINATED NOTES DUE 2006
Dear Sirs:
In connection with our proposed purchase of 10% Senior
Subordinated Notes due 2006 (the "Securities") of the Company, we confirm that:
1. We understand that any subsequent transfer of the
Securities is subject to certain restrictions and conditions set forth
in the Indenture dated as of March 19, 1996 relating to the Securities
(the "Indenture") and the undersigned agrees to be bound by, and not to
resell, pledge or otherwise transfer the Securities except in
compliance with such restrictions and conditions and the Securities Act
of 1933, as amended (the "Securities Act").
2. We understand that the Securities have not been
registered under the Securities Act or any other applicable securities
law, and that the Securities may not be offered, sold or otherwise
transferred except as permitted in the following sentence. We agree,
on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, that if we should offer, sell, transfer,
pledge, hypothecate or otherwise dispose of any Securities within
three years after the original issuance of the Securities, we will do
so only (A) to the Company, (B) pursuant to a registration statement
which has been declared effective under the Securities Act, (C) inside
the United States to a "qualified
D-1
institutional buyer" in compliance with Rule 144A under the Securities
Act, (D) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes to
you a signed letter substantially in the form of this letter, (E)
outside the United States to a foreign person in compliance with Rule
904 of Regulation S under the Securities Act, or (F) pursuant to
another available exemption from the registration requirements of the
Securities Act, and we further agree to provide to any person
purchasing any of the Securities from us a notice advising such
purchaser that resales of the Securities are restricted as stated
herein and in the Indenture.
3. We understand that, on any proposed transfer of any
Securities prior to March 19, 1999 pursuant to paragraphs 2(D), 2(E)
and 2(F) above, we will be required to furnish to you and the Company
such certifications, legal opinions and other information as you and
the Company may reasonably require to confirm that the proposed
transfer complies with the foregoing restrictions. We further
understand that the Securities purchased by us will bear a legend to
the foregoing effect.
4. We are an institutional "accredited investor" (as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act)
and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Securities, and we and any accounts for which we are
acting are acquiring the Securities for investment purposes and not
with a view to, or offer of sale in connection with, any distribution
in violation of the Securities Act, and we are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Securities purchased by us for
our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise
sole investment discretion.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:_____________________________________
Authorized Signature
D-2
EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED
IN CONNECTION WITH TRANSFERS
PURSUANT TO REGULATION S
State Street Bank and Trust Company ____________, ____
c/o State Street Bank and Trust Company, N.A.
61 Broadway
New York, New York 10006
Attention: Corporate Trust Department
State Street Bank and Trust Company
Two International Place -- 4th Floor
Boston, Massachusetts 02110
Attention: Corporate Trust Window
Re: SOUTHDOWN, INC. (THE "COMPANY")
10% SENIOR SUBORDINATED NOTES DUE 2006
Dear Sirs:
In connection with our proposed sale of 10% Senior
Subordinated Notes due 2006 (the "Securities") of the Company, we confirm that
such sale has been effected pursuant to and in accordance with Regulation S
under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, we represent that:
(1) the offer of the Securities was not made to a person
in the United States;
(2) either (a) at the time the buy offer was originated,
the transferee was outside the United States or we and any person
acting on our behalf reasonably believed that the transferee was
outside the United States, or (b) the transaction was executed in, on
or through the facilities of a designated off-shore securities market
and neither we nor any person acting on our behalf knows that the
transaction has been prearranged with a buyer in the United States;
E-1
(3) no directed selling efforts have been made in the
United States in contravention of the requirements of Rule 903(b) or
Rule 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Securities.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:__________________________________
Authorized Signature
E-2
EXHIBIT 4.2
SOUTHDOWN, INC.
$125,000,000
10% Senior Subordinated Notes due 2006
REGISTRATION RIGHTS AGREEMENT
March 19, 1996
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
C/O LEHMAN BROTHERS INC.
3 World Financial Center
New York, New York 10285
Ladies and Gentlemen:
SOUTHDOWN, INC., a Louisiana corporation (the "Company"), proposes
to issue and sell to Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (the "Initial Purchasers"), upon the terms set forth in a
purchase agreement dated March 13, 1996 (the "Purchase Agreement"), $125,000,000
aggregate principal amount of its 10% Senior Subordinated Notes due 2006 (the
"Notes"). The Notes will be issued pursuant to an indenture (the "Indenture")
between the Company and State Street Bank and Trust Company, as trustee (the
"Trustee"), dated as of March 19, 1996, substantially in the form previously
furnished to the Initial Purchasers. As an inducement to the Initial Purchasers
to purchase the Notes under the Purchase Agreement, the Company agrees with the
Initial Purchasers, for the benefit of the holders of the Notes (including,
without limitation, the Initial Purchasers as holders of the Notes), as follows:
1. DEFINITIONS. As used in this Agreement, the following capitalized
terms shall have the following meanings:
ADDITIONAL INTEREST: As defined in Section 7(a) hereof.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: Exchange Notes that
are acquired by a Broker-Dealer in the Exchange Offer in exchange for Notes that
such Broker-Dealer acquired for
1
its own account as a result of market-making activities or other trading
activities (other than Notes acquired directly from the Company or any of its
affiliates).
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
CLOSING DATE: The date on which the Company delivers the Notes to
the Initial Purchasers.
COMMISSION: The Securities and Exchange Commission.
COMPANY: As defined in the initial paragraph of this Agreement.
COMPANY INDEMNIFIED PARTY: As defined in Section 6(b) hereof.
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Securities Act of the Exchange Offer Registration
Statement relating to the Exchange Notes to be issued in the Exchange Offer, (b)
the maintenance of the Exchange Offer Registration Statement continuously
effective during, and the keeping of the Exchange Offer open for, a period not
less than the minimum period required pursuant to Section 2(b) hereof, and (c)
the delivery by the Company to the Trustee under the Indenture of Exchange Notes
in the same aggregate principal amount as the aggregate principal amount of
Notes tendered by Holders thereof pursuant to the Exchange Offer.
DEPOSITARY: The Trustee, or any other exchange agent appointed by
the Company.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE NOTES: The Company's 10% Senior Subordinated Notes due
2006, Series B, to be issued pursuant to the Indenture in the Exchange Offer.
EXCHANGE OFFER: The registration by the Company under the Securities
Act of the Exchange Notes pursuant to the Exchange Offer Registration Statement,
pursuant to which the Company shall offer the Holders of all outstanding
Transfer Restricted Securities the opportunity to exchange all such outstanding
Transfer Restricted Securities for Exchange Notes in an aggregate principal
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
EXCHANGE OFFER DETERMINATION DATE: As defined in Section 3(a)
hereof.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
2
HOLDER: Any holder of Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities.
IDENTIFIED BROKER-DEALER: As defined in Section 4(c)(v) hereof.
INDEMNIFIED PARTY: As defined in Section 6(c) hereof.
INDENTURE: As defined in the initial paragraph of this Agreement.
INITIAL PURCHASER: As defined in the initial paragraph of this
Agreement.
NASD: National Association of Securities Dealers, Inc.
NOTES: As defined in the initial paragraph of this Agreement.
PERSON: An individual, partnership, corporation, limited liability
company, trust, unincorporated organization, or a government or agency or
political subdivision thereof.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
PURCHASE AGREEMENT: As defined in the initial paragraph of this
Agreement.
REGISTRATION STATEMENT: Any registration statement of the Company
relating to (a) an offering of Exchange Notes pursuant to a Exchange Offer or
(b) the registration for resale of Transfer Restricted Securities pursuant to
the Shelf Registration Statement, in each case, (i) which is filed pursuant to
the provisions of this Agreement and (ii) including the Prospectus included
therein, all amendments and supplements thereto (including post-effective
amendments) and all exhibits and material incorporated by reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer that holds Broker-Dealer
Transfer Restricted Securities.
SECURITIES ACT: The Securities Act of 1933, as amended.
SELLER INDEMNIFIED PARTIES: As defined in Section 6(a) hereof.
SELLING HOLDER: As defined in Section 4(c)(ii) hereof.
SHELF REGISTRATION: As defined in Section 3(a) hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 3(a) hereof.
3
SUSPENSION EVENT: As defined in Section 4(e) hereof.
SUSPENSION EVENT NOTICE: As defined in Section 4(e) hereof.
SUSPENSION PERIOD: As defined in Section 4(e) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section
77aaa-77bbbb), as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
the Exchange Note received therefor is entitled to be resold to the public by
the Holder thereof without complying with the prospectus delivery requirements
of the Securities Act, (b) the date on which such Note has been disposed of in
accordance with a Shelf Registration Statement, (c) the date on which such Note
is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including delivery of
the Prospectus contained therein) or (d) the date on which such Note is
distributed to the public pursuant to Rule 144 under the Securities Act.
