<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1997
REGISTRATION NO. 333-32145
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
<TABLE>
<S> <C>
OWENS CORNING OWENS CORNING CAPITAL II
(Exact name of Registrant as specified (Exact name of Registrant as specified
in its charter) in its certificate of trust)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
34-4323452 31-6560375
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
C/O OWENS CORNING
OWENS CORNING WORLD HEADQUARTERS OWENS CORNING WORLD HEADQUARTERS
TOLEDO, OHIO 43659 TOLEDO, OHIO 43659
(419) 248-8000 (419) 248-8000
(Address, including zip code, and (Address, including zip code,
telephone number, including area code, and telephone number, including area
of principal executive offices) code, of principal executive offices)
</TABLE>
---------------
CHRISTIAN L. CAMPBELL, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
OWENS CORNING
OWENS CORNING WORLD HEADQUARTERS
TOLEDO, OHIO 43659
(419) 248-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service for each Registrant)
---------------
Please send copies of all communications to:
<TABLE>
<S> <C>
RALPH ARDITI, ESQ. JOHN W. OSBORN, ESQ.
DEBEVOISE & PLIMPTON SKADDEN, ARPS, SLATE,
875 THIRD AVENUE MEAGHER & FLOM LLP
NEW YORK, NEW YORK 10022 919 THIRD AVENUE
(212) 909-6000 NEW YORK, NEW YORK 10022
(212) 735-3000
</TABLE>
---------------
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective depending upon
market conditions and other factors.
---------------
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box: [ ]
If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
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 SUPPLEMENT AND THE ACCOMPANYING
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 STATE OR
JURISDICTION.
SUBJECT TO COMPLETION, DATED SEPTEMBER , 1997
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED , 1997)
6,000,000 FELINE PRIDES(SM)
OWENS CORNING
OWENS CORNING CAPITAL II
------------------
The securities offered hereby are 6,000,000 FELINE PRIDES(SM) ("FELINE
PRIDES" or the "Securities") of Owens Corning, a Delaware corporation ("OC" or
the "Company"), and Owens Corning Capital II, a statutory business trust formed
under the laws of the State of Delaware ("OC Capital" or the "Trust"). Each
FELINE PRIDES offered hereby initially will consist of a unit (referred to as an
"Income PRIDES"(SM)) with a Stated Amount of $50 (the "Stated Amount") comprised
of (a) a stock purchase contract (a "Purchase Contract") under which (i) the
holder will purchase from the Company on November 16, 2000 (the "Purchase
Contract Settlement Date"), for an amount of cash equal to the Stated Amount, a
number of newly issued shares of common stock, $.10 par value per share (the
"Common Stock"), of the Company equal to the Settlement Rate described herein,
and (ii) the Company will pay the holder unsecured contract adjustment payments
("Contract Adjustment Payments") at the rate of % of the Stated Amount per
annum, provided that if such rate is 0%, then the Company will not make any
Contract Adjustment Payments, and (b) beneficial ownership of a % Trust
Preferred Security (a "Trust Preferred Security"), having a stated liquidation
amount per Trust Preferred Security equal to the Stated Amount, representing a
preferred undivided beneficial interest in the assets of OC Capital. The Company
will, directly or indirectly, own all the common securities (the "Common
Securities" and, together with the Trust Preferred Securities, the "Trust
Securities") representing undivided beneficial interests in the assets of OC
Capital. OC Capital exists for the sole purpose of issuing the Trust Securities
and investing the proceeds thereof in an equivalent amount of % Subordinated
Debentures of the Company, due November 16, 2002 (the "Debentures"). As long as
the FELINE PRIDES are in the form of Income PRIDES, the related Trust Preferred
Securities will be pledged to the Collateral Agent (as defined herein), to
secure the holder's obligation to purchase Common Stock under the related
Purchase Contracts.
------------------ (continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE S-17 OF THIS PROSPECTUS SUPPLEMENT FOR
CERTAIN INFORMATION RELEVANT TO AN INVESTMENT IN THE SECURITIES, INCLUDING THE
PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS OF CERTAIN
DISTRIBUTIONS ON THE SECURITIES MAY BE DEFERRED AND THE RELATED UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF SUCH DEFERRAL.
------------------
Prior to the offering made hereby there has been no public market for the
Securities. Application will be made to list the Income PRIDES on the New York
Stock Exchange ("NYSE") under the symbol "[OC ]", subject to official notice of
issuance. On , 1997, the last reported sale price of the Common Stock
on the NYSE was $ per share.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS TO WHICH IT
RELATES. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
================================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) COMMISSION(2) THE COMPANY(3)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Income PRIDES.......................... $50.00 $ $
- ----------------------------------------------------------------------------------------------------------------
Total(4)................................... $300,000,000 $ $
================================================================================================================
</TABLE>
(1) Plus accrued distributions on the related Trust Preferred Securities and
Contract Adjustment Payments, if any, from , 1997. The purchase
price of each Income PRIDES will be allocated between the related Purchase
Contract and the related Trust Preferred Security in proportion to their
respective fair market values at the time of purchase. See "Certain Federal
Income Tax Consequences -- Acquisition of Income PRIDES; Initial Basis in
Trust Preferred Securities and Purchase Contracts."
(2) The Company and OC Capital have agreed to indemnify the Underwriters against
certain liabilities under the Securities Act of 1933, as amended. See
"Underwriting."
(3) Before deducting estimated expenses payable by the Company estimated at
$ .
(4) The Company and OC Capital have granted to the Underwriters a 30-day option
to purchase up to an additional 900,000 Income PRIDES, to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Commission and Proceeds to the Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------
The Securities are offered by the several Underwriters, subject to prior
sale, when, as and if issued to and accepted by them, and subject to approval of
certain legal matters by counsel for the Underwriters and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Securities offered hereby will be made in New York, New York on
or about , 1997.
------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
------------------
The date of this Prospectus Supplement is , 1997.
- ---------------
(SM) Service Mark of Merrill Lynch & Co. Inc.
<PAGE> 3
Aggregate payments of % of the Stated Amount per annum will be made or
accrue on each Income PRIDES quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing , 1997,
until the Purchase Contract Settlement Date. These payments will consist of
cumulative cash distributions on the related Trust Preferred Securities payable
by OC Capital at the rate of % of the Stated Amount per annum, and Contract
Adjustment Payments payable by the Company at the rate of % of the Stated
Amount per annum (provided that if such rate is 0%, then the Company will not
make any Contract Adjustment Payments), in each case, subject to the Company's
right to defer payment of such amounts. The ability of OC Capital to make the
quarterly distributions on the Trust Preferred Securities will be solely
dependent upon the receipt of corresponding interest payments from the Company
on the Debentures. The Company will have the right at any time, and from time to
time, limited to a period not extending beyond the maturity date of the
Debentures, to defer the interest payments due on the Debentures, and to defer
Contract Adjustment Payments, if any, until the Purchase Contract Settlement
Date. As a consequence of such deferral, quarterly distributions on the Income
PRIDES would be deferred, but would continue to accrue with interest compounded
quarterly.
The distribution rate on the Trust Preferred Securities and the interest
rate on the related Debentures will be reset on the Purchase Contract Settlement
Date to a rate per annum (the "Reset Rate") to be determined by the Reset Agent
(as defined herein) equal to the sum of (x) a spread amount (the "Reset Spread")
to be determined by the Reset Agent on the fifth Business Day prior to the
Purchase Contract Settlement Date and (y) the rate of interest on the Two-Year
Benchmark Treasury (as defined herein) in effect on the Purchase Contract
Settlement Date, such sum being the distribution rate the Trust Preferred
Securities should bear in order for a Trust Preferred Security to have an
approximate market value of 100.5% of the Stated Amount on the Purchase Contract
Settlement Date, provided that the Reset Spread may not exceed 200 basis points
(2%). Such market value may be less than 100.5% if the Reset Spread is set at
the maximum of 2%.
The payment of distributions and certain redemptions out of moneys held by
OC Capital and payments on liquidation of OC Capital will be guaranteed by the
Company (the "Guarantee") to the extent described herein and under "Description
of the Guarantee." The Guarantee covers payments of distributions and other
payments on the Trust Preferred Securities only if and to the extent OC Capital
has funds available therefor, which will not be the case unless the Company has
made a payment of principal or interest on the Debentures held by OC Capital as
its sole asset. The Guarantee, when taken together with the Company's
obligations under the Debentures, the Indenture (as defined below) and the
Company's obligations under the Declaration (as defined below), provides a full
and unconditional guarantee by the Company of amounts due on the Trust Preferred
Securities.
The Company's obligations in respect of the Contract Adjustment Payments,
the Debentures and the Guarantee generally will be senior unsecured obligations
of the Company, and will be subordinated and junior in right of payment only to
the Company's obligations under the Senior Indebtedness (as defined herein).
Payments by the Company of Senior Indebtedness are required to be used to repay,
when due, principal of and interest and premium, if any, on the $2,800,000 State
of Ohio Pollution Control Revenue Bonds, Series 1977A (the "Ohio Bonds"), of
which $1,000,000 in aggregate principal amount was outstanding as of the date
hereof. The remaining principal amount of the Ohio Bonds will mature and become
due and payable on December 1, 1997.
Each holder of an Income PRIDES will have the right to substitute for the
related Trust Preferred Securities held by the Collateral Agent zero-coupon U.S.
Treasury Securities (CUSIP No. 912820 AY3), which are principal strips of the
8 1/2% U.S. Treasury Securities which mature on the Business Day immediately
preceding the Purchase Contract Settlement Date (the "Treasury Securities"), in
an amount per Income PRIDES equal to the Stated Amount per Trust Preferred
Security. Because Treasury Securities are issued in integral multiples of
$1,000, holders may make such substitutions only in integral multiples of 20
Income PRIDES. Such Treasury Securities will be pledged with the Collateral
Agent to secure the holder's obligation to purchase Common Stock under the
related Purchase Contracts. FELINE PRIDES with respect to which Treasury
Securities have been substituted for the related Trust Preferred Securities as
collateral to secure such obligation are referred to herein as Growth
PRIDES(SM). Each Growth PRIDES will consist of a unit with a face amount of $50
comprised of (a) a Purchase Contract under which (i) the holder will
S-2
<PAGE> 4
purchase from the Company on the Purchase Contract Settlement Date for an amount
of cash equal to the Stated Amount of such Growth PRIDES a number of newly
issued shares of Common Stock of the Company equal to the Settlement Rate
described herein and (ii) the Company will pay the holder Contract Adjustment
Payments, at the rate of % of the Stated Amount per annum, provided that if
such rate is 0%, then the Company will not make any Contract Adjustment
Payments, and (b) a 1/20 undivided beneficial ownership interest in a related
Treasury Security having a principal amount at maturity equal to $1,000 and
maturing on the Business Day immediately preceding the Purchase Contract
Settlement Date. Upon the substitution of Treasury Securities for the related
Trust Preferred Securities as collateral, such Trust Preferred Securities will
be released to the holder as described herein and thereafter will trade
separately from the resulting Growth PRIDES. Contract Adjustment Payments, if
any, will be payable by the Company on the Growth PRIDES on March 31, June 30,
September 30 and December 31 of each year. In addition, imputed interest will
continue to accrete on the related Treasury Securities. A holder of Growth
PRIDES will have the right to subsequently recreate Income PRIDES by delivering
20 Growth PRIDES to the Purchase Contract Agent plus 20 Trust Preferred
Securities to the Collateral Agent in exchange for 20 Income PRIDES and the
release of the related Treasury Security to such holder. Such Trust Preferred
Securities will be pledged with the Collateral Agent to secure the holder's
obligation to purchase Common Stock under the related Purchase Contracts.
Holders of Debentures will have the right to require the Company to
repurchase, on the Purchase Contract Settlement Date, their Debentures at a
price per Debenture equal to $50, plus accrued and unpaid interest, if any,
thereon. Upon the repurchase of such Debentures by the Company, the proceeds
from such repurchase shall simultaneously be applied to redeem Trust Preferred
Securities of such holders having an aggregate stated liquidation amount equal
to the aggregate principal amount of the Debentures so repurchased. On the
Business Day immediately preceding the Purchase Contract Settlement Date, unless
a holder of Income PRIDES or Growth PRIDES (i) has settled the related Purchase
Contracts through the early delivery of cash to the Purchase Contract Agent in
the manner described herein, (ii) has notified the Purchase Contract Agent of
its intention to settle the related Purchase Contracts with separate cash on the
Business Day immediately preceding the Purchase Contract Settlement Date and has
so settled the related Purchase Contracts or (iii) an event described under
"Description of the Purchase Contracts -- Termination" has occurred, (A) in the
case of Income PRIDES, such holder will be deemed to have requested OC Capital
to put the related Debentures to the Company on the Purchase Contract Settlement
Date for a price equal to the aggregate principal amount of such Debentures plus
accrued and unpaid interest, if any, thereon, and, upon the repurchase of such
Debentures, the proceeds will be applied to redeem the related Trust Preferred
Securities of such holder having an aggregate stated liquidation amount equal to
the aggregate principal amount of the Debentures so repurchased, and an amount
equal to such aggregate stated liquidation amount will automatically be applied
to satisfy in full such holder's obligation to purchase Common Stock under the
related Purchase Contracts, and (B) in the case of Growth PRIDES, the principal
amount of the related Treasury Securities, when paid at maturity, will
automatically be applied to satisfy in full such holder's obligation to purchase
Common Stock under the related Purchase Contracts.
In the event that a holder of either Income PRIDES or Growth PRIDES effects
the early settlement of the related Purchase Contracts through the delivery of
cash or settles such Purchase Contracts with cash on the Business Day
immediately preceding the Purchase Contract Settlement Date, the related Trust
Preferred Securities or Treasury Securities, as the case may be, will be
released to the holder as described herein.
The Company will have the right at any time to dissolve the Trust and cause
the Debentures to be distributed to the holders of the Trust Securities. If the
Debentures are distributed to the holders of the Trust Preferred Securities, the
Company will use its best efforts to cause the Debentures to be listed on such
exchange on which the Trust Preferred Securities are then listed, including, if
applicable, the New York Stock Exchange.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES. SUCH
TRANSACTIONS MAY INCLUDE STABILIZING TRANSACTIONS, THE PURCHASE OF SECURITIES TO
COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
S-3
<PAGE> 5
PROSPECTUS SUPPLEMENT SUMMARY
The following summary information is qualified in its entirety by the more
detailed information and Consolidated Financial Statements of the Company
appearing elsewhere in the accompanying Prospectus, this Prospectus Supplement
or in the documents incorporated herein or in the accompanying Prospectus by
reference. A listing of the pages on which certain definitions of capitalized
terms used in this Prospectus Supplement Summary and elsewhere in this
Prospectus Supplement are defined is set forth in the "Index of Terms for
Prospectus Supplement" herein. Except as otherwise noted, all information in
this Prospectus Supplement assumes no exercise of the Underwriters'
over-allotment option.
Owens Corning, a global company incorporated in Delaware in 1938, serves
consumers and industrial customers with high-performance glass fiber composites
and building materials systems. These products are used in industries such as
home improvement, new construction, transportation, marine, aerospace, energy,
appliance, packaging and electronics. The Company operates in two industry
segments -- Building Materials and Composite Materials -- divided into ten
businesses. The Company also has affiliate companies in a number of countries.
Owens Corning's Building Materials products are marketed through multiple
distribution channels, often with the aid of the Company's well known
"spokescritter," the Pink Panther. Over the last several years, the Company has
supplemented its traditional relationships with specialty distributors and
wholesalers with increasing presence among the large "do-it-yourself" home
center retailers. In 1996, 41% of total Company sales were made to the U.S. home
improvement and remodeling markets which these retailers serve.
The Company recently introduced a strategic initiative, System Thinking for
the Home(TM), designed to leverage Owens Corning's broad product offering and
strong brand recognition. This systems approach represents a shift from
product-oriented to systems-driven solutions across all lines of business. By
redefining its role as a provider of insulation, roofing, siding, windows and
accessories and linking all of its products and technology to create a
high-performance building envelope, Company management is targeting an increased
share of the $220 billion building materials and home improvement industry.
Building Materials operates primarily in North America and Europe. It also
has a growing presence in Latin America and Asia Pacific. Building Materials
sells a variety of building and home improvement products in three major
categories: glass fiber and foam insulation, roofing materials, and other
specialty products for the home, such as housewrap, vinyl windows and patio
doors, and vinyl siding. The businesses responsible for these products and
markets include: Insulation, Building Materials Sales and Distribution -- North
America, Building Materials -- Europe and Africa, Roofing Systems, Specialty and
Foam Products, Western Fiberglass Group, Latin America, and Asia Pacific.
Composite Materials operates in North America, Europe and Latin America,
with affiliates and licensees around the world, including a growing presence in
Asia Pacific. The businesses responsible for these products include: Composites,
Latin America, Engineered Pipe & Fabrication Systems, and Asia Pacific.
The Company is the world's leading producer of glass fiber materials used
in composites. Composites are fabricated material systems made up of two or more
components (e.g., plastic resin and glass fiber) used in various applications to
replace traditional materials, such as aluminum, wood, and steel. The global
composites industry has expanded to include more than 40,000 end-use
applications. Worldwide, the composites industry has relatively few raw material
component suppliers (glass fiber, resin and additives) delivering to thousands
of industrial customers through various channels. Depending on the end-use
application, these raw materials move through different manufacturing process
chains, ultimately finding their way to consumers through myriad markets
worldwide. The primary end use markets that the Company serves are construction,
transportation, and electrical/electronics.
S-4
<PAGE> 6
SUMMARY FINANCIAL INFORMATION
The following summary consolidated financial data have been derived from
the Consolidated Financial Statements of the Company and should be read in
conjunction with "Selected Consolidated Financial Information" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus Supplement, and the Consolidated
Financial Statements of the Company and the Notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 (the
"1996 Form 10-K") and the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997 (the "Second Quarter Form 10-Q"), each of which is
incorporated in the accompanying Prospectus by reference. See "Incorporation of
Certain Documents by Reference" in the accompanying Prospectus. The following
summary consolidated financial data (other than in respect of balance sheet
data) do not include financial information concerning Fibreboard Corporation
because the acquisition by the Company of Fibreboard Corporation did not occur
until the end of the quarter ended June 30, 1997. See "The Company -- Recent
Developments -- Fibreboard Acquisition."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- -------------------------------------------------------
1997 1996(a) 1996(b) 1995(c) 1994(d) 1993(e) 1992(f)
------- ------- ------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA AND WHERE NOTED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales............................ $ 1,892 $1,805 $3,832 $3,612 $3,351 $2,944 $2,878
Gross margin......................... 462 471 998 942 815 678 644
Income (loss) from operations........ 182 (690) (504) 412 226 236 213
Cost of borrowed funds............... 42 36 77 87 94 89 110
Net income (loss).................... 105 (434) (284) 231 159 131 73
Net income (loss) per share
(primary).......................... 1.96 (8.43) (5.50) 4.64 3.61 3.00 1.70
Net income (loss) per share (fully
diluted)........................... 1.87 (8.43) (5.50) 4.40 3.35 2.81 1.67
Weighted average number of shares
outstanding (in thousands of
shares) (primary).................. 53,619 51,512 51,722 49,711 44,209 43,593 43,013
CASH FLOW DATA:
Net cash flow from operations........ (319) (87) 335 285 233 253 192
Capital expenditures................. 131 167 325 276 258 178 144
BALANCE SHEET DATA:
Total assets......................... 5,076(g) 3,980 3,913 3,261 3,274 3,013 3,162
Total debt........................... 2,033(g) 1,142 934 893 1,212 1,004 1,099
Stockholders' deficit................ (353) (666) (484) (212) (680) (869) (1,008)
RATIO OF EARNINGS TO FIXED
CHARGES(h)........................... 3.02x -- -- 3.67x 2.15x 2.42x 1.88x
RATIO OF EARNINGS TO COMBINED FIXED
CHARGES AND PREFERRED STOCK
DIVIDENDS(h)......................... 3.02x -- -- 3.67x 2.15x 2.42x 1.88x
</TABLE>
- ---------------
(a) For the six months ended June 30, 1996, the net loss of $434 million, or
$8.43 per share, includes a net after-tax charge of $542 million for
asbestos litigation claims that may be received after 1999 and probable
additional insurance recovery; after-tax special charges totaling $27
million including valuation adjustments associated with prior divestitures,
major product line productivity initiatives and a contribution to the
Owens-Corning Foundation; and an after-tax gain of $27 million from the sale
of the Company's ownership interest in its former Japanese affiliate, Asahi
Fiber Glass Co. Ltd.
Pursuant to generally accepted accounting principles, common stock
equivalents and convertible securities have been excluded from the
calculations of earnings per share in 1996, due to their anti-dilutive
effect. Consequently, primary and fully diluted earnings per share are equal
for 1996.
(b) In 1996 the net loss of $284 million, or $5.50 per share, includes a net
after-tax charge of $542 million for asbestos litigation claims that may be
received after 1999 and probable additional insurance recovery; after-tax
special charges totaling $27 million including valuation adjustments
associated with prior divestitures, major product line productivity
initiatives and a contribution to the Owens-Corning Foundation; an after-tax
charge of $26 million for restructuring and other actions; a $27 million
reduction of tax reserves due to favorable legislation; and an after-tax
gain of $27 million from the sale of the Company's ownership interest in its
former Japanese affiliate, Asahi Fiber Glass Co. Ltd.
Pursuant to generally accepted accounting principles, common stock
equivalents and convertible securities have been excluded from the
calculations of earnings per share in 1996, due to their anti-dilutive
effect. Consequently, primary and fully diluted earnings per share are equal
for 1996.
(c) Net income for 1995 of $231 million, or $4.64 per share ($4.40 per share
fully diluted), included a one time gain of $8 million which was the result
of a tax loss carryback.
S-5
<PAGE> 7
(d) Net income for 1994 of $159 million, or $3.61 per share ($3.35 per share
fully diluted), included the following offsetting special items: an
after-tax gain of $123 million reflecting a change to the capital method of
accounting for the rebuilding of glass melting facilities; an after-tax
charge of $85 million for productivity initiatives and other actions; a
non-cash, after-tax charge of $10 million to reflect adoption of Statement
of Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" for the Company's non-U.S.
plans; and a non-cash, after-tax charge of $28 million to reflect adoption
of SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
(e) Net income for 1993 of $131 million, or $3.00 per share ($2.81 per share
fully diluted), included a credit of $26 million for the cumulative effect
of adopting the new accounting standard for income taxes; a one-time gain of
$14 million reflecting a tax benefit resulting from a revaluation of
deferred taxes necessitated by the new federal tax law; an $8 million
pre-tax charge for the writedown of the Company's hydrocarbon ventures; and
a $23 million charge for the restructuring of the Company's European
operations.
(f) Net income for 1992 was $73 million, or $1.70 per share ($1.67 per share
fully diluted), and included a pre-tax reorganization charge of $16 million.
(g) In the second quarter of 1997, the Company purchased Fibreboard Corporation,
a North American manufacturer of vinyl siding and accessories and
manufactured stone, for $657 million, including $138 million of debt
assumed. The purchase price, which is included in long-term debt at June 30,
1997, was financed primarily through borrowings on the Company's new
long-term credit facility early in the third quarter of 1997. The purchase
price allocations were based on preliminary estimates of fair market value
and are subject to revision. The estimated fair value of assets acquired
from Fibreboard Corporation, including goodwill, was $923 million, and
liabilities assumed totaled $404 million (including the debt of $138
million).
(h) For purposes of the calculation of these ratios, earnings represent net
income before fixed charges, provision for taxes on income, undistributed
earnings of equity basis investments, extraordinary losses from early
retirement of debt and the cumulative effect of accounting changes. Fixed
charges include interest expense and the portion (one-third) of rental
expenses deemed to be representative of interest. Preferred stock dividends
represent only the distributions on the MIPS securities. The Company's
earnings for the six months ended June 30, 1996 and the year ended December
31, 1996 were insufficient to cover fixed charges by approximately $700
million and $600 million, respectively.
S-6
<PAGE> 8
THE TRUST
Owens Corning Capital II is a statutory business trust formed under
Delaware law pursuant to (i) a declaration of trust, dated as of April 2, 1997,
executed by the Company, as sponsor (the "Sponsor"), and the trustees of the
Trust (the "Owens Corning Trustees") and (ii) the filing of a certificate of
trust with the Secretary of State of the State of Delaware on April 2, 1997.
Such declaration will be amended and restated in its entirety (as so amended and
restated, the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus Supplement forms a part. The
Declaration will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in the assets of the Trust, (ii) investing the gross proceeds of the
Trust Securities in the Debentures and (iii) engaging in only those other
activities necessary or incidental thereto. See "The Trust."
THE OFFERING
Securities Offered......... 6,000,000 Income PRIDES.
Issuers.................... Owens Corning and Owens Corning Capital II.
Stated Amount.............. $50 per Income PRIDES.
Components of FELINE
PRIDES................... Each FELINE PRIDES offered hereby initially will
consist of a unit (referred to as an "Income
PRIDES(SM)") comprised of (a) a stock purchase
contract (the "Purchase Contract") under which (i)
the holder will purchase from the Company on
November 16, 2000 (the "Purchase Contract
Settlement Date"), for an amount of cash equal to
the Stated Amount, a number of newly issued shares
of common stock, par value $.10 per share (the
"Common Stock"), of the Company equal to the
Settlement Rate (as defined herein), and (ii) the
Company will pay Contract Adjustment Payments, if
any, to the holder, and (b) beneficial ownership of
a % Trust Preferred Security, having a stated
liquidation amount equal to the Stated Amount,
representing a preferred, undivided beneficial
interest in the assets of the Trust. The purchase
price of each Income PRIDES will be allocated
between the related Purchase Contract and the
related Trust Preferred Security in proportion to
their respective fair market values at the time of
purchase. See "Certain Federal Income Tax
Consequences -- Acquisition of Income PRIDES;
Initial Basis in Trust Preferred Securities and
Purchase Contracts." The Company will, directly or
indirectly, own all of the Common Securities. The
Trust exists for the sole purpose of issuing the
Trust Preferred Securities and the Common
Securities and investing the proceeds thereof in an
equivalent amount of % Debentures of the
Company, due November 16, 2002 (the "Debentures").
The distribution rate on the Trust Preferred
Securities and the interest rate on the related
Debentures will be reset on the Purchase Contract
Settlement Date to the Reset Rate, to be determined
by a nationally recognized investment banking firm
chosen by the Company (the "Reset Agent"). See
"Description of the Preferred Securities -- Market
Rate Reset."
The Company will have the right at any time to
dissolve the Trust and, after satisfaction of
liabilities to creditors of the Trust, if any,
cause the Debentures to be distributed to the
holders of the Trust Preferred Securities.
References herein to Trust Preferred Securities,
unless the
S-7
<PAGE> 9
context otherwise requires, mean (i) the Trust
Preferred Securities or (ii) the Debentures which
have been delivered to the holders upon dissolution
of the Trust in the case of an Investment Company
Event (as defined herein) or otherwise. The
distribution rate and the payment dates for the
Trust Preferred Securities will correspond to the
interest rate and the payment dates for the
Debentures, which will be the sole assets of the
Trust. As long as a FELINE PRIDES is in the form of
an Income PRIDES, the related Trust Preferred
Securities will be pledged with The Chase Manhattan
Bank as collateral agent for the Company (together
with any successor thereto in such capacity, the
"Collateral Agent"), to secure the holder's
obligation to purchase Common Stock under the
related Purchase Contracts. See "Risk Factors."
Purchase Contract
Agreement.................. The FELINE PRIDES will be issued under a Purchase
Contract Agreement, to be dated as of ,
1997 (the "Purchase Contract Agreement"), between
the Company and The Bank of New York, as agent for
the holders of the FELINE PRIDES (together with any
successor thereto in such capacity, the "Purchase
Contract Agent").
Substitution of Pledged
Securities............... Each holder of an Income PRIDES will have the right
to substitute for the related Trust Preferred
Securities held by the Collateral Agent zero-coupon
U.S. Treasury Securities (CUSIP No. 912820 AY3),
which are principal strips of the 8 1/2% U.S.
Treasury Securities which mature on November 15,
2000 (the "Treasury Securities"), in an amount per
Income PRIDES equal to the Stated Amount per Trust
Preferred Security. Because Treasury Securities are
issued in integral multiples of $1,000, holders of
Income PRIDES may make such substitutions only in
integral multiples of 20 Income PRIDES. Such
Treasury Securities will be pledged with the
Collateral Agent to secure the holder's obligation
to purchase Common Stock under the related Purchase
Contracts. FELINE PRIDES with respect to which
Treasury Securities have been substituted for the
related Trust Preferred Securities as collateral to
secure such obligation will be referred to as
Growth PRIDES(SM). Each Growth PRIDES will consist
of a unit with a face amount of $50 comprised of
(a) a Purchase Contract under which (i) the holder
will purchase from the Company on the Purchase
Contract Settlement Date or earlier for an amount
of cash equal to the Stated Amount of such Growth
PRIDES a number of newly issued shares of Common
Stock of the Company equal to the Settlement Rate
described herein and (ii) the Company will pay the
holder Contract Adjustment Payments, if any, and
(b) a 1/20 undivided beneficial ownership interest
in a related Treasury Security having a principal
amount at maturity equal to $1,000 and maturing on
the Business Day immediately preceding the Purchase
Contract Settlement Date. Upon the substitution of
Treasury Securities for the related Trust Preferred
Securities as collateral, such Trust Preferred
Securities will be released to the holder as
described herein and thereafter will trade
separately from the resulting Growth PRIDES. See
"Description of the FELINE PRIDES -- Substitution
of Pledged Securities."
Holders who elect to substitute Pledged Securities
(as defined in "Description of the Purchase
Contracts -- Pledged Securities and Pledge
Agreement"), thereby creating Growth PRIDES or
recreating
S-8
<PAGE> 10
Income PRIDES (as discussed below), will be
responsible for any fees or expenses payable in
connection therewith. See "Certain Provisions of
the Purchase Contract Agreement and the Pledge
Agreement -- Miscellaneous."
Recreating Income PRIDES... A holder of Growth PRIDES will have the right to
subsequently recreate Income PRIDES by delivering
20 Growth PRIDES to the Purchase Contract Agent
plus 20 Trust Preferred Securities to the
Collateral Agent in exchange for 20 Income PRIDES
and the release of the related Treasury Security to
such holder. Such Trust Preferred Securities will
be pledged with the Collateral Agent to secure the
holder's obligation to purchase Common Stock under
the related Purchase Contracts. See "Description of
the FELINE PRIDES -- Recreating Income PRIDES."
Current Payments........... Holders of Income PRIDES will be entitled to
receive aggregate cash distributions at a rate
of % of the Stated Amount per annum from and
after , 1997, payable quarterly in
arrears, consisting of cumulative cash
distributions on the related Trust Preferred
Securities payable by the Trust at the rate
of % of the Stated Amount per annum, and
Contract Adjustment Payments, payable by the
Company at the rate of % of the Stated Amount
per annum (provided that if such rate is 0%, then
the Company will not make any Contract Adjustment
Payments), in each case subject to the Company's
right to defer the payment of such amounts. The
ability of the Trust to make the quarterly
distributions on the related Trust Preferred
Securities will be solely dependent upon the
receipt of corresponding interest payments from the
Company on the Debentures. The Company's
obligations with respect to the Debentures and to
the Contract Adjustment Payments, if any, will be
senior and unsecured and will rank pari passu in
right of payment with all other senior unsecured
obligations of the Company, except that such
obligations with respect to the Debentures and to
the Contract Adjustment Payments, if any, will be
subordinated and junior in right of payment to the
Senior Indebtedness (as defined herein).
In the event that a holder of Income PRIDES
substitutes Treasury Securities for the related
Trust Preferred Securities, such holder would
receive on the resulting Growth PRIDES only the
quarterly distributions of Contract Adjustment
Payments, if any, subject to the Company's rights
of deferral described herein. In addition, imputed
interest would continue to accrete on the related
Treasury Securities. See "Risk Factors -- Right to
Defer Current Payments."
Contract Adjustment
Payments................... Contract Adjustment Payments will be fixed at a
rate per annum of % of the Stated Amount per
Purchase Contract, provided that if such rate is
0%, then the Company will not make any Contract
Adjustment Payments. Contract Adjustment Payments
will be specified as a positive component of the
distributions on the Income PRIDES only if and to
the extent that the rate of distributions on the
Trust Preferred Securities, as determined on the
date on which the Income PRIDES are priced for
sale, is less than the aggregate distribution rate
required on such date for the offer and sale of the
Income PRIDES at the price to public specified on
the cover page of this Prospectus Supplement.
Accordingly, the final Prospectus Supplement will
indicate whether and to what extent Contract
Adjustment Payments will be required to be made by
the Com-
S-9
<PAGE> 11
pany. See "Description of the Purchase
Contracts -- Contract Adjustment Payments."
Option to Extend
Distribution
Payment Periods.......... The Company has the right at any time, and from
time to time, limited to a period not extending
beyond the maturity date of the Debentures, to
defer the interest payments due on the Debentures.
As a consequence of such deferral, quarterly
distributions to holders of Income PRIDES (or any
Trust Preferred Securities outstanding after the
Purchase Contract Settlement Date or after a
substitution of collateral resulting in the
creation of Growth PRIDES) would be deferred (but
despite such deferral, would continue to accumulate
quarterly and would accrue interest thereon
compounded quarterly at the rate of % per annum
through and including November 15, 2000, and at the
Reset Rate thereafter). The Company also has the
right to defer the payment of Contract Adjustment
Payments, if any, on the related Purchase Contracts
until no later than the Purchase Contract
Settlement Date; however, such deferred Contract
Adjustment Payments, if any, will bear additional
Contract Adjustment Payments at the rate of % per
annum (such deferred Contract Adjustment Payments
together with the additional Contract Adjustment
Payments shall be referred to as the "Deferred
Contract Adjustment Payments"). See "Description of
the Purchase Contracts -- Contract Adjustment
Payments." If interest payments on the Debentures
or the Contract Adjustment Payments, if any, are
deferred, the Company has agreed, among other
things, not to declare or pay any dividend on or
repurchase its capital stock during the period of
such deferral.
In the event that the Company elects to defer the
payment of Contract Adjustment Payments, if any, on
the related Purchase Contracts until the Purchase
Contract Settlement Date, each holder of the
related Income PRIDES or Growth PRIDES will receive
on the Purchase Contract Settlement Date in respect
of such Deferred Contract Adjustment Payments, in
lieu of a cash payment, a number of shares of
Common Stock equal to (x) the aggregate amount of
Deferred Contract Adjustment Payments payable to
such holder divided by (y) the Applicable Market
Value (as defined herein). See "Description of the
Purchase Contracts -- Option to Defer Contract
Adjustment Payments."
Payment Dates.............. Subject to the deferral provisions described
herein, the current payments described above in
respect of the Income PRIDES will be payable
quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year,
commencing , 1997, through and
including (i) in the case of the Contract
Adjustment Payments, if any, the Purchase Contract
Settlement Date or the most recent such quarterly
date on or prior to any early settlement of the
related Purchase Contracts and (ii) in the case of
Trust Preferred Securities, through and including
the most recent such quarterly date on or prior to
the earlier of the Purchase Contract Settlement
Date and the date the liquidation amount of a Trust
Preferred Security, together with all accumulated
and unpaid distributions thereon, is paid in full
(each, a "Payment Date").
Purchase Contract
Settlement Date.......... November 16, 2000.
S-10
<PAGE> 12
Settlement of Purchase
Contracts................ On the Business Day immediately preceding the
Purchase Contract Settlement Date, unless a holder
of Income PRIDES or Growth PRIDES (i) has settled
the related Purchase Contracts through the early
delivery of cash to the Purchase Contract Agent in
the manner described herein, (ii) has notified the
Purchase Contract Agent of its intention to settle
the related Purchase Contracts with separate cash
on the Business Day prior to the Purchase Contract
Settlement Date and has so settled such Purchase
Contracts, or (iii) an event described under
"Description of the Purchase
Contracts -- Termination" has occurred, (A) in the
case of Income PRIDES, such holder will be deemed
to have requested the Trust to put the related
Debentures to the Company on the Purchase Contract
Settlement Date, for a price equal to the aggregate
principal amount of such Debentures plus accrued
and unpaid interest, if any, thereon, and, upon the
repurchase of such Debentures, the proceeds will be
applied to redeem the related Trust Preferred
Securities of such holder having an aggregate
stated liquidation amount equal to the aggregate
principal amount of the Debentures so to be
repurchased, and an amount equal to such aggregate
stated liquidation amount will automatically be
applied to satisfy in full such holder's obligation
to purchase Common Stock under the related Purchase
Contracts, and (B) in the case of Growth PRIDES,
the principal amount of the related Treasury
Securities, when paid at maturity, will
automatically be applied to satisfy in full such
holder's obligation to purchase Common Stock under
the related Purchase Contracts. See "Description of
the Debentures -- Put Option."
In the event that a holder of either Income PRIDES
or Growth PRIDES effects the early settlement of
the related Purchase Contracts through the delivery
of cash or settles such Purchase Contracts with
cash on the Business Day immediately preceding the
Purchase Contract Settlement Date, the related
Trust Preferred Securities or Treasury Securities,
as the case may be, will be released to the holder
as described herein.
Settlement Rate............ The number of new shares of Common Stock issuable
upon settlement of each Purchase Contract on the
Purchase Contract Settlement Date (the "Settlement
Rate") will be calculated as follows (subject to
adjustment under certain circumstances): (a) if the
Applicable Market Value is equal to or greater than
$ (the "Threshold Appreciation Price"),
the Settlement Rate will be , (b) if the
Applicable Market Value is less than the Threshold
Appreciation Price but greater than $ ,
the Settlement Rate will equal the Stated Amount
divided by the Applicable Market Value, and (c) if
the Applicable Market Value is less than or equal
to $ , the Settlement Rate will be
. "Applicable Market Value" means the
average of the Closing Price (as defined) per share
of Common Stock on each of the thirty consecutive
Trading Days (as defined) ending on the second
Trading Day immediately preceding the Purchase
Contract Settlement Date.
Early Settlement........... A holder of Income PRIDES or Growth PRIDES may
settle (an "Early Settlement") the related Purchase
Contracts prior to the Purchase Contract Settlement
Date in the manner described herein, but only in
S-11
<PAGE> 13
integral multiples of 20 Income PRIDES or Growth
PRIDES. Upon such Early Settlement, (a) the holder
will pay to the Company through the Purchase
Contract Agent in immediately available funds an
amount equal to the Stated Amount for each Purchase
Contract to be settled and deliver the Income
PRIDES or Growth PRIDES, as the case may be, to the
Purchase Contract Agent, (b) the related Trust
Preferred Securities or Treasury Securities, as
applicable, within three Business Days of the date
of Early Settlement, will be transferred to the
holder free and clear of the Company's security
interest therein, and (c) the Company, within three
Business Days of the date of Early Settlement, will
deliver newly issued shares of Common Stock to
the holder for each Purchase Contract so settled.
Upon Early Settlement, (i) the holder's rights to
receive Deferred Contract Adjustment Payments, if
any, on the Purchase Contracts being settled will
be forfeited, (ii) the holder's right to receive
additional Contract Adjustment Payments, if any, in
respect of such Purchase Contracts will terminate
and (iii) no adjustment will be made to or for the
holder on account of Deferred Contract Adjustment
Payments, if any, or any amount accrued in respect
of Contract Adjustment Payments, if any.
Termination................ The Purchase Contracts (including the right
thereunder to receive accrued or Deferred Contract
Adjustment Payments, if any, and the obligation to
purchase Common Stock) will automatically terminate
upon the occurrence of certain events of
bankruptcy, insolvency or reorganization with
respect to the Company. Upon such termination, the
Collateral Agent will release the related Trust
Preferred Securities or, if substituted, the
related Treasury Securities, held by it to the
Purchase Contract Agent for distribution to the
holders, although there may be a limited delay
before such release and distribution. In the event
that the Company becomes the subject of a case
under the United States Bankruptcy Code of 1978, as
amended (the "Bankruptcy Code"), such delay may
occur as a result of the automatic stay under the
Bankruptcy Code and continue until such automatic
stay has been lifted.
Voting and Certain Other
Rights..................... Holders of Trust Preferred Securities will not be
entitled to vote to appoint, remove or replace, or
to increase or decrease the number of Regular
Trustees and will generally have no voting rights
except in the limited circumstances described under
"Description of Trust Preferred
Securities -- Voting Rights." Holders of Purchase
Contracts forming part of the Income PRIDES or
Growth PRIDES in their capacities as such holders
will have no voting or other rights in respect of
the Common Stock.
Listing of the Income
PRIDES................... Application will be made to list the Income PRIDES
on the New York Stock Exchange (the "NYSE") under
the symbol " ", subject to official notice of
issuance. The Growth PRIDES and the Trust Preferred
Securities will not be listed or traded on any
securities exchange. See "Underwriting."
NYSE Symbol of Common
Stock.................... "OWC"
S-12
<PAGE> 14
TRUST PREFERRED SECURITIES
The Trust.................. Owens Corning Capital II, a Delaware business
trust. The sole assets of the Trust will consist of
the Debentures. The Company will directly or
indirectly own all of the Common Securities
representing undivided beneficial interests in the
assets of the Trust.
Trust Preferred
Securities................. 6,000,000 of % Trust Preferred Securities
(liquidation amount $50 per Trust Preferred
Security), representing preferred, undivided
beneficial interests in the assets of the Trust.
Distributions.............. Distributions on the Trust Preferred Securities,
which will constitute all or a portion of the
distributions on the Income PRIDES, will be
cumulative, will accrue from the first date of
issuance of the Trust Preferred Securities and will
be payable initially at the annual rate of % of
the liquidation amount of $50 per Trust Preferred
Security to but excluding the Purchase Contract
Settlement Date, and from the Purchase Contract
Settlement Date to but excluding November 16, 2002,
at the Reset Rate, in each case, when, as and if
funds are available for payment. Subject to the
distribution deferral provisions, distributions
will be payable quarterly in arrears on each March
31, June 30, September 30 and December 31,
commencing , 1997.
Market Rate
Reset.................... The quarterly distribution rate on the Trust
Preferred Securities and the interest rate on the
Debentures will be reset on the Purchase Contract
Settlement Date to the Reset Rate, determined by
the Reset Agent as the rate the Trust Preferred
Securities should bear in order for a Trust
Preferred Security to have an approximate market
value of 100.5% of the Stated Amount on the
Purchase Contract Settlement Date, provided, that
in no event will the Reset Rate be higher than the
rate on the Two-Year Benchmark Treasury plus 200
basis points (2%). Such market value may be less
than 100.5% if the Reset Spread is set at the
maximum of 2%. It is currently anticipated that
Merrill Lynch & Co. will be the Reset Agent. See
"Description of the Trust Preferred Securities --
Market Rate Reset."
Distribution Deferral
Provisions............... The ability of the Trust to pay distributions on
the Trust Preferred Securities will be solely
dependent on the receipt of interest payments from
the Company on the Debentures. The Company will
have the right at any time, and from time to time,
to defer the interest payments due on the
Debentures for successive extension periods (the
"Extension Periods") limited, in the aggregate, to
a period not extending beyond the maturity date of
the Debentures. The corresponding quarterly
distributions on the Trust Preferred Securities
would be deferred by the Trust (but would continue
to accumulate quarterly and would accrue interest,
compounded quarterly, at the rate of % per annum
through and including November 15, 2000, and at the
Reset Rate thereafter) until the end of any such
Extension Period. If a deferral of an interest
payment occurs, the holders of the Trust Preferred
Securities will accrue interest income for United
States federal income tax purposes in advance of
the receipt of any corresponding cash distribution
with respect to such deferred interest payment. See
"Risk Factors -- Right to Defer Current Payments,"
"Description of the Trust Preferred
Securities -- Distribu-
S-13
<PAGE> 15
tions" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue
Discount on Trust Preferred Securities."
Rights Upon Deferral of
Distribution............. During any period in which interest payments on the
Debentures are deferred, interest will accrue on
the Debentures (compounded quarterly) and quarterly
distributions on the Trust Preferred Securities
will continue to accumulate with interest thereon
at the rate of % per annum through and including
November 15, 2000, and at the Reset Rate
thereafter, compounded quarterly.
Liquidation Preference..... In the event of any liquidation of the Trust, and
after satisfaction of liabilities to creditors of
the Trust, if any, holders will be entitled to
receive Debentures in an aggregate principal amount
equal to the aggregate stated liquidation amount of
the Trust Preferred Securities.
Put Option................. Holders of Debentures will have the right to
require the Company to repurchase, on the Purchase
Contract Settlement Date, their Debentures at a
price per Debenture equal to $50, plus accrued and
unpaid interest, if any, thereon. Upon the
repurchase of such Debentures by the Company, the
proceeds from such repurchase shall simultaneously
be applied to redeem Trust Preferred Securities of
such holders having an aggregate stated liquidation
amount equal to the aggregate principal amount of
the Debentures so repurchased. On the Business Day
immediately preceding the Purchase Contract
Settlement Date, each holder of Income PRIDES that
has neither previously exercised such holder's
option of Early Settlement nor settled the related
Purchase Contracts with cash on such date will be
deemed to have requested the Trust to put the
related Debentures to the Company on the Purchase
Contract Settlement Date for a price per Debenture
equal to $50, plus accrued and unpaid interest, if
any, thereon (a "Put Option"). Upon the repurchase
of such Debentures by the Company pursuant to such
Put Option, (i) the proceeds from such repurchase
shall simultaneously be applied to redeem Trust
Preferred Securities of such holder having an
aggregate stated liquidation amount equal to the
aggregate principal amount of the Debentures so
repurchased, and an amount equal to such aggregate
stated liquidation amount will automatically be
applied to satisfy in full such holder's obligation
to purchase Common Stock under the related Purchase
Contracts as described herein and (ii) any accrued
and unpaid interest with respect to the Debentures
so repurchased will be paid to such holder in cash.
To the extent that holders of Income PRIDES
exercise their right of Early Settlement or settle
their related Purchase Contracts with cash on the
Business Day immediately preceding the Purchase
Contract Settlement Date, such holders will not be
deemed to have requested the Trust to put the
related Debentures to the Company and the related
Trust Preferred Securities will not be redeemed on
the Purchase Contract Settlement Date as stated
above.
Investment Company Event
Distribution............. In certain circumstances involving an Investment
Company Event (which event will generally be
triggered if the Trust is considered an "investment
company" under the Investment Company Act of 1940,
as amended), the Trust would be dissolved, with the
result that, after satisfaction of liabilities to
creditors of the Trust, if any, Debentures with an
aggregate principal amount equal to the aggregate
stated liquidation
S-14
<PAGE> 16
amount of the Trust Preferred Securities would be
distributed to the holders of the Trust Preferred
Securities on a pro rata basis. In such event, an
Income PRIDES would thereafter consist of a
Debenture with a principal amount equal to the
Stated Amount of such Income PRIDES and the related
Purchase Contract, and a holder could, on the
Purchase Contract Settlement Date, cause the
Debenture to be repaid and the proceeds thereof
applied to satisfy in full such holder's obligation
to purchase Common Stock under the related Purchase
Contract as described herein.
Redemption................. The Company will not have the ability to redeem the
Debentures prior to their stated maturity date.
Guarantee.................. The Company will irrevocably and unconditionally
guarantee (the "Guarantee"), generally on a senior
unsecured basis (but subordinated to the extent
described herein), the payment in full of (i)
distributions on the Trust Preferred Securities to
the extent the Trust has funds available therefor,
(ii) the redemption price of Trust Preferred
Securities in respect of which the related
Debentures have been repurchased by the Company on
the Purchase Contract Settlement Date, to the
extent the Trust has funds available therefor, and
(iii) generally, the liquidation amount of the
Trust Preferred Securities to the extent the Trust
has assets available for distribution to holders of
Trust Preferred Securities in the event of a
dissolution of the Trust. The Guarantee will be a
senior unsecured obligation of the Company and will
rank pari passu with all of the Company's other
senior unsecured obligations, except that such
obligations with respect to the Guarantee will be
subordinated and junior in right of payment to the
Company's obligations under the Senior
Indebtedness.
Debentures................. The Debentures will mature on November 16, 2002,
and will bear, initially, interest at the rate
of % per annum, payable quarterly in arrears on
each March 31, June 30, September 30 and December
31 commencing , 1997. The interest rate
on the Debentures and the distribution rate on the
Trust Preferred Securities will be reset on the
Purchase Contract Settlement Date to the Reset Rate
determined by the Reset Agent. See "Description of
Debentures -- Interest." Interest payments on the
Debentures may be deferred from time to time by the
Company for successive Extension Periods not
extending, in the aggregate, beyond the stated
maturity date of the Debentures. During any
Extension Period, interest at the rate of % per
annum through and including November 15, 2000, and
at the Reset Rate thereafter would continue to
accrue and compound quarterly. Upon the termination
of any Extension Period and the payment of all
amounts then due, the Company may commence a new
Extension Period, provided such new Extension
Period does not extend beyond the stated maturity
date of the Debentures. No interest shall be due
during an Extension Period until the end of such
period. During an Extension Period, the Company
will be prohibited from paying dividends on or
purchasing any of its capital stock and making
certain other restricted payments until quarterly
interest payments are resumed and all amounts then
due on the Debentures are paid. The Debentures will
be senior unsecured obligations of the Company and
will rank pari passu with all of the Company's
other senior unsecured obligations, except that the
Debentures will be subordinated
S-15
<PAGE> 17
and junior in right of payment to the Company's
obligations under the Senior Indebtedness. See
"Description of the Debentures."
Federal Income Tax
Consequences............. The Debentures may be issued with original issue
discount ("OID"), in which case a holder will be
required to include such OID in income on an
economic accrual basis, or if the Company exercises
its right to defer payments of interest on the
Debentures will be treated as reissued with OID.
Contract Adjustment Payments, if any, and Deferred
Contract Adjustment Payments (whether payable in
cash or additional shares of Common Stock), if any,
may constitute income to a holder when received or
accrued, in accordance with such holder's method of
accounting. Holders should consult their advisors
concerning the treatment of Contract Adjustment
Payments and Deferred Contract Adjustment Payments,
if any, including the possibility that any such
payment may be treated as a loan, purchase price
adjustment, rebate or payment analogous to an
option premium, rather than being includible in
income on a current basis. A holder of Growth
PRIDES will continue to include in income any
interest, OID or market discount or amortize any
bond premium otherwise includible or deductible,
respectively, with respect to Treasury Securities
held by the Collateral Agent. See "Certain Federal
Income Tax Consequences."
Use of Proceeds............ All or substantially all of the proceeds from the
sale of the Income PRIDES, of which the Trust
Preferred Securities are a component, will be
invested by the Trust in Debentures of the Company,
and the remainder, if any, will be paid to the
Company. The net proceeds of such sale of
approximately $ million ultimately will be used
by the Company to repay indebtedness under the $2
billion Credit Agreement, dated as of June 26, 1997
(the "Credit Agreement"), among the Company,
certain subsidiaries of the Company, the banks
party thereto and Credit Suisse First Boston, as
agent for such banks, and for general corporate
purposes, including, without limitation, working
capital, repurchases or redemptions of the
Company's outstanding debt securities or other
reductions of the Company's outstanding borrowings,
business acquisitions, investments in or loans to
subsidiaries or capital expenditures. See "Use of
Proceeds."
S-16
<PAGE> 18
RISK FACTORS
Potential purchasers of the FELINE PRIDES offered hereby should carefully
consider the risk factors set forth herein under "Risk Factors" as well as other
information contained in this Prospectus Supplement and the accompanying
Prospectus.
INVESTMENT IN FELINE PRIDES WILL BECOME INVESTMENT IN COMMON STOCK; RISK OF
DECLINE IN EQUITY VALUE
Although holders of the FELINE PRIDES will be the beneficial owners of the
related Trust Preferred Securities or Treasury Securities, as the case may be,
prior to the Purchase Contract Settlement Date, unless a holder of FELINE PRIDES
settles the related Purchase Contracts through the delivery of cash to the
Purchase Contract Agent in the manner described below or the Purchase Contracts
are terminated (upon the occurrence of certain events of bankruptcy, insolvency
or reorganization with respect to the Company), the proceeds of the repurchase
by the Company of the related Debentures or the principal of the related
Treasury Securities, when paid at maturity, as the case may be, will
automatically be applied to the purchase of a specified number of shares of
Common Stock on behalf of such holder. Thus, unless a holder has cash settled,
following the Purchase Contract Settlement Date, holders will own shares of
Common Stock rather than a beneficial interest in Trust Preferred Securities or
Treasury Securities. See "Description of the Purchase Contracts -- General."
There can be no assurance that the market value of the Common Stock receivable
by the holder on the Purchase Contract Settlement Date will be equal to or
greater than the Stated Amount of the FELINE PRIDES held by such holder. If the
Applicable Market Value of the Common Stock is less than the closing price of
the Common Stock on the date hereof, the market value of the Common Stock
receivable by the holder on the Purchase Contract Settlement Date will be less
than the Stated Amount paid for the FELINE PRIDES, in which case an investment
in the Securities will result in a loss. Accordingly, a holder of the FELINE
PRIDES assumes the risk that the market value of the Common Stock may decline,
and that such decline could be substantial.
LIMITATIONS ON OPPORTUNITY FOR EQUITY APPRECIATION
The opportunity for equity appreciation afforded by an investment in the
FELINE PRIDES is less than the opportunity for equity appreciation afforded by a
direct investment in the Common Stock because the market value of the Common
Stock to be received by a holder of Purchase Contracts on the Purchase Contract
Settlement Date will only exceed the Stated Amount if the Applicable Market
Value of the Common Stock exceeds the Threshold Appreciation Price (which
represents an appreciation of % over the closing price of the Common Stock
on the date hereof). Moreover, holders of the FELINE PRIDES will only be
entitled to receive on the Purchase Contract Settlement Date % (the
percentage equal to the closing price of the Common Stock on the date hereof
divided by the Threshold Appreciation Price) of any appreciation of the value of
the Common Stock in excess of the Threshold Appreciation Price.
FACTORS AFFECTING TRADING PRICES
The trading prices of Income PRIDES and Growth PRIDES in the secondary
market will be directly affected by the trading prices of the Common Stock in
the secondary market, the general level of interest rates and the credit quality
of the Company. It is impossible to predict whether the price of Common Stock or
interest rates will rise or fall. Trading prices of Common Stock will be
influenced by the Company's operating results and prospects and by economic,
financial and other factors and market conditions that can affect the capital
markets generally, including the level of, and fluctuations in, the trading
prices of stocks generally and sales of substantial amounts of Common Stock in
the market subsequent to the offering of the Securities or the perception that
such sales could occur. Fluctuations in interest rates may give rise to
opportunities of arbitrage based upon changes in the relative value of the
Common Stock underlying the Purchase Contracts and of the other components of
the FELINE PRIDES. Any such arbitrage could, in turn, affect the trading prices
of the Income PRIDES, Growth PRIDES, Trust Preferred Securities and Common
Stock.
S-17
<PAGE> 19
VOTING AND CERTAIN OTHER RIGHTS
Holders of Trust Preferred Securities will not be entitled to vote to
appoint, remove or replace or to increase or decrease the number of Owens
Corning Trustees, and generally will have no voting rights except in the limited
circumstances described under "Description of the Trust Preferred
Securities -- Voting Rights." Holders of FELINE PRIDES will not be entitled to
any rights with respect to the Common Stock (including, without limitation,
voting rights and rights to receive any dividends or other distributions in
respect thereof) unless and until such time as the Company shall have delivered
shares of Common Stock for FELINE PRIDES on the Purchase Contract Settlement
Date or as a result of Early Settlement, as the case may be, and unless the
applicable record date, if any, for the exercise of such rights occurs after
such date. For example, in the event that an amendment is proposed to the
Articles of Incorporation or By-Laws of the Company and the record date for
determining the stockholders of record entitled to vote on such amendment occurs
prior to such delivery, holders of FELINE PRIDES will not be entitled to vote on
such amendment.
DILUTION OF COMMON STOCK
The number of shares of Common Stock that holders of the FELINE PRIDES are
entitled to receive on the Purchase Contract Settlement Date or as a result of
Early Settlement is subject to adjustment for certain events arising from stock
splits and combinations, stock dividends and certain other actions of the
Company that modify its capital structure. See "Description of the Purchase
Contracts -- Anti-Dilution Adjustments." Such number of shares of Common Stock
to be received by such holders on the Purchase Contract Settlement Date or as a
result of Early Settlement will not be adjusted for other events, such as
offerings of Common Stock for cash or in connection with acquisitions. The
Company is not restricted from issuing additional Common Stock during the term
of either the Purchase Contracts or the Trust Preferred Securities and has no
obligation to consider the interests of the holders of FELINE PRIDES for any
reason. Additional issuances may materially and adversely affect the price of
the Common Stock and, because of the relationship of the number of shares to be
received on the Purchase Contract Settlement Date to the price of the Common
Stock, such other events may adversely affect the trading price of Income PRIDES
or Growth PRIDES.
POSSIBLE ILLIQUIDITY OF THE SECONDARY MARKET
It is not possible to predict how Income PRIDES, Growth PRIDES or Trust
Preferred Securities will trade in the secondary market or whether such market
will be liquid or illiquid. Income PRIDES and Growth PRIDES are novel securities
and there is currently no secondary market for either Income PRIDES or Growth
PRIDES. Application will be made to list the Income PRIDES on the NYSE. The
Growth PRIDES and the Trust Preferred Securities will not be listed or traded on
any securities exchange. The Company and the Trust have been advised by the
Underwriters that they presently intend to make a market for the Growth PRIDES
and the Trust Preferred Securities; however, they are not obligated to do so and
any market making may be discontinued at any time. There can be no assurance as
to the liquidity of any market that may develop for the Income PRIDES, the
Growth PRIDES or the Trust Preferred Securities, the ability of holders to sell
such securities, the price at which holders would be able to sell such
securities or whether a trading market, if it develops, will continue. In
addition, in the event that holders of Income PRIDES were to substitute Treasury
Securities for Trust Preferred Securities, thereby converting their Income
PRIDES to Growth PRIDES, the liquidity of Income PRIDES could be adversely
affected. There can be no assurance that the Income PRIDES will not be delisted
from the NYSE or that trading in the Income PRIDES will not be suspended as a
result of the election by holders to create Growth PRIDES through the
substitution of collateral, which could cause the number of Income PRIDES to
fall below the requirement for listing securities on the NYSE that at least
1,000,000 Income PRIDES be outstanding at any time.
PLEDGED SECURITIES ENCUMBERED
Although holders of FELINE PRIDES will be beneficial owners of the related
Trust Preferred Securities or Treasury Securities (together, the "Pledged
Securities"), as applicable, those Pledged Securities will be pledged with the
Collateral Agent to secure the obligations of the holders under the related
Purchase Contracts. Thus, rights of the holders to their Pledged Securities will
be subject to the Company's security
S-18
<PAGE> 20
interest. Additionally, notwithstanding the automatic termination of the
Purchase Contracts, in the event that the Company becomes the subject of a case
under the Bankruptcy Code, the delivery of the Pledged Securities to holders of
the FELINE PRIDES may be delayed by the imposition of the automatic stay of
Section 362 of the Bankruptcy Code.
INVESTMENT COMPANY EVENT DISTRIBUTION
Upon the occurrence of an Investment Company Event, the Trust will be
dissolved (except in the limited circumstances described in the following
sentence) with the result that Debentures with an aggregate principal amount
equal to the aggregate stated liquidation amount of the Trust Preferred
Securities would be distributed to the holders of the Trust Preferred Securities
on a pro rata basis. Such dissolution and distribution shall be conditioned on
the Company being unable to avoid such Investment Company Event within a 90 day
period by taking some ministerial action or pursuing some other reasonable
measure that will have no adverse effect on the Trust, the Company or the
holders of the Trust Preferred Securities, and will involve no material cost. In
addition, the Company will have the right at any time to dissolve the Trust. See
"Description of the Trust Preferred Securities -- Distribution of the
Debentures."
Under current United States federal income tax law, a distribution of
Debentures upon the dissolution of the Trust would not be a taxable event to
holders of the Trust Preferred Securities. See "Certain Federal Income Tax
Consequences -- Distribution of Debentures to U.S. Holders of Trust Preferred
Securities."
There can be no assurance as to the impact on the market prices for Income
PRIDES of a distribution of the Debentures in exchange for Trust Preferred
Securities upon a dissolution of the Trust. Because Income PRIDES will consist
of Debentures and related Purchase Contracts upon the occurrence of the
dissolution of the Trust as a result of an Investment Company Event or
otherwise, prospective purchasers of Income PRIDES are also making an investment
decision with regard to the Debentures and should carefully review all the
information regarding the Debentures contained herein. See "Description of the
Trust Preferred Securities -- Distribution of the Debentures" and "Description
of the Debentures -- General."
RIGHT TO DEFER CURRENT PAYMENTS
The Company may, at its option, defer the payment of Contract Adjustment
Payments, if any, on the Purchase Contracts until the Purchase Contract
Settlement Date. However, deferred installments of Contract Adjustment Payments,
if any, will bear Deferred Contract Adjustment Payments at the rate of % per
annum (compounding on each succeeding Payment Date) until paid. If the Purchase
Contracts are settled early or terminated (upon the occurrence of certain events
of bankruptcy, insolvency or reorganization with respect to the Company), the
right to receive Contract Adjustment Payments (other than any accrued but unpaid
Contract Adjustment Payments that have not been deferred), if any, and Deferred
Contract Adjustment Payments, if any, will also terminate.
In the event that the Company elects to defer the payment of any Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each holder of Purchase Contracts will receive on the Purchase
Contract Settlement Date in respect of the Deferred Contract Adjustment
Payments, in lieu of a cash payment, a number of shares of Common Stock equal to
(x) the aggregate amount of Deferred Contract Adjustment Payments payable to a
holder of FELINE PRIDES divided by (y) the Applicable Market Value. See
"Description of the Purchase Contracts -- Contract Adjustment Payments."
The Company also will have the right under the Indenture to defer payments
of interest on the Debentures by extending the interest payment period at any
time, and from time to time, on the Debentures. As a consequence of such an
extension, quarterly distributions on the Trust Preferred Securities, held
either as a component of the Income PRIDES or held separately, would be deferred
(but despite such deferrals would accrue interest at a rate of % per annum
through and including November 15, 2000, and at the Reset Rate thereafter,
compounded on a quarterly basis) by the Trust during any such Extension Period.
Such right to extend the interest payment period for the Debentures will be
limited such that an Extension Period may not extend beyond the maturity date of
the Debentures. During any such Extension Period, (a) the Company shall not
declare or pay dividends on, make distributions with respect to, or redeem,
purchase or acquire, or
S-19
<PAGE> 21
make a liquidation payment with respect to, any of its capital stock (other than
(i) purchases or acquisitions of capital stock of the Company in connection with
the satisfaction by the Company of its obligations under any employee benefit
plans or the satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event requiring the Company
to purchase capital stock of the Company, (ii) as a result of a reclassification
of the Company's capital stock or the exchange or conversion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
or distributions in capital stock of the Company and (v) redemptions or
repurchases of any rights pursuant to the Rights Agreement, dated as of December
12, 1996 (as amended from time to time, the "Rights Agreement"), between the
Company and The Chase Manhattan Bank, as Rights Agent thereunder, or any
successor to the Rights Agreement, and the declaration thereunder of a dividend
of rights in the future), (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank junior to the Debentures and (c)
the Company shall not make any guarantee payments with respect to the foregoing
(other than payments pursuant to the Guarantee or the Common Securities
Guarantee (as defined herein)). Prior to the termination of any such Extension
Period, the Company may further extend the interest payment period; provided,
that such Extension Period may not extend beyond the Stated Maturity of the
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the above requirements. See "Description of the Trust Preferred
Securities -- Distributions" and "Description of the Debentures -- Option to
Extend Interest Payment Period."
The Company believes, and intends to take the position, that as of the
issue date of the Debentures, the likelihood that it will exercise its right to
defer payments of interest on the Debentures is remote and that, therefore, the
Debentures should not be considered to be issued with original issue discount as
a result of the Company's right to defer payments of interest on the Debentures
unless it actually exercises such deferral right. There is no assurance that the
Internal Revenue Service will agree with such position. See "Certain Federal
Income Tax Consequences."
Should the Company exercise its right to defer payments of interest by
extending the interest payment period, each holder of Trust Preferred Securities
held either as a component of the Income PRIDES or held separately would be
required to accrue original issue discount in its gross income for United States
federal income tax purpose even though the Company would not make actual cash
payments during an Extension Period. As a result, each such holder of Trust
Preferred Securities would recognize income for United States federal income tax
purposes in advance of the receipt of cash and would not receive the cash from
the Trust related to such income if such holder disposes of its Trust Preferred
Securities prior to the record date for the date on which distributions of such
amounts are made. The Company has no current intention of exercising its right
to defer payments of interest by extending the interest payment period on the
Debentures. However, should the Company determine to exercise such right in the
future, the market price of the Trust Preferred Securities is likely to be
affected. A holder that disposes of its Trust Preferred Securities during an
Extension Period, therefore, might not receive the same return on its investment
as a holder that continues to hold its Trust Preferred Securities. In addition,
as a result of the existence of the Company's right to defer interest payments,
the market price of the Trust Preferred Securities (which represent an undivided
beneficial interest in the assets of the Trust) may be more volatile than the
market price of other securities that are not subject to such deferral. See
"Certain Federal Income Tax Consequences."
UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
No statutory, judicial or administrative authority directly addresses the
treatment of the FELINE PRIDES or instruments similar to the FELINE PRIDES for
United States federal income tax purposes. As a result, certain United States
federal income tax consequences of the purchase, ownership and disposition of
FELINE PRIDES are not entirely clear. See "Certain Federal Income Tax
Consequences."
S-20
<PAGE> 22
PURCHASE CONTRACT AGREEMENT NOT QUALIFIED UNDER TRUST INDENTURE ACT; LIMITED
OBLIGATIONS OF PURCHASE CONTRACT AGENT
Although the Trust Preferred Securities constituting a part of the Income
PRIDES will be issued pursuant to the Declaration, which will be qualified under
the Trust Indenture Act, the Purchase Contract Agreement will not be qualified
as an indenture under the Trust Indenture Act and the Purchase Contract Agent
will not be required to qualify as a trustee thereunder. Accordingly, holders of
FELINE PRIDES will not have the benefit of the protections of the Trust
Indenture Act. The protections generally afforded the holder of a security
issued under an indenture that has been qualified under the Trust Indenture Act
include disqualification of the indenture trustee for "conflicting interests" as
defined under the Trust Indenture Act, provisions preventing a trustee that is
also a creditor of the issuer from improving its own credit position at the
expense of the security holders immediately prior to or after a default under
such indenture and the requirement that the indenture trustee deliver reports at
least annually with respect to certain matters concerning the indenture trustee
and the securities. Under the terms of the Purchase Contract Agreement, the
Purchase Contract Agent will have only limited obligations to the holders of
FELINE PRIDES. See "Certain Provisions of the Purchase Contract Agreement and
the Pledge Agreement -- Information Concerning the Purchase Contract Agent."
RIGHTS UNDER THE GUARANTEE
The Guarantee will be qualified as an indenture under the Trust Indenture
Act. The Guarantee Trustee will act as indenture trustee under the Guarantee for
the purposes of compliance with the provisions of the Trust Indenture Act. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Trust Preferred Securities.
The Guarantee guarantees to the holders of the Trust Preferred Securities,
generally on a senior basis (but subordinated to the extent described herein),
the payment of (i) any accrued and unpaid distributions that are required to be
paid on the Trust Preferred Securities, to the extent the Trust has funds
available therefor, (ii) the redemption price, including all accumulated and
unpaid distributions to the date of redemption, of Trust Preferred Securities in
respect of which the related Debentures have been repurchased by the Company on
the Purchase Contract Settlement Date, to the extent the Trust has funds
available therefor, and (iii) upon a voluntary or involuntary dissolution of the
Trust (other than in connection with the distribution of Debentures to the
holders of Trust Preferred Securities), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid distributions on the Trust
Preferred Securities to the date of payment to the extent the Trust has funds
available therefor or (b) the amount of assets of the Trust remaining available
for distribution to holders of the Trust Preferred Securities in liquidation of
the Trust. The holders of a majority in liquidation amount of the Trust
Preferred Securities will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. Notwithstanding the foregoing, any holder of Trust
Preferred Securities may institute a legal proceeding directly against the
Company to enforce such holder's rights under the Guarantee without first
instituting a legal proceeding against the Trust, the Guarantee Trustee or any
other person or entity. If the Company were to default on its obligation to pay
amounts payable on the Debentures or otherwise, the Trust would lack funds for
the payment of distributions or amounts payable on redemption of the Trust
Preferred Securities or otherwise, and, in such event, holders of the Trust
Preferred Securities would not be able to rely upon the Guarantee for payment of
such amounts. Instead, holders of the Trust Preferred Securities would rely on
the enforcement (1) by the Institutional Trustee of its rights as registered
holder of the Debentures against the Company pursuant to the terms of the
Indenture and the Debentures or (2) by such holder of the Institutional
Trustee's or such holder's own rights against the Company to enforce payments on
the Debentures. See "-- Enforcement of Certain Rights by Holders of Trust
Preferred Securities," "Description of the Debentures" and "Description of the
Guarantee." The Declaration provides that each holder of Trust Preferred
Securities, by acceptance thereof, agrees to the provisions of the Guarantee,
including the subordination provisions thereof, and the Indenture.
S-21
<PAGE> 23
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF TRUST PREFERRED SECURITIES
If a Declaration Event of Default (as defined herein) occurs and is
continuing, the holders of Trust Preferred Securities would rely on the
enforcement by the Institutional Trustee of its rights as registered holder of
the Debentures against the Company. In addition, the holders of a majority in
liquidation amount of the Trust Preferred Securities will have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee or to direct the exercise of any trust or
power conferred upon the Institutional Trustee under the Declaration, including
the right to direct the Institutional Trustee to exercise the remedies available
to it as the holder of the Debentures. The Indenture provides that the Debt
Trustee (as defined herein) shall give holders of Debentures notice of all
defaults or events of default within 30 days after occurrence. However, except
in the cases of a default or an event of default in payment on the Debentures,
the Debt Trustee will be protected in withholding such notice if its officers or
directors in good faith determine that withholding of such notice is in the
interest of such holders.