TRUSTEE: As defined in the initial paragraph of this Agreement.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
2. EXCHANGE OFFER.
(a) Unless not permitted by applicable federal law (after the
procedures set forth in Section 4(a)(i) have been complied with), the Company
shall (i) prepare and, as promptly as practicable after the Closing Date but in
no event later than 30 days after the Closing Date, file or cause to be filed
with the Commission the Exchange Offer Registration Statement, (ii) use its
reasonable best efforts to cause such Exchange Offer Registration Statement to
become effective at the earliest possible time, but in no event later than 90
days after the Closing Date, (iii) in connection with the foregoing, (A) file
all pre-effective amendments to such Exchange Offer Registration Statement as
may be reasonably necessary in order to cause such Exchange Offer Registration
Statement to become effective, (B) file, if applicable, a post-effective
amendment to such Exchange Offer Registration Statement pursuant to Rule 430A
under the Securities Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Exchange Notes to be
made under the Blue Sky laws of such jurisdictions as are necessary to permit
Consummation of the Exchange Offer, and (iv) upon the effectiveness of such
Exchange Offer Registration Statement, promptly commence and Consummate the
Exchange Offer. The Exchange Offer Registration Statement shall be on the
appropriate form permitting registration of the Exchange Notes to be offered in
exchange for the Notes that are Transfer Restricted Securities and to permit
sales of Broker-Dealer Transfer Restricted Securities by Restricted
Broker-Dealers as contemplated by Section 2(c) below.
4
(b) The Company shall use its reasonable best efforts to cause the
Exchange Offer Registration Statement to be effective continuously during, and
shall keep the Exchange Offer open for a period not less than the minimum period
required under applicable federal and state securities laws to Consummate the
Exchange Offer; PROVIDED, HOWEVER, that in no event shall such period be less
than 20 Business Days. The Company shall use its best reasonable efforts to
cause the Exchange Offer to be Consummated on the earliest practicable date
after the Exchange Offer Registration Statement has become effective, but in no
event later than the later of 120 days following the Closing Date or 30 days
following the effective date of the Exchange Offer Registration Statement. The
Company shall cause the Exchange Offer to comply with all applicable federal and
state securities laws. No securities other than the Notes and the Exchange Notes
shall be included in the Exchange Offer Registration Statement.
(c) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter
of transmittal and related documents;
(ii) keep the Exchange Offer open for not less than 20 Business Days
after the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) use the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Notes at any time prior to
the close of business, New York City time, on the last business day on
which the Exchange Offer shall remain open, by sending to the institution
specified in the notice, a telegram, telex, facsimile transmission or
letter setting forth the name of such Holder, the principal amount of
Notes delivered for exchange (identifying such Notes) and a statement that
such Holder is withdrawing his election to have such Notes exchanged; and
(v) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer, the
Company shall:
(i) accept for exchange Notes duly tendered and not validly
withdrawn pursuant to the Exchange Offer in accordance with the terms of
the Exchange Offer Registration Statement and the letter of transmittal
which is an exhibit thereto;
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes so accepted for exchange by the Company; and
(iii) cause the Trustee promptly to authenticate and deliver
Exchange Notes to each Holder of Notes equal in principal amount to the
Notes of such Holder so accepted for exchange.
5
Interest on each Exchange Note will accrue from the last date on
which interest was paid or duly provided for on the Notes surrendered in
exchange therefor or, if no interest has been paid on the Notes, from March 19,
1996.
(d) The Company shall include a "Plan of Distribution" section in
the Prospectus contained in the Exchange Offer Registration Statement and
indicate therein that any Restricted Broker-Dealer who holds Notes that are
Transfer Restricted Securities and that were acquired for the account of such
Broker-Dealer as a result of market-making activities or other trading
activities may exchange such Notes (other than Transfer Restricted Securities
acquired directly from the Company or any affiliate of the Company) pursuant to
the Exchange Offer; however, such Broker-Dealer may be deemed to be an
"underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with its initial sale of each Exchange Note received by such
Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may
be satisfied by the delivery by such Broker-Dealer of the Prospectus contained
in the Exchange Offer Registration Statement. Such "Plan of Distribution"
section shall also contain all other information with respect to such sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers that
the Commission may require in order to permit such sales pursuant thereto, but
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
the amount of Notes held by any such Broker-Dealer, except to the extent
required by the Commission as a result of a change in policy after the date of
this Agreement.
The Company shall use its best reasonable efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 4(c) below to the extent
necessary to ensure that it is available for sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers, and to ensure that such
Registration Statement conforms with the requirements of this Agreement, the
Securities Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of one year from the date on which the
Exchange Offer Registration Statement is declared effective, or, if shorter,
until all Broker-Dealer Transfer Restricted Securities have been sold
thereunder. During such period, the Company shall provide sufficient copies of
the latest version of such Prospectus to such Restricted Broker-Dealers promptly
upon request at any time in order to facilitate such sales.
The Company may in the letter of transmittal used in the Exchange
Offer require each Broker-Dealer tendering Notes in the Exchange Offer to
indicate whether such Broker-Dealer acquired such Notes for its own account as a
result of market-making activities or other trading activities (other than Notes
acquired directly from the Company or any of its affiliates), and if no
Broker-Dealer indicates that such Notes were so acquired, the Company shall have
no obligation hereunder to maintain the effectiveness of the Exchange Offer
Registration Statement past the Consummation of the Exchange Offer. The Company
may also require in such letter of transmittal that any Holder indicate whether
such Holder would be a Holder described in Section 3(ii)(B). The Company also
may include in such letter of transmittal an agreement by each tendering Holder
that such Holder agrees to be bound by the provisions of this Agreement.
6
3. SHELF REGISTRATION. If (i) the Company is not required to file an
Exchange Offer Registration Statement with respect to the Exchange Notes because
the Exchange Offer is not permitted by applicable law (after the procedures set
forth in Section 4(a)(i) below have been complied with) or (ii) any Holder of
Transfer Restricted Securities shall notify the Company at any time prior to 20
Business Days following the Consummation of the Exchange Offer that (A) such
Holder was prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Exchange Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Notes acquired directly from the Company, then the
Company shall take the following actions:
(a) The Company (x) shall, as promptly as practicable, but in no
event later than 30 days after the date on which the Company determines that it
is not required to file the Exchange Offer Registration Statement pursuant to
clause (i) above or 30 days after the date on which the Company receives the
notice specified in clause (ii) above (the "Exchange Offer Determination Date"),
file or cause to be filed with the Commission a registration statement pursuant
to Rule 415 under the Securities Act (which may be an amendment to the Exchange
Offer Registration Statement) (in either event, the "Shelf Registration
Statement") relating to the offer and sale of (A) all Transfer Restricted
Securities, in the case of Shelf Registration Statement filed by reason of
clause (i) above, or (B) all Transfer Restricted Securities held by Holders
described in clauses (ii)(A) through (C) above, in the case of a Shelf
Registration Statement filed by reason of clause (ii) above, in either case, the
Holders of which shall have timely provided the information required pursuant to
Section 3(d) hereof (hereafter, the "Shelf Registration") and (y) shall use its
reasonable best efforts to cause such Shelf Registration Statement to become
effective on or prior to 90 days after the Exchange Offer Determination Date.
If, after the Company has filed an Exchange Offer Registration Statement which
satisfies the requirements of Section 2 above, the Company is required to file
and make effective a Shelf Registration Statement solely because the Exchange
Offer shall not be permitted under applicable federal law, then the filing of
the Exchange Offer Registration Statement shall be deemed to satisfy the
requirement of clause (x) above and shall constitute the filing of a Shelf
Registration Statement for purposes of Section 7(a)(i). Such an event shall have
no effect on the requirements of clause (y) above.
(b) The Company shall use its reasonable best efforts to keep the
Shelf Registration Statement continuously effective, supplemented and amended as
required by and subject to the provisions of Section 4(b) hereof in order to
permit the Prospectus included therein to be usable for sales of Transfer
Restricted Securities by the Holders thereof for a period of three years from
the Closing Date (or one year from such date in the case of a Shelf Registration
Statement filed solely at the request of the Initial Purchasers that hold
Transfer Restricted Securities acquired directly from the Company) or such
shorter period that will terminate when all the Transfer Restricted Securities
covered by the Shelf Registration Statement have been sold pursuant to such
Shelf Registration Statement or otherwise.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause the Shelf Registration Statement and the
related Prospectus and any
7
amendment or supplement thereto, as of the effective date of such Shelf
Registration Statement, amendment or supplement, as the case may be, (i) to
comply in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission and (ii) not to
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, other than statements or omissions made in reliance upon and in
conformity with information furnished to the Company in writing by any Holder
expressly for use in such Shelf Registration Statement and the related
Prospectus or any amendment or supplement thereto.
(d) No Holder of Transfer Restricted Securities may include any of
its Transfer Restricted Securities in any Shelf Registration Statement pursuant
to this Agreement unless and until such Holder furnishes to the Company in
writing, within 20 days after receipt of a request therefor, such information as
the Company may reasonably request for use in connection with any Shelf
Registration Statement or Prospectus or preliminary Prospectus included therein.