If the Institutional Trustee fails to enforce its rights under the
Debentures in respect of an Indenture Event of Default (as defined herein) after
a holder of record of Trust Preferred Securities has made a written request,
such holder of record of Trust Preferred Securities may institute a legal
proceeding against the Company to enforce the Institutional Trustee's rights
under the Debentures. In addition, if the Company fails to pay interest or
principal on the Debentures (a "Debt Payment Failure") on the date such interest
or principal is otherwise payable, and such Debt Payment Failure is continuing,
a holder of Trust Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate stated liquidation
amount of the Trust Preferred Securities of such holder (a "Direct Action")
after the respective due date specified in the Debentures. In connection with
such a Direct Action, the Company shall have the right under the Indenture to
set off any payment made to such holder by the Company. The holders of Trust
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures. See "Description of the Trust
Preferred Securities -- Declaration Events of Default."
LIMITED RIGHTS OF ACCELERATION
The Institutional Trustee, as holder of the Debentures, may accelerate
payment of the principal and accrued and unpaid interest on the Debentures only
upon the occurrence and continuation of a Declaration Event of Default or
Indenture Event of Default, which generally are limited to payment defaults,
breaches of certain covenants, certain events of bankruptcy, insolvency and
reorganization of the Company and certain events of dissolution of the Trust.
See "Description of the Trust Preferred Securities -- Declaration Events of
Default." Accordingly, there is no right to acceleration upon default by the
Company of its payment obligations under the Guarantee.
TRADING PRICE OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities may trade at a price that does not fully
reflect the value of accrued but unpaid interest with respect to the underlying
Debentures. A holder who uses the accrual method of accounting for tax purposes
(and a cash method holder, if the Debentures are deemed to be issued with OID)
and who disposes of his Trust Preferred Securities between record dates for
payments of distributions thereon will be required to include accrued but unpaid
interest on the Debentures through the date of disposition in income as ordinary
income (i.e., interest or, possibly, OID), and to add such amount to his
adjusted tax basis in his pro rata share of the underlying Debentures deemed
disposed of. To the extent the selling price is less than the holder's adjusted
tax basis, a holder will recognize a loss. See "Certain Federal Income
Consequences -- Interest Income and Original Issue Discount on the Trust
Preferred Securities" and "-- Sales or Redemptions of Trust Preferred
Securities."
FOREIGN EXCHANGE RISK
As a result of the Company's continued global expansion, a growing portion
of the Company's revenues, expenses and net assets are denominated in currencies
other than U.S. dollars. Changes in exchange rates, therefore, may have an
effect on the Company's results of operations.
S-22
<PAGE> 24
THE COMPANY
Owens Corning, a global company incorporated in Delaware in 1938, serves
consumers and industrial customers with high-performance glass fiber composites
and building materials systems. These products are used in industries such as
home improvement and repair, new construction, transportation, marine,
aerospace, energy, appliance, packaging and electronics. The Company operates in
two industry segments -- Building Materials and Composite Materials -- divided
into ten businesses. The Company also has affiliate companies in a number of
countries.
Owens Corning's Building Materials products are marketed through multiple
distribution channels, often with the aid of the Company's well known
"spokescritter," the Pink Panther. Over the last several years, the Company has
supplemented its traditional relationships with specialty distributors and
wholesalers with increasing presence among the large "do-it-yourself" home
center retailers. In 1996, 41% of total Company sales were made to the U.S. home
improvement and remodeling markets which these retailers serve.
The Company recently introduced a strategic initiative, System Thinking for
the Home(TM), designed to leverage Owens Corning's broad product offering and
strong brand recognition. This systems approach represents a shift from
product-oriented to systems-driven solutions across all lines of business. By
redefining its role as a provider of insulation, roofing, siding, windows and
accessories and linking all of its products and technology to create a
high-performance building envelope, Company management is targeting an increased
share of the $220 billion building materials and home improvement industry.
Building Materials operates primarily in North America and Europe. It also
has a growing presence in Latin America and Asia Pacific. Building Materials
sells a variety of building and home improvement products in three major
categories: glass fiber and foam insulation, roofing materials, and other
specialty products for the home, such as housewrap, vinyl windows and patio
doors, and vinyl siding. The businesses responsible for these products and
markets include: Insulation, Building Materials Sales and Distribution -- North
America, Building Materials -- Europe and Africa, Roofing Systems, Specialty and
Foam Products, Western Fiberglass Group, Latin America, and Asia Pacific.
Composite Materials operates in North America, Europe and Latin America,
with affiliates and licensees around the world, including a growing presence in
Asia Pacific. The businesses responsible for these products include: Composites,
Latin America, Engineered Pipe & Fabrication Systems, and Asia Pacific.
The Company is the world's leading producer of glass fiber materials used
in composites. Composites are fabricated material systems made up of two or more
components (e.g., plastic resin and glass fiber) used in various applications to
replace traditional materials, such as aluminum, wood, and steel. The global
composites industry has expanded to include more than 40,000 end-use
applications. Worldwide, the composites industry has relatively few raw material
component suppliers (glass fiber, resin and additives) delivering to thousands
of industrial customers through various channels. Depending on the end-use
application, these raw materials move through different manufacturing process
chains, ultimately finding their way to consumers through myriad markets
worldwide. The primary end use markets that the Company serves are construction,
transportation, and electrical/electronics.
The following table summarizes selected information concerning the
Company's industry segments. The table does not include information concerning
Fibreboard Corporation because the acquisition by the Company of Fibreboard
Corporation did not occur until the end of the quarter ended June 30, 1997. See
" -- Recent Developments." For further information, see Notes 1 and 3 of the
Notes to Consolidated Financial Statements of the Company as of June 30, 1997
included in the Second Quarter Form 10-Q and Note 1 of the
S-23
<PAGE> 25
Notes to Consolidated Financial Statements of the Company as of December 31,
1996 included in the 1996 Form 10-K, each of which is incorporated in the
accompanying Prospectus by reference.
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------ ------------------
1997 1996(a) 1996(b) 1995
------ ------- ------- ------
(IN MILLIONS)
<S> <C> <C> <C> <C>
NET SALES:
Building Materials................................... $1,318 $1,221 $2,687 $2,404
Composite Materials.................................. 574 584 1,145 1,208
Consolidated Net Sales............................... $1,892 $1,805 $3,832 $3,612
INCOME (LOSS) FROM OPERATIONS:
Building Materials................................... $ 122 $ 89 $ 219 $ 237
Composite Materials.................................. 101 116 222 225
General Corporate Expense............................ (41) (895) (945) (50)
Total Income (Loss) from Operations............... $ 182 $ (690) $ (504) $ 412
</TABLE>
- ---------------
(a) Income from operations for the six months ended June 30, 1996 includes a net
pretax charge of $875 million for asbestos litigation claims that may be
received after 1999 and probable additional insurance recovery; charges
totaling $42 million, including valuation adjustments associated with prior
divestitures, major product line productivity initiatives and a contribution
to the Owens-Corning Foundation; and a pretax gain of $37 million from the
sale of the Company's ownership interest in its former Japanese affiliate,
Asahi Fiber Glass Co. Ltd. The impact of these special items was to reduce
income from operations for Building Materials by $22 million and for
Composite Materials by $5 million and to increase general corporate expense
by $853 million.
(b) Income from operations for the year ended December 31, 1996 includes a net
pretax charge of $875 million for asbestos litigation claims that may be
received after 1999 and probable additional insurance recovery; charges
totaling $42 million, including valuation adjustments associated with prior
divestitures, major product line productivity initiatives and a contribution
to the Owens-Corning Foundation; a pretax charge of $43 million for
restructuring and other actions; and a pretax gain of $37 million from the
sale of the Company's ownership interest in its former Japanese affiliate,
Asahi Fiber Glass Co. Ltd. The impact of these special items was to reduce
income from operations for Building Materials by $50 million and for
Composite Materials by $12 million, and to increase general corporate
expense by $861 million.
RECENT DEVELOPMENTS
Fibreboard Acquisition
On June 27, 1997, Sierra Corp., a Delaware corporation and a wholly owned
subsidiary of the Company ("Sierra Corp."), completed a tender offer (the
"Fibreboard Tender Offer") for all of the outstanding shares of common stock
(including certain associated preferred stock purchase rights) of Fibreboard
Corporation, a Delaware corporation ("Fibreboard"), by purchasing approximately
92% of such shares for a purchase price of $55.00 per share. On July 3, 1997,
Sierra Corp. was merged with and into Fibreboard (the "Fibreboard Merger" and,
together with the Fibreboard Tender Offer, the "Fibreboard Acquisition"), and,
as a result of the Fibreboard Merger, each outstanding share of Fibreboard's
common stock that was not purchased in the Fibreboard Tender Offer was converted
into a right to receive $55.00 in cash (subject to applicable appraisal rights
pursuant to Delaware law). Fibreboard is a leading producer and distributor of
vinyl siding and other residential and industrial building materials.
The total purchase price for the Fibreboard Acquisition was $657 million,
which included an assumption of $138 million of debt. The Fibreboard Acquisition
was financed through loans made under a $2 billion Credit Agreement, dated as of
June 26, 1997 (the "Credit Agreement"), among the Company, Sierra Corp., certain
other subsidiaries of the Company, the banks party thereto and Credit Suisse
First Boston, as agent for such banks.
S-24
<PAGE> 26
The acquisition of Fibreboard provides the Company with a significant
position in vinyl siding and therefore furthers the System Thinking for the
Home(TM) strategy. Fibreboard also manufactures and sells other products which
Company management believes are complementary to Owens Corning's existing
product and distribution strengths. Through Fibreboard's company-owned
distribution system, the Company also gains additional access to a significant
customer base.
Amerimark Acquisition
On July 29, 1997, the Company entered into an agreement to purchase
substantially all of the assets and to assume certain of the liabilities of
AmeriMark Building Products, Inc., a Delaware corporation ("AmeriMark"), and its
subsidiaries for approximately $310 million. AmeriMark is a specialty building
products company serving the exterior residential housing industry, with major
product lines that include vinyl siding, vinyl windows and aluminum accessories.
The Company currently intends to finance up to two-thirds of the purchase price
through the sale of non-core businesses, including the Company's Pabco
subsidiary, which had 1996 sales of $58 million. The balance of the AmeriMark
purchase price is expected to come from cash generated by the Company's
operations and external sources, as required.
S-25
<PAGE> 27
THE TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a declaration of trust, dated as of April 2, 1997, executed by the
Sponsor and the Owens Corning Trustees and (ii) the filing of a certificate of
trust with the Secretary of State of the State of Delaware on April 2, 1997.
Such declaration will be amended and restated in its entirety substantially in
the form filed as an exhibit to the Registration Statement of which this
Prospectus Supplement forms a part. The Declaration will be qualified as an
indenture under the Trust Indenture Act. Although upon issuance of the Trust
Preferred Securities, the holders of Income PRIDES will be the beneficial owners
of the related Trust Preferred Securities, such Trust Preferred Securities will
be pledged with the Collateral Agent to secure the obligations of the holders
under the related Purchase Contracts. See "Description of the Purchase
Contracts -- Pledged Securities and Pledge Agreement" and "Description of the
Trust Preferred Securities -- Book-Entry Only Issuance-The Depository Trust
Company." The Company will directly or indirectly acquire Common Securities in
an aggregate liquidation amount equal to 3% of the total capital of the Trust.
The Trust exists for the exclusive purposes of (i) issuing the Trust Securities
representing undivided beneficial interests in the assets of the Trust, (ii)
investing the proceeds of the Trust Securities in the Debentures and (iii)
engaging in only those other activities necessary or incidental thereto. The
Trust has a term of approximately seven (7) years, but may dissolve earlier as
provided in the Declaration.
Pursuant to the Declaration, the number of Owens Corning Trustees initially
is three. Two of the Owens Corning Trustees (the "Regular Trustees") are persons
who are employees or officers of or who are affiliated with the Company. The
third trustee will be a financial institution that is unaffiliated with the
Company, which trustee serves as institutional trustee under the Declaration and
as indenture trustee for the purposes of compliance with the provisions of the
Trust Indenture Act (the "Institutional Trustee"). Initially, Wilmington Trust
Company, a banking organization organized under the laws of the State of
Delaware, will be the Institutional Trustee until removed or replaced by the
holder of the Common Securities. For the purpose of compliance with the
provisions of the Trust Indenture Act, Wilmington Trust Company will also act as
trustee (the "Guarantee Trustee") under the Guarantee and as Delaware Trustee
for the purposes of the Trust Act (as defined herein), until removed or replaced
by the holder of the Common Securities. See "Description of the Guarantee" and
"Description of the Trust Preferred Securities -- Voting Rights."
The Institutional Trustee will hold title to the Debentures for the benefit
of the holders of the Trust Securities and the Institutional Trustee will have
the power to exercise all rights, powers and privileges under the Indenture as
the holder of the Debentures. In addition, the Institutional Trustee will
maintain exclusive control of a segregated non-interest bearing bank account
(the "Property Account") to hold all payments made in respect of the Debentures
for the benefit of the holders of the Trust Securities. The Institutional
Trustee will make payments of distributions and payments on liquidation,
redemption and otherwise to the holders of the Trust Securities out of funds
from the Property Account. The Guarantee Trustee will hold the Guarantee for the
benefit of the holders of the Trust Preferred Securities. The Company, as the
direct or indirect holder of all the Common Securities, will have the right to
appoint, remove or replace any Owens Corning Trustee and to increase or decrease
the number of Owens Corning Trustees; provided, that the number of Owens Corning
Trustees shall be at least three, a majority of which shall be Regular Trustees.
The Company will pay all fees and expenses related to the Trust and the offering
of the Trust Securities. See "Description of the Debentures -- Miscellaneous."
The rights of the holders of the Trust Preferred Securities, including
economic rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act, as amended (the "Trust Act"), and
the Trust Indenture Act. See "Description of the Trust Preferred Securities."
The trustee in the State of Delaware is Wilmington Trust Company, Rodney
Square North, 1100 North Market Street, Wilmington, Delaware 19890. The
principal place of business of the Trust shall be c/o Owens Corning, Owens
Corning World Headquarters, Toledo, Ohio 43659, and its telephone number shall
be (419) 248-8000.
S-26
<PAGE> 28
USE OF PROCEEDS
All or substantially all of the proceeds from the sale of the Income
PRIDES, of which the Trust Preferred Securities are a component, will be
invested by the Trust in the Debentures, and the remainder, if any, will be paid
to the Company. The net proceeds from such sale, estimated to be approximately
$ million, ultimately will be used by the Company to repay indebtedness
under the Credit Agreement and for general corporate purposes, including,
without limitation, working capital, repurchases or redemptions of the Company's
outstanding debt securities or other reductions of the Company's outstanding
borrowings, business acquisitions, investments in or loans to subsidiaries or
capital expenditures. The average interest rate as of August , 1997 borne by
the loans then outstanding under the Credit Agreement was % per annum. The
loan commitments under the Credit Agreement expire in June 2002.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock is listed and traded on the NYSE and the Toronto Stock
Exchange (the "TSE") under the symbol "OWC." The following table sets forth, for
the periods indicated, the high and low sales prices in dollars per share of the
Common Stock as reported in the NYSE Composite Transactions Tape.
<TABLE>
<CAPTION>
HIGH LOW
----------- -----------
<S> <C> <C> <C> <C>
1995
First Quarter................................. 36 1/4 30 1/4
Second Quarter................................ 40 34 5/8
Third Quarter................................. 47 1/8 36 1/2
Fourth Quarter................................ 46 3/4 40 3/8
1996
First Quarter................................. 46 39 3/4
Second Quarter................................ 43 1/8 37 5/8
Third Quarter................................. 43 36
Fourth Quarter................................ 43 1/2 36 1/4
1997
First Quarter................................. 49 7/8 40
Second Quarter................................ 45 36 7/8
Third Quarter (through September 12, 1997).... 44 3/16 39 1/4
</TABLE>
A recent closing sale price for the Common Stock as reported on the NYSE
Composite Transactions Tape is set forth on the cover page of this Prospectus
Supplement.
In June 1996, the Board of Directors of the Company approved an annual
dividend policy. The Company had not previously declared any dividends since
1986. The Company has declared dividends of $.0625 per share of Common Stock for
each of the third and fourth quarters of 1996 and the first and second quarters
of 1997, and $.075 per share for the third quarter of 1997.
S-27
<PAGE> 29
CONDENSED CONSOLIDATED CAPITALIZATION
The following table summarizes (i) the actual capitalization of the Company
and its consolidated subsidiaries (including Fibreboard) at June 30, 1997 and
(ii) such capitalization as adjusted to reflect (a) the sale of the FELINE
PRIDES offered hereby (based on an assumed aggregate public offering price of
$50 per Security), (b) the concurrent purchase by the Trust from the Company of
$300,000,000 principal amount of Debentures and (c) an assumed application of
the proceeds from the foregoing, after estimated underwriting commissions and
estimated expenses of this offering, to repay indebtedness. For further
information, see Note 4 of Notes to the Consolidated Financial Statements of the
Company as of June 30, 1997 included in the Second Quarter Form 10-Q,
incorporated in the accompanying Prospectus by reference.
<TABLE>
<CAPTION>
AT JUNE 30, 1997
(IN MILLIONS)
----------------------
ACTUAL AS ADJUSTED
------ -----------
<S> <C> <C>
Short-term debt, including current portion of long-term
debt..................................................... $ 179 $ 119
Long-term debt:
Senior................................................... 1,877 1,647
Less: Current portion................................. 23 23
------ ------
Total long-term debt..................................... 1,854 1,624
------ ------
Company obligated convertible security of subsidiary
holding solely parent debentures ("MIPS")................ 194 194
Company obligated preferred security of subsidiary holding
solely parent debentures................................. -- 290
Minority interest.......................................... 25 25
------ ------
Stockholders' equity:
Preferred Stock, no par value; 8 million shares
authorized; none issued............................... -- --
Common Stock, $.10 par value; 100 million shares
authorized; 53,338,336 shares issued and
outstanding(a)........................................ 653 653
Deficit.................................................. (980) (980)
Foreign currency translation adjustments................. (8) (8)
Other.................................................... (18) (18)
------ ------
Total stockholders' equity............................... (353) (353)
------ ------
Total capitalization....................................... $1,899 $ 1,899
====== ======
</TABLE>
- ---------------
(a) Does not include shares of Common Stock issuable under the Purchase
Contracts or which may be issued pursuant to various stock compensation
plans of the Company (see Note 16 of Notes to Consolidated Financial
Statements of the Company as of December 31, 1996 included in the 1996 Form
10-K, incorporated in the accompanying Prospectus by reference).
ACCOUNTING TREATMENT
The financial statements of the Trust will be reflected in the Company's
consolidated financial statements, with the Trust Preferred Securities shown on
the Company's balance sheet as Company Obligated Preferred Securities of
Subsidiary Holding Solely Parent Debentures. The financial statement footnotes
to the Company's consolidated financial statements will reflect that the sole
asset of the Trust will be the Subordinated Debentures due November 16, 2002 of
the Company. Dividends on the Trust Preferred Securities will be reflected as a
charge to the Company's consolidated income, identified as Minority Interest in
Income, whether paid or accrued.
The Purchase Contracts are forward transactions in Owens Corning's common
equity. Upon settlement of a Purchase Contract, Owens Corning will receive the
Stated Amount on such Purchase Contract and will issue the requisite number of
shares of Common Stock. The Stated Amount thus received will be credited to
shareholders' equity allocated between the common stock and paid in capital
accounts. The present value of the Contract Adjustment Payments, if any, will
initially be charged to equity, with an offsetting credit to liabilities.
Subsequent Contract Adjustment Payments, if any, will be allocated between this
liability account and interest expense based on a constant rate calculation over
the life of the transaction.
S-28
<PAGE> 30
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial information
of the Company (i) for the six months ended June 30, 1997 and 1996, which has
been derived from the unaudited quarterly consolidated financial statements of
the Company for the six months ended June 30, 1997 and 1996, and (ii) for each
of the five fiscal years in the period ended December 31, 1996, which has been
derived from the annual consolidated financial statements of the Company audited
by Arthur Andersen LLP, independent public accountants. This table should be
read in conjunction with those statements, all of which have been previously
filed with the Securities and Exchange Commission (the "Commission"). The
financial information presented below for the six months ended June 30, 1997 and
1996 reflects all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of the Company's results. Operating results
for the six months ended June 30, 1997 are not necessarily indicative of the
results that may be expected for the entire year ending December 31, 1997. The
following table (other than in respect of balance sheet data) does not include
financial information concerning Fibreboard because the Fibreboard Acquisition
did not occur until the end of the quarter ended June 30, 1997. See "The Company
- -- Recent Developments -- Fibreboard Acquisition." The following table is
qualified in its entirety by, and should be read in conjunction with,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and the consolidated financial information and related notes of the
Company included in the documents incorporated in the accompanying Prospectus by
reference. See "Incorporation of Certain Documents by Reference" in the
accompanying Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ -------------------------------------------------------
1997 1996(a) 1996(b) 1995(c) 1994(d) 1993(e) 1992(f)
------ ------- ------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA AND WHERE NOTED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................ $1,892 $1,805 $3,832 $3,612 $3,351 $2,944 $2,878
Gross margin............................. 462 471 998 942 815 678 644
Income (loss) from operations............ 182 (690) (504) 412 226 236 213
Cost of borrowed funds................... 42 36 77 87 94 89 110
Net income (loss)........................ 105 (434) (284) 231 159 131 73
Net income (loss) per share (primary).... 1.96 (8.43) (5.50) 4.64 3.61 3.00 1.70
Net income (loss) per share (fully
diluted)............................... 1.87 (8.43) (5.50) 4.40 3.35 2.81 1.67
Weighted average number of shares
outstanding (in thousands of shares)
(primary).............................. 53,619 51,512 51,722 49,711 44,209 43,593 43,013
CASH FLOW DATA:
Net cash flow from operations............ (319) (87) 335 285 233 253 192
Capital expenditures..................... 131 167 325 276 258 178 144
BALANCE SHEET DATA:
Total assets............................. 5,076(g) 3,980 3,913 3,261 3,274 3,013 3,162
Total debt............................... 2,033(g) 1,142 934 893 1,212 1,004 1,099
Stockholders' deficit.................... (353) (666) (484) (212) (680) (869) (1,008)
RATIO OF EARNINGS TO FIXED CHARGES(h)...... 3.02x -- -- 3.67 x 2.15 x 2.42 x 1.88 x
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS(h)......... 3.02x -- -- 3.67 x 2.15 x 2.42 x 1.88 x
</TABLE>
- ---------------
(a) For the six months ended June 30, 1996, the net loss of $434 million, or
$8.43 per share, includes a net after-tax charge of $542 million for
asbestos litigation claims that may be received after 1999 and probable
additional insurance recovery; after-tax special charges totaling $27
million including valuation adjustments associated with prior divestitures,
major product line productivity initiatives and a contribution to the
Owens-Corning Foundation; and an after-tax gain of $27 million from the sale
of the Company's ownership interest in its former Japanese affiliate, Asahi
Fiber Glass Co. Ltd.
Pursuant to generally accepted accounting principles, common stock
equivalents and convertible securities have been excluded from the
calculations of earnings per share in 1996, due to their anti-dilutive
effect. Consequently, primary and fully diluted earnings per share are equal
for 1996.
S-29
<PAGE> 31
(b) In 1996 the net loss of $284 million, or $5.50 per share, includes a net
after-tax charge of $542 million for asbestos litigation claims that may be
received after 1999 and probable additional insurance recovery; after-tax
special charges totaling $27 million including valuation adjustments
associated with prior divestitures, major product line productivity
initiatives and a contribution to the Owens-Corning Foundation; an after-tax
charge of $26 million for restructuring and other actions; a $27 million
reduction of tax reserves due to favorable legislation; and an after-tax
gain of $27 million from the sale of the Company's ownership interest in its
former Japanese affiliate, Asahi Fiber Glass Co. Ltd.
Pursuant to generally accepted accounting principles, common stock
equivalents and convertible securities have been excluded from the
calculations of earnings per share in 1996, due to their anti-dilutive
effect. Consequently, primary and fully diluted earnings per share are equal
for 1996.
(c) Net income for 1995 of $231 million, or $4.64 per share ($4.40 per share
fully diluted), included a one time gain of $8 million, which was the
result of a tax loss carryback.
(d) Net income for 1994 of $159 million, or $3.61 per share ($3.35 per share
fully diluted), included the following offsetting special items: an
after-tax gain of $123 million reflecting a change to the capital method of
accounting for the rebuilding of glass melting facilities; an after-tax
charge of $85 million for productivity initiatives and other actions; a
non-cash, after-tax charge of $10 million to reflect adoption of Statement
of Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" for the Company's non-U.S.
plans; and a non-cash, after-tax charge of $28 million to reflect adoption
of SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
(e) Net income for 1993 of $131 million, or $3.00 per share ($2.81 per share
fully diluted), included a credit of $26 million for the cumulative effect
of adopting the new accounting standard for income taxes; a one-time gain
of $14 million reflecting a tax benefit resulting from a revaluation of
deferred taxes necessitated by the new federal tax law; an $8 million
pre-tax charge for the writedown of the Company's hydrocarbon ventures; and
a $23 million charge for the restructuring of the Company's European
operations.
(f) Net income for 1992 was $73 million, or $1.70 per share ($1.67 per share
fully diluted), and included a pre-tax reorganization charge of $16
million.
(g) In the second quarter of 1997, the Company purchased Fibreboard Corporation,
a North American manufacturer of vinyl siding and accessories and
manufactured stone, for $657 million, including $138 million of debt
assumed. The purchase price, which is included in long-term debt as of June
30, 1997, was financed primarily through borrowings on the Company's new
long-term credit facility early in the third quarter of 1997. The purchase
price allocations were based on preliminary estimates of fair market value
and are subject to revision. The estimated fair value of assets acquired
from Fibreboard Corporation, including goodwill, was $923 million, and
liabilities assumed totaled $404 million (including the debt of $138
million).
(h) For purposes of the calculation of these ratios, earnings represent net
income before fixed charges, provision for taxes on income, undistributed
earnings of equity basis investments, extraordinary losses from early
retirement of debt and the cumulative effect of accounting changes. Fixed
charges include interest expense and the portion (one-third) of rental
expenses deemed to be representative of interest. Preferred stock dividends
represent only the distributions on the MIPS securities. The Company's
earnings for the six months ended June 30, 1996 and the year ended December
31, 1996 were insufficient to cover fixed charges by approximately $700
million and $600 million, respectively.
S-30
<PAGE> 32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
(All per share information in this Section is on a fully diluted basis.)
RESULTS OF OPERATIONS
Six Months Ended June 30, 1997
Net sales were $1,017 million for the quarter ended June 30, 1997, a six
percent increase from the 1996 level of $956 million. The growth is attributable
to increased volumes in the Building Materials and Composite Materials segments,
worldwide. In Building Materials, niche acquisitions and the integration of
their products into the Company's existing channels of distribution continue to
grow the Company's volumes, particularly in the U.S. and Europe. These volume
increases were offset in large part by a decline in worldwide composites
pricing, the effects of a stronger dollar on sales made in foreign currencies,
and a decline in insulation prices in North America. The decline in composites
pricing was most notable in Europe, and primarily reflects increased production
capacity by the major producers in anticipation of market growth and the effects
of customer consolidations. Gross margin for the quarter ended June 30, 1997 was
24%, a decline from the second quarter 1996 level of 27%, primarily resulting
from declining prices and a change in the mix of product sales in Building
Materials to lower margin products.
Net income for the quarter ended June 30, 1997 was $63 million, or $1.11
per share, compared to a net loss of $473 million, or $9.19 per share, for the
quarter ended June 30, 1996. Income from operations of $105 million in the
second quarter of 1997 was negatively impacted by the price declines described
above. This impact was partially offset by volume increases experienced in the
Company's roofing, foam and composites businesses. Additionally, income from
operations benefited by $15 million from the modification of certain employee
benefits in the U.S. Earnings in the second quarter of 1997 were also affected
by increased cost of borrowed funds resulting from increased borrowing to fund
working capital and certain acquisitions, and the improved performance of the
Company's unconsolidated affiliates.
Included in the quarter ended June 30, 1996 was the net after-tax charge of
$542 million, or $10.53 per share, for asbestos litigation claims that may be
received after 1999 and probable additional insurance recovery. The net loss
created by this item caused common stock equivalents and convertible securities
to be excluded from the number of fully diluted shares reported in the second
quarter of 1996 due to their anti-dilutive effect. Had these anti-dilutive
shares been included in the calculation of earnings per share, such amount for
the second quarter of 1996 would have been $.09 lower.
Net sales for the six months ended June 30, 1997, were $1,892 million, a
five percent increase over the $1,805 million reported for the first six months
of 1996. This increase reflects the strength of the Company's roofing and foam
businesses in the Building Materials segment, coupled with the Company's
continued expansion through strategic niche acquisitions.
For the six months ended June 30, 1997, the Company reported net income of
$105 million, or $1.87 per share, compared to a net loss of $434 million, or
$8.43 per share, for the comparable period in 1996. When compared to the earlier
year period, net income for the six months ended June 30, 1997 was negatively
impacted by price declines, partially offset by the benefit of increased volumes
and productivity gains, particularly in the insulation business.
In addition to the net asbestos charge recorded in the second quarter of
1996, results for the six months ended June 30, 1996 included a $37 million
pretax gain from the sale of the Company's minority interest in Asahi Fiber
Glass Co. Ltd. in Japan and several one-time special charges, including
valuation adjustments associated with prior divestitures, major product line
productivity initiatives and a contribution to the Owens-Corning Foundation. The
impact of the gain on net income was reduced to near zero by these special
items.
Marketing and administrative expenses were $122 million for the quarter
ended June 30, 1997, compared to $115 million in the same period in 1996. The
increase is primarily the result of incremental administrative expenses from
acquisitions.
S-31
<PAGE> 33
In the Building Materials segment, sales increased 8% for the quarter and
six months ended June 30, 1997 compared to 1996. This growth reflects the
incremental sales from acquisitions as well as an increase in volume,
particularly in the roofing and foam businesses. Income from operations for
Building Materials increased to $122 million for the six months ended June 30,
1997. This improvement is primarily the result of volume increases, productivity
gains and incremental amounts derived from acquisitions offset in part by the
continuing costs of the Company's expansion program in the Asia Pacific region.
On June 27, the Company acquired 92% of the outstanding stock of Fibreboard
through the Fibreboard Tender Offer, which was commenced in May, for all of the
outstanding shares of Fibreboard at $55 per share. In early July, Fibreboard
became a wholly owned subsidiary of the Company as a result of the Fibreboard
Merger, which was consummated at the same price as the Fibreboard Tender Offer.
The purchase price of Fibreboard was $657 million, including the assumption of
$138 million of indebtedness, the majority of which was financed through
borrowings under the Credit Agreement. Fibreboard is one of the five largest
producers in North America of vinyl siding and accessories, marketing products
under the brand names Norandex and Vytec. The business has plants in the U.S.
and Canada and also operates more than 130 company-owned distribution centers in
32 states. Fibreboard is also the leading producer of manufactured stone used in
home building construction. On July 15, the Company announced plans to sell the
Pabco business of Fibreboard. Pabco is a producer of calcium silicate insulation
used for industrial pipe applications and metal jacketing for pipe insulation.
As the Fibreboard Acquisition was completed at the end of the quarter, the
reported results do not include the results of operations of Fibreboard. To
enhance comparability, certain information below is presented on a "pro forma"
basis and reflects the acquisition of Fibreboard (excluding Pabco and operations
that were discontinued by Fibreboard prior to the Fibreboard Acquisition) as
though it had occurred at the beginning of the respective periods presented. The
pro forma results include certain adjustments, primarily for depreciation and
amortization, interest and other expenses directly attributable to the
Fibreboard Acquisition and are not necessarily indicative of the combined
results that would have occurred had the Fibreboard Acquisition occurred at the
beginning of those periods.
<TABLE>
<CAPTION>
PRO FORMA AS REPORTED
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
1997 1996 1997 1996
------ ------ ------ ------
(IN MILLIONS OF DOLLARS, EXCEPT SHARE
DATE)
<S> <C> <C> <C> <C>
Net Sales............................ $2,223 $2,092 $1,892 $1,805
Income from continuing operations.... 99 (443) 105 (434)
Fully diluted earnings per share from
continuing operations.............. $ 1.76 $(8.59) $ 1.87 $(8.43)
</TABLE>
Additionally, during the first quarter of 1997, the Company acquired
Polypan Nord S.P.A., a manufacturer of extruded polystyrene foam (XPS)
insulation products based in Italy and Falcon Manufacturing of California, Inc.,
a U.S. producer of expanded polystyrene (EPS) foam insulation products.
In the Composite Materials segment, sales increased four percent for the
quarter ended June 30, 1997, but were down two percent for the six months then
ended, when compared to the comparable 1996 periods. While composites sales
showed improvement in overall volume, the business continued to experience
significant price decline during the quarter, particularly in Europe where
weakening currencies compounded the sales decline. Composite Materials income
from operations in the quarter and six months ended June 30, 1997, of $52 and
$101 million, respectively, declined from the equivalent prior year periods. The
declines are primarily attributable to the pricing weakness being experienced in
Europe. The Company does not expect to see significant improvement in the
Composite Materials segment in 1997. However, the Company now believes pricing
is stabilizing in both the U.S. and Europe and has implemented a price increase
effective during the second half of the year.
During the second quarter of 1997, the Company completed the acquisition of
the assets of The Stewart Group, Inc., a manufacturer and marketer of a
composite central strength member for telecommunication
S-32
<PAGE> 34
cable using a proprietary technology. With this addition, the Company now
markets a complete line of glass fiber products that protect and reinforce fiber
optic and copper telecommunications cable.
In the first quarter of 1997, the Company completed the previously
announced acquisition of Knytex Company, a manufacturer of specialty glass fiber
fabrics.
The Company's cost of borrowed funds for the quarter ended June 30, 1997
was $5 million higher than during second quarter 1996, due to increased
borrowings used to fund growth in working capital and certain acquisitions.
Years Ended December 31, 1996, 1995 and 1994
Net sales were $3.832 billion for the year ended December 31, 1996,
reflecting a 6% increase from the 1995 level of $3.612 billion. Net sales in
1994 were $3.351 billion. Most of the 1996 growth is attributable to volume
increases in the Building Materials segment, particularly in North America, as
well as incremental sales growth resulting from 1995 and 1996 acquisitions. See
Notes 1 and 5 to the Consolidated Financial Statements of the Company included
in the 1996 Form 10-K, which is incorporated in the accompanying Prospectus by
reference. Sales outside the U.S. represented 25% of total sales for the year
ended December 31, 1996, compared to 27% and 24% for the years 1995 and 1994,
respectively. The strength of U.S. Building Materials sales in combination with
sluggish European Composites business contributed to the slightly lower
percentage of sales outside the U.S. when compared to 1995. Gross margin for
each of the years ended December 31, 1996 and 1995 was 26%, up from 24% in 1994.
Gross margin in 1996 was adversely impacted by the lower sales volume in the
European Composites business.
For the year ended December 31, 1996, the Company reported a net loss of
$284 million, or $5.50 per share, compared to net income of $231 million, or
$4.40 per share, and net income of $159 million, or $3.35 per share, for the
years ended December 31, 1995 and 1994, respectively. The 1996 net loss reflects
a net after-tax charge of $542 million, or $10.49 per share, for asbestos
litigation claims that may be received after 1999 and probable additional
insurance recovery; after-tax special charges totaling $27 million, or $.52 per
share, including valuation adjustments associated with prior divestitures, major
product line productivity initiatives and a contribution to the Owens-Corning
Foundation; an after-tax charge of $26 million, or $.50 per share, for
restructuring and other actions; a $27 million, or $.52 per share, reduction of
tax reserves due to favorable legislation; and an after-tax gain of $27 million,
or $.52 per share, from the sale of the Company's interest in its former
Japanese affiliate, Asahi Fiber Glass Co. Ltd. The net loss created by the
special items mentioned above caused common stock equivalents and convertible
securities to be excluded from the number of fully diluted shares reported in
1996 due to their anti-dilutive effect. For comparative purposes, these
anti-dilutive shares have been included in the calculation of fully diluted net
income per share from ongoing operations in 1996 and represent a difference of
$.32 per share. Results from operations in 1996 reflect the benefits of
acquisitions, strong results from Building Materials in North America,
particularly in the roofing and foam businesses, and a favorable litigation
settlement with a former supplier, offset in part by increased administrative
costs from regional expansion into Asia Pacific and globally within the
engineered pipe systems business. See Notes, 8, 12, 18 and 21 to the
Consolidated Financial Statements of the Company included in the 1996 Form 10-K,
which is incorporated in the accompanying Prospectus by reference.
Net income of $231 million, or $4.40 per share, for the year ended December
31, 1995 reflects a one time gain of $8 million, or $.15 per share, resulting
from a tax loss carryback. See Note 8 to the Consolidated Financial Statements
of the Company included in the 1996 Form 10-K, which is incorporated in the
accompanying Prospectus by reference.
Net income of $159 million for the year ended December 31, 1994 included
the following special items: an after-tax gain of $123 million, or $2.45 per
share, reflecting a change to the capital method of accounting for the
rebuilding of glass melting facilities; an after-tax charge of $85 million, or
$1.69 per share, for productivity initiatives and other actions; a non-cash,
after-tax charge of $10 million, or $.20 per share, to reflect adoption of
Statement of Financial Accounting Standards (SFAS) No. 106, Employers'
Accounting for Postretirement Benefits Other Than Pensions, for plans outside
the United States; and a non-cash, after-tax charge of $28 million, or $.56 per
share, to reflect adoption of SFAS No. 112, Employers' Accounting for
S-33
<PAGE> 35
Postemployment Benefits. See Notes 6, 18 and 19 to the Consolidated Financial
Statements of the Company included in the 1996 Form 10-K, which is incorporated
in the accompanying Prospectus by reference.
In the Building Materials segment, sales increased 12% for the year ended
December 31, 1996 compared to 1995. This growth reflects volume increases,
particularly in North America, as well as incremental sales from 1995 and 1996
acquisitions offset by a slight decline in prices, particularly in Canada. While
results from operations for Building Materials in 1996 compared to 1995
reflected increases due to acquisitions, increased sales volumes and the
improving performance in the Company's Asia Pacific operations, these benefits
were more than offset by the portion of the special items for 1996 described
above ($50 million) that were attributable to this segment.
Building Materials sales in the U.S. increased 11% and Canada also posted
improvement in 1996. This improvement in the North American markets is being
driven by the Company's integration of its expanded product line from
acquisitions and branded products into the Company's well established channels
of distribution. The expanded product line includes Luminess(TM) vinyl windows,
Transitions(R) vinyl siding and FOAMULAR(R) rigid polystyrene foam insulation.
The third quarter 1996 acquisition of Celfortec, a Canadian producer of
FOAMULAR(R) insulation, also contributed to Building Materials growth in North
America. Building Materials Europe sales increased 11% over 1995, primarily from
the second quarter 1996 acquisition of the extruded polystyrene foam business of
Linpac Insulation, with production facilities in the U.K. and Spain. With these
acquisitions in the extruded polystyrene foam operations in Europe and Canada
and the joint venture announced in 1996 to produce foam insulation in China, the
Company has significantly expanded its global position in the foam insulation
business as part of the Company's global building systems strategy.
In 1996, the Company's roofing business continued to increase sales and
improve margins through volume increases and productivity initiatives. The
window business also continued to experience significant sales growth and
productivity improvements during the year. Additionally, in the second quarter
of 1996 the Company acquired the U.S. assets of Partek Insulation, a producer of
rock mineral wool insulation, which has expanded the Company's insulation
product offering into the high temperature insulation market. The Company
further expanded its Building Materials multi-product offering in 1996 with the
introduction of the branded products, Build-R-Tape(R) used to seal sheathing
joints and PinkSeal(TM) foam sealant.
In the Composite Materials segment, sales decreased 5% for the year ended
December 31, 1996. This sales decrease is primarily the result of sluggish
European reinforcements business as well as a decline in the Canadian market,
while in the U.S., composites sales remained relatively flat. While results from
operations for Composite Materials in 1996 compared to 1995 reflected increases
due to improved operating performance and productivity improvements,
particularly in the U.S., these benefits were more than offset by the portion of
the special items for 1996 described above ($12 million) that were attributable
to this segment.
In 1996, the Company announced three new large diameter glass reinforced
plastic ("GRP") pipe joint ventures, one in Colombia, Egypt and Turkey. GRP pipe
is used primarily in water and wastewater systems. In addition to these
ventures, the Company also formed an application development center in India and
announced plans for similar such centers in Brazil and China, to develop and
promote the use of composite materials as a replacement for more traditional
materials.
At the end of 1996, the Company announced the acquisition of the remainder
of the equity interest in Knytex(R), a manufacturer of specialty glass fiber
fabrics. This business, which knits, weaves, stitches or bonds glass fiber to
provide value-added performance characteristics, will be combined with the
Company's existing European specialty fabrics business to form Owens Corning
Fabrics.
The Company's cost of borrowed funds for the year ended December 31, 1996
was $77 million, $10 million lower than 1995. The average total debt outstanding
during the year decreased substantially in 1996 compared to 1995 as the result
of the mid-year 1995 conversion of $173 million of the Company's 8% convertible
junior subordinated debentures into shares of common stock, combined with the
issuance of $200 million of convertible preferred securities. In 1996, the
Company averaged short-term debt of $129 million, approximately $55 million
lower than in 1995. The average debt reduction, together with lower average
short-term interest rates, contributed to the lower cost of borrowed funds in
1996. Additionally, due to
S-34
<PAGE> 36
several large construction projects, interest capitalized in 1996 increased
about $4 million over 1995. See Notes 2 and 3 to the Consolidated Financial
Statements of the Company included in the 1996 Form 10-K, which is incorporated
in the accompanying Prospectus by reference.
At December 31, 1996, certain of the Company's foreign subsidiaries and
state tax jurisdictions have combined tax net operating loss carryforwards the
benefit of which is approximately $63 million. The Company has $580 million in
net deferred tax assets at December 31, 1996, all of which management expects
will be realized through future income from operations. See Note 8 to the
Consolidated Financial Statements of the Company included in the 1996 Form 10-K,
which is incorporated in the accompanying Prospectus by reference.
LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS
Six Months Ended June 30, 1997
Cash flow from operations, excluding asbestos-related activities, was
negative $6 million for the second quarter of 1997, compared to $73 million for
second quarter 1996. The decline from 1996 to 1997 is primarily attributable to
a reduction in accounts payable and accrued liabilities, and an increase in
accounts receivable, in the ordinary course of the Company's business. Excluding
Fibreboard inventories of approximately $110 million, inventories at June 30,
1997 increased 26% over December 31, 1996 levels due to the Company's seasonal
inventory build in the first half of the year. See Notes 6 and 7 to the
Consolidated Financial Statements of the Company as of June 30, 1997, included
in the Second Quarter Form 10-Q, which is incorporated in the accompanying
Prospectus by reference.
At June 30, 1997, the Company's net working capital was $260 million and
its current ratio was 1.22, as compared to negative $163 million and .85,
respectively at December 31, 1996. The increase in 1997 is the result of
increased working capital, driven by higher seasonal inventories and
receivables, as well as a decline in accounts payable and accrued liabilities.
The Company's total borrowings at June 30, 1997 were $2,033 million, $1,099
million higher than at year-end 1996. The June 30, 1997 long-term debt balance
reflects the seasonal increases in the Company's working capital described above
plus $519 million payable, as well as $138 million of debt assumed, for the
acquisition of Fibreboard. The acquisition amounts were drawn from the Credit
Agreement in early July. Since the cash was not exchanged until July, the
Consolidated Statement of Cash Flows, for the quarter and six months ended June
30, 1997, does not reflect the acquisition of Fibreboard. Typically, the Company
reports greater cash usage during the first half of the year as the Company
builds inventories and other working capital.
As of June 30, 1997, the Company had unused lines of credit of $736 million
available under long-term bank loan facilities and an additional $37 million
under short-term facilities, after the exclusion of the amount utilized in early
July to fund the acquisition of Fibreboard, compared to $440 million and $195
million, respectively, at year-end 1996. The increase in available lines of
credit is the result of the new $2 billion Credit Agreement established to fund
the acquisition of Fibreboard. Letters of credit issued under the Credit
Agreement, most of which support appeals from asbestos trials, reduce the
available credit of that facility. The impact of such reduction is reflected in
the unused lines of credit discussed above. See Notes 3 and 4 of the
Consolidated Financial Statements of the Company as of June 30, 1997, included
in the Second Quarter Form 10-Q, which is incorporated in the accompanying
Prospectus by reference.
Capital spending for property, plant and equipment, excluding acquisitions
and investments in affiliates, was $131 million for the first six months of
1997. For the year 1997, the Company anticipates capital spending, exclusive of
acquisitions and investments in affiliates, to be approximately $250 million,
the majority of which is committed. The Company expects that funding for these
expenditures will be from the Company's operations and external sources as
required.
Gross payments for asbestos litigation claims against Owens Corning during
the second quarter of 1997, including $11 million in defense costs and $2
million for appeal bond and other costs, were $90 million. Proceeds from
insurance were $24 million, resulting in a net pretax cash outflow of $66
million, or $40 million
S-35
<PAGE> 37
after-tax. During the second quarter of 1997, Owens Corning received
approximately 9,700 new asbestos personal injury cases and closed approximately
3,200 cases. Over the next twelve months, Owens Corning's total payments for
asbestos litigation claims, including defense costs, are expected to be
approximately $300 million. Proceeds from insurance of $50 million are expected
to be available to cover Owens Corning's costs, resulting in a net pretax cash
outflow of $250 million, or $150 million after-tax. See Note 8 Item A to the
Consolidated Financial Statements of the Company as of June 30, 1997,
incorporated in the accompanying Prospectus by reference.
During the next twelve months, any payments for asbestos claims against
Fibreboard are expected to be paid by Fibreboard's insurers. See Note 8 Item B
to the Consolidated Financial Statements of the Company as of June 30, 1997,
included in the Second Quarter Form 10-Q, which is incorporated in the
accompanying Prospectus by reference.
The Company expects funds generated from operations, together with funds
available under long and short term bank loan facilities, to be sufficient to
satisfy its debt service obligations under its existing indebtedness, as well as
its contingent liabilities for uninsured asbestos personal injury claims.
The Company has been deemed by the Environmental Protection Agency (EPA) to
be a potentially responsible party (PRP) with respect to certain sites under the
Comprehensive Environmental Response, Compensation and Liability Act
(Superfund). The Company has also been deemed a PRP under similar state or local
laws, including two state Superfund sites where the Company is the primary
generator. In other instances, other PRPs have brought suits or claims against
the Company as a PRP for contribution under such federal, state or local laws.
During the second quarter of 1997, the Company was designated a PRP in such
federal, state, local or private proceedings for one additional site. At June
30, 1997, a total of 42 such PRP designations remained unresolved by the
Company, some of which designations the Company believes to be erroneous. The
Company is also involved with environmental investigation or remediation at a
number of other sites at which it has not been designated a PRP. The Company has
established a $30 million reserve, of which $15 million relates to Fibreboard,
for its Superfund (and similar state, local and private action) contingent
liabilities. Based upon information presently available to the Company, and
without regard to the application of insurance, the Company believes that,
considered in the aggregate, the additional costs associated with such
contingent liabilities, including any related litigation costs, will not have a
materially adverse effect on the Company's results of operations, financial
condition or long-term liquidity.
The 1990 Clean Air Act Amendments (Act) provide that the EPA will issue
regulations on a number of air pollutants over a period of years. Until these
regulations are developed, the Company cannot determine the extent to which the
Act will affect it. The Company anticipates that its sources to be regulated
will include glass fiber manufacturing and asphalt processing activities. The
EPA's announced schedule is to issue regulations covering glass fiber
manufacturing by late 1997 and asphalt processing activities by late 2000, with
implementation as to existing sources up to three years thereafter. Based on
information now known to the Company, including the nature and limited number of
regulated materials it emits, the Company does not expect the Act to have a
materially adverse effect on the Company's results of operations, financial
condition or long-term liquidity.
Years Ended December 31, 1996, 1995 and 1994
Cash flow from operations, excluding proceeds from insurance and payments
for asbestos litigation claims, was $501 million for 1996, compared to $342
million for 1995. The improvement in 1996 relates to an increase in accounts
payable and accrued liabilities offset in part by an increase in inventory.
Additionally, 1995 cash flow from operations was reduced by $64 million for the
December 1995 funding of a Voluntary Employee's Beneficiary Association (VEBA)
trust. The 1996 cash flow from operations reflects the disbursements for
benefits from the VEBA trust and collection of a tax receivable. See Note 6 to
the Consolidated Financial Statements of the Company included in the 1996 Form
10K, which is incorporated in the accompanying Prospectus by reference.
At December 31, 1996, the Company's net working capital and current ratio
were negative $163 million and .85, compared to negative $9 million and .99 at
December 31, 1995, and negative $143 million and .87 at
S-36
<PAGE> 38
December 31, 1994, respectively. The decrease in 1996 was primarily due to
increased accounts payable and accrued liabilities, and also a larger current
asbestos liability, offset somewhat by increased inventories. Excluding the
impact of short-term borrowings used to finance a $110 million U.K. acquisition
in June 1994, the Company's net working capital was negative $33 million and its
current ratio was .97 at December 31, 1994.
During 1995, virtually all of the Company's $173 million issue of 8%
convertible junior subordinated debentures were converted. Debentures not
converted were redeemed for cash. The conversion resulted in the issuance of 5.8
million new shares of common stock. Also in 1995, Owens-Corning Capital, L.L.C.,
a Delaware limited liability company, of which all of the common limited company
interests are indirectly owned by the Company, issued $200 million of 6.5%
cumulative convertible preferred securities. The proceeds from the issuance were
loaned to the Company and partially used to repay a short-term credit facility.
See Note 4 to the Consolidated Financial Statements of the Company included in
the 1996 Form 10K, which is incorporated in the accompanying Prospectus by
reference.
Capital spending for property, plant and equipment, excluding acquisitions,
was $325 million during 1996.
Gross payments for asbestos litigation claims during 1996, including $44
million in defense costs and $11 million for appeal bond and other costs, were
$267 million. Proceeds from insurance were $101 million resulting in a net
pretax cash outflow of $166 million, or $100 million after-tax. During 1996, the
Company received approximately 36,400 new asbestos personal injury cases and
closed approximately 22,700 cases. See Note 21 to the Consolidated Financial
Statements of the Company included in the 1996 Form 10K, which is incorporated
in the accompanying Prospectus by reference.
In June 1996 the Company filed a lawsuit in federal court in New Orleans
alleging a massive scheme to defraud the Company in connection with asbestos
litigation cases. The suit alleges that medical test results in tens of
thousands of asbestos litigation claims were falsified by the owners and
operators of certain pulmonary function testing laboratories. A second lawsuit,
alleging similar practices, was filed against the owner and operator of an
additional testing laboratory in January 1997. The Company believes that at
least 40,000 claims in its current backlog involve plaintiffs whose pulmonary
function tests were improperly administered or manipulated by the testing
laboratories or otherwise inconsistent with proper medical practice.
FUTURE REQUIRED ACCOUNTING CHANGES
On June 30, 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
No. 130). This statement establishes standards for reporting and display of
comprehensive income and its components in financial statements. The adoption of
this standard will not impact results from operations, financial condition, or
long-term liquidity, but will require the Company to classify items of other
comprehensive income by their nature in a financial statement and display the
accumulated balance of other comprehensive income separately in the equity
section of the balance sheet. The Company is required to adopt the new standard
for periods beginning after December 15, 1997.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share (SFAS No.128).
This statement introduces new methods for calculating earnings per share. The
adoption of this standard will not impact results from operations, financial
condition, or long-term liquidity, but will require the Company to restate
earnings per share reported in prior periods to conform with this statement. The
Company is required to adopt the new standard for periods ending after December
15, 1997. The Company believes that the adoption of this standard will result in
essentially the same earnings per share when comparing the current fully diluted
earnings per share calculation to the calculation of diluted earnings per share
required by SFAS No. 128.
S-37
<PAGE> 39
ASBESTOS AND OTHER LITIGATION
The following is a discussion of the status of the asbestos and other
litigation as of June 30, 1997; see also "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity, Capital Resources
and Other Related Matters."
ASBESTOS LIABILITIES
Owens Corning (Excluding Fibreboard)
Owens Corning is a co-defendant with other former manufacturers,
distributors and installers of products containing asbestos and with miners and
suppliers of asbestos fibers (collectively, the "Producers") in personal injury
and property damage litigation. The personal injury claimants generally allege
injuries to their health caused by inhalation of asbestos fibers from Owens
Corning's products. Most of the claimants seek punitive damages as well as
compensatory damages. The property damage claims generally allege property
damage to school, public and commercial buildings resulting from the presence of
products containing asbestos. Virtually all of the asbestos-related lawsuits
against Owens Corning arise out of its manufacture, distribution, sale or
installation of an asbestos-containing calcium silicate, high temperature
insulation product, the manufacture of which was discontinued in 1972.
STATUS. As of June 30, 1997, approximately 165,700 asbestos personal
injury claims were pending against Owens Corning, of which 16,700 were received
in the first six months of 1997. Owens Corning received approximately 36,400
such claims in 1996 and 55,900 in 1995.
Many of the recent claims appear to be the product of mass screening
programs and not to involve malignancies or other significant asbestos related
impairment. Owens Corning believes that at least 40,000 of the recent claims
involve plaintiffs whose pulmonary function tests ("PFTs") were improperly
administered or manipulated by the testing laboratory or otherwise inconsistent
with proper medical practice, and it is investigating a number of testing
organizations and their methods. In 1996 Owens Corning filed suit in federal
court in New Orleans, Louisiana against the owners and operators of certain
pulmonary function testing laboratories in the southeastern U.S. challenging
such improper testing practices. This matter is now in active pre-trial
discovery. In January 1997, Owens Corning filed a similar suit in federal court
in Jackson, Mississippi against the owner of an additional testing laboratory.
During 1996 Owens Corning engaged in discussions with a group of
approximately 30 leading plaintiffs' law firms to explore approaches toward
resolution of its asbestos liability. Agreements with the various firms not to
file claims against Owens Corning except for those involving malignancies, most
of which agreements expired on or before January 1, 1997, may have impacted the
number of cases received by Owens Corning during 1996 and the first two quarters
of 1997.
Through June 30, 1997, Owens Corning had resolved (by settlement or
otherwise) approximately 192,100 asbestos personal injury claims. This number
includes cases resolved by two orders of dismissal for lack of medical proof,
covering approximately 18,900 federal maritime cases which named Owens Corning
as a defendant, resulting in a 15,600 case reduction in the backlog after
reduction for duplicate cases and cases previously settled. Of these cases,
approximately 11,700 were dismissed in 1996, with the remaining 3,900 being
dismissed in the first quarter of 1997. During 1996, 1995 and 1994, Owens
Corning resolved approximately 60,600 asbestos personal injury claims, over 99%
without trial, and incurred total indemnity payments of $626 million (an average
of about $10,300 per case).
Owens Corning's indemnity payments have varied considerably over time and
from case to case, and are affected by a multitude of factors. These include the
type and severity of the disease sustained by the claimant (i.e., mesothelioma,
lung cancer, other types of cancer, asbestosis or pleural changes); the
occupation of the claimant; the extent of the claimant's exposure to
asbestos-containing products manufactured, sold or installed by Owens Corning;
the extent of the claimant's exposure to asbestos-containing products
manufactured, sold or installed by other Producers; the number and financial
resources of other Producer defendants; the jurisdiction of suit; the presence
or absence of other possible causes of the claimant's illness; the availability
or not of legal defenses such as the statute of limitations or state of the art;
whether the claim was resolved on an
S-38
<PAGE> 40
individual basis or as part of a group settlement; and whether the claim
proceeded to an adverse verdict or judgment.
INSURANCE. As of June 30, 1997, Owens Corning had approximately $265
million in unexhausted insurance coverage (net of deductibles and self-insured
retentions and excluding coverage issued by insolvent carriers) under its
liability insurance policies applicable to asbestos personal injury claims. This
insurance, which is substantially confirmed, includes both products hazard
coverage and primary level non-products coverage. Portions of this coverage are
not available until 1998 and beyond under agreements with the carriers
confirming such coverage. All of Owens Corning's liability insurance policies
cover indemnity payments and defense fees and expenses subject to applicable
policy limits.
In addition to its confirmed primary level non-products insurance, Owens
Corning has a significant amount of unconfirmed potential non-products coverage
with excess level carriers. For purposes of calculating the amount of insurance
applicable to asbestos liabilities, Owens Corning has estimated its probable
recoveries in respect of this additional non-products coverage at $225 million,
which amount was recorded in the second quarter of 1996. This coverage is
unconfirmed and the amount and timing of recoveries from these excess level
policies will depend on subsequent negotiations or proceedings.
RESERVE. The Company's financial statements include a reserve for the
estimated cost associated with Owens Corning's asbestos personal injury claims.
This reserve was established principally through a charge to income in 1991 for
the costs of asbestos claims expected to be received through 1999 and an
additional $1.1 billion non-recurring, noncash charge to income (before taking
into account the probable non-products insurance recoveries) during the second
quarter of 1996 for cases that may be received subsequent to 1999. In
establishing the reserve, Owens Corning took into account, among other things,
the effect of federal court decisions relating to punitive damages and the
certification of class actions in asbestos cases, the discussions with the group
of plaintiffs' law firms referred to above, the results of its continuing
investigations of medical screening practices of the kind at issue in the
federal PFT lawsuits, recent developments as to the prospects for federal and
state tort reform, the continued rate of case filings at historically high
levels, additional information on filings received during the 1993-1995 period
and other factors. The combined effect of the $1.1 billion charge and the $225
million probable additional non-products insurance recovery was an $875 million
charge in the second quarter of 1996.
Owens Corning's estimated total liabilities in respect of indemnity and
defense costs associated with pending and unasserted asbestos personal injury
claims that may be received in the future, and its estimated insurance
recoveries in respect of such claims, are reported separately as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
-------- ------------
(IN MILLIONS OF DOLLARS)
<S> <C> <C>
RESERVE FOR ASBESTOS LITIGATION CLAIMS
Current.............................................................. $ 300 $ 300
Other................................................................ 1,485 1,670
------ ------
Total Reserve................................................ 1,785 1,970
------ ------
INSURANCE FOR ASBESTOS LITIGATION CLAIMS
Current.............................................................. 50 100
Other................................................................ 440 454
------ ------
Total Insurance.............................................. 490 554
------ ------
Net Owens Corning Asbestos Liability................................... $1,295 $1,416
====== ======
</TABLE>
Owens Corning cautions that such factors as the number of future asbestos
personal injury claims received by it, the rate of receipt of such claims, and
the indemnity and defense costs associated with asbestos personal injury claims,
as well as the prospects for confirming additional insurance, including the
additional $225 million in non-products coverage referenced above, are
influenced by numerous variables that are difficult to predict, and that
estimates, such as Owens Corning's, which attempt to take account of such
S-39
<PAGE> 41
variables, are subject to considerable uncertainty. Owens Corning believes that
its estimate of liabilities and insurance will be sufficient to provide for the
costs of all pending and future asbestos personal injury claims that involve
malignancies or significant asbestos-related functional impairment. While such
estimates cover unimpaired claims, the number and cost of unimpaired claims are
much harder to predict and such estimates reflect Owens Corning's belief that
such claims have little or no value. Owens Corning will continue to review the
adequacy of its estimate of liabilities and insurance on a periodic basis and
make such adjustments as may be appropriate.
MANAGEMENT OPINION. Although any opinion is necessarily judgmental and
must be based on information now known to Owens Corning, in the opinion of
management, while any additional uninsured and unreserved costs which may arise
out of pending personal injury and property damage asbestos claims and
additional similar asbestos claims filed in the future may be substantial over
time, management believes that any such additional costs will not impair the
ability of the Company to meet its obligations, to reinvest in its businesses or
to take advantage of attractive opportunities for growth.
Fibreboard (Excluding Owens Corning)
Prior to 1972, Fibreboard manufactured insulation products containing
asbestos. Fibreboard has since been named as a defendant in many thousands of
personal injury claims for injuries allegedly caused by asbestos exposure as
well as in asbestos property damage cases.
As of June 30, 1997, approximately 97,600 asbestos personal injury claims
were pending against Fibreboard, of which 21,200 were received in the first six
months of 1997. Fibreboard received approximately 32,900 such claims in 1996 and
20,700 in 1995. These claims and most of the pending claims are made against the
Fibreboard Global Settlement Trust and are subject to the Global Settlement
injunction discussed below. In the first six months of 1997, Fibreboard resolved
approximately 1,800 asbestos personal injury claims at an average cost of
$22,000 per claim. Approximately 2,700 such claims were resolved in 1996 at an
approximate average cost of $34,000 per claim and 14,500 were resolved in 1995
at an approximate average cost of $12,000 per claim.
The average cost per claim has increased recently from the historical
average cost of $11,000 per claim. This is due to the absence of group
settlements, where large numbers of low value cases are traditionally settled
along with higher value cases, and due to the fact that in 1996 and 1997 a
relatively small number of individual cases involving more seriously injured
plaintiffs were settled as exigent claims (all of which are malignancy claims)
during the pendency of the Global Settlement injunction discussed below.
As of June 30, 1997, amounts payable under various asbestos claim
settlement agreements were $88 million. These amounts are payable either from
the Settlement Trust discussed below or directly by the insurers. Amounts due
from insurers in payment of these or past claims paid directly by Fibreboard, as
of June 30, 1997 are $110 million.
The asbestos-related long-term debt of $26 million consists of amounts
advanced under a reimbursement agreement; interest accrues at prime minus 2%.
Fibreboard has unique insurance coverage of personal injury claims. During
1993, Fibreboard and its insurers, Continental Casualty Company (Continental)
and Pacific Indemnity Company (Pacific), entered into the Insurance Settlement,
and Fibreboard, its insurers and representatives of a nationwide class of future
asbestos plaintiffs entered into the Global Settlement. These agreements are
interrelated and require final court approval. On July 26, 1996, the U.S. Fifth
Circuit Court of Appeals affirmed the Global Settlement by a majority decision
and the Insurance Settlement by a unanimous decision.
The parties opposing the Global Settlement filed petitions seeking review
with the U.S. Supreme Court. On June 27, 1997, the Supreme Court granted the
petitions, vacated the judgment and remanded the case to the Fifth Circuit for
further consideration in light of the Supreme Court's decision in the Amchem
Products, Inc. v. Windsor case. Amchem involved a proposed nationwide class
action settlement of future asbestos personal injury claims against the members
of the Center for Claims Resolution. The Supreme Court, affirming the
intermediate appellate court, disapproved and vacated the Amchem class action
settlement, determining that the Amchem class action failed to meet the
requirements of Federal Rule of Civil Procedure
S-40
<PAGE> 42
23. In light of the remand to the Fifth Circuit, final resolution of the Global
Settlement may not be known until 1998 or later.
On October 24, 1996, the statutory time period for objectors to seek
further judicial review of the Insurance Settlement lapsed with no petition for
review having been filed with the U.S. Supreme Court. Therefore, the Insurance
Settlement is now final and not subject to further appeal.
The parties will continue to seek approval of the Global Settlement. If the
Global Settlement becomes effective, all asbestos-related personal injury
liabilities of Fibreboard will be resolved through insurance funds and existing
corporate reserves. A permanent injunction barring the filing of any further
claims against Fibreboard or its insurers is included as part of the Global
Settlement. Upon final approval, Fibreboard's insurers are required to pay
existing settlements and assume full responsibility for any claims filed before
August 27, 1993, the date the settling parties reached agreement on the terms of
the Global Settlement. A court-supervised claims processing trust ("Settlement
Trust") will be responsible for resolving claims which were not filed against
Fibreboard before August 27, 1993, and any further claims that might otherwise
be asserted against Fibreboard in the future.
The Settlement Trust will be funded principally by Continental and Pacific.
These insurers have placed $1,525 million in an interest-bearing escrow account
pending court approval of the settlements. Fibreboard is responsible for
contributing $10 million plus accrued interest toward the Settlement Trust,
which it will obtain from other remaining insurance sources and existing
reserves. The Home Insurance Company has already paid $9.9 million into the
escrow account on behalf of Fibreboard, in satisfaction of an earlier settlement
agreement. The balance of the escrow account was $1,691 million at June 30,
1997, after payment of interim expenses and exigent claims associated with the
Global Settlement.
If the Global Settlement becomes effective, Fibreboard would have no
on-going or future liabilities for asbestos personal injury claims in excess of
the $10 million currently reserved in other long term liabilities.
The Insurance Settlement is structured as an alternative solution in the
event the Global Settlement fails to receive final approval. Under the Insurance
Settlement, Continental and Pacific will pay in full settlements reached as of
August 27, 1993 and provide Fibreboard with the remaining balance of the Global
Settlement escrow account for claims filed after August 27, 1993, plus an
additional $475 million for claims which were pending but not settled at August
27, 1993, less amounts paid for those claims since August 27, 1993. Upon
fulfillment of their obligations under the Insurance Settlement, Continental and
Pacific will be discharged from any further obligations to Fibreboard under
their insurance policies and will be protected by an injunction against any
claims of asbestos personal injury claimants based upon those insurance
policies. Under the Insurance Settlement, Fibreboard will manage the defense and
resolution of asbestos-related personal injury claims and will remain subject to
suit by asbestos personal injury claimants.
The Insurance Settlement will not be fully implemented or funded until such
time as the Global Settlement has been finally resolved. In the event the Global
Settlement is finally approved, the Insurance Settlement will not be
implemented.
While there are various uncertainties regarding whether the Global
Settlement or the Insurance Settlement will be in effect, and these may
ultimately impact Fibreboard's liability for asbestos personal injury claims,
the Company believes the amounts available under the Insurance Settlement will
be adequate to fund the ongoing defense and indemnity costs associated with
asbestos-related personal injury claims for the foreseeable future.
The Company anticipates reevaluating and updating its estimates of the
Fibreboard liability for asbestos personal injury claims once it is determined
which of the Global Settlement or the Insurance Settlement is ultimately
implemented.
NON-ASBESTOS LIABILITIES
Various other lawsuits and claims arising in the normal course of business
are pending against the Company, some of which allege substantial damages.
Management believes that the outcome of these lawsuits and claims will not have
a materially adverse effect on the Company's financial position or results of
operations.
S-41
<PAGE> 43
DESCRIPTION OF THE FELINE PRIDES
The following descriptions of certain terms of the FELINE PRIDES offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the FELINE PRIDES set forth
in the accompanying Prospectus, to which reference is hereby made. The summaries
of certain provisions of documents described below are not necessarily complete,
and in each instance reference is hereby made to the copies of such documents
(including the definitions therein of certain terms) which are on file with the
Commission. Wherever particular Sections of, or terms defined in, such documents
are referred to herein, such Sections or defined terms are incorporated by
reference herein. Capitalized terms not defined herein have the meanings
assigned to such terms in the accompanying Prospectus.
Each FELINE PRIDES will be issued under the Purchase Contract Agreement
between the Company and the Purchase Contract Agent. Each FELINE PRIDES offered
hereby initially will consist of a unit (referred to as an Income PRIDES) with a
Stated Amount of $50 comprised of (a) a Purchase Contract under which (i) the
holder will purchase from the Company on the Purchase Contract Settlement Date,
for an amount of cash equal to the Stated Amount, a number of newly issued
shares of Common Stock equal to the Settlement Rate described below under
"Description of the Purchase Contracts-General," and (ii) the Company will pay
Contract Adjustment Payments, if any, to the holder, and (b) (i) beneficial
ownership of a related % Trust Preferred Security, having a stated
liquidation amount per Trust Preferred Security equal to the Stated Amount,
representing a preferred, undivided beneficial interest in the assets of the
Trust, which will consist solely of the Debentures, or (ii) in the case of a
distribution of the Debentures upon the dissolution of the Trust as a result of
an Investment Company Event, as described below, or otherwise, Debentures having
a principal amount equal to the Stated Amount. The purchase price of each Income
PRIDES will be allocated between the related Purchase Contract and the related
Trust Preferred Security in proportion to their respective fair market values at
the time of purchase. See "Certain Federal Income Tax
Consequences -- Acquisition of Income PRIDES; Initial Basis in Trust Preferred
Securities and Purchase Contracts." As long as a FELINE PRIDES is in the form of
an Income PRIDES, the related Trust Preferred Securities will be pledged to the
Collateral Agent, to secure the holder's obligation to purchase Common Stock
under the related Purchase Contract.
SUBSTITUTION OF PLEDGED SECURITIES
Each holder of an Income PRIDES will have the right, at any time, to
substitute for the related Trust Preferred Securities held by the Collateral
Agent Treasury Securities in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Trust Preferred Securities. Because
Treasury Securities are issued in integral multiples of $1,000, holders of
Income PRIDES may make such substitution only in integral multiples of 20 Income
PRIDES. Such Treasury Securities will be pledged with the Collateral Agent to
secure the holder's obligation to purchase Common Stock under the related
Purchase Contracts with respect to which Treasury Securities have been
substituted for the related Trust Preferred Securities as collateral to secure
such holder's obligation under the related Purchase Contracts. FELINE PRIDES
with respect to which Treasury Securities have been substituted for the related
Trust Preferred Securities as collateral to secure such holder's obligation
under the related Purchase Contracts will be referred to as Growth PRIDES. To
create 20 Growth PRIDES, the Income PRIDES holder will (a) deposit with the
Collateral Agent a Treasury Security having a principal amount at maturity of
$1,000 and (b) transfer 20 Income PRIDES to the Purchase Contract Agent
accompanied by a notice stating that the Income PRIDES holder has deposited a
Treasury Security with the Collateral Agent and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release to such holder the 20
Trust Preferred Securities relating to such 20 Income PRIDES. Upon such deposit
and receipt of an instruction from the Purchase Contract Agent, the Collateral
Agent will effect the release of the related 20 Trust Preferred Securities from
the pledge under the Pledge Agreement free and clear of the Company's security
interest therein to the Purchase Contract Agent, which will (i) cancel the 20
Income PRIDES, (ii) transfer the 20 related Trust Preferred Securities to such
holder and (iii) deliver 20 Growth PRIDES to the holder. The substituted
Treasury Security will be pledged with the Collateral Agent to secure the
holder's obligation to purchase Common Stock under the related Purchase
Contracts. Each Growth PRIDES will consist of a unit with a Stated Amount of $50
comprised of (a) a Purchase Contract with respect to which (i) the holder will
purchase from the Company on the Purchase
S-42
<PAGE> 44
Contract Settlement Date or earlier for an amount of cash equal to the Stated
Amount of such Growth PRIDES, a number of newly issued shares of Common Stock of
the Company equal to the Settlement Rate described herein, and (ii) the Company
will pay the holder Contract Adjustment Payments, if any, and (b) a 1/20
undivided beneficial ownership interest in a related Treasury Security having a
principal amount at maturity equal to $1,000 and maturing on the Business Day
immediately preceding the Purchase Contract Settlement Date. The related Trust
Preferred Securities released to the holder thereafter will trade separately
from the resulting Growth PRIDES. Contract Adjustment Payments, if any, will be
payable by the Company on the Growth PRIDES on each Payment Date from the later
of , 1997 and the last Payment Date on which Contract Adjustment
Payments, if any, were paid. In addition, imputed interest would accrete on the
related Treasury Securities. Distributions on any Trust Preferred Securities, up
to but not including the Purchase Contract Settlement Date, including after a
substitution of collateral resulting in the creation of Growth PRIDES, will
continue to be payable by the Trust at the rate of % of the Stated Amount
per annum, subject to the Company's deferral rights described in "-- Current
Payments."
Holders who elect to substitute Pledged Securities, thereby creating Growth
PRIDES or recreating Income PRIDES (as discussed below), shall be responsible
for any fees or expenses payable in connection with such substitution. See
"Certain Provisions of the Purchase Contract Agreement and the Pledge
Agreement -- Miscellaneous. "
RECREATING INCOME PRIDES
A holder of Growth PRIDES may recreate Income PRIDES by (a) depositing with
the Collateral Agent 20 Trust Preferred Securities and (b) transferring 20
Growth PRIDES to the Purchase Contract Agent accompanied by a notice stating
that the Growth PRIDES holder has deposited 20 Trust Preferred Securities with
the Collateral Agent and requesting that the Purchase Contract Agent instruct
the Collateral Agent to release to such holder the related Treasury Security.
Upon such deposit and receipt of instructions from the Purchase Contract Agent,
the Collateral Agent will effect the release of the related Treasury Security
from the pledge of the Pledge Agreement free and clear of the Company's security
interest therein to the Purchase Contract Agent, which will (i) cancel the 20
Growth PRIDES, (ii) transfer such Treasury Security to such holder and (iii)
deliver 20 Income PRIDES to such holder. The substituted Trust Preferred
Securities will be pledged with the Collateral Agent to secure the holder's
obligation to purchase Common Stock under the related Purchase Contracts.
CURRENT PAYMENTS
Holders of Income PRIDES are entitled to receive aggregate cash
distributions at a rate of % of the Stated Amount per annum from and after
, 1997, payable quarterly in arrears. The quarterly payments on the
Income PRIDES will consist of (i) cumulative cash distributions on the related
Trust Preferred Securities initially payable by the Trust at the rate of %
of the Stated Amount per annum and (ii) Contract Adjustment Payments payable by
the Company at the rate of % of the Stated Amount per annum (provided that
if such rate is 0%, then the Company will not make any Contract Adjustment
Payments), in each case subject to the Company's right of deferral as described
herein.
The ability of the Trust to make the quarterly distributions on the Trust
Preferred Securities is solely dependent upon the receipt of corresponding
interest payments from the Company on the Debentures. The Company has the right
at any time, and from time to time, limited to a period not extending beyond the
maturity of the Debentures, to defer the interest payments on the Debentures. As
a consequence of such deferral, quarterly distributions to holders of Income
PRIDES (or any Trust Preferred Securities outstanding after the Purchase
Contract Settlement Date or after a substitution of collateral resulting in the
creation of Growth PRIDES) would be deferred (but despite such deferral, would
continue to accumulate quarterly and would accrue interest thereon compounded
quarterly at the rate of % per annum through and including November 15, 2000,
and at the Reset Rate thereafter). The Company also has the right to defer the
payment of Contract Adjustment Payments, if any, on the related Purchase
Contracts until the Purchase Contract Settlement Date; however, deferred
Contract Adjustment Payments, if any, will bear additional Contract
S-43
<PAGE> 45
Adjustment Payments at the rate of % per annum (such deferred installments
of Contract Adjustment Payments, if any, together with the additional Contract
Adjustment Payments, if any, shall be referred to as the "Deferred Contract
Adjustment Payments"). See "Description of the Purchase Contracts-Contract
Adjustment Payments" and "Description of the Trust Preferred
Securities -- Distributions."
The Company's obligations with respect to the Debentures and the Contract
Adjustment Payments, if any, will be senior and unsecured and will rank pari
passu in right of payment with all other senior unsecured obligations of the
Company, except that such obligations with respect to the Debentures and the
Contract Adjustment Payments, if any, will be subordinated and junior in right
of payment to the Senior Indebtedness. The Company's obligations with respect to
the Debentures and the Contract Adjustment Payments, if any, will not be
subordinated to any other senior unsecured obligations of the Company, whether
incurred prior to, on or after the date hereof.
In the event a holder of Income PRIDES substituted Treasury Securities for
the related Trust Preferred Securities, such holder would receive on the
resulting Growth PRIDES only quarterly Contract Adjustment Payments, if any,
subject to the Company's rights of deferral. In addition, imputed interest would
accrete on the related Treasury Securities.
VOTING AND CERTAIN OTHER RIGHTS
Holders of Trust Preferred Securities, in their capacities as such holders,
will not be entitled to vote to appoint, remove or replace, or to increase or
decrease the number of Regular Trustees and will generally have no voting rights
except in the limited circumstances described under "Description of Trust
Preferred Securities -- Voting Rights." Holders of Purchase Contracts relating
to the Income PRIDES or Growth PRIDES, in their capacities as such holders, will
have no voting or other rights in respect of the Common Stock.
LISTING OF THE SECURITIES
Application will be made to list the Income PRIDES on the NYSE under the
symbol " ," subject to official notice of issuance. The Growth PRIDES and
the Trust Preferred Securities will not be listed or traded on any securities
exchange.
NYSE SYMBOL OF COMMON STOCK
The Common Stock is listed on the NYSE under the symbol "OWC."
DESCRIPTION OF THE PURCHASE CONTRACTS
GENERAL
Each Purchase Contract underlying a FELINE PRIDES (unless earlier
terminated, or earlier settled at the holder's option) will obligate the holder
of such Purchase Contract to purchase, and the Company to sell, on the Purchase
Contract Settlement Date, for an amount in cash equal to the Stated Amount of
such FELINE PRIDES, a number of newly issued shares of Common Stock equal to the
Settlement Rate. The Settlement Rate will be calculated as follows (subject to
adjustment under certain circumstances): (a) if the Applicable Market Value is
equal to or greater than the Threshold Appreciation Price, the Settlement Rate
will be , (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but greater than $ , the Settlement Rate will equal
the Stated Amount divided by the Applicable Market Value, and (c) if the
Applicable Market Value is less than or equal to $ , the Settlement
Rate will be . "Applicable Market Value" means the average of the
Closing Prices (as defined) per share of Common Stock on each of the thirty
consecutive Trading Days (as defined) ending on the second Trading Day
immediately preceding the Purchase Contract Settlement Date.
No fractional shares of Common Stock will be issued by the Company pursuant
to the Purchase Contracts. In lieu of fractional shares otherwise issuable
(calculated on an aggregate basis) in respect of Purchase Contracts being
settled by a holder of Income PRIDES or Growth PRIDES, the holder will be
entitled to receive an amount of cash equal to such fraction of a share times
the Applicable Market Value.
S-44
<PAGE> 46
On the Business Day immediately preceding the Purchase Contract Settlement
Date, unless a holder of Income PRIDES or Growth PRIDES (i) has settled the
related Purchase Contracts prior to the Purchase Contract Settlement Date
through the early delivery of cash to the Purchase Contract Agent in the manner
described under "-- Early Settlement," (ii) has notified the Purchase Contract
Agent of its intention to settle the related Purchase Contracts with separate
cash on the Business Day immediately preceding the Purchase Contract Settlement
Date in the manner described under "-- Notice to Settle with Cash" and has so
settled such Purchase Contracts, or (iii) an event described under
"-- Termination" below has occurred, (A) in the case of Income PRIDES, such
holder will be deemed to have requested the Trust to put the aggregate principal
amount of the related Debentures to the Company for a price equal to such
principal amount, plus accrued and unpaid interest, if any, and upon the
repurchase of such Debentures by the Company pursuant to a Put Option, (1) the
proceeds from such repurchase shall simultaneously be applied to redeem the
related Trust Preferred Securities of such holder having an aggregate stated
liquidation amount equal to the aggregate principal amount of the Debentures so
repurchased, and an amount equal to such aggregate stated liquidation amount
will be automatically applied to satisfy in full such holder's obligation to
purchase Common Stock under the related Purchase Contracts and (2) any accrued
and unpaid interest with respect to the Debentures so repurchased will be paid
to such holder in cash (see "Description of the Debentures -- Put Option"), and
(B) in the case of Growth PRIDES, the principal amount of the related Treasury
Securities, when paid at maturity, will automatically be applied to satisfy in
full the holder's obligation to purchase Common Stock under the related Purchase
Contracts. Such Common Stock will then be issued and delivered to such holder or
such holder's designee, upon presentation and surrender of the certificate
evidencing such FELINE PRIDES (a "FELINE PRIDES Certificate") and payment by the
holder of any transfer or similar taxes payable in connection with the issuance
of the Common Stock to any person other than such holder. In the event that a
holder of either Income PRIDES or Growth PRIDES effects the early settlement of
the related Purchase Contract through the delivery of cash or settles the
related Purchase Contract with cash on the Business Day immediately preceding
the Purchase Contract Settlement Date, the related Trust Preferred Securities or
Treasury Securities, as the case may be, will be released to the holder as
described herein. The funds received by the Collateral Agent on the Business Day
immediately preceding the Purchase Contract Settlement Date, either upon cash
settlement of a Purchase Contract or by application of the proceeds from the put
of the related Debenture, will be promptly invested in overnight permitted
investments and paid to the Company on the Purchase Contract Settlement Date.
Any funds received by the Collateral Agent in respect of the interest earned
from the overnight investment in permitted investments will be distributed to
the Purchase Contract Agent for payment to the holders.
Prior to the date on which shares of Common Stock are issued in settlement
of Purchase Contracts, the Common Stock underlying the related Purchase
Contracts will not be deemed to be outstanding for any purpose and the holders
of such Purchase Contracts will not have any voting rights, rights to dividends
or other distributions or other rights or privileges of a stockholder of the
Company by virtue of holding such Purchase Contracts. See "Description of Trust
Preferred Securities -- Voting Rights."
Each holder of Income PRIDES or Growth PRIDES, by acceptance thereof, will
under the terms of the Purchase Contract Agreement and the related Purchase
Contracts be deemed to have (a) irrevocably agreed to be bound by the terms of
the related Purchase Contracts and the Pledge Agreement for so long as such
holder remains a holder of such FELINE PRIDES, and (b) duly appointed the
Purchase Contract Agent as such holder's attorney-in-fact to enter into and
perform the related Purchase Contracts on behalf of and in the name of such
holder. In addition, each beneficial owner of Income PRIDES or Growth PRIDES, by
acceptance of such interest, will be deemed to have agreed to treat (i) itself
as the owner of the related Trust Preferred Securities or Treasury Securities,
as the case may be, and (ii) the Debentures as indebtedness of the Company, in
each case, for United States federal, state and local income and franchise tax
purposes.
EARLY SETTLEMENT
A holder of Income PRIDES or Growth PRIDES may settle the related Purchase
Contracts prior to the Purchase Contract Settlement Date by presenting and
surrendering the FELINE PRIDES Certificate evidencing such Income PRIDES or
Growth PRIDES at the offices of the Purchase Contract Agent with the
S-45
<PAGE> 47
form of "Election to Settle Early" on the reverse side of such certificate
completed and executed as indicated, accompanied by payment (in the form of a
certified or cashier's check payable to the order of the Company or in
immediately available funds) of an amount equal to the Stated Amount times the
number of Purchase Contracts being settled. So long as the FELINE PRIDES are
evidenced by one or more global security certificates deposited with the
Depositary (as defined below), procedures for early settlement will also be
governed by standing arrangements between the Depositary and the Purchase
Contract Agent. HOLDERS MAY SETTLE PURCHASE CONTRACTS EARLY ONLY IN INTEGRAL
MULTIPLES OF 20 INCOME PRIDES OR 20 GROWTH PRIDES.
Upon Early Settlement of the Purchase Contracts related to any Income
PRIDES or Growth PRIDES, (a) the holder will receive newly issued shares of
Common Stock per Income PRIDES or Growth PRIDES having a Stated Amount of $50
(regardless of the market price of the Common Stock on the date of such Early
Settlement), subject to adjustment under the circumstances described in "--
Anti-Dilution Adjustments" below, (b) the Trust Preferred Securities or Treasury
Securities, as the case may be, related to such Income PRIDES or Growth PRIDES
will thereupon be transferred to the holder free and clear of the Company's
security interest therein, (c) the holder's right to receive Deferred Contract
Adjustment Payments, if any, on the Purchase Contracts being settled will be
forfeited, (d) the holder's right to receive future Contract Adjustment
Payments, if any, will terminate and (e) no adjustment will be made to or for
the holder on account of Deferred Contract Adjustment Payments, if any, or any
amounts accrued in respect of Contract Adjustment Payments.
If the Purchase Contract Agent receives a FELINE PRIDES Certificate,
accompanied by the completed "Election to Settle Early" and requisite check or
immediately available funds, from a holder of FELINE PRIDES by 5:00 p.m., New
York City time, on a Business Day, that day will be considered the settlement
date. If the Purchase Contract Agent receives the foregoing after 5:00 p.m., New
York City time, on a Business Day or at any time on a day that is not a Business
Day, the next Business Day will be considered the settlement date.
Upon Early Settlement of Purchase Contracts in the manner described above,
presentation and surrender of the FELINE PRIDES Certificate evidencing the
related Income PRIDES or Growth PRIDES and payment of any transfer or similar
taxes payable by the holder in connection with the issuance of the related
Common Stock to any person other than the holder of such Income PRIDES or Growth
PRIDES, the Company will cause the shares of Common Stock being purchased to be
issued, and the related Trust Preferred Securities or Treasury Securities, as
the case may be, securing such Purchase Contracts to be released from the pledge
under the Pledge Agreement (described in "-- Pledged Securities and Pledge
Agreement") and transferred, within three Business Days following the settlement
date, to the purchasing holder or such holder's designee.
NOTICE TO SETTLE WITH CASH
A holder of an Income PRIDES or Growth PRIDES wishing to settle the related
Purchase Contract with separate cash on the Business Day immediately preceding
the Purchase Contract Settlement Date must notify the Purchase Contract Agent by
presenting and surrendering the FELINE PRIDES Certificate evidencing such Income
PRIDES or Growth PRIDES at the offices of the Purchase Contract Agent with the
form of "Notice to Settle by Separate Cash" on the reverse side of the
certificate completed and executed as indicated on or prior to 5:00 p.m., New
York City time, on the second Business Day immediately preceding the Purchase
Contract Settlement Date. Such form must be accompanied by payment (in the form
of a certified or cashier's check payable to the order of the Company or in
immediately available funds) of an amount equal to the Stated Amount times the
number of Purchase Contracts being settled.
CONTRACT ADJUSTMENT PAYMENTS
Contract Adjustment Payments, will be fixed at a rate per annum of % of
the Stated Amount per Purchase Contract, provided that if such rate is 0%, then
the Company will not make any Contract Adjustment Payments. Contract Adjustment
Payments that are not paid when due (after giving effect to any
S-46
<PAGE> 48
permitted deferral thereof) will bear interest thereon at the rate per annum
of % thereof, compounded quarterly, until paid. Contract Adjustment
Payments, if any, payable for any period will be computed on the basis of a
360-day year of twelve 30 day-months. Contract Adjustment Payments, if any, will
accrue from , 1997 and will be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing ,
1997. Contract Adjustment Payments will be specified as a positive component of
the distributions on the Income PRIDES only if and to the extent that the rate
of distributions on the Trust Preferred Securities, as determined on the date on
which the Income PRIDES are priced for sale, is less than the aggregate
distribution rate required on such date for the offer and sale of the Income
PRIDES at the price to public specified on the cover page of this Prospectus
Supplement. Accordingly, the final Prospectus Supplement will indicate whether
and to what extent Contract Adjustment Payments will be required to be made by
the Company.
Contract Adjustment Payments, if any, will be payable to the holders of
Purchase Contracts as they appear on the books and records of the Purchase
Contract Agent on the relevant record dates, which, as long as the Income PRIDES
or Growth PRIDES remain in book-entry only form, will be one Business Day prior
to the relevant payment dates. Such distributions will be paid through the
Purchase Contract Agent who will hold amounts received in respect of the
Contract Adjustment Payments, if any, for the benefit of the holders of the
Purchase Contracts relating to such Income PRIDES or Growth PRIDES. Subject to
any applicable laws and regulations, each such payment will be made as described
under "Book-Entry System" below. In the event that the Income PRIDES or Growth
PRIDES do not continue to remain in book-entry only form, the Company shall have
the right to select relevant record dates, which shall be more than one Business
Day but less than 60 Business Days prior to the relevant payment dates. In the
event that any date on which Contract Adjustment Payments, if any, are to be
made on the Purchase Contracts related to the Income PRIDES or Growth PRIDES is
not a Business Day, then payment of the Contract Adjustment Payments payable on
such date will be made on the next succeeding day which is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such payment date. A "Business Day" shall
mean any day other than Saturday, Sunday or any other day on which banking
institutions in New York City (in the State of New York) are permitted or
required by any applicable law to close.
The Company's obligations with respect to Contract Adjustment Payments, if
any, will be senior unsecured obligations of the Company and will rank pari
passu with all of the Company's other senior unsecured debt obligations, except
that such obligations with respect to the Contract Adjustment Payments will be
subordinated and junior in right of payment to the Company's obligations under
the Senior Indebtedness. The Company's obligations with respect to Contract
Adjustment Payments, if any, will not be subordinated to any other unsecured
debt obligations of the Company, whether incurred prior to, on or after the date
hereof.
OPTION TO DEFER CONTRACT ADJUSTMENT PAYMENTS
The Company may, at its option and upon prior written notice to the holders
of the FELINE PRIDES and the Purchase Contract Agent, defer the payment of
Contract Adjustment Payments, if any, on the Purchase Contracts until no later
than the Purchase Contract Settlement Date. However, Deferred Contract
Adjustment Payments, if any, will bear additional Contract Adjustment Payments
at the rate of % per annum (compounding on each succeeding Payment Date)
until paid. If the Purchase Contracts are terminated (upon the occurrence of
certain events of bankruptcy, insolvency or reorganization with respect to the
Company), the right to receive Contract Adjustment Payments (other than any
accrued but unpaid Contract Adjustment Payments that have not been deferred), if
any, and Deferred Contract Adjustment Payments, if any, will also terminate.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments, if any, on the Purchase Contracts until the Purchase
Contract Settlement Date, each holder of FELINE PRIDES will receive on the
Purchase Contract Settlement Date in respect of the Deferred Contract Adjustment
Payments,
S-47
<PAGE> 49
in lieu of a cash payment, a number of shares of Common Stock equal to (x) the
aggregate amount of Deferred Contract Adjustment Payments payable to such holder
divided by (y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments, if any, on the
Purchase Contract Settlement Date. In lieu of fractional shares otherwise
issuable (calculated on an aggregate basis after taking into account all of the
FELINE PRIDES held by a particular holder) with respect to such payment of
Deferred Contract Adjustment Payments, the holder will be entitled to receive an
amount in cash equal to such fraction of a share times the Applicable Market
Value.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, if any, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or make guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase capital stock of the Company, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company
capital stock, (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of the
Company capital stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company or (v) redemptions or
purchases of any rights pursuant to the Rights Agreement, or any successor to
such Rights Agreement, and the declaration thereunder of a dividend of rights in
the future).
ANTI-DILUTION ADJUSTMENTS
The formula for determining the Settlement Rate will be subject to
adjustment (without duplication) upon the occurrence of certain events,
including: (a) the payment of dividends (and other distributions) of Common
Stock on Common Stock; (b) the issuance to all holders of Common Stock of
rights, warrants or options entitling them, for a period of up to 45 days, to
subscribe for or purchase Common Stock at less than the Current Market Price (as
defined) thereof; (c) subdivisions, splits and combinations of Common Stock; (d)
distributions to all holders of Common Stock of evidences of indebtedness of the
Company, shares of capital stock, securities, cash or property (excluding any
dividend or distribution covered by clause (a) or (b) above and any dividend or
distribution paid exclusively in cash); (e) distributions consisting exclusively
of cash to all holders of Common Stock in an aggregate amount that, together
with (i) other all-cash distributions made within the preceding 12 months and
(ii) any cash and the fair market value, as of the expiration of the tender or
exchange offer referred to below, of consideration payable in respect of any
tender or exchange offer by the Company or a subsidiary thereof for the Common
Stock concluded within the preceding 12 months, exceeds 15% of the Company's
aggregate market capitalization (such aggregate market capitalization being the
product of the Current Market Price of the Common Stock multiplied by the number
of shares of Common Stock then outstanding) on the date of such distribution;
and (f) the successful completion of a tender or exchange offer made by the
Company or any subsidiary thereof for the Common Stock which involves an
aggregate consideration that, together with (i) any cash and the fair market
value of other consideration payable in respect of any tender or exchange offer
by the Company or a subsidiary thereof for the Common Stock concluded within the
preceding 12 months and (ii) the aggregate amount of any all-cash distributions
to all holders of the Company's Common Stock made within the preceding 12
months, exceeds 15% of the Company's aggregate market capitalization on the
expiration of such tender or exchange offer.
In the case of certain reclassifications, consolidations, mergers, sales or
transfers of assets or other transactions pursuant to which the Common Stock is
converted into the right to receive other securities, cash or property, each
Purchase Contract then outstanding would, without the consent of the holders of
the related Income PRIDES or Growth PRIDES, as the case may be, become a
contract to purchase only the kind and amount of securities, cash and other
property receivable upon consummation of the transaction by a holder of
S-48
<PAGE> 50
the number of shares of Common Stock which would have been received by the
holder of the related Income PRIDES or Growth PRIDES immediately prior to the
date of consummation of such transaction if such holder had then settled such
Purchase Contract.
If at any time the Company makes a distribution of property to its
stockholders which would be taxable to such stockholders as a dividend for
United States federal income tax purposes (i.e., distributions of evidences of
indebtedness or assets of the Company, but generally not stock dividends or
rights to subscribe to capital stock) and, pursuant to the Settlement Rate
adjustment provisions of the Purchase Contract Agreement, the Settlement Rate is
increased, such increase may give rise to a taxable dividend to holders of
FELINE PRIDES. See "Certain Federal Income Tax Consequences -- Adjustment to
Settlement Rate."
In addition, the Company may make such increases in the Settlement Rate as
the Board of Directors of the Company deems advisable to avoid or diminish any
income tax to holders of its capital stock resulting from any dividend or
distribution of capital stock (or rights to acquire capital stock) or from any
event treated as such for income tax purposes or for any other reasons.
Adjustments to the Settlement Rate will be calculated to the nearest
1/10,000th of a share. No adjustment in the Settlement Rate shall be required
unless such adjustment would require an increase or decrease of at least one
percent in the Settlement Rate: provided, however, that any adjustments which by
reason of the foregoing are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
The Company will be required, within ten Business Days following the
occurrence of an event that requires or permits an adjustment in the Settlement
Rate, to provide written notice to the Purchase Contract Agent of the occurrence
of such event and a statement in reasonable detail setting forth the method by
which the adjustment to the Settlement Rate was determined and setting forth the
revised Settlement Rate.
Each adjustment to the Settlement Rate will result in a corresponding
adjustment to the number of shares of Common Stock issuable upon early
settlement of a Purchase Contract.
TERMINATION
The Purchase Contracts, and the rights and obligations of the Company and
of the holders of the FELINE PRIDES thereunder (including the right thereunder
to receive accrued Contract Adjustment Payments or Deferred Contract Adjustment
Payments and the right and obligation to purchase Common Stock), will
automatically terminate upon the occurrence of certain events of bankruptcy,
insolvency or reorganization with respect to the Company. Upon such termination,
the Collateral Agent will release the related Trust Preferred Securities or
Treasury Securities, as the case may be, held by it to the Purchase Contract
Agent for distribution to the holders. Upon such termination, however, such
release and termination may be subject to a limited delay. In the event that the
Company becomes the subject of a case under the Bankruptcy Code, such delay may
occur as a result of the automatic stay under the Bankruptcy Code and continue
until such automatic stay has been lifted.
PLEDGED SECURITIES AND PLEDGE AGREEMENT
The Trust Preferred Securities related to the Income PRIDES or, if
substituted, the Treasury Securities related to the Growth PRIDES (together, the
"Pledged Securities") will be pledged to the Collateral Agent, for the benefit
of the Company, pursuant to a pledge agreement, to be dated as of , 1997 (the
"Pledge Agreement"), to secure the obligations of holders of FELINE PRIDES to
purchase Common Stock under the related Purchase Contracts. The rights of
holders of FELINE PRIDES to the related Pledged Securities will be subject to
the Company's security interest therein created by the Pledge Agreement. No
holder of Income PRIDES or Growth PRIDES will be permitted to withdraw the
Pledged Securities related to such Income PRIDES or Growth PRIDES from the
pledge arrangement except (i) to substitute Treasury Securities for the related
Trust Preferred Securities, (ii) to substitute Trust Preferred Securities for
the related Treasury Securities (for both (i) and (ii), as provided for under
"Description of the FELINE PRIDES -- Substitution of Pledged Securities") or
(iii) upon the termination or Early Settlement of the related Purchase
S-49
<PAGE> 51
Contracts. Subject to such security interest and the terms of the Purchase
Contract Agreement and the Pledge Agreement, each holder of Income PRIDES will
be entitled through the Purchase Contract Agent and the Collateral Agent to all
of the proportional rights and preferences of the related Trust Preferred
Securities (including distribution, voting, redemption, repayment and
liquidation rights) and each holder of Growth PRIDES will retain beneficial
ownership of the related Treasury Securities pledged in respect of the related
Purchase Contracts. The Company will have no interest in the Pledged Securities
other than its security interest.
Except as described in "Description of the Purchase Contracts -- General,"
the Collateral Agent will, upon receipt of distributions on the Pledged
Securities, distribute such payments to the Purchase Contract Agent, which will
in turn distribute those payments, together with Contract Adjustment Payments,
if any, received from the Company, to the persons in whose names the related
Income PRIDES or Growth PRIDES are registered at the close of business on the
Record Date immediately preceding the date of such distribution.
The quarterly payments on the Income PRIDES will consist of (i) cumulative
cash distributions on the Trust Preferred Securities payable by the Trust at the
rate of % of the Stated Amount per annum, and (ii) Contract Adjustment
Payments, if any, payable by the Company, at the rate of % per annum, in
each case subject to the Company's right to defer the payment of such amounts.
The ability of the Trust to make quarterly distributions on the related
Trust Preferred Securities is solely dependent upon the receipt of corresponding
interest payments from the Company on the Debentures. The Company has the right
at any time, and from time to time, limited to a period not extending beyond the
maturity of the Debentures, to defer the interest payments on the Debentures. As
a consequence of such deferral, quarterly distributions to holders would be
deferred (but despite such deferral, would continue to accrue with interest
thereon compounded quarterly at the rate of % per annum through and including
November 15, 2000, and at the Reset Rate thereafter). See "Description of the
Purchase Contract -- Contract Adjustment Payments" and "Description of the Trust
Preferred Securities -- Distributions."
In the event a holder of Income PRIDES substituted Treasury Securities for
the related Trust Preferred Securities, such holder would receive on the
resulting Growth PRIDES only the quarterly Contract Adjustment Payments, if any,
subject to the Company's rights of deferral. In addition, imputed interest would
continue to accrete on the related Treasury Securities.
BOOK-ENTRY SYSTEM
The Depository Trust Company (the "Depositary") will act as securities
depositary for the FELINE PRIDES. The FELINE PRIDES will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global security certificates
("Global Security Certificates"), representing the total aggregate number of
FELINE PRIDES, will be issued and will be deposited with the Depositary and will
bear a legend regarding the restrictions on exchanges and registration of
transfer thereof referred to below.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the FELINE PRIDES so
long as such FELINE PRIDES are represented by Global Security Certificates.
The Depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Depositary holds
securities that its participants ("Participants") deposit with the Depositary.
The Depositary also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
Participants include securities brokers and dealers, banks, trust companies,
clearing corporations and certain other organizations ("Direct Participants").
The Depositary is owned by a number of
S-50
<PAGE> 52
its Direct Participants and by the NYSE, the American Stock Exchange, Inc., and
the National Association of Securities Dealers, Inc. Access to the Depositary
system is also available to others, such as securities brokers and dealers,
banks and trust companies that clear transactions through or maintain a direct
or indirect custodial relationship with a Direct Participant either directly or
indirectly ("Indirect Participants"). The rules applicable to the Depositary and
its Participants are on file with the Commission.
No FELINE PRIDES represented by Global Security Certificates may be
exchanged in whole or in part for FELINE PRIDES registered, and no transfer of
Global Security Certificates in whole or in part may be registered, in the name
of any person other than the Depositary or any nominee of the Depositary unless
the Depositary has notified the Company that it is unwilling or unable to
continue as depositary for such Global Security Certificates or has ceased to be
qualified to act as such as required by the Purchase Contract Agreement or there
shall have occurred and be continuing a default by the Company in respect of its
obligations under one or more Purchase Contracts. All FELINE PRIDES represented
by one or more Global Security Certificates or any portion thereof will be
registered in such names as the Depositary may direct.
As long as the Depositary or its nominee is the registered owner of the
Global Security Certificates, such Depositary or such nominee, as the case may
be, will be considered the sole owner and holder of the Global Security
Certificates and all FELINE PRIDES represented thereby for all purposes under
the FELINE PRIDES and the Purchase Contract Agreement. Except in the limited
circumstances referred to above, owners of beneficial interests in Global
Security Certificates will not be entitled to have such Global Security
Certificates or the FELINE PRIDES represented thereby registered in their names,
will not receive or be entitled to receive physical delivery of FELINE PRIDES
Certificates in exchange therefor and will not be considered to be owners or
holders of such Global Security Certificates or any FELINE PRIDES represented
thereby for any purpose under the FELINE PRIDES or the Purchase Contract
Agreement. All payments on the FELINE PRIDES represented by the Global Security
Certificates and all transfers and deliveries of Trust Preferred Securities,
Treasury Securities and Common Stock with respect thereto will be made to the
Depositary or its nominee, as the case may be, as the holder thereof.
Ownership of beneficial interests in the Global Security Certificates will
be limited to Participants or persons that may hold beneficial interests through
institutions that have accounts with the Depositary or its nominee. Ownership of
beneficial interests in Global Security Certificates will be shown only on, and
the transfer of those ownership interests will be effected only through, records
maintained by the Depositary or its nominee (with respect to Participants'
interests) or any such Participant (with respect to interests of persons held by
such Participants on their behalf). Procedures for settlement of Purchase
Contracts on the Purchase Contract Settlement Date or upon Early Settlement will
be governed by arrangements among the Depositary, Participants and persons that
may hold beneficial interests through Participants designed to permit such
settlement without the physical movement of certificates. Payments, transfers,
deliveries, exchanges and other matters relating to beneficial interests in
Global Security Certificates may be subject to various policies and procedures
adopted by the Depositary from time to time. None of the Company, the Purchase
Contract Agent or any agent of the Company or the Purchase Contract Agent will
have any responsibility or liability for any aspect of the Depositary's or any
Participant's records relating to, or for payments made on account of,
beneficial interests in Global Security Certificates, or for maintaining,
supervising or reviewing any of the Depositary's records or any Participant's
records relating to such beneficial ownership interests.
CERTAIN PROVISIONS OF THE PURCHASE CONTRACT
AGREEMENT AND THE PLEDGE AGREEMENT
GENERAL
Distributions on the FELINE PRIDES will be payable, Purchase Contracts (and
documents related thereto) will be settled and transfers of the FELINE PRIDES
will be registrable at the office of the Purchase Contract Agent in the Borough
of Manhattan, The City of New York. In addition, in the event that the FELINE
PRIDES do not remain in book-entry form, payment of distributions on the FELINE
PRIDES may
S-51
<PAGE> 53
be made, at the option of the Company, by check mailed to the address of the
person entitled thereto as shown on the Security Register.
Shares of Common Stock will be delivered on the Purchase Contract
Settlement Date, or, if the Purchase Contracts have terminated, the related
Pledged Securities will be delivered potentially after a limited delay as a
result of the imposition of the automatic stay under the Bankruptcy Code (see
"Description of the Purchase Contracts -- Termination"), in each case upon
presentation and surrender of the FELINE PRIDES Certificate at the office of the
Purchase Contract Agent.
If a holder of outstanding Income PRIDES or Growth PRIDES fails to present
and surrender the FELINE PRIDES Certificate evidencing such Income PRIDES or
Growth PRIDES to the Purchase Contract Agent on the Purchase Contract Settlement
Date, the shares of Common Stock issuable in settlement of the related Purchase
Contract and in payment of any Deferred Contract Adjustment Payments will be
registered in the name of the Purchase Contract Agent and, together with any
distributions thereon, shall be held by the Purchase Contract Agent as agent for
the benefit of such holder, until such FELINE PRIDES Certificate is presented
and surrendered or the holder provides satisfactory evidence that such
certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Purchase Contract Agent and the Company.
If the Purchase Contracts have terminated prior to the Purchase Contract
Settlement Date, the related Pledged Securities have been transferred to the
Purchase Contract Agent for distribution to the holders entitled thereto and a
holder fails to present and surrender the FELINE PRIDES Certificate evidencing
such holder's Income PRIDES or Growth PRIDES to the Purchase Contract Agent, the
related Pledged Securities delivered to the Purchase Contract Agent and payments
thereon shall be held by the Purchase Contract Agent as agent for the benefit of
such holder, until such FELINE PRIDES Certificate is presented or the holder
provides the evidence and indemnity described above.
The Purchase Contract Agent will have no obligation to invest or to pay
interest on any amounts held by the Purchase Contract Agent pending
distribution, as described above.
No service charge will be made for any registration of transfer or exchange
of the FELINE PRIDES, except for any tax or other governmental charge that may
be imposed in connection therewith.
MODIFICATION
The Purchase Contract Agreement and the Pledge Agreement will contain
provisions permitting the Company and the Purchase Contract Agent or Collateral
Agent, as the case may be, with the consent of the holders of not less than
66 2/3% of the Purchase Contracts at the time outstanding, to modify the terms
of the Purchase Contracts, the Purchase Contract Agreement and the Pledge
Agreement, except that no such modification may, without the consent of the
holder of each outstanding Purchase Contract affected thereby, (a) change any
Payment Date, (b) change the amount or type of Pledged Securities related to
such Purchase Contract, impair the right of the holder of any Pledged Securities
to receive distributions on such Pledged Securities (except for the rights of
holders of Income PRIDES to substitute Treasury Securities for the related Trust
Preferred Securities or the rights of holders of Growth PRIDES to substitute
Trust Preferred Securities for the related Treasury Securities) or otherwise
adversely affect the holder's rights in or to such Pledged Securities, (c)
change the place or currency of payment or reduce any Contract Adjustment
Payments or any Deferred Contract Adjustment Payments, (d) impair the right to
institute suit for the enforcement of such Purchase Contract, (e) reduce the
amount of Common Stock purchasable under such Purchase Contract, increase the
price to purchase Common Stock on settlement of such Purchase Contract, change
the Purchase Contract Settlement Date or otherwise adversely affect the holder's
rights under such Purchase Contract or (f) reduce the above-stated percentage of
outstanding Purchase Contracts the consent of whose holders is required for the
modification or amendment of the provisions of the Purchase Contracts, the
Purchase Contract Agreement or the Pledge Agreement; provided, that if any
amendment or proposal referred to above would adversely affect only the Income
PRIDES or the Growth PRIDES, then only the affected class of holder will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the consent of the holders of not less than
66 2/3% of such class.
S-52
<PAGE> 54
NO CONSENT TO ASSUMPTION
Each holder of Income PRIDES or Growth PRIDES, by acceptance thereof, will
under the terms of the Purchase Contract Agreement and the Income PRIDES or
Growth PRIDES, as applicable, be deemed expressly to have withheld any consent
to the assumption (i.e., affirmance) of the related Purchase Contracts by the
Company or its trustee in the event that the Company becomes the subject of a
case under the Bankruptcy Code.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
The Company will covenant in the Purchase Contract Agreement that it will
not merge or consolidate with any other entity or sell, assign, transfer, lease
or convey all or substantially all of its properties and assets to any person,
firm or corporation unless the Company is the continuing corporation or the
successor corporation is a corporation organized under the laws of the United
States of America or a state thereof and such corporation expressly assumes the
obligations of the Company under the Purchase Contracts, the Debentures, the
Purchase Contract Agreement and the Pledge Agreement, and the Company or such
successor corporation is not, immediately after such merger, consolidation,
sale, assignment, transfer, lease or conveyance, in default in the performance
of any of its obligations thereunder.
TITLE
The Company, the Purchase Contract Agent and the Collateral Agent may treat
the registered owner of any FELINE PRIDES as the absolute owner thereof for the
purpose of making payment and settling the related Purchase Contracts and for
all other purposes.
REPLACEMENT OF FELINE PRIDES CERTIFICATES
In the event that physical certificates have been issued, any mutilated
FELINE PRIDES Certificate will be replaced by the Company at the expense of the
holder upon surrender of such certificate to the Purchase Contract Agent. FELINE
PRIDES Certificates that become destroyed, lost or stolen will be replaced by
the Company at the expense of the holder upon delivery to the Company and the
Purchase Contract Agent of evidence of the destruction, loss or theft thereof
satisfactory to the Company and the Purchase Contract Agent. In the case of a
destroyed, lost or stolen FELINE PRIDES Certificate, an indemnity satisfactory
to the Purchase Contract Agent and the Company may be required at the expense of
the holder of the FELINE PRIDES evidenced by such certificate before a
replacement will be issued.
Notwithstanding the foregoing, the Company will not be obligated to issue
any Income PRIDES or Growth PRIDES on or after the Purchase Contract Settlement
Date or after the Purchase Contracts have terminated. The Purchase Contract
Agreement will provide that in lieu of the delivery of a replacement FELINE
PRIDES Certificate following the Purchase Contract Settlement Date, the Purchase
Contract Agent, upon delivery of the evidence and indemnity described above,
will deliver the Common Stock issuable pursuant to the Purchase Contracts
included in the Income PRIDES or Growth PRIDES evidenced by such certificate,
or, if the Purchase Contracts have terminated prior to the Purchase Contract
Settlement Date, transfer the principal amount of the Pledged Securities
included in the Income PRIDES or Growth PRIDES evidenced by such certificate.
GOVERNING LAW
The Purchase Contract Agreement, the Pledge Agreement and the Purchase
Contracts will be governed by, and construed in accordance with, the laws of the
State of New York.
INFORMATION CONCERNING THE PURCHASE CONTRACT AGENT
The Bank of New York will be the Purchase Contract Agent. The Purchase
Contract Agent will act as the agent for the holders of Income PRIDES and Growth
PRIDES from time to time. The Purchase Contract Agreement will not obligate the
Purchase Contract Agent to exercise any discretionary actions in connection
S-53
<PAGE> 55
with a default under the terms of the Income PRIDES and Growth PRIDES or the
Purchase Contract Agreement.
The Purchase Contract will contain provisions limiting the liability of the
Purchase Contract Agent. The Purchase Contract Agreement will contain provisions
under which the Purchase Contract Agent may resign or be replaced. Such
resignation or replacement would be effective upon the appointment of a
successor.
INFORMATION CONCERNING THE COLLATERAL AGENT
The Chase Manhattan Bank will be the Collateral Agent. The Collateral Agent
will act solely as the agent of the Company and will not assume any obligation
or relationship of agency or trust for or with any of the holders of the Income
PRIDES and Growth PRIDES except for the obligations owed by a pledgee of
property to the owner thereof under the Pledge Agreement and applicable law.
The Pledge Agreement will contain provisions limiting the liability of the
Collateral Agent. The Pledge Agreement will contain provisions under which the
Collateral Agent may resign or be replaced. Such resignation or replacement
would be effective upon the appointment of a successor.
MISCELLANEOUS
The Purchase Contract Agreement will provide that the Company will pay all
fees and expenses related to (i) the offering of the FELINE PRIDES, (ii) the
retention of the Collateral Agent and (iii) the enforcement by the Purchase
Contract Agent of the rights of the holders of the FELINE PRIDES; provided,
however, that holders who elect to substitute the related Pledged Securities,
thereby creating Growth PRIDES or recreating Income PRIDES, shall be responsible
for any fees or expenses payable in connection with such substitution, as well
as any commissions, fees or other expenses incurred in acquiring the Pledged
Securities to be substituted, and the Company shall not be responsible for any
such fees or expenses.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES
The Trust Preferred Securities, which form a component of the Income
PRIDES, and which, under certain circumstances, will trade separately, will be
issued pursuant to the terms of the Declaration. See "Description of the FELINE
PRIDES -- Substitution of Pledged Securities." The Declaration will be qualified
as an indenture under the Trust Indenture Act. The Institutional Trustee,
Wilmington Trust Company, an independent trustee, will act as indenture trustee
for the Trust Preferred Securities under the Declaration for purposes of
compliance with the provisions of the Trust Indenture Act. The terms of the
Trust Preferred Securities will include those stated in the Declaration and
those made part of the Declaration by the Trust Indenture Act. The following
summary of certain provisions of the Trust Preferred Securities and the
Declaration is not necessarily complete, and reference is hereby made to the
copy of the Declaration (including the definitions therein of certain terms)
which is filed as an exhibit to the Registration Statement of which this
Prospectus Supplement is a part, the Trust Act and the Trust Indenture Act.
Whenever particular defined terms are referred to in this Prospectus Supplement,
such defined terms are incorporated herein by reference.
GENERAL
The Declaration authorizes the Owens Corning Trustees to issue on behalf of
the Trust the Trust Securities, which represent undivided beneficial interests
in the assets of the Trust. All of the Common Securities will be owned, directly
or indirectly, by the Company. The Common Securities rank pari passu, and
payments will be made thereon on a pro rata basis, with the Trust Preferred
Securities, except that upon the occurrence and during the continuance of a
Declaration Event of Default, the rights of the holders of the Common Securities
to receive payment of periodic distributions and payments upon liquidation,
redemption and otherwise will be subordinated to the rights of the holders of
the Trust Preferred Securities. The Declaration does not permit the issuance by
the Trust of any securities other than the Trust Securities or the incurrence of
any indebtedness by the Trust. Pursuant to the Declaration, the Institutional
Trustee will own the Debentures purchased by the Trust for the benefit of the
holders of the Trust Securities. The payment of
S-54
<PAGE> 56
distributions out of money held by the Trust, and payments upon redemption of
the Trust Preferred Securities or liquidation of the Trust, are guaranteed by
the Company to the extent described under "Description of the Guarantee." The
Guarantee, when taken together with the Company's obligations under the
Debentures and the Indenture and its obligations under the Declaration,
including the obligations to pay costs, expenses, debts and liabilities of the
Trust (other than with respect to the Trust Preferred Securities), provides a
full and unconditional guarantee of amounts due on the Trust Preferred
Securities. The Guarantee will be held by Wilmington Trust Company, the
Guarantee Trustee, for the benefit of the holders of the Trust Preferred
Securities. The Guarantee does not cover payment of distributions when the Trust
does not have sufficient available funds to pay such distributions. In such
event, the remedy of a holder of Trust Preferred Securities is to vote to direct
the Institutional Trustee to enforce the Institutional Trustee's rights under
the Debentures (except in the limited circumstances in which the holder may take
direct action). See "-- Declaration Events of Default" and "-- Voting Rights."
DISTRIBUTIONS
Distributions on the Trust Preferred Securities will be fixed initially at
a rate per annum of % of the stated liquidation amount of $50 per Trust
Preferred Security. Distributions on the Trust Preferred Securities will be
reset on the Purchase Contract Settlement Date. See "-- Market Rate Reset."
Distributions in arrears for more than one quarter will bear interest thereon at
the rate of % per annum through and including November 15, 2000 and at the
Reset Rate thereafter, compounded quarterly. The term "distribution" as used
herein includes any such interest payable unless otherwise stated. The amount of
distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months.
Distributions on the Trust Preferred Securities will be cumulative and will
accrue from , 1997 and will be payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year, commencing ,
1997, when, as and if funds are available for payment. Distributions will be
made by the Institutional Trustee, except as otherwise described below.
The Company has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period from time to time on
the Debentures, which right, if exercised, would defer quarterly distributions
on the Trust Preferred Securities (though such distributions would continue to
accrue with interest at the rate of % per annum through and including November
15, 2000, and at the Reset Rate thereafter) during any such extended interest
payment period. Such right to extend the interest payment period for the
Debentures is limited to a period, in the aggregate, not extending beyond the
maturity date of the Debentures. In the event that the Company exercises this
right, then (a) the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase capital stock of the Company, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock, (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
or distributions in capital stock of the Company and (v) redemptions or
purchases of any rights pursuant to the Rights Agreement or any successor to the
Rights Agreement, and the declaration thereunder of a dividend of rights in the
future), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities
(including guarantees) issued by the Company that rank junior to such
Debentures, and (c) the Company shall not make any guarantee payments with
respect to the foregoing other than pursuant to the Guarantee or the Common
Securities Guarantee. Prior to the termination of any such Extension Period, the
Company may further extend the interest payment period; provided, that such
Extension Period, together with all such previous and further extensions
thereof, may not extend beyond the maturity date of the Debentures. Upon the
termination of any Extension Period and the payment of all amounts then due, the
Company may select a new Extension Period, subject to the above requirements.
See
S-55
<PAGE> 57
"Description of the Debentures -- Interest" and "-- Option to Extend Interest
Payment Period." If distributions are deferred, the deferred distributions and
accrued interest thereon shall be paid to holders of record of the Trust
Preferred Securities as they appear on the books and records of the Trust on the
record date next following the termination of such Extension Period.
Distributions on the Trust Preferred Securities must be paid on the dates
payable to the extent that the Trust has funds available in the Property Account
for the payment of such distributions. The Trust's funds available for
distribution to the holders of the Trust Preferred Securities will be limited to
payments received from the Company on the Debentures. See "Description of the
Debentures." The payment of distributions out of moneys held by the Trust is
guaranteed by the Company to the extent set forth under "Description of the
Guarantee."
Distributions on the Trust Preferred Securities will be payable to the
holders thereof, including the Collateral Agent, as they appear on the books and
records of the Trust on the relevant record dates, which, as long as the Trust
Preferred Securities remain in book-entry only form, will be one Business Day
prior to the relevant payment dates. Such distributions will be paid through the
Institutional Trustee who will hold amounts received in respect of the
Debentures in the Property Account for the benefit of the holders of the Trust
Preferred Securities. Subject to any applicable laws and regulations and the
provisions of the Declaration, each such payment will be made as described under
"Book-Entry Only Issuance -- The Depository Trust Company" below. In the event
that the Trust Preferred Securities do not continue to remain in book-entry
form, the Regular Trustees shall have the right to select relevant record dates,
which shall be more than one Business Day but less than 60 Business Days prior
to the relevant payment dates. In the event that any date on which distributions
are to be made on the Trust Preferred Securities is not a Business Day, then
payment of the distributions payable on such date will be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such record date.
MARKET RATE RESET
The quarterly distribution rate on the Trust Preferred Securities and the
interest rate on the related Debentures will be reset on the Purchase Contract
Settlement Date to the Reset Rate, which will be equal to the sum of the Reset
Spread and the rate on the Two-Year Benchmark Treasury in effect on the Purchase
Contract Settlement Date and will be determined by the Reset Agent as the rate
the Trust Preferred Securities should bear in order for a Trust Preferred
Security to have an approximate market value on the Purchase Contract Settlement
Date of 100.5% of the Stated Amount, provided that in no event will the Reset
Rate be higher than the rate on the Two-Year Benchmark Treasury on the Purchase
Contract Settlement Date plus 200 basis points (2%). Such market value may be
less than 100.5% if the Reset Spread is set at the maximum of 2%. The "Two-Year
Benchmark Treasury" shall mean direct obligations of the United States (which
may be obligations traded on a when-issued basis only) having a maturity
comparable to the remaining term to maturity of the Trust Preferred Securities,
as agreed upon by the Company and the Reset Agent. The rate for the Two-Year
Benchmark Treasury will be the bid side rate displayed at 10:00 A.M., New York
City time, on the Purchase Contract Settlement Date in the Telerate system (or
if the Telerate system is (a) no longer available on the Purchase Contract
Settlement Date or (b) in the opinion of the Reset Agent (after consultation
with the Company) no longer an appropriate system from which to obtain such
rate, such other nationally recognized quotation system as, in the opinion of
the Reset Agent (after consultation with the Company) is appropriate). If such
rate is not so displayed, the rate for the Two-Year Benchmark Treasury shall be,
as calculated by the Reset Agent, the yield to maturity for the Two-Year
Benchmark Treasury, expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis, and computed by taking
the arithmetic mean of the secondary market bid rates, as of 10:30 A.M., New
York City time, on the Purchase Contract Settlement Date of three leading United
States government securities dealers selected by the Reset Agent (after
consultation with the Company) (which may include the Reset Agent or an
affiliate thereof). In no event will the Reset Rate be higher than the rate on
the Two-Year
S-56
<PAGE> 58
Benchmark Treasury on the Purchase Contract Settlement Date plus 200 basis
points (2%). It is currently anticipated that Merrill Lynch & Co. will be the
investment banking firm acting as the Reset Agent.
On the fifth business day prior to the Purchase Contract Settlement Date,
the Two-Year Benchmark Treasury to be used to determine the Reset Rate on the
Purchase Contract Settlement Date will be selected and the Reset Spread to be
added to the rate on the Two-Year Benchmark Treasury in effect on the Purchase
Contract Settlement Date will be established by the Reset Agent, and the Reset
Spread and the Two-Year Benchmark Treasury will be announced by the Company (the
"Reset Announcement Date"). The Company will cause a notice of the Reset Spread
and such Two-Year Benchmark Treasury to be published on the Business Day
following the Reset Announcement Date by publication in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal. The Company will request, not later than
7 nor more than 15 calendar days prior to the Reset Announcement Date, that the
Depositary notify its participants holding Trust Preferred Securities, Income
PRIDES or Growth PRIDES of such Reset Announcement Date and of the procedures
that must be followed if any owner of FELINE PRIDES wishes to settle the related
Purchase Contract with cash on the Purchase Contract Settlement Date.
MATURITY; PUT OPTION
Subject to the requirement that the Trust put the Debentures to the Company
under certain circumstances, the Debentures will mature on November 16, 2002.
Upon the repayment of the Debentures at maturity, the proceeds from such
repayment shall simultaneously be applied to redeem Trust Preferred Securities
having an aggregate stated liquidation amount equal to the aggregate principal
amount of the Debentures so repaid. See "Description of the Debentures."
In accordance with the terms of the Debentures, holders, including the
Institutional Trustee and the Collateral Agent, as applicable, will have the
right to require the Company to repurchase, on the Purchase Contract Settlement
Date, their Debentures at a price per Debenture equal to $50, plus accrued and
unpaid interest, if any, thereon. Upon the repurchase of such Debentures by the
Company, the proceeds from such repurchase shall simultaneously be applied to
redeem Trust Preferred Securities of such holders having an aggregate stated
liquidation amount equal to the aggregate principal amount of the Debentures so
repurchased.
On the Business Day immediately preceding the Purchase Contract Settlement
Date, each holder of Income PRIDES that has neither previously exercised such
holder's option of Early Settlement nor settled the related Purchase Contracts
with cash on the Business Day immediately preceding the Purchase Contract
Settlement Date will be deemed to have requested the Trust to put the related
Debentures to the Company on the Purchase Contract Settlement Date for a price
equal to the aggregate principal amount of such Debentures, plus accrued and
unpaid interest, if any, thereon. Upon the repurchase of the Debentures by the
Company pursuant to such Put Option, (i) the proceeds from such repurchase shall
simultaneously be applied to redeem the related Trust Preferred Securities of
such holder having an aggregate stated liquidation amount equal to the aggregate
principal amount of the Debentures so repurchased an amount equal to such
aggregate stated liquidation amount and, will automatically be applied to
satisfy in full such holder's obligation to purchase Common Stock under the
related Purchase Contracts as described herein and (ii) any accrued and unpaid
interest with respect to the Debentures so repurchased will be paid to such
holder in cash. See "Description of Purchase Contracts -- General."
DISTRIBUTION OF THE DEBENTURES
"Investment Company Event" means that the Regular Trustees shall have
received an opinion from independent counsel experienced in practice under the
1940 Act (as defined below) to the effect that, as a result of the occurrence of
a change in law or regulation or a written change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), which Change in
1940 Act Law becomes effective on or after the date of this Prospectus
Supplement, there is more than an insubstantial risk that the Trust is or will
be considered an "investment
S-57
<PAGE> 59
company" which is required to be registered under the Investment Company Act of
1940, as amended (the "1940 Act") .
If, at any time, an Investment Company Event shall occur and be continuing,
the Trust shall be dissolved, with the result that Debentures with an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an
interest rate identical to the distribution rate of, and accrued and unpaid
interest equal to accrued and unpaid distributions on, the Trust Securities,
would be distributed to the holders of the Trust Securities in liquidation of
such holders' interests in the Trust on a pro rata basis within 90 days
following the occurrence of such Investment Company Event; provided, however,
that such dissolution and distribution shall be conditioned on the Company being
unable to avoid such Investment Company Event within such 90-day period by
taking some ministerial action or pursuing some other similar reasonable measure
that will have no adverse effect on the Trust, the Company or the holders of the
Trust Securities and will involve no material cost. If an Investment Company
Event occurs, Debentures distributed to the Collateral Agent in liquidation of
such holder's interest in the Trust would be pledged (in lieu of the Trust
Preferred Securities) to secure Income PRIDES holders' obligations to purchase
Common Stock under the Purchase Contracts.
The Company will have the right at any time to dissolve the Trust and,
after satisfaction of liabilities of creditors of the Trust as provided by
applicable law, cause the Debentures to be distributed to the holders of the
Trust Securities. As of the date of any distribution of Debentures upon
dissolution of the Trust, (i) the Trust Preferred Securities will no longer be
deemed to be outstanding, (ii) the Depositary or its nominee, as the record
holder of the Trust Preferred Securities, will receive a registered global
certificate or certificates representing the Debentures to be delivered upon
such distribution, and (iii) any certificates representing Trust Preferred
Securities not held by the Depositary or its nominee will be deemed to represent
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, such Trust Preferred Securities until such certificates are presented to the
Company or its agent for transfer or reissuance. Debentures distributed to the
Collateral Agent in liquidation of the interest of the holders of the Trust
Preferred Securities in the Trust would be pledged (in lieu of the Trust
Preferred Securities) to secure Income PRIDES holders' obligations to purchase
Common Stock under the Purchase Contracts.
There can be no assurance as to the market prices for either the Trust
Preferred Securities or the Debentures that may be distributed in exchange for
the Trust Preferred Securities if a dissolution of the Trust were to occur.
Accordingly, the Trust Preferred Securities or such Debentures that an investor
may receive if a dissolution of the Trust were to occur may trade at a discount
to the price that the investor paid to purchase the Trust Preferred Securities
forming a part of the Income PRIDES offered hereby.
Subject to applicable law (including, without limitation, United States
federal securities laws) the Company or its subsidiaries may at any time, and
from time to time, purchase outstanding Trust Preferred Securities by tender, in
the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution of the Trust, the
then holders of the Trust Preferred Securities will be entitled to receive out
of the assets of the Trust, after satisfaction of liabilities to creditors,
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of, with an interest rate identical to the distribution rate
of, and accrued and unpaid interest equal to accrued and unpaid distributions
on, the Trust Preferred Securities on a pro rata basis in exchange for such
Trust Preferred Securities.
The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution pro rata with the holders of the Trust
Preferred Securities, except that if a Declaration Event of Default has occurred
and is continuing, the Trust Preferred Securities shall have a preference over
the Common Securities with regard to such distributions.
S-58
<PAGE> 60
Pursuant to the Declaration, the Trust shall dissolve (i) on ,
2004, the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company or the holder of the Common Securities, (iii) upon the filing of a
certificate of dissolution or its equivalent with respect to the Company or the
revocation of the charter of the Company and the expiration of 90 days after the
date of revocation without a reinstatement thereof, (iv) after the receipt by
the Institutional Trustee of written direction from the Company to dissolve the
Trust or the filing of a certificate of dissolution or its equivalent with
respect to the Trust, (v) upon the distribution of Debentures or (vi) upon the
entry of a decree of a judicial dissolution of the holder of the Common
Securities, the Company or the Trust.
DECLARATION EVENTS OF DEFAULT
An event of default under the Indenture (an "Indenture Event of Default")
constitutes an event of default under the Declaration with respect to the Trust
Securities (a "Declaration Event of Default"); provided, that pursuant to the
Declaration, the holder of the Common Securities will be deemed to have waived
any Declaration Event of Default with respect to the Common Securities until all
Declaration Events of Default with respect to the Trust Preferred Securities
have been cured, waived or otherwise eliminated. Until such Declaration Events
of Default with respect to the Trust Preferred Securities have been so cured,
waived or otherwise eliminated, the Institutional Trustee will be deemed to be
acting solely on behalf of the holders of the Trust Preferred Securities and
only the holders of the Trust Preferred Securities will have the right to direct
the Institutional Trustee with respect to certain matters under the Declaration
and, therefore, the Indenture. If a Declaration Event of Default with respect to
the Trust Preferred Securities is waived by holders of Trust Preferred
Securities, such waiver will also constitute the waiver of such Declaration
Event of Default with respect to the Common Securities without any further act,
vote or consent of the holders of the Common Securities. If the Institutional
Trustee fails to enforce its rights under the Debentures in respect of an
Indenture Event of Default after a holder of record of Trust Preferred
Securities has made a written request, such holder of record of Trust Preferred
Securities may institute a legal proceeding against the Company to enforce the
Institutional Trustee's rights under the Debentures without first proceeding
against the Institutional Trustee or any other person or entity. Notwithstanding
the foregoing, if a Declaration Event of Default has occurred and is continuing
and such event is attributable to the failure of the Company to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (after giving effect to any right of deferral), then a holder of Trust
Preferred Securities may directly institute a proceeding after the respective
due date specified in the Debentures for enforcement of payment (a "Direct
Action") to such holder directly of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Trust Preferred Securities of such holder. In connection with such Direct
Action, the Company shall have the right under the Indenture to set off any
payment made to such holder of the Company. The holders of Trust Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures. See "Effect of Obligations under the Debentures
and the Guarantee."
Upon the occurrence of a Declaration Event of Default, the Institutional
Trustee as the sole holder of the Debentures will have the right under the
Indenture to declare the principal of and interest on the Debentures to be
immediately due and payable. The Company and the Trust are each required to file
annually with the Institutional Trustee an officer's certificate as to its
compliance with all conditions and covenants under the Declaration.
VOTING RIGHTS
Except as described herein, under the Trust Act and the Trust Indenture Act
and under "Description of the Guarantee -- Modification of the Guarantee;
Assignment," and as otherwise required by law and the Declaration, the holders
of the Trust Preferred Securities will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate stated liquidation amount of
the Trust Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee, or direct the exercise of any trust or power
S-59
<PAGE> 61
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture with respect to the
Debentures, (ii) waive any past Indenture Event of Default that is waivable
under Section of the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and payable or
(iv) consent to any amendment, modification or termination of the Indenture or
the Debentures where such consent shall be required; provided, however, that,
where a consent or action under the Indenture would require the consent or act
of holders of more than a majority in principal amount of the Debentures (a
"Super-Majority") affected thereby, only the holders of at least such
Super-Majority in aggregate stated liquidation amount of the Trust Preferred
Securities may direct the Institutional Trustee to give such consent or take
such action. The Institutional Trustee shall notify all holders of the Trust
Preferred Securities of any notice of default received from the Debt Trustee (as
defined below) with respect to the Debentures. Such notice shall state that such
Indenture Event of Default also constitutes a Declaration Event of Default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clauses (i), (ii) or (iii) above unless the Institutional
Trustee has obtained an opinion of tax counsel experienced in such matters to
the effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the direction of the holders of the Trust
Preferred Securities and the Common Securities with respect to such amendment,
modification or termination and shall vote with respect to such amendment,
modification or termination as directed by a majority in stated liquidation
amount of the Trust Preferred Securities and the Common Securities voting
together as a single class; provided, however, that where a consent under the
Indenture would require the consent of a Super-Majority, the Institutional
Trustee may only give such consent at the direction of the holders of at least
the proportion in stated liquidation amount of the Trust Preferred Securities
and the Common Securities which the relevant Super-Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
holders of the Trust Preferred Securities and the Common Securities unless the
Institutional Trustee has obtained an opinion of tax counsel experienced in such
matters to the effect that, as a result of such action, the Trust will not fail
to be classified as a grantor trust for United States federal income tax
purposes.
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Declaration Event of Default.
Any required approval or direction of holders of Trust Preferred Securities
may be given at a separate meeting of holders of Trust Preferred Securities
convened for such purpose, at a meeting of all of the holders of Trust
Securities or pursuant to written consent. The Regular Trustees will cause a
notice of any meeting at which holders of Trust Preferred Securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of Trust Preferred
Securities. Each such notice will include a statement setting forth the
following information: (i) the date of such meeting or the date by which such
action is to be taken; (ii) a description of any resolution proposed for
adoption at such meeting on which such holders are entitled to vote or of such
matter upon which written consent is sought; and (iii) instructions for the
delivery of proxies or consents. No vote or consent of the holders of Trust
Preferred Securities will be required for the Trust to cancel Trust Preferred
Securities or distribute Debentures in accordance with the Declaration.
Notwithstanding that holders of Trust Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the Trust
Preferred Securities that are owned at such time by the Company or any entity
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the Company, shall not be entitled to vote or consent and
shall, for purposes of such vote or consent, be treated as if such Trust
Preferred Securities were not outstanding.
S-60
<PAGE> 62
The procedures by which holders of Trust Preferred Securities may exercise
their voting rights are described below. See "-- Book-Entry Only Issuance -- The
Depository Trust Company" below.
Holders of the Trust Preferred Securities will have no rights to appoint or
remove the Owens Corning Trustees, who may be appointed, removed or replaced
solely by the Company as the indirect or direct holder of all of the Common
Securities.
MODIFICATION OF THE DECLARATION
The Declaration may be modified and amended if approved by the Regular
Trustees (and in certain circumstances the Institutional Trustee or the Delaware
Trustee), provided, that if any proposed amendment provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Trust Securities, whether by
way of amendment to the Declaration or otherwise or (ii) the dissolution of the
Trust other than pursuant to the terms of the Declaration, then the holders of
the Trust Securities voting together as a single class will be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of at least a majority in such stated
liquidation amount of the Trust Securities affected thereby; provided, that if
any amendment or proposal referred to in clause (i) above would adversely affect
only the Trust Preferred Securities or the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
majority in stated liquidation amount of such class of securities.
Notwithstanding the foregoing, no amendment or modification may be made to
the Declaration if such amendment or modification would (i) cause the Trust to
be classified as other than a grantor trust for purposes of United States
federal income taxation, (ii) reduce or otherwise adversely affect the powers of
the Institutional Trustee or (iii) cause the Trust to be deemed an "investment
company" which is required to be registered under the Investment Company Act of
1940 (the "1940 Act").
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) if the Trust is not the
surviving entity, such successor entity either (x) expressly assumes all of the
obligations of the Trust under the Trust Securities or (y) substitutes for the
Trust Securities other securities having substantially the same terms as the
Trust Securities (the "Successor Securities"), so long as the Successor
Securities rank the same as the Trust Securities with respect to distributions
and payments upon liquidation, redemption and otherwise, (ii) the Company
expressly acknowledges a trustee of such successor entity possessing the same
powers and duties as the Institutional Trustee as the holder of the Debentures,
(iii) if the Trust Preferred Securities are listed, any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization on which the Trust Preferred Securities
are then listed or quoted, (iv) such merger, consolidation, amalgamation or
replacement does not cause the Trust Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized statistical
rating organization, (v) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of the holders
of the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (vi) such successor entity has a purpose identical to that of the
Trust, (vii) prior to such merger, consolidation, amalgamation or replacement,
the Company has received an opinion of a nationally recognized independent
counsel to the Trust experienced in such matters to the effect that, (A) such
merger, consolidation, amalgamation or replacement does not adversely effect the
rights, preferences and privileges of the holders of the Trust Securities
(including any Successor Securities) in any material respect (other than with
respect to any dilution of the holders' interest in the new entity), (B)
following such merger, consolidation, amalgamation or replacement, neither the
Trust nor such successor entity will be required to register as an investment
company under the 1940 Act and
S-61
<PAGE> 63
(C) following such merger, consolidation, amalgamation or replacement, the Trust
(or the successor entity) will continue to be classified as a grantor trust for
federal income tax purposes, and (viii) the Company guarantees the obligations
of such successor entity under the Successor Securities at least to the extent
provided by the Guarantee and the Common Securities Guarantee. Notwithstanding
the foregoing the Trust shall not, except with the consent of holders of 100% in
stated liquidation amount of the Trust Securities, consolidate, amalgamate,
merge with or into, or be replaced by any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as other than a grantor trust for federal
income tax purposes.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
The Depositary will act as securities depositary for the Trust Preferred
Securities. The Trust Preferred Securities will be issued only as
fully-registered securities registered in the name of Cede & Co. (the
Depositary's nominee). One or more fully-registered global Trust Preferred
Securities certificates, representing the total aggregate number of Trust
Preferred Securities, will be issued and will be deposited with the Depositary.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of securities in definitive form. Such laws
may impair the ability to transfer beneficial interests in the global Trust
Preferred Securities as represented by a global certificate.
Purchases of Trust Preferred Securities within the Depositary's system must
be made by or through Direct Participants, which will receive a credit for the
Trust Preferred Securities on the Depositary's records. The ownership interest
of each actual purchaser of each Trust Preferred Security (a "Beneficial Owner")
is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from the Depositary of
their purchases, but Beneficial Owners are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Trust Preferred Securities. Transfers of
ownership interests in the Trust Preferred Securities are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial owners will not receive certificates representing their ownership
interests in the Trust Preferred Securities, except in the event that use of the
book-entry system for the Trust Preferred Securities is discontinued.
To facilitate subsequent transfers, all the Trust Preferred Securities
deposited by Participants with the Depositary are registered in the name of the
Depositary's nominee, Cede & Co. The deposit of Trust Preferred Securities with
the Depositary and their registration in the name of Cede & Co. effect no change
in beneficial ownership. The Depositary has no knowledge of the actual
Beneficial Owners of the Trust Preferred Securities. The Depositary's records
reflect only the identity of the Direct Participants to whose accounts such
Trust Preferred Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
So long as the Depositary or its nominee is the registered owner or holder
of a Global Certificate, the Depositary or such nominee, as the case may be,
will be considered the sole owner or holder of the Trust Preferred Securities
represented thereby for all purposes under the Declaration and the Trust
Preferred Securities. No beneficial owner of an interest in a Global Certificate
will be able to transfer that interest except in accordance with the Depositary
applicable procedures, in addition to those provided for under the Declaration.
The Depositary has advised the Company that it will take any action
permitted to be taken by a holder of Trust Preferred Securities (including the
presentation of Trust Preferred Securities for exchange as described below) only
at the direction of one or more Participants to whose account the Depositary's
interests in the Global Certificates are credited and only in respect of such
portion of the stated liquidation amount of Trust Preferred Securities as to
which such Participant or Participants has or have given such directions.
However, if there is a Declaration Event of Default under the Trust Preferred
Securities, the Depositary will exchange the Global Certificates for
Certificated Securities, which it will distribute to its Participants.
S-62
<PAGE> 64
Conveyance of notices and other communications by the Depositary to Direct
Participants and Indirect Participants and by Direct Participants and Indirect
Participants to Beneficial Owners will be governed by arrangements among them,
subject to any statutory or regulatory requirements that may be in effect from
time to time.
Although voting with respect to the Trust Preferred Securities is limited,
in those cases where a vote is required, neither the Depositary nor Cede & Co.
will itself consent or vote with respect to Trust Preferred Securities. Under
its usual procedures, the Depositary would mail an Omnibus Proxy to the Trust as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Trust Preferred Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy). The Company and the Trust believe that
the arrangements among the Depositary, Direct and Indirect Participants, and
Beneficial Owners will enable the Beneficial Owners to exercise rights
equivalent in substance to the rights that can be directly exercised by a record
holder of a beneficial interest in the Trust.
Distribution payments on the Trust Preferred Securities will be made to the
Depositary in immediately available funds. The Depositary's practice is to
credit Direct Participants' accounts on the relevant payment date in accordance
with their respective holdings shown on the Depositary's records unless the
Depositary has reason to believe that it will not receive payments on such
payment date. Payments by Participants to Beneficial Owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name,"
and such payments will be the responsibility of such Participant and not of the
Depositary, the Trust or the Company, subject to any statutory or regulatory
requirements to the contrary that may be in effect from time to time. Payment of
distributions to the Depositary is the responsibility of the Trust, disbursement
of such payments to Direct Participants is the responsibility of the Depositary,
and disbursement of such payments to the Beneficial Owners is the responsibility
of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Trust Preferred
Security certificate will not be entitled to receive physical delivery of Trust
Preferred Securities. Accordingly, each Beneficial Owner must rely on the
procedures of the Depositary to exercise any rights under the Trust Preferred
Securities.
Although the Depositary has agreed to the foregoing procedure in order to
facilitate transfer of interests in the Global Certificates among Participants,
the Depositary is under no obligation to perform or continue to perform such
procedures and such procedures may be discontinued at any time. None of the
Company, the Trust or any Owens Corning Trustee will have any responsibility for
the performance by the Depositary or its Participants or Indirect Participants
under the rules and procedures governing the Depositary. The Depositary may
discontinue providing its services as securities depositary with respect to the
Trust Preferred Securities at any time by giving reasonable notice to the Trust.