No Holder of Transfer Restricted Securities shall be entitled to Additional
Interest pursuant to Section 7 hereof (i) for the period during which its
failure to provide such information prevents or delays the filing or
effectiveness of the Shelf Registration Statement or (ii) if any or all of its
Transfer Restricted Securities are omitted from the Shelf Registration Statement
because of its failure to comply with the preceding sentence. No Holder
described in Section 3(ii)(B) shall be entitled to include any Exchange Notes in
the Shelf Registration Statement if it did not either (1) indicate in the letter
of transmittal used in the Exchange Offer that it would be a Holder described in
Section 3(ii)(B) or (2) notify the Company in writing prior to 20 Business Days
following the Consummation of the Exchange Offer that it is a Holder described
in Section 3(ii)(B). Each Holder as to which any Shelf Registration Statement is
being effected agrees to notify the Company as promptly as practicable of any
inaccuracy or change in information previously furnished by such Holder to the
Company or the happening of any event, in either case as a result of which the
Shelf Registration Statement or any Prospectus or preliminary Prospectus
included therein contains any untrue statement of a material fact regarding such
Holder or its distribution of Transfer Restricted Securities or omits to state
any material fact regarding such Holder or its distribution of Transfer
Restricted Securities required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading and to furnish promptly to the Company any additional
information (i) required to correct and update any previously furnished
information or (ii) required so that the Shelf Registration Statement or any
Prospectus shall not contain any untrue statement of such a material fact or any
omission to state such a material fact.
4. REGISTRATION PROCEDURES.
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company shall comply with all applicable provisions of
Section 4(c) below, shall use its best reasonable efforts to effect such
exchange and to permit the sale of Broker-Dealer Transfer Restricted Securities
being sold in accordance with the intended method or methods of distribution
thereof during the period set forth in Section 2(d), and shall comply with all
of the following provisions:
8
(i) If, following the date hereof, there has been published a change
in Commission policy with respect to exchange offers such as the Exchange Offer,
such that in the reasonable opinion of counsel to the Company there is a
substantial question as to whether the Exchange Offer is permitted by applicable
federal law, the Company hereby agrees to seek a noaction letter or other
favorable decision from the Commission allowing the Company to Consummate an
Exchange Offer. The Company hereby agrees to pursue the issuance of such a
decision to the Commission staff level but shall not be required to take
commercially unreasonable action to effect a change of Commission policy. In
connection with the foregoing, the Company hereby agrees to take all such other
actions as are reasonably requested by the Commission staff or otherwise
reasonably required in connection with the issuance of such decision, including
without limitation (A) participating in telephonic conferences with the
Commission staff, (B) delivering to the Commission staff an analysis prepared by
counsel to the Company setting forth the legal bases, if any, upon which such
counsel has concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the Commission
staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
(which may be contained in the letter of transmittal contemplated by the
Exchange Offer Registration Statement) to the effect that (A) it is not an
affiliate of the Company, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Exchange Notes to be issued in the
Exchange Offer and (C) it is acquiring the Exchange Notes in its ordinary course
of business. Each Broker-Dealer holding Notes acquired for its own account as a
result of market-making activities or other trading activities (other than Notes
acquired directly from the Company or any of its affiliates) shall also furnish
to the Company a written acknowledgment (which may be in such letter of
transmittal) that such Broker-Dealer shall deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale by it of
Broker-Dealer Transfer Restricted Securities, but that by so acknowledging and
by delivering a prospectus, such Broker-Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. In addition,
all such Holders of Transfer Restricted Securities shall otherwise reasonably
cooperate in the Company's preparations for the Exchange Offer. Each Holder
hereby acknowledges and agrees that any Broker-Dealer and any such Holder using
the Exchange Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the Commission
enunciated in MORGAN STANLEY AND CO., INC. (available June 5, 1991) and EXXON
CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and similar
noaction letters (including, if applicable, any no-action letter obtained
pursuant to clause 4(a)(i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction, which secondary resale transaction must be covered
by an effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K if the
resales are of Exchange Notes obtained by such Holder in exchange for Notes
acquired by such Holder directly from the Company or an affiliate thereof.
9
(iii) Prior to the effectiveness of the Exchange Offer Registration
Statement, the Company shall provide a supplemental letter to the Commission (A)
stating that the Company is registering the Exchange Offer in reliance on the
position of the Commission enunciated in EXXON CAPITAL HOLDINGS CORPORATION
(available May 13, 1988), MORGAN STANLEY AND CO., INC. (available June 5, 1991)
and, if applicable, any no-action letter obtained pursuant to clause 4(a)(i)
above, (B) including a representation that the Company has not entered into any
arrangement or understanding with any Person to distribute the Exchange Notes to
be received in the Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Exchange Offer is
acquiring the Exchange Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the distribution
of the Exchange Notes received in the Exchange Offer and (C) setting forth any
other undertaking or representation required by the Commission as set forth in
any no-action letter obtained pursuant to clause 4(a)(i) above.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Company shall comply with all the provisions of
Section 4(c) below and shall use its reasonable best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section 3(d)
hereof) during the period set forth in Section 3(b), and pursuant thereto the
Company will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Securities Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Exchange Offer Registration Statement and the related Prospectus, to the
extent that the same are required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the
Company shall take the following actions:
(i) The Company shall prepare and file with the Commission such
amendments and post-effective amendments to the Registration Statement as may be
necessary to keep the Registration Statement effective for the applicable period
set forth in Section 2 or 3 hereof, or such shorter period as will terminate
when all Transfer Restricted Securities covered by such Registration Statement
have been sold; cause the Prospectus to be supplemented by any required
Prospectus supplement and, as so supplemented, to be filed pursuant to Rule 424
under the Securities Act, and to comply fully with Rules 424, 430A and 462, as
applicable, under the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during the applicable period
in accordance with the intended method or methods of distribution by the sellers
thereof set forth in such Registration Statement or supplement to the
Prospectus.
(ii) The Company shall furnish to each Initial Purchaser, each
Selling Holder specifically named in any Registration Statement or Prospectus
contained in the Shelf Registration
10
Statement in connection with its sale of Notes (a "Selling Holder") and each of
the underwriters in connection with an Underwritten Offering, if any, prior to
the filing thereof with the Commission, a draft copy of any Registration
Statement and any Prospectus included therein or any amendments or supplements
to any such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment of such
Initial Purchasers, Selling Holders and underwriters in connection with such
sale, if any, for a period of at least five Business Days, and the Company will
not file any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including all such
documents incorporated by reference) to which the Initial Purchasers, Selling
Holders of the Transfer Restricted Securities covered by such Registration
Statement or the underwriters in connection with such sale, if any, shall
reasonably object within five Business Days after the receipt thereof. Such
Selling Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment, Prospectus or
supplement, as applicable, as proposed to be filed, contains a material
misstatement or omission which has been specifically identified by such Selling
Holder or underwriter or fails to comply with the applicable requirements of the
Securities Act.
(iii) Promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus, the
Company shall provide draft copies of such document to the Selling Holders and
to the underwriters in connection with such sale, if any, make the Company's
representatives available for discussion of such document and other customary
due diligence matters, and include such information in such document prior to
the filing thereof as such Selling Holders or underwriters, if any, reasonably
may request if the omission thereof would constitute an omission of a material
fact necessary to make the statements therein (or the statements in the
Prospectus into which such documents would be incorporated by reference), in
light of the circumstances under which they were made, not misleading; provided
that the Company may omit from the draft copy of any such document that is to be
so incorporated by reference after the effectiveness of such Registration
Statement which is to be provided to the Initial Purchasers, Selling Holders and
underwriters pursuant to this paragraph or the preceding paragraph such
information as would, in the Company's reasonable judgment, involve the
disclosure of confidential, non-public information.
(iv) If requested by any Selling Holders or the underwriters in
connection with such sale, if any, the Company shall promptly include in any
Registration Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such Selling Holders and
underwriters, if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with respect to
the principal amount of Transfer Restricted Securities being sold to such
underwriters, the purchase price being paid therefor and any other terms of the
offering of the Transfer Restricted Securities to be sold in such offering,
except to the extent the Company reasonably believes that the inclusion of such
information could result in a violation of the federal securities laws; and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the Company is notified of the matters to be
included in such Prospectus supplement or post-effective amendment.
11
(v) The Company shall notify the Initial Purchasers, the Selling
Holders and each of the underwriters in connection with such sale, if any, in
writing:
(A) when the Registration Statement and any amendment thereto
or Prospectus or Prospectus supplement has been filed with the
Commission and when the Registration Statement or any post-effective
amendment thereto has become effective;
(B) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information relating thereto;
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Transfer
Restricted Securities for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose; and
(E) of the occurrence of any event that requires the Company
to make changes in the Registration Statement, the Prospectus, any
amendment or supplement thereto or any document incorporated therein
by reference in order to make any statement of a material fact made
therein true or that 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 (which advice shall be
accompanied by a Suspension Notice); PROVIDED, HOWEVER, that such
notification need not specifically identify such event if notifying
the Initial Purchasers, the Selling Holders or the underwriters of
the occurrence thereof would, in the Company's reasonable judgment,
involve the disclosure of confidential, non-public information.