Under such circumstances, in the event that a successor securities depositary is
not obtained, Trust Preferred Securities certificates are required to be printed
and delivered to holders. Additionally, the Regular Trustees (with the consent
of the Company) may decide to discontinue use of the system of book-entry
transfers through the Depositary (or any successor depositary) with respect to
the Trust Preferred Securities. In that event, certificates for the Trust
Preferred Securities will be printed and delivered to holders. In each of the
above circumstances, the Company will, appoint a paying agent with respect to
the Trust Preferred Securities.
The information in this section concerning the Depositary and the
Depositary's book-entry system has been obtained from sources that the Company
and the Trust believe to be reliable, but neither the Company nor the Trust
takes responsibility for the accuracy hereof.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payments in respect of the Trust Preferred Securities represented by the
Global Certificates shall be made to the Depositary, which shall credit the
relevant accounts at the Depositary on the applicable distribution dates, or, in
the case of certificated securities, such payments shall be made by check mailed
to the address of the holder entitled thereto as such address shall appear on
the Register. The Paying Agent shall be permitted to resign as Paying Agent upon
30 days' written notice to the Owens Corning Trustees. In the
S-63
<PAGE> 65
event that The Bank of New York shall no longer be the Paying Agent, the Regular
Trustees shall appoint a successor to act as Paying Agent (which shall be a bank
or trust company).
The Institutional Trustee will act as registrar, transfer agent and paying
agent for the Trust Preferred Securities.
Registration of transfers of Trust Preferred Securities will be effected
without charge by or on behalf of the Trust, but upon payment (and the giving of
such indemnity as the Trust or the Company may require) in respect of any tax or
other government charge which may be imposed in relation to it.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee prior to the occurrence of a default with respect
to the Trust Securities and after the curing of any defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provisions, the Institutional Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Trust Preferred Securities, unless offered reasonable indemnity by
such holder against the costs, expenses and liabilities which might be incurred
thereby. The holders of Trust Preferred Securities will not be required to offer
such indemnity in the event such holders, by exercising their voting rights,
direct the Institutional Trustee to take any action it is empowered to take
under the Declaration following a Declaration Event of Default. The
Institutional Trustee also serves as trustee under the Guarantee.
GOVERNING LAW
The Declaration and the Trust Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
The Regular Trustees are authorized and directed to operate the Trust in
such a way so that the Trust will not be required to register as an "investment
company" under the 1940 Act or be characterized as other than a grantor trust
for federal income tax purposes. The Company is authorized and directed to
conduct its affairs so that the Debentures will be treated as indebtedness of
the Company for federal income tax purposes. In this connection, the Company and
the Regular Trustees are authorized to take any action not inconsistent with
applicable law, the Declaration of Trust, the certificate of trust of the Trust
or the certificate of incorporation of the Company, that each of the Company and
the Regular Trustees determines in its discretion to be necessary or desirable
to achieve such end, as long as such action does not adversely affect the
interests of the holders of the Trust Preferred Securities or vary the terms
thereof.
Holders of the Trust Preferred Securities have no preemptive rights.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by the Company for the benefit of the holders
from time to time of Trust Preferred Securities. The Guarantee will be qualified
as an indenture under the Trust Indenture Act. Wilmington Trust Company, an
independent trustee, will act as indenture trustee under the Guarantee (the
"Guarantee Trustee") for the purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the Guarantee will be those set forth in the
Guarantee and those made part of the Guarantee by the Trust Indenture Act. The
following summary is not necessarily complete, and reference is hereby made to
the copy of the form of Guarantee (including the definitions therein of certain
terms) which is filed as an exhibit to the Registration Statement of which this
Prospectus Supplement forms a part, and to the Trust Indenture Act. Whenever
particular defined terms of the Guarantee are referred to in this Prospectus
Supplement, such defined terms are incorporated herein by reference. The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Trust Preferred Securities.
S-64
<PAGE> 66
GENERAL
Pursuant to the Guarantee, the Company will irrevocably and unconditionally
agree, to the extent set forth therein, to pay in full on a senior unsecured
basis, to the holders of the Trust Preferred Securities issued by the Trust, the
Guarantee Payments (as defined herein) (except to the extent paid by the Trust),
as and when due, regardless of any defense, right of set-off or counterclaim
which the Trust may have or assert. The following payments or distributions with
respect to Trust Preferred Securities issued by the Trust to the extent not paid
by or on behalf of the Trust (the "Guarantee Payments"), will be subject to the
Guarantee thereon (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on the Trust Preferred Securities,
to the extent the Trust shall have funds available therefor; (ii) the redemption
price, including all accumulated and unpaid distributions to the date of
redemption, of Trust Preferred Securities in respect of which the related
Debentures have been repurchased by the Company on the Purchase Contract
Settlement Date, to the extent the Trust shall have funds available therefor;
and (iii) upon a voluntary or involuntary dissolution of the Trust (other than
in connection with the distribution of Debentures to the holders of Trust
Preferred Securities), the lesser of (a) the aggregate of the stated liquidation
amount and all accrued and unpaid distributions on such Trust Preferred
Securities to the date of payment, to the extent the Trust has funds available
therefor, and (b) the amount of assets of the Trust remaining available for
distribution to holders of the Trust Preferred Securities in liquidation of the
Trust. The Company's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Company to the holders of Trust
Preferred Securities or by causing the Trust to pay such amounts to such
holders.
The Guarantee will be a full and unconditional guarantee generally on a
senior unsecured basis with respect to the Trust Preferred Securities issued by
the Trust, but will not apply to any payment of distributions except to the
extent the Trust shall have funds available therefor. If the Company does not
make interest payments on the Debentures purchased by the Trust, the Trust will
not pay distributions on the Trust Preferred Securities and will not have funds
available therefor. See "Effect of Obligations under the Debentures and the
Guarantee."
The Guarantee, when taken together with the Company's obligations under the
Debentures, the Indenture, and the Declaration, will have the effect of
providing a full and unconditional guarantee on a senior unsecured basis (other
than in respect of the Company's obligations under the Senior Indebtedness) by
the Company of payments due on the Trust Preferred Securities.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities
(the "Common Securities Guarantee") to the same extent as the Guarantee, except
that upon an Indenture Event of Default, holders of Trust Preferred Securities
shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Trust
Preferred Securities issued by the Trust remain outstanding, if there shall have
occurred any event that would constitute an event of default under the Guarantee
or the Declaration, then (a) the Company shall not declare or pay any dividend
on, make any distributions with respect to, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase capital stock of the Company, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for another class or series of the Company's
capital stock, (iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
or distributions in capital stock of the Company and (v) redemptions or
purchases of any rights pursuant to the Rights Agreement or any successor to the
Rights Agreement, and the declaration thereunder of a dividend of rights in the
future), (b) the Company shall not
S-65
<PAGE> 67
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company which rank junior
to the Debentures and (c) the Company shall not make any guarantee payments with
respect to the foregoing (other than payments pursuant to the Guarantee or the
Common Securities Guarantee).
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Trust Preferred Securities (in which case no vote will be
required), the Guarantee may be amended only with the prior approval of the
holders of not less than a majority in stated liquidation amount of the
outstanding Trust Preferred Securities issued by the Trust. All guarantees and
agreements contained in the Guarantee shall bind the successors, assigns,
receivers, trustees and representatives of the Company and shall inure to the
benefit of the holders of the Trust Preferred Securities then outstanding.
TERMINATION
The Guarantee will terminate (a) upon distribution of the Debentures held
by the Trust to the holders of the Trust Preferred Securities, (b) upon full
payment of the redemption price of all the Trust Preferred Securities in the
event that all of the Debentures are repurchased by the Company on the Purchase
Contract Settlement Date or (c) upon full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Trust. The Guarantee
will continue to be effective or will be reinstated, as the case may be, if at
any time any holder of Trust Preferred Securities must restore payment of any
sums paid under the Trust Preferred Securities or the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder.
The holders of a majority in stated liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of the Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee. If the Guarantee
Trustee fails to enforce such Guarantee, any holder of Trust Preferred
Securities may institute a legal proceeding directly against the Company to
enforce such holder's rights under the Guarantee, without first instituting a
legal proceeding against the Trust, the Guarantee Trustee or any other person or
entity. The Company waives any right or remedy to require that any action be
brought first against the Trust or any other person or entity before proceeding
directly against the Company.
STATUS OF THE GUARANTEE
The Guarantee will constitute a senior unsecured obligation of the Company
and will rank pari passu with all of the Company's other senior unsecured
obligations, except that such obligations with respect to the Guarantee will be
subordinated and junior in right of payment to the Company's obligations under
the Senior Indebtedness. The Company's obligations with respect to the Guarantee
will not be subordinated to any other senior unsecured obligations of the
Company, whether incurred prior to, on or after the date hereof.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without instituting a
legal proceeding against any other person or entity).
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to
S-66
<PAGE> 68
such provisions, the Guarantee Trustee is under no obligation to exercise any of
the powers vested in it by the Guarantee at the request of any holder of Trust
Preferred Securities, unless offered reasonable indemnity against the costs,
expenses and liabilities which might be incurred thereby; but the foregoing
shall not relieve the Guarantee Trustee, upon the occurrence of an event of
default under the Guarantee, from exercising the rights and powers vested in it
by the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
internal laws of the State of New York.
DESCRIPTION OF THE DEBENTURES
Set forth below is a description of the specific terms of the Debentures in
which the Trust will invest the proceeds from the issuance and sale of the Trust
Securities. The following description is not necessarily complete, and reference
is hereby made to the copy of the form of the Indenture to be entered into
between the Company and Wilmington Trust Company, as trustee (the "Debt
Trustee"), as supplemented or amended from time to time (as so supplemented and
amended, the "Indenture") which is filed as an exhibit to the Registration
Statement of which this Prospectus Supplement forms a part, and to the Trust
Indenture Act. Certain capitalized terms used herein are defined in the
Indenture.
Under certain circumstances involving the dissolution of the Trust,
Debentures may be distributed to the holders of the Trust Securities in
liquidation of the Trust. See "Description of the Trust Preferred
Securities -- Distribution of the Debentures."
GENERAL
The Debentures will be issued as senior unsecured debt under the Indenture
and will rank pari passu in right of payment with all of the Company's other
senior unsecured debt obligations, except that the Debentures will be
subordinated and junior in right of payment to the Company's obligations under
the Senior Indebtedness. The Company's obligations with respect to the
Debentures will not be subordinated to any other unsecured debt obligations of
the Company, whether incurred prior to, on or after the date hereof. The
Debentures will be limited in aggregate principal amount to $ , such
amount being the sum of the aggregate stated liquidation amounts of the Trust
Preferred Securities and the Common Securities.
The Debentures will not be subject to a sinking fund provision. The entire
principal amount of the Debentures will mature and become due and payable,
together with any accrued and unpaid interest thereon including Compound
Interest (as defined herein) and Additional Interest (as defined herein), if
any, on November 16, 2002.
The Company will have the right at any time to dissolve the Trust and cause
the Debentures to be distributed to the holders of the Trust Securities. If
Debentures are distributed to holders of Trust Securities in liquidation of such
holders' interests in the Trust, such Debentures will initially be issued as a
Global Security (as defined herein). As described herein, under certain limited
circumstances, Debentures may be issued in certificated form in exchange for a
Global Security. See "-- Book-Entry and Settlement" below. In the event that
Debentures are issued in certificated form, such Debentures will be in
denominations of $50 and integral multiples thereof and may be transferred or
exchanged at the offices described below. Payments on Debentures issued as a
Global Security will be made to the Depositary, a successor depositary or, in
the event that no depositary is used, to a Paying Agent for the Debentures. In
the event Debentures are issued in certificated form, principal and interest
will be payable, the transfer of the Debentures will be registrable and
Debentures will be exchangeable for Debentures of other denominations of a like
aggregate principal amount, at the corporate trust office or agency of the
Institutional Trustee in Wilmington, Delaware; provided, that at the option of
the Company, payment of interest may be made by check mailed to the address of
the holder entitled thereto or by wire transfer to an account appropriately
designated by the holder entitled thereto. Notwithstanding the foregoing, so
long as the holder of any Debentures is the Institutional Trustee, the
S-67
<PAGE> 69
payment of principal and interest on the Debentures held by the Institutional
Trustee will be made at such place and to such account as may be designated by
the Institutional Trustee.
The Indenture does not contain provisions that afford holders of the
Debentures protection in the event of a highly leveraged transaction or other
similar transaction involving the Company that may adversely affect such
holders.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Debentures
issued thereunder will be subordinate and junior in right of payment to the
Senior Indebtedness to the extent provided in the Indenture. In the event of any
dissolution, winding-up, liquidation or reorganization of the Company (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings, or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Company or otherwise), the
Senior Indebtedness will first be paid in full before any payment or
distribution may be made in respect of the principal of (and premium, if any) or
interest, if any, on the Debentures.
The Company may not make any payment with respect to the Debentures if and
for so long as (i) the Senior Indebtedness is or becomes due and payable
(whether at maturity, for an installment of principal or interest, upon
acceleration, for mandatory prepayment, or otherwise) and remains unpaid; (ii)
any Senior Indebtedness Default (as defined below) has occurred and has not been
cured or waived in conformity with the terms of the instrument, indenture or
agreement governing such Senior Indebtedness; or (iii) a payment by the Company
with respect to the Debentures would, immediately after giving effect thereto,
result in a Senior Indebtedness Default.
A payment with respect to the Debentures shall include, without limitation,
payment of principal of, premium, if any, and interest on the Debentures, the
purchase of Debentures by the Company and any other payment other than a payment
in stock or any equity securities.
"Senior Indebtedness Default" means the failure to make any payment of the
Senior Indebtedness when due or the happening of an event of default with
respect to the Senior Indebtedness, as defined therein or in the instrument
under which the same is outstanding, which, by its terms, if occurring prior to
the stated maturity of the Senior Indebtedness, permits or with the giving of
notice or lapse of time (or both) would permit any holder thereof, any group of
such holders or any trustee or representative for such holders thereupon to
accelerate the maturity thereof or which results in such acceleration.
"Senior Indebtedness" means all obligations of the Company to pay rent
under the lease, dated as of December 1, 1977, between the Ohio Water
Development Authority, as Lessor, and the Company, as Lessee. Senior
Indebtedness shall continue to constitute Senior Indebtedness for all purposes
of the Debentures, and the provisions of the Article of the Indenture governing
subordination shall continue to apply to the Senior Indebtedness,
notwithstanding the fact that the Senior Indebtedness or any claim in respect
thereof shall be disallowed, avoided or subordinated pursuant to the provisions
of the Bankruptcy Code or other applicable law.
INTEREST
Each Debenture shall bear interest initially at the rate of % per annum
from the original date of issuance, payable quarterly in arrears on March 31,
June 30, September 30 and December 31 of each year (each an "Interest Payment
Date"), commencing , 1997, to the person in whose name such Debenture
is registered, subject to certain exceptions, at the close of business on the
Business Day next preceding such Interest Payment Date. The interest rate on the
Debentures and the distribution rate on the related Trust Preferred Securities
will be reset on the Purchase Contract Settlement Date to the Reset Rate, which
will be equal to the sum of the Reset Spread and the rate on the Two-Year
Benchmark Treasury in effect on the Purchase Contract Settlement Date, and will
be determined by the Reset Agent as the rate the Trust Preferred Securities
should bear in order for a Trust Preferred Security to have an approximate
market value on the Purchase Contract Settlement Date of 100.5% of the Stated
Amount, provided that in no event will the Reset Rate be higher than the rate on
the Two-Year Benchmark Treasury on the Purchase Contract
S-68
<PAGE> 70
Settlement Date plus 200 basis points (2%). Such market value may be less than
100.5% if the Reset Spread is set at the permitted maximum of 2%. The "Two-Year
Benchmark Treasury" shall mean direct obligations of the United States (which
may be obligations traded on a when-issued basis only) having a maturity
comparable to the remaining term of the Trust Preferred Securities, as agreed
upon by the Company and the Reset Agent. The rate for the Two-Year Benchmark
Treasury will be the bid side rate displayed at 10:00 A.M., New York City time,
on the Purchase Contract Settlement Date in the Telerate system (or if the
Telerate system is (a) no longer available on the Purchase Contract Settlement
Date or (b) in the opinion of the Reset Agent, no longer an appropriate system
from which to obtain such rate, such other nationally recognized quotation
system as, in the opinion of the Reset Agent (after consultation with the
Company) is appropriate). If such rate is not so displayed, the rate for the
Two-Year Benchmark Treasury shall be, as calculated by the Reset Agent, the
yield to maturity for the Two-Year Benchmark Treasury, expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis, and computed by taking the arithmetic mean of the secondary
market bid rates, as of 10:30 A.M., New York City time, on the Purchase Contract
Settlement Date of three leading United States government securities dealers
selected by the Reset Agent (after consultation with the Company) (which may
include the Reset Agent or an affiliate thereof). It is currently anticipated
that Merrill Lynch & Co. will be the investment banking firm acting as the Reset
Agent.
On the Reset Announcement Date, the Two-Year Benchmark Treasury will be
selected and the Reset Spread to be added to the rate on the Two-Year Benchmark
Treasury in effect on the Purchase Contract Settlement Date will be established
by the Reset Agent, and the Reset Spread and the Two-Year Benchmark Treasury
will be announced by the Company". The Company will cause a notice of the Reset
Spread and such Two-Year Benchmark Treasury to be published on the Business Day
following the Reset Announcement Date by publication in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal. In the event the Debentures shall not
continue to remain in book-entry only form, the Company shall have the right to
select record dates, which shall be more than fifteen Business Days but less
than 60 Business Days prior to the Interest Payment Date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year consisting of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed will be computed on the basis of the actual number of days elapsed
in such 90-day period. In the event that any date on which interest is payable
on the Debentures is not a Business Day, then payment of the interest payable on
such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay), except
that, if such Business Day is in the next succeeding calendar year, then such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
REDEMPTION
The Company will not have the ability to redeem the Debentures prior to
their stated maturity date. However, the Company will be able to defease the
Debentures by making an irrevocable deposit with the Debt Trustee of money
and/or U.S. governmental obligations that will provide money in an amount
sufficient, in the opinion of a nationally recognized independent accounting
firm, to pay each payment of principal and interest on their Debentures.
PUT OPTION
In accordance with the terms of the Debentures, holders, including the
Institutional Trustee and the Collateral Agent, as applicable, will have the
right to require the Company to repurchase, on the Purchase Contract Settlement
Date, their Debentures at a price per Debenture equal to $50, plus accrued and
unpaid interest, if any, thereon. Upon the repurchase of such Debentures by the
Company, the proceeds from such repurchase shall simultaneously be applied to
redeem Trust Preferred Securities of such holders having an aggregate stated
liquidation amount equal to the aggregate principal amount of the Debentures so
repurchased.
S-69
<PAGE> 71
On the Business Day immediately preceding the Purchase Contract Settlement
Date, each holder of Income PRIDES that has neither previously exercised such
holder's option of Early Settlement nor settled the related Purchase Contracts
with cash on the Business Day immediately preceding the Purchase Contract
Settlement Date will be deemed to have requested the Trust to put the related
Debentures to the Company on the Purchase Contract Settlement Date for a price
equal to the aggregate principal amount of such Debentures, plus accrued and
unpaid interest, if any, thereon. Upon the repurchase of the Debentures by the
Company pursuant to such Put Option, (i) the proceeds from such repurchase shall
simultaneously be applied to redeem the related Trust Preferred Securities of
such holder having an aggregate stated liquidation amount equal to the aggregate
principal amount of the Debentures so repurchased, an amount equal to such
aggregate stated liquidation amount and, will automatically be applied to
satisfy in full such holder's obligation to purchase Common Stock under the
related Purchase Contracts as described herein and (ii) any accrued and unpaid
interest with respect to the Debentures so repurchased will be paid to such
holder in cash. See "Description of Purchase Contracts -- General."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
The Company shall have the right at any time, and from time to time, during
the term of the Debentures, to defer payments of interest by extending the
interest payment period for a period not extending beyond the maturity date of
the Debentures, at the end of which Extension Period, the Company shall pay all
interest then accrued and unpaid (including any Additional Interest, as herein
defined) together with interest thereon compounded quarterly at the rate of
% per annum through and including November 15, 2000, and at the Reset Rate
thereafter, to the extent permitted by applicable law ("Compound Interest");
provided, that during any such Extension Period, (a) the Company shall not
declare or pay dividends or make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its obligations
under any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase capital stock of the Company, (ii) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of the Company and
(v) redemptions or purchases of any rights pursuant to the Rights Agreement or
any successor to the Rights Agreement, and the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank junior to the Debentures, and
(c) the Company shall not make any guarantee payments with respect to the
foregoing (other than payments pursuant to the Guarantee or the Common
Securities Guarantee). Prior to the termination of any such Extension Period,
the Company may further defer payments of interest by extending the interest
payment period; provided, however, that such Extension Period, including all
such previous and further extensions, may not extend beyond the maturity of the
Debentures. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may commence a new Extension Period, subject to
the terms set forth in this section. No interest during an Extension Period,
except at the end thereof, shall be due and payable, but the Company, at its
option, may prepay on any Interest Payment Date all of the interest accrued
during the then elapsed portion of an Extension Period. The Company has no
present intention of exercising its right to defer payments of interest by
extending the interest payment period on the Debentures. If the Institutional
Trustee shall be the sole holder of the Debentures, the Company shall give the
Regular Trustees and the Institutional Trustee notice of its selection of such
Extension Period one Business Day prior to the earlier of (i) the date
distributions on the Trust Preferred Securities are payable or (ii) the date the
Regular Trustees are required to give notice, if applicable, to the NYSE (or
other applicable self-regulatory organization) or to holders of the Trust
Preferred Securities of the record or payment date of such distribution. The
Regular Trustees shall give notice of the Company's selection of such Extension
Period to the holders of the Trust Preferred Securities. If the Institutional
Trustee shall not be the sole holder of the Debentures, the Company shall give
the holders of
S-70
<PAGE> 72
the Debentures notice of its selection of such Extension Period ten Business
Days prior to the earlier of (i) the Interest Payment Date or (ii) the date upon
which the Company is required to give notice, if applicable, to the NYSE (or
other applicable self-regulatory organization) or to holders of the Debentures
of the record or payment date of such related interest payment.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Debentures such additional amounts as shall be required so that the net
amounts received and retained by the Trust after paying any such taxes, duties,
assessments or other governmental charges will be not less than the amounts the
Trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
INDENTURE EVENTS OF DEFAULT
If any Indenture Event of Default shall occur and be continuing, the
Institutional Trustee, as the holder of the Debentures, will have the right to
declare the principal of and the interest on the Debentures (including any
Compound Interest and Additional Interest, if any) and any other amounts payable
under the Indenture to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Debentures.
The following are Events of Default under the Indenture with respect to the
Debentures: (1) failure to pay interest on the Debentures when due, continued
for 30 days; however, if the Company is permitted by the terms of the Debentures
to defer the payment in question, the date on which such payment is due and
payable shall be the date on which the Company is required to make payment
following such deferral, if such deferral has been elected pursuant to the terms
of the Debentures; (2) failure to pay the principal of (or premium, if any, on)
the Debentures when due and payable at Maturity, upon redemption or otherwise;
however, if the Company is permitted by the terms of the Debentures to defer the
payment in question, the date on which such payment is due and payable shall be
the date on which the Company is required to make payment following such
deferral, if such deferral has been elected pursuant to the terms of the
Debentures; (3) failure to observe or perform in any material respect certain
other covenants contained in the Indenture, continued for a period of 90 days
after written notice has been given to the Company by the Debt Trustee or
holders of at least 25% in aggregate principal amount of the outstanding
Debentures; and (4) certain events of bankruptcy, insolvency or reorganization
relating to the Company.
The Indenture provides that the Debt Trustee shall, within 30 days after
the occurrence of any Default or Event of Default with respect to the
Debentures, give the holders of the Debentures notice of all uncured Defaults or
Events of Default known to it (the term "Default" includes any event which after
notice or passage of time or both would be an Event of Default); provided,
however, that, except in the case of an Event of Default or a Default in a
payment on the Debentures, the Debt Trustee shall be protected in withholding
such notice so long as the board of directors, the executive committee or
directors or responsible officers of the Debt Trustee in good faith determine
that the withholding of such notice is in the interest of the holders of the
Debentures.
If an Event of Default with respect to the Debentures occurs and is
continuing, the Debt Trustee or the holders of at least 25% in aggregate
principal amount of the outstanding Debentures, by notice in writing to the
Company (and to the Debt Trustee if given by the holders of at least 25% in
aggregate principal amount of the Debentures), may declare the unpaid principal
of and accrued interest to the date of acceleration on all the outstanding
Debentures to be due and payable immediately and, upon any such declaration, the
Debentures shall become immediately due and payable.
In addition, in the case of the Debentures held by the Trust, if an Event
of Default has occurred and is continuing and such event is attributable to the
failure of the Company to pay interest or principal, then a holder of Trust
Preferred Securities may directly institute a proceeding against the Company for
payment.
S-71
<PAGE> 73
Any such declaration with respect to the Debentures may be annulled and
past Events of Default and Defaults (except, unless theretofore cured, an Event
of Default or a Default in payment of principal of or interest on the
Debentures) may be waived by the holders of a majority of the principal amount
of the outstanding Debentures, upon the conditions provided in the Indenture.
The Indenture provides that the Company shall periodically file statements
with the Debt Trustee regarding compliance by the Company with certain of the
respective covenants thereof and shall specify any Event of Default or Defaults
with respect to the Debentures, in performing such covenants, of which the
signers may have knowledge.
An Indenture Event of Default also constitutes a Declaration Event of
Default. The holders of Trust Preferred Securities in certain circumstances have
the right to direct the Institutional Trustee to exercise its rights as the
holder of the Debentures. See "Description of the Trust Preferred
Securities -- Declaration Events of Default" and "-- Voting Rights."
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable, the Company acknowledges that a holder of Trust Preferred
Securities may directly institute a proceeding for enforcement of payment to
such holder directly of the principal of and interest on the Debentures having a
principal amount equal to the aggregate stated liquidation amount of the Trust
Preferred Securities of such holder after the respective due date specified in
the Debentures. In connection with such action, the Company shall have the right
under the Indenture to set-off any payment made to such holder by the Company.
The holders of Trust Preferred Securities will not be able to exercise directly
any other remedy available to the holders of the Debentures.
BOOK-ENTRY AND SETTLEMENT
If distributed to holders of Trust Preferred Securities in connection with
the involuntary or voluntary dissolution of the Trust, the Debentures will be
issued in the form of one or more global certificates (each a "Global Security")
registered in the name of the Depositary or its nominee. Except under the
limited circumstances described below, Debentures represented by the Global
Security will not be exchangeable for, and will not otherwise be issuable as,
Debentures in certificated form. The Global Securities described above may not
be transferred except by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or to a successor depositary or its nominee.
The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in certificated form. Such
laws may impair the ability to transfer beneficial interests in such a Global
Security.
Except as provided below, owners of beneficial interests in such a Global
Security will not be entitled to receive physical delivery of Debentures in
certificated form and will not be considered the holders (as defined in the
Indenture) thereof for any purpose under the Indenture, and no Global Security
representing Debentures shall be exchangeable, except for another Global
Security of like denomination and tenor to be registered in the name of the
Depositary or its nominee or to a successor Depositary or its nominee.
Accordingly, each Beneficial Owner must rely on the procedures of the Depositary
or if such person is not a Participant, on the procedures of the Participant
through which such person owns its interest to exercise any rights of a holder
under the Indenture.
THE DEPOSITARY
If Debentures are distributed to holders of Trust Preferred Securities in
liquidation of such holders' interests in the Trust, the Depositary will act as
securities depositary for the Debentures. For a description of the Depositary
and the specific terms of the depositary arrangements, see "Description of the
Trust Preferred Securities -- Book-Entry Only Issuance -- The Depository Trust
Company." As of the date of this Prospectus Supplement, the description therein
of the Depositary's book-entry system and the Depositary's practices as they
relate to purchases, transfers, notices and payments with respect to the Trust
Preferred Securities apply in all material respects to any debt obligations
represented by one or more Global Securities held by the
S-72
<PAGE> 74
Depositary. The Company may appoint a successor to the Depositary or any
successor depositary in the event the Depositary or such successor depositary is
unable or unwilling to continue as a depositary for the Global Securities.
None of the Company, the Trust, the Institutional Trustee, any paying agent
and any other agent of the Company or the Debt Trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Security
for such Debentures or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
A Global Security shall be exchangeable for Debentures registered in the
names of persons other than the Depositary or its nominee only if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as a
depositary for such Global Security and no successor depositary shall have been
appointed, (ii) the Depositary at any time, ceases to be a clearing agency
registered under the Exchange Act at which time the depositary is required to be
so registered to act as such depositary and no successor depositary shall have
been appointed, (iii) the Company, in its sole discretion, determines that such
Global Security shall be so exchangeable or (iv) there shall have occurred an
Indenture Event of Default with respect to such Debentures. Any Global Security
that is exchangeable pursuant to the preceding sentence shall be exchangeable
for Debentures registered in such names as the Depositary shall direct. It is
expected that such instructions will be based upon directions received by the
Depositary from its Participants with respect to ownership of beneficial
interests in such Global Security.
GOVERNING LAW
The Indenture and the Debentures will be governed by, and construed in
accordance with, the internal laws of the State of New York.
MISCELLANEOUS
The Company will pay all fees and expenses related to (i) the offering of
the Trust Securities and the Debentures, (ii) the organization, maintenance and
dissolution of the Trust, (iii) the retention of the Owens Corning Trustees and
(iv) the enforcement by the Institutional Trustee of the rights of the holders
of the Trust Preferred Securities. The payment of such fees and expenses will be
fully and unconditionally guaranteed by the Company.
EFFECT OF OBLIGATIONS UNDER THE
DEBENTURES AND THE GUARANTEE
As set forth in the Declaration, the sole purpose of the Trust is to issue
the Trust Securities evidencing undivided beneficial interests in the assets of
the Trust, and to invest the proceeds from such issuance and sale in the
Debentures and engage in only those other activities necessary or incidental
thereto.
As long as payments of interest and other payments are made when due on the
Debentures, such payments will be sufficient to cover distributions and payments
due on the Trust Securities because of the following factors: (i) the aggregate
principal amount of Debentures will be equal to the sum of the aggregate stated
liquidation amount of the Trust Securities; (ii) the interest rate and the
interest and other payment dates on the Debentures will match the distribution
rate and distribution and other payment dates for the Trust Securities; (iii)
the Company shall pay, and the Trust shall not be obligated to pay, directly or
indirectly, all costs, expenses, debts, and obligations of the Trust (other than
with respect to the Trust Securities); and (iv) the Declaration further provides
that the Owens Corning Trustees shall not take or cause or permit the Trust to,
among other things, engage in any activity that is not consistent with the
purposes of the Trust.
Payments of distributions (to the extent funds therefor are available) and
other payments due on the Trust Preferred Securities (to the extent funds
therefor are available) are guaranteed by the Company as and to the extent set
forth under "Description of the Guarantee." If the Company does not make
interest payments on the Debentures purchased by the Trust, the Trust will not
have sufficient funds to pay
S-73
<PAGE> 75
distributions on the Trust Preferred Securities. The Guarantee does not apply to
any payment of distributions unless and until the Trust has sufficient funds for
the payment of such distributions.
If the Company fails to make interest or other payments on the Debentures
when due (taking account of any Extension Period), the Declaration provides a
mechanism whereby the holders of the Trust Preferred Securities, using the
procedures described in "Description of the Trust Preferred
Securities -- Book-Entry Only Issuance -- The Depository Trust Company" and
"-- Voting Rights," may direct the Institutional Trustee to enforce its rights
under the Indenture. If the Institutional Trustee fails to enforce its rights
under the Indenture in respect of an Indenture Event of Default, such holder of
record of Trust Preferred Securities may institute a legal proceeding against
the Company to enforce the Institutional Trustee's rights under the Indenture
without first instituting any legal proceeding against the Institutional Trustee
or any other person or entity. Notwithstanding the foregoing, if a Declaration
Event of Default has occurred and is continuing and such event is attributable
to the failure of the Company to pay interest or principal on the Debentures on
the date such interest or principal is otherwise payable, then a holder of Trust
Preferred Securities may directly institute a proceeding against the Company for
payment. The Company, under the Guarantee, acknowledges that the Guarantee
Trustee shall enforce the Guarantee on behalf of the holders of the Trust
Preferred Securities. If the Company fails to make payments under the Guarantee,
the Guarantee provides a mechanism whereby the holders of the Trust Preferred
Securities may direct the Guarantee Trustee to enforce its rights thereunder.
Notwithstanding the foregoing, if the Company has failed to make a payment under
the Guarantee, any holder of Trust Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Trust, the
Guarantee Trustee, or any other person or entity.
The Guarantee, when taken together with the Company's obligations under the
Debentures and the Indenture and its obligations under the Declaration,
including its obligations to pay costs, expenses, debts and liabilities of the
Trust (other than with respect to the Trust Securities), has the effect of
providing a full and unconditional guarantee of amounts due on the Trust
Preferred Securities. See "Description of Guarantee."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of FELINE PRIDES, Trust
Preferred Securities and Common Stock acquired under a Purchase Contract. This
summary applies only to a beneficial owner of FELINE PRIDES that acquires Income
PRIDES at the closing of the initial offering for an amount equal to the Stated
Amount thereof and that is for United States federal income tax purposes (i) an
individual citizen or resident of the United States, (ii) a corporation created
or organized in or under the laws of the United States or any state thereof or
the District of Columbia, (iii) a domestic partnership, (iv) an estate the
income of which is subject to United States federal income taxation, regardless
of its source, or (v) a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust and one or
more United States persons have the authority to control all substantial
decisions of such trust, in each case holding FELINE PRIDES, Trust Preferred
Securities or Common Stock acquired under a Purchase Contract as a capital asset
(for purposes of this summary, a "U.S. Holder"). The statements of law or legal
conclusion in this summary represent the opinion of Debevoise & Plimpton,
special counsel to the Company ("Tax Counsel").
This summary is based upon the Internal Revenue Code of 1986, as amended
(the "Code"), Treasury regulations (including proposed Treasury regulations)
issued thereunder, Internal Revenue Service ("IRS") rulings and pronouncements
and judicial decisions now in effect, all of which are subject to change at any
time. Such changes may be applied retroactively in a manner that could adversely
affect a U.S. Holder. This summary does not address all potential tax
consequences that may be applicable to a particular U.S. Holder, and is not
intended to be wholly applicable to all categories of U.S. Holders (including,
for example, (a) insurance companies, banks, tax-exempt organizations or
dealers, (b) persons holding FELINE PRIDES, Trust Preferred Securities or Common
Stock as a part of a straddle, hedge, conversion transaction or other integrated
investment or (c) persons whose functional currency is not the U.S. Dollar),
some of which may be
S-74
<PAGE> 76
subject to special rules, nor does it address alternative minimum taxes or
state, local or foreign taxes. PROSPECTIVE INVESTORS THAT ARE NOT UNITED STATES
PERSONS (WITHIN THE MEANING OF SECTION 7701(a)(30) OF THE CODE) ARE URGED TO
CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN FELINE PRIDES, INCLUDING THE POTENTIAL
APPLICATION OF UNITED STATES WITHHOLDING TAXES.
No statutory, judicial or administrative authority directly addresses the
treatment of FELINE PRIDES or instruments similar to FELINE PRIDES for United
States federal income tax purposes. As a result, no assurance can be given that
the IRS will agree with the tax consequences described herein. PROSPECTIVE
INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS REGARDING THE UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF
THE FELINE PRIDES IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS AND THE POSSIBLE EFFECTS OF
CHANGES IN UNITED STATES FEDERAL OR OTHER TAX LAWS.
OWNERSHIP OF TRUST PREFERRED SECURITIES AND TREASURY SECURITIES
A U.S. Holder will be treated as owning the Trust Preferred Securities or
Treasury Securities constituting a part of the FELINE PRIDES. The Company and,
by acquiring FELINE PRIDES, each U.S. Holder agree to treat such U.S. Holder as
the owner, for United States federal, state and local income and franchise tax
purposes, of the Trust Preferred Securities or Treasury Securities constituting
a part of the FELINE PRIDES beneficially owned by such U.S. Holder. The
remainder of this summary will assume that U.S. Holders of FELINE PRIDES will be
treated as the owners of the Trust Preferred Securities or Treasury Securities
constituting a part of such FELINE PRIDES for United States federal income tax
purposes.
ACQUISITION OF INCOME PRIDES; INITIAL BASIS IN TRUST PREFERRED SECURITIES AND
PURCHASE CONTRACTS
A U.S. Holder's acquisition of Income PRIDES will be treated as an
acquisition of the Trust Preferred Security and the Purchase Contract
constituting such Income PRIDES. The purchase price of each Income PRIDES will
be allocated between the Trust Preferred Security and the Purchase Contract
constituting such Income PRIDES in proportion to their respective fair market
values at the time of purchase. Such allocation will establish the U.S. Holder's
initial tax basis in the Trust Preferred Security and the Purchase Contract.
The Company intends to take the position that, at the time of issuance of
the Income PRIDES, the fair market value of each Trust Preferred Security equals
$ and the fair market value of each Purchase Contract equals
$ . The Company's position will be binding upon each U.S. Holder (but
not on the IRS) unless such U.S. Holder explicitly discloses a contrary position
on a statement attached to such U.S. Holder's timely filed United States federal
income tax return for the taxable year in which an Income PRIDES is acquired.
Thus, absent such disclosure, a U.S. Holder should allocate the purchase price
for an Income PRIDES (i.e., the Stated Amount) in accordance with the foregoing.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Trust Preferred Securities, Tax
Counsel will render its opinion to the effect that, under current law and
assuming compliance with the terms of the Declaration, and based on certain
assumptions described in such opinion, the Trust will be classified as a grantor
trust and not as an association taxable as a corporation for United States
federal income tax purposes. Accordingly, each U.S. Holder will be considered
the owner of an undivided interest in the Debentures and will take into account
its pro rata share of all items of income, gain, loss or deduction of the Trust.
Any amount included in a U.S. Holder's gross income will increase such U.S.
Holder's tax basis in its Trust Preferred Securities, and the amount of
distributions to a U.S. Holder will reduce such U.S. Holder's tax basis in its
Trust Preferred Securities.
S-75
<PAGE> 77
CLASSIFICATION OF THE DEBENTURES
The Company, the Trust and, by acquiring FELINE PRIDES, each U.S. Holder
agree to treat the Debentures as indebtedness of the Company for all United
States federal, state and local income and franchise tax purposes. There is no
authority addressing the tax classification of instruments similar to the
Debentures issued as part of an instrument similar to FELINE PRIDES.
Nevertheless, in connection with the issuance of the Debentures, Tax Counsel
will render its opinion to the effect that, under current law and assuming
compliance with the terms of the Indenture and certain other documents, and
based on certain assumptions and advice described in such opinion, the
Debentures will be classified as indebtedness of the Company for United States
federal income tax purposes. The remainder of this summary will assume that the
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT ON TRUST PREFERRED SECURITIES
Subject to the discussion below regarding the Company's right to defer
payments of interest on the Debentures, the Debentures should be treated as
"reset bonds" under applicable Treasury Regulations, and interest on the
Debentures should not constitute contingent interest for purposes of the
"original issue discount" ("OID") rules. Under the Treasury Regulations
applicable to reset bonds, the Debentures should be treated, solely for purposes
of calculating the accrual of OID, as maturing on the day immediately preceding
the Purchase Contract Settlement Date for an amount equal to 100.5% of the
Stated Amount (the "Reset Amount") and as having been reissued on the Purchase
Contract Settlement Date for the Reset Amount. If the amount of the initial
purchase price for the FELINE PRIDES allocated to the Trust Preferred Security
is less than the Reset Amount, the Debentures should be treated as having been
issued with OID equal to the difference between the Reset Amount and the amount
so allocated to the Trust Preferred Security, unless such difference is less
than three-fourths of one-percent of the Reset Amount. If the Debentures were
treated as issued with OID, a U.S. Holder would be required to include such OID
in income on an economic accrual basis over the period between the issue date
and the day immediately preceding the Purchase Contract Settlement Date
regardless of such U.S. Holder's method of tax accounting. Consequently, each
U.S. Holder (including those using the cash basis of accounting) would be
required to include OID in its gross income even though the Company will not
actually make current cash payments with respect to such OID. In addition, a
U.S. Holder should include stated interest on the Debentures in income as
ordinary income when paid to the Trust or accrued, in accordance with such U.S.
Holder's regular method of accounting.
Under the Indenture, the Company has the right to defer payments of
interest on the Debentures. The Company's right to defer payments of interest
could cause the Debentures to be subject to the OID rules. The Company, however,
believes, and intends to take the position, that as of the issue date, the terms
and conditions of the Debentures (in particular the restrictions on the
Company's ability to pay dividends during an Extension Period) make the
likelihood that the Company would exercise its option to defer the payment of
interest a "remote" contingency for these purposes. If so treated, except as
provided below, the Debentures would not be subject to the OID rules as a result
of the Company's right to defer payments of interest on the Debentures.
If the Company were to exercise its right to defer payments of interest,
the Debentures would at that time be treated, solely for purposes of the OID
rules, as reissued with OID. In such event, all of a U.S. Holder's taxable
interest income with respect to the Debentures would thereafter be accounted for
on an economic accrual basis regardless of such U.S. Holder's method of tax
accounting, and actual distributions of stated interest would not be reported as
taxable income. Consequently, each U.S. Holder (including those using the cash
basis of accounting) would be required to include OID in its gross income even
though the Company would not make actual cash payments during an Extension
Period.
The IRS could take the position that the likelihood that the Company would
exercise its right to defer payments of interest is not a "remote" contingency
for these purposes, in which case U.S. Holders would be required to accrue OID
on the Debentures on an economic accrual basis under the OID rules described in
the preceding paragraph.
S-76
<PAGE> 78
Corporate U.S. Holders will not be entitled to a dividends-received
deduction with respect to any income recognized with respect to the Trust
Preferred Securities.
INCOME FROM CONTRACT ADJUSTMENT PAYMENTS AND DEFERRED CONTRACT ADJUSTMENT
PAYMENTS
There is no direct authority addressing the treatment of the Contract
Adjustment Payments, if any, and Deferred Contract Adjustment Payments, if any,
under current law, and such treatment is unclear. Contract Adjustment Payments
and Deferred Contract Adjustment Payments (whether payable in cash or in
additional shares of Common Stock), if any, may constitute taxable income to
each U.S. Holder when received or accrued, in accordance with the U.S. Holder's
method of accounting. To the extent the Company is required to file information
returns with respect to Contract Adjustment Payments or Deferred Contract
Adjustment Payments, it intends to treat such payments as taxable income to each
U.S. Holder. U.S. Holders should consult their tax advisors concerning the
treatment of Contract Adjustment Payments and Deferred Contract Adjustment
Payments, including the possibility that any such payment may be treated as a
loan, purchase price adjustment, rebate or payment analogous to an option
premium, rather than being includible in income on a current basis. The Company
does not intend to deduct the Contract Adjustment Payments or Deferred Contract
Adjustment Payments, if any, because it views them as a cost of issuing the
Common Stock. The treatment of Contract Adjustment Payments and Deferred
Contract Adjustment Payments could affect a U.S. Holder's tax basis in a
Purchase Contract or Common Stock received under a Purchase Contract or the
amount realized by a U.S. Holder upon the sale or disposition of a FELINE PRIDES
or the termination of a Purchase Contract (see "-- Acquisition of Common Stock
under a Purchase Contract," "-- Sale or Disposition of FELINE PRIDES" and "--
Termination of Purchase Contract" below).
DISTRIBUTION OF DEBENTURES TO U.S. HOLDERS OF TRUST PREFERRED SECURITIES
Under current law, a distribution by the Trust of the Debentures as
described under the caption "Description of the Trust Preferred
Securities -- Liquidation Distribution Upon Dissolution" will be non-taxable to
U.S. Holders. In such event, a U.S. Holder will have an aggregate tax basis in
the Debentures received in the liquidation equal to the aggregate tax basis such
U.S. Holder had in its Trust Preferred Securities surrendered therefor, and the
holding period of such Debentures would include the period during which such
U.S. Holder had held the Trust Preferred Securities. A U.S. Holder will continue
to include interest (or OID) in respect of Debentures received from the Trust in
the manner described under "-- Interest Income and Original Issue Discount on
Trust Preferred Securities."
ACQUISITION OF COMMON STOCK UNDER A PURCHASE CONTRACT
A U.S. Holder generally will not recognize gain or loss on the purchase of
Common Stock under a Purchase Contract, except with respect to any cash paid in
lieu of a fractional share of Common Stock. Subject to the following discussion,
a U.S. Holder's aggregate initial tax basis in the Common Stock received under a
Purchase Contract (including any Common Stock received as a Deferred Contract
Adjustment Payment) generally should equal the purchase price paid for such
Common Stock (i.e., the Stated Amount) plus such U.S. Holder's tax basis in the
Purchase Contract (if any), less the portion of such purchase price and tax
basis allocable to the fractional share. Payments of Contract Adjustment
Payments or Deferred Contract Adjustment Payments that have been received in
cash by a U.S. Holder but not included in income by such U.S. Holder should
reduce such U.S. Holder's tax basis in the Purchase Contract or the Common Stock
to be received thereunder. Any Contract Adjustment Payments or Deferred Contract
Adjustment Payments included in a U.S. Holder's income but not paid in cash
should increase such U.S. Holder's tax basis in the Purchase Contract or the
Common Stock (see "-- Income from Contract Adjustment Payments and Deferred
Contract Adjustment Payments" above). The holding period for Common Stock
received under a Purchase Contract will commence on the day after the
acquisition of such Common Stock.
SUBSTITUTION OF TREASURY SECURITIES TO CREATE GROWTH PRIDES
A U.S. Holder of an Income PRIDES that delivers Treasury Securities to the
Collateral Agent in substitution for Trust Preferred Securities generally will
not recognize gain or loss upon the delivery of such
S-77
<PAGE> 79
Treasury Securities or the release of the Trust Preferred Securities to such
U.S. Holder. Such U.S. Holder will continue to include in income any interest,
OID or market discount or amortize any bond premium otherwise includible or
deductible, respectively, by such U.S. Holder with respect to such Treasury
Securities and Trust Preferred Securities, and such U.S. Holder's tax basis in
the Treasury Securities, the Trust Preferred Securities and the Purchase
Contract will not be affected by such delivery and release. U.S. Holders should
consult their tax advisors concerning the tax consequences of purchasing, owning
and disposing of Treasury Securities.
SUBSTITUTION OF TRUST PREFERRED SECURITIES TO RECREATE INCOME PRIDES
A U.S. Holder of a Growth PRIDES that delivers Trust Preferred Securities
to the Collateral Agent to recreate an Income PRIDES generally will not
recognize gain or loss upon the delivery of such Trust Preferred Securities or
the release of the Treasury Securities to the U.S. Holder. Such U.S. Holder will
continue to include in income any interest, OID or market discount or amortize
any bond premium otherwise includible or deductible, respectively, by such U.S.
Holder with respect to such Treasury Securities and Trust Preferred Securities,
and such U.S. Holder's tax basis in the Treasury Securities, the Trust Preferred
Securities and the Purchase Contract will not be affected by such delivery and
release.
SALE OR DISPOSITION OF FELINE PRIDES
If a U.S. Holder sells, exchanges or otherwise disposes of FELINE PRIDES,
such U.S. Holder will be treated as having sold, exchanged or disposed of the
Purchase Contract and the Trust Preferred Securities or, in the case of Growth
PRIDES, the Treasury Securities, that constitute such FELINE PRIDES and
generally will have gain or loss equal to the difference between the portion of
the proceeds to such U.S. Holder allocable to the Purchase Contract and the
Trust Preferred Securities or Treasury Securities, as the case may be, and such
U.S. Holder's respective adjusted tax bases in the Purchase Contract and the
Trust Preferred Securities or Treasury Securities. Such gain or loss generally
will be capital gain or loss, except to the extent that such U.S. Holder is
treated as having received an amount with respect to accrued interest on the
Trust Preferred Securities, which will be treated as ordinary interest income,
or to the extent such U.S. Holder is treated as having received an amount with
respect to accrued Contract Adjustment Payments or Deferred Contract Adjustment
Payments, which may be treated as ordinary income, in each case to the extent
not previously included in income. Such capital gain or loss will be long-term
capital gain or loss if the U.S. Holder held the FELINE PRIDES (or, in the case
of gain or loss with respect to the Trust Preferred Securities or Treasury
Securities, such Trust Preferred Securities or Treasury Securities) for more
than one year at the time of disposition. Under recently enacted legislation,
the maximum tax rate on capital gains for an individual U.S. Holder has been
reduced if such U.S. Holder's holding period is more than eighteen months. If
the sale, exchange or other disposition of FELINE PRIDES occurs when the
Purchase Contract has negative value, the U.S. Holder might be considered to
have received additional consideration for the Trust Preferred Securities or
Treasury Securities in an amount equal to such negative value, and to have paid
such amount to be released from the U.S. Holder's obligation under the Purchase
Contract. U.S. Holders should consult their tax advisors regarding a sale,
exchange or other disposition of the FELINE PRIDES at a time when the Purchase
Contract has negative value.
Payments to a U.S. Holder of Contract Adjustment Payments or Deferred
Contract Adjustment Payments that have not previously been included in the
income of such U.S. Holder should either reduce such U.S. Holder's tax basis in
the Purchase Contract or result in an increase in the amount realized on the
disposition of the Purchase Contract. Any Contract Adjustment Payments or
Deferred Contract Adjustment Payments included in a U.S. Holder's income but not
paid should increase such U.S. Holder's tax basis in the Purchase Contract (see
"-- Income from Contract Adjustment Payments and Deferred Contract Adjustment
Payments" above).
SALES OR REDEMPTIONS OF TRUST PREFERRED SECURITIES
Gain or loss will be recognized by a U.S. Holder on a sale or redemption of
a Trust Preferred Security (including a redemption for cash) in an amount equal
to the difference between the amount realized by the
S-78
<PAGE> 80
U.S. Holder on the sale or redemption and the U.S. Holder's adjusted tax basis
in the Trust Preferred Security sold or redeemed. Gain or loss recognized by a
U.S. Holder on Trust Preferred Securities held for more than one year generally
will be taxable as long-term capital gain or loss (except to the extent
attributable to accrued interest, which will be taxable as ordinary income to
the extent not previously included in income). Under recently enacted
legislation, the maximum tax rate on capital gains for an individual U.S. Holder
has been reduced if such U.S. Holder's holding period is more than eighteen
months.
OWNERSHIP OF COMMON STOCK ACQUIRED UNDER THE PURCHASE CONTRACT
Any dividend on Common Stock paid by the Company out of its current or
accumulated earnings and profits (as determined for United States federal income
tax purposes) will be includable in income by the U.S. Holder when received. Any
such dividend will be eligible for the dividends received deduction if received
by an otherwise qualifying corporate U.S. Holder that meets the holding period
and other requirements for the dividends received deduction.
SALE OR DISPOSITION OF COMMON STOCK
Upon a sale, exchange or other disposition of Common Stock, a U.S. Holder
generally will recognize gain or loss equal to the difference between the amount
realized and such U.S. Holder's adjusted tax basis in the Common Stock. Such
gain or loss will be capital gain or loss and will be long-term capital gain or
loss if the U.S. Holder held the Common Stock for more than one year at the time
of such disposition. Under recently enacted legislation, the maximum tax rate on
capital gains for an individual U.S. Holder has been reduced if such U.S.
Holder's holding period is more than eighteen months.
EARLY SETTLEMENT OF PURCHASE CONTRACT
A U.S. Holder will not recognize gain or loss on the receipt of such U.S.
Holder's proportionate share of Trust Preferred Securities or Treasury
Securities upon Early Settlement of a Purchase Contract and will have the same
tax basis in such Trust Preferred Securities or Treasury Securities as before
such Early Settlement.
TERMINATION OF PURCHASE CONTRACT
If a Purchase Contract terminates, a U.S. Holder will recognize gain or
loss equal to the difference between the amount realized (if any) upon such
termination and such U.S. Holder's adjusted tax basis (if any) in the Purchase
Contract at the time of such termination. Payments of Contract Adjustment
Payments or Deferred Contract Adjustment Payments, if any, received by a U.S.
Holder but not included in income by such U.S. Holder should either reduce such
U.S. Holder's tax basis in the Purchase Contract or result in an amount realized
on the termination of the Purchase Contract. Any Contract Adjustment Payments or
Deferred Contract Adjustment Payments included in a U.S. Holder's income but not
paid should increase such U.S. Holder's tax basis in the Purchase Contract (see
"-- Income from Contract Adjustment Payments and Deferred Contract Adjustment
Payments" above). Any such gain or loss should be capital gain or loss and
should be long-term capital gain or loss if the U.S. Holder held such Purchase
Contract for more than one year at the time of such termination. Under recently
enacted legislation, the maximum tax rate on capital gains for an individual
U.S. Holder has been reduced if such Holder's holding period is more than
eighteen months. A U.S. Holder will not recognize gain or loss on the receipt of
such U.S. Holder's proportionate share of the Trust Preferred Securities or
Treasury Securities upon termination of the Purchase Contract and will have the
same tax basis in such Trust Preferred Securities or Treasury Securities as
before such distribution.
ADJUSTMENT TO SETTLEMENT RATE
U.S. Holders of FELINE PRIDES might be treated as receiving a constructive
distribution from the Company if (i) the Settlement Rate is adjusted and as a
result of such adjustment the proportionate interest of U.S. Holders of FELINE
PRIDES in the assets, earnings and profits of the Company is increased and (ii)
the adjustment is not made pursuant to a bona fide, reasonable anti-dilution
formula. An adjustment in the Settlement Rate would not be considered made
pursuant to such a formula if the adjustment were made to compensate a U.S.
Holder for certain taxable distributions with respect to the Common Stock. Thus,
under
S-79
<PAGE> 81
certain circumstances, an increase in the Settlement Rate might give rise to a
taxable dividend to U.S. Holders of FELINE PRIDES even though such U.S. Holders
would not receive any cash related thereto.
SECONDARY HOLDERS OF FELINE PRIDES
U.S. Holders should be aware that certain United States federal income tax
consequences of the purchase, ownership and disposition of FELINE PRIDES to an
investor that does not acquire Income PRIDES in the initial offering (a
"Secondary Holder") are not clear. In particular, if the Purchase Contract
constituting a part of the FELINE PRIDES has negative value at the time of such
purchase, it is not clear whether a Secondary Holder's tax basis in the Trust
Preferred Securities or Treasury Securities constituting a part of such FELINE
PRIDES will be limited to its cash purchase price or whether it will also
include an amount equal to such negative value. U.S. Holders should consult
their tax advisors regarding the United States federal income tax consequences
to Secondary Holders of the purchase, ownership and disposition of FELINE
PRIDES.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
Payments under the FELINE PRIDES, Trust Preferred Securities or Common
Stock acquired under a Purchase Contract, the proceeds received with respect to
a fractional share of Common Stock upon the settlement of a Purchase Contract,
and the sale of FELINE PRIDES, Trust Preferred Securities or Common Stock
acquired under a Purchase Contract, may be subject to information reporting and
United States federal backup withholding tax at the rate of 31% if the U.S.
Holder thereof fails to supply an accurate taxpayer identification number or
otherwise fails to comply with applicable United States information reporting or
certification requirements. Any amounts so withheld will be allowed as a credit
against such U.S. Holder's United States federal income tax liability.
S-80
<PAGE> 82
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
(the "Underwriting Agreement") among the Company and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Credit Suisse First Boston Corporation and Goldman,
Sachs & Co. (the "Underwriters"), the Company and the Trust have agreed to sell
to the Underwriters, and each of the Underwriters severally has agreed to
purchase from the Company and the Trust, the number of Income PRIDES set forth
opposite each Underwriter's name. In the Underwriting Agreement, the several
Underwriters severally have agreed, subject to the terms and conditions set
forth therein, to purchase all of the Income PRIDES offered hereby if any of the
Income PRIDES are purchased. In the event of default by an Underwriter, the
Underwriting Agreement provides that, in certain circumstances, the purchase
commitments of the nondefaulting Underwriters may be increased or the
Underwriting Agreement may be terminated.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS INCOME PRIDES
- ------------------------------------------------------------------------------ -------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith Incorporated............................
Credit Suisse First Boston Corporation........................................
Goldman, Sachs & Co...........................................................
--------
Total...............................................................
========
</TABLE>
The Underwriters have advised the Company and the Trust that they propose
initially to offer the Income PRIDES to the public at the public offering price
set forth on the cover page of this Prospectus Supplement and to certain dealers
at such price less a concession not in excess of $ . per Income PRIDES. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $ . per Income PRIDES on sales to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
Until the distribution of the Securities is completed, rules of the
Commission may limit the ability of the Underwriters and any selling group
members to bid for and purchase the Securities or shares of Common Stock. As an
exception to these rules, the Underwriters are permitted to engage in certain
transactions that stabilize the price of the Securities or the Common Stock.
Such transactions consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of the Securities or the Common Stock.
If the Underwriters create a short position in the Securities in connection
with this offering, i.e., if they sell more Securities than are set forth on the
cover page of this Prospectus, the Underwriters may reduce that short position
by purchasing Securities in the open market. The Underwriters may also elect to
reduce any short position by exercising all or part of the over-allotment option
described below.
The Underwriters may also impose a penalty bid on certain Underwriters and
selling group members. This means that if the Underwriters purchase Securities
in the open market to reduce the Underwriters' short position or to stabilize
the price of the Securities, they may reclaim the amount of the selling
concession from any Underwriter and any selling group members who sold those
Securities as part of this offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of a security to the extent that it were
to discourage resales of the security.
Neither the Company, the Trust nor any of the Underwriters makes any
representation or prediction as to the direction or magnitude of any effect that
the transactions described above may have on the price of the Securities or the
Common Stock. In addition, neither the Company, the Trust nor any of the
Underwriters makes any representation that the Underwriters will engage in such
transaction or that such transactions, once commenced, will not be discontinued
without notice.
The Company and the Trust have granted to the Underwriters an option,
exercisable for 30 days following the date of this Prospectus Supplement, to
purchase up to an aggregate of an additional 900,000 Income
S-81
<PAGE> 83
PRIDES from the Company and the Trust at the Price to Public set forth on the
cover page of this Prospectus Supplement. In the event that such option is
exercised, the Company will pay to the Underwriters the Underwriting Commission
per Income PRIDES set forth on the cover page of this Prospectus Supplement. The
Underwriters may exercise this option only to cover over-allotments, if any,
made on the sale of the Income PRIDES offered hereby. If the Underwriters
exercise their over-allotment option, each of the Underwriters has severally
agreed, subject to certain conditions, to effect the foregoing transactions with
respect to approximately the same percentage of such Income PRIDES that the
respective number of Income PRIDES set forth opposite its name in the foregoing
table bears to the Income PRIDES offered hereby.
The Company and the Trust have agreed, for a period of days after the
date of this Prospectus Supplement, to not, without the prior written consent of
Merrill Lynch, Pierce, Fenner and Smith Incorporated, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise dispose of,
or enter into any agreement to sell, any Income PRIDES, Purchase Contracts,
Trust Preferred Securities or Common Stock, as the case may be, or any
securities of the Company similar to the Income PRIDES, Purchase Contracts,
Trust Preferred Securities or Common Stock or any security convertible into or
exchangeable or exercisable for Income PRIDES, Purchase Contracts, Trust
Preferred Securities or Common Stock other than to the Underwriters pursuant to
the Underwriting Agreement, other than shares of Common Stock or options for
shares of Common Stock issued pursuant to or sold in connection with any
employee benefit, dividend reinvestment and stock option and stock purchase
plans of the Company and its subsidiaries and other than the Growth PRIDES or
Income PRIDES to be created or recreated upon substitution of Pledged
Securities, or shares of Common Stock issuable upon early settlement of the
Income PRIDES or Growth PRIDES or upon exercise of stock options.
Prior to this offering, there has been no public market for the Income
PRIDES. The public offering price for the Income PRIDES was determined in
negotiations between the Company, the Trust and the Underwriters. In determining
the terms of the Income PRIDES, including the public offering price, the
Company, the Trust and the Underwriters considered the market price of the
Common Stock and also considered the Company's recent results of operations, the
future prospects of the Company and the industry in general, market prices and
terms of, and yields on, securities of other companies considered to be
comparable to the Company and prevailing conditions in the securities markets.
Application will be made to list the Income PRIDES on the NYSE under the symbol
" ", subject to official notice of issuance. The Growth PRIDES and the Trust
Preferred Securities will not be listed or traded on any securities exchange.
The Company and the Trust have been advised by the Underwriters that they
presently intend to make a market for the Growth PRIDES and the Trust Preferred
Securities; however, they are not obligated to do so and any market making may
be discontinued at any time. There can be no assurance that an active trading
market will develop for the Income PRIDES, the Growth PRIDES or the Trust
Preferred Securities or that the Income PRIDES will trade in the public market
subsequent to the offering at or above the initial public offering price.
The Company and the Trust have agreed to indemnify the Underwriters
against, or to contribute to payments that the Underwriters may be required to
make in respect of, certain liabilities, including liabilities under the
Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, the Underwriters and
their respective affiliates have performed, and may in the future perform,
investment banking and/or commercial banking services for the Company. In
addition, in connection with the financing of the acquisition of Fibreboard
Corporation, the Company, Sierra Corp. and certain other subsidiaries of the
Company entered into a $2 billion Credit Agreement, dated as of June 26, 1997,
with the banks party thereto and Credit Suisse First Boston, as agent for such
banks. A portion of the outstanding amount of loans under the Credit Agreement,
including amounts provided by Credit Suisse First Boston, will be repaid with a
portion of the net proceeds of this Offering. See "The Company -- Recent
Developments" and "Use of Proceeds."
S-82
<PAGE> 84
LEGAL OPINIONS
The validity of the Purchase Contracts, the Common Stock issuable upon
settlement thereof and the Debentures will be passed upon for the Company and
the Trust by Debevoise & Plimpton, New York, New York, and certain matters of
Delaware law with respect to the validity of the Trust Preferred Securities
offered hereby will be passed upon for the Company and the Trust by Morris,
Nichols, Arsht & Tunnell, special Delaware counsel to the Company. The validity
of the Purchase Contracts, the Common Stock issuable upon settlement thereof,
the Debentures and the Trust Preferred Securities will be passed upon for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York.
S-83
<PAGE> 85
INDEX OF TERMS FOR PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Additional Interest......................................................... S-71
Applicable Market Value..................................................... S-11, S-44
Change in the 1940 Act Law.................................................. S-57
Collateral Agent............................................................ S-8
Common Securities........................................................... S-1
Common Securities Guarantee................................................. S-65
Compound Interest........................................................... S-69
Contract Adjustment Payments................................................ S-1
Debentures.................................................................. S-2, S-7
Debt Payment Failure........................................................ S-22
Debt Trustee................................................................ S-67
Declaration................................................................. S-7
Declaration Event of Default................................................ S-59
Deferred Contract Adjustment Payments....................................... S-10, S-44
Direct Action............................................................... S-22, S-59
Early Settlement............................................................ S-11
Extension Periods........................................................... S-13
FELINE PRIDES............................................................... S-1
FELINE PRIDES Certificate................................................... S-45
Growth PRIDES............................................................... S-2, S-8, S-42
Guarantee................................................................... S-2, S-15
Guarantee Payments.......................................................... S-65
Guarantee Trustee........................................................... S-26, S-64
Income PRIDES............................................................... S-1, S-7, S-42
Indenture................................................................... S-67
Indenture Event of Default.................................................. S-59
Institutional Trustee....................................................... S-26
Interest Payment Date....................................................... S-68
Investment Company Event.................................................... S-57
OC.......................................................................... S-1
OC Capital.................................................................. S-1
Owens Corning Trustees...................................................... S-7
Payment Date................................................................ S-10
Pledge Agreement............................................................ S-49
Pledged Securities.......................................................... S-18, S-49
Property Account............................................................ S-26
Purchase Contract........................................................... S-1, S-7
Purchase Contract Agent..................................................... S-8
Purchase Contract Agreement................................................. S-8
Purchase Contract Settlement Date........................................... S-1, S-7
Put Option.................................................................. S-14
Regular Trustees............................................................ S-26
Reset Agent................................................................. S-7
Reset Announcement Date..................................................... S-57
Reset Amount................................................................ S-76
Reset Rate.................................................................. S-2
Reset Spread................................................................ S-2
Securities.................................................................. S-1
Senior Indebtedness......................................................... S-68
Senior Indebtedness Default................................................. S-68
Settlement Rate............................................................. S-11
</TABLE>
A-1
<PAGE> 86
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
Sponsor..................................................................... S-7
Stated Amount............................................................... S-1
Successor Securities........................................................ S-61
Super-Majority.............................................................. S-60
Tax Counsel................................................................. S-75
Threshold Appreciation Price................................................ S-11
Treasury Securities......................................................... S-2, S-8
Trust....................................................................... S-1
Trust Preferred Security.................................................... S-1
Trust Securities............................................................ S-1
Two-Year Benchmark Treasury................................................. S-56, S-68
Underwriting Agreement...................................................... S-81
</TABLE>
A-2
<PAGE> 87
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 OR OTHER JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE OR JURISDICTION.
SUBJECT TO COMPLETION, DATED , 1997
PROSPECTUS
U.S.$690,000,000
OWENS CORNING
STOCK PURCHASE CONTRACTS,
STOCK PURCHASE UNITS AND
DEBENTURES
OWENS CORNING CAPITAL II
PREFERRED SECURITIES
GUARANTEED AS SET FORTH HEREIN BY
OWENS CORNING
------------------
Owens Corning (the "Company") may from time to time offer together or
separately (i) Stock Purchase Contracts ("Stock Purchase Contracts") to purchase
shares of common stock, $0.10 par value per share ("Common Stock"), of the
Company, (ii) Stock Purchase Units, each representing ownership of a Stock
Purchase Contract and Preferred Securities (as defined below) or debt
obligations of third parties, including U.S. Treasury securities, securing the
holder's obligation to purchase Common Stock under the Stock Purchase Contracts
("Stock Purchase Units"), and (iii) its subordinated debentures (the
"Debentures"). Owens Corning Capital II, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), may offer, from time to time,
preferred securities ("Preferred Securities"), representing preferred undivided
beneficial interests in the assets of the Trust. The Stock Purchase Contracts,
Stock Purchase Units, Debentures and Preferred Securities are collectively
called the "Securities."
The Securities offered pursuant to this Prospectus may be issued in one or
more series or issuances and will be limited to U.S.$690,000,000 aggregate
public offering price (or, in the case of Debentures, its equivalent (based on
the applicable exchange rate at the time of issue) if issued with principal
amounts denominated in one or more foreign currencies, or such greater amount if
issued at an original issue discount, as shall result in aggregate proceeds of
U.S.$690,000,000). Certain specific terms of the particular Securities in
respect of which this Prospectus is being delivered are set forth in the
accompanying Prospectus Supplement (the "Prospectus Supplement"), including,
where applicable, (i) in the case of Stock Purchase Contracts, the number of
shares of Common Stock issuable thereunder, the purchase price of the Common
Stock, the date or dates on which the Common Stock is required to be purchased
by the holders of the Stock Purchase Contracts, any periodic payments required
to be made by the Company to the holders of the Stock Purchase Contracts or vice
versa, and the terms of the offering and sale thereof, (ii) in the case of Stock
Purchase Units, the specific terms of the Stock Purchase Contracts and any
Preferred Securities or debt obligations of third parties securing the holder's
obligation to purchase the Common Stock under the Stock Purchase Contracts, and
the terms of the offering and sale thereof, (iii) in the case of Debentures, the
specific designation, aggregate principal amount, denominations, maturity,
interest payment dates, interest rate (which may be fixed or variable) or method
of calculating interest, if any, applicable Extension Period (as defined below)
or interest deferral terms, if any, place or places where principal, premium, if
any, and interest, if any, will be payable, any terms of redemption, any sinking
fund provisions, terms for any conversion or exchange into other securities,
initial offering or purchase price, methods of distribution and any other
special terms, and (iv) in the case of Preferred Securities, the specific title,
aggregate amount, stated liquidation preference, number of securities, the rate
of payment of periodic cash distributions ("Distributions") or method of
calculating such rate, applicable Extension Period or Distribution deferral
terms, if any, place or places where Distributions will be payable, any terms of
redemption, initial offering or purchase price, methods of distribution and any
other special terms. If so specified in the applicable Prospectus Supplement,
the Securities offered thereby may be issued in whole or in part in the form of
one or more temporary or permanent global securities ("Global Securities").
The Debentures will be senior unsecured obligations of the Company and will
rank pari passu in right of payment with all of the Company's other senior
unsecured obligations, except that the Debentures will be subordinated and
junior in right of payment to the Company's obligations under the Senior
Indebtedness (as defined in "Description of Debentures -- Subordination") of the
Company. If provided in an accompanying Prospectus Supplement, the Company will
have the right to defer payments of interest on any series of Debentures by
extending the interest payment period thereon at any time or from time to time
for such number of consecutive interest payment periods (which shall not extend
beyond the maturity of the Debentures) with respect to each deferral period as
may be specified in such Prospectus Supplement (each, an "Extension Period").
See "Description of Debentures -- Option to Defer Interest Payments."
The Company will be the owner of the common securities (the "Common
Securities," and, together with the Preferred Securities, the "Trust
Securities") of the Trust. The payment of Distributions with respect to the
Preferred Securities and payments on liquidation or redemption with respect to
the Preferred Securities, in each case out of funds held by the Trust, will be
irrevocably guaranteed by the Company to the extent described herein (the
"Guarantee"). Certain payments in respect of the Common Securities may also be
guaranteed by the Company. See "Description of the Guarantee." The obligations
of the Company under the Guarantee will be senior unsecured obligations of the
Company and will rank pari passu with all of the Company's other senior
unsecured obligations, except that such obligations with respect to the
Guarantee will be subordinated and junior in right of payment to the Company's
obligations under the Senior Indebtedness (as defined in "Description of
Debentures -- Subordination"). Concurrently with the issuance by the Trust of
the Preferred Securities, the Trust will invest the proceeds thereof and any
contributions made in respect of the Common Securities in the Debentures, which
will have terms corresponding to the terms of the Preferred Securities. The
Debentures will be the sole assets of the Trust, and payments under the
Debentures and those made by the Company in respect of fees and expenses
incurred by the Trust will be the only revenue of the Trust. Upon the occurrence
of certain events as are described herein and in the accompanying Prospectus
Supplement,
<PAGE> 88
(continued on next page)
the Company may redeem the Debentures and cause the redemption of the Trust
Securities. In addition, if provided in the applicable Prospectus Supplement,
the Company may dissolve the Trust at any time and, after satisfaction of the
liabilities to creditors of the Trust as provided by applicable law, cause the
Debentures to be distributed to the holders of the Preferred Securities in
liquidation of their interest in the Trust. See "Description of Preferred
Securities--Redemption--Distribution of Debentures" and "--Liquidation
Distribution Upon Termination."
Holders of the Preferred Securities will be entitled to receive preferential
cumulative cash Distributions accruing from the date of original issuance and
payable periodically as specified in an accompanying Prospectus Supplement. If
provided in an accompanying Prospectus Supplement, the Company will have the
right to defer payments of interest on the Debentures by extending the interest
payment period thereon at any time or from time to time for one or more
Extension Periods (which shall not extend beyond the maturity of the
Debentures). If interest payments are so deferred, Distributions on the
Preferred Securities will also be deferred and the Company will not be
permitted, subject to certain exceptions set forth herein, to declare or pay any
cash distributions with respect to the Company's capital stock or debt
securities that rank pari passu with or junior to the Debentures. During an
Extension Period, Distributions will continue to accumulate (and the Preferred
Securities will accumulate additional Distributions thereon at the rate per
annum if and as specified in the related Prospectus Supplement). See
"Description of Preferred Securities -Distributions."
Taken together, the Company's obligations under the Debentures, the
Indenture (as defined herein), the Declaration (as defined herein) and the
Guarantee, in the aggregate, have the effect of providing a full, irrevocable
and unconditional guarantee of payments of Distributions and other amounts due
on the Preferred Securities. See "Relationship Among the Preferred Securities,
the Debentures and the Guarantee."
The Common Stock is listed on the New York Stock Exchange and the Toronto
Stock Exchange under the trading symbol "OWC." The Prospectus Supplement will
state whether any Securities offered thereby will be listed on any national
securities exchange. If such Securities are not listed on any national
securities exchange, there can be no assurance that there will be a secondary
market for any such Securities.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Company may sell the Securities to or through underwriters, through
dealers or agents, directly to purchasers or through a combination of such
methods. See "Plan of Distribution." The accompanying Prospectus Supplement sets
forth the names of any underwriters, dealers or agents, if any, involved in the
sale of the Securities in respect of which this Prospectus is being delivered
and any applicable fee, commission or discount arrangements with them.
------------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES
UNLESS ACCOMPANIED BY A PROSPECTUS SUPPLEMENT.
------------------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE> 89
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE APPLICABLE PROSPECTUS
SUPPLEMENT, AND IF GIVEN OR MADE SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE TRUST OR ANY AGENT,
UNDERWRITER OR DEALER. THIS PROSPECTUS AND THE APPLICABLE PROSPECTUS SUPPLEMENT
DO NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH THEY
RELATE, OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THOSE TO WHICH
THEY RELATE IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE DELIVERY OF THIS PROSPECTUS
AND/OR THE APPLICABLE PROSPECTUS SUPPLEMENT AT ANY TIME DOES NOT IMPLY THAT THE
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
AVAILABLE INFORMATION
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
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, Suite
1300, New York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500
West Madison Street, Chicago, Illinois 60661. Copies of such material can also
be obtained at prescribed rates by writing to the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission
also maintains a site on the world wide web at http://www.sec.gov that contains
reports, proxy and information statements and other information filed
electronically by the Company. In addition, such reports, proxy statements and
other information may be inspected at the offices of the New York Stock
Exchange, 20 Broad Street, New York, New York 10005, upon which the Common Stock
is traded.
This Prospectus constitutes a part of a registration statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") filed by the Company and the Trust with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus and
any accompanying Prospectus Supplement do not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company, the Trust and the Securities offered
hereby, reference is made to the Registration Statement and the exhibits and the
financial statements, notes and schedules filed as a part thereof or
incorporated by reference therein, which may be inspected at the public
reference facilities of the Commission, at the addresses set forth above.
Statements made in this Prospectus and any Prospectus Supplement concerning the
contents of any documents referred to herein are not necessarily complete, and
in each instance reference is hereby made to the copy of such document filed as
an exhibit to the Registration Statement or otherwise filed with the Commission.
No separate financial statements of the Trust have been included herein.
The Company and the Trust do not consider that such financial statements would
be material to holders of the Preferred Securities because the Trust is a newly
formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any activity
other than its holding as trust assets the Debentures and the issuance of the
Trust Securities. See "The Trust," "Description of Debentures," "Description of
Preferred Securities" and "Description of the Guarantee."
2
<PAGE> 90
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K (File No. 1-3660) for the year
ended December 31, 1996, filed on March 20,1997 (the "1996 Form 10-K").
(2) The Company's Quarterly Report on Form 10-Q (File No. 1-3660) for the
quarter ended March 31, 1997, filed on May 1, 1997.
(3) The Company's Quarterly Report on Form 10-Q (File No. 1-3660) for the
quarter ended June 30, 1997, filed on July 24, 1997 (the "Second
Quarter Form 10-Q").
(4) The Company's Current Report on Form 8-K (File No. 1-3660), filed on
May 14, 1997.
(5) The Company's Current Report on Form 8-K (File No. 1-3660), filed on
May 28, 1997.
(6) The Company's Current Report on Form 8-K (File No. 1-3660), filed on
July 15, 1997.
(7) The Company's Current Report on Form 8-K (File No. 1-3660), filed on
August 8, 1997.
(8) Description of the Common Stock contained in the Company's Registration
Statement on Form 8-A, filed on October 16, 1986.
(9) Description of the Company's 1996 Preferred Share Purchase Rights
associated with the Common Stock contained in the Company's
Registration Statement on Form 8-A, filed on December 19, 1996.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Securities shall hereby be
deemed to be incorporated by reference into this Prospectus and to be a part of
this Prospectus from the date of filing of such documents. Any statement
contained herein, or in a document all or a portion of which is incorporated or
deemed to be incorporated by reference herein, shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that any statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein or in any accompanying Prospectus
Supplement modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents described above and incorporated by reference
herein (not including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents). Written or telephone
requests should be directed to: Owens Corning, Owens Corning World Headquarters,
Toledo, Ohio 43659, Attention: Secretary's Office (telephone: (419) 248-8000).
3
<PAGE> 91
THE COMPANY
Owens Corning, a global company incorporated in Delaware in 1938, serves
consumers and industrial customers with high-performance glass fiber composites
and building materials systems. These products are used in industries such as
home improvement and repair, new construction, transportation, marine,
aerospace, energy, appliance, packaging and electronics. The Company operates in
two industry segments -- Building Materials and Composite Materials -- divided
into ten businesses. The Company also has affiliate companies in a number of
countries.
Owens Corning's Building Materials products are marketed through multiple
distribution channels, often with the aid of the Company's well known
"spokescritter," the Pink Panther. Over the last several years, the Company has
supplemented its traditional relationships with specialty distributors and
wholesalers with increasing presence among the large "do-it-yourself" home
center retailers. In 1996, 41% of total Company sales were made to the U.S. home
improvement and remodeling markets which these retailers serve.
The Company recently introduced a strategic initiative, System Thinking for
the Home(TM), designed to leverage Owens Corning's broad product offering and
strong brand recognition. This systems approach represents a shift from
product-oriented to systems-driven solutions across all lines of business. By
redefining its role as a provider of insulation, roofing, siding, windows and
accessories and linking all of its products and technology to create a
high-performance building envelope, Company management is targeting an increased
share of the $220 billion building materials and home improvement industry.
Building Materials operates primarily in North America and Europe. It also
has a growing presence in Latin America and Asia Pacific. Building Materials
sells a variety of building and home improvement products in three major
categories: glass fiber and foam insulation, roofing materials, and other
specialty products for the home, such as housewrap, vinyl windows and patio
doors, and vinyl siding. The businesses responsible for these products and
markets include: Insulation, Building Materials Sales and Distribution -- North
America, Building Materials -- Europe and Africa, Roofing Systems, Specialty and
Foam Products, Western Fiberglass Group, Latin America, and Asia Pacific.
Composite Materials operates in North America, Europe and Latin America,
with affiliates and licensees around the world, including a growing presence in
Asia Pacific. The businesses responsible for these products include: Composites,
Latin America, Engineered Pipe & Fabrication Systems, and Asia Pacific.
The Company is the world's leading producer of glass fiber materials used
in composites. Composites are fabricated material systems made up of two or more
components (e.g., plastic resin and glass fiber) used in various applications to
replace traditional materials, such as aluminum, wood, and steel. The global
composites industry has expanded to include more than 40,000 end-use
applications. Worldwide, the composites industry has relatively few raw material
component suppliers (glass fiber, resin and additives) delivering to thousands
of industrial customers through various channels. Depending on the end-use
application, these raw materials move through different manufacturing process
chains, ultimately finding their way to consumers through myriad markets
worldwide. The primary end use markets that the Company serves are construction,
transportation, and electrical/electronics.
The Company's principal executive offices are located at Owens Corning
World Headquarters, Toledo, Ohio 43659, and its telephone number is (419)
248-8000. Unless the context indicates otherwise, references in this Prospectus
to the "Company" include Owens Corning and its consolidated subsidiaries.
4
<PAGE> 92
THE TRUST
The Trust is a statutory business trust formed under Delaware law pursuant
to (i) a declaration of trust, dated as of April 2, 1997, executed by the
Company, as sponsor (the "Sponsor"), and the trustees of the Trust (the "Owens
Corning Trustees") and (ii) the filing of a certificate of trust with the
Secretary of State of the State of Delaware on April 2, 1997. Such declaration
of trust will be amended and restated in its entirety (as so amended and
restated, the "Declaration") substantially in the form filed as an exhibit to
the Registration Statement of which this Prospectus forms a part. The
Declaration will be qualified as an indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). The Company will directly or
indirectly acquire Common Securities in an aggregate liquidation amount equal to
3% of the total capital of the Trust. The Trust exists for the exclusive
purposes of (i) issuing the Trust Securities representing undivided beneficial
interests in its assets, (ii) investing the proceeds of the Trust Securities in
the Debentures and (iii) engaging in only those other activities necessary or
incidental thereto. Unless otherwise specified in the applicable Prospectus
Supplement, the Trust has a term of approximately seven years, but may terminate
earlier as provided in the Declaration.
Pursuant to the Declaration, the number of Owens Corning Trustees initially
is three. Two of the Owens Corning Trustees (the "Regular Trustees") are persons
who are employees or officers of or who are affiliated with the Company. The
third trustee is a financial institution that is unaffiliated with the Company,
which trustee serves as institutional trustee under the Declaration and as
indenture trustee for the purposes of compliance with the provisions of the
Trust Indenture Act (the "Institutional Trustee"). Initially, Wilmington Trust
Company, a banking organization duly organized under the laws of the State of
Delaware, will be the Institutional Trustee until removed or replaced by the
holder of the Common Securities. For the purpose of compliance with the
provisions of the Trust Indenture Act, Wilmington Trust Company will also act as
trustee (the "Guarantee Trustee") under the Guarantee and as the trustee in the
State of Delaware (the "Delaware Trustee") for the purposes of the Trust Act (as
defined herein), until removed or replaced by the holder of the Common
Securities. See "Description of the Guarantee" and "Description of Preferred
Securities -- Voting Rights; Amendment of Declaration."
The Institutional Trustee will hold title to the Debentures for the benefit
of the holders of the Trust Securities and the Institutional Trustee will have
the power to exercise all rights, powers and privileges under the Indenture (as
defined herein) as the holder of the Debentures. In addition, the Institutional
Trustee will maintain exclusive control of a segregated non-interest bearing
bank account (the "Property Account") to hold all payments made in respect of
the Debentures for the benefit of the holders of the Trust Securities. The
Institutional Trustee will make payments of distributions and payments on
liquidation, redemption and otherwise to the holders of the Trust Securities out
of funds from the Property Account. The Guarantee Trustee will hold the
Guarantee for the benefit of the holders of the Preferred Securities. The
Company, as the direct or indirect holder of all the Common Securities, will
have the right to appoint, remove or replace any Owens Corning Trustee and to
increase or decrease the number of Owens Corning Trustees; PROVIDED, that the
number of Owens Corning Trustees shall be at least three, a majority of which
shall be Regular Trustees. The Company will pay all fees and expenses related to
the Trust and the offering of the Trust Securities. See "Description of the
Guarantee -- Expenses of the Trust."
The rights of the holders of the Preferred Securities, including economic
rights, rights to information and voting rights, are set forth in the
Declaration, the Delaware Business Trust Act, as amended (the "Trust Act"), and
the Trust Indenture Act. See "Description of Preferred Securities."
The Delaware Trustee is Wilmington Trust Company, Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890. The principal place of business
of the Trust is c/o Owens Corning, Owens Corning World Headquarters, Toledo,
Ohio, 43659 and its telephone number is (419) 248-8000.
5
<PAGE> 93
USE OF PROCEEDS
The Company intends to use the net proceeds from the sale of the Securities
(including Debentures issued to the Trust in connection with the investment by
the Trust of all of the proceeds from the sale of Preferred Securities) for
general corporate purposes, including, without limitation, working capital,
repurchases or redemptions of the Company's outstanding debt securities or other
reductions of the Company's outstanding borrowings, business acquisitions,
investments in or loans to subsidiaries, capital expenditures or for such other
purposes as may be specified in the applicable Prospectus Supplement.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated financial information
of the Company (i) for the six months ended June 30, 1997 and 1996, which has
been derived from the unaudited quarterly consolidated financial statements of
the Company for the six months ended June 30, 1997 and 1996, and (ii) for each
of the five fiscal years in the period ended December 31, 1996, which has been
derived from the annual consolidated financial statements of the Company audited
by Arthur Andersen LLP, independent public accountants. This table should be
read in conjunction with those statements, all of which have been previously
filed with the Commission. The financial information presented below for the six
months ended June 30, 1997 and 1996 reflects all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of the Company's
results. Operating results for the six months ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the entire year
ending December 31, 1997. The following table (other than in respect of balance
sheet data) does not include financial information concerning Fibreboard because
the Fibreboard Acquisition did not occur until the end of the quarter ended June
30, 1997. The following table is qualified in its entirety by, and should be
read in conjunction with, "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the consolidated financial information
and related notes of the Company included in the documents incorporated herein
by reference. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------ -------------------------------------------------------
1997 1996(a) 1996(b) 1995(c) 1994(d) 1993(e) 1992(f)
------ ------- ------- ------- ------- ------- -------
(IN MILLIONS OF DOLLARS, EXCEPT PER SHARE DATA AND WHERE NOTED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales................................ $1,892 $1,805 $3,832 $3,612 $3,351 $2,944 $2,878
Gross margin............................. 462 471 998 942 815 678 644
Income (loss) from operations............ 182 (690) (504) 412 226 236 213
Cost of borrowed funds................... 42 36 77 87 94 89 110
Net income (loss)........................ 105 (434) (284) 231 159 131 73
Net income (loss) per share (primary).... 1.96 (8.43) (5.50) 4.64 3.61 3.00 1.70
Net income (loss) per share (fully
diluted)............................... 1.87 (8.43) (5.50) 4.40 3.35 2.81 1.67
Weighted average number of shares
outstanding
(in thousands of shares) (primary)..... 53,619 51,512 51,722 49,711 44,209 43,593 43,013
CASH FLOW DATA:
Net cash flow from operations............ (319) (87) 335 285 233 253 192
Capital expenditures..................... 131 167 325 276 258 178 144
BALANCE SHEET DATA:
Total assets............................. 5,076(g) 3,980 3,913 3,261 3,274 3,013 3,162
Total debt............................... 2,033(g) 1,142 934 893 1,212 1,004 1,099
Stockholders' deficit.................... (353) (666) (484) (212) (680) (869) (1,008)
RATIO OF EARNINGS TO FIXED CHARGES(h)...... 3.02x -- -- 3.67 x 2.15 x 2.42 x 1.88 x
RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS(h)......... 3.02x -- -- 3.67 x 2.15 x 2.42 x 1.88 x
</TABLE>
- ---------------
(a) For the six months ended June 30, 1996, the net loss of $434 million, or
$8.43 per share, includes a net after-tax charge of $542 million for
asbestos litigation claims that may be received after 1999 and probable
additional insurance recovery; after-tax special charges totaling $27
million including valuation
6
<PAGE> 94
adjustments associated with prior divestitures, major product line
productivity initiatives and a contribution to the Owens-Corning Foundation;
and an after-tax gain of $27 million from the sale of the Company's
ownership interest in its former Japanese affiliate, Asahi Fiber Glass Co.
Ltd.
Pursuant to generally accepted accounting principles, common stock
equivalents and convertible securities have been excluded from the
calculations of earnings per share in 1996, due to their anti-dilutive
effect. Consequently, primary and fully diluted earnings per share are equal
for 1996.
(b) In 1996 the net loss of $284 million, or $5.50 per share, includes a net
after-tax charge of $542 million for asbestos litigation claims that may be
received after 1999 and probable additional insurance recovery; after-tax
special charges totaling $27 million including valuation adjustments
associated with prior divestitures, major product line productivity
initiatives and a contribution to the Owens-Corning Foundation; an after-tax
charge of $26 million for restructuring and other actions; a $27 million
reduction of tax reserves due to favorable legislation; and an after-tax
gain of $27 million from the sale of the Company's ownership interest in its
former Japanese affiliate, Asahi Fiber Glass Co. Ltd.
Pursuant to generally accepted accounting principles, common stock
equivalents and convertible securities have been excluded from the
calculations of earnings per share in 1996, due to their anti-dilutive
effect. Consequently, primary and fully diluted earnings per share are equal
for 1996.
(c) Net income for 1995 of $231 million, or $4.64 per share ($4.40 per share
fully diluted), included a one time gain of $8 million, which was the result
of a tax loss carryback.
(d) Net income for 1994 of $159 million, or $3.61 per share ($3.35 per share
fully diluted), included the following offsetting special items: an
after-tax gain of $123 million reflecting a change to the capital method of
accounting for the rebuilding of glass melting facilities; an after-tax
charge of $85 million for productivity initiatives and other actions; a
non-cash, after-tax charge of $10 million to reflect adoption of Statement
of Financial Accounting Standards ("SFAS") No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions" for the Company's non-U.S.
plans; and a non-cash, after-tax charge of $28 million to reflect adoption
of SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
(e) Net income for 1993 of $131 million, or $3.00 per share ($2.81 per share
fully diluted), included a credit of $26 million for the cumulative effect
of adopting the new accounting standard for income taxes; a one-time gain of
$14 million reflecting a tax benefit resulting from a revaluation of
deferred taxes necessitated by the new federal tax law; an $8 million
pre-tax charge for the writedown of the Company's hydrocarbon ventures; and
a $23 million charge for the restructuring of the Company's European
operations.
(f) Net income for 1992 was $73 million, or $1.70 per share ($1.67 per share
fully diluted), and included a pre-tax reorganization charge of $16 million.
(g) In the second quarter of 1997, the Company purchased Fibreboard Corporation,
a North American manufacturer of vinyl siding and accessories and
manufactured stone, for $657 million, including $138 million of debt
assumed. The purchase price, which is included in long-term debt as of June
30, 1997, was financed primarily through borrowings on the Company's new
long-term credit facility early in the third quarter of 1997. The purchase
price allocations were based on preliminary estimates of fair market value
and are subject to revision. The estimated fair value of assets acquired
from Fibreboard Corporation, including goodwill, was $923 million, and
liabilities assumed totaled $404 million (including the debt of $138
million).
(h) For purposes of the calculation of these ratios, earnings represent net
income before fixed charges, provision for taxes on income, undistributed
earnings of equity basis investments, extraordinary losses from early
retirement of debt and the cumulative effect of accounting changes. Fixed
charges include interest expense and the portion (one-third) of rental
expenses deemed to be representative of interest. Preferred stock dividends
represent only the distributions on the MIPS securities. The Company's
earnings for the six months ended June 30, 1996 and the year ended December
31, 1996 were insufficient to cover fixed charges by approximately $700
million and $600 million, respectively.
7
<PAGE> 95
DESCRIPTION OF DEBENTURES
The Debentures are to be issued in one or more series under an Indenture,
as supplemented or amended from time to time (as so supplemented or amended, the
"Indenture"), between the Company and Wilmington Trust Company, as trustee (the
"Debt Trustee"). This summary of certain terms and provisions of the Debentures
and the Indenture is not necessarily complete, and reference is hereby made to
the copy of the form of the Indenture which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the Trust
Indenture Act. Whenever particular defined terms of the Indenture are referred
to in this Section or in a Prospectus Supplement, such defined terms are
incorporated herein or therein by reference.
GENERAL
Unless otherwise specified in the applicable Prospectus Supplement, each
series of Debentures will be issued as senior unsecured debt under the Indenture
and will rank pari passu in right of payment with all of the Company's other
senior unsecured obligations, except that the Debentures will be subordinated
and junior in right of payment to the extent and in the manner set forth in the
Indenture to the Company's obligations under the Senior Indebtedness. See "--
Subordination." Except as otherwise provided in the applicable Prospectus
Supplement, the Indenture does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, whether under the Indenture, any other
indenture that the Company may enter into in the future or otherwise. See "--
Subordination" and the Prospectus Supplement relating to any offering of
Securities.
The Debentures will be issuable in one or more series pursuant to an
indenture supplemental to the Indenture or a resolution of the Company's Board
of Directors or a committee thereof.
The applicable Prospectus Supplement or Prospectus Supplements will
describe the following terms of the Debentures: (i) the title of the Debentures;
(ii) any limit upon the aggregate principal amount of the Debentures; (iii) the
date or dates on which the principal of the Debentures is payable or the method
of determination thereof; (iv) the rate or rates, if any, at which the
Debentures shall bear interest, the Interest Payment Dates on which any such
interest shall be payable, the right, if any, of the Company to defer or extend
an Interest Payment Date, and the Regular Record Date for any interest payable
on any Interest Payment Date or the method by which any of the foregoing shall
be determined; (v) the place or places where, subject to the terms of the
Indenture as described below under "-- Payment and Paying Agents," the principal
of and premium, if any, and interest, if any, on the Debentures will be payable
and where, subject to the terms of the Indenture as described below under "--
Denominations, Registration and Transfer," the Debentures may be presented for
registration of transfer or exchange and the place or places where notices and
demands to or upon the Company in respect of the Debentures and the Indenture
may be made ("Place of Payment"); (vi) any period or periods within, or date or
dates on which, the price or prices at which and the terms and conditions upon
which Debentures may be redeemed, in whole or in part, at the option of the
Company or a holder thereof; (vii) the obligation or the right, if any, of the
Company or a holder thereof to redeem, purchase or repay the Debentures and the
period or periods within which, the price or prices at which, the currency or
currencies (including currency unit or units) in which and the other terms and
conditions upon which the Debentures shall be redeemed, repaid or purchased, in
whole or in part, pursuant to such obligation; (viii) the denominations in which
any Debentures shall be issuable if other than denominations of $1,000 and any
integral multiple thereof; (ix) if other than in U.S. Dollars, the currency or
currencies (including currency unit or units) in which the principal of (and
premium, if any) and interest, if any, on the Debentures shall be payable, or in
which the Debentures shall be denominated; (x) any additions, modifications or
deletions in the Events of Default or covenants of the Company specified in the
Indenture with respect to the Debentures; (xi) if other than the principal
amount thereof, the portion of the principal amount of Debentures that shall be
payable upon declaration of acceleration of the maturity thereof; (xii) any
additions or changes to the Indenture with respect to a series of Debentures as
shall be necessary to permit or facilitate the issuance of such series in bearer
form, registrable or not registrable as to principal, and with or without
interest coupons; (xiii) any index or indices used to determine the amount of
payments of principal of and premium, if any, on the Debentures and the manner
in which such amounts will be determined; (xiv) the terms and conditions
8
<PAGE> 96
relating to the issuance of a temporary Global Security representing all of the
Debentures of such series and exchange of such temporary Global Security for
definitive Debentures of such series; (xv) subject to the terms described under
"-- Global Debentures," whether the Debentures of the series shall be issued in
whole or in part in the form of one or more Global Securities and, in such case,
the depositary for such Global Securities, which depositary shall be a clearing
agency registered under the Exchange Act; (xvi) the appointment of any paying
agent or agents; (xvii) the terms and conditions of any obligation or right of
the Company or a holder to convert or exchange Debentures into Preferred
Securities or other securities; (xviii) the relative degree, if any, to which
such Debentures of the series shall be senior to or be subordinated to other
series of such Debentures or other indebtedness of the Company in right of
payment, whether such other series of Debentures or other indebtedness are
outstanding or not; and (xix) any other terms of the Debentures not inconsistent
with the provisions of the Indenture.
Debentures may be sold at a substantial discount below their stated
principal amount, bearing no interest or interest at a rate which at the time of
issuance is below market rates. Certain material U.S. federal income tax
consequences and special considerations applicable to any such Debentures will
be described in the applicable Prospectus Supplement.
If the purchase price of any of the Debentures is payable in one or more
foreign currencies or currency units or if any Debentures are denominated in one
or more foreign currencies or currency units or if the principal of, premium, if
any, or interest, if any, on any Debentures is payable in one or more foreign
currencies or currency units, the restrictions, elections, certain material U.S.
federal income tax considerations, specific terms and other information with
respect to such issue of Debentures and such foreign currency or currency units
will be set forth in the applicable Prospectus Supplement.
If any index is used to determine the amount of payments of principal of,
premium, if any, or interest on any series of Debentures, certain material U.S.
federal income tax, accounting and other considerations applicable thereto will
be described in the applicable Prospectus Supplement.
DENOMINATIONS, REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable Prospectus Supplement, the
Debentures will be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. Debentures of any
series will be exchangeable for other Debentures of the same issue and series,
of any authorized denominations, of a like aggregate principal amount, of the
same Original Issue Date and Stated Maturity and bearing the same interest rate.
Debentures may be presented for exchange as provided above, and may be
presented for registration of transfer (with the form of transfer endorsed
thereon, or a satisfactory written instrument of transfer, duly executed), at
the office of the appropriate Securities Registrar or at the office of any
transfer agent designated by the Company for such purpose with respect to any
series of Debentures and referred to in the applicable Prospectus Supplement,
without service charge and upon payment of any taxes and other governmental
charges as described in the Indenture. The Company will appoint the Debt Trustee
as Securities Registrar under the Indenture. If the applicable Prospectus
Supplement refers to any transfer agents (in addition to the Securities
Registrar) initially designated by the Company with respect to any series of
Debentures, the Company may at any time rescind the designation of any such
transfer agent or approve a change in the location through which any such
transfer agent acts, provided that the Company maintains a transfer agent in
each Place of Payment for such series. The Company may at any time designate
additional transfer agents with respect to any series of Debentures.
In the event of any redemption, neither the Company nor the Debt Trustee
shall be required to (i) issue, register the transfer of or exchange Debentures
of any series during a period beginning at the opening of business 15 days
before the day of selection for redemption of Debentures of that series and
ending at the close of business on the day of mailing of the relevant notice of
redemption or (ii) transfer or exchange any Debentures so selected for
redemption, except, in the case of any Debentures being redeemed in part, any
portion thereof not to be redeemed.
9
<PAGE> 97
GLOBAL DEBENTURES
The Debentures of a series may be issued in whole or in part in the form of
one or more Global Debentures that will be deposited with, or on behalf of, a
depositary identified in the Prospectus Supplement relating to such series.
Global Debentures may be issued only in fully registered form and in either
temporary or permanent form. Unless and until it is exchanged in whole or in
part for the individual Debentures represented thereby, a Global Debenture may
not be transferred except as a whole by the depositary for such Global Debenture
to a nominee of such depositary or by a nominee of such depositary to such
depositary or another nominee of such depositary or by the depositary or any
nominee to a successor depositary or any nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Debentures will be described in the Prospectus Supplement relating to such
series. The Company anticipates that the following provisions will generally
apply to depositary arrangements.
Upon the issuance of a Global Debenture, and the deposit of such Global
Debenture with or on behalf of the applicable depositary, the depositary for
such Global Debenture or its nominee will credit on its book-entry registration
and transfer system, the respective principal amounts of the individual
Debentures represented by such Global Debenture to the accounts of persons that
have accounts with such depositary ("Participants"). Such accounts shall be
designated by the dealers, underwriters or agents with respect to such
Debentures or by the Company if such Debentures are offered and sold directly by
the Company. Ownership of beneficial interests in a Global Debenture will be
limited to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Debenture will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the applicable depositary or its nominee (with respect to interests of
Participants) and the records of Participants (with respect to interests of
persons who hold through Participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Debenture.
So long as the depositary for a Global Debenture, or its nominee, is the
registered owner of such Global Debenture, such depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Debentures
represented by such Global Debenture for all purposes under the Indenture.
Except as provided below, owners of beneficial interests in a Global Debenture
will not be entitled to have any of the individual Debentures of the series
represented by such Global Debenture registered in their names, will not receive
or be entitled to receive physical delivery of any such Debentures of such
series in definitive form and will not be considered the owners or holders
thereof under the Indenture.
Payments of principal of (and premium, if any) and interest on individual
Debentures represented by a Global Debenture registered in the name of a
depositary or its nominee will be made to such depositary or its nominee, as the
case may be, as the registered owner of the Global Debenture representing such
Debentures. None of the Company, the Debt Trustee, any paying agent, or the
Securities Registrar for such Debentures will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interest of the Global Debenture for such Debentures or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that the depositary for a series of Debentures or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Debenture representing any of such Debentures,
immediately will credit Participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
such Global Debenture for such Debentures as shown on the records of such
depositary or its nominee. The Company also expects that payments by
Participants to owners of beneficial interests in such Global Debenture held
through such Participants will be governed by standing instructions and
customary practices, as is now the case with securities held for the accounts of
customers in bearer form or registered in "street name." Such payments will be
the responsibility of such Participants.
10
<PAGE> 98
Unless otherwise specified in the applicable Prospectus Supplement, if the
depositary for a series of Debentures is at any time unwilling, unable or
ineligible to continue as depositary and a successor depositary is not appointed
by the Company within 90 days, the Company will issue individual Debentures of
such series in exchange for the Global Debenture representing such series of
Debentures. In addition, unless otherwise specified in the applicable Prospectus
Supplement, the Company may at any time and in its sole discretion, subject to
any limitations described in the Prospectus Supplement relating to such
Debentures, determine not to have any Debentures of such series represented by
one or more Global Debentures and, in such event, will issue individual
Debentures of such series in exchange for such Global Debentures. Further, if
the Company so specifies with respect to the Debentures of a series, an owner of
a beneficial interest in a Global Debenture representing Debentures of such
series may, on terms acceptable to the Company, the Debt Trustee and the
depositary for such Global Debenture, receive individual Debentures of such
series in exchange for such beneficial interests, subject to any limitations
described in the Prospectus Supplement relating to such Debentures. In any such
instance, an owner of a beneficial interest in a Global Debenture will be
entitled to physical delivery of individual Debentures of the series represented
by such Global Debenture equal in principal amount to such beneficial interest
and to have such Debentures registered in its name. Individual Debentures of
such series so issued will be issued in denominations, unless otherwise
specified by the Company, of $1,000 and integral multiples thereof. The
applicable Prospectus Supplement may specify other circumstances under which
individual Debentures may be issued in exchange for the Global Debenture
representing any Debentures.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of principal of (and premium, if any) and any interest on Debentures will be
made at the office of the Debt Trustee in Wilmington, Delaware or at the office
of such paying agent or paying agents as the Company may designate from time to
time in the applicable Prospectus Supplement, except that at the option of the
Company payment of any interest may be made (i) except in the case of Global
Debentures, by check mailed to the address of the person or entity entitled
thereto as such address shall appear in the Securities Register or (ii) by
transfer to an account maintained by the person or entity entitled thereto as
specified in the Securities Register, provided that proper transfer instructions
have been received by the Regular Record Date. Unless otherwise indicated in the
applicable Prospectus Supplement, payment of any interest on Debentures will be
made to the person or entity in whose name such Debenture is registered at the
close of business on the Regular Record Date for such interest, except in the
case of Defaulted Interest. The Company may at any time designate additional
paying agents or rescind the designation of any paying agent; however, the
Company will at all times be required to maintain a paying agent in each Place
of Payment for each series of Debentures.
Any moneys deposited with the Debt Trustee or any paying agent, or held by
the Company in trust, for the payment of the principal of (and premium, if any)
or interest on any Debenture and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall, at
the request of the Company, be repaid to the Company or released from such
trust, as applicable, and the holder of such Debenture shall thereafter look, as
a general unsecured creditor, only to the Company for payment thereof.
REDEMPTION
Unless otherwise indicated in the applicable Prospectus Supplement,
Debentures will not be subject to any sinking fund.
Unless otherwise indicated in the applicable Prospectus Supplement, the
Company may, at its option, redeem the Debentures of any series in whole at any
time or in part from time to time, at the redemption price set forth in the
applicable Prospectus Supplement plus accrued and unpaid interest to the date
fixed for redemption, and Debentures in denominations larger than $50 may be
redeemed in part but only in integral multiples of $50. If the Debentures of any
series are so redeemable only on or after a specified date or upon the
satisfaction of additional conditions, the applicable Prospectus Supplement will
specify such date or describe such conditions.
11
<PAGE> 99
Except as otherwise specified in the applicable Prospectus Supplement, if a
Special Event (as defined in "Description of Preferred
Securities -- Redemption -- Special Event Redemption" below or in the applicable
Prospectus Supplement) in respect of the Trust shall occur and be continuing,
the Company may, at its option, redeem such series of Debentures, in whole (but
not in part), at a redemption price equal to the amount described in the
applicable Prospectus Supplement. See "Description of Preferred Securities --
Redemption -- Special Event Redemption."
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Debentures to be redeemed
at such holder's registered address. Unless the Company defaults in the payment
of the redemption price, on and after the redemption date interest shall cease
to accrue on such Debentures or portions thereof called for redemption.
ADDITIONAL INTEREST
If at any time the Trust shall be required to pay any taxes, duties,
assessments or governmental charges of whatever nature (other than withholding
taxes) imposed by the United States, or any other taxing authority, then, in any
such case, the Company will pay as additional interest ("Additional Interest")
on the Debentures such additional amounts as shall be required so that the net
amounts received and retained by the Trust after paying any such taxes, duties,
assessments or other governmental charges will be not less than the amounts the
Trust would have received had no such taxes, duties, assessments or other
governmental charges been imposed.
OPTION TO DEFER INTEREST PAYMENTS
If provided in the applicable Prospectus Supplement, the Company shall have
the right at any time and from time to time during the term of any series of
Debentures to defer the payment of interest for such number of consecutive
interest payment periods as may be specified in the applicable Prospectus
Supplement (each, an "Extension Period"), subject to the terms, conditions and
covenants, if any, specified in such Prospectus Supplement, provided that such
Extension Period may not extend beyond the Stated Maturity of the Debentures.
Certain material U.S. federal income tax consequences and special considerations
applicable to any such Debentures will be described in the applicable Prospectus
Supplement.
At the end of such Extension Period, the Company shall pay all interest
then accrued and unpaid (including any Additional Interest, as herein defined)
together with interest thereon compounded semi-annually at the rate specified
for the Debentures to the extent permitted by applicable law ("Compound
Interest"); provided, that during any such Extension Period, (a) the Company
shall not declare or pay dividends on, make any distribution with respect to, or
redeem, purchase, acquire or make a liquidation payment with respect to, any of
its capital stock (other than (i) purchases or acquisitions of capital stock of
the Company in connection with the satisfaction by the Company of its
obligations under any employee benefit plans or the satisfaction by the Company
of its obligations pursuant to any contract or security outstanding on the date
of such event requiring the Company to purchase capital stock of the Company,
(ii) as a result of a reclassification of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) dividends or distributions in capital stock of the
Company and (v) redemptions or purchases of any rights pursuant to the Rights
Agreement, dated as of December 12, 1996 (as amended from time to time, the
"Rights Agreement"), between the Company and The Chase Manhattan Bank, as Rights
Agent, or any successor to the Rights Agreement, and the declaration thereunder
of a dividend of rights in the future, (b) the Company shall not make any
payment of interest, principal or premium, if any, on or repay, repurchase or
redeem any debt securities issued by the Company that rank pari passu with or
junior to the Debentures, and (c) the Company shall not make any guarantee
payments with respect to the foregoing (other than payments pursuant to the
Guarantee or the Common Securities Guarantee). Prior to the termination of any
such Extension Period, the Company may further defer payments of interest by
extending the interest payment period; provided, however, that, such Extension
Period, including all such previous and further extensions, may not extend
beyond the
12
<PAGE> 100
maturity of the Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Company may commence a new Extension
Period, subject to the terms set forth in this section. No interest during an
Extension Period, except at the end thereof, shall be due and payable, but the
Company may prepay at any time all or any portion of the interest accrued during
an Extension Period. The Company has no present intention of exercising its
right to defer payments of interest by extending the interest payment period on
the Debentures. If the Institutional Trustee shall be the sole holder of the
Debentures, the Company shall give the Regular Trustees and the Institutional
Trustee notice of its selection of such Extension Period one Business Day prior
to the earlier of (i) the date distributions on the Preferred Securities are
payable or (ii) the date the Regular Trustees are required to give notice to the
New York Stock Exchange (or other applicable self-regulatory organization) or to
holders of the Preferred Securities of the record or payment date of such
distribution. The Regular Trustees shall give notice of the Company's selection
of such Extension Period to the holders of the Preferred Securities. If the
Institutional Trustee shall not be the sole holder of the Debentures, the
Company shall give the holders of the Debentures notice of its selection of such
Extension Period ten Business Days prior to the earlier of (i) the Interest
Payment Date or (ii) the date upon which the Company is required to give notice
to the New York Stock Exchange (or other applicable self-regulatory
organization) or to holders of the Debentures of the record or payment date of
such related interest payment.
MODIFICATION OF INDENTURE
From time to time, the Indenture may be modified by the Company and the
Debt Trustee without the consent of any holders of the Debentures with respect
to certain matters, including (i) to cure any ambiguity, defect or inconsistency
or to correct or supplement any provision which may be inconsistent with any
other provision of the Indenture, (ii) to qualify, or maintain the qualification
of, the Indenture under the Trust Indenture Act and (iii) to make any change
that does not materially adversely affect the interests of any holder of
Debentures. In addition, under the Indenture, certain rights and obligations of
the Company and the rights of holders of the Debentures may be modified by the
Company and the Debt Trustee with the written consent of the holders of at least
a majority in aggregate principal amount of the outstanding Debentures; but no
extension of the maturity of Debentures, reduction in the interest rate or
extension of the time for payment of interest, change in the optional redemption
or repurchase provisions in a manner adverse to any holder of Debentures, other
modification in the terms of payment of the principal of, or interest on, the
Debentures, or reduction of the percentage required for modification, will be
effective against any holder of any outstanding Debentures without the holder's
consent.
In addition, the Company and the Debt Trustee may execute, without the
consent of any holder of Debentures, any supplemental Indenture for the purpose
of creating any new series of Debentures.
INDENTURE EVENTS OF DEFAULT
The Indenture provides that any one or more of the following described
events with respect to a series of Debentures that has occurred and is
continuing constitutes an "Indenture Event of Default" with respect to such
series of Debentures:
(i) failure for 30 days to pay any interest on such series of the
Debentures when due (subject to the deferral of any due date in the case of
an Extension Period); or
(ii) failure to pay any principal or premium, if any, on such series
of Debentures when due whether at maturity, upon redemption, by declaration
or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Indenture for 90 days after written notice
has been given to the Company from the Debt Trustee or the holders of at
least 25% in principal amount of such series of outstanding Debentures; or
(iv) certain events in bankruptcy, insolvency or reorganization of the
Company.
The holders of a majority in outstanding principal amount of such series of
Debentures have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Debt Trustee. The Debt Trustee or the
holders of not less than 25% in aggregate outstanding principal amount of such
series
13
<PAGE> 101
of Debentures may declare the principal due and payable immediately upon an
Indenture Event of Default. The holders of a majority in aggregate outstanding
principal amount of such series of Debentures may annul such declaration and
waive the default if the default (other than the non-payment of the principal of
such series of Debentures which has become due solely by such acceleration) has
been cured and a sum sufficient to pay all matured installments of interest and
principal due otherwise than by acceleration has been deposited with the Debt
Trustee.
The holders of a majority in outstanding principal amount of the Debentures
affected thereby may, on behalf of the holders of all the Debentures, waive any
past default, except a default in the payment of principal or interest (unless
such default has been cured and a sum sufficient to pay all matured installments
of interest and principal due otherwise than by acceleration has been deposited
with the Debt Trustee) or a default in respect of a covenant or provision which
under the Indenture cannot be modified or amended without the consent of the
holder of each outstanding Debenture. The Company is required to file annually
with the Debt Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Indenture.
In case an Indenture Event of Default shall occur and be continuing as to a
series of Debentures, all of which are held by the Trust, the Institutional
Trustee will have the right to declare the principal of and the interest on such
Debentures, and any other amounts payable under the Indenture, to be forthwith
due and payable and to enforce its other rights as a creditor with respect to
such Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an Indenture Event of Default with respect to the Debentures has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on the Debentures on the date such interest
or principal is otherwise payable, a holder of the Preferred Securities may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of the principal of or interest on such Debentures having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such holder (a "Direct Action"). The Company may not amend the
Indenture to remove the foregoing right to bring a Direct Action without the
prior written consent of the holders of all of the Preferred Securities. If the
right to bring a Direct Action is removed, the Trust may become subject to the
reporting obligations under the Exchange Act. [Unless otherwise specified in the
applicable Prospectus Supplement, the Company shall have the right under the
Indenture to set-off any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action.] The holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures unless there shall have been an Event of Default
under the Declaration. See "Description of Preferred Securities--Events of
Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or merge
into any other person or entity or sell, assign, convey, transfer or lease its
properties and assets substantially as an entirety to any person or entity
unless (i) either the Company is the continuing corporation, or any successor or
purchaser is a corporation, partnership, or trust or other entity organized
under the laws of the United States of America, any State thereof or the
District of Columbia, and any such successor or purchaser expressly assumes the
Company's obligations on the Debentures under a supplemental indenture; and (ii)
immediately after giving effect thereto, no Indenture Event of Default, and no
event which, after notice or lapse of time or both, would become an Indenture
Event of Default, shall have happened and be continuing.
The general provisions of the Indenture do not afford holders of the
Debentures protection in the event of a highly leveraged or other transaction
involving the Company that may adversely affect holders of the Debentures.
14
<PAGE> 102
SATISFACTION AND DISCHARGE; DEFEASANCE
The Indenture provides that when, among other things, all Debentures not
previously delivered to the Debt Trustee for cancellation (i) have become due
and payable or (ii) will become due and payable at their Stated Maturity within
one year, and the Company deposits or causes to be deposited with the Debt
Trustee, as trust funds in trust for the purpose, an amount in the currency or
currencies in which the Debentures are payable sufficient to pay and discharge
the entire indebtedness on the Debentures not previously delivered to the Debt
Trustee for cancellation, for the principal (and premium, if any) and interest
to the date of the deposit or to the Stated Maturity, as the case may be, then
the Indenture will cease to be of further effect (except as to the Company's
obligations to pay all other sums due pursuant to the Indenture and to provide
the officers' certificates and opinions of counsel described therein), and the
Company will be deemed to have satisfied and discharged the Indenture. The
Company will also have the right to defease the Debentures if and to the extent
indicated in the applicable Prospectus Supplement.
CONVERSION OR EXCHANGE
If and to the extent indicated in the applicable Prospectus Supplement, the
Debentures of any series may be convertible or exchangeable into Preferred
Securities or other securities. The specific terms on which Debentures of any
series may be so converted or exchanged will be set forth in the applicable
Prospectus Supplement. Such terms may include provisions for conversion or
exchange, either mandatory, at the option of the holder, or at the option of the
Company, in which case the number of shares of Preferred Securities or other
securities to be received by the holders of Debentures would be calculated as of
a time and in the manner stated in the applicable Prospectus Supplement.
SUBORDINATION
In the Indenture, the Company has covenanted and agreed that any Debentures
issued thereunder will be subordinate and junior in right of payment to the
Senior Indebtedness to the extent provided in the Indenture. In the event of any
dissolution, winding-up, liquidation or reorganization of the Company (whether
voluntary or involuntary and whether in bankruptcy, insolvency or receivership
proceedings, or upon an assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of the Company or otherwise), the
Senior Indebtedness will first be paid in full before any payment or
distribution may be made in respect of the principal of (and premium, if any) or
interest, if any, on the Debentures.
The Company may not make any payment with respect to the Debentures if and
for so long as (i) the Senior Indebtedness is or becomes due and payable
(whether at maturity, for an installment of principal or interest, upon
acceleration, for mandatory prepayment, or otherwise) and remains unpaid; (ii)
any Senior Indebtedness Default (as defined below) has occurred and has not been
cured or waived in conformity with the terms of the instrument, indenture or
agreement governing the Senior Indebtedness; or (iii) a payment by the Company
with respect to the Debentures would, immediately after giving effect thereto,
result in a Senior Indebtedness Default.
A payment with respect to the Debentures shall include, without limitation,
payment of principal of, premium, if any, and interest on the Debentures, the
purchase of Debentures by the Company and any other payment other than a payment
in stock or any equity securities.
"Senior Indebtedness Default" means the failure to make any payment of the
Senior Indebtedness when due or the happening of an event of default with
respect to the Senior Indebtedness, as defined therein or in the instrument
under which the same is outstanding, which, by its terms, if occurring prior to
the stated maturity of the Senior Indebtedness, permits or with the giving of
notice or lapse of time (or both) would permit any holder thereof, any group of
such holders or any trustee or representative for such holders thereupon to
accelerate the maturity thereof or which results in such acceleration.
"Senior Indebtedness" means all obligations of the Company to pay rent
under the lease, dated as of December 1, 1977, between the Ohio Water
Development Authority, as Lessor, and the Company, as Lessee. Senior
Indebtedness shall continue to constitute Senior Indebtedness for all purposes
of the Debentures, and
15
<PAGE> 103
certain provisions of the Indenture shall continue to apply to the Senior
Indebtedness, notwithstanding the fact that the Senior Indebtedness or any claim
in respect thereof shall be disallowed, avoided or subordinated pursuant to the
provisions of the Bankruptcy Code or other applicable law.
The Indenture provides that the foregoing subordination provisions, insofar
as they relate to any particular issue of Debentures, may be changed prior to
such issuance. Any such change would be described in the Prospectus Supplement
relating to such Debentures.
GOVERNING LAW
The Indenture and the Debentures will be governed by and construed in
accordance with the laws of the State of New York.
MISCELLANEOUS
The Company will pay all fees and expenses related to (i) the offering of
the Trust Securities and the Debentures, (ii) the organization, maintenance and
dissolution of the Trust, (iii) the retention of the Owens Corning Trustees and
(iv) the enforcement by the Institutional Trustee of the rights of the holders
of the Preferred Securities.
INFORMATION CONCERNING THE DEBT TRUSTEE
The Debt Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debt Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Debt Trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the Debt Trustee reasonably believes that repayment or adequate indemnity is not
reasonably assured to it.
Wilmington Trust Company, the Debt Trustee, is also Institutional Trustee
and Delaware Trustee under the Declaration and Guarantee Trustee under the
Guarantee. The Company maintains trust and other business relationships in the
ordinary course of business with Wilmington Trust Company. Pursuant to the
provisions of the Trust Indenture Act, upon the occurrence of certain events,
Wilmington Trust Company may be deemed to have a conflicting interest, by virtue
of its acting as the Institutional Trustee, the Delaware Trustee, the Debt
Trustee and the Guarantee Trustee, and its other business relationships with the
Company, and thereby may be required to resign and be replaced by a successor
trustee under the Indenture, the Declaration and the Guarantee.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Declaration, the Owens Corning Trustees on
behalf of the Trust will issue the Preferred Securities and the Common
Securities. The Preferred Securities will represent preferred undivided
beneficial interests in the assets of the Trust and the holders thereof will be
entitled to a preference in certain circumstances with respect to Distributions
and amounts payable on redemption or liquidation over the Common Securities, as
well as other benefits as described in the Declaration. This summary of certain
provisions of the Preferred Securities and the Declaration is not necessarily
complete, and reference is hereby made to the copy of the Declaration, including
the definitions therein of certain terms, which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the Trust
Indenture Act. Wherever particular defined terms of the Declaration are referred
to in this Section or in a Prospectus Supplement, such defined terms are
incorporated herein by reference. The form of Declaration has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
16
<PAGE> 104
GENERAL
The Preferred Securities of the Trust will rank pari passu, and payments
will be made thereon pro rata, with the Common Securities of the Trust except as
described under "-- Subordination of Common Securities." Legal title to the
Debentures will be held by the Institutional Trustee in trust for the benefit of
the holders of the Preferred Securities and Common Securities. The Guarantee
Agreement executed by the Company for the benefit of the holders of the Trust's
Preferred Securities (the "Guarantee") will be a guarantee on a subordinated
basis with respect to the Preferred Securities but will not guarantee payment of
Distributions or amounts payable on redemption or liquidation of the Preferred
Securities when the Trust does not have funds on hand available to make such
payments. See "Description of the Guarantee."
DISTRIBUTIONS
The Trust's Preferred Securities represent preferred undivided beneficial
interests in the assets of the Trust, and the Distributions on each Preferred
Security will be payable at a rate specified in the Prospectus Supplement for
the Preferred Securities. The amount of Distributions payable for any period
will be computed on the basis of a 360-day year of twelve 30-day months unless
otherwise specified in the applicable Prospectus Supplement. Distributions that
are in arrears will accumulate additional Distributions thereon at the rate per
annum if and as specified in the applicable Prospectus Supplement ("Additional
Amounts"). The term "Distributions" as used herein includes any Additional
Amounts unless otherwise stated.
Distributions on the Preferred Securities will be cumulative, will
accumulate from the date of original issuance and will be payable on such dates
as specified in the applicable Prospectus Supplement. In the event that any date
on which Distributions are payable on the Preferred Securities is not a Business
Day (as defined below), payment of the Distribution payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, payment of such Distribution shall be
made on the immediately preceding Business Day, in each case with the same force
and effect as if made on such date (each date on which Distributions are payable
in accordance with the foregoing, a "Distribution Date"). A "Business Day" shall
mean any day other than a Saturday or a Sunday, or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to remain closed or a day on which the corporate trust office of
the Institutional Trustee or the Debt Trustee is closed for business.
If provided in the applicable Prospectus Supplement, the Company has the
right under the Indenture to defer payments of interest on the Debentures by
extending the interest payment period thereon from time to time for a period or
periods that will be specified in the applicable Prospectus Supplement. Such
extension right, if exercised, would result in the deferral of Distributions on
the Preferred Securities (though such Distributions would continue to accumulate
additional Distribution thereon at the rate per annum if and as specified in the
applicable Prospectus Supplement) during any such extended interest payment
period. Such right to extend the interest payment period for the Debentures is
limited to a period not extending beyond the stated Maturity of the Debentures.
In the event that the Company exercises this right, then (a) the Company shall
not declare or pay dividends on, make distributions with respect to, or redeem,
purchase or acquire, or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its obligations
under any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase capital stock of the Company, (ii) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one class or a series of the Company's capital stock for another
class or a series of the Company's capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) dividends or distributions in capital stock of the
Company and (v) redemptions or purchases of any rights pursuant to the Rights
Agreement, and the declaration thereunder of a dividend of rights in the
future), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank pari passu with or junior to the Debentures, and (c) the
Company shall not make any guarantee payments with respect to the foregoing
(other than payments pursuant
17
<PAGE> 105
to the Guarantee or the Common Securities Guarantee (as defined herein)). Prior
to the termination of any such Extension Period, the Company may further extend
the interest payment period; provided, that such Extension Period, together with
all such previous and further extensions thereof, may not extend beyond the
stated Maturity of the Debentures. Upon the termination of any Extension Period
and the payment of all amounts then due, the Company may select a new Extension
Period, subject to the above requirements. See "Description of the
Debentures -- Option to Defer Interest Payments." If Distributions are deferred,
the deferred Distributions and accumulated additional Distributions thereon
shall be paid to holders of record of the Preferred Securities as they appear on
the books and records of the Trust on the record date next following the
termination of such deferral period.
It is anticipated that the revenue of the Trust available for distribution
to holders of its Preferred Securities will be limited to payments under the
Debentures in which the Trust will invest the proceeds from the issuance and
sale of the Preferred Securities and the Common Securities. See "Description of
Debentures -- Debentures." If the Company does not make interest payments on
such Debentures, the Institutional Trustee will not have funds available to pay
Distributions on the Preferred Securities. The payment of Distributions (if and
to the extent the Trust has funds legally available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by the
Company on a limited basis as set forth herein under "Description of the
Guarantee."
Distributions on the Preferred Securities will be payable to the holders
thereof as they appear on the register of the Trust on the relevant record
dates, which, as long as the Preferred Securities remain in book-entry form,
will be one Business Day prior to the relevant Distribution Date. Subject to any
applicable laws and regulations and the provisions of the Declaration, unless
otherwise specified in the applicable Prospectus Supplement, each such payment
will be made as described under "Book-Entry Issuance." In the event any
Preferred Securities are not in book-entry form, the relevant record date for
such Preferred Securities shall be the date, at least 15 days prior to the
relevant Distribution Date, that is specified in the applicable Prospectus
Supplement.
REDEMPTION
Mandatory Redemption
Unless otherwise specified in the applicable Prospectus Supplement, upon
any repayment or redemption, in whole or in part, of any Debentures that are
held by the Trust unless otherwise specified in the applicable Prospectus
Supplement, whether at maturity or upon earlier redemption as provided in the
Indenture, the proceeds from such repayment or redemption shall be applied by
the Institutional Trustee to redeem a Like Amount (as defined below) of the
related Trust Securities, upon not less than 30 nor more than 60 days notice, at
a redemption price (the "Redemption Price") equal to the aggregate liquidation
amount of such Trust Securities plus accumulated and unpaid Distributions
thereon to the date of redemption (the "Redemption Date") and the related amount
of the premium, if any, paid by the Company upon the concurrent redemption of
such Debentures. See "Description of Debentures -- Optional Redemption." If less
than all of any series of Debentures that are held by the Trust are to be repaid
or redeemed on a Redemption Date, then the proceeds from such repayment or
redemption shall be allocated to the redemption pro rata of the Preferred
Securities and the Common Securities. The amount of premium, if any, paid by the
Company upon the redemption of all or any part of any Debentures held by the
Trust shall be allocated pro rata to the Preferred Securities and the Common
Securities.
Distribution of Debentures
Unless otherwise specified in the applicable Prospectus Supplement, the
Company will have the right at any time to dissolve the Trust and, after
satisfaction of the liabilities of creditors of the Trust as provided by
applicable law, to cause the Debentures in respect of the Trust Securities
issued by the Trust to be distributed to the holders of the Trust Securities in
liquidation of the Trust.
After the liquidation date fixed for any distribution of Debentures held by
the Trust, (i) the Preferred Securities will no longer be deemed to be
outstanding, (ii) the depositary (if any) for the Preferred Securities,
18
<PAGE> 106
as the record holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Debentures to be delivered
upon such distribution and (iii) any certificates representing such Preferred
Securities not held by or on behalf of such depositary will be deemed to
represent the Debentures having a principal amount equal to the liquidation
amount of the Preferred Securities, and bearing accrued and unpaid interest in
an amount equal to the accrued and unpaid Distributions on the Preferred
Securities, until such certificates are presented to the Regular Trustees or
their agent for transfer or reissuance.
There can be no assurance as to the market prices for the Preferred
Securities or the Debentures that may be distributed in exchange for Preferred
Securities if a dissolution or liquidation of the Trust were to occur.
Accordingly, the Preferred Securities that an investor may purchase, or the
Debentures that the investor may receive on dissolution or liquidation of the
Trust, may trade at a discount to the price that the investor paid to purchase
the Preferred Securities offered hereby.
Special Event Redemption
If a Tax Event or an Investment Company Event (each as defined below or in
the applicable Prospectus Supplement, a "Special Event") shall occur and be
continuing, unless otherwise specified in the applicable Prospectus Supplement,
the Company will have the right to redeem the Debentures in whole (but not in
part) and therefore cause a mandatory redemption of the Trust Securities in
whole (but not in part) at the Redemption Price within 90 days following the
occurrence of such Special Event.
If provided in the applicable Prospectus Supplement, the Company shall have
the right to extend or shorten the maturity of any series of Debentures held by
the Trust at the time that the Company exercises its right to elect to dissolve
the related Trust and, after satisfaction of the liability to creditors of the
Trust as provided by applicable law, cause such Debentures to be distributed to
the holders of the Preferred Securities and Common Securities of the Trust in
liquidation of the Trust, provided that it can extend the maturity only if
certain conditions specified in the applicable Prospectus Supplement are met at
the time such election is made and at the time of such extension.
"Tax Event" means the receipt by the Trust of an opinion of counsel
experienced in such matters to the effect that, as a result of (i) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, (ii) any amendment to or
change in an interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory authority or (iii)
any interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the generally accepted position on
the date the Preferred Securities are issued, which amendment or change is
effective or which interpretation or pronouncement is announced on or after the
date of issuance of the Preferred Securities under the Declaration, there is
more than an insubstantial risk that (x) the Trust is, or will be within 90 days
of the date thereof, subject to U.S. federal income tax with respect to income
received or accrued on the Debentures, (y) interest payable by the Company on
the Debentures is not, or within 90 days of the date thereof, will not be,
deductible, in whole or in part, for U.S. federal income tax purposes, or (z)
the Trust is, or will be within 90 days of the date thereof, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
"Investment Company Event" means the occurrence of a change in law or
regulation or a change in interpretation or application of law or regulation by
any legislative body, court, governmental agency or regulatory authority (a
"Change in 1940 Act Law") to the effect that the Trust is or will be considered
an "investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which Change in
1940 Act Law becomes effective on or after the date of original issuance of the
Preferred Securities.
"Like Amount" means (i) with respect to a redemption of any Trust
Securities, Trust Securities having a liquidation amount equal to that portion
of the principal amount of Debentures to be contemporaneously redeemed in
accordance with the Indenture, allocated to the Common Securities and to the
Preferred Securities based upon the relative liquidation amounts of such classes
of Trust Securities, and the proceeds of which will be used to pay the
Redemption Price of such Trust Securities, and (ii) with respect to a
distribution
19
<PAGE> 107
of Debentures to holders of any Trust Securities in connection with a
dissolution or liquidation of Trust, Debentures having a principal amount equal
to the liquidation amount of the Trust Securities of the holder to whom such
Debentures are distributed.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Debentures. Redemptions of Preferred Securities shall be made
and the Redemption Price shall be payable on each Redemption Date only to the
extent that the Trust has funds on hand available for the payment of such
Redemption Price. See also "-- Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of the Preferred
Securities, then, on the Redemption Date, to the extent funds are available, the
Institutional Trustee will deposit irrevocably with the Depositary for the
Preferred Securities (if such Preferred Securities are issued in the form of one
or more Global Preferred Securities) funds sufficient to pay the applicable
Redemption Price and will give such Depository irrevocable instructions and
authority to pay the Redemption Price to the beneficial owners of the Preferred
Securities. See "-- Global Preferred Securities" and "Book-Entry Issuance." If
the Preferred Securities are not issued in the form of one or more Global
Preferred Securities, the Trust, to the extent funds are available, will
irrevocably deposit with the paying agent for the Preferred Securities funds
sufficient to pay the applicable Redemption Price and will give such paying
agent irrevocable instructions and authority to pay the Redemption Price to the
holders thereof upon surrender of their certificates evidencing the Preferred
Securities. Notwithstanding the foregoing, Distributions payable on or prior to
the Redemption Date for the Preferred Securities called for redemption shall be
payable to the holders of the Preferred Securities on the relevant record dates
for the related Distribution Dates. If notice of redemption shall have been
given and funds deposited as required, then upon the date of such deposit, all
rights of the holders of the Preferred Securities so called for redemption will
cease, except the right of the holders of the Preferred Securities to receive
the Redemption Price, but without interest on such Redemption Price, and the
Preferred Securities will cease to be outstanding. In the event that any date
fixed for redemption of Preferred Securities is not a Business Day, then payment
of the Redemption Price payable on such date will be made on the next succeeding
day which is a Business Day (and without any interest or other payment in
respect of any such delay), except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding Business
Day. In the event that payment of the Redemption Price in respect of Preferred
Securities called for redemption is improperly withheld or refused and not paid
either by the Trust or by the Company pursuant to the Guarantee as described
under "Description of the Guarantee", Distributions on such Preferred Securities
will continue to accumulate at the then applicable rate, from the Redemption
Date originally established by the Trust for the Preferred Securities to the
date such Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
Redemption Price.
Subject to applicable law (including, without limitation, U.S. federal
securities law), the Company or its subsidiaries may at any time and from time
to time purchase outstanding Preferred Securities by tender, in the open market
or by private agreement.
If less than all of the Preferred Securities and Common Securities issued
by the Trust are to be redeemed on a Redemption Date, then the aggregate
liquidation amount of such Preferred Securities and Common Securities to be
redeemed shall be allocated pro rata among the Preferred Securities and Common
Securities of such Trust based on the relative liquidation amounts of such
classes of Trust Securities. The particular Preferred Securities to be redeemed
shall be selected on a pro rata basis not more than 60 days prior to the
Redemption Date by the Institutional Trustee from the outstanding Preferred
Securities not previously called for redemption, by such method as the
Institutional Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions (equal to $50 or an integral multiple
of $50 in excess thereof) of the liquidation amount of Preferred Securities of a
denomination larger than $50. The Institutional Trustee shall promptly notify
the registrar in writing of the Preferred Securities selected for redemption
and, in the case of any Preferred Securities selected for partial redemption,
the liquidation amount thereof to be
20
<PAGE> 108
redeemed. For all purposes of each Declaration, unless the context otherwise
requires, all provisions relating to the redemption of Preferred Securities
shall relate, in the case of any Preferred Securities redeemed or to be redeemed
only in part, to the portion of the aggregate liquidation amount of Preferred
Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each holder of Preferred Securities to be
redeemed at its registered address. Unless the Company defaults in payment of
the Redemption Price on the Debentures, on and after the Redemption Date
interest will cease to accrue on the Debentures or portions thereof (and
Distributions will cease to accumulate on the Preferred Securities or portions
thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions (including Additional Amounts , if applicable) on,
and the Redemption Price of, the Trust's Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the liquidation
amount of the Preferred Securities and Common Securities; provided, however,
that if on any Distribution Date or Redemption Date an Indenture Event of
Default shall have occurred and be continuing, no payment of any Distribution
(including Additional Amounts, if applicable) on, or Redemption Price of, any of
the Trust's Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
(including Additional Amounts, if applicable) on all of the Trust's outstanding
Preferred Securities for all Distribution periods terminating on or prior
thereto, or in the case of payment of the Redemption Price the full amount of
such Redemption Price on all of the Trust's outstanding Preferred Securities
then called for redemption, shall have been made or provided for, and all funds
available to the Institutional Trustee shall first be applied to the payment in
full in cash of all Distributions (including Additional Amounts, if applicable)
on, or Redemption Price of, the Trust's Preferred Securities then due and
payable.
In the case of any Event of Default under a Declaration resulting from an
Indenture Event of Default, the Company as holder of the Trust's Common
Securities will be deemed to have waived any right to act with respect to any
such Event of Default under such Declaration until the effect of all such Events
of Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until any such Events of Default under the Declaration
have been so cured, waived or otherwise eliminated, the Institutional Trustee
shall act solely on behalf of the holders of the Preferred Securities and not on
behalf of the Company as holder of the Trust's Common Securities, and only the
holders of the Preferred Securities will have the right to direct the
Institutional Trustee to act on their behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Unless otherwise specified in the applicable Prospectus Supplement,
pursuant to the Declaration, the Trust shall dissolve (i) on , 2004,
the expiration of the term of the Trust, (ii) upon the bankruptcy of the
Company, (iii) upon the filing of a certificate of dissolution or its equivalent
with respect to the Company, after receipt by the Institutional Trustee of
written direction from the Company to dissolve the Trust or after obtaining the
consent of the holders of at least a majority in liquidation amount of the Trust
Securities affected thereby voting together as a single class to dissolve the
Trust, or the revocation of the charter of the Company and the expiration of 90
days after the date of revocation without a reinstatement thereof, (iv) upon the
distribution of Debentures, (v) upon the entry of a decree of a judicial
dissolution of the holder of the Common Securities, the Company or the Trust, or
(vi) upon the redemption of all the Trust Securities.
If an early dissolution occurs as described in clause (ii), (iii) or (v)
above, the Trust shall be liquidated by the Owens Corning Trustees as
expeditiously as the Owens Corning Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the holders of the applicable Trust Securities a
Like Amount of the Debentures that are then held by the Trust, unless such
distribution is determined by the Institutional Trustee not to be practical, in
which event such
21
<PAGE> 109
holders will be entitled to receive out of the assets of the Trust available for
distribution to holders, after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, an amount equal to, in the case of holders
of Preferred Securities, the aggregate of the liquidation amount plus accrued
and unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities shall be paid on a pro rata basis. The
holder(s) of the Trust's Common Securities will be entitled to receive
distributions upon any such liquidation pro rata with the holders of the
Preferred Securities, except that if an Indenture Event of Default has occurred
and is continuing, the Preferred Securities shall have a priority over the
Common Securities. If specified in the applicable Prospectus Supplement, a
supplemental Indenture may provide that if an early dissolution occurs as
described in clause (v) above, the Debentures that are then held by the Trust
may be subject to optional redemption in whole (but not in part).
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Declaration (an "Event of Default") with respect to the Preferred Securities
issued thereunder (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) the occurrence of an Indenture Event of Default under the
Indenture (see "Description of Debentures -- Indenture Events of Default");
or
(ii) default by the Institutional Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(iii) default by the Institutional Trustee in the payment of any
Redemption Price of any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect,
of any covenant or warranty of the Owens Corning Trustees in the
Declaration (other than a covenant or warranty a default in the performance
of which or the breach of which is dealt with in clause (ii) or (iii)
above), and continuation of such default or breach for a period of 90 days
after written notice has been given to the defaulting Owens Corning Trustee
or Trustees by the holders of at least 25% in aggregate liquidation amount
of the outstanding Preferred Securities, which notice shall specify such
default or breach and require it to be remedied and shall state that such
notice is a "Notice of Default" under the Declaration; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Institutional Trustee and the failure by the Company to
appoint a successor Institutional Trustee within 60 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Institutional Trustee, the Institutional Trustee shall
transmit notice of such Event of Default to the holders of the Preferred
Securities, the Regular Trustees and the Company, as Depositor, unless such
Event of Default shall have been cured or waived. The Company, as Depositor, and
the Regular Trustees are required to file annually with the Institutional
Trustee a certificate as to whether or not they are in compliance with all the
conditions and covenants applicable to them under the Declaration.
If an Indenture Event of Default has occurred and is continuing, the
Preferred Securities of the Trust shall have a preference over the Common
Securities of the Trust upon dissolution of the Trust as described above. See
"-- Liquidation Distribution Upon Dissolution." The existence of an Event of
Default does not entitle the holders of Preferred Securities to accelerate the
maturity thereof.
22
<PAGE> 110
REMOVAL OF OWENS CORNING TRUSTEES
Unless an Indenture Event of Default shall have occurred and be continuing,
any Owens Corning Trustee may be removed at any time by the holder of the Common
Securities. If an Indenture Event of Default with respect to any series of
Debentures has occurred and is continuing, the Institutional Trustee and the
Delaware Trustee may be removed at such time by the holders of a majority in
liquidation amount of the outstanding Preferred Securities of the Trust. In no
event will the holders of the Preferred Securities of the Trust have the right
to vote to appoint, remove or replace the Administrative Trustees, which voting
rights are vested exclusively in the Company as the holder of the Common
Securities of the Trust. No resignation or removal of an Owens Corning Trustee
and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
CO-TRUSTEES AND SEPARATE INSTITUTIONAL TRUSTEE
Unless an Event of Default with respect to the Preferred Securities of the
Trust shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust Property may at the time be located,
the Company, as the holder of the Common Securities of the Trust, and the
Regular Trustees shall have power to appoint one or more persons either to act
as a co-trustee, jointly with the Institutional Trustee, of all or any part of
such Trust Property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the applicable Declaration. In case an Indenture Event of Default
has occurred and is continuing, the Institutional Trustee alone shall have power
to make such appointment.
MERGER OR CONSOLIDATION OF TRUST TRUSTEES
Any entity into which the Institutional Trustee, the Delaware Trustee or
any Regular Trustee that is not a natural person may be merged or converted or
with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
entity succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under the Declarations,
provided such entity shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS OR AMALGAMATIONS
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety, to any corporation or other body, except as
described below. The Trust may, with the consent of the Regular Trustees and
without the consent of the holders of the Trust Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any State; provided, that (i) if the Trust is not the
survivor, such successor entity either (x) assumes all of the obligations of the
Trust under the Trust Securities or (y) substitutes for the Trust Securities
other securities having substantially the same terms as the Trust Securities
(the "Successor Securities"), so long as the Successor Securities rank the same
as the Trust Securities rank with respect to distributions and payments upon
liquidation, redemption and otherwise, (ii) the Company expressly acknowledges a
trustee of such successor entity possessing the same powers and duties as the
Institutional Trustee as the holder of the Debentures, (iii) the Preferred
Securities or any Successor Securities are listed, or any Successor Securities
will be listed upon notification of issuance, on any national securities
exchange or with another organization on which the Preferred Securities are then
listed or quoted, (iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor Securities) to
be downgraded by any nationally recognized statistical rating organization, (v)
such merger, consolidation, amalgamation or replacement does not adversely
affect the rights, preferences and privileges of the holders of the Trust
Securities (including any Successor Securities) in any material respect (other
than with respect to any dilution of the holders' interest in the new entity),
(vi) such successor entity has a purpose identical to that of the Trust, (vii)
prior to such merger, consolidation, amalgamation or replacement, the Company
has received an opinion of independent counsel to the Trust experienced in such
matters to the
23
<PAGE> 111
effect that, (A) such merger, consolidation, amalgamation or replacement does
not adversely affect the rights, preferences and privileges of the holders of
the Trust Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the holders' interest in the
new entity), (B) following such merger, consolidation, amalgamation or
replacement, neither the Trust nor such successor entity will be required to
register as an investment company under the 1940 Act and (C) following such
merger, consolidation, amalgamation or replacement, the Trust (or the successor
entity) will continue to be classified as a grantor trust for United States
federal income tax purposes and (viii) the Company guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Guarantee and the Common Securities Guarantee. Notwithstanding
the foregoing, the Trust shall not, except with the consent of holders of 100%
in liquidation amount of the Trust Securities, consolidate, amalgamate, merge
with or into, or be replaced by any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it, if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF DECLARATION
Except as provided below and under "Description of the
Guarantee -- Modification of the Guarantee; Assignment" and as otherwise
required by law and the Declaration, the holders of the Preferred Securities
will have no voting rights.