The Company shall also give notice of the matters in clause (C), (D)
and (E) to each Restricted Broker-Dealer that has specifically identified itself
as such in writing to the Company (for so long as it holds Broker-Dealer
Transfer Restricted Securities)("Identified Broker-Dealers").
(vi) If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Transfer
Restricted Securities under state securities or Blue Sky laws, the Company shall
use its reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(vii) The Company shall deliver to each of the Initial Purchasers,
to each Selling Holder and each of the underwriters in connection with such
sale, if any, and each Identified BrokerDealer, without charge, at least one
copy of the Registration Statement, as first filed with the Commission, and of
each amendment thereto, including financial statements and schedules, and if
12
requested, documents incorporated by reference therein and all exhibits
(including those incorporated by reference).
(viii) The Company shall deliver to each of the Initial Purchasers,
to each Selling Holder and each of the underwriters in connection with such
sale, if any, and each Identified BrokerDealer, without charge, as many copies
of the Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request. The Company hereby
consents to the use of the Prospectus and any amendment or supplement thereto by
each of the Selling Holders and each of the underwriters, if any, and each
Identified Broker-Dealer, in connection with the offering and the sale of the
Transfer Restricted Securities covered by the Prospectus or any amendment or
supplement thereto.
(ix) Prior to any public offering of Transfer Restricted Securities,
the Company shall register or qualify or cooperate with the Selling Holders, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Transfer Restricted Securities for offer
and sale under the securities or blue sky laws of such jurisdictions as any such
Holder or underwriter reasonably requests, and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the Transfer Restricted Securities covered by the applicable Registration
Statement; PROVIDED THAT the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it is not then so qualified
or (ii) take any action which would subject it to general service of process or
to taxation in any jurisdiction where it is not then so subject.
(x) In connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, the Company shall cooperate with the Selling Holders and the
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold and not
bearing any restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the Selling Holders or the
underwriters, if any, may request at least two (2) Business Days prior to the
sale of Transfer Restricted Securities.
(xi) Upon the occurrence of any event (i) contemplated by Section
4(c)(v)(E) above or (ii) that would cause any such Registration Statement or the
Prospectus contained therein not to be effective and usable for resale of
Transfer Restricted Securities during the period required by this Agreement, the
Company shall, subject to Section 4(c)(ii) hereof, promptly (but not to the
extent covered by Section 4(e)), (A) prepare a post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Transfer Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (B) use its best reasonable efforts to cause such
amendment to be declared effective and such Registration Statement and the
related Prospectus to become usable for their intended purpose(s) as soon as
practicable thereafter.
13
(xii) Not later than the effective date of the Exchange Offer
Registration Statement, the Company will provide a CUSIP number for the Exchange
Notes and provide the applicable trustee with printed certificates for the
Exchange Notes in a form eligible for deposit with The Depository Trust Company.
(xiii) The Company will use its reasonable best efforts to comply
with all rules and regulations of the Commission to the extent and so long as
they are applicable to the Exchange Offer or the Shelf Registration and will
make generally available to its securities holders within 18 months after the
effective date of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Securities Act.
(xiv) The Company shall cause the Indenture to be qualified under
the TIA not later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with the
Trustee and the Holders of Notes to effect such changes to the Indenture as may
be required for such Indenture to be so qualified in accordance with the terms
of the TIA and shall execute and use its reasonable best efforts to cause the
Trustee to execute all documents that may be required to effect such changes and
all forms and documents required to be filed with the Commission to enable such
Indenture to be so qualified in a timely manner.
(xv) The Company may require each Holder whose Notes are to be sold
pursuant to the Shelf Registration to furnish to the Company such information
regarding the Holder and the distribution of such Notes as the Company may from
time to time reasonably require for inclusion in the Shelf Registration
Statement.
(xvi) The Company shall enter into such agreements (including an
underwriting agreement) and make such representations and warranties and take
all such other actions in connection therewith in order to expedite or
facilitate the disposition of the Transfer Restricted Securities pursuant to any
Shelf Registration Statement contemplated by this Agreement as may be reasonably
requested by any Selling Holder of Transfer Restricted Securities or underwriter
in connection with any sale or resale pursuant to any Shelf Registration
Statement contemplated by this Agreement, and if the registration is an
Underwritten Registration, the Company shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its best
reasonable efforts to furnish) to each underwriter, upon the effectiveness
of the Shelf Registration Statement:
(1) a certificate, dated the date of effectiveness of the
Shelf Registration Statement, as the case may be, signed on behalf
of the Company by (x) the President or any Vice President and (y) a
principal financial or accounting officer of the Company,
confirming, as of the date thereof, the matters set forth in Section
7(g) of the Purchase Agreement and such other similar matters as the
underwriters may reasonably request;
(2) an opinion, dated the date of effectiveness of the Shelf
Registration Statement, of counsel for the Company covering matters
similar to those set forth in Exhibit A to the Purchase Agreement
and such other matters as the underwriters may
14
reasonably request, and in any event including a statement to the
effect that such counsel has participated in conferences with
officers and other representatives of the Company and
representatives of the independent public accountants for the
Company, at which contents of the Shelf Registration Statement and
related matters were discussed, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis of
the foregoing (relying as to materiality to a large extent upon
facts provided to such counsel by officers and other representatives
of the Company and without independent check or verification), no
facts came to such counsel's attention that caused such counsel to
believe that the Shelf Registration Statement, at the time such
Shelf Registration Statement or any post-effective amendment thereto
became effective, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that the
Prospectus contained in such Shelf Registration Statement, as of its
date, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. Such counsel may state further that such
counsel assumes no responsibility for, has not independently
verified, and makes no comment with respect to the accuracy,
completeness or fairness of the financial statements, notes and
schedules and other financial, accounting or statistical data
included in the Shelf Registration Statement or the related
Prospectus; and
(3) a customary comfort letter, dated as of the date of
effectiveness of the Shelf Registration Statement, from the
Company's independent accountants, in the customary form and
covering matters of the type customarily covered in comfort letters
to underwriters in connection with primary underwritten offerings,
and affirming matters similar to those set forth in the comfort
letter delivered pursuant to Section 7(e) of the Purchase Agreement;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement, the indemnification
provisions and procedures of Section 6 hereof with respect to all parties
to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the underwriters, to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
pursuant to this Section 4(c)(xvi).
The above shall be done at each closing under such underwriting or
similar agreement, as and to the extent required thereunder, and if at any time
the representations and warranties of the Company contemplated in (A)(1) above
cease to be true and correct, the Company shall so advise the underwriters and
the Selling Holders promptly and, if requested by such Persons, shall confirm
such advice in writing.
15
(xvii) The Company shall (i) make reasonably available for
inspection by the Selling Holders, any underwriter participating in any
disposition pursuant to such Registration Statement, any Identified
Broker-Dealer and any attorney, accountant or other agent retained by the
Selling Holders or any such underwriter or Identified Broker-Dealer all relevant
financial and other records, pertinent corporate documents and properties of the
Company and (ii) cause the Company's officers, directors and employees to supply
all relevant information reasonably requested by the Selling Holders or any such
underwriter, attorney, accountant or agent in connection with such Registration
Statement or any post-effective amendment thereto subsequent to the filing
thereof and prior to its effectiveness; provided that such persons enter into
confidentiality agreements reasonably satisfactory to the Company.
(xviii) The Company shall cooperate and assist in any filings
required to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the rules and
regulations of the NASD and shall use its reasonable best efforts to cause such
Registration Statement to become effective and approved by such governmental
agencies or authorities as may be necessary to enable the Holders selling
Transfer Restricted Securities to consummate the disposition of such Transfer
Restricted Securities.
(xix) The Company shall use its reasonable best efforts to cause the
Exchange Notes, if applicable, and, in the event of a Shelf Registration, the
Notes to be rated with not more than two rating agencies selected by the
Company, if so requested by the Selling Holders or by the underwriters, if any,
unless the Exchange Notes or the Notes, as the case may be, are already so rated
or unless the Company has obtained such ratings for its long-term debt
securities generally;
(xx) The Company shall use its best reasonable efforts to cause the
disposition of the Transfer Restricted Securities covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities as may be necessary to enable the seller or sellers thereof or
the underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in Section 4(c)(ix)
above.
(xxi) The Company shall provide promptly to each Selling Holder and
each Identified Broker-Dealer upon request each document filed with the
Commission pursuant to the requirements of Section 13 or Section 15(d) of the
Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of a Suspension Event Notice
from the Company, such Holder will forthwith discontinue disposition of Transfer
Restricted Securities pursuant to the applicable Registration Statement until
such Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 4(c)(xi) hereof, or until it is advised in writing by
the Company that the use of the Prospectus may be resumed, and has received
copies of any additional or supplemental filings that are incorporated by
reference in the Prospectus (the "Advice"). If so directed by the Company, each
Holder will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such Holder's possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice. In the event
16
the Company shall give any such Suspension Event Notice, the time period
regarding the effectiveness of such Registration Statement set forth in Section
2(c) or 3(b) hereof, as applicable, shall be extended by the number of days
during the period included in such Suspension Period.
(e) REASONABLE BEST EFFORTS. The Company shall be deemed not to have
used its reasonable best efforts to keep a Registration Statement effective
during the requisite periods referenced in Section 2(c) and 3(b) hereof if it
voluntarily takes any action that would result in Selling Holders and Restricted
Broker-Dealers covered thereby not being able to offer and sell such Transfer
Restricted Securities during that period using the Prospectus included in such
Registration Statement, unless such action is required by applicable law
(including, but not limited to, reasonable periods necessary to prepare
appropriate disclosure), PROVIDED that the foregoing provision shall not apply
to actions taken (or contemplated to be taken) by the Company in good faith and
for business reasons (a "Suspension Event"), including, without limitation, the
acquisition or divestiture of assets and the offering or sale of securities, so
long as the Company promptly thereafter complies with the requirements of
Section 4(c)(xi) hereof, if applicable, and so long as the Company gives prompt
notice of such Suspension Event (a "Suspension Event Notice") to Selling Holders
and Identified Broker-Dealers. Any such period during which the Company fails to
keep such Registration Statement effective and usable for offers and sales of
Transfer Restricted Securities is referred to as a "Suspension Period." A
Suspension Period shall commence on and include the date that the Company gives
notice that the Registration Statement is no longer effective or the Prospectus
included therein is no longer usable for offers and sales of Transfer Restricted
Securities and shall end on the date when each seller of Transfer Restricted
Securities covered by such Registration Statement either receives the copies of
the supplemented or amended Prospectus contemplated by Section 4(c)(xi) hereof
or is advised in writing by the Company that use of the Prospectus may be
resumed. If one or more Suspension Periods occur, the time period referenced in
Sections 2(d) and 3(b) hereof during which the Company must keep such
Registration Statement effective shall be extended by the number of days
included in each such Suspension Period.
5. REGISTRATION EXPENSES.
(a) The Company shall bear all expenses incurred in connection with
the performance of its obligations pursuant to this Agreement regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by any Initial Purchaser or Holders with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel)
that may be required by the rules and regulations of the NASD); (ii) all fees
and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Exchange Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telecommunications; (iv) all
fees and disbursements of counsel for the Company and, subject to (b) below, the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing the Notes or the Exchange Notes on a national
securities exchange or automated quotation system pursuant to the requirements
hereof if the Company, in its sole discretion, determines to so list the Notes
or the Exchange Notes; and (vi) all fees and disbursements of independent
certified public accountants of
17
the Company (including the expenses of any special audit and comfort letters
required by or incident to such performance).
(b) In connection with any Shelf Registration Statement required by
this Agreement, the Company will reimburse the Selling Holders of Transfer
Restricted Securities being registered pursuant to the Shelf Registration
Statement for the reasonable fees and disbursements of not more than one
counsel, who shall be chosen by the Holders of a majority in principal amount of
the Transfer Restricted Securities for whose benefit such Registration Statement
is being prepared.
6. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each Selling
Holder, its officers and employees, and each person, if any, who controls such
Selling Holder within the meaning of the Securities Act and each Restricted
Broker-Dealer that sells any Broker-Dealer Transfer Restricted Securities and
that satisfies its prospectus delivery requirements through the delivery of the
Prospectus contained in the Exchange Offer Registration Statement, its officers
and employees, and each person, if any, who controls such Restricted
Broker-Dealer (each such Restricted Broker-Dealer and Selling Holder, such
controlling persons and each such officer and employee are referred to
collectively as the "Seller Indemnified Parties"), from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of Notes or Exchange Notes), to which such
Seller Indemnified Party may become subject, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or preliminary Prospectus or Prospectus forming a part
thereof (or in any amendment or supplement thereto) or (ii) the omission or
alleged omission to state in any Registration Statement a material fact required
to be stated therein or necessary to make the statements therein not misleading
and the omission or alleged omission to state in any preliminary Prospectus or
Prospectus a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and shall reimburse the Seller Indemnified Parties
promptly upon demand for any legal and other expenses reasonably incurred by
them in connection with investigating, defending or preparing to defend against
any such loss, claim, damage, liability or action as such expenses are incurred;
PROVIDED, HOWEVER, that the Company shall not be liable in any such case to the
extent that such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Registration Statement or preliminary Prospectus or
Prospectus forming a part thereof (or in any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the respective Holder specifically for inclusion
therein; PROVIDED FURTHER, that as to the preliminary Prospectus this indemnity
shall not inure to the benefit of any Seller Indemnified Party, or any officer
or employee of, or any person controlling, that Seller Indemnified Party on
account of any loss, claim, damage, liability or action arising from the sale of
Notes or Exchange Notes to any person by that Seller Indemnified Party if that
Seller Indemnified Party failed to send or give a copy of the Prospectus, as the
same may be amended or supplemented, prior to the sale to such person, and the
untrue statement or alleged untrue statement or a material fact or omission or
alleged omission to state a material fact in such preliminary Prospectus or the
Prospectus, as the case
18
may be, was remedied or corrected in such Prospectus, amendment or supplement,
unless such failure resulted from noncompliance by the Company with Section
4(c)(viii) hereof. The foregoing indemnity agreement is in addition to any
liability which the Company may otherwise have to such Seller Indemnified Party.
(b) Each Holder, severally and not jointly, shall indemnify and hold
harmless the Company, its officers and employees and each person who controls
the Company within the meaning of the Securities Act (a "Company Indemnified
Party") from and against any loss, claim, damage or liability or any action in
respect thereof (including, but not limited to, any loss, claim, damage,
liability or action relating to purchases and sales of Notes or Exchange Notes)
to which a Company Indemnified Party may become subject, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or preliminary Prospectus or Prospectus forming a part
thereof (or in any amendment or supplement thereto) or (ii) the omission or
alleged omission to state in any Registration Statement a material fact required
to be stated therein or necessary to make the statements therein not misleading
and the omission or alleged omission to state in any preliminary Prospectus or
Prospectus a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder specifically for inclusion therein, and
shall reimburse the Company Indemnified Party promptly upon demand for any legal
and other expenses reasonably incurred by the Company Indemnified Party in
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which such Holder may
otherwise have to any Company Indemnified Party.
(c) Promptly after receipt by a Seller Indemnified Party or a
Company Indemnified Party (each, an "Indemnified Party") under this Section 6 of
notice of any claim or the commencement of any action (including any
governmental or regulatory investigation or proceeding), the Indemnified Party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 6, notify the indemnifying party in writing of the
claim or the commencement of the action, PROVIDED THAT the failure to notify the
indemnifying party shall not relieve such indemnifying party from any liability
which it may have under this Section 6, except to the extent the indemnifying
party was materially prejudiced by such failure and PROVIDED FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any liability
such indemnifying party may have to an Indemnified Party otherwise than under
this Section 6. In case any such claim or action shall be brought against an
Indemnified Party, such Indemnified Party shall notify in writing the
indemnifying party thereof, and the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
indemnifying party to the Indemnified Party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the Indemnified Party under this Section 6 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of
19
investigation; PROVIDED, HOWEVER, that an Indemnified Party shall have the right
to employ counsel to represent jointly such Indemnified Parties under this
Section 6, if in the reasonable judgment of such Indemnified Parties, it is
advisable for the Indemnified Parties to be jointly represented by separate
counsel, and in that event the fees and expenses of such separate counsel shall
be paid by indemnifying party; PROVIDED, HOWEVER, that an indemnifying party
shall not be liable for fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for all Indemnified
Parties. No indemnifying party shall (i) without the prior written consent of
the Indemnified Parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnified Parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any Indemnified Party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable to or insufficient to hold harmless any Indemnified
Party under Section 6(a) or (b) hereof in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
applicable indemnifying party shall, in lieu of indemnifying such Indemnified
Party, contribute to the amount paid or payable by such Indemnified Party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company on the one hand and the Holders on the other from the
offering of the Notes or the Exchange Notes, 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 on the one hand and the Holders
on the other with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and such Holders on the other with respect to such
offering shall be deemed to be in the same proportion as (x) the total net
proceeds received by the Company from the offering of the Notes pursuant to the
Purchase Agreement (before deducting expenses) bear to (y) the net proceeds
received by such Holders from the resale of such Notes or Exchange Notes, as the
case may be. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the Company
on the one hand or such Holders, on the other, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and each Holder agree that it
would not be just and equitable if contributions pursuant to this Section 6(d)
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an Indemnified Party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 6(d) shall be deemed to include, for purposes
of this
20
Section 6(d), 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 6(d), no Holder shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the net proceeds received by such Holder from the sale of Notes or
Exchange Notes pursuant to a Registration Statement exceeds the amount of
damages which such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission, and no
Initial Purchaser shall be required to contribute, in the aggregate, any amount
in excess of the amount by which the total price at which such Initial Purchaser
sold the Notes purchased by it (or Exchange Notes received by it, if applicable)
exceeds the sum of (i) the amount paid by such Initial Purchaser for such Notes
and (ii) the amount of any damages that such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' and the Initial Purchasers' obligations in this
Section 6(d) to contribute are several in proportion to the respective principal
amount of the Notes or Exchange Notes held by each of the Holders or purchased
by each of the Initial Purchasers and not joint.