Subject to the requirement of the Institutional Trustee obtaining a tax
opinion in certain circumstances set forth in the last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee,
or direct the exercise of any trust or power conferred upon the Institutional
Trustee under the Declaration including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) exercise the remedies available
under the Indenture with respect to the Debentures, (ii) waive any past
Indenture Event of Default that is waivable under Section of the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable or (iv) consent to any amendment,
modification or termination of the Indenture or the Debentures where such
consent shall be required; provided, however, that, where a consent or action
under the Indenture would require the consent or act of holders of more than a
majority in principal amount of the Debentures (a "Super-Majority") affected
thereby, only the holders of at least such Super-Majority in aggregate
liquidation amount of the Preferred Securities may direct the Institutional
Trustee to give such consent or take such action. The Institutional Trustee
shall notify all holders of the Preferred Securities of any notice of default
received from the Debt Trustee with respect to the Debentures. Such notice shall
state that such Indenture Event of Default also constitutes an Event of Default.
Except with respect to directing the time, method and place of conducting a
proceeding for a remedy, the Institutional Trustee shall not take any of the
actions described in clause (i), (ii) or (iii) above unless the Institutional
Trustee has obtained an opinion of tax counsel experienced in such matters to
the effect that, as a result of such action, the Trust will not fail to be
classified as a grantor trust for United States federal income tax purposes.
In the event the consent of the Institutional Trustee, as a holder of the
Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the direction of the holders of the Trust Securities with respect to
such amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a majority in liquidation
amount of the Trust Securities voting together as a single class; provided,
however, that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at the
direction of the holders of at least the proportion in liquidation amount of the
Trust Securities which the relevant Super-Majority represents of the aggregate
principal amount of the Debentures outstanding. The Institutional Trustee shall
be under no obligation to take any such action in accordance with the directions
of the holders of the Trust Securities unless the Institutional Trustee has
obtained an opinion of tax counsel experienced in such matters to the effect
that for the purposes of United States federal income tax, the Trust will not be
classified as other than a grantor trust.
24
<PAGE> 112
A waiver of an Indenture Event of Default will constitute a waiver of the
corresponding Event of Default.
Any required approval or direction of holders of Preferred Securities may
be given at a separate meeting of holders of Preferred Securities convened for
such purpose, at a meeting of all of the holders of Trust Securities or pursuant
to written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents. No vote or consent
of the holders of Preferred Securities will be required for the Trust to redeem
and cancel Preferred Securities or distribute Debentures in accordance with the
Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned at such time by the Company or any entity directly or
indirectly controlling or controlled by, or under direct or indirect common
control with, the Company, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if such Preferred Securities
were not outstanding.
The procedures by which holders of Preferred Securities may exercise their
voting rights are described below. See "Book-Entry Issuance" below.
Holders of the Preferred Securities will have no rights to appoint or
remove the Owens Corning Trustees, who may be appointed, removed or replaced
solely by the Company as the indirect or direct holder of all of the Common
Securities.
GLOBAL PREFERRED SECURITIES
The Preferred Securities of the Trust may be issued in whole or in part in
the form of one or more Global Preferred Securities that will be deposited with,
or on behalf of, the depositary identified in the Prospectus Supplement relating
to the Preferred Securities. Unless otherwise indicated in the applicable
Prospectus Supplement for the Preferred Securities, the depositary will be The
Depository Trust Company ("DTC"). Global Preferred Securities may be issued only
in fully registered form and in either temporary or permanent form. Unless and
until it is exchanged in whole or in part for the individual Preferred
Securities represented thereby, a Global Preferred Security may not be
transferred except as a whole by the depositary for such Global Preferred
Security to a nominee of such depositary or by a nominee of such depositary to
such depositary or another nominee of such depositary or by such depositary or
any nominee to a successor depositary or any nominee of such successor.
While the specific terms of the depositary arrangement with respect to the
Preferred Securities of the Trust (if other than as described under "Book-Entry
Issuance") will be described in the Prospectus Supplement relating to the
Preferred Securities, the Company anticipates that the following provisions will
generally apply to depositary arrangements.
Upon the issuance of a Global Preferred Security, and the deposit of such
Global Preferred Security with or on behalf of the applicable depositary, the
depositary for such Global Preferred Security or its nominee will credit, on its
book-entry registration and transfer system, the respective aggregate
liquidation amounts of the individual Preferred Securities represented by such
Global Preferred Securities to the accounts of Participants. Such accounts shall
be designated by the dealers, underwriters or agents with respect to such
Preferred Securities or by the Company if such Preferred Securities are offered
and sold directly by the Company. Ownership of beneficial interests in a Global
Preferred Security will be limited to Participants or persons that may hold
interests through Participants. Ownership of beneficial interests in such Global
Preferred Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the applicable depositary or its
nominee (with respect to interests of Participants) and the records of
Participants (with respect to interests of persons who hold through
Participants). The laws of some states require that
25
<PAGE> 113
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Preferred Security.
So long as the depositary for a Global Preferred Security, or its nominee,
is the registered owner of such Global Preferred Security, such depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Preferred Securities represented by such Global Preferred Security for all
purposes under the Declaration. Except as provided below, owners of beneficial
interests in a Global Preferred Security will not be entitled to have any of the
individual Preferred Securities represented by such Global Preferred Security
registered in their names, will not receive or be entitled to receive physical
delivery of any such Preferred Securities in definitive form and will not be
considered the owners or holders thereof under the Declaration.
Payments of liquidation amount, premium or Distributions in respect of
individual Preferred Securities represented by a Global Preferred Security
registered in the name of a depositary or its nominee will be made to such
depositary or its nominee, as the case may be, as the registered owner of the
Global Preferred Security representing such Preferred Securities. None of the
Company, the Institutional Trustee, any paying agent or the registrar for such
Preferred Securities will have any responsibility or liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the Global Preferred Security representing such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
The Company expects that the depositary for the Preferred Securities of the
Trust, or its nominee, upon receipt of any payment of liquidation amount,
premium or Distributions in respect of a Global Preferred Security representing
any of such Preferred Securities, immediately will credit Participants' accounts
with payments in amounts proportionate to their respective beneficial interest
in the aggregate lf such Global Preferred Security for such Preferred Securities
as shown on the records of such Depositary or its nominee. The Company also
expects that payments by Participants to owners of beneficial interests in such
Global Preferred Security held through such Participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers in bearer form or registered in
"street name." Such payments will be the responsibility of such Participants.
Unless otherwise specified in the applicable Prospectus Supplement, if a
Depositary for the Preferred Securities of an Trust is at any time unwilling,
unable or ineligible to continue as a depositary and a successor depositary is
not appointed by the Company within 90 days, the Trust will issue individual
Preferred Securities of the Trust in exchange for the Global Preferred Security
representing such Preferred Securities. In addition, the Company may at any time
and in its sole discretion, subject to any limitations described in the
Prospectus Supplement relating to the Preferred Securities, determine not to
have any Preferred Securities of the Trust represented by one or more Global
Preferred Securities and, in such event, the Trust will issue individual
Preferred Securities in exchange for the Global Preferred Security or Securities
representing such Preferred Securities. Further, if the Company so specifies
with respect to the Preferred Securities of the Trust, an owner of a beneficial
interest in a Global Preferred Security representing such Preferred Securities
may, on terms acceptable to the Company, the Institutional Trustee and the
Depositary for such Global Preferred Security, receive individual Preferred
Securities in exchange for such beneficial interests, subject to any limitations
described in the Prospectus Supplement relating to such Preferred Securities. In
any such instance, an owner of a beneficial interest in a Global Preferred
Security will be entitled to physical delivery of individual Preferred
Securities represented by such Global Preferred Security equal in liquidation
amount to such beneficial interest and to have such Preferred Securities
registered in its name. Individual Preferred Securities so issued will be issued
in denominations, unless otherwise specified by the Company, of $50 and integral
multiples thereof.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities shall be made to the
applicable depositary, which shall credit the relevant accounts at such
depositary on the applicable Distribution Dates or, if the Preferred Securities
are not held by a depositary, such payments shall be made by check mailed to the
address of the
26
<PAGE> 114
holder entitled thereto as such address shall appear on the Register. Unless
otherwise specified in the applicable Prospectus Supplement, the paying agent
for the Preferred Securities shall initially be the Institutional Trustee and
any co-paying agent chosen by the Institutional Trustee and acceptable to the
Regular Trustees and the Company. The paying agent shall be permitted to resign
as paying agent upon 30 days' written notice to the Institutional Trustees and
the Company. In the event that the Institutional Trustee shall no longer be the
paying agent, the Regular Trustees shall appoint a successor to act as paying
agent (which shall be a bank or trust company acceptable to the Regular Trustees
and the Company).
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable Prospectus Supplement, the
Institutional Trustee will act as registrar and transfer agent for the Preferred
Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of each Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Trust will not be required to register or cause to be registered
the transfer of the Preferred Securities after the Preferred Securities have
been called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, other than during the occurrence and continuance
of an Event of Default, undertakes to perform only such duties as are
specifically set forth in the Declarations and, after such Event of Default,
must exercise the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Institutional Trustee is under no obligation to exercise any of
the powers vested in it by the Declarations at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. If no Event of
Default has occurred and is continuing and the Institutional Trustee is required
to decide between alternative causes of action, construe ambiguous provisions in
a Declaration or is unsure of the application of any provision of a Declaration,
and the matter is not one on which holders of Preferred Securities are entitled
under such Declaration to vote, then the Institutional Trustee shall take such
action as is directed by the Company and if not so directed, shall take such
action as it deems advisable and in the best interests of the holders of the
Trust Securities and will have no liability except for its own bad faith,
negligence or willful misconduct.
MISCELLANEOUS
The Regular Trustees are authorized and directed to conduct the affairs of
and to operate the Trust in such a way that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act or fail to be classified as a grantor trust for U.S. federal income tax
purposes and so that the Debentures will be treated as indebtedness of the
Company for U.S. federal income tax purposes. In this connection, the Company
and the Regular Trustees are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Trust or the Declaration,
that the Company and the Regular Trustees determine in their discretion to be
necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the Preferred
Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information concerning the Guarantee which
will be executed and delivered by the Company for the benefit of the holders
from time to time of Preferred Securities. The Guarantee will be qualified as an
indenture under the Trust Indenture Act. Wilmington Trust Company, an
independent trustee, will act as indenture trustee under the Guarantee (the
"Guarantee Trustee") for the purposes of compliance with the provisions of the
Trust Indenture Act. The terms of the Guarantee will be
27
<PAGE> 115
those set forth in the Guarantee and those made part of the Guarantee by the
Trust Indenture Act. The following summary is not necessarily complete, and
reference is hereby made to the copy of the form of the Guarantee (including the
definitions therein of certain terms) which is filed as an exhibit to the
Registration Statement of which this Prospectus forms a part, and to the Trust
Indenture Act. Whenever particular defined terms of the Guarantee are referred
to in this Prospectus, such defined terms are incorporated herein by reference.
The Guarantee will be held by the Trustee for the benefit of the holders of the
Preferred Securities.
GENERAL
Pursuant to the Guarantee, unless otherwise specified in the applicable
Prospectus Supplement, the Company will irrevocably and unconditionally agree,
to the extent set forth therein, to pay in full, on a subordinated basis, to the
holders of the Preferred Securities issued by the Trust, the Guarantee Payments
(as defined herein) (except to the extent paid by the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Trust may
have or assert. The following payments or distributions with respect to
Preferred Securities issued by the Trust, to the extent not paid by or on behalf
of the Trust (the "Guarantee Payments"), will be subject to the Guarantee
(without duplication): (i) any accrued and unpaid distributions which are
required to be paid on the Preferred Securities, to the extent the Trust shall
have funds available therefor; (ii) with respect to any Preferred Securities
called for redemption by the Trust, the redemption price (the "Redemption
Price") and all accrued and unpaid distributions to the date of redemption, to
the extent the Trust has funds available therefor and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of Debentures to the holders of Preferred
Securities or the redemption of all of the Preferred Securities), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
distributions on the Preferred Securities to the date of payment, to the extent
the Trust has funds available therefor, and (b) the amount of assets of the
Trust remaining available for distribution to holders of the Preferred
Securities in liquidation of the Trust. The Company's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Company to the holders of Preferred Securities or by causing the Trust to
pay such amounts to such holders.
The Guarantee will be a full and unconditional guarantee on a subordinated
basis of the Guarantee Payments with respect to the Preferred Securities, but
will not apply to any payment of distributions except to the extent the Trust
shall have funds available therefor. If the Company does not make interest
payments on the Debentures purchased by the Trust, the Trust will not pay
distributions on the Preferred Securities issued by the Trust and will not have
funds available therefor. See "Relationship Among the Preferred Securities, The
Debentures and the Guarantee." The Guarantee, when taken together with the
Company's obligations under the Indenture and the Declaration, will have the
effect of providing a full and unconditional guarantee on a subordinated basis
by the Company of payments due on the Preferred Securities.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Trust with respect to the Common Securities
(the "Common Securities Guarantee") to the same extent as the Guarantee, except
that upon an Indenture Event of Default, holders of the Preferred Securities
shall have priority over holders of Common Securities with respect to
distributions and payments on liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In the Guarantee, the Company will covenant that, so long as any Preferred
Securities issued by the Trust remain outstanding, if there shall have occurred
any event that would constitute an event of default under the Guarantee or the
Declaration, then (a) the Company shall not declare or pay any dividend on, make
any distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than (i)
purchases or acquisitions of capital stock of the Company in connection with the
satisfaction by the Company of its obligations under any employee benefit plans
or the satisfaction by the Company of its obligations pursuant to any contract
or security outstanding on the date of such event requiring the Company to
purchase capital stock of the Company, (ii) as a result of a reclassification of
the Company's capital stock or the exchange or conversion of one class or series
of the Company's capital stock for
28
<PAGE> 116
another class or series of the Company's capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) dividends or distributions in capital stock of the
Company and (v) redemptions or purchases of any rights pursuant to the Rights
Agreement or any successor to the Rights Agreement, and the declaration
thereunder of a dividend of rights in the future), (b) the Company shall not
make any payment of interest, principal or premium, if any, on or repay,
repurchase or redeem any debt securities issued by the Company which rank pari
passu with or junior to the Debentures and (c) the Company shall not make any
guarantee payments with respect to the foregoing (other than payments pursuant
to the Guarantee or the Common Securities Guarantee).
MODIFICATION OF THE GUARANTEE; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required), the
Guarantee may be amended only with the prior approval of the holders of not less
than a majority in liquidation amount of the outstanding Preferred Securities
issued by the Trust. All guarantees and agreements contained in the Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
the Company and shall inure to the benefit of the holders of the Preferred
Securities then outstanding.
TERMINATION
The Guarantee will terminate as to the Preferred Securities (a) upon full
payment of the Redemption Price of all Preferred Securities then outstanding,
(b) upon distribution of the Debentures held by the Trust to the holders of the
Preferred Securities of the Trust or (c) upon full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust. The
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of Preferred Securities must restore payment of
any sums paid under such Preferred Securities or the Guarantee.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Guarantee Trustee in respect of the Guarantee or
to direct the exercise of any trust or power conferred upon the Guarantee
Trustee under the Guarantee. If the Guarantee Trustee fails to enforce the
Guarantee, any holder of Preferred Securities may institute a legal proceeding
directly against the Company to enforce such holder's rights under the
Guarantee, without first instituting a legal proceeding against the Trust, the
Guarantee Trustee or any other person or entity. Notwithstanding the foregoing,
if the Company has failed to make a required guarantee payment, a holder of
Preferred Securities may directly institute a proceeding against the Company for
enforcement of the Guarantee for such payment. The Company waives any right or
remedy to require that any action be brought first against the Trust or any
other person or entity before proceeding directly against the Company.
STATUS OF THE GUARANTEE
The Guarantee will constitute a senior unsecured obligation of the Company
and will rank pari passu with all of the Company's other senior unsecured
obligations, except that such obligations with respect to the Guarantee will be
subordinated and junior in right of payment to the Company's obligations under
the Senior Indebtedness. The terms of the Preferred Securities provide that each
holder of Preferred Securities issued by the Trust by acceptance thereof agrees
to the subordination provisions and other terms of the Guarantee.
The Guarantee will constitute a guarantee of payment and not of collection
(that is, the guaranteed party may institute a legal proceeding directly against
the guarantor to enforce its rights under the guarantee without instituting a
legal proceeding against any other person or entity).
29
<PAGE> 117
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, prior to the occurrence of a default with respect to
the Guarantee, undertakes to perform only such duties as are specifically set
forth in the Guarantee and, after default, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby; but the foregoing shall not relieve the Guarantee Trustee, upon the
occurrence of an event of default under the Guarantee, from exercising the
rights and powers vested in it by the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
internal laws of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE DEBENTURES AND THE GUARANTEE
As long as payments of interest and other payments are made when due on the
Debentures, such payments will be sufficient to cover Distributions and other
payments due on the Preferred Securities, primarily because (i) the aggregate
principal amount of the Debentures will be equal to the sum of the aggregate
stated liquidation amount of the Preferred Securities and Common Securities;
(ii) the interest rate and interest and other payment dates on the Debentures
will match the Distribution rate and Distribution and other payment dates for
the Preferred Securities; (iii) the Company shall be obligated to pay, directly
or indirectly, all costs, expenses, debts and obligations of the Trust (other
than with respect to the Trust Securities); and (iv) the Declaration further
provides that the Trust will not engage in any activity that is not consistent
with the limited purposes of the Trust.
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Trust has funds available for the payment of such
Distributions) are irrevocably guaranteed by the Company as and to the extent
set forth under "Description of the Guarantee." Taken together, the Company's
obligations under a series of Debentures, the Indenture, the Declaration and the
Guarantee have the effect of providing a full, irrevocable and unconditional
guarantee of payments of Distributions and other amounts due on the Preferred
Securities. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only the
combined operation of these documents that has the effect of providing a full,
irrevocable and unconditional guarantee of the Trust's obligations under the
Preferred Securities. If and to the extent that the Company does not make
payments on the Debentures, the Trust will not pay Distributions or other
amounts due on the Preferred Securities. The Guarantee does not cover payment of
Distributions when the Trust does not have sufficient funds to pay such
Distributions. In such event, the remedy of a holder of Preferred Securities is
to institute a legal proceeding directly against the Company for enforcement of
payment of such Distributions to such holder.
Notwithstanding anything to the contrary in the Indenture, the Company has
the right to set-off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of such payment making, a payment under the Guarantee.
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Trust or
any other person or entity.
The Trust's Preferred Securities evidence preferred undivided beneficial
interests in the assets of the Trust, and each Trust exists for the sole purpose
of issuing the Preferred Securities and Common Securities and investing the
proceeds thereof in Debentures. A principal difference between the rights of a
holder of a Preferred Security and a holder of a Debenture is that a holder of a
Debenture will accrue, and (subject to the permissible extension of the interest
period) is entitled to receive, interest on the principal amount of
30
<PAGE> 118
Debentures held, while a holder of Preferred Securities is only entitled to
receive Distributions if and to the extent the Trust has funds available for the
payment of such Distributions.
Upon any voluntary or involuntary dissolution of the Trust involving the
liquidation of the Debentures, the holders of Preferred Securities of the Trust
will be entitled to receive, out of assets held by the Trust, the Liquidation
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Termination." Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Institutional Trustee, as holder of the
Debentures, would be a subordinated creditor of the Company, subordinated in
right of payment to all Senior Indebtedness, but entitled to receive payment in
full of principal and interest, before any stockholders of the Company receive
payments or distributions. Since the Company is the guarantor under the
Guarantee, the positions of a holder of the Preferred Securities and a holder of
the Debentures relative to other creditors and to stockholders of the Company in
the event of liquidation or bankruptcy of the Company would be substantially the
same.
A default or event of default under any Senior Indebtedness would not
constitute a default or Indenture Event of Default under the Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Indebtedness,
the subordination provisions of the Indenture provide that no payments may be
made in respect of the Debentures until such Senior Indebtedness has been paid
in full or any payment default thereunder has been cured or waived. Failure to
make required payments on any Debentures would constitute an Indenture Event of
Default under the Indenture.
DESCRIPTION OF CAPITAL STOCK
The Company's Certificate of Incorporation, as amended (the "Charter"),
currently authorizes the issuance of two classes of stock: (i) 100 million
shares of Common Stock, par value $0.10 per share, of which 53,338,336 shares
were issued and outstanding as of June 30, 1997 and (ii) 8 million shares of
Preferred Stock, without par value, of which no shares were issued and
outstanding on such date.
The following descriptions of the classes of the Company's capital stock
are summaries and are not necessarily complete, and reference is hereby made to
the applicable provisions of the General Corporation Law of Delaware, the
Charter, the Certificate of Designation of Series A Participating Preferred
Stock (the "Certificate of Designation"), the Certificate of Increase of
Designation of Series A Participating Preferred Stock (the "Certificate of
Increase") and the Rights Agreement which, in the case of the Charter, the
Certificate of Designation, the Certificate of Increase and the Rights
Agreement, are included as Exhibits to the Registration Statement of which this
Prospectus forms a part.
COMMON STOCK
Each holder of Common Stock is entitled to one vote for every share
standing in his or her name on the books of the Company. The Common Stock does
not have cumulative voting rights for the election of directors, which means
that holders of more than 50% of the shares voting for the election of directors
can elect 100% of the directors if they choose to do so, and, in such event, the
holders of the remaining shares voting for the election of directors will not be
able to elect any person or persons to the Board of Directors.
Subject to the limitations contained in the Company's debt instruments and
after provision for the payment of dividends on any series of Preferred Stock
which might be issued and which has a preference with respect to the payment of
dividends, holders of Common Stock are entitled to receive such dividends as may
be declared by the Board of Directors of the Company.
The Common Stock has no conversion rights and is not redeemable. No holder
of Common Stock has any preemptive right to subscribe for any stock or other
securities of the Company which may be issued.
In the event of dissolution, liquidation or winding up of the Company, or
upon any distribution of its assets, the holders of Common Stock are entitled to
receive a pro rata portion of all of the assets available for distribution to
stockholders, subject to any preferential right which may be accorded to any
series of Preferred Stock which might be issued.
31
<PAGE> 119
The Common Stock is listed on the NYSE and the Toronto Stock Exchange. The
outstanding shares of Common Stock are validly issued, fully paid and
non-assessable.
PREFERRED STOCK
The Board of Directors of the Company has the authority, without further
action by stockholders, to determine the principal rights, preferences and
privileges of any unissued Preferred Stock. Provisions may be included in the
shares of Preferred Stock, such as extraordinary voting, dividend, redemption or
conversion rights, which could discourage an unsolicited tender offer or
takeover proposal.
SERIES A PREFERRED STOCK
Out of the authorized Preferred Stock, the Company has designated 750,000
shares of Series A Participating Preferred Stock ("Series A Preferred Stock"),
the terms of which are summarized below. Each outstanding share of Common Stock
includes a right, which expires December 30, 2006, to purchase one one-hundredth
of a share of Series A Preferred Stock ("1996 Preferred Share Purchase Rights"),
which Rights are listed on the New York Stock Exchange and the terms of which
are summarized below under "1996 Preferred Share Purchase Rights."
Dividends
Holders of shares of Series A Preferred Stock are entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, dividends, payable in cash quarterly in arrears on
January 1, April 1, July 1 and October 1 of each year (each, a "Quarterly
Dividend Payment Date"), at an annual rate per share of the greater of (i)
$10.00 or (ii) 100 times the aggregate per share amount of all cash and non-cash
dividends or other distributions (other than dividends payable in Common Stock
or subdivisions of outstanding shares of Common Stock) declared on the Common
Stock since the last Quarterly Dividend Payment Date. Accrued but unpaid
dividends accumulate but do not bear interest.
The Series A Preferred Stock will be junior as to dividends to any series
or class of Preferred Stock (or any similar stock) that ranks senior as to
dividends to the Series A Preferred Stock. The Series A Preferred Stock has
priority as to dividends over the Common Stock and any other series or class of
the Company's stock thereafter issued that ranks junior as to dividends to the
Series A Preferred Stock. If dividends or distributions payable on the Series A
Preferred Stock are in arrears, the Company (i) may not declare or pay dividends
or other distributions on the Common Stock (or any other stock of the Company
that ranks junior to the Series A Preferred Stock) and (ii) is restricted in its
declaration and payment of dividends or other distributions on any stock of the
Company that ranks on a parity with the Series A Preferred Stock except for
dividends paid ratably in accordance with the respective preferential amounts
payable on the Series A Preferred Stock and all such parity stock.
Liquidation Rights
In the case of the voluntary or involuntary liquidation, dissolution or
winding-up of the Company, holders of shares of Series A Preferred Stock are
entitled to receive the liquidation preference of the higher of (i) $100.00 per
share, plus an amount equal to the accrued and unpaid dividends to the payment
date, or (ii) 100 times the aggregate per share amount to be distributed to
holders of shares of Common Stock, before any payment or distribution is made to
the holders of shares of Common Stock (or any other stock of the Company that
ranks junior to the Series A Preferred Stock). The holders of shares of Series A
Preferred Stock and of any other stock of the Company that ranks on a parity
with the Series A Preferred Stock are entitled to share ratably, in accordance
with the respective preferential amounts payable on such stock, in any
distribution that is not sufficient to pay in full the aggregate of the amounts
payable thereon.
Consolidation and Merger Rights
In case the Company enters into any consolidation, merger, combination or
other transaction in which the shares of Common Stock are changed into or
exchanged for other stock or securities, cash and/or any other
32
<PAGE> 120
property, each share of Series A Preferred Stock at the same time will be
similarly changed into or exchanged for an amount per share equal to 100 times
the aggregate amount of stock or securities, cash and/or any other property into
which or for which each share of Common Stock is changed or exchanged.
Limitation on Share Repurchase
If dividends or distributions payable on the Series A Preferred Stock are
in arrears, the Company may not redeem, purchase or otherwise acquire for
consideration (i) any stock of the Company that ranks on a parity with the
Series A Preferred Stock, except in exchange for shares of any stock of the
Company ranking junior to the Series A Preferred Stock or (ii) any shares of
Series A Preferred Stock or any stock of the Company that ranks on a parity with
the Series A Preferred Stock, except through a purchase offer made in writing or
by publication to all holders of such shares on terms that the Board of
Directors of the Company determines will result in fair and equitable treatment
among the respective series or classes of shares.
Voting Rights
Each share of Series A Preferred Stock entitles the holder thereof to 100
votes on all matters submitted to a vote of the Company's stockholders, and the
holders of the shares of Series A Preferred Stock and the holders of shares of
Common Stock and any other capital stock of the Company having general voting
rights will vote together as one class on all matters submitted to a vote of the
Company's stockholders.
If, at the time of any annual stockholders' meeting for the election of
directors, the equivalent of at least six quarterly dividends payable on any
shares of Series A Preferred Stock are in default, the number of members of the
Company's Board of Directors will be increased by two, and the holders of the
Series A Preferred Stock, voting separately as a class, will be entitled at such
meeting (and each subsequent annual stockholders' meeting) to elect such two
additional directors. Such voting rights will terminate when all such dividends
in arrears have been paid or declared and set apart for payment. Upon the
termination of such voting rights, the terms of office of all directors so
elected will terminate immediately and the number of members of the Company's
Board of Directors will be reduced by two.
Other Features
The shares of Series A Preferred Stock are not redeemable. Unless otherwise
provided in the Company's Restated Certificate of Incorporation or the
designation of a subsequent series of Preferred Stock, the Series A Preferred
Stock will rank junior to all of the Company's other series of Preferred Stock
as to the payment of dividends and the distribution of assets on liquidation,
dissolution or winding-up, and senior to the Common Stock. Series A Preferred
Stock may be issued in fractions of a share (in one one-hundredths (1/100) of a
share and integral multiples thereof).
1996 PREFERRED SHARE PURCHASE RIGHTS
Under a Rights Agreement, dated as of December 12, 1996 (the "Rights
Agreement"), between the Company and The Chase Manhattan Bank, as Rights Agent,
each outstanding share of Common Stock is coupled with a 1996 Preferred Share
Purchase Right. Each right entitles the holder to buy from the Company one
one-hundredth of a share of Series A Preferred Stock at a price of $190.
The 1996 Preferred Share Purchase Rights become exercisable and detach from
the Common Stock ten business days after a person or group acquires, or
announces a tender offer for, 15% or more of the Company's outstanding shares of
Common Stock. The rights will expire on December 30, 2006, unless redeemed
earlier by the Company. The rights are redeemable by the Company at one cent
each at any time prior to public announcement or notice to the Company that an
acquiring person or group has purchased 15% or more of the Company's outstanding
Common Stock (an "Acquisition Event"). At any time after an Acquisition Event
and prior to the acquisition by such person or group of 50% or more of the
outstanding Common Stock, the Board of Directors of the Company may exchange one
share of Common Stock for each right outstanding, other than the rights held by
the acquiring person or group. At any time after an Acquisition Event and the
rights become exercisable, each right, other than rights held by the acquiring
person or group, would entitle its
33
<PAGE> 121
holder to buy Common Stock of the Company having a market value of twice the
exercise price of the right or, if the Company is subsequently acquired in a
merger or other business combination, such shares of the acquiring or surviving
company. Until the 1996 Preferred Share Purchase Rights detach from the Common
Stock (or the earlier termination or redemption of the 1996 Preferred Share
Purchase Rights), an additional 1996 Preferred Share Purchase Right will be
issued with every share of newly issued Common Stock.
DELAWARE LAW AND CERTAIN CHARTER PROVISIONS
The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. In general, this statute prohibits a publicly held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person becomes an interested stockholder, unless the
business combination is approved in a prescribed manner. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within the prior three years did own) 15% or more of the corporation's voting
stock.
In addition to Section 203 of the General Corporation Law of Delaware and
the Preferred Share Purchase Rights, the Charter and the Company's By-Laws
contain several provisions that may discourage certain transactions involving an
actual or threatened change of control of the Company.
The Charter requires that certain business combinations and other
combinations involving the Company and a holder of 10% or more of its voting
securities be approved by at least 66 2/3% of all shares having voting rights.
The Charter also divides the board of directors into three classes with only
approximately one-third of the directors up for election each year. The Charter
also prohibits shareholder action by written consent.
The Company's By-Laws requires sixty to ninety days' advance notice of
matters to be brought before the annual meeting by a shareholder.
The foregoing provisions of the General Corporation Law of Delaware, the
Charter and the Company's By-Laws are intended to encourage persons seeking to
acquire control of the Company to consult first with the Board of Directors to
permit negotiation of the terms of any proposed business combination or offer.
They may, however, also have the effect of discouraging a third party from
attempting to acquire control of the Company. In addition, since these
provisions are designed to discourage accumulations of large blocks of stock by
third parties who wish to gain control of the Company, such provisions may
reduce the temporary market price fluctuations caused by such accumulations.
TRANSFER AGENT AND REGISTRAR
The primary Transfer Agent and Registrar for the Common Stock is
ChaseMellon Shareholder Services, located in New York, New York.
DESCRIPTION OF STOCK PURCHASE CONTRACTS
AND STOCK PURCHASE UNITS
The Company may issue Stock Purchase Contracts, including contracts
obligating holders to purchase from the Company, and the Company to sell to the
holders, a specified number of shares of Common Stock or Preferred Stock at a
future date or dates. The consideration per share of Preferred Stock or Common
Stock may be fixed at the time the Stock Purchase Contracts are issued or may be
determined by reference to a specific formula set forth in the Stock Purchase
Contracts. The Stock Purchase Contracts may be issued separately or as a part of
units ("Stock Purchase Units") consisting of a Stock Purchase Contract and Debt
Securities, Preferred Securities or debt obligations of third parties, including
U.S. Treasury securities, securing the holders' obligations to purchase the
Preferred Stock or the Common Stock under the Stock Purchase Contracts. The
Stock Purchase Contracts may require the Company to make periodic payments to
the holders of the Stock Purchase Units or vice versa, and such payments may be
unsecured or prefunded on some basis. The Stock Purchase Contracts may require
holders to secure their obligations thereunder in a specified manner.
The applicable Prospectus Supplement will describe the terms of any Stock
Purchase Contracts or Stock Purchase Units. The description in the Prospectus
Supplement will not necessarily be complete, and reference will be made to the
Stock Purchase Contracts, and, if applicable, collateral arrangements and
depositary arrangements, relating to such Stock Purchase Contracts or Stock
Purchase Units.
34
<PAGE> 122
BOOK-ENTRY ISSUANCE
Unless otherwise specified in the applicable Prospectus Supplement, DTC
will act as depositary for Securities issued in the form of Global Securities.
Such Securities will be issued only as fully-registered securities registered in
the name of Cede & Co. (DTC's nominee). One or more fully-registered Global
Securities will be issued for such Securities representing in the aggregate the
total number of such Securities, and will be deposited with or on behalf of DTC.
DTC is a limited purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its Participants deposit with DTC. DTC also facilitates
the settlement among Participants of securities transactions, such as transfers
and pledges, in deposited securities through electronic computerized book-entry
changes in Participants' accounts, thereby eliminating the need for physical
movement of securities certificates. Direct Participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations ("Direct Participants"). DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange, Inc. and the National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain custodial
relationships with Direct Participants, either directly or indirectly ("Indirect
Participants"). The rules applicable to DTC and its Participants are on file
with the Commission.
Purchases of Securities within the DTC system must be made by or through
Direct Participants, which will receive a credit for such Securities on DTC's
records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Securities. Transfers of ownership
interests in Securities issued in the form of Global Securities are to be
accomplished by entries made on the books of Participants acting on behalf of
Beneficial Owners. Beneficial Owners will not receive certificates representing
their ownership interests in such Securities, except in the event that use of
the book-entry system for such Securities is discontinued.
DTC has no knowledge of the actual Beneficial Owners of the Securities
issued in the form of Global Securities; DTC's records reflect only the identity
of the Direct Participants to whose accounts such Securities are credited, which
may or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Redemption notices shall be sent to Cede & Co. as the registered holder of
Securities issued in the form of Global Securities. If less than all of a series
of such Securities are being redeemed, DTC's current practice is to determine by
lot the amount of the interest of each Direct Participant to be redeemed.
Although voting with respect to Securities issued in the form of Global
Securities is limited to the holders of record of such Securities, in those
instances in which a vote is required, neither DTC nor Cede & Co. will itself
consent or vote with respect to such Securities. Under its usual procedures, DTC
would mail an omnibus proxy (the "Omnibus Proxy") to the issuer of such
Securities as soon as possible after the record date. The Omnibus Proxy assigns
Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts such Securities are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
35
<PAGE> 123
Payments in respect of Securities issued in the form of Global Securities
will be made by the issuer of such Securities to DTC. DTC's practice is to
credit Direct Participants' accounts on the relevant payment date in accordance
with their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility of such Participant and not
of DTC, the Institutional Trustee, either Trust or the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payments to DTC are the responsibility of the issuer of the applicable
Securities, disbursement of such payments to Direct Participants is the
responsibility of DTC, and disbursements of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depositary with respect to
any Securities at any time by giving reasonable notice to the issuer of such
Securities. In the event that a successor depositary is not obtained, individual
Security certificates representing such Securities are required to be printed
and delivered. The Company, at its option, may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary).
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Trust and the Company believe to be
accurate, but the Trust and the Company assume no responsibility for the
accuracy thereof. Neither the Trust nor the Company has any responsibility for
the performance by DTC or its Participants of their respective obligations as
described herein or under the rules and procedures governing their respective
operations.
PLAN OF DISTRIBUTION
Any of the Securities being offered hereby may be sold in any one or more
of the following ways from time to time: (i) through agents; (ii) to or through
underwriters; (iii) through dealers; and (iv) directly by the Company or, in the
case of Preferred Securities, by the Trust to purchasers.
The distribution of the Securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices.
Offers to purchase Securities may be solicited by agents designated by the
Company from time to time. Any such agent involved in the offer or sale of the
Securities in respect of which this Prospectus is delivered will be named, and
any commissions payable by the Company or the Trust to such agent will be set
forth, in the applicable Prospectus Supplement. Unless otherwise indicated in
such Prospectus Supplement, any such agent will be acting on a reasonable best
efforts basis for the period of its appointment. Any such agent may be deemed to
be an underwriter, as that term is defined in the Securities Act, of the
Securities so offered and sold.
If Securities are sold by means of an underwritten offering, the Company
and, in the case of an offering of Preferred Securities, the Trust will execute
an underwriting agreement with an underwriter or underwriters at the time an
agreement for such sale is reached, and the names of the specific managing
underwriter or underwriters, as well as any other underwriters, the respective
amounts underwritten and the terms of the transaction, including commissions,
discounts and any other compensation of the underwriters and dealers, if any,
will be set forth in the applicable Prospectus Supplement which will be used by
the underwriters to make resales of the Securities in respect of which this
Prospectus is being delivered to the public. If underwriters are utilized in the
sale of any Securities in respect of which this Prospectus is being delivered,
such Securities will be acquired by the underwriters for their own account and
may be resold from time to time in one or more transactions, including
negotiated transactions, at fixed public offering prices or at varying prices
determined by the underwriters at the time of sale. Securities may be offered to
the public either through underwriting syndicates represented by managing
underwriters or directly by one or more underwriters. If any underwriter or
underwriters are utilized in the sale of Securities, unless otherwise indicated
in the applicable Prospectus Supplement, the underwriting agreement will provide
that the obligations of the underwriters are subject to
36
<PAGE> 124
certain conditions precedent and that the underwriters with respect to a sale of
such Securities will be obligated to purchase all such Securities if any are
purchased.
The Company or the Trust, as applicable, may grant to the underwriters
options to purchase additional Securities, to cover over-allotments, if any, at
the initial public offering price (with additional underwriting commissions or
discounts), as may be set forth in the Prospectus Supplement relating thereto.
If the Company or the Trust, as applicable, grants any over-allotment option,
the terms of such over-allotment option will be set forth in the Prospectus
Supplement for such Securities.
If a dealer is utilized in the sale of the Securities in respect of which
this Prospectus is delivered, the Company or the Trust, as applicable, will sell
such Securities to the dealer as principal. The dealer may then resell such
Securities to the public at varying prices to be determined by such dealer at
the time of resale. Any such dealer may be deemed to be an underwriter, as such
term is defined in the Securities Act, of the Securities so offered and sold.
The name of the dealer and the terms of the transaction will be set forth in the
Prospectus Supplement relating thereto.
Offers to purchase Securities may be solicited directly by the Company or
the Trust, as applicable, and the sale thereof may be made by the Company or the
Trust directly to institutional investors or others, who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any resale
thereof. The terms of any such sales will be described in the Prospectus
Supplement relating thereto.
Securities may also be offered and sold, if so indicated in the applicable
Prospectus Supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms ("remarketing firms"), acting as principals for their own
accounts or as agents for the Company or the Trust, as applicable. Any
remarketing firm will be identified and the terms of its agreement, if any, with
the Company or the Trust and its compensation will be described in the
applicable Prospectus Supplement. Remarketing firms may be deemed to be
underwriters, as that term is defined in the Securities Act, in connection with
the Securities remarketed thereby.
If so indicated in the applicable Prospectus Supplement, the Company or the
Trust, as applicable, may authorize agents and underwriters to solicit offers by
certain institutions to purchase Securities from the Company or the Trust at the
public offering price set forth in the applicable Prospectus Supplement pursuant
to delayed delivery contracts providing for payment and delivery on the date or
dates stated in the applicable Prospectus Supplement. Such delayed delivery
contracts will be subject to only those conditions set forth in the applicable
Prospectus Supplement. A commission indicated in the applicable Prospectus
Supplement will be paid to underwriters and agents soliciting purchases of
Securities pursuant to delayed delivery contracts accepted by the Company or the
Trust, as applicable.
Agents, underwriters, dealers and remarketing firms may be entitled under
relevant agreements with the Company or the Trust, as applicable, to
indemnification by the Company or the Trust against certain liabilities,
including liabilities under the Securities Act, or to contribution with respect
to payments which such agents, underwriters, dealers and remarketing firms may
be required to make in respect thereof.
Each series of Securities will be a new issue and, other than the Common
Stock, which is listed on the New York Stock Exchange and the Toronto Stock
Exchange, will have no established trading market. The Company may elect to list
any series of Securities on an exchange, and in the case of the Common Stock, on
any additional exchange, but, unless otherwise specified in the applicable
Prospectus Supplement, the Company shall not be obligated to do so. No assurance
can be given as to the liquidity of the trading market for any of the
Securities.
Agents, underwriters, dealers and remarketing firms may be customers of,
engage in transactions with, or perform services for, the Company and its
subsidiaries in the ordinary course of business.
LEGAL OPINIONS
Unless otherwise specified in a Prospectus Supplement relating to
particular Securities, the validity of the Securities offered hereby, other than
Preferred Securities, will be passed upon for the Company by Debevoise
37
<PAGE> 125
& Plimpton, New York, New York, and certain matters of Delaware law with respect
to the validity of the Preferred Securities offered hereby will be passed upon
for the Company by Morris, Nichols, Arsht & Tunnell, special Delaware counsel to
the Company and the Trust. The validity of the Securities offered hereby will be
passed upon for the underwriters, dealers or agents, if any, by counsel to be
named in the applicable Prospectus Supplement.
EXPERTS
The financial statements and schedules incorporated in this Registration
Statement by reference to the 1996 Form 10-K have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their report with
respect thereto, and are incorporated in this Registration Statement by
reference in reliance upon the authority of said firm as experts in giving said
reports.
The consolidated financial statements of the Company included in any
subsequent Annual Report of the Company on Form 10-K and incorporated by
reference in this Registration Statement will have been examined by the
independent public accountants whose report thereon appears in such Annual
Report. Such consolidated financial statements of the Company shall be deemed to
be incorporated herein from the date of filing of the applicable report on Form
10-K in reliance on the reports of such independent public accountants, given on
the authority of such firm as experts in auditing and accounting.
38
<PAGE> 126
======================================================
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY OWENS CORNING OR THE UNDERWRITERS. NEITHER THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS, NOR ANY SALE MADE
HEREUNDER AND THEREUNDER, SHALL UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF OWENS CORNING SINCE THE DATE
HEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Prospectus Supplement Summary.................... S-4
Risk Factors..................................... S-17
The Company...................................... S-23
The Trust........................................ S-26
Use of Proceeds.................................. S-27
Price Range of Common Stock and Dividends........ S-27
Condensed Consolidated Capitalization............ S-28
Accounting Treatment............................. S-28
Selected Consolidated Financial Information...... S-29
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ S-31
Asbestos and Other Litigation.................... S-38
Description of the Feline Prides................. S-42
Description of the Purchase Contracts............ S-44
Certain Provisions of the Purchase Contract
Agreement and the Pledge Agreement............. S-51
Description of the Trust Preferred Securities.... S-54
Description of the Guarantee..................... S-64
Description of the Debentures.................... S-67
Effect of Obligations under the Debentures and
the Guarantee.................................. S-73
Certain Federal Income Tax Consequences.......... S-74
Underwriting..................................... S-81
Legal Opinions................................... S-83
Index of Terms for Prospectus Supplement......... A-1
PROSPECTUS
Available Information............................ 2
Incorporation of Certain Documents by
Reference...................................... 3
The Company...................................... 4
The Trust........................................ 5
Use of Proceeds.................................. 6
Selected Consolidated Financial Information...... 6
Description of Debentures........................ 8
Description of Preferred Securities.............. 16
Description of the Guarantee..................... 27
Relationship Among the Preferred Securities, the
Debentures and the Guarantee................... 30
Description of Capital Stock..................... 31
Description of Stock Purchase Contracts and Stock
Purchase Units................................. 34
Book-Entry Issuance.............................. 35
Plan of Distribution............................. 36
Legal Opinions................................... 37
Experts.......................................... 38
</TABLE>
======================================================
======================================================
6,000,000
FELINE PRIDES(SM)
OWENS CORNING
OWENS CORNING CAPITAL II
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
, 1997
(SM)SERVICE MARK OF MERRILL LYNCH & CO. INC.
======================================================
<PAGE> 127
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses (other than underwriting
discounts and commissions) expected to be incurred in connection with the
issuance and distribution of the securities being registered. Except for the
Securities and Exchange Commission filing fee, all amounts shown are estimates:
<TABLE>
<S> <C>
Registration Fee.......................................................... $136,364
NYSE Listing Fees......................................................... *
Rating Agency Fees........................................................ *
Accountants' Fees and Expenses............................................ *
Counsel's Fees and Expenses............................................... *
Blue Sky Fees and Expenses (including counsel's fees)..................... *
Printing and Engraving Expenses........................................... *
Fees and Expenses of Trustees............................................. *
Miscellaneous............................................................. *
--------
Total..................................................................... *
========
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
A. Reference is made to Section 102(b)(7) of the General Corporation Law of
the State of Delaware as to the limitation of personal liability of directors
and officers and to Section 145 of the General Corporation Law of the State of
Delaware as to indemnification by the Company of its directors and officers.
Delaware law provides that a corporation may eliminate or limit the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director: (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (iii) for wilful or negligent payments of unlawful
dividends or unlawful stock repurchases or redemptions; or (iv) for any
transaction from which the director derived an improper personal benefit.
Delaware law also provides that a corporation may indemnify its directors,
officers, employees or agents against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by them in connection with any action, suit or proceeding brought by third
parties to which they may be made parties by reason of their being or having
been directors, officers, employees or agents, and shall so indemnify directors
and officers only if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful.
B. Article FOURTEENTH of the Company's Certificate of Incorporation, as
amended, provides as follows with respect to the indemnification of the
Company's directors and officers and the limitation of personal liability of its
directors and officers:
FOURTEENTH: The corporation shall indemnify to the full extent
authorized or permitted by law any person made, or threatened to be made, a
party to any action or proceeding (whether civil or criminal or otherwise)
by reason of the fact that he, his testator or intestate, is or was a
director or officer of the corporation or by reason of the fact that such
director or officer, at the request of the corporation, is or was serving
any other corporation, partnership, joint venture, trust, employee benefit
plan or other enterprise, in any capacity. Nothing contained herein shall
affect any rights to indemnification to which employees other than
directors and officers may be entitled by law. No director of the
corporation shall be personally liable to the corporation or its
stockholders for monetary damages for any breach of fiduciary duty by such
a director as a director. Notwithstanding the foregoing sentence, a
director shall be liable to the extent provided by applicable law (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which such director derived an improper personal benefit.
No amendment to or repeal of this Article FOURTEENTH shall apply to or have
any effect on the liability or alleged
II-1
<PAGE> 128
liability of any director of the corporation for or with respect to any
acts or omissions of such director occurring prior to such amendment.
C. Article IX of the Company's By-Laws provides as follows with respect to
the indemnification of the Company's directors and officers and of certain other
persons:
ARTICLE IX
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Corporation shall, to the fullest extent permitted by applicable
law from time to time in effect, (but, in the case of any amendment of such
law, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than such law permitted the
Corporation to provide prior to such amendment) indemnify any and all
persons who may serve or who have served at any time as directors or
officers of the Corporation, or who at the request of the Corporation may
serve or at any time have served as directors, officers, employees or
agents of another corporation (including subsidiaries of the Corporation)
or of any partnership, joint venture, trust or other enterprise, and any
directors or officers of the Corporation who at the request of the
Corporation may serve or at any time have served as agents or fiduciaries
of an employee benefit plan of the Corporation or any of its subsidiaries,
from and against any and all of the expenses, liabilities or other matters
referred to in or covered by law whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or
agent or in any other capacity while serving as a director, officer,
employee or agent. The Corporation may also indemnify any and all other
persons whom it shall have power to indemnify under any applicable law from
time to time in effect to the extent permitted by such law. The
indemnification provided by this Article IX shall not be deemed exclusive
of any other rights to which any person may be entitled under any provision
of the Certificate of Incorporation, other By-Law, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in
an official capacity and as to action in another capacity while holding
such office, and shall be contract rights and continue as to a person who
has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
If a claim under this Article IX is not paid in full by the
Corporation within sixty days after a written claim has been received by
the Corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be twenty days, the
director or officer may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in
whole or in part in any such suit, or in a suit brought by the Corporation
to recover an advancement of expenses pursuant to the terms of an
undertaking, the director or officer shall be entitled to be paid also the
expense of prosecuting or defending such suit. In (i) any suit brought by
the director or officer to enforce a right to indemnification hereunder
(but not in a suit brought by the director or officer to enforce a right to
an advancement of expenses) it shall be a defense that, and (ii) any suit
by the Corporation to recover an advancement of expenses pursuant to the
terms of an undertaking, the Corporation shall be entitled to recover such
expenses upon a final adjudication that, the director or officer has not
met any applicable standard for indemnification set forth in the Delaware
General Corporation Law. Neither the failure of the Corporation (including
its Board of Directors, independent legal counsel, or its stockholders) to
have made a determination prior to the commencement of such suit that
indemnification of the director or officer is proper in the circumstances
because the director or officer has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the director or officer has not met such
applicable standard of conduct, shall create a presumption that the
director or officer has not met the applicable standard of conduct or, in
the case of such a suit brought by the director or officer, be a defense to
such suit. In any suit brought by the director or officer to enforce a
right to indemnification or to an advancement of expenses hereunder, or by
the Corporation to recover an advancement of expenses pursuant to the terms
of an undertaking, the burden of proving that the director
II-2
<PAGE> 129
or officer is not entitled to be indemnified, or to such advancement of
expenses, under this Article IX or otherwise shall be on the Corporation.
The indemnification provided in this Article IX shall inure to each
person referred to herein, whether or not the person is serving in any of
the enumerated capacities at the time such expenses (including attorneys'
fees), judgments, fines or amounts paid in settlement are imposed or
incurred, and whether or not the claim asserted against him is based on
matters which antedate the adoption of this Article IX. None of the
provisions of this Article IX shall be construed as a limitation upon the
right of the Corporation to exercise its general power to enter into a
contract or understanding of indemnity with a director, officer, employee,
agent or any other person in any proper case not provided for herein. Each
person who shall act or have acted as a director or officer of the
Corporation shall be deemed to be doing so in reliance upon such right of
indemnification.
For purposes of this Article IX, the term "Corporation" shall include
constituent corporations referred to in subsection (h) of Section 145 of
the General Corporation Law of the State of Delaware (or any similar
provision of applicable law at the time in effect).
D. The Company has entered into an Indemnity Agreement with each member of
the Company's Board of Directors. Each Indemnity Agreement provides, among other
things, that in the event the director was, is or becomes a party, witness or
other participant in a Claim (as defined in the Indemnity Agreement) by reason
of (or arising in part out of) an Indemnifiable Event (as defined in the
Indemnity Agreement), the Company is required to indemnify the director to the
fullest extent authorized by the Company's By-Laws as in effect on the date of
the Indemnification Agreement notwithstanding any subsequent amendment, repeal
or modification of such By-Laws, against any and all expenses, judgments, fines,
penalties and amounts paid in settlement of such Claim. The Indemnity Agreement
requires that the Company advance to the director all expenses relating to
Claims and contains an undertaking by the director to reimburse the Company for
any such advances that are subsequently determined in a final judicial
determination to have been impermissible under applicable law.
E. The directors and officers of the Company are covered by insurance
policies, maintained by the Company at its expense, insuring the directors and
officers against certain liabilities which might be incurred by them in such
capacities, including liabilities arising under the Securities Act of 1933.
ITEM 16. EXHIBITS.
The following Exhibits are filed as part of this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- ----------------------------------------------------------------------------------
<S> <C>
1.1 Form of Underwriting Agreement for the FELINE PRIDES.*
4.1 Certificate of Incorporation of the Company, as amended (incorporated by reference
to Exhibit (3)(i) to the Company's quarterly report on Form 10-Q (File No. 1-3660)
for the quarter ended March 31, 1997).
4.2 By-laws of the Company, as amended (incorporated by reference to Exhibit 3 to the
Company's annual report on Form 10-K (File No. 1-3660) for the fiscal year ended
December 31, 1995).
4.3 Specimen Certificate of Common Stock of the Company (incorporated by reference to
Exhibit 99 to the Company's Annual Report on Form 10-K (File No. 1-3660) for the
fiscal year ended December 31, 1996).
4.4.1 Rights Agreement, dated as of December 12, 1996 (incorporated by reference to
Exhibit 1 to the Company's Registration Statement on Form 8-A (File No. 1-3660),
dated December 19, 1996).
4.4.2 Form of Rights Certificate (attached as Exhibit to the Rights Agreement
incorporated by reference herein as Exhibit 4.4.1).
4.5.1 Form of Purchase Contract Agreement (including as Exhibit A the form of the
Security Certificate).
4.5.2. Form of Pledge Agreement.
</TABLE>
II-3
<PAGE> 130
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
- ----------- ----------------------------------------------------------------------------------
<S> <C>
4.6.1 Certificate of Trust of Owens Corning Capital II (incorporated by reference to
Exhibit 4.8.1 to the Registration Statement on Form S-3 (Reg. No. 333-24501) of
the Company, Owens Corning Capital II and Owens Corning Capital III).
4.6.2 Declaration of Trust of Owens Corning Capital II (incorporated by reference to
Exhibit 4.8.2 to the Registration Statement on Form S-3 (Reg. No. 333-24501) of
the Company, Owens Corning Capital II and Owens Corning Capital III).
4.7.1 Form of Amended and Restated Declaration of Trust for Owens Corning Capital II,
with respect to the Trust Preferred Securities.
4.7.2 Form of Preferred Security Certificate for Owens Corning Capital II, with respect
to the Trust Preferred Securities (included as Exhibit A-1 to the Amended and
Restated Declaration of Trust (Exhibit 4.7.1)).
4.7.3 Form of Preferred Securities Guarantee Agreement in respect of Owens Corning
Capital II, with respect to the Trust Preferred Securities.
4.8.1 Form of Indenture between Owens Corning and Wilmington Trust Company, as Trustee.
4.8.2 Form of Debentures (included in Section 6.1 of the First Supplemental Indenture
(Exhibit 4.8.3)).
4.8.3 Form of First Supplemental Indenture between Owens Corning and Wilmington Trust
Company, as Trustee.
5.1.1 Opinion of Debevoise & Plimpton as to the legality of the Securities (other than
the Preferred Securities) being registered.*
5.1.2 Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware counsel, relating to
the legality of the Preferred Securities of Owens Corning Capital II.*
8.1 Opinion of Debevoise & Plimpton, as to United States tax matters.*
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed
Charges and Preferred Stock Dividends.**
23.1 Consent of Arthur Andersen LLP, independent public accountants.
23.2 Consent of Debevoise & Plimpton (included in Exhibit 5.1.1 and 8.1).*
23.3 Consent of Morris, Nichols, Arsht & Tunnell, special Delaware counsel (included in
Exhibit 5.1.2).*
24 Powers of Attorney.**
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company, as Debt Trustee
under the Indenture.
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company, as Institutional
Trustee under the Amended and Restated Declaration of Trust of Owens Corning
Capital II.
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company, as Guarantee
Trustee under the Guarantee for Owens Corning Capital II.
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
ITEM 17. UNDERTAKINGS.
(A) RULE 415 OFFERING
The undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
II-4
<PAGE> 131
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (1)(i) and (1)(ii) of this section do
not apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(B) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The undersigned Registrants hereby further undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(C) POLICY REGARDING INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the foregoing provisions, or otherwise, the Registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by any Registrant of expenses incurred
or paid by a director, officer or controlling person of a 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, such Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(D) REGISTRATION STATEMENTS PERMITTED BY RULE 430A.
The undersigned Registrants hereby undertake that:
II-5
<PAGE> 132
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by any Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE> 133
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Owens Corning
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Toledo, State of Ohio, on September 15, 1997.
OWENS CORNING
By: /s/ Michael I. Miller
----------------------------------
Michael I. Miller
Vice President and Treasurer
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:
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
- ----------------------------------- -------------------------------------- -------------------
<S> <C> <C>
* Chairman of the Board, Chief Executive September 15, 1997
- ----------------------------------- Officer and Director (principal
(Glen H. Hiner) executive officer)
* Senior Vice President and Chief September 15, 1997
- ----------------------------------- Financial Officer (principal financial
(David W. Devonshire) officer)
* Vice President and Controller September 15, 1997
- -----------------------------------
(Steven J. Strobel)
* Director September 15, 1997
- -----------------------------------
(Norman P. Blake, Jr.)
* Director September 15, 1997
- -----------------------------------
(Gaston Caperton)
* Director September 15, 1997
- -----------------------------------
(Leonard S. Coleman, Jr.)
* Director September 15, 1997
- -----------------------------------
(William W. Colville)
* Director September 15, 1997
- -----------------------------------
(John H. Dasburg)
* Director September 15, 1997
- -----------------------------------
(Landon Hilliard)
* Director September 15, 1997
- -----------------------------------
(Sir Trevor Holdsworth)
* Director September 15, 1997
- -----------------------------------
(Jon M. Huntsman, Jr.)
* Director September 15, 1997
- -----------------------------------
(Ann Iverson)
* Director September 15, 1997
- -----------------------------------
(W. Walker Lewis)
* Director September 15, 1997
- -----------------------------------
(Furman C. Moseley, Jr.)
* Director September 15, 1997
- -----------------------------------
(W. Ann Reynolds)
*By: /s/ Michael I. Miller
------------------------------
Attorney-in-fact
</TABLE>
II-7
<PAGE> 134
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, Owens Corning
Capital II (i) certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and (ii) has duly caused this
Amendment No. 2 to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Toledo, State of Ohio, on
September 15, 1997.
OWENS CORNING CAPITAL II
By OWENS CORNING, as Sponsor
By /s/ Michael I. Miller
-----------------------------------
Name: Michael I. Miller
Title: Vice President and Treasurer
II-8
<PAGE> 135
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
- ------ ------------------------------------------------------------------- --------------
<C> <S> <C>
1.1 Form of Underwriting Agreement for the FELINE PRIDES.*
4.1 Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit (3)(i) to the Company's
quarterly report on Form 10-Q (File No. 1-3660) for the quarter
ended March 31, 1997).
4.2 By-laws of the Company, as amended (incorporated by reference to
Exhibit 3 to the Company's annual report on Form 10-K (File No.
1-3660) for the fiscal year ended December 31, 1995).
4.3 Specimen Certificate of Common Stock of the Company (incorporated
by reference to Exhibit 99 to the Company's Annual Report on Form
10-K (File No. 1-3660) for the fiscal year ended December 31,
1996).
4.4.1 Rights Agreement, dated as of December 12, 1996 (incorporated by
reference to Exhibit 1 to the Company's Registration Statement on
Form 8-A (File No. 1-3660), dated December 19, 1996).
4.4.2 Form of Rights Certificate (attached as Exhibit to the Rights
Agreement incorporated by reference herein as Exhibit 4.4.1).
4.5.1 Form of Purchase Contract Agreement (including as Exhibit A the
form of the Security Certificate).
4.5.2 Form of Pledge Agreement.
4.6.1 Certificate of Trust of Owens Corning Capital II (incorporated by
reference to Exhibit 4.8.1 to the Registration Statement on Form
S-3 (Reg. No. 333-24501) of the Company, Owens Corning Capital II
and Owens Corning Capital III).
4.6.2 Declaration of Trust of Owens Corning Capital II (incorporated by
reference to Exhibit 4.8.2 to the Registration Statement on Form
S-3 (Reg. No. 333-24501) of the Company, Owens Corning Capital II
and Owens Corning Capital III).
4.7.1 Form of Amended and Restated Declaration of Trust for Owens Corning
Capital II, with respect to the Trust Preferred Securities.
4.7.2 Form of Preferred Security Certificate for Owens Corning Capital
II, with respect to the Trust Preferred Securities (included as
Exhibit A-1 to the Amended and Restated Declaration of Trust
(Exhibit 4.7.1)).
4.7.3 Form of Preferred Securities Guarantee Agreement in respect of
Owens Corning Capital II, with respect to the Trust Preferred
Securities.
4.8.1 Form of Indenture between Owens Corning and Wilmington Trust
Company, as Trustee.
4.8.2 Form of Debentures (included in Section 6.1 of the First
Supplemental Indenture (Exhibit 4.8.3)).
4.8.3 Form of First Supplemental Indenture between Owens Corning and
Wilmington Trust Company, as Trustee.
5.1.1 Opinion of Debevoise & Plimpton as to the legality of the
Securities (other than the Preferred Securities) being registered.*
5.1.2 Opinion of Morris, Nichols, Arsht & Tunnell, special Delaware
counsel, relating to the legality of the Preferred Securities of
Owens Corning Capital II.*
8.1 Opinion of Debevoise & Plimpton, as to United States tax matters.*
12.1 Computation of Ratio of Earnings to Fixed Charges and Ratio of
Earnings to Fixed Charges and Preferred Stock Dividends.**
23.1 Consent of Arthur Andersen LLP, independent public accountants.
23.2 Consent of Debevoise & Plimpton (included in Exhibit 5.1.1 and
8.1).*
23.3 Consent of Morris, Nichols, Arsht & Tunnell, special Delaware
counsel (included in Exhibit 5.1.2).*
24 Powers of Attorney.**
</TABLE>
II-9
<PAGE> 136
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER EXHIBIT NUMBERED PAGE
- ------ ------------------------------------------------------------------- --------------
<C> <S> <C>
25.1 Form T-1 Statement of Eligibility of Wilmington Trust Company, as
Debt Trustee under the Indenture.
25.2 Form T-1 Statement of Eligibility of Wilmington Trust Company, as
Institutional Trustee under the Amended and Restated Declaration of
Trust of Owens Corning Capital II.
25.3 Form T-1 Statement of Eligibility of Wilmington Trust Company, as
Guarantee Trustee under the Guarantee for Owens Corning Capital II.
</TABLE>
- ---------------
* To be filed by amendment.
** Previously filed.
II-10
<PAGE> 1
Exhibit 4.5.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OWENS CORNING
AND
THE BANK OF NEW YORK,
AS PURCHASE CONTRACT AGENT
--------------------------
FORM OF PURCHASE CONTRACT AGREEMENT
--------------------------
DATED AS OF _______ __, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
RECITALS.................................................................. 1
ARTICLE I
Definitions and Other Provisions
of General Applications................................................. 1
Section 1.1. Definitions............................................. 1
Section 1.2. Compliance Certificates and Opinions.................... 12
Section 1.3. Form of Documents Delivered to Agent.................... 13
Section 1.4. Acts of Holders; Record Dates........................... 14
Section 1.5. Notices................................................. 16
Section 1.6. Notice to Holders; Waiver............................... 17
Section 1.7. Effect of Headings and Table of Contents................ 18
Section 1.8. Successors and Assigns.................................. 18
Section 1.9. Separability Clause..................................... 18
Section 1.10. Benefits of Agreement................................... 18
Section 1.11. Governing Law........................................... 19
Section 1.12. Legal Holidays.......................................... 19
Section 1.13. Counterparts............................................ 19
Section 1.14. Inspection of Agreement................................. 19
ARTICLE II
Certificate Forms......................................................... 20
i
<PAGE> 3
Page
----
Section 2.1. Forms of Certificates Generally......................... 20
Section 2.2. Form of Agent's Certificate of Authentication........... 21
ARTICLE III
The Securities........................................................... 21
Section 3.1. Title and Terms; Denominations.......................... 21
Section 3.2. Rights and Obligations Evidenced by
the Certificates........................................ 22
Section 3.3. Execution, Authentication, Delivery
and Dating.............................................. 23
Section 3.4. Temporary Certificates.................................. 24
Section 3.5. Registration; Registration of Trans-
fer and Exchange........................................ 25
Section 3.6. Book-Entry Interests.................................... 27
Section 3.7. Notices to Holders...................................... 28
Section 3.8. Appointment of Successor Clearing
Agency.................................................. 28
Section 3.9. Definitive Certificates................................. 28
Section 3.10. Mutilated, Destroyed, Lost and Stolen
Certificates............................................ 28
Section 3.11. Persons Deemed Owners................................... 30
Section 3.12. Cancellation............................................ 31
Section 3.13. Substitution of Securities.............................. 31
Section 3.14. Reestablishment of Income PRIDES........................ 33
Section 3.15. Transfer of Collateral upon Occur-
rence of Termination Event.............................. 34
ii
<PAGE> 4
Page
----
Section 3.16. No Consent to Assumption................................ 35
ARTICLE IV
The Preferred Securities................................................. 35
Section 4.1. Payment of Distribution; Rights to
Distributions Preserved; Distribution
Rate Reset; Notice...................................... 35
Section 4.2. Notice and Voting....................................... 37
Section 4.3. Investment Company Event................................ 38
ARTICLE V
The Purchase Contracts............................ 39
Section 5.1. Purchase of Shares of Common Stock...................... 39
Section 5.2. Contract Adjustment Payments............................ 41
Section 5.3. Deferral of Payment Dates For Con-
tract Adjustment Payments............................... 42
Section 5.4. Payment of Purchase Price............................... 44
Section 5.5. Issuance of Shares of Common Stock...................... 46
Section 5.6. Adjustment of Settlement Rate........................... 47
Section 5.7. Notice of Adjustments and Certain
Other Events............................................ 55
Section 5.8. Termination Event; Notice............................... 56
Section 5.9. Early Settlement........................................ 56
Section 5.10. No Fractional Shares.................................... 58
Section 5.11. Charges and Taxes....................................... 59
ARTICLE VI
Remedies................................................................. 60
iii
<PAGE> 5
Page
----
Section 6.1. Unconditional Right of Holders to
Receive Contract Adjustment Payments
and to Purchase Common Stock............................ 60
Section 6.2. Restoration of Rights and Remedies...................... 60
Section 6.3. Rights and Remedies Cumulative.......................... 60
Section 6.4. Delay or Omission Not Waiver............................ 61
Section 6.5. Undertaking for Costs................................... 61
Section 6.6. Waiver of Stay or Extension Laws........................ 62
ARTICLE VII
The Agent................................................................ 62
Section 7.1. Certain Duties and Responsibilities..................... 62
Section 7.2. Notice of Default....................................... 63
Section 7.3. Certain Rights of Agent................................. 63
Section 7.4. Not Responsible for Recitals or Issu-
ance of Securities...................................... 65
Section 7.5. May Hold Securities..................................... 65
Section 7.6. Money Held in Custody................................... 65
Section 7.7. Compensation and Reimbursement.......................... 65
Section 7.8. Corporate Agent Required; Eligibili-
ty...................................................... 66
Section 7.9. Resignation and Removal; Appointment
of Successor............................................ 66
Section 7.10. Acceptance of Appointment by Succes-
sor..................................................... 68
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business.................................. 69
iv
<PAGE> 6
Page
----
Section 7.12. Preservation of Information; Communi-
cations to Holders...................................... 69
Section 7.13. No Obligations of Agent................................. 70
Section 7.14. Tax Compliance.......................................... 70
ARTICLE VIII
Supplemental Agreements.................................................. 71
Section 8.1. Supplemental Agreements Without Consent
of Holders.............................................. 71
Section 8.2. Supplemental Agreements with Consent
of Holders.............................................. 72
Section 8.3. Execution of Supplemental Agreements.................... 73
Section 8.4. Effect of Supplemental Agreements....................... 73
Section 8.5. Reference to Supplemental Agreements.................... 73
ARTICLE IX
Consolidation, Merger, Sale or Conveyance................................ 74
Section 9.1. Covenant Not to Merge, Consolidate,
Sell or Convey Property Except Under
Certain Conditions...................................... 74
Section 9.2. Rights and Duties of Successor
Corporation............................................. 75
Section 9.3. Opinion of Counsel to Agent............................. 75
ARTICLE X
Covenants................................................................ 76
Section 10.1. Performance Under Purchase Contracts.................... 76
Section 10.2. Maintenance of Office or Agency......................... 76
Section 10.3. Company to Reserve Common Stock......................... 77
v
<PAGE> 7
Page
----
Section 10.4. Covenants as to Common Stock............................ 77
Section 10.5. Statements of Officers of the Company
as to Default........................................... 77
EXHIBIT A Form of Income PRIDES Certificate
EXHIBIT B Form of Growth PRIDES Certificate
EXHIBIT C Instruction to Collateral Agent
EXHIBIT D Instruction to Purchase Contract Agent
vi
<PAGE> 8
PURCHASE CONTRACT AGREEMENT, dated as of _______ __, 1997, between
Owens Corning, a Delaware corporation (the "Company"), and The Bank of New York,
a national banking association, acting as purchase contract agent for the
Holders of Securities from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.
All things necessary to make the Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Agent, as provided in this Agreement, the
valid obligations of the Company, and to constitute these presents a valid
agreement of the Company, in accordance with its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
Definitions and Other Provisions
of General Applications
Section 1.1. Definitions.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance
<PAGE> 9
with generally accepted accounting principles in the United States;
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(d) the following terms have the meanings given to them in the
Declaration: (i) Authorized Newspaper; (ii) Coupon Rate; (iii) Indenture, (iv)
Investment Company Event; (v) Liquidation Distribution; (vi) Reset Agent;
(vii) Reset Announcement Date; (viii) Reset Rate; (ix) Reset Spread; and (x)
Two-Year Benchmark Treasury; and
(e) the following terms have the meanings given to them in this Section
1.1(e).
"Act" when used with respect to any Holder, has the meaning specified
in Section 1.4.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agent" means the Person named as the "Agent" in the first paragraph of
this instrument until a successor Agent shall have become such pursuant to the
applicable provisions of this Agreement, and thereafter "Agent" shall mean such
Person.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Applicable Market Value" has the meaning specified in Section 5.1.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that
2
<PAGE> 10
from time to time provides a uniform system of bankruptcy laws.
"Beneficial Owner" means, with respect to a Book- Entry Interest, a
Person, who is the beneficial owner of such Book-Entry Interest, as reflected on
the books of the Clearing Agency, or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Board of Directors" means the board of directors of the Company or a
duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day which is not a Saturday or Sunday or a day
on which banking institutions in New York City (in the State of New York) are
permitted or required by any applicable law to close.
"Cash Settlement" has the meaning set forth in Section 5.4(a)(i).
"Certificate" means an Income PRIDES Certificate or a Growth PRIDES
Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the Securities and in whose name or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Securities.
3
<PAGE> 11
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Price" has the meaning specified in Section 3.13.
"Collateral" has the meaning specified in Section 2.1 of the Pledge
Agreement.
"Collateral Agent" means The Chase Manhattan Bank, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have become
such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.
"Collateral Substitution" has the meaning specified in Section 3.13.
"Common Stock" means the Common Stock, par value $.10 per share, of the
Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such pursuant
to the applicable provision of this Agreement, and thereafter "Company" shall
mean such successor.
"Contract Adjustment Payments" means the fee payable by the Company in
respect of each Purchase Contract, equal to ____% per annum of the Stated
Amount, computed on the basis of a 360 day year of twelve 30 day months, plus
any Deferred Contract Adjustment Payments accrued pursuant to Section 5.2.
"Corporate Trust Office" means the principal corporate trust office of
the Agent at which, at any particular time, its corporate trust business shall
be administered, which office at the date hereof is located at 101 Barclay
Street, 12E, New York, NY 10286, Attention: _____________________________,
except that for purposes of Section 10.2, such term shall mean the office or
agency of the Agent in the Borough of Manhattan, the City
4
<PAGE> 12
of New York, which office at the date hereof is located at 101 Barclay Street,
12E, New York, NY 10286.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Debentures" means the series of debentures of the Company designated
the ____% Debentures due November 16, 2002, to be issued under the Indenture as
of the date hereof.
"Declaration" means the Amended and Restated Declaration of Trust of
Owens Corning Capital II, dated ______ __, 1997, among the Company, as the
sponsor, the trustees named therein and the holders from time to time of
individual beneficial interests in the assets of the Trust.
"Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.
"Depositary" means, initially, DTC until another Clearing Agency
becomes its successor.
"DTC" means the Depository Trust Company, the initial Clearing
Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4.
5
<PAGE> 13
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Global Certificate" means a Certificate that evidences all or part of
the Securities and is registered in the name of a Depositary or a nominee
thereof.
"Global Preferred Security Certificate" means a certificate evidencing
the rights and obligations of a holder in respect of the number of Preferred
Securities specified on such certificate and which is registered in the name of
a Clearing Agency or a nominee thereof.
"Growth PRIDES" means, following the substitution of one or more
Treasury Securities for Preferred Securities as collateral to secure a holder's
obligations under a Purchase Contract, the collective rights and obligations of
a holder of a Growth PRIDES Certificate in respect of such Treasury Securities,
subject to the Pledge thereof, and the related Purchase Contract.
"Growth PRIDES Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Growth PRIDES specified
on such certificate.
"Growth PRIDES Register" and "Growth PRIDES Registrar" have the
respective meanings specified in Section 3.5.
"Holder," when used with respect to a Security, means a Person in whose
name the Security evidenced by an Income PRIDES Certificate and/or a Growth
PRIDES Certificate is registered in the related Income PRIDES Register and/or
the Growth PRIDES Register, as the case may be.
"Income PRIDES" means the collective rights and obligations of a Holder
of an Income PRIDES Certificate in respect of a Preferred Security, subject to
the Pledge thereof, and a related Purchase Contract.
"Income PRIDES Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Income PRIDES specified
on such certificate.
6
<PAGE> 14
"Income PRIDES Register" and "Income PRIDES Registrar" have the
respective meanings specified in Section 3.5.
"Indenture" has the meaning set forth in Section 1.1 of the
Declaration.
"Indenture Trustee" means Wilmington Trust Company, a Delaware state
banking association, as trustee under the Indenture, or any successor thereto.
"Institutional Trustee" means Wilmington Trust Company, as
institutional trustee under the Declaration, or any successor thereto that is a
financial institution unaffiliated with the Company.
"Investment Company Event" has the meaning set forth in Annex I of the
Declaration.
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Company by its Chairman of the Board, any Vice
Chairman, its President or a Vice President and by its Treasurer, an Assistant
Treasurer, its Secretary or an Assistant Secretary, and delivered to the Agent.
"Liquidation Distribution" has the meaning set forth in Annex I of the
Declaration.
"NYSE" has the meaning specified in Section 5.1.
"Officer's Certificate" means a certificate signed by the Chairman of
the Board, any Vice Chairman of the Board, the President, any Vice President,
the Treasurer or the Secretary of the Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company and who shall be
reasonably acceptable to the Agent.
"Outstanding Securities," with respect to any Income PRIDES and/or
Growth PRIDES, means, as of the date of determination, all Income PRIDES and/or
Growth PRIDES evidenced by Certificates theretofore authenticated, executed and
delivered under this Agreement, except:
7
<PAGE> 15
(i) If a Termination Event has occurred, (A) Growth PRIDES and
(B) Income PRIDES for which the Stated Amount of the related Preferred
Security or a Liquidation Distribution in respect of such Preferred
Security has been theretofore deposited with the Agent in trust for the
Holders of such Income PRIDES;
(ii) Income PRIDES and Growth PRIDES evidenced by Certificates
theretofore cancelled by the Agent or delivered to the Agent for
cancellation or deemed cancelled pursuant to the provisions of this
Agreement; and
(iii) Income PRIDES and Growth PRIDES evidenced by
Certificates in exchange for or in lieu of which other Certificates
have been authenticated, executed on behalf of the Holder and delivered
pursuant to this Agreement, other than any such Certificate in respect
of which there shall have been presented to the Agent proof
satisfactory to it that such Certificate is held by a bona fide
purchaser in whose hands the Income PRIDES or Growth PRIDES evidenced
by such Certificate are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
number of the Income PRIDES or Growth PRIDES have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Income PRIDES or
Growth PRIDES owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Income PRIDES or
Growth PRIDES which a Responsible Officer of the Agent knows to be so owned
shall be so disregarded. Income PRIDES or Growth PRIDES so owned which have been
pledged in good faith may be regarded as Outstanding Securities if the pledgee
establishes to the satisfaction of the Agent the pledgee's right so to act with
respect to such Income PRIDES or Growth PRIDES and that the pledgee is not the
Company or any Affiliate of the Company.
"Payment Date" means each March 31, June 30, September 30, and
December 31, commencing __________ __, 1997.
8
<PAGE> 16
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Permitted Investments" has the meaning set forth in Section 1 of the
Pledge Agreement.
"Pledge" means the pledge under the Pledge Agreement of the Preferred
Securities or the Treasury Securities, in each case constituting a part of the
Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, by and among the Company, the Collateral Agent and the Agent, on its own
behalf and as attorney-in-fact for the Holders from time to time of the
Securities.
"Predecessor Certificate" means a Predecessor Income PRIDES Certificate
or a Predecessor Growth PRIDES Certificate.
"Predecessor Growth PRIDES Certificate" of any particular Growth PRIDES
Certificate means every previous Growth PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Growth PRIDES evidenced thereby; and, for the purposes of this definition, any
Growth PRIDES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Growth PRIDES
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Growth PRIDES
Certificate.
"Predecessor Income PRIDES Certificate" of any particular Income PRIDES
Certificate means every previous Income PRIDES Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Income PRIDES evidenced thereby; and, for the purposes of this definition, any
Income PRIDES Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Income PRIDES
Certificate shall be deemed to evidence the same rights and obligations of the
Company
9
<PAGE> 17
and the Holder as the mutilated, destroyed, lost or stolen Income PRIDES
Certificate.
"Preferred Securities" means the ____% Trust Originated Preferred
Securities of the Trust, each having a liquidation amount of $50, representing
preferred undivided beneficial interests in the assets of the Trust.
"Proceeds" has the meaning set forth in Section 1 of the Pledge
Agreement.
"Purchase Contract," when used with respect to any Security, means the
contract obligating the Company to (i) sell and the Holder of such Security to
purchase Common Stock and (ii) pay the Holder Contract Adjustment Payments, if
any, on the terms and subject to the conditions set forth in Article Five
hereof.
"Purchase Contract Settlement Date" means November 16, 2000.
"Purchase Contract Settlement Fund" has the meaning specified in
Section 5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Record Date" for the distribution and Contract Adjustment Payments
payable on any Payment Date means, as to any Global Certificate, the Business
Day next preceding such Payment Date, and as to any other Certificate, the 15th
day of the month preceding such Payment Date.
"Register" means the Income PRIDES Register and the Growth PRIDES
Register.
"Registrar" means the Income PRIDES Registrar and the Growth PRIDES
Registrar.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Repayment Price" means, with respect to a Preferred Security, the
Stated Amount plus any accrued and unpaid
10
<PAGE> 18
distributions thereon to the date of repayment (subject to the rights of holders
of record on the relevant record date to receive distributions due on a Payment
Date).
"Responsible Officer," when used with respect to the Agent, means any
officer of the Agent assigned by the Agent to administer its corporate trust
matters.
"Security" means an Income PRIDES or a Growth PRIDES.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" means $50.
"Termination Date" means the date, if any, on which a Termination Event
occurs.
"Termination Event" means the occurrence of any of the following
events: (i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order shall have been entered granting relief under
the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued undischarged
and unstayed for a period of 60 days; or (ii) a judgment, decree or court order
for the appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or of its property, or for the winding
up or liquidation of its affairs, shall have been entered, and, unless such
judgment, decree or order shall have been entered within 60 days prior to the
Purchase Contract Settlement Date, such judgment, decree or order shall have
continued undischarged and unstayed for a period of 60 days, or (iii) at any
time on or prior to the Purchase Contract Settlement Date the Company shall file
a petition for relief under the Bankruptcy Code, or shall consent to the filing
of a bankruptcy proceeding against it, or shall file a petition or answer or
consent seeking reorganization or liquidation under the Bankruptcy Code or any
other similar applicable Federal or State law, or shall consent to
11
<PAGE> 19
the filing of any such petition, or shall consent to the appointment of a
receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it
or of its property, or shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they become
due.
"Threshold Appreciation Price" has the meaning specified in Section
5.1.
"TIA" means the Trust Indenture Act of 1939, as amended, or any
successor statute.
"Trading Day" has the meaning specified in Section 5.1.
"Treasury Security" means a zero-coupon U.S. Treasury Security due
November 15, 2000 (Cusip Number 912820 AY3) which is the principal strip of the
8.50% U.S. Treasury Security which matures on November 15, 2000.
"Trust" means Owens Corning Capital II, a statutory business trust
formed under the laws of the State of Delaware.
"Underwriting Agreement" means the Underwriting Agreement dated _______
__, 1997 between the Company and the Trust, on the one hand, and Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Credit Suisse First Boston Corporation, and
Goldman Sachs & Co., as representatives of the several Underwriters named
therein, on the other hand.
"Vice President" means any vice president, whether or not designated by
a number or a word or words added before or after the title "vice president."
Section 1.2. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent an
Officer's Certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with and an Opin-
12
<PAGE> 20
ion of Counsel stating that, in the opinion of such counsel, all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual,
he has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
13
<PAGE> 21
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.4. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement 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 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 Agent and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 7.1) conclusive in favor of the Agent 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 in any manner which the Agent deems
sufficient.
14
<PAGE> 22
(c) The ownership of Securities shall be proved by the Income PRIDES
Register or the Growth PRIDES Register,
as the case may be.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Certificate shall bind every future
Holder of the same Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Agent or the
Company in reliance thereon, whether or not notation of such action is made upon
such Certificate.
(e) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Securities on such record date, and no other Holders,
shall be entitled to take the relevant action, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite number of Outstanding Securities on such record
date. Nothing in this paragraph shall be construed to prevent the Company from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect), and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite number of Outstanding Securities on
the date such action is taken. Promptly after any record date is set pursuant to
this paragraph, the Company, at its own expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Agent in writing and to each Holder of Securities in the
manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the
Company may designate any date as the "Expiration Date" and from time to time
may change the Expira-
15
<PAGE> 23
tion Date to any earlier or later day; provided that no such change shall be
effective unless notice of the proposed new Expiration Date is given to the
Agent in writing, and to each Holder of Securities in the manner set forth in
Section 1.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the Company shall be deemed to have initially designated the 180th day after
such record date as the Expiration Date with respect thereto, subject to its
right to change the Expiration Date as provided in this paragraph.
Notwithstanding the foregoing, no Expiration Date shall be later than the 180th
day after the applicable record date.
Section 1.5. Notices.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Agreement to
be made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, to the
Agent at 101 Barclay Street, 12E, New York, NY 10286, Attention:
____________________, or at any other address previously furnished in
writing by the Agent to the Holders and the Company, or
(2) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, to the
Company at Owens Corning World Headquarters, Toledo, Ohio 43659,
Attention: Corporate Secretary, or at any other address previously
furnished in writing to the Agent by the Company.
(3) the Collateral Agent by the Agent, the Company or any
Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given, furnished or filed
in
16
<PAGE> 24
writing and personally delivered or mailed, first-class postage
prepaid, addressed to the Collateral Agent at The Chase Manhattan Bank,
450 W. 33rd Street, 15th Floor, New York, New York 10001, Attention:
Corporate Trust Trustee Administration, or at any other address
previously furnished in writing by the Collateral Agent to the Agent,
the Company and the Holders; or
(4) the Institutional Trustee by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, addressed
to the Institutional Trustee at 1100 N. Market Street, Corporate
Financial Center, Wilmington, DE 19890, Attention:___________________,
or at any other address previously furnished in writing by the
Institutional Trustee to the Company; or
(5) the Indenture Trustee by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and personally
delivered or mailed, first-class postage prepaid, addressed to the
Indenture Trustee at 1100 N. Market Street, Corporate Financial Center,
Wilmington, DE 19890, Attention: , or at any other address previously
furnished in writing by the Indenture Trustee to the Company.
Section 1.6. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Agreement provides for notice in any
manner,
17
<PAGE> 25
such notice may be waived in writing by the Person entitled to receive such
notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Agent, but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
Section 1.7. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
Section 1.8. Successors and Assigns.
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.9. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefits or any legal or equitable right, remedy
or claim under this Agreement. The Holders from time to time shall be
beneficiaries of this Agreement and shall be bound by all of the terms and
conditions hereof and of the Securities evidenced by their Certificates by their
acceptance of delivery of such Certificates.
18
<PAGE> 26
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by and construed in
accordance with the laws of the State of New York.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Income PRIDES
Certificates or the Growth PRIDES Certificates) payment of the Contract
Adjustment Payments, if any, shall not be made on such date, but such payments
shall be made on the next succeeding Business Day with the same force and effect
as if made on such Payment Date, provided that no interest shall accrue or be
payable by the Company or any Holder for the period from and after any such
Payment Date, except that, if such next succeeding Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.
In any case where any Purchase Contract Settlement Date shall not be a
Business Day, then (notwithstanding any other provision of this Agreement, the
Income PRIDES Certificates or the Growth PRIDES Certificates), the Purchase
Contracts shall not be performed on such date, but the Purchase Contracts shall
be performed on the next preceding Business Day with the same force and effect
as if performed on such Purchase Contract Settlement Date.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by any
Holder.
19
<PAGE> 27
ARTICLE II
Certificate Forms
Section 2.1. Forms of Certificates Generally.
The Income PRIDES Certificates (including the form of Purchase
Contracts forming part of the Income PRIDES evidenced thereby) shall be in
substantially the form set forth in Exhibit A hereto, with such letters, numbers
or other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Income PRIDES Certificates, as evidenced by their
execution of the Income PRIDES Certificates.
The definitive Income PRIDES Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing the
Income PRIDES evidenced by such Income PRIDES Certificates, consistent with the
provisions of this Agreement, as evidenced by their execution thereof.
The Growth PRIDES Certificates (including the form of Purchase
Contracts forming part of the Growth PRIDES evidenced thereby) shall be in
substantially the form set forth in Exhibit B hereto, with such letters, numbers
or other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Growth PRIDES may be listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Growth PRIDES Certificates, as evidenced by their
execution of the Growth PRIDES Certificates.
The definitive Growth PRIDES Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing the
Growth PRIDES evidenced by such Growth PRIDES Certifi-
20
<PAGE> 28
cates, consistent with the provisions of this Agreement, as evidenced by their
execution thereof.
Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED
IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE
REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY
BE REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING
AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Section 2.2. Form of Agent's Certificate of Authentication.
The form of the Agent's certificate of authentication of the Income
PRIDES shall be in substantially the form set forth on the form of the Income
PRIDES Certificates.
The form of the Agent's certificate of authentication of the Growth
PRIDES shall be in substantially the form set forth on the form of the Growth
PRIDES Certificates.
ARTICLE III
The Securities
Section 3.1. Title and Terms; Denominations.
The aggregate number of Income PRIDES evidenced by Certificates
authenticated, executed on behalf of the Holders and delivered hereunder is
limited to 6,900,000 except for Certificates authenticated, executed and
delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13, 3.14, 5.9 or 8.5.
21
<PAGE> 29
The Certificates shall be issuable only in registered form and only in
denominations of a single Income PRIDES or Growth PRIDES and any integral
multiple thereof.
Section 3.2. Rights and Obligations Evidenced by the Certificates.
Each Income PRIDES Certificate shall evidence the number of Income
PRIDES specified therein, with each such Income PRIDES representing the
ownership by the Holder thereof of a beneficial interest in Preferred Security
with a principal amount equal to the Stated Amount, subject to the Pledge of
such Preferred Security by such Holder pursuant to the Pledge Agreement, and the
rights and obligations of the Holder thereof and the Company under one Purchase
Contract. The Agent as attorney-in-fact for, and on behalf of, each Holder of
Income PRIDES shall pledge, pursuant to the Pledge Agreement, the Preferred
Security forming a part of such Holder's Income PRIDES, to the Collateral Agent
and grant to the Collateral Agent a security interest in the right, title, and
interest of such Holder in such Preferred Security, for the benefit of the
Company, to secure the obligation of the Holder under the Purchase Contracts to
purchase the Common Stock of the Company. Prior to the purchase of shares of
Common Stock under the Purchase Contracts, such Purchase Contracts shall not
entitle the Holders of Income PRIDES Certificates to any of the rights of a
holder of shares of Common Stock, including, without limitation, the right to
vote or receive any dividends or other payments or to consent or to receive
notice as stockholders in respect of the meetings of stockholders or for the
election of directors of the Company or for any other matter, or any other
rights whatsoever as stockholders of the Company.
Each Growth PRIDES Certificate shall evidence the number of Growth
PRIDES specified therein, with each such Growth PRIDES representing the
ownership by the Holder thereof of a beneficial interest in Treasury Security
with a principal amount equal to the aggregate Stated Amount of the Preferred
Securities for which such Treasury Security is being substituted, subject to the
Pledge of such Treasury Security by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof and the Company
under one Purchase Con-
22
<PAGE> 30
tract. Prior to the purchase, if any, of shares of Common Stock under the
Purchase Contracts, such Growth PRIDES Certificates shall not entitle the
Holders of Growth PRIDES Certificates to any of the rights of a holder of shares
of Common Stock, including, without limitation, the right to vote or receive any
dividends or other payments or to consent or to receive notice as stockholders
in respect of the meetings of stockholders or for the election of directors of
the Company or for any other matter, or any other rights whatsoever as
stockholders of the Company.
Section 3.3. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Certificates, and the
Agent in accordance with such Issuer Order shall authenticate, execute on behalf
of the Holder and deliver such Certificates.
The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Certificates may be manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.
No Purchase Contract evidenced by a Certificate shall be valid until
such Certificate has been executed on behalf of the Holder by the manual
signature of an authorized signatory of the Agent, as such Holder's
attorney-in-fact. Such signature by an authorized signa-
23
<PAGE> 31
tory of the Agent shall be conclusive evidence that the Holder of such
Certificate has entered into the Purchase Contracts evidenced by such
Certificate.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or
be valid or obligatory for any purpose unless there appears on such Certificate
a certificate of authentication substantially in the form provided for herein
executed by an authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder.
Section 3.4. Temporary Certificates.
Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the form set forth in Exhibit
A or Exhibit B hereto, as the case may be, with such letters, numbers or other
marks of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income PRIDES or Growth PRIDES are listed, or
as may, consistently herewith, be determined by the officers of the Company
executing such Certificates, as evidenced by their execution of the
Certificates.
If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of
24
<PAGE> 32
like tenor authorized denominations and evidencing a like number of Income
PRIDES or Growth PRIDES, as the case may be, as the temporary Certificate or
Certificates so surrendered. Until so exchanged, the temporary Certificates
shall in all respects evidence the same benefits and the same obligations with
respect to the Income PRIDES or Growth PRIDES, as the case may be, evidenced
thereby as definitive Certificates.
Section 3.5. Registration; Registration of Transfer and Exchange.
The Agent shall keep at the Corporate Trust Office a register (the
"Income PRIDES Register") in which, subject to such reasonable regulations as it
may prescribe, the Agent shall provide for the registration of Income PRIDES
Certificates and of transfers of Income PRIDES Certificates (the Agent, in such
capacity, the "Income PRIDES Registrar") and a Register (the "Growth PRIDES
Register") in which, subject to such reasonable regulations as it may prescribe,
the Agent shall provide for the registration of the Growth PRIDES Certificates
following Collateral Substitutions and transfers of Growth PRIDES Certificates
(the Agent, in such capacity, the "Growth PRIDES Registrar").
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, like
tenor, and evidencing a like number of Income PRIDES or Growth PRIDES, as the
case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Income PRIDES or Growth PRIDES, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf of the
Holder, and deliver the Certificates which the Holder making the exchange is
entitled to receive.
25
<PAGE> 33
All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of Income
PRIDES or Growth PRIDES, as the case may be, and be entitled to the same
benefits and subject to the same obligations, under this Agreement as the Income
PRIDES or Growth PRIDES, as the case may be, evidenced by the Certificate
surrendered upon such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer
or for exchange shall (if so required by the Agent) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Agent duly executed, by the Holder thereof or his attorney duly
authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Agent may require payment
from the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates, other than any exchanges pursuant to Sections 3.6 and
8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder and deliver any Certificate
presented or surrendered for registration of transfer or for exchange on or
after the Purchase Contract Settlement Date or the Termination Date. In lieu of
delivery of a new Certificate, upon satisfaction of the applicable conditions
specified above in this Section and receipt of appropriate registration or
transfer instructions from such Holder, the Agent shall (i) if the Purchase
Contract Settlement Date has occurred, deliver the shares of Common Stock
issuable in respect of the Purchase Contracts forming a part of the Securities
evidenced by such Certificate, (ii) in the case of Income PRIDES, if a
Termination Event shall have occurred prior to the Purchase Contract Settlement
Date, transfer the aggregate Stated Amount of the Preferred Securities evidenced
thereby, or (iii) in the case of Growth PRIDES, if a Termination Event shall
have occurred prior to the Purchase Contract Settlement Date, transfer the
Treasury
26
<PAGE> 34
Securities evidenced thereby, in each case subject to the applicable conditions
and in accordance with the applicable provisions of Article Five hereof.
Section 3.6. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of
one or more, fully registered Global Certificates, to be delivered to the
Depositary by, or on behalf of, the Company. Such Global Certificate shall
initially be registered on the books and records of the Company in the name of
Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive
a definitive Certificate representing such Beneficial Owner's interest in such
Global Certificate, except as provided in Section 3.9. The Agent shall enter
into an agreement with the Depositary if so requested by the Company. Unless and
until definitive, fully registered Certificates have been issued to Beneficial
Owners pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full force
and effect;
(b) the Company shall be entitled to deal with the Clearing
Agency for all purposes of this Agreement (including the payment of Contract
Adjustment Payments, if any, and receiving approvals, votes or consents
hereunder) as the Holder of the Securities and the sole holder of the Global
Certificate(s) and shall have no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 3.6
conflict with any other provisions of this Agreement, the provisions of this
Section 3.6 shall control; and
(d) the rights of the Beneficial Owners shall be exercised
only through the Clearing Agency and shall be limited to those established by
law and agreements between such Beneficial Owners and the Clearing Agency and/or
the Clearing Agency Participants. The Clearing Agency will make book entry
transfers among Clearing Agency Participants and receive and transmit payments
of Contract Adjustment Payments to such Clearing Agency Participants.
27
<PAGE> 35
Section 3.7. Notices to Holders.
Whenever a notice or other communication to the Holders is required to
be given under this Agreement, the Company or the Company's agent shall give
such notices and communications to the Holders and, with respect to any
Securities registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.
Section 3.8. Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities, the Company may, in its
sole discretion, appoint a successor Clearing Agency with respect to the
Securities.
Section 3.9. Definitive Certificates.
If (i) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 3.8, (ii) the Company elects to terminate the book-entry system through
the Clearing Agency with respect to the Securities, or (iii) there shall have
occurred and be continuing a default by the Company in respect of its
obligations under one or more Purchase Contracts, then upon surrender of the
Global Certificates representing the Book-Entry Interests with respect to the
Securities by the Clearing Agency, accompanied by registration instructions, the
Company shall cause definitive Certificates to be delivered to Beneficial Owners
in accordance with the instructions of the Clearing Agency. The Company shall
not be liable for any delay in delivery of such instructions and may
conclusively rely on and shall be protected in relying on, such instructions.
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Agent, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a
28
<PAGE> 36
new Certificate, evidencing the same number of Income PRIDES or Growth PRIDES,
as the case may be, and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence
to their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity as may be required by them to hold each of them
and any agent of any of them harmless, then, in the absence of notice to the
Company or the Agent that such Certificate has been acquired by a bona fide
purchaser, the Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver to the Holder,
in lieu of any such destroyed, lost or stolen Certificate, a new Certificate,
evidencing the same number of Income PRIDES or Growth PRIDES, as the case may
be, and bearing a number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Agent, and the Agent shall not be obligated to
authenticate, execute on behalf of the Holder, and deliver to the Holder, a
Certificate on or after the Purchase Contract Settlement Date or the Termination
Date. In lieu of delivery of a new Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Agent shall (i) if
the Purchase Contract Settlement Date has occurred, deliver the shares of Common
Stock issuable in respect of the Purchase Contracts forming a part of the
Securities evidenced by such Certificate, or (ii) if a Termination Event shall
have occurred prior to the Purchase Contract Settlement Date, transfer the
Preferred Securities or the Treasury Securities, as the case may be, evidenced
thereby, in each case subject to the applicable conditions and in accordance
with the applicable provisions of Article Five hereof.
Upon the issuance of any new Certificate under this Section, the
Company and the Agent may require the payment by the Holder of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Agent)
connected therewith.
29
<PAGE> 37
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer,
the Company and the Agent, and any agent of the Company or the Agent, may treat
the Person in whose name such Certificate is registered as the owner of the
Income PRIDES or Growth PRIDES evidenced thereby, for the purpose of receiving
distributions on the Preferred Securities, receiving payments of Contract
Adjustment Payments, performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any distributions on the Preferred
Securities or the Contract Adjustment Payments payable in respect of the
Purchase Contracts constituting a part of the Income PRIDES or Growth PRIDES
evidenced thereby shall be overdue and notwithstanding any notice to the
contrary, and neither the Company nor the Agent, nor any agent of the Company or
the Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent the Company, the Agent or any agent of the Company
or the Agent, from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee), as a Holder,
with respect to such Global Certificate or impair, as between such Clearing
Agency and owners of beneficial interests in such Global Certificate, the
operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
30
<PAGE> 38
Section 3.12. Cancellation.
All Certificates surrendered for delivery of shares of Common Stock on
or after the Purchase Contract Settlement Date, upon the transfer of Preferred
Securities or Treasury Securities, as the case may be, after the occurrence of a
Termination Event or pursuant to an Early Settlement, or upon the registration
of a transfer or exchange of a Security, or a Collateral Substitution or the
re-establishment of an Income PRIDES shall, if surrendered to any Person other
than the Agent, be delivered to the Agent and, if not already cancelled, shall
be promptly cancelled by it. The Company may at any time deliver to the Agent
for cancellation any Certificates previously authenticated, executed and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon Issuer Order, be
promptly cancelled by the Agent. No Certificates shall be authenticated,
executed on behalf of the Holder and delivered in lieu of or in exchange for any
Certificates cancelled as provided in this Section, except as expressly
permitted by this Agreement. All cancelled Certificates held by the Agent shall
be destroyed by the Agent unless otherwise directed by Issuer Order.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
Section 3.13. Substitution of Securities.
A Holder may separate Preferred Securities from the related Purchase
Contracts in respect of an Income PRIDES by substituting for such Preferred
Securities, Treasury Securities in an aggregate principal amount equal to the
aggregate Stated Amount of such Preferred Securities (a "Collateral
Substitution") at any time from and after the date of this Agreement and on or
prior to the second Business Day immediately preceding the Purchase Contract
Settlement Date by (a) depositing with the Collateral Agent Treasury Securities
having an aggregate principal amount equal to the aggregate Stated Amount of the
Preferred Securities comprising part of such Income PRIDES and (b) transferring
the related Income PRIDES to the Agent accompanied by a notice to the Agent,
substantially
31
<PAGE> 39
in the form of Exhibit D hereto, stating that the Holder has transferred the
relevant amount of Treasury Securities to the Collateral Agent and requesting
that the Agent instruct the Collateral Agent to release the Preferred Securities
underlying such Income PRIDES, whereupon the Agent shall promptly give such
instruction to the Collateral Agent, substantially in the form of Exhibit C
hereto. Upon receipt of the Treasury Securities described in clause (a) above
and the instruction described in clause (b) above, in accordance with the terms
of the Pledge Agreement, the Collateral Agent will release to the Agent, on
behalf of the Holder, Preferred Securities having a corresponding aggregate
Stated Amount from the Pledge, free and clear of the Company's security interest
therein, and upon receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES;
(ii) transfer the Preferred Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and
deliver a Growth PRIDES Certificate executed by the Company in
accordance with Section 3.3 evidencing the same number of Purchase
Contracts as were evidenced by the cancelled Income PRIDES
Certificates.
Holders who elect to separate the Preferred Security from the related
Purchase Contract and to substitute Treasury Securities for such Preferred
Securities shall be responsible for any fees or expenses payable to the
Collateral Agent for its services as Collateral Agent in respect of the
substitution, and the Company shall not be responsible for any such fees or
expenses.
Holders may make Collateral Substitutions only in integral multiples of
20 Income PRIDES.
In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Income PRIDES or fails
to deliver an Income PRIDES Certificate(s) to the Agent after depositing
Treasury Securities with the Collateral Agent, the Preferred Security
constituting a part of such Income PRIDES, and any distributions on such
Preferred
32
<PAGE> 40
Security, shall be held in the name of the Agent or its nominee in trust for the
benefit of such Holder, until such Income PRIDES is so transferred or the Income
PRIDES Certificate is so delivered, as the case may be, or, with respect to an
Income PRIDES Certificate, such Holder provides satisfactory evidence that such
Income PRIDES Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Except as described in this Section 3.13, for so long as the Purchase
Contract underlying an Income PRIDES remains in effect, such Income PRIDES shall
not be separable into its constituent parts, and the rights and obligations of
the Holder in respect of the Preferred Security and Purchase Contract comprising
such Income PRIDES may be acquired, and may be transferred and exchanged, only
as an Income PRIDES.
Section 3.14. Reestablishment of Income PRIDES.
A Holder of a Growth PRIDES may at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date,
recreate Income PRIDES by (a) depositing with the Collateral Agent Preferred
Securities having an aggregate Stated Amount equal to the aggregate principal
amount of the Treasury Securities comprising part of the Growth PRIDES to the
Collateral Agent and (b) transferring the related Growth PRIDES to the Agent
accompanied by a notice to the Agent, substantially in the form of Exhibit D
hereto, stating that the Holder has transferred the relevant amount of Preferred
Securities to the Collateral Agent and requesting that the Agent instruct the
Collateral Agent to release the Treasury Securities underlying such Growth
PRIDES, whereupon the Agent shall promptly give such instruction to the
Collateral Agent, substantially in the form of Exhibit C hereto. Upon receipt of
the Preferred Securities described in clause (a) above and the instruction
described in clause (b) above, in accordance with the terms of the Pledge
Agreement, the Collateral Agent will effect the release of the Treasury
Securities having a corresponding aggregate principal amount from the Pledge to
the Agent free and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
33
<PAGE> 41
(i) cancel the related Growth PRIDES;
(ii) transfer the Treasury Securities to the
Holder; and
(iii) authenticate, execute on behalf of such Holder and
deliver an Income PRIDES Certificate executed by the Company in
accordance with Section 3.3 evidencing the same number of Purchase
Contracts as were evidenced by the cancelled Growth PRIDES.
Holders of Growth PRIDES may reestablish Income PRIDES only in integral
multiples of 20 Income PRIDES for 20 Growth PRIDES.
Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Growth PRIDES remains in effect, such Growth PRIDES shall
not be separable into its constituent parts and the rights and obligations of
the Holder of such Growth PRIDES in respect of the Treasury Security and
Purchase Contract comprising such Growth PRIDES may be acquired, and may be
transferred and exchanged only as a Growth PRIDES.
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer to the
Agent of the Preferred Securities or the Treasury Securities, as the case may
be, underlying the Income PRIDES and the Growth PRIDES, respectively, pursuant
to the terms of the Pledge Agreement, the Agent shall request transfer
instructions with respect to such Preferred Securities and/or Treasury
Securities, as the case may be, from each Holder by written request mailed to
such Holder at its address as it appears in the Income PRIDES Register or the
Growth PRIDES Register, as the case may be. Upon book-entry transfer of the
Income PRIDES or Growth PRIDES or delivery of an Income PRIDES Certificate or
Growth PRIDES Certificate to the Agent with such transfer instructions, the
Agent shall transfer the Preferred Securities or Treasury Securities underlying
such Income PRIDES or Growth PRIDES, as the case may be, to such Holder by
book-entry transfer, or other appropriate procedures, in accordance with such
instructions. In the event a Holder of Income PRIDES or Growth PRIDES fails to
effect such transfer or delivery, the
34
<PAGE> 42
Preferred Securities or Treasury Securities underlying such Income PRIDES or
Growth PRIDES, as the case may be, and any distributions thereon, shall be held
in the name of the Agent or its nominee in trust for the benefit of such Holder,
until such Income PRIDES or Growth PRIDES are transferred or the Income PRIDES
Certificate or Growth PRIDES Certificate is surrendered or such Holder provides
satisfactory evidence that such Income PRIDES Certificate or Growth PRIDES
Certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Agent and the Company.
Section 3.16. No Consent to Assumption.
Each Holder of a Security, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company,
receiver, liquidator or a person or entity performing similar functions, its
trustee in the event that the Company becomes the debtor under the Bankruptcy
Code or subject to other similar state or federal law providing for
reorganization or liquidation.
ARTICLE IV
The Preferred Securities
Section 4.1. Payment of Distribution; Rights to Distributions Preserved.
A distribution on any Preferred Security which is paid on any Payment
Date shall, subject to receipt thereof by the Agent from the Collateral Agent as
provided by the terms of the Pledge Agreement, be paid to the Person in whose
name the Income PRIDES Certificate (or one or more Predecessor Income PRIDES
Certificates) of which such Preferred Security is a part is registered at the
close of business on the Record Date for such Payment Date.
Each Income PRIDES Certificate evidencing Preferred Securities
delivered under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Income PRIDES Certificate shall carry the rights to
35
<PAGE> 43
distributions accrued and unpaid, and to accrue distributions, which were
carried by the Preferred Securities underlying such other Income PRIDES
Certificate.
In the case of any Income PRIDES with respect to which Cash Settlement
of the underlying Purchase Contract is effected on the Business Day immediately
preceding the Purchase Contract Settlement Date, or with respect to which Early
Settlement of the underlying Purchase Contract is effected on a Early Settlement
Date, or with respect to which a Collateral Substitution is effected on a date,
after any Record Date and on or prior to the next succeeding Payment Date,
distributions on the Preferred Securities underlying such Income PRIDES
otherwise payable on such Payment Date shall be payable on such Payment Date
notwithstanding such Cash Settlement or Early Settlement or Collateral
Substitution, and such distributions shall, subject to receipt thereof by the
Agent, be paid to the Person in whose name the Income PRIDES Certificate (or one
or more Predecessor Income PRIDES Certificates) is registered at the close of
business on the Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Income PRIDES with respect to
which Cash Settlement or Early Settlement of the underlying Purchase Contract is
effected on the Business Day immediately preceding the Purchase Contract
Settlement Date or an Early Settlement Date, as the case may be, or with respect
to which a Collateral Substitution has been effected, distributions on the
related Preferred Securities that would otherwise be payable after the Purchase
Contract Settlement Date or Early Settlement Date shall not be payable hereunder
to the Holder of such Income PRIDES; PROVIDED, HOWEVER, that to the extent that
such Holder continues to hold the separated Preferred Securities that formerly
comprised a part of such Holder's Income PRIDES, such Holder shall be entitled
to receive the distributions on such separated Preferred Securities.
Section 4.2. Notice and Voting.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Preferred
Securities pledged with the Collateral Agent but only to the extent instructed
by the Holders as described below. Upon receipt of notice of any meeting at
which holders of
36
<PAGE> 44
Preferred Securities are entitled to vote or upon any solicitation of consents,
waivers or proxies of holders of Preferred Securities, the Agent shall, as soon
as practicable thereafter, mail to the Holders a notice (a) containing such
information as is contained in the notice or solicitation, (b) stating that each
Holder on the record date set by the Agent therefor (which, to the extent
possible, shall be the same date as the record date for determining the holders
of Preferred Securities entitled to vote) shall be entitled to instruct the
Agent as to the exercise of the voting rights pertaining to the Preferred
Securities underlying their Income PRIDES and (c) stating the manner in which
such instructions may be given. Upon the written request of the Holders on such
record date, the Agent shall endeavor insofar as practicable to vote or cause to
be voted, in accordance with the instructions set forth in such requests, the
maximum number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the Preferred
Security underlying such Income PRIDES. The Company hereby agrees, if
applicable, to solicit Holders to timely instruct the Agent in order to enable
the Agent to vote such Preferred Securities or to cause such Preferred
Securities to be voted, and the Trust shall covenant in the Declaration to take
all action which may be deemed necessary by the Agent in order to enable the
Agent to vote such Preferred Securities or to cause such Preferred Securities to
be voted.
Section 4.3. Investment Company Event.
Upon the occurrence of an Investment Company Event or a liquidation of
the Trust, a principal amount of Debentures constituting the assets of the Trust
and underlying the Preferred Securities equal to the aggregate Stated Amount of
the Pledged Preferred Securities shall be delivered to the Collateral Agent in
exchange for the Pledged Preferred Securities. Thereafter, the Debentures will
be held by the Collateral Agent in accordance with the terms of the Pledge
Agreement to secure the obligations of each Holder of an Income PRIDES to
purchase the Common Stock of the Company under the Purchase Contracts
constituting a part of such Income PRIDES. Following the occurrence of an
Investment Company Event or a liquidation of the Trust, the Holders and the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Debentures as
37
<PAGE> 45
the Holders and the Collateral Agent had in respect of the Preferred Securities
subject to the Pledge thereof as provided in Articles II, III, IV, V and VI of
the Pledge Agreement, and any reference herein to the Preferred Securities shall
be deemed to be a reference to the Debentures. The Company may cause to be made
in any Income PRIDES Certificates thereafter to be issued such change in
phraseology and form (but not in substance) as may be appropriate to reflect the
liquidation of the Trust and the substitution of Debentures for Preferred
Securities as Collateral.
ARTICLE V
The Purchase Contracts
Section 5.1. Purchase of Shares of Common Stock.
Each Purchase Contract shall obligate the Holder of the related
Security to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "Purchase Price"), a
number of new shares of Common Stock equal to the Settlement Rate unless, on or
prior to the Purchase Contract Settlement Date, there shall have occurred a
Termination Event with respect to the Security of which such Purchase Contract
is a part. The "Settlement Rate" is equal to (a) if the Applicable Market Value
(as defined below) is equal to or greater than $____ (the "Threshold
Appreciation Price"), ____ shares of Common Stock per Purchase Contract, (b) if
the Applicable Market Value is less than the Threshold Appreciation Price, but
is greater than $____, the number of shares of Common Stock equal to the Stated
Amount divided by the Applicable Market Value and (c) if the Applicable Market
Value is less than or equal to $____, ____ shares of Common Stock per Purchase
Contract, in each case subject to adjustment as provided in Section 5.6 (and in
each case rounded upward or downward to the nearest 1/10,000th of a share). As
provided in Section 5.10, no fractional shares of Common Stock will be issued
upon settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Prices
per share of Common Stock on each of the 30 consecutive Trading Days ending on
the second
38
<PAGE> 46
Trading Day immediately preceding the Purchase Contract Settlement Date. The
"Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such
date or, if the Common Stock is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States national or regional securities
exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is not
so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of the Common Stock.
Each Holder of an Income PRIDES or a Growth PRIDES, by its acceptance
thereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact, agrees to be bound by
the terms and provisions thereof, covenants and agrees to perform its
obligations under such Purchase Contracts, and consents to the provisions
hereof, irrevocably authorizes the Agent as its attorney-in-fact to enter into
and perform the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Preferred Securities or
the Treasury Securities pursuant to the Pledge Agreement; PROVIDED that upon a
Termination Event, the rights of the Holder of such Security under the Purchase
Contract may be enforced without regard to any other rights or obligations. Each
Holder of an Income PRIDES or a Growth PRIDES, by its acceptance thereof,
further covenants and agrees, that, to the extent and in the manner provided in
Section 5.4 and the Pledge Agreement, but subject to the
39
<PAGE> 47
terms thereof, payments in respect of the Stated Amount of the Preferred
Securities or the Proceeds of the Treasury Securities on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.
Upon registration of transfer of a Certificate, the transferee shall be bound
(without the necessity of any other action on the part of such transferee),
under the terms of this Agreement, the Purchase Contracts underlying such
Certificate and the Pledge Agreement and the transferor shall be released from
the obligations under this Agreement, the Purchase Contracts underlying the
Certificates so transferred and the Pledge Agreement. The Company covenants and
agrees, and each Holder of a Certificate, by its acceptance thereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.
Section 5.2. Contract Adjustment Payments.
In the event that the Contract Adjustment Payments constitute a
component of Income PRIDES or Growth PRIDES, subject to Section 5.3 herein, the
Company shall pay, on each Payment Date, the Contract Adjustment Payments
payable in respect of each Purchase Contract to the Person in whose name a
Certificate (or one or more Predecessor Certificates) is registered at the close
of business on the Record Date next preceding such Payment Date. The Contract
Adjustment Payments will be payable at the office of the Agent in The City of
New York maintained for that purpose or, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such Person's address as
it appears on the Income PRIDES Register or Growth PRIDES Register.
Upon the occurrence of a Termination Event, Contract Adjustment
Payments shall cease to accrue in respect of any period from and after the date
of such Termination Event (unless the Company defaults in the payment of accrued
Contract Adjustment Payments). The Company's obligations to pay any accrued
Contract Adjustment Payments shall be deemed to be fulfilled if the Company
deposits with the Agent funds necessary to pay accrued Contract Adjustment
Payments, in trust with irrevocable
40
<PAGE> 48
instructions and authorization that such funds shall be delivered to the
Holders.
Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the re-establishment of an Income PRIDES) any other
Certificate shall carry the rights to Contract Adjustment Payments accrued and
unpaid, and to accrue Contract Adjustment Payments, which were carried by the
Purchase Contracts underlying such other Certificates.
In the case of any Security with respect to which Early Settlement of
the underlying Purchase Contract is effected on an Early Settlement Date, after
any Record Date and on or prior to the next succeeding Payment Date, Contract
Adjustment Payments otherwise payable on such Payment Date shall be payable on
such Payment Date notwithstanding such Early Settlement, and such Contract
Adjustment Payments shall be paid to the Person in whose name the Certificate
evidencing such Security (or one or more Predecessor Certificates) is registered
at the close of business on such Record Date. Except as otherwise expressly
provided in the immediately preceding sentence, in the case of any Security with
respect to which Early Settlement of the underlying Purchase Contract is
effected on an Early Settlement Date, Contract Adjustment Payments that would
otherwise be payable after the Early Settlement Date with respect to such
Purchase Contract shall not be payable.
The Company's obligations with respect to Contract Adjustment Payments,
if any, will be senior and unsecured and will rank pari passu in right of
payment with all other senior unsecured obligations of the Company, except that
such obligations with respect to the Contract Adjustment Payments will be
subordinated and junior in right of payment to the Company's obligations under
the Lease, dated as of December 1, 1997, between Ohio Water Development
Authority, as Lessor, and the Company, as Lessee.
Section 5.3. Deferral of Payment Dates For Contract Adjustment Payments.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the
41
<PAGE> 49
payment of any or all of the Contract Adjustment Payments otherwise payable on
any Payment Date, but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying the amount to
be deferred) at least ten Business Days prior to the earlier of (i) the next
succeeding Payment Date or (ii) the date the Company is required to give notice
of the Record Date or Payment Date with respect to payment of such Contract
Adjustment Payments to the New York Stock Exchange or other applicable
self-regulatory organization or to Holders of the Securities, but in any event
not less than two Business Days prior to such Record Date. Any Contract
Adjustment Payments so deferred shall bear additional Contract Adjustment
Payments thereon at the rate of ____% per annum (computed on the basis of 360
day year of twelve 30 day months), compounding on each succeeding Payment Date,
until paid in full (such deferred installments of Contract Adjustment Payments
together with the additional Contract Adjustment Payments accrued thereon, being
referred to herein as the "Deferred Contract Adjustment Payments"). Deferred
Contract Adjustment Payments shall be due on the next succeeding Payment Date
except to the extent that payment is deferred pursuant to this Section. No
Contract Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date or, with respect to any particular Purchase
Contract, Early Settlement thereof. If the Purchase Contracts are terminated
upon the occurrence of a Termination Event, the Holder's right to receive
Contract Adjustment Payments and Deferred Contract Adjustment Payments will
terminate.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date, in lieu of a cash payment, a number of shares of Common Stock equal to (x)
the aggregate amount of Deferred Contract Adjustment Payments payable to a
Holder divided by (y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by the Company with
respect to the payment of Deferred Contract Adjustment Payments on the Purchase
Contract Settlement Date. In lieu of fractional shares otherwise issuable with
respect to such payment of Deferred Con-
42
<PAGE> 50
tract Adjustment Payments, the Holder will be entitled to receive an amount in
cash as provided in Section 5.10.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases or acquisitions
of shares of capital stock of the Company in connection with the satisfaction by
the Company of its obligations under any employee benefit plans or the
satisfaction by the Company of its obligations pursuant to any contract or
security outstanding on the date of such event requiring the Company to purchase
capital stock of the Company, (ii) as a result of a reclassification of the
Company's capital stock or the exchange or conversion of one class or series of
the Company's capital stock for another class or series of the Company's capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) dividends or
distributions in capital stock of the Company or (v) redemptions or purchases of
any rights pursuant to the Rights Agreement (the "Rights Agreement"), dated as
of December 12, 1996, between the Company and The Chase Manhattan Bank, as
Rights Agent, or any successor to the Rights Agreement, and the declaration
thereunder of a dividend of rights in the future).
Section 5.4. Payment of Purchase Price.
(a) Unless a Holder settles the underlying Purchase Contract either
through the early delivery of cash to the Purchase Contract Agent in the manner
described in Section 5.9 or otherwise, the Purchase Price for the shares of
Common Stock purchased pursuant to a Purchase Contract shall be paid by
application of payments received by the Company on the Purchase Contract
Settlement Date from the Collateral Agent pursuant to the Pledge Agreement,
payable at the office of the Collateral Agent in the City of New York maintained
for such purpose, as follows:
43
<PAGE> 51
(i) A Holder may effect a "Cash Settlement" of a Purchase
Contract by (A) providing the Agent with notice of its election to
effect a Cash Settlement on or prior to 5:00 p.m., New York City time,
on the second Business Day immediately preceding the Purchase Contract
Settlement Date and (B) concurrently making a payment of the Purchase
Price to the Collateral Agent prior to 9:00 a.m., New York City time,
on the Business Day immediately preceding the Purchase Contract
Settlement Date in lawful money of the United States by certified or
cashiers' check or wire transfer in immediately available funds payable
to or upon the order of the Company. Upon receipt of notice from a
Holder electing a Cash Settlement, the Agent promptly shall notify the
Collateral Agent of such Holder's election. Any cash received by the
Collateral Agent will be invested promptly by the Collateral Agent in
Permitted Investments and paid to the Company on the Purchase Contract
Settlement Date in settlement of the Purchase Contract in accordance
with the terms of the Pledge Agreement. Any funds received by the
Collateral Agent in respect of the investment earnings from the
investment in such Permitted Investments, will be distributed to the
Agent when received for payment to the Holder.
(ii) A Holder of Income PRIDES who does not make an effective
Cash Settlement or an Early Settlement under Section 5.9 hereof shall
be deemed to have elected to pay for the shares of Common Stock to be
issued under the related Purchase Contract from the proceeds of the
related Preferred Securities underlying its Income PRIDES, which will
be applied automatically by the Collateral Agent to pay the Purchase
Price for the Purchase Contract to the Company on the Purchase Contract
Settlement Date as provided in subparagraph (a)(i); and
(iii) A Holder of Growth PRIDES shall pay for the shares of
Common Stock to be issued under the Purchase Contract from the Proceeds
of the related Pledged Treasury Securities held by the Collateral
Agent, which will be applied automatically by the Collateral Agent to
pay the Purchase Price for the Purchase Contract to the Company on the
Purchase Contract Settlement Date without receiving any in-
44
<PAGE> 52
struction from the Holder. Upon the maturity of the Pledged Treasury
Notes held by the Collateral Agent on the day immediately prior to the
Purchase Contract Settlement Date, the principal amount of the Treasury
Securities received by the Collateral Agent will be invested promptly
in overnight Permitted Investments. In the event the sum of the
proceeds from the related Pledged Treasury Securities and the
investment earnings earned from such investments is in excess of the
aggregate Purchase Price of the Purchase Contracts being settled
thereby, the Collateral Agent will distribute such excess to the Agent
for the benefit of the Holder of the related Growth PRIDES when
received.
Any distribution to Holders of excess funds and interest described in
subparagraph (i), (ii) or (iii) above, shall be payable at the office of the
Agent in The City of New York maintained for that purpose or, at the option of
the Holder, by check mailed to the address of the Person entitled thereto at
such address as it appears on the Register.
(b) The Company shall not be obligated to issue any shares of
Common Stock in respect of a Purchase Contract or deliver any certificate
therefor to the Holder unless it shall have received payment in full of the
Purchase Price for the shares of Common Stock to be purchased thereunder in the
manner herein set forth.
(c) Upon Cash Settlement of any Purchase Contract, (i) the
Collateral Agent will in accordance with the terms of the Pledge Agreement cause
the Pledged Preferred Securities or the Pledged Treasury Securities underlying
the relevant Security to be released from the Pledge by the Collateral Agent
free and clear of any security interest of the Company and transferred to the
Agent for delivery to the Holder thereof or its designee as soon as practicable
and (ii) subject to the receipt thereof from the Collateral Agent, the Agent
shall, by book-entry transfer, or other appropriate procedures, in accordance
with instructions provided by the Holder thereof, transfer the Pledged Preferred
Security or the Pledged Treasury Securities (or, if no such instructions are
given to the Agent by the Holder, the Agent shall hold the Pledged Preferred
Security or the Pledged Treasury Securities, and any distributions thereon, in
the
45
<PAGE> 53
name of the Agent or its nominee in trust for the benefit of such Holder).
Section 5.5. Issuance of Shares of Common Stock.
Unless a Termination Event shall have occurred on or prior to the
Purchase Contract Settlement Date, on the Purchase Contract Settlement Date,
upon its receipt of payment in full of the Purchase Price for the shares of
Common Stock purchased by the Holders pursuant to the foregoing provisions of
this Article, and in payment of Deferred Contract Adjustment Payments, if any,
owed by the Company to the Holders and subject to Section 5.6(b), the Company
shall issue and deposit with the Agent, for the benefit of the Holders of the
Outstanding Securities, one or more certificates representing the new shares of
Common Stock registered in the name of the Agent (or its nominee) as custodian
for the Holders (such certificates for shares of Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred to
as the "Purchase Contract Settlement Fund") to which the Holders are entitled
hereunder. Subject to the foregoing, upon surrender of a Certificate to the
Agent on or after the Purchase Contract Settlement Date, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article Five (after
taking into account all Securities then held by such Holder) together with cash
in lieu of fractional shares as provided in Section 5.10 and any dividends or
distributions with respect to such shares constituting part of the Purchase
Contract Settlement Fund, but without any interest thereon, and the Certificate
so surrendered shall forthwith be cancelled. Such shares shall be registered in
the name of the Holder or the Holder's designee as specified in the settlement
instructions provided by the Holder to the Agent. If any shares of Common Stock
issued in respect of a Purchase Contract and in payment of any Deferred Contract
Adjustment Payments are to be registered to a Person other than the Person in
whose name the Certificate evidencing such Purchase Contract is registered, no
such registration shall be made unless the Person requesting such registration
has paid any transfer and other taxes required by reason of such registration in
a
46
<PAGE> 54
name other than that of the registered Holder of the Certificate evidencing
such Purchase Contract or has established to the satisfaction of the Company
that such tax either has been paid or is not payable.
Section 5.6. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on any class of Common Stock of the Company in Common Stock, the
Settlement Rate in effect at the opening of business on the day following the
date fixed for the determination of stockholders entitled to
receive such dividend or other distribution shall be increased by dividing such
Settlement Rate by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on the date fixed
for such determination and the denominator shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such increase to become effective immediately after the opening of
business on the day following the date fixed for such determination. For the
purposes of this paragraph (1), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include shares issuable in respect of scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company will not pay any dividend or
make any distribution on shares of Common Stock held in the treasury of the
Company.
(2) In case the Company shall issue rights, options or warrants to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price per share of the Common
Stock on the date fixed for the determination of stockholders entitled to
receive such rights, options or warrants (other than pursuant to a dividend
reinvestment plan), the Settlement
47
<PAGE> 55
Rate in effect at the opening of business on the day following the date fixed
for such determination shall be increased by dividing such Settlement Rate by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such determination
plus the number of shares of Common Stock which the aggregate of the offering
price of the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such Current Market Price and the denominator
shall be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination plus the number of shares of
Common Stock so offered for subscription or purchase, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (2), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of shares of Common
Stock. The Company shall not issue any such rights, options or warrants in
respect of shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision, split or
combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to
all holders of its Common Stock evidences of its indebtedness or assets
(including securities, but excluding any rights or warrants referred to in
paragraph (2) of this Section, any dividend or
48
<PAGE> 56
distribution paid exclusively in cash and any dividend or distribution referred
to in paragraph (1) of this Section), the Settlement Rate shall be adjusted so
that the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on the date fixed for the
determination of stockholders entitled to receive such distribution by a
fraction of which the numerator shall be the Current Market Price per share of
the Common Stock on the date fixed for such determination less the then fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution filed with the Agent) of the
portion of the assets or evidences of indebtedness so distributed applicable to
one share of Common Stock and the denominator shall be such Current Market Price
per share of the Common Stock, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution. In any case
in which this paragraph (4) is applicable, paragraph (2) of this Section shall
not be applicable.
(5) In case the Company shall, (I) by dividend or otherwise, distribute
to all holders of its Common Stock cash (excluding any cash that is distributed
in a Reorganization Event to which Section 5.6(b) applies or as part of a
distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (II) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) or paragraph (6) of this
Section has been made and (III) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) of consideration payable in
respect of any tender or exchange offer by the Company or any of its
subsidiaries for all or any portion of the Common Stock concluded within the 12
months preceding the date of payment of the distribution described in clause (I)
above and in respect of which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made, exceeds 15% of the product of the
Current Market Price per share of the Common Stock on the date for the
determination of holders of shares of Common Stock entitled to receive such
dis-
49
<PAGE> 57
tribution times the number of shares of Common Stock outstanding on such date,
then, and in each such case, immediately after the close of business on such
date for determination, the Settlement Rate shall be increased so that the same
shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date fixed for determination
of the stockholders entitled to receive such distribution by a fraction (i) the
numerator of which shall be equal to the Current Market Price per share of the
Common Stock on the date fixed for such determination less an amount equal to
the quotient of (x) the combined amount distributed or payable in the
transactions described in clauses (I), (II) and (III) above and (y) the number
of shares of Common Stock outstanding on such date for determination and (ii)
the denominator of which shall be equal to the Current Market Price per share of
the Common Stock on such date for determination.
(6) In case (I) a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares) of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and described in a Board Resolution) that combined together with (II) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a Board
Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (III) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash within the 12 months preceding the expiration of such tender
or exchange offer and in respect of which no adjustment pursuant to paragraph
(5) of this Section or this paragraph (6) has been made, exceeds 15% of the
product of
50
<PAGE> 58
the Current Market Price per share of the Common Stock as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender or
exchange offer (as it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) on the Expiration Time, then, and in
each such case, immediately prior to the opening of business on the day after
the date of the Expiration Time, the Settlement Rate shall be adjusted so that
the same shall equal the rate determined by dividing the Settlement Rate
immediately prior to the close of business on the date of the Expiration Time by
a fraction (i) the numerator of which shall be equal to (A) the product of (I)
the Current Market Price per share of the Common Stock on the date of the
Expiration Time and (II) the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time less (B) the amount of
cash plus the fair market value (determined as aforesaid) of the aggregate
consideration payable to stockholders based on the transactions described in
clauses (I), (II) and (III) above (assuming in the case of clause (I) the
acceptance, up to any maximum specified in the terms of the tender or exchange
offer, of Purchased Shares), and (ii) the denominator of which shall be equal to
the product of (A) the Current Market Price per share of the Common Stock as of
the Expiration Time and (B) the number of shares of Common Stock outstanding
(including any tendered shares) as of the Expiration Time less the number of all
shares validly tendered and not withdrawn as of the Expiration Time (the shares
deemed so accepted, up to any such maximum, being referred to as the "Purchased
Shares").
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve
(a) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within the
meaning of paragraph (4) of this Section), and (b) a subdivision, split or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the
51
<PAGE> 59
effective date of such reclassification shall be deemed to be "the day upon
which such subdivision or split becomes effective" or "the day upon which such
combination becomes effective", as the case may be, and "the day upon which such
subdivision, split or combination becomes effective" within the meaning of
paragraph (3) of this Section).
(8) The "Current Market Price" per share of Common Stock on any day
means the average of the daily Closing Prices for the 5 consecutive Trading Days
selected by the Company commencing not more than 30 Trading Days before, and
ending not later than, the earlier of the day in question and the day before the
"ex date" with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "ex date", when used with
respect to any issuance or distribution, shall mean the first date on which the
Common Stock trades regular way on such exchange or in such market without the
right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment in
the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an adjustment shall also
be made to the Applicable Market Value solely to determine which of clauses (a),
(b) or (c) of the definition of Settlement Rate in Section 5.1 will apply on the
Purchase Contract Settlement Date. Such adjustment shall be made by multiplying
the Applicable Market Value by a fraction of which the numerator shall be the
Settlement Rate immediately after such adjustment pursuant to paragraph (1),
(2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a) and the denominator
shall be the Settlement Rate immediately before such adjustment.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this
52
<PAGE> 60
Section, as it considers to be advisable in order to avoid or diminish any
income tax to any holders of shares of Common Stock resulting from any dividend
or distribution of stock or issuance of rights or warrants to purchase or
subscribe for stock or from any event treated as such for income tax purposes or
for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of (i) any consolidation or merger of the Company, with or into
another Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (ii) any sale, transfer,
lease or conveyance to another Person of the property of the Company as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company with another Person (other than in connection with a
merger or acquisition) or (iv) any liquidation, dissolution or winding up of the
Company other than as a result of or after the occurrence of a Termination Event
(any such event, a "Reorganization Event"), the Settlement Rate will be adjusted
to provide that each Holder of Securities will receive on the Purchase Contract
Settlement Date with respect to each Purchase Contract forming a part thereof,
the kind and amount of securities, cash and other property receivable upon such
Reorganization Event by a Holder of the number of shares of Common Stock
issuable on account of each Purchase Contract if the Purchase Contract
Settlement Date had occurred immediately prior to such Reorganization Event,
assuming such Holder of Common Stock is not a Person with which the Company
consolidated or into which the Company merged or which merged into the Company
or to which such sale or transfer was made, as the case may be ("Constituent
Person"), or an Affiliate of a Constituent Person, and failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such Reorganization Event (provided that if the
kind or amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the
53
<PAGE> 61
purpose of this Section the kind and amount of securities, cash and other
property receivable upon such Reorganization Event by each non-electing share
shall be deemed to be the kind and amount so receivable per share by a plurality
of the non-electing shares). In the event of such a Reorganization Event, the
Person formed by such consolidation, merger or exchange or the Person which
acquires the assets of the Company or, in the event of a liquidation or
dissolution of the Company, the Company or a liquidating trust created in
connection therewith, shall execute and deliver to the Agent an agreement
supplemental hereto providing that the Holders of each Outstanding Security
shall have the rights provided by this Section 5.6. Such supplemental agreement
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section. The above
provisions of this Section shall similarly apply to successive Reorganization
Events.
Section 5.7. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Settlement Rate in
accordance with Section 5.6 and prepare and transmit to the Agent an
Officer's Certificate setting forth the Settlement Rate, the method of
calculation thereof in reasonable detail, and the facts requiring such
adjustment and upon which such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an
event that permits or requires an adjustment to the Settlement Rate
pursuant to Section 5.6 (or if the Company is not aware of such
occurrence, as soon as practicable after becoming so aware), provide a
written notice to the Holders of the Securities of the occurrence of
such event and a statement in reasonable detail setting forth the
method by which the adjustment to the Settlement Rate was determined
and setting forth the adjusted Settlement Rate.
54
<PAGE> 62
(b) The Agent shall not at any time be under any duty or responsibility
to any Holder of Securities to determine whether any facts exist which may
require any adjustment of the Settlement Rate, or with respect to the nature or
extent or calculation of any such adjustment when made, or with respect to the
method employed in making the same. The Agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of Common
Stock, or of any securities or property, which may at the time be issued or
delivered with respect to any Purchase Contract; and the Agent makes no
representation with respect thereto. The Agent shall not be responsible for any
failure of the Company to issue, transfer or deliver any shares of Common Stock
pursuant to a Purchase Contract or to comply with any of the duties,
responsibilities or covenants of the Company contained in this Article.
Section 5.8. Termination Event; Notice.
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments, if the Company shall have such obligation, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Agent or the Company, if, on or prior to the Purchase
Contract Settlement Date, a Termination Event shall have occurred. Upon and
after the occurrence of a Termination Event, the Securities shall thereafter
represent the right to receive the Preferred Securities forming a part of such
Securities in the case of Income PRIDES, or Treasury Securities in the case of
Growth PRIDES, in accordance with the provisions of Section 4.3 of the Pledge
Agreement. Upon the occurrence of a Termination Event, the Company shall
promptly but in no event later than two Business Days thereafter give written
notice to the Agent, the Collateral Agent and to the Holders, at their addresses
as they appear in the Register.
Section 5.9. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
5.9, at the option of the Holder thereof, Purchase Contracts underlying
Securities, having
55
<PAGE> 63
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof, may
be settled early ("Early Settlement") as provided herein. In order to exercise
the right to effect Early Settlement with respect to any Purchase Contracts, the
Holder of the Certificate evidencing such Purchase Contracts shall deliver such
Certificate to the Agent at the Corporate Trust Office duly endorsed for
transfer to the Company or in blank with the form of Election to Settle Early on
the reverse thereof duly completed and accompanied by payment in the form of a
certified or cashier's check payable to the order of the Company in an amount
(the "Early Settlement Amount") equal to (i) the product of (A) the Stated
Amount times (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement plus (ii) if such delivery is made
with respect to any Purchase Contracts during the period from the close of
business on any Record Date next preceding any Payment Date to the opening of
business on such Payment Date, an amount equal to the sum of (x) the Contract
Adjustment Payments, if any, payable on such Payment Date with respect to such
Purchase Contracts plus (y) in the case of Income PRIDES Certificate, the
distributions on the related Preferred Securities payable on such Payment Date.
Except as provided in the immediately preceding sentence and subject to the
second to last paragraph of Section 5.2, no payment or adjustment shall be made
upon Early Settlement of any Purchase Contract on account of any Contract
Adjustment Payments accrued on such Purchase Contract or on account of any
dividends on the Common Stock issued upon such Early Settlement. If the
foregoing requirements are first satisfied with respect to Purchase Contracts
underlying any Securities at or prior to 5:00 p.m., New York City time, on a
Business Day, such day shall be the "Early Settlement Date" with respect to such
Securities and if such requirements are first satisfied after 5:00 p.m., New
York City time, on a Business Day or on a day that is not a Business Day, the
"Early Settlement Date" with respect to such Securities shall be the next
succeeding Business Day.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Company shall issue, and the Holder shall be entitled to
receive, ____ shares of Common Stock on account of each Purchase Contract as to
which Early Settlement is effected (the "Early Settlement Rate"); PROVIDED,
HOWEVER, that upon
56
<PAGE> 64
the Early Settlement of the Purchase Contracts, the Holder of such related
Securities will forfeit the right to receive any Deferred Contract Adjustment
Payments. The Early Settlement Rate shall be adjusted in the same manner and at
the same time as the Settlement Rate is adjusted. As promptly as practicable
after Early Settlement of Purchase Contracts in accordance with the provisions
of this Section 5.9, the Company shall issue and shall deliver to the Agent at
the Corporate Trust Office a certificate or certificates for the full number of
shares of Common Stock issuable upon such Early Settlement together with payment
in lieu of any fraction of a share, as provided in Section 5.10.
(c) The Company shall cause the shares of Common Stock issuable upon
Early Settlement of Purchase Contracts, and the related Preferred Securities, in
the case of Income PRIDES, or the related Treasury Securities, in the case of
Growth PRIDES, deliverable, to be issued and delivered, in the case of such
shares of Common Stock, and released from the Pledge by the Collateral Agent and
transferred, in the case of such Preferred Securities or Treasury Securities, to
the Agent, for delivery to the Holder thereof or its designee, no later than the
third Business Day after the applicable Early Settlement Date.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and Preferred Securities or
Treasury Securities, as the case may be, from the Collateral Agent, as
applicable, the Agent shall, in accordance with the instructions provided by the
Holder thereof on the applicable form of Election to Settle Early on the reverse
of the Certificate evidencing the related Securities, (i) transfer to the Holder
the Preferred Securities or Treasury Securities, as the case may be, forming a
part of such Securities, and (ii) deliver to the Holder a certificate or
certificates for the full number of shares of Common Stock issuable upon such
Early Settlement together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, countersign and deliver to the Holder
57
<PAGE> 65
thereof, at the expense of the Company, a Certificate evidencing the Securities
as to which Early Settlement was not effected.
(f) Holders may settle Securities early only in integral multiples of
20 Income PRIDES or 20 GROWTH PRIDES.
Section 5.10. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early Settlement of any Purchase Contracts or with
respect to the payment of Deferred Contract Adjustment Payments, if any, on the
Purchase Contract Settlement Date. If Certificates evidencing more than one
Purchase Contract shall be surrendered for settlement at one time by the same
Holder, the number of full shares of Common Stock which shall be delivered upon
settlement shall be computed on the basis of the aggregate number of Purchase
Contracts evidenced by the Certificates so surrendered. Instead of any
fractional share of Common Stock which would otherwise be deliverable upon
settlement of any Purchase Contracts on the Purchase Contract Settlement Date or
upon Early Settlement or with respect to the payment of any Deferred Contract
Adjustment Payments, if any, the Company, through the Agent, shall make a cash
payment in respect of such fractional interest in an amount equal to the value
of such fractional shares times the Applicable Market Value. The Company shall
provide the Agent from time to time with sufficient funds to permit the Agent to
make all cash payments required by this Section 5.10 in a timely manner.
Section 5.11. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable
to the initial issuance and delivery of the shares of Common Stock pursuant to
the Purchase Contracts and in payment of any Deferred Contract Adjustment
Payments; PROVIDED, HOWEVER, that the Company shall not be required to pay any
such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Purchase Contract or any issuance of
a share of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in
58
<PAGE> 66
respect of the Purchase Contracts evidenced thereby, other than in the name of
the Agent, as custodian for such Holder, and the Company shall not be required
to issue or deliver such share certificates or Certificates unless or until the
Person or Persons requesting the transfer or issuance thereof shall have paid to
the Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
ARTICLE VI
Remedies
Section 6.1. Unconditional Right of Holders to Receive Contract Adjustment
Payments and to Purchase Common Stock.
In the event that Contract Adjustment Payments shall constitute a
component of Income PRIDES or Growth PRIDES, the Holder of any Income PRIDES or
Growth PRIDES shall have the right, which is absolute and unconditional (subject
to the right of the Company to defer payment thereof pursuant to Section 5.3 and
subject to the forfeiture of any Deferred Contract Adjustment Payments upon
Early Settlement pursuant to Section 5.9(b) or upon the occurrence of a
Termination Event), to receive payment of each installment of the Contract
Adjustment Payments with respect to the Purchase Contract constituting a part of
such Security on the respective Payment Date for such Security and to purchase
Common Stock pursuant to such Purchase Contract and, in each such case, to
institute suit for the enforcement of any such payment and right to purchase
Common Stock, and such rights shall not be impaired without the consent of such
Holder.
Section 6.2. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company and such Holder shall be restored severally and respectively to their
former
59
<PAGE> 67
positions hereunder and thereafter all rights and remedies of such Holder
shall continue as though no such proceeding had been instituted.
Section 6.3. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.4. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right or remedy upon
a default shall impair any such right or remedy or constitute a waiver of any
such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
Section 6.5. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of Income PRIDES
or Growth PRIDES, by its acceptance of such Income PRIDES or Growth PRIDES shall
be deemed to have agreed, that any court may in its discretion require, in any
suit for the enforcement of any right or remedy under this Agreement, or in any
suit against the Agent for any action taken, suffered or omitted by it as Agent,
the filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section shall not
apply to any suit
60
<PAGE> 68
instituted by the Company, to any suit instituted by the Agent, to any suit
instituted by any Holder, or group of Holders, holding in the aggregate more
than 10% of the Outstanding Securities, or to any suit instituted by any Holder
for the enforcement of distributions on any Preferred Securities or Contract
Adjustment Payments, if any, on any Purchase Contract on or after the respective
Payment Date therefor in respect of any Security held by such Holder, or for
enforcement of the right to purchase shares of Common Stock under the Purchase
Contracts constituting part of any Security held by such Holder.
Section 6.6. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
The Agent
Section 7.1. Certain Duties and Responsibilities.