(e) The agreements contained in this Section 6 shall survive the
sale of Notes or Exchange Notes pursuant to any Registration Statement and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of any Indemnified Party.
7. ADDITIONAL INTEREST UNDER CERTAIN CIRCUMSTANCES.
(a) If the Company fails to comply with Sections 2 and 3 hereof,
additional interest (the "Additional Interest") shall be assessed as follows:
(i) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is not filed within 30 days following the Closing Date or
the Exchange Offer Determination Date, as the case may be, then commencing on
the 31st day after the Closing Date or the Exchange Offer Determination Date, as
the case may be, Additional Interest shall be accrued on the Notes over and
above the accrued interest at a rate of 0.50% per annum for the first 90 days
immediately following the 30th day after the Closing Date or the Exchange Offer
Determination Date, as the case may be, such Additional Interest rate increasing
by an additional 0.25% per annum at the beginning of each subsequent 90-day
period;
(ii) if an Exchange Offer Registration Statement or a Shelf
Registration Statement is filed but is not declared effective within 90 days
following the Closing Date or the Exchange Offer Determination Date, as the case
may be, then, commencing on the 91st day after the Closing Date or the Exchange
Offer Determination Date, as the case may be, Additional Interest shall be
accrued on the Notes over and above the accrued interest at a rate of 0.50% per
annum for the first 90 days immediately following the 90th day after the Closing
Date or the Exchange Offer Determination Date, as the case may be, such
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period; and
21
(iii) if (A) the Exchange Offer is not Consummated by the later of
120 days following the Closing Date or within 30 days following the effective
date of the Exchange Offer Registration Statement or (B) the Shelf Registration
Statement has been filed and declared effective but such Shelf Registration
Statement ceases to be effective or the Prospectus which is a part thereof
cannot be used as a result of a Suspension Event Notice lasting for a period of
more than 90 days prior to three years from the Closing Date, or such earlier
time as the Company is no longer required to keep the Shelf Registration
Statement effective pursuant to this Agreement, then Additional Interest shall
be accrued on the Notes over and above the accrued interest at a rate of 0.50%
per annum for the first 60 days immediately following (x) the later of the 120th
day after the Closing Date or the 30th day after the effective date of the
Exchange Offer Registration Statement, in the case of (A) above, or (y) the day
such Shelf Registration Statement ceases to be effective for, or a Suspension
Event has lasted for, more than 90 days in the case of (B) above, such
Additional Interest rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 60-day period;
PROVIDED, HOWEVER, that the Additional Interest rate on the Notes may not exceed
1.0% per annum; and PROVIDED FURTHER, that (1) upon the filing of an Exchange
Offer Registration Statement or a Shelf Registration Statement (in the case of
(i) above), (2) upon the effectiveness of an Exchange Offer Registration
Statement or a Shelf Registration Statement (in the case of (ii) above), (3)
upon the Consummation of the Exchange Offer (in the case of (iii)(A) above), or
(4) upon the effectiveness of a Shelf Registration Statement that had ceased to
remain effective prior to three years from the Closing Date, or such earlier
time as the Company is no longer required to keep the Shelf Registration
Statement effective pursuant to this Agreement, or the end of the Suspension
Period (in the case of (iii) (B) above), Additional Interest on the Notes as a
result of such clause (i), (ii) or (iii) shall immediately cease to accrue. The
Additional Interest specified in this Section 7(a) shall be payable by the
Company to the Holders at the times, in the manner and subject to the terms and
conditions set forth in the Indenture, as nearly as may be, as though the rate
set out in the Notes had been increased, which payments shall be calculated
pursuant to Section 7(b) below.
(b) Any amount of Additional Interest due pursuant to clause (i),
(ii) or (iii) of Section 7(a) above will be payable on the same original
interest payment dates of the Notes.
The amount of Additional Interest with respect to any Note will be
determined by multiplying the applicable Additional Interest rate by the
principal amount of the Note, multiplied by a fraction, the numerator of which
is the number of days (not to exceed 360) such Additional Interest rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
(c) If the Company effects the Exchange Offer, the Company will be
entitled to close the Exchange Offer; PROVIDED THAT it has accepted all Notes
theretofore validly tendered in accordance with the terms of the Exchange Offer.
Notes not so tendered in the Exchange Offer shall bear interest at the same
rates in effect at the time of issuance of the Notes.
8. RULE 144A. The Company hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company is not subject to Section 13 or 15(d) of the
Securities Exchange Act, to make available, upon request
22
of any Holder of Transfer Restricted Securities, to any Holder or beneficial
owner of Transfer Restricted Securities in connection with any sale thereof and
any prospective purchaser of such Transfer Restricted Securities designated by
such Holder or beneficial owner, the information required by Rule 144A(d)(4)
under the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
9. UNDERWRITTEN REGISTRATIONS. No Holder may participate in any
Underwritten Registration hereunder unless such Holder (a) agrees to sell such
Holder's Transfer Restricted Securities on the basis provided in customary
underwriting arrangements entered into in connection therewith and (b) completes
and executes all reasonable questionnaires, powers of attorney and other
documents required under the terms of such underwriting arrangements.
10. SELECTION OF UNDERWRITERS. For any Underwritten Offering, the
investment banker or investment bankers and manager or managers for such
Underwritten Offering that will administer such offering will be selected by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities included in such offering; PROVIDED, HOWEVER, that such investment
bankers and managers must be reasonably satisfactory to the Company. Such
investment bankers and managers are referred to herein as the "underwriters."
11. MISCELLANEOUS.
(a) REMEDIES. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture, the Purchase Agreement or granted
by law, including recovery of additional interest or other damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities that is inconsistent with the rights granted to the Holders in this
Agreement or otherwise conflicts with the provisions hereof. The rights granted
to the Holders hereunder do not in any way conflict with and are not
inconsistent with the rights granted to the holders of the Company's securities
under any agreement in effect on the date hereof.
(c) ADJUSTMENTS AFFECTING THE NOTES. The Company will not take any
action, or voluntarily permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Company to
Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Company has obtained the
written consent of Holders that hold a majority in aggregate principal amount of
the Transfer Restricted Securities, in which case all Holders shall be bound.
Notwithstanding the foregoing, a waiver or consent to depart from provisions
hereof that relates (i) to the rights of Holders whose securities are being
registered shall
23
require only the written consent of the Holders of a majority in principal
amount of the Transfer Restricted Securities being so registered, and (ii) to
the rights of Holders whose Notes are being tendered pursuant to the Exchange
Offer shall require only the written consent of the Holders of a majority in
principal amount of the Notes being tendered.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopies or air courier which guarantees overnight delivery:
(i) if to a Holder, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 11(e), which
address initially is, with respect to each Holder, the address of such Holder to
which confirmation of the sale of Notes to such Holder was first sent by the
Initial Purchaser, provided that a copy thereof shall have been provided to the
Company, with a copy in like manner to the Initial Purchaser at its address as
follows:
Lehman Brothers Inc.
3 World Financial Center
New York, NY 10285-1600
Attention: Syndicate Registration
Telecopy: 212-528-8822
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower
New York, NY 10281
(ii) if to an Initial Purchaser, to the Initial Purchaser's address
specified in 11(e)(i); and
(iii) if to the Company, at its address as follows:
Southdown, Inc.
1200 Smith Street
Suite 2400
Houston, Texas 77002-4486
Attention: Executive Vice President -
Finance and Administration
All such notices and communications shall be deemed to have been
duly given at the time delivered by hand, if personally delivered; three
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt acknowledged by
24
recipient's telecopy operator, if telecopied; and on the next Business Day
delivered, if sent by overnight air courier guaranteeing next day delivery.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders of the Notes; PROVIDED, HOWEVER, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
so executed shall be deemed to be an original and all of which taken together
shall constitute one and the same Agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO THE CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings other than those set forth or referred to herein with
respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
25
Please confirm that the foregoing correctly sets forth the agreement
between the Company and each Initial Purchaser.
Very truly yours,
SOUTHDOWN, INC.
By:
Name:
Title:
Accepted in New York, New York
________________, 1996
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: Lehman Brothers Inc.
By:
Authorized Signatory
26
EXHIBIT 12
SOUTHDOWN, INC.
COMPUTATION OF FIXED CHARGE RATIOS FOR S-4
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
PRO
FORMA
1995 1994 1993 1992 1991 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) from continuing operations
before income taxes ....................................... $ 70.8 $ 44.0 $ 5.0 $(29.6) $(68.0) $ 74.7
Add:
Interest on indebtedness, excluding
capitalized interest ................................... 26.7 27.7 39.3 45.0 41.4 22.8
Portion of rents representative of the
interest factor ........................................ 4.7 4.0 3.3 3.1 2.7 4.7
------ ------ ------ ------ ------ ------
Earnings as adjusted (a) ..................................... $102.2 $ 75.7 $ 47.6 $ 18.5 $(23.9) $102.2
====== ====== ====== ====== ====== ======
Fixed charges
Interest on indebtedness
Southdown and consolidated subsidiaries ................ $ 28.2 $ 29.7 $ 40.0 $ 45.0 $ 41.0 $ 24.3
Unconsolidated subsidiaries ............................ -- -- -- -- 0.7 --
------ ------ ------ ------ ------ ------
28.2 29.7 40.0 45.0 41.7 24.3
------ ------ ------ ------ ------ ------
Rents:
Southdown and consolidated subsidiaries ................. 14.0 11.9 9.9 9.2 7.9 14.0
Unconsolidated subsidiaries ............................. -- -- -- -- 0.3 --
------ ------ ------ ------ ------ ------
14.0 11.9 9.9 9.2 8.2 14.0
------ ------ ------ ------ ------ ------
Portion of rents representative of
the interest factor .................................. 4.7 4.0 3.3 3.1 2.7 4.7
------ ------ ------ ------ ------ ------
Preferred stock dividend requirement
of majority owned subsidiary ......................... -- -- -- -- 0.1 --
Ratio of earnings from continuing
operations to earnings from continuing
operations before income taxes ....................... -- -- -- -- 1.7 --
------ ------ ------ ------ ------ ------
-- -- -- -- 0.2 --
------ ------ ------ ------ ------ ------
Fixed charges .......................................... $ 32.9 $ 33.7 $ 43.3 $ 48.1 $ 44.6 $ 29.0
====== ====== ====== ====== ====== ======
Ratio of earnings to fixed charges (b) ....................... 3.1 2.2 1.1 0.4 N/A 3.5
====== ====== ====== ====== ====== ======
</TABLE>
- ------------
(a) For purposes of computing the ratios set forth in the table, "earnings"
consist of earnings from continuing operations before income taxes and
fixed charges excluding capitalized interest. "Fixed charges' consist
of (i) interest on all indebtedness (whether capitalized or expensed),
(ii) one-third of operating lease rental expense deemed to be
representative of interest and (iii) preferred stock dividend
requirements of majority-owned subsidiaries.
(b) For the years ended December 31, 1992 and 1991, the deficiency in the
coverage of earnings to fixed charges was $29.6 million and $68.5
million, respectively.
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM T-1
----------
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(B)(2) [ ]
STATE STREET BANK AND TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
Massachusetts 04-1867445
(JURISDICTION OF INCORPORATION OR (I.R.S. EMPLOYER
ORGANIZATION IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
225 Franklin Street, Boston, Massachusetts 02110
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
John R. Towers, Esq. Senior Vice President and Corporate Secretary
225 Franklin Street, Boston, Massachusetts 02110
(617)654-3253
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
---------------------
SOUTHDOWN, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
LOUISIANA 72-0296500
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1200 SMITH STREET, SUITE 2400
HOUSTON, TEXAS 77002-4486
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
--------------------
10% SENIOR SUBORDINATED NOTES DUE 2006, SERIES B
(TITLE OF INDENTURE SECURITIES)
<PAGE>
GENERAL
ITEM 1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISORY AUTHORITY TO
WHICH IT IS SUBJECT.
Department of Banking and Insurance of The Commonwealth of
Massachusetts, 100 Cambridge Street, Boston, Massachusetts.
Board of Governors of the Federal Reserve System, Washington,
D.C., Federal Deposit Insurance Corporation, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Trustee is authorized to exercised corporate trust powers.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee or of its
parent, State Street Boston Corporation.
(See note on page 2.)
ITEM 3. THROUGH ITEM 15. NOT APPLICABLE.
ITEM 16. LIST OF EXHIBITS.
LIST BELOW ALL EXHIBITS FILED AS PART OF THIS STATEMENT OF ELIGIBILITY.
1. A COPY OF THE ARTICLES OF ASSOCIATION OF THE TRUSTEE AS NOW IN
EFFECT.
A copy of the Articles of Association of the trustee, as now
in effect, is on file with the Securities and Exchange
Commission as Exhibit 1 to Amendment No. 1 to the Statement of
Eligibility and Qualification of Trustee (Form T-1) filed with
the Registration Statement of Morse Shoe, Inc. (File No.
22-17940) and is incorporated herein by reference thereto.
2. A COPY OF THE CERTIFICATE OF AUTHORITY OF THE TRUSTEE TO COMMENCE
BUSINESS, IF NOT CONTAINED IN THE ARTICLES OF ASSOCIATION.
A copy of a Statement from the Commissioner of Banks of
Massachusetts that no certificate of authority for the trustee
to commence business was necessary or issued is on file with
the Securities and Exchange Commission as Exhibit 2 to
Amendment No. 1 to the Statement of Eligibility and
Qualification of Trustee (Form T-1) filed with the
Registration Statement of Morse Shoe, Inc. (File No. 22-17940)
and is incorporated herein by reference thereto.
3. A COPY OF THE AUTHORIZATION OF THE TRUSTEE TO EXERCISE CORPORATE
TRUST POWERS, IF SUCH AUTHORIZATION IS NOT CONTAINED IN THE DOCUMENTS
SPECIFIED IN PARAGRAPH (1) OR (2), ABOVE.
A copy of the authorization of the trustee to exercise
corporate trust powers is on file with the Securities and
Exchange Commission as Exhibit 3 to Amendment No. 1 to the
Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Morse
Shoe, Inc. (File No. 22-17940) and is incorporated herein by
reference thereto.
4. A COPY OF THE EXISTING BY-LAWS OF THE TRUSTEE, OR INSTRUMENTS
CORRESPONDING THERETO.
A copy of the by-laws of the trustee, as now in effect, is on
file with the Securities and Exchange Commission as Exhibit 4
to the Statement of Eligibility and Qualification of Trustee
(Form T-1) filed with the Registration Statement of Eastern
Edison Company (File No. 33-37823) and is incorporated herein
by reference thereto.
1
5. A COPY OF EACH INDENTURE REFERRED TO IN ITEM 4. IF THE OBLIGOR IS IN
DEFAULT.
Not applicable.
6. THE CONSENTS OF UNITED STATES INSTITUTIONAL TRUSTEES REQUIRED BY
SECTION 321(B) OF THE ACT.
The consent of the trustee required by Section 321(b) of the
Act is annexed hereto as Exhibit 6 and made a part hereof.
7. A COPY OF THE LATEST REPORT OF CONDITION OF THE TRUSTEE PUBLISHED
PURSUANT TO LAW OR THE REQUIREMENTS OF ITS SUPERVISING OR EXAMINING
AUTHORITY.
A copy of the latest report of condition of the trustee
published pursuant to law or the requirements of its
supervising or examining authority is annexed hereto as
Exhibit 7 and made a part hereof.
NOTES
In answering any item of this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor or any underwriter for
the obligor, the trustee has relied upon information furnished to it by the
obligor and the underwriters, and the trustee disclaims responsibility for the
accuracy or completeness of such information.
The answer furnished to Item 2. of this statement will be amended, if
necessary, to reflect any facts which differ from those stated and which would
have been required to be stated if known at the date hereof.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, State Street Bank and Trust Company, a corporation
organized and existing under the laws of The Commonwealth of Massachusetts, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Boston and The
Commonwealth of Massachusetts, on the 16th day of April, 1996.
STATE STREET BANK AND TRUST COMPANY
By: /s/ JILL OLSON
Jill Olson
Assistant Vice President
2
EXHIBIT 6
CONSENT OF THE TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the proposed issuance by Southdown,
Inc. of its 10% Senior Subordinated Notes due 2006, Series B, we hereby consent
that reports of examination by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon request therefor.
STATE STREET BANK AND TRUST COMPANY
By: /s/ JILL OLSON
Jill Olson
Assistant Vice President
Dated: April 16, 1996
3
EXHIBIT 7
Consolidated Report of Condition of State Street Bank and Trust Company of
Boston, Massachusetts and foreign and domestic subsidiaries, a state banking
institution organized and operating under the banking laws of this commonwealth
and a member of the Federal Reserve System, at the close of business December
31, 1995, published in accordance with a call made by the Federal Reserve Bank
of this District pursuant to the provisions of the Federal Reserve Act and in
accordance with a call made by the Commissioner of Banks under General Laws,
Chapter 172, Section 22(a).
Thousands of
Dollars
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ....... 1,331,827
Interest-bearing balances ................................ 5,971,326
Securities
. ................................................................. 6,325,054
Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and its Edge subsidiary ...................... 5,436,994
Loans and lease financing receivables:
Loans and leases, net of unearned income .... 4,308,339
Allowance for loan and lease losses ......... 63,491
Loans and leases, net of unearned income
and allowances ......................................... 4,244,848
Assets held in trading accounts ................................... 1,042,846
Premises and fixed assets ......................................... 374,362
Other real estate owned ........................................... 3,223
Investments in unconsolidated subsidiaries ........................ 31,624
Customers' liability to this bank on acceptances outstanding ...... 57,472
Intangible assets ................................................. 68,384
Other assets ...................................................... 670,058
----------
Total assets ...................................................... 25,558,018
==========
LIABILITIES
Deposits:
In domestic offices ...................................... 6,880,231
Noninterest-bearing ................ 4,728,115
Interest-bearing ................... 2,152,116
In foreign offices and Edge subsidiary ................... 9,607,427
Noninterest-bearing ................ 28,265
Interest-bearing ................... 9,579,162
Federal funds purchased and securities sold under
agreements to repurchase in domestic offices of
the bank and of its Edge subsidiary ...................... 5,913,969
Demand notes issued to the U.S. Treasury and Trading Liabilities .. 530,406
Other borrowed money .............................................. 493,191
Bank's liability on acceptances executed and outstanding .......... 57,387
Other liabilities ................................................. 620,287
----------
Total liabilities ................................................. 24,102,898
==========
EQUITY CAPITAL
Common stock ...................................................... 29,176
Surplus ........................................................... 228,448
Undivided profits ................................................. 1,197,496
----------
Total equity capital .............................................. 1,455,120
----------
Total liabilities and equity capital .............................. 25,558,018
==========
4
I, Rex S. Schuette, Senior Vice President and Comptroller of the above named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Rex S. Schuette
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
David A. Spina
Marshall N. Carter
Charles F. Kaye
5
EXHIBIT 99.2
February 29, 1996
To the Banks party to the Third Amended and Restated Credit Agreement
("Agreement") dated as of November 3, 1995 among Southdown, Inc. ("Southdown"),
such Banks, and Wells Fargo Bank, N.A., as Agent ("Agent") under the Agreement
and to the Agent
Re: Retirement of Senior Subordinated Notes (capitalized terms
used herein and defined in the Agreement but not defined
herein are used herein as defined in the Agreement) and
related issuance of new subordinated notes substantially on
the terms set forth in the Description of the Notes (Draft of
2/26/96), a copy of which has been delivered to the Agent, in
a principal amount complying with the limitations set forth in
paragraph (6) below ("New Subordinated Debt")
Ladies and Gentlemen:
Southdown proposes (i) to issue the New Subordinated Debt, and (ii) to use the
proceeds of the New Subordinated Debt and, if needed, other amounts for the
purchase, redemption, payment and/or deposit in trust in connection with any
defeasance of Senior Subordinated Notes and for related costs and expenses
("Permitted Uses", whether for principal, accrued interest, required prepayment
penalty or premium, purchase premium or costs and expenses incurred in
connection with the issuance of the New Subordinated Debt or any such purchase,
redemption, payment or deposit) and for other general corporate purposes. Any
purchase of Senior Subordinated Notes would be substantially in accordance with
the terms of the Offer to Purchase dated February 14, 1996 and related tender
offer materials sent to the Agent or would be at a price not materially greater
than the price provided in such Offer to Purchase. Southdown hereby agrees to
the following modifications to the Agreement and other matters and requests that
you sign below to indicate your agreement to such modifications and other
matters:
(1) The New Subordinated Debt will constitute a permitted refinancing of
Existing Subordinated Debt for purposes of Sections 6.1(m) and 6.19 of
the Agreement to the extent that proceeds of the New Subordinated Debt
are used for any Permitted Uses. Any such proceeds not so used within
50 days after the date the New Subordinated Debt is issued shall count
against the $75,000,000 basket allowed by Section 6.1(k) of the
Agreement (except to the extent that such basket has already been
reduced pursuant to paragraph (6) below) until used for any Permitted
Uses. Consistent with
-1-
the last sentence of Section 6.1(m) of the Agreement, proceeds will be
considered to be used for Permitted Uses even though (i) the proceeds
are used to repay the Loans and a subsequent borrowing under the
Agreement is used for any Permitted Uses, or (ii) the proceeds are used
to acquire Cash Equivalents that are subsequently liquidated and used
for any Permitted Uses.
(2) The Banks consent to the use of the proceeds of the New Subordinated
Debt (and, if needed, other amounts) for Permitted Uses as contemplated
herein, and any such use shall not constitute a Permitted Junior
Payment (but the Junior Payment Amount shall be reduced to the extent
provided in paragraph (6) below).
(3) Deposits in trust in connection with any defeasance of the Senior
Subordinated Notes shall be considered a Permitted Lien under the
Agreement.
(4) As contemplated by the Registration Rights Agreement envisioned by the
Description of the Notes (Draft of 2/26/96) delivered to the Agent, the
Banks agree that Southdown may exchange any of the New Subordinated
Debt in a registered exchange offer for a like principal amount of
senior subordinated notes issued under the same indenture as the New
Subordinated Debt or a substantially similar indenture ("New Exchange
Subordinated Debt"). Such exchange shall not constitute a Permitted
Junior Payment. As used in the Agreement, Subordinated Debt shall mean
and refer to the Existing Subordinated Debt, the Exchange Subordinated
Debt, the New Subordinated Debt and the New Exchange Subordinated Debt.
Each of (a) the reference to Senior Subordinated Notes in clause (i) of
the definition of "Permitted Junior Payments" in the Agreement, and (b)
the reference in the last sentence of 6.1(m) of the Agreement to
Existing Subordinated Debt shall mean any Subordinated Debt (other than
the Exchange Subordinated Debt) as defined in the previous sentence
hereof; and the reference to Debt in Section 6.12 of the Agreement
shall mean any Subordinated Debt as defined in the previous sentence
hereof. The reference to the Subordinated Indenture in Section 5.12 of
the Agreement shall include the Subordinated Indenture and any
indenture pursuant to which New Subordinated Debt or New Exchange
Subordinated Debt is issued.
(5) Clause (x) of Section 7.2(i) of the Agreement hereby is amended to read
as follows:
(x) arises under Section 7.l(b) as a result of a default under
any indenture or other agreement pursuant to which
Subordinated Debt was issued and such
-2-
Subordinated Debt is declared due prior to its stated maturity
as a result of such default or
(6) The principal amount of the New Subordinated Debt issued will be not
more than $150,000,000 and will be not less than (i) the principal
amount of Senior Subordinated Notes purchased, redeemed, paid or
defeased in accordance herewith minus (ii) the Junior Payment Amount at
the date of such issuance. If the principal amount of Senior
Subordinated Notes so purchased, redeemed, paid or defeased exceeds the
principal amount of the New Subordinated Debt issued, the Junior
Payment Amount shall be permanently reduced by the amount of such
excess. Furthermore, if the principal amount of the New Subordinated
Debt exceeds $125,000,000, the $75,000,000 basket allowed by Section
6.1(k) of the Agreement shall be permanently reduced by the amount of
such excess.
(7) This letter may be executed in counterparts and will be effective when
signed by Southdown and the Majority Banks. Except as modified hereby,
the Agreement shall remain unchanged and in full force and effect. To
the extent any terms or provisions of this letter conflict with those
of the Agreement, the terms and provisions of this letter shall
control. This letter shall be governed by, and construed and enforced
in accordance with, the laws of the State of California.
Very truly yours,
SOUTHDOWN, INC.
By __________________________
Title:__________________________
-3-
Agreed to:
WELLS FARGO BANK, N.A., SOCIETE GENERALE,
a national banking association, in its SOUTHWEST AGENCY
individual capacity and as Agent
By __________________________ By __________________________
Title:__________________________ Title:__________________________
CIBC INC. CREDIT SUISSE
By __________________________ By __________________________
Title:__________________________ Title:__________________________
By __________________________
Title:__________________________
THE BANK OF NOVA SCOTIA CAISSE NATIONALE DE
CREDIT AGRICOLE
By __________________________ By __________________________
Title:__________________________ Title:__________________________
THE FIRST NATIONAL BANK BANQUE PARIBAS
OF BOSTON
By __________________________ By __________________________
Title:__________________________ Title:__________________________
By __________________________
Title:__________________________
-4-