(a)(1) The Agent undertakes to perform, with respect to the Securities,
such duties and only such duties as are specifically set forth in this Agreement
and the Pledge Agreement, and no implied covenants or obligations shall be read
into this Agreement against the Agent; and
(2) in the absence of bad faith or negligence on its part, the
Agent may, with respect to the Securities, conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions
61
<PAGE> 69
furnished to the Agent and conforming to the requirements of this
Agreement, but in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the
Agent, the Agent shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Agreement.
(b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure to
act, or its own wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Agent was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if adequate indemnity is not provided
to it.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
(d) The Agent is authorized to execute and deliver the Pledge Agreement
in its capacity as Agent.
Section 7.2. Notice of Default.
Within 30 days after the occurrence of any default by the Company
hereunder, of which a Responsible Officer of the Agent has actual knowledge, the
Agent shall transmit by mail to the Company and the Holders of Securities, as
their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.
62
<PAGE> 70
Section 7.3. Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officer's Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate of the Company;
(d) the Agent 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;
(e) the Agent shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the Agent,
in its discretion, may make reasonable further inquiry or investigation into
such facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Agent shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or attorney;
and
63
<PAGE> 71
(f) the Agent may execute any of the powers hereunder or perform any
duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder.
Section 7.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as
the statements of the Company and the Agent assumes no responsibility for their
accuracy. The Agent makes no representations as to the validity or sufficiency
of either this Agreement or of the Securities, or of the Pledge Agreement or the
Pledge. The Agent shall not be accountable for the use or application by the
Company of the proceeds in respect of the Purchase Contracts.
Section 7.5. May Hold Securities.
Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Collateral
Agent or any other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
Section 7.6. Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated
from the other funds except to the extent required by law. The Agent shall be
under no obligation to invest or pay interest on any money received by it
hereunder except as otherwise agreed in writing with the Company.
Section 7.7. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Agent from time to time rea-
sonable compensation for all services rendered by it
hereunder;
64
<PAGE> 72
(2) except as otherwise expressly provided herein, to
reimburse the Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Agent in accordance
with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or bad faith; and
(3) to indemnify the Agent and any predecessor Agent for, and
to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of its duties
hereunder, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance
of any of its powers or duties hereunder.
Section 7.8. Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or State authority and having a
Corporate Trust Office in the Borough of Manhattan, The City of New York, if
there be such a corporation in the Borough of Manhattan, The City of New York
qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said supervising or examining
authority, then for the purposes of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
65
<PAGE> 73
Section 7.9. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice thereof
to the Company 60 days prior to the effective date of such resignation. If the
instrument of acceptance by a successor Agent required by Section 7.10 shall not
have been delivered to the Agent within 30 days after the giving of such notice
of resignation, the resigning Agent may petition any court of competent
jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Securities delivered to the Agent and the
Company.
(d) if at any time
(1) the Agent fails to comply with Section 310(b) of the TIA,
as if the Agent were an indenture trustee under an indenture qualified
under the TIA, after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six
months, or
(2) the Agent shall cease to be eligible under Section 7.8 and
shall fail to resign after written request therefor by the Company or
by any such Holder, or
(3) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Agent, or (ii) any Holder who has
66
<PAGE> 74
been a bona fide Holder of a Security for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Agent and the appointment of a successor
Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Agent and
shall comply with the applicable requirements of Section 7.10. If no successor
Agent shall have been so appointed by the Company and accepted appointment in
the manner required by Section 7.10, any Holder who has been a bona fide Holder
of a Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to
give, notice of each resignation and each removal of the Agent and each
appointment of a successor Agent by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders as their names and addresses
appear in the applicable Register. Each notice shall include the name of the
successor Agent and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Agent, every
such successor Agent so appointed shall execute, acknowledge and deliver to the
Company and to the retiring Agent an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Agent shall become
effective and such successor Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Agent; but, on the request of the Company or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Agent all the rights, powers and
trusts of the retiring Agent and shall duly assign, transfer and deliver to such
successor Agent all property and money held by such retiring Agent hereunder.
67
<PAGE> 75
(b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time
of such acceptance such successor Agent shall be qualified and eligible under
this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by the
Agent then in office, any successor by merger, conversion or consolidation to
such Agent may adopt such authentication and execution and deliver the
Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Agent, and furnish to the Agent reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under
68
<PAGE> 76
this Agreement or under the Securities and is accompanied by a copy of the form
of proxy or other communication which such applicants propose to transmit, then
the Agent shall, within five Business Days after the receipt of such
application, afford such applicants access to the information preserved at the
time by the Agent in accordance with Section 7.12(a).
(c) Every Holder agrees with the Company and the Agent that none of the
Company, the Agent nor any agent of any of them shall be held accountable by
reason of the disclosure of any such information as to the names and addresses
of the Holders in accordance with Section 7.12(b), regardless of the source from
which such information was derived.
Section 7.13. No Obligations of Agent.
Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be deemed to have
agreed, that the Agent's execution of the Certificates on behalf of the Holders
shall be solely as agent and attorney-in-fact for the Holders, and that the
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article Five hereof.
Section 7.14. Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the Company, will
comply with all applicable certification, information reporting and withholding
(including "backup" withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i) any payments made
with respect to the Securities or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Securities. Such compliance
shall include, without limitation, the preparation and timely filing of required
returns and the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.
69
<PAGE> 77
(b) The Agent shall comply with any written direction received from the
Company with respect to the application of such requirements to particular
payments or Holders or in other particular circumstances, and may for purposes
of this Agreement rely on any such direction in accordance with the provisions
of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
Supplemental Agreements
Section 8.1. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the Agent, at any
time and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the
following purposes:
(1) to evidence the succession of another
Person to the Company, and the assumption by any
such successor of the covenants of the Company
herein and in the Certificates; or
(2) to add to the covenants of the Company for
the benefit of the Holders, or to surrender any
right or power herein conferred upon the Company;
or
(3) to evidence and provide for the acceptance
of appointment hereunder by a successor Agent; or
(4) to make provision with respect to the
rights of Holders pursuant to the requirements of
Section 5.6(b); or
70
<PAGE> 78
(5) except as provided for in Section 5.6, to cure any
ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein, or to make any other
provisions with respect to such matters or questions arising under this
Agreement, provided such action shall not adversely affect the
interests of the Holders.
Section 8.2. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than 66 2/3% of the
outstanding Purchase Contracts voting together as one Class, by Act of said
Holders delivered to the Company and the Agent, the Company when authorized by a
Board Resolution, and the Agent may enter into an agreement or agreements
supplemental hereto for the purpose of modifying in any manner the terms of the
Purchase Contracts, or the Pledge Agent provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the consent of the Holder of each
Outstanding Security affected thereby,
(1) change any Payment Date;
(2) change the amount or the type of Collateral required to be
Pledged to secure a Holder's Obligations under the Purchase Contract,
impair the right of the Holder of any Purchase Contract to receive
distributions on the related Collateral (except for the rights of
Holders of Income PRIDES to substitute the Treasury Securities for the
Pledge Preferred Securities or the rights of holders of Growth PRIDES
to substitute Preferred Securities for the Pledged Treasury Securities)
or otherwise adversely affect the Holder's rights in or to such
Collateral or adversely alter the rights in or to such Collateral;
(3) reduce any Contract Adjustment Payments or any Deferred
Contract Adjustment Payment, or change any place where, or the coin or
currency in which, any Contract Adjustment Payments is payable;
(4) impair the right to institute suit for the
enforcement of any Purchase Contract;
71
<PAGE> 79
(5) reduce the number of shares of Common Stock to be
purchased pursuant to any Purchase Contract, increase the price to
purchase shares of Common Stock upon settlement of any Purchase
Contract, change the Purchase Contract Settlement Date or otherwise
adversely affect the Holder's rights under any Purchase Contract; or
(6) reduce the percentage of the outstanding
Purchase Contracts the consent of whose Holders is
required for any such supplemental agreement;
provided, that if any amendment or proposal referred to above would adversely
affect only the Income PRIDES or the Growth PRIDES, then only the affected class
of Holder will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the consent of Holders
of not less than 66 2/3% of such class.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.3. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
Section 8.4. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter
72
<PAGE> 80
authenticated, executed on behalf of the Holders and delivered hereunder shall
be bound thereby.
Section 8.5. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and the Company, to any such supplemental
agreement may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Agent in exchange for
Outstanding Certificates.
ARTICLE IX
Consolidation, Merger, Sale or Conveyance
Section 9.1. Covenant Not to Merge, Consolidate, Sell or Convey Property Except
Under Certain Conditions.
The Company covenants that it will not merge or consolidate with any
other Person or sell, assign, transfer, lease or convey all or substantially all
of its properties and assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i) either the Company
shall be the continuing corporation, or the successor (if other than the
Company) shall be a corporation organized and existing under the laws of the
United States of America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of the Company under the
Purchase Contracts, this Agreement and the Pledge Agreement by one or more
supplemental agreements in form satisfactory to the Agent and the Collateral
Agent, executed and delivered to the Agent and the Collateral Agent by such
corporation, and (ii) the Company or such successor corporation, as the case may
be, shall not, immediately after such merger or consolidation, or such sale,
assignment, transfer, lease or con-
73
<PAGE> 81
veyance, be in default in the performance of any covenant or condition
hereunder, under any of the Securities or under the Pledge Agreement.
Section 9.2. Rights and Duties of Successor Corporation.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by the successor corporation in
accordance with Section 9.1, such successor corporation shall succeed to and be
substituted for the Company with the same effect as if it had been named herein
as the Company. Such successor corporation thereupon may cause to be signed, and
may issue either in its own name or in the name of Owens Corning, any or all of
the Certificates evidencing Securities issuable hereunder which thereto- fore
shall not have been signed by the Company and delivered to the Agent; and, upon
the order of such successor corporation, instead of the Company, and subject to
all the terms, conditions and limitations in this Agreement prescribed, the
Agent shall authenticate and execute on behalf of the Holders and deliver any
Certificates which previously shall have been signed and delivered by the
officers of the Company to the Agent for authentication and execution, and any
Certificate evidencing Securities which such successor corporation thereafter
shall cause to be signed and delivered to the Agent for that purpose. All the
Certificates so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Certificates theretofore or thereafter
issued in accordance with the terms of this Agreement as though all of such
Certificates had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued as
may be appropriate.
Section 9.3. Opinion of Counsel to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, com-
74
<PAGE> 82
plies with the provisions of this Article and that all conditions precedent to
the consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
Covenants
Section 10.1. Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from
time to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
Section 10.2. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City of New
York an office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Purchase Contracts
or Early Settlement and for transfer of Collateral upon occurrence of a
Termination Event, where Certificates may be surrendered for registration of
transfer or exchange, for a Collateral Substitution or re-establishment of an
Income PRIDES and where notices and demands to or upon the Company in respect of
the Securities and this Agreement may be served. The Company will give prompt
written notice to the Agent of the location, and any change in the location, of
such office or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Agent with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby appoints the
Agent as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission
75
<PAGE> 83
shall in any manner relieve the Company of its obligation to maintain an office
or agency in the Borough of Manhattan, The City of New York for such purposes.
The Company will give prompt written notice to the Agent of any such designation
or rescission and of any change in the location of any such other office or
agency. The Company hereby designates as the place of payment for the Securities
the Corporate Trust Office and appoints the Agent at its Corporate Trust Office
as paying agent in such city.
Section 10.3. Company to Reserve Common Stock.
The Company shall at all times prior to the Purchase Contract
Settlement Date reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock the full number of shares of Common
Stock issuable (x) against tender of payment in respect of all Purchase
Contracts constituting a part of the Securities evidenced by Outstanding
Certificates and (y) in payment of Deferred Contract Adjustment Payments, if
any, owed by the Company to the Holders.
Section 10.4. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be
issued against tender of payment in respect of any Purchase Contract
constituting a part of the Outstanding Securities and in payment of any Deferred
Contract Adjustment Payments will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable.
Section 10.5. Statements of Officers of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officer's
Certificate, stating whether or not to the best knowledge of the signers thereof
the Company is in default in the performance and observance of any of the terms,
provisions and conditions hereof, and if the Company shall be in default,
specifying all such defaults and the nature and status thereof of which they may
have knowledge.
76
<PAGE> 84
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
OWENS CORNING
Attested by
By:
- --------------------------- --------------------------
Name:
Title:
THE BANK OF NEW YORK
Attested by
By:
- --------------------------- --------------------------
Name:
Title:
77
<PAGE> 85
EXHIBIT A
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
Company or its agent for registration of transfer, exchange or payment, and any
Certificate issued is registered in the name of Cede & Co., or such other name
as requested by an authorized representative of The Depository Trust Company,
and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.
No. _____ Number of Income PRIDES ___ Cusip No. ______
Form of Face of Income PRIDES Certificate
____% Income PRIDES
This Income PRIDES Certificate certifies that ___________ is the
registered Holder of the number of Income PRIDES set forth above. Each Income
PRIDES represents (i) beneficial ownership by the Holder of one _____% Trust
Originated Preferred Security (the "Preferred Security") of Owens Corning
Capital II, a Delaware statutory business trust (the "Trust"), having a
liquidation amount of $50, subject to the Pledge of such Preferred Security by
such Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with Owens Corning, a
Delaware corporation (the "Company"). All capitalized terms used herein which
are defined in the Purchase Contract Agreement have the meaning set forth
therein.
A-1
<PAGE> 86
Pursuant to the Pledge Agreement, the Preferred Securities constituting
part of each Income PRIDES evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising a portion of such Income PRIDES.
The Pledge Agreement provides that all payments of the Stated Amount
of, or cash distributions on, any Pledged Preferred Securities (as defined in
the Pledge Agreement) constituting part of the Income PRIDES received by the
Collateral Agent shall be paid by the Collateral Agent by wire transfer in same
day funds (i) in the case of (A) cash distributions with respect to Pledged
Preferred Securities and (B) any payments of the Stated Amount with respect to
any Preferred Securities that have been released from the Pledge pursuant to the
Pledge Agreement, to the Agent to the account designated by the Agent, no later
than 2:00 p.m., New York City time, on the Business Day such payment is received
by the Collateral Agent (provided that in the event such payment is received by
the Collateral Agent on a day that is not a Business Day or after 12:30 p.m.,
New York City time, on a Business Day, then such payment shall be made no later
than 10:30 a.m., New York City time, on the next succeeding Business Day) and
(ii) in the case of payments of the Stated Amount of any Pledged Preferred
Securities, to the Company on the relevant Payment Date (as defined herein) in
accordance with the terms of the Pledge Agreement, in full satisfaction of the
respective obligations of the Holders of the Income PRIDES of which such Pledged
Preferred Securities are a part under the Purchase Contracts forming a part of
such Income PRIDES. Distributions on any Preferred Security forming part of an
Income PRIDES evidenced hereby which are payable quarterly in arrears on March
31, June 30, September 30 and December 31 each year, commencing _______, 1997 (a
"Payment Date"), shall, subject to receipt thereof by the Agent from the
Collateral Agent, be paid to the Person in whose name this Income PRIDES
Certificate (or a Predecessor Income PRIDES Certificate) is registered at the
close of business on the Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this
Income PRIDES Certificate to purchase, and the Company to sell, on November 16,
2000 (the "Purchase Contract Settlement Date"), at a price equal to $50
A-2
<PAGE> 87
(the "Stated Amount"), a number of shares of Common Stock, par value $.10 per
share ("Common Stock"), of the Company, equal to the Settlement Rate unless on
or prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event with respect to the Income PRIDES of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement and more
fully described on the reverse hereof. The purchase price (the "Purchase Price")
for the shares of Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Purchase Contract
Settlement Date by application of payment received in respect of the Stated
Amount of the Pledged Preferred Securities pledged to secure the obligations
under such Purchase Contract of the Holder of the Income PRIDES of which such
Purchase Contract is a part. A Holder may cause the Preferred Security pledged
to secure the obligations under the Purchase Contract of the Holder of the
Income PRIDES of which such Purchase Contract is a part to be repaid and the
proceeds therefrom to be used to pay the Purchase Price of the shares of Common
Stock of the Company.
The Company shall pay, on each Payment Date, in respect of each
Purchase Contract forming part of an Income PRIDES evidenced hereby an amount
(the "Contract Adjustment Payments") equal to _____% per annum of the Stated
Amount, computed on the basis of a 360 day year of twelve 30 day months, subject
to deferral at the option of the Company as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof; provided, however,
that the Company shall not make such Contract Adjustment payments in the event
that the Contract Adjustment Payments do not constitute a Component of Income
PRIDES or Growth PRIDES. Such Contract Adjustment Payments shall be payable to
the Person in whose name this Income PRIDES Certificate (or a Predecessor Income
PRIDES Certificate) is registered at the close of business on the Record Date
for such Payment Date.
Distributions on the Preferred Securities and Contract Adjustment
Payments, if any, will be payable at the office of the Agent in The City of New
York or, at the option of the Company, by check mailed to the address of the
Person entitled thereto as such address appears on the Income PRIDES Register.
A-3
<PAGE> 88
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Income PRIDES Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.
A-4
<PAGE> 89
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
OWENS CORNING
By:
-------------------------
Name:
Title:
By:
-------------------------
Name:
Title:
Attest:
- ---------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: THE BANK OF NEW YORK, not indi-
vidually but solely as
Attorney-in-Fact of such Holder
By:
-------------------------
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Income PRIDES Certificates referred to in the within
mentioned Purchase Contract Agreement.
By: THE BANK OF NEW YORK as Agent
By:
----------------------------------
Authorized Officer
A-5
<PAGE> 90
(Form of Reverse of Income PRIDES Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of _____, 1997 (as supplemented from time to time,
the "Purchase Contract Agreement"), between the Company and The Bank of New
York, as Purchase Contract Agent (herein called the "Agent"), to which Purchase
Contract Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Agent, the Company, and the Holders and
of the terms upon which the Income PRIDES Certificates are, and are to be,
executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Income PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the "Purchase
Price"), a number of shares of Common Stock of the Company equal to the
Settlement Rate unless, on or prior to the Purchase Contract Settlement Date,
there shall have occurred a Termination Event with respect to the Security of
which such Purchase Contract is a part. The "Settlement Rate" is equal to (a) if
the Applicable Market Value (as defined below) is equal to or greater than
$_____ (the "Threshold Appreciation Price"), ______ shares of Common Stock per
Purchase Contract, (b) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $_____, the number of shares of Common
Stock per Purchase Contract equal to the Stated Amount divided by the Applicable
Market Value and (c) if the Applicable Market Amount is less than or equal to
$____, ____ shares of Common Stock per Purchase Contract, in each case subject
to adjustment as provided in the Purchase Contract Agreement. No fractional
shares of Common Stock will be issued upon settlement of Purchase Contracts, as
provided in the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder of the
related Income PRIDES to purchase at the Purchase Price, and the company to
sell, a number of new shares of Common Stock equal to the Early Settlement Rate
or the Settlement Rate, as applicable.
A-6
<PAGE> 91
The "Applicable Market Value" means the average of the Closing Prices
per share of Common Stock on each of the 30 consecutive Trading Days ending on
the second Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination means
the closing sale price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed, or if the
Common Stock is not so listed on a United States national or regional securities
exchange, as reported by The Nasdaq Stock Market, or, if the Common Stock is not
so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company. A "Trading
Day" means a day on which the Common Stock (A) is not suspended from trading on
any national or regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once on the national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Income PRIDES Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting a Cash Settlement or an Early Settlement. A Holder of an
Income PRIDES who fails to make an effective Cash Settlement or an Early
Settlement in respect of a Purchase Contract prior to a Purchase Contract
Settlement Date will be deemed to have elected to have requested the Trust to
deliver to the Company a principal amount of the Debenture, underlying the
Preferred Security equal to the Stated Amount of the Purchase Contract for
application to the Purchase Price of the Common Stock.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract
A-7
<PAGE> 92
or deliver any certificates therefor to the Holder unless it shall have received
payment in full of the aggregate purchase price for the shares of Common Stock
to be purchased thereunder in the manner herein set forth.
Each Purchase Contract evidenced hereby and the obligations and rights
of the Company and the Holder thereunder shall terminate if a Termination Event
shall have occurred. Upon the occurrence of a Termination Event, the Company
shall give written notice to the Agent and to the Holders, at their addresses as
they appear in the Income PRIDES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Preferred
Security (as defined in the Pledge Agreement) forming a part of each Income
PRIDES, or the Liquidation Distribution received in respect of such Pledged
Preferred Security, from the Pledge. An Income PRIDES shall thereafter represent
the right to receive the Preferred Security forming a part of such Income
PRIDES, or the Liquidation Distribution received in respect of such Preferred
Security, and any accrued Contract Adjustment Payments on the Purchase Contract
forming a part of such Income PRIDES in accordance with the terms of the
Purchase Contract Agreement and the Pledge Agreement. Contract Adjustment
Payments shall cease to accrue in respect of any period from and after the date
of a Termination Event.
Under the terms of the Pledge Agreement, the Agent will be entitled to
exercise the voting and any other consensual rights pertaining to the Pledged
Preferred Securities. Upon receipt of notice of any meeting at which holders of
Preferred Securities are entitled to vote or solicitation of consents, waivers
or proxies of holders of Preferred Securities, the Agent shall, as soon as
practicable thereafter, mail to the Income PRIDES holders a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Income PRIDES holder on the record date set by the Agent
therefor (which, to the extent possible, shall be the same date as the record
date for determining the holders of Preferred Securities entitled to vote) shall
be entitled to instruct the Agent as to the exercise of the voting rights
pertaining to the Preferred Securities constituting a part of such holder's
Income PRIDES and (c) stating the manner in which such instructions may be
given. Upon the written request of the Income PRIDES holders on such
A-8
<PAGE> 93
record date, the Agent shall endeavor insofar as practicable to vote or cause to
be voted, in accordance with the instructions set forth in such requests, the
maximum number of Preferred Securities as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of an Income PRIDES, the Agent shall abstain from voting the Preferred
Security evidenced by such Income PRIDES.
Upon the occurrence of an Investment Company Event or liquidation of
the Trust, a principal amount of the Debentures constituting the assets of the
Trust and underlying the Preferred Securities equal to the aggregate Stated
Amount of the Pledged Preferred Securities shall be delivered to the Collateral
Agent in exchange for Pledged Preferred Securities. Thereafter, the Debentures
shall be held by the Collateral Agent to secure the obligations of each Holder
of Income PRIDES to purchase shares of Common Stock under the Purchase Contracts
constituting a part of such Income PRIDES. Following the liquidation of the
Trust, the Holders and the Collateral Agent shall have such security interests,
rights and obligations with respect to the Debentures as the Holders and the
Collateral Agent had in respect of the Pledged Preferred Securities, and any
reference in the Purchase Contract Agreement or Pledge Agreement to the
Preferred Securities shall be deemed to be a reference to the Debentures.
The Income PRIDES Certificates are issuable only in registered form and
only in denominations of a single Income PRIDES and any integral multiple
thereof. The transfer of any Income PRIDES Certificate will be registered and
Income PRIDES Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Income PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A holder who elects to substitute a Treasury
Security for Preferred Securities, thereby creating Growth PRIDES, shall be
responsible for any fees or expenses payable in connection therewith. Except as
provided in the Purchase Contract Agreement, for so long as the Purchase
Contract underlying an Income PRIDES remains in effect, such Income
A-9
<PAGE> 94
PRIDES shall not be separable into its constituent parts, and the rights and
obligations of the Holder of such Income PRIDES in respect of the Preferred
Security and Purchase Contract constituting such Income PRIDES may be
transferred and exchanged only as an Income PRIDES. The holder of an Income
PRIDES may substitute for the Pledged Preferred Securities securing its
obligation under the related Purchase Contract Treasury Securities in an
aggregate principal amount equal to the aggregate Stated Amount of the Pledged
Preferred Securities in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement. From and after such Collateral Substitution,
the Security for which such Pledged Treasury Securities secures the holder's
obligation under the Purchase Contract shall be referred to as a "Growth
PRIDES." A Holder may make such Collateral Substitution only in integral
multiples of 20 Income PRIDES for 20 Growth PRIDES. Such Collateral Substitution
may cause the aggregate principal amount of this Certificate to be increased or
decreased; PROVIDED, HOWEVER, the aggregate principal amount outstanding under
this Income PRIDES Certificate shall not exceed $_____. All such adjustments to
the aggregate principal amount of this Income PRIDES Certificate shall be duly
recorded by placing an appropriate notation on the Schedule attached hereto.
A Holder of a Growth PRIDES may recreate Income PRIDES by delivering to
the Collateral Agent Preferred Securities with a Stated Amount equal to the
aggregate principal amount of the Pledged Treasury Securities in exchange for
the release of such Pledged Treasury Securities in accordance with the terms of
the Purchase Contract Agreement and the Pledge Agreement.
Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, the Contract Adjustment Payments, if any, payable in respect
of each Purchase Contract to the Person in whose name the Income PRIDES
Certificate evidencing such Purchase Contract is registered at the close of
business on the Record Date for such Payment Date. Contract Adjustment Payments,
if any, will be payable at the office of the Agent in The City of New York or,
at the option of the Company, by check mailed to the address of the Person
entitled thereto at such address as it appears on the Income PRIDES Register.
A-10
<PAGE> 95
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall
bear additional Contract Adjustment Payments thereon at the rate of ___% per
annum (computed on the basis of a 360 day year of twelve 30 day months),
compounding on each succeeding Payment Date, until paid in full (such deferred
installments of Contract Adjustment Payments, if any, together with the
additional Contract Adjustment Payments, if any, accrued thereon, are referred
to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding Payment Date
except to the extent that payment is deferred pursuant to the Purchase Contract
Agreement. No Contract Adjustment Payments may be deferred to a date that is
after the Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, the Holder of this Income PRIDES Certificate will receive on
the Purchase Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to the Holder of the Income PRIDES Certificate of
Securities divided by (y) the Applicable Market Value. No fractional shares of
Common Stock will be issued with respect to the payment of Deferred Contract
Adjustment Payments on the Purchase Contract Settlement Date, as provided in the
Purchase Contract Agreement.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases or acquisitions
of shares capital stock of the Company in connection with the satisfaction by
the Company of its
A-11
<PAGE> 96
obligations under any employee benefit plans or the satisfaction by the Company
of its obligations pursuant to any contract or security outstanding on the date
of such event requiring the Company to purchase capital stock of the Company,
(ii) as a result of a reclassification of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) dividends or distributions in capital stock of the
Company or (v) redemptions or purchases of any rights pursuant to the Rights
Agreement, or any successor to the Rights Agreement, and the declaration
thereunder of a dividend of rights in the future).
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments or any Deferred Contract Adjustment Payments, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Agent or the Company, if, on or prior to the Purchase
Contract Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two business days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in the
Income PRIDES Register. Upon and after the occurrence of a Termination Event,
the Collateral Agent shall release the Preferred Securities from the Pledge in
accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement at the option of the Holder thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this Income
PRIDES Certificate, the Holder of this Income PRIDES Certificate shall deliver
this Income
A-12
<PAGE> 97
PRIDES Certificate to the Agent at the Corporate Trust Office duly endorsed for
transfer to the Company or in blank with the form of Election to Settle Early
set forth below duly completed and accompanied by payment in the form of a
certified or cashier's check payable to the order of the Company in an amount
(the "Early Settlement Amount") equal to (i) the product of (A) the Stated
Amount times (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Early Settlement, plus (ii) if such delivery is
made with respect to any Purchase Contracts during the period from the close of
business on any Record Date for any Payment Date to the opening of business on
such Payment Date, an amount equal to the sum of (x) the Contract Adjustment
Payments, if any, payable on such Payment Date with respect to such Purchase
Contracts plus from the period from, but not including the Early Settlement
Date, to the Payment Date (y) the distributions with respect to the related
Pledged Preferred Securities payable on such Payment Date from the period from,
but not including the Early Settlement Date, to the Payment Date. Upon Early
Settlement of Purchase Contracts by a Holder of the related Securities, the
Pledged Preferred Securities underlying such Securities shall be released from
the Pledge as provided in the Pledge Agreement and the Holder shall be entitled
to receive, a number of shares of Common Stock on account of each Purchase
Contract forming part of a Income PRIDES as to which Early Settlement is
effected equal to the Early Settlement Rate; provided however, that upon the
Early Settlement of the Purchase Contracts, the Holder thereof will forfeit the
right to receive any Deferred Contract Adjustment Payments, if any, on such
Purchase Contracts. The Early Settlement Rate shall initially be equal to _____
shares of Common Stock and shall be adjusted in the same manner and at the same
time as the Settlement Rate is adjusted as provided in the Purchase Contract
Agreement.
Upon registration of transfer of this Income PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Income
PRIDES Certificate. The Company covenants and agrees, and the Holder, by his
acceptance hereof, likewise
A-13
<PAGE> 98
covenants and agrees, to be bound by the provisions of this paragraph.
The Holder of this Income PRIDES Certificate, by his acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Income PRIDES evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
his obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on his behalf as his attorney-in-fact, and consents to the
Pledge of the Preferred Securities underlying this Income PRIDES Certificate
pursuant to the Pledge Agreement. The Holder further covenants and agrees, that,
to the extent and in the manner provided in the Purchase Contract Agreement and
the Pledge Agreement, but subject to the terms thereof, payments in respect to
the Stated Amount of the Pledged Preferred Securities on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% of
the Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company
or the Agent may treat the Person in whose name this Income PRIDES Certificate
is registered as the owner of the Income PRIDES evidenced hereby for the purpose
of receiving payments of distributions payable quarterly on the Preferred
Securities, receiving payments of Contract Adjustment Payments, if any, and any
Deferred Contract Adjustment Payments, performance of the Purchase Contracts and
for all other purposes whatsoever, whether
A-14
<PAGE> 99
or not any payments in respect thereof be overdue and notwithstanding any notice
to the contrary, and neither the Company, the Agent nor any such agent shall be
affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
A-15
<PAGE> 100
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ------------Custodian------------
(cust) (minor)
Under Uniform Gifts to Minors Act
---------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survi-
vorship and not as tenants in common
Additional abbreviations may also be used though not in the above list.
---------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby
sell(s), assign(s) and transfer(s) unto ________________________________________
________________________________________________________________________________
Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee _________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Postal Zip Code
________________________________________________________________________________
of Assignee the within Income PRIDES Certificates and all rights
________________________________________________________________________________
thereunder, hereby irrevocably constituting and appointing
________________________________________________________________________________
attorney to transfer said Income PRIDES Certificates on the books of Owens
Corning with full power of substitution in the premises.
Dated:
---------------------- ---------------------------
Signature
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Income PRIDES
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
A-16
<PAGE> 101
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Income PRIDES evidenced
by this Income PRIDES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:
---------------------- ---------------------------
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the
Holder, please print such Person's
name and address:
Please print name
and address of
Registered Holder:
- -------------------------------- -----------------------------
Name Name
- -------------------------------- -----------------------------
Address Address
- -------------------------------- -----------------------------
- -------------------------------- -----------------------------
- -------------------------------- -----------------------------
Social Security or other
Taxpayer Identification
Number, if any --------------------------
A-17
<PAGE> 102
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income PRIDES Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Income PRIDES evidenced by this Income PRIDES
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Income PRIDES with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Income PRIDES Certificate representing any Income PRIDES evidenced hereby as to
which Early Settlement of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. Pledged Preferred Securities deliverable upon such
Early Settlement will be transferred in accordance with the transfer
instructions set forth below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated:
----------------------------- --------------------------------------
Signature
A-18
<PAGE> 103
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares of Common Stock REGISTERED HOLDER
or Income PRIDES Certificates
are to be registered in the
name of and delivered to and
Pledged Preferred Securities
are to be transferred to a
Person other than the Hold-
er, please print such
Person's name and address:
Please print name
and address of
Registered Holder:
- ------------------------------- ------------------------------
Name Name
- ------------------------------- ------------------------------
Address Address
- ------------------------------- ------------------------------
- ------------------------------- ------------------------------
Social Security or other
Taxpayer Identification
Number, if any ------------------------------
Transfer Instructions for Pledged Preferred Securities Transferable Upon Early
Settlement or a Termination Event:
- -------------------------------
- -------------------------------
- -------------------------------
A-19
<PAGE> 104
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OF DECREASED IN GLOBAL CERTIFICATE
The following increases or decreases in this Global
Certificate have been made:
<TABLE>
<CAPTION>
================================================================================================================================
Principal
Amount of Signature
Amount of Amount of this Global of autho-
decrease in increase in Certificate rized
Principal Principal following officer of
Amount of Amount of such de- Trustee or
the Global the Global crease or Securities
Date Certificate Certificate increase Custodian
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
================================================================================================================================
</TABLE>
A-20
<PAGE> 105
EXHIBIT B
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED
IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON
OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company (55 Water Street, New York, New York) to the
Company or its agent for registration of transfer, exchange or payment, and any
Certificate issued is registered in the name of Cede & Co., or such other name
as requested by an authorized representative of The Depository Trust Company,
and any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.
No. ____ Number of Growth PRIDES _____ Cusip No. ________
Form of Face of Growth PRIDES Certificate
This Growth PRIDES Certificate certifies that __________ is the
registered Holder of the number of Growth PRIDES set forth above. Each Growth
PRIDES represents (i) a 1/20 undivided beneficial ownership interest, of a
Treasury Security having a principal amount at maturity equal to $1,000, subject
to the Pledge of such Treasury Security by such Holder pursuant to the Pledge
Agreement, and (ii) the rights and obligations of the Holder under 20 Purchase
Contracts with Owens Corning, a Delaware Corporation (the "Company"). All
capitalized terms used herein which are defined in the Purchase Contract
Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Growth PRIDES evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising a portion of such Growth PRIDES.
Each Purchase Contract evidenced hereby obligates the Holder of this
Growth PRIDES Certificate to purchase, and the Company,
B-1
<PAGE> 106
to sell, on November 16, 2000 (the "Purchase Contract Settlement Date"), at a
price equal to $50 (the "Stated Amount"), a number of shares of Common stock,
par value $.10 per share ("Common Stock"), of the Company equal to the
Settlement Rate unless on or prior to the Purchase Contract Settlement Date
there shall have occurred a Termination Event with respect to the Growth PRIDES
of which such Purchase Contract is a part, all as provided in the Purchase
Contract Agreement and more fully described on the reverse hereof. The purchase
price for the shares of Common Stock purchased pursuant to each Purchase
Contract evidenced hereby will be paid by application of the Proceeds from the
Treasury Securities pledged to secure the obligations under such Purchase
Contract in accordance with the terms of the Pledge Agreement.
The Company shall pay on each Payment Date in respect of each
Purchase Contract evidenced hereby an amount (the "Contract Adjustment
Payments") equal to ____% per annum of the Stated Amount, computed on the basis
of the actual number of days elapsed in a year of 360 day year of twelve 30 day
months, as the case may be, subject to deferral at the option of the Company as
provided in the Purchase Contract Agreement and more fully described on the
reverse hereof; provided, that, the Company shall not make Contract Adjustment
Payments if Contract Adjustment Payments do not constitute a portion of the
Income PRIDES or Growth PRIDES. Such Contract Adjustment Payments, if any, shall
be payable to the Person in whose name this Growth PRIDES Certificate (or a
Predecessor Growth PRIDES Certificate) is registered at the close of business on
the Record Date for such Payment Date.
Contract Adjustment Payments, if any, will be payable at the office of
the Agent in The City of New York or, at the option of the Company, by check
mailed to the address of the Person entitled thereto as such address appears on
the Growth PRIDES Register.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Growth PRIDES Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.
B-2
<PAGE> 107
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
OWENS CORNING
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
Attest:
- ---------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: THE BANK OF NEW YORK
not individually but solely as
Attorney-in-Fact of such Holder
By:
--------------------------------
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Growth PRIDES referred to in the within-mentioned
Purchase Contract Agreement.
By: THE BANK OF NEW YORK as Agent
By:
--------------------------------
Authorized Officer
B-3
<PAGE> 108
(Form of Reverse of
Growth PRIDES Certificate)
Each Purchase Contract evidenced hereby is governed by a Purchase
Contract Agreement, dated as of _______, 1997 (as supplemented from time to
time, the "Purchase Contract Agreement") between the Company and The Bank of New
York, as Purchase Contract Agent (including its successors thereunder, herein
called the "Agent"), to which the Purchase Contract Agreement and supplemental
agreements thereto reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Agent, the Company and the Holders and of the terms upon which the Growth
PRIDES Certificates are, and are to be, executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder of this
Growth PRIDES Certificate to purchase, and the Company to sell, on the Purchase
Contract Settlement Date at a price equal to the Stated Amount (the "Purchase
Price"), a number of shares of Common Stock of the Company equal to the
Settlement Rate unless, on or prior to the Purchase Contract Settlement Date,
there shall have occurred a Termination Event or an Early Settlement with
respect to the Security of which such Purchase Contract is a part. The
"Settlement Rate" is equal to (a) if the Applicable Market Value (as defined
below) is equal to or greater than $____ (the "Threshold Appreciation Price"),
____ shares of Common Stock per Purchase Contract, (b) if the Applicable Market
Value is less than the Threshold Appreciation Price but is greater than $____,
the number of shares of Common Stock per Purchase Contract equal to the Stated
Amount divided by the Applicable Market Value and (c) if the Applicable Market
Amount is less than or equal to $____, _____ shares of Common Stock per Purchase
Contract, in each case subject to adjustment as provided in the Purchase
Contract Agreement. No fractional shares of Common Stock will be issued upon
settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement.
The "Applicable Market Value" means the average of the Closing Prices
per share of Common Stock on each of the thirty consecutive Trading Days ending
on the second Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination means
the closing sale price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed, or if the
Common Stock is not so listed on a United
B-4
<PAGE> 109
States national or regional securities exchange, as reported by The Nasdaq Stock
Market, or, if the Common Stock is not so reported, the last quoted bid price
for the Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of the Common Stock on such date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Company. A "Trading Day" means a day on which the Common Stock
(A) is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of this Growth PRIDES Certificate shall pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting either an Early Settlement of each such Purchase Contract or
by applying a principal amount of the Pledged Treasury Securities underlying
such Holder's Growth PRIDES equal to the Stated Amount of such Purchase Contract
to the purchase of the Common Stock.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the aggregate purchase
price for the shares of Common Stock to be purchased thereunder in the manner
herein set forth.
Each Purchase Contract evidenced hereby and the obligations and rights
of the Company and the Holder thereunder shall terminate if a Termination Event
shall have occurred. Upon the occurrence of a Termination Event, the Company
shall give written notice to the Agent and to the Holders, at their addresses as
they appear in the Growth PRIDES Register. Upon and after the occurrence of a
Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities (as defined in the Pledge Agreement) forming a part of each Growth
PRIDES. A Growth PRIDES shall thereafter represent the right to receive any
accrued Contract Adjustment Payments on the Purchase Contract forming a part of
such Growth PRIDES in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement. Contract Adjustment Payments, if any, shall
cease to accrue in respect of any period from and after the date of a
Termination Event.
B-5
<PAGE> 110
The Growth PRIDES Certificates are issuable only in registered form and
only in denominations of a single Growth PRIDES and any integral multiple
thereof. The transfer of any Growth PRIDES Certificate will be registered and
Growth PRIDES Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Growth PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith. A holder who elects to substitute Preferred
Securities for a Treasury Security, thereby creating Income PRIDES, shall be
responsible for any fees or expenses associated therewith. Except as provided in
the Purchase Contract Agreement, for so long as the Purchase Contract underlying
a Growth PRIDES remains in effect, such Growth PRIDES shall not be separable
into its constituent parts, and the rights and obligations of the Holder of such
Growth PRIDES in respect of the Treasury Security and Purchase Contract
constituting such Growth PRIDES may be transferred and exchanged only as a
Growth PRIDES. The holder of a Growth PRIDES may substitute for the Pledged
Treasury Securities securing its obligations under the related Purchase Contract
Preferred Securities with an aggregate Stated Amount equal to the aggregate
principal amount of the Pledged Treasury Securities in accordance with the terms
of the Purchase Contract Agreement and the Pledge Agreement. From and after such
substitution, the Holder's Security shall be referred to as an "Income PRIDES."
Such substitution may cause the aggregate principal amount of this Certificate
to be increased or decreased; PROVIDED, HOWEVER, the aggregate principal amount
outstanding under this Growth PRIDES Certificate shall not exceed $______. All
such adjustments to the aggregate principal amount of this Growth PRIDES
Certificate shall be duly recorded by placing an appropriate notation on the
Schedule attached hereto.
A Holder of an Income PRIDES may recreate a Growth PRIDES by delivering
to the Collateral Agent Treasury Securities in an aggregate principal amount
equal to the aggregate Stated Amount of the Pledged Preferred Securities in
exchange for the release of such Pledged Preferred Securities in accordance with
the terms of the Purchase Contract Agreement and the Pledge Agreement. Any such
recreation of a Growth PRIDES may be effected only in multiples of 20 Income
PRIDES for 20 Growth PRIDES.
Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, the Contract Adjustment Payments, if any, payable in respect
of each Purchase Contract to the Person in whose name the Growth PRIDES
Certificate evidencing such
B-6
<PAGE> 111
Purchase Contract is registered at the close of business on the Record Date for
such Payment Date. Contract Adjustment Payments will be payable at the office of
the Agent in The City of New York or, at the option of the Company, by check
mailed to the address of the Person entitled thereto at such address as it
appears on the Growth PRIDES Register.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall
bear additional Contract Adjustment Payments thereon at the rate of ____% per
annum (computed on the basis of a 360 day year of twelve 30 day months),
compounding on each succeeding Payment Date, until paid in full (such deferred
installments of Contract Adjustment Payments together with the additional
Contract Adjustment Payments accrued thereon, are referred to herein as the
"Deferred Contract Adjustment Payments"). Deferred Contract Adjustment Payments,
if any, shall be due on the next succeeding Payment Date except to the extent
that payment is deferred pursuant to the Purchase Contract Agreement. No
Contract Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, the Holder of this Growth PRIDES Certificate will receive on
the Purchase Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to the Holder of the Growth PRIDES Certificate of
Securities divided by (y) the Applicable Market Value. No fractional shares of
Common Stock will be issued with respect to the payment of Deferred Contract
Adjustment Payments on the Purchase Contract Settlement Date, as provided in the
Purchase Contract Agreement.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then, until the Deferred Contract
Adjustment Payments have been paid, the Company shall not declare or pay
dividends on, make distributions with respect to, or redeem, purchase or
acquire, or make a liquidation payment with respect to, any of its capital stock
or make guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of shares capital stock of the Company in connection
with the satisfaction by the Company of its obliga-
B-7
<PAGE> 112
tions under any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase capital stock of the Company, (ii) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of the Company's capital stock or the security being
converted or exchanged, (iv) dividends or distributions in capital stock of the
Company or (v) redemptions or purchases of any rights pursuant to the Rights
Agreement, or any successor to the Rights Agreement, and the declaration
thereunder of a dividend of rights in the future).
The Purchase Contracts and the obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments or any Deferred Contract Adjustment Payments, shall
immediately and automatically terminate, without the necessity of any notice or
action by any Holder, the Agent or the Company, if, on or prior to the Purchase
Contract Settlement Date, a Termination Event shall have occurred. Upon the
occurrence of a Termination Event, the Company shall promptly but in no event
later than two business days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in the
Growth PRIDES Register. Upon and after the occurrence of a Termination Event,
the Collateral Agent shall release the Treasury Securities from the Pledge in
accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement at the option of the Holder thereof, Purchase Contracts
underlying Securities having an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof may be settled early ("Early Settlement") as provided
in the Purchase Contract Agreement. In order to exercise the right to effect
Early Settlement with respect to any Purchase Contracts evidenced by this Growth
PRIDES Certificate, the Holder of this Growth PRIDES Certificate shall deliver
this Growth PRIDES Certificate to the Agent at the Corporate Trust Office duly
endorsed for transfer to the Company or in blank with the form of Election to
Settle Early set forth below duly completed and accompanied by payment in the
form of a certified or cashier's check payable to the order of the Company in an
amount (the "Early Settlement Amount") equal to (i) the product of (A) the
Stated Amount times
B-8
<PAGE> 113
(B) the number of Purchase Contracts with respect to which the Holder has
elected to effect Early Settlement, plus (ii) if such delivery is made with
respect to any Purchase Contracts during the period from the close of business
on any Record Date for any Payment Date to the opening of business on such
Payment Date, an amount equal to the Contract Adjustment Payments, if any,
payable, if any, on such Payment Date with respect to such Purchase Contracts
from the period from, but not including the Early Settlement Date, to the
Payment Date. Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Pledged Treasury Securities underlying such Securities
shall be released from the Pledge as provided in the Pledge Agreement and the
Holder shall be entitled to receive, a number of shares of Common Stock on
account of each Purchase Contract forming part of a Growth PRIDES as to which
Early Settlement is effected equal to _____ shares of Common Stock per Purchase
Contract (the "Early Settlement Rate"); provided however, that upon the Early
Settlement of the Purchase Contracts, the Holder thereof will forfeit the right
to receive any Deferred Contract Adjustment Payments on such Purchase Contracts.
The Early Settlement Rate shall initially be equal to _______ shares of Common
Stock per Growth PRIDES and shall be adjusted in the same manner and at the same
time as the Settlement Rate is adjusted as provided in the Purchase Contract
Agreement.
Upon registration of transfer of this Growth PRIDES Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Growth
PRIDES Certificate. The Company covenants and agrees, and the Holder, by his
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Growth PRIDES Certificate, by his acceptance hereof,
authorizes the Agent to enter into and perform the related Purchase Contracts
forming part of the Growth PRIDES evidenced hereby on his behalf as his
attorney-in-fact, expressly withholds any consent to the assumption (i.e.,
affirmance) of the Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the Bankruptcy Code, agrees
to be bound by the terms and provisions thereof, covenants and agrees to perform
his obligations under such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into and perform the
Pledge Agreement on his behalf as his attorney-
B-9
<PAGE> 114
in-fact, and consents to the Pledge of the Treasury Securities underlying this
Growth PRIDES Certificate pursuant to the Pledge Agreement. The Holder further
covenants and agrees, that, to the extent and in the manner provided in the
Purchase Contract Agreement and the Pledge Agreement, but subject to the terms
thereof, payments in respect to the Stated Amount of the Pledged Treasury
Securities on the Purchase Contract Settlement Date shall be paid by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of at least 66 2/3% of
the Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and
construed in accordance with, the laws of the State of New York.
The Company, the Agent and its Affiliates and any agent of the Company
or the Agent may treat the Person in whose name this Growth PRIDES Certificate
is registered as the owner of the Growth PRIDES evidenced hereby for the purpose
of receiving payments of interest on the Treasury Securities, receiving payments
of Contract Adjustment Payments, if any, and any Deferred Contract Adjustment
Payments, performance of the Purchase Contracts and for all other purposes
whatsoever, whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the Agent
nor any such agent shall be affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof,
entitle the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent.
B-10
<PAGE> 115
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ------------Custodian------------
(cust) (minor)
Under Uniform Gifts to Minors Act
---------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
---------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto _________________________________________________
________________________________________________________________________________
Please insert Social Security or Taxpayer I.D. or other Identify-
ing Number of Assignee _________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Please Print or Type Name and Address Including Postal Zip Code
________________________________________________________________________________
of Assignee the within Growth PRIDES Certificates and all rights
________________________________________________________________________________
thereunder, hereby irrevocably constituting and appointing
________________________________________________________________________________
attorney to transfer said Growth PRIDES Certificates on the books of Owens
Corning with full power of substitution in the premises.
Dated:
-------------------- ----------------------------------------
Signature
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Growth PRIDES
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
B-11
<PAGE> 116
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Growth PRIDES evidenced
by this Growth PRIDES Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:
-------------------------- -------------------------------------
Signature
If shares are to be registered
in the name of and delivered to REGISTERED HOLDER
a Person other than the
Holder, please print such Person's
name and address:
Please print name and address
of Registered Holder:
- ----------------------------- ------------------------------------
Name Name
- ----------------------------- ------------------------------------
Address Address
- ----------------------------- ------------------------------------
- ----------------------------- ------------------------------------
Social Security or other
Taxpayer Identification
Number, if any ------------------------------------
B-12
<PAGE> 117
ELECTION TO SETTLE EARLY
The undersigned Holder of this Growth PRIDES Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Growth PRIDES evidenced by this Growth PRIDES
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Growth PRIDES with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Growth PRIDES Certificate representing any Growth PRIDES evidenced hereby as to
which Early Settlement of the related Purchase Contracts is not effected, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. Pledged Treasury Securities deliverable upon such
Early Settlement will be transferred in accordance with the transfer
instructions set forth below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated:
---------------------- ---------------------------------
Signature
B-13
<PAGE> 118
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares of Common Stock REGISTERED HOLDER
or Growth PRIDES Certifi-
cates are to be registered
in the name of and delivered
to and Pledged Treasury
Securities are to be
transferred to a Person
other than the Holder, please
print such Person's name and address:
Please print name and address
of Registered Holder:
- --------------------------- ------------------------------
Name Name
- --------------------------- ------------------------------
Address Address
- --------------------------- ------------------------------
- --------------------------- ------------------------------
- --------------------------- ------------------------------
Social Security or other
Taxpayer Identification
Number, if any
Transfer Instructions for Pledged Treasury Securities Transferable Upon Early
Settlement or a Termination Event:
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
B-14
<PAGE> 119
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global
Certificate have been made:
<TABLE>
<CAPTION>
================================================================================================================================
Principal
Amount of Signature
Amount of Amount of this Global of autho-
decrease in increase in Certificate rized
Principal Principal following officer of
Amount of Amount of such de- Trustee or
the Global the Global crease or Securities
Date Certificate Certificate increase Custodian
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
================================================================================================================================
</TABLE>
B-15
<PAGE> 120
EXHIBIT C
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES of Owens Corning (the "Company"),
and Owens Corning Capital II
We hereby notify you in accordance with Section 4.1 of the
Pledge Agreement, dated as of ________ __, 1997, among the Company, yourselves,
as Collateral Agent, and ourselves, as Purchase Contract Agent and as
attorney-in-fact for the holders of [Income PRIDES] [Growth PRIDES] from time to
time, that the holder of securities listed below (the "Holder") has elected to
substitute [$_____ aggregate principal amount of Treasury Securities]
[$_______Stated Amount of Preferred Securities] in exchange for the [Pledged
Preferred Securities] [Pledged Treasury Securities] held by you in accordance
with the Pledge Agreement and has delivered to us a notice stating that the
Holder has Transferred [Treasury Securities] [Preferred Securities] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Preferred Securities], to release the Preferred Securities]
[Treasury Securities] related to such [Income PRIDES] [Growth PRIDES] to us in
accordance with the Holder's instructions.
Date:______________ THE BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities] for the [Pledged Preferred
Securities] [Pledged Treasury Securities]:
- --------------------------- ------------------------------
Name Social Security or other
Taxpayer Identification
- ---------------------------
Address
- ---------------------------
- ---------------------------
C-1
<PAGE> 121
EXHIBIT D
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
101 Barclay Street, 12E
New York, NY 10286
Attention:
Re: FELINE PRIDES of Owens Corning (the "Company"),
and Owens Corning Capital II
The undersigned Holder hereby notifies you that it has delivered to
The Chase Manhattan Bank, as Collateral Agent, $_______ aggregate principal
amount of [Treasury Securities] [Preferred Securities] in exchange for the
[Pledged Preferred Securities] [Pledged Treasury Securities] held by the
Collateral Agent, in accordance with Section 4.1 of the Pledge Agreement, dated
__________ __, 1997, between you, the Company and the Collateral Agent. The
undersigned Holder hereby instructs you to instruct the Collateral Agent to
release to you on behalf of the undersigned Holder the [Pledged Preferred
Securities] [Pledged Treasury Securities] related to such [Income PRIDES]
[Growth PRIDES].
Dated:
------------------------ ----------------------------------
Signature
Please print name and address of Registered Holder:
- ------------------------- ----------------------------------
Name Social Security or other
Taxpayer Identification
- ------------------------- Number, if any
Address
- -------------------------
- -------------------------
- -------------------------
D-1
<PAGE> 1
Exhibit 4.5.2
OWENS CORNING,
THE BANK OF NEW YORK
AND
THE CHASE MANHATTAN BANK
FORM OF PLEDGE AGREEMENT
Dated as of _______ __, 1997
<PAGE> 2
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Definitions........................................................ 2
Section 2. Pledge; Control and Perfection..................................... 7
Section 2.1. The Pledge......................................................... 7
Section 2.2. Control and Perfection............................................. 9
Section 3. Distributions on Pledged Collateral................................ 10
Section 4. Substitution, Release, Repledge and
Settlement of Preferred Securities................................. 12
Section 4.1. Substitution of Preferred Securities
and the Establishment of Growth
PRIDES............................................................. 12
Section 4.2. Pledge of Preferred Securities and
Re-establishment of Income PRIDES.................................. 12
Section 4.3. Termination Event.................................................. 13
Section 4.4. Cash Settlement.................................................... 14
Section 4.5. Early Settlement................................................... 15
Section 4.6. Application of Proceeds Settlement ................................ 15
Section 5. Voting Rights -- Preferred
Securities......................................................... 16
Section 6. Rights and Remedies; Investment
Company Event...................................................... 17
Section 6.1. Rights and Remedies of the Collateral
Agent.............................................................. 17
Section 6.2. Investment Company Event, etc...................................... 18
Section 7. Representation and Warranties;
Covenants.......................................................... 19
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 7.1. Representations and Warranties..................................... 19
Section 7.2. Covenants.......................................................... 20
Section 8. The Collateral Agent............................................... 20
Section 8.1. Appointment, Powers and Immunities................................. 21
Section 8.2. Instructions of the Company........................................ 22
Section 8.3. Reliance by Collateral Agent....................................... 22
Section 8.4. Rights in Other Capacities......................................... 22
Section 8.5. Non-Reliance on Collateral Agent................................... 23
Section 8.6. Compensation and Indemnity......................................... 23
Section 8.7. Failure to Act..................................................... 24
Section 8.8. Resignation of Collateral Agent.................................... 24
Section 8.9. Right to Appoint Agent or Advisor.................................. 25
Section 8.10. Survival........................................................... 25
Section 8.11. Indemnity.......................................................... 26
Section 9. Amendment.......................................................... 26
Section 9.1. Amendment Without Consent of Holders............................... 26
Section 9.2. Amendment with Consent of Holders.................................. 27
Section 9.3. Execution of Amendments............................................ 27
Section 9.4. Effect of Amendments............................................... 28
Section 9.5. Reference to Amendments............................................ 28
Section 10. Miscellaneous...................................................... 28
Section 10.1. No Waiver.......................................................... 28
Section 10.2. Governing Law...................................................... 29
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 10.3. Notices............................................................ 29
Section 10.4. Successors and Assigns............................................. 29
Section 10.5. Counterparts....................................................... 30
Section 10.6. Severability....................................................... 30
Section 10.7. Expenses, etc...................................................... 30
Section 10.8. Security Interest Absolute......................................... 31
</TABLE>
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
iii
<PAGE> 5
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of __________ __, 1997 (this "Agreement"),
among Owens Corning, a Delaware corporation (the "Company"), The Chase Manhattan
Bank, a New York banking corporation, not individually but solely as collateral
agent (in such capacity, together with its successors in such capacity, the
"Collateral Agent") and in its capacity as a "securities intermediary" as
defined in Section 8-102(a)(14) of Revised Article 8 (as defined herein) (in
such capacity, together with its successors in such capacity, the "Securities
Intermediary"), and The Bank of New York, not individually but solely as
purchase contract agent and as attorney-in-fact of the Holders (as defined in
the Purchase Contract Agreement) from time to time of the Securities (as
hereinafter defined) (in such capacity, together with its successors in such
capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement
(as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as modified and supplemented
and in effect from time to time, the "Purchase Contract Agreement"), pursuant to
which there may be issued up to 6,900,000 FELINE PRIDES (the "Securities").
Each Security, at issuance, consists of a unit (the "Income PRIDES")
comprised of (a) one stock purchase contract (the "Purchase Contract") under
which (i) the Holder will purchase from the Company on November 16, 2000, for an
amount equal to the Stated Amount, a number of shares of Common Stock equal to
the Settlement Rate, and (ii) the Company will pay the Holder Contract
Adjustment Payments, if any, and (b) beneficial ownership of a ____% Trust
Originated Preferred Security (a "Preferred Security") issued by Owens Corning
Capital II (the "Trust"), having a liquidation amount equal to $50 (the "Stated
Amount") and maturing on _______ __, 2002, unless settled earlier.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Securities have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of
<PAGE> 6
such Holders, among other things, to execute and deliver this Agreement on
behalf of such Holders and to grant the pledge provided hereby of the Preferred
Securities and any Treasury Securities (as defined below) delivered in exchange
therefor to secure each Holder's obligations under the related Purchase
Contract, as provided herein and subject to the terms hereof. Upon such pledge
the Preferred Securities will be beneficially owned by the Holders but will be
owned of record by the Purchase Contract Agent subject to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree as
follows:
Section 1. DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(c) the following terms have the meanings assigned to them in
the Purchase Contract Agreement: (i) Act, (ii) Agent, (iii) Board
Resolution, (iv) Cash Settlement, (v) Certificate, (vi) Collateral
Settlement, (vii) Common Stock, (viii) Contract Adjustment Payments,
(ix) Early Settlement, (x) Early Settlement Amount, (xi) Early
Settlement Date, (xii) Debentures, (xiii) Opinion of Counsel, (xiv)
Outstanding Securities, (xv) Purchase Contract, (xvi) Purchase Contract
Settlement Date, (xvii) Purchase Price, (xviii) Repayment Price, (xix)
Settlement Rate, (xx) Termination Event, and (xxi) Underwriting
Agreement;
(d) the following terms have the meanings assigned to them
in the Declaration: (i) Investment Company Event, (ii) Liquidation
Distribution, (iii) Institutional Trustee, and (iv) Tax Event.
2
<PAGE> 7
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in The City of New York (in the State of
New York) are permitted or required by any applicable law to close.
"Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the trust account (number _____) maintained
at The Chase Manhattan Bank in the name "The Bank of New York, as Purchase
Contract Agent on behalf of the holders of certain securities of Owens Corning
Capital II, Collateral Account subject to the security interest of The Chase
Manhattan Bank, as Collateral Agent, for the benefit of Owens Corning, as
pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Declaration" means the Amended and Restated Declaration of Trust of
the Trust, dated as of _____ __, 1997, among the Company as sponsor, the
trustees named therein
3
<PAGE> 8
and the holders from time to time of undivided beneficial interests in the
assets of the Trust.
"Growth PRIDES" means a Purchase Contract with respect to which
Treasury Securities have been substituted for Preferred Securities as collateral
to secure the Holder's obligations under such Purchase Contract.
"Holder" when used with respect to a Security, or a Purchase Contract
constituting a part thereof, means The Depository Trust Company (or its nominee)
as the registered holder of an Income PRIDES or a Growth PRIDES, as the case may
be.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Permitted Investments" means any one of the following which shall
mature on the next succeeding Business Day (i) any evidence of indebtedness with
an original maturity of 365 days or less issued, or directly and fully
guaranteed or insured, by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof or such indebtedness constitutes
a general obligation of it); (ii) deposits, certificates of deposit or
acceptances with an original maturity of 365 days or less of any institution
which is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than US$ 200.0 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States Government or issued by any agency thereof and backed by
the full faith and credit of the United States Government; (v) investments in
commercial paper, other than commercial paper issued by the Company or its
affiliates, of any corporation incorporated under the laws of the United States
or any State thereof, which commercial paper has a rating at the time of
purchase at least equal to "A-1" by Standard & Poor's Ratings Services or at
least equal to "P-1" by Moody's Investors Service, Inc.; and (vi) investments in
4
<PAGE> 9
money market funds registered under the Investment Company Act of 1940, as
amended, which have net assets of at least $200.0 million and at least 85.0% of
whose assets consist of securities and other obligations of the types described
in clauses (i) through (v) above.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Preferred Securities" has the meaning specified in Section 2.1
hereof.
"Pledged Treasury Securities" has the meaning specified in Section
2.1 hereof.
"Preferred Securities" has the meaning specified in the Recitals.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in ss. 8-102(a)(9) of Revised Article
8) and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Collateral.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this instrument.
"Purchase Contract Agreement" has the meaning specified in the
Recitals.
"Revised Article 8" means the 1994 Official Text of Revised Article 8
of the Uniform Commercial Code, together with conforming and miscellaneous
amendments to Articles 1, 3, 4, 5, 9 and 10, 1994 Official Text, as adopted by
the American Law Institute and the National Conference of Commissioners on
Uniform State Laws and approved by the American Bar Association on February 14,
1995.
5
<PAGE> 10
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the preamble to
this Agreement.
"Security Entitlement" has the meaning set forth in Section 8.102(a)(7)
of Revised Article 8.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended from
time to time. Unless otherwise defined herein, all terms defined in the TRADES
Regulations are used herein as therein defined.
"Transfer" means, with respect to the Collateral and in accordance with
the instructions of the Collateral Agent, the Purchase Contract Agent or the
Holder, as applicable:
(i) in the case of Collateral consisting of securities which
cannot be delivered by book-entry or which the parties agree
are to be delivered in physical form, delivery in appro-
priate physical form to the recipient accompanied by any
duly executed instruments of transfer, assignments in blank,
transfer tax stamps and any other documents necessary to
constitute a legally valid transfer to the recipient;
(ii) in the case of Collateral consisting of securities
maintained in book-entry form (other than Treasury Securities)
by (A) causing such securities to be credited to a book-entry
securities account of the recipient or an Intermediary and
(B) causing such Intermediary, if any, (i) to send to the
recipient confirmation of the transfer of the relevant
interest in such Collateral to the recipient and
6
<PAGE> 11
(ii) to identify by book-entry or otherwise such Collateral
as subject to the relevant interest in favor of the
recipient or such other method as may be effective under
applicable law; and
(iii) in the case of Treasury Securities in book-entry form, by
causing a "securities intermediary" (as defined in Section
8-102(a)(14) of Revised Article 8) to (i) credit a "securi-
ties entitlement" (as defined in Section 8-102(a)(17) of
Revised Article 8) with respect to such securities to a
securities account maintained by or on behalf of the re-
cipient; (ii) to issue a confirmation to the recipient with
respect to such credit and (iii) to make appropriate notations
in its books to reflect the security interest of the recipient
in such Treasury Securities.
"Treasury Security" means a zero-coupon U.S. Treasury Security maturing
on November 15, 2000 (Cusip Number 912820 AY3) which are the principal strips of
the 8.50% U.S. Treasury Securities which mature on November 15,
2000.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as to
(i) a Preferred Security, the Stated Amount, (ii) Cash, the face amount thereof
and (iii) Treasury Securities, the aggregate principal amount thereof at
maturity.
Section 2. PLEDGE; CONTROL AND PERFECTION.
Section 2.1. THE PLEDGE. The Holders from time to time acting through
the Purchase Contract Agent, as their attorney-in-fact, hereby pledge and grant
to the Collateral Agent, for the benefit of the Company, as collateral security
for the performance when due by such Holders of their respective obligations
under the related Purchase Contracts, a security interest in (i) all of the
right, title and interest of such Holders (a) in the Preferred Securities
constituting a part of the securities and all Proceeds thereof (including any
Proceeds from the repayment of the Preferred Securities by the Trust) and any
7
<PAGE> 12
Treasury Securities delivered in exchange for such Preferred Securities in
accordance with Section 4 hereof, in each case that have been Transferred to or
received by the Collateral Agent and not released by the Collateral Agent to
such Holders under the provisions of this Agreement (the "Collateral"); (b) in
payments made by Holders pursuant to Section 4.4; (c) in the Collateral Account
and all securities, financial assets and other property credited thereto and all
security entitlements related thereto; (d) in any Debentures delivered to the
Collateral Agent upon the occurrence of an Investment Company Event or a
liquidation of the Trust as provided in Section 6.3 and (e) all proceeds of the
foregoing. Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Income PRIDES, shall cause the Preferred Securities comprising a part of the
Income PRIDES to be delivered to the Collateral Agent for the benefit of the
Company by physically delivering such securities to the Securities Intermediary
endorsed in blank and causing the Securities Intermediary to credit the
Collateral Account with such securities and send the Collateral Agent a
confirmation of the deposit of such securities. In the event a Holder of Income
PRIDES so elects, such Holder may Transfer Treasury Securities to the Collateral
Agent for the benefit of the Company in exchange for the release by the
Collateral Agent on behalf of the Company of Preferred Securities to the
Purchase Contract Agent on behalf of such Holder. Treasury Securities shall be
Transferred to the Collateral Account maintained by the Collateral Agent at the
Securities Intermediary by book-entry transfer to the Collateral Account in
accordance with the TRADES Regulations and other applicable law and by the
notation by the Securities Intermediary on its books that a Security Entitlement
with respect to such Treasury Securities has been credited to the Collateral
Account. For purposes of perfecting the Pledge under applicable law, including,
to the extent applicable, the TRADES Regulations, the Uniform Commercial Code as
adopted and in effect in any applicable jurisdiction or Revised Article 8 as
made applicable by the TRADES Regulations, the Collateral Agent shall be the
agent of the Company as provided herein. The pledge provided in this Section 2.1
is herein referred to as the "Pledge" and the Preferred Securities or Treasury
Securities subject to the Pledge, excluding any Preferred Securities or Treasury
Securities released from the Pledge as provided in Section 4 hereof, are
hereinafter referred to as
8
<PAGE> 13
"Pledged Preferred Securities" or the "Pledged Treasury Securities,"
respectively. Subject to the Pledge and the provisions of Section 2.2 hereof,
the Holders from time to time shall have full beneficial ownership of the
Collateral. Whenever directed by the Collateral Agent acting on behalf of the
Company, the Securities Intermediary shall have the right to reregister the
Preferred Securities or any other securities held in physical form in its name.
Except as may be required in order to release Preferred Securities in
connection with a Holder's election to convert its investment from an Income
Pride to a Growth Pride, or except as otherwise required to release securities
as specified herein, the Collateral Agent shall not relinquish physical
possession of any certificate evidencing a Preferred Security prior to the
termination of this Agreement. If it becomes necessary for the Collateral Agent
to relinquish physical possession of a certificate in order to release a portion
of the Preferred Securities evidenced thereby from the Pledge, the Collateral
Agent shall use its best efforts to obtain physical possession of a replacement
certificate evidencing any Preferred Securities remaining subject to the Pledge
hereunder registered to it or indorsed in blank within fifteen days of the date
it relinquished possession. The Collateral Agent shall promptly notify the
Company of its failure to obtain possession of any such replacement certificate
as required hereby.
Section 2.2. CONTROL AND PERFECTION. In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase Contract Agent, as
their attorney-in-fact, hereby authorize and direct the Securities Intermediary
(without the necessity of obtaining the further consent of the Purchase Contract
Agent or any of the Holders), and the Securities Intermediary agrees, to comply
with and follow any instructions and entitlement orders (as defined in ss.
8-102(a)(8) of Revised Article 8) that the Collateral Agent on behalf of the
Company may give in writing with respect to the Collateral Account, the
Collateral credited thereto and any security entitlements with respect to any
thereof. Such instructions and entitlement orders may, without limitation,
direct the Securities Intermediary to transfer, redeem, sell, liquidate, assign,
deliver or otherwise
9
<PAGE> 14
dispose of the Preferred Securities, the Treasury Securities and any security
entitlements with respect thereto and to pay and deliver any income, proceeds or
other funds derived therefrom to the Company. The Holders from time to time
acting through the Purchase Contract Agent hereby further authorize and direct
the Collateral Agent, as agent of the Company, to itself issue instructions and
entitlement orders, and to otherwise take action, with respect to the Collateral
Account, the Collateral credited thereto and any security entitlements with
respect to any thereof, pursuant to the terms and provisions hereof, all without
the necessity of obtaining the further consent of the Purchase Contract Agent or
any of the Holders. In addition, to further protect and perfect the Pledge, the
Securities Intermediary agrees that it will, until Revised Article 8 becomes
effective in New York, at all times mark its books with respect to the
Collateral Account to show that all securities credited thereto are subject to
the Pledge in favor of the Collateral Agent for the benefit of the Company. The
Collateral Agent shall be the Agent of the Company and shall act as directed in
writing by the Company. Without limiting the generality of the foregoing, the
Collateral Agent shall issue entitlement orders to the Securities Intermediary
when and as directed by the Company.
Section 3. DISTRIBUTIONS ON PLEDGED COLLATERAL. So long as the Purchase
Contract Agent is the registered owner of the Pledged Preferred Securities it
shall receive all payments thereon. If the Pledged Preferred Securities are
reregistered, such that the Collateral Agent becomes the registered holder, all
payments of the Stated Amount of, or cash distributions on, any Pledged
Preferred Securities and all payments of the principal of, or cash distributions
on, any Pledged Treasury Securities received by the Collateral Agent that are
properly payable hereunder shall be paid by the Collateral Agent by wire
transfer in same day funds:
(i) In the case of (A) cash distributions with respect to
Pledged Preferred Securities and (B) any payments of the Stated Amount
with respect to any Preferred Securities that have been released from
the Pledge pursuant to Section 4.3 hereof, to the Purchase Contract
Agent, for the benefit of the relevant Holders of Securities, to the
account designated by the Purchase Contract Agent for such
10
<PAGE> 15
purpose, no later than 2:00 p.m., New York City time, on the Business
Day such payment is received by the Collateral Agent (provided that in
the event such payment is received by the Collateral Agent on a day
that is not a Business Day or after 12:30 p.m., New York City time, on
a Business Day, then such payment shall be made no later than 10:30
a.m., New York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Holders of the Growth PRIDES to the accounts
designated by them in writing for such purpose no later than 2:00 p.m.,
New York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received
by the Collateral Agent on a day that is not a Business Day or after
12:30 p.m., New York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of any
Pledged Preferred Securities or the principal of any Pledged Treasury
Securities, to the Company on the relevant Payment Date in accordance
with the procedure set forth in Section 6.2(a) or 6.2(b) hereof, in
full satisfaction of the respective obligations of the Holders under
the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided herein shall be
applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the Stated Amount on account of any
Preferred Security that, at the time of such payment, is a Pledged Preferred
Security or a Holder of a Growth PRIDES shall receive any payments of principal
on account of any Treasury Securities that, at the time of such payment, are
Pledged Treasury Securities, the Purchase Contract Agent or such Holder shall
hold the same as trustee of an express trust for the benefit of the Company (and
promptly deliver the same over to the Company) for application to the obliga-
11
<PAGE> 16
tions of the Holders under the related Purchase Contracts, and the Holders shall
acquire no right, title or interest in any such payments of Stated Amount or
principal so received.
Section 4. SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF PREFERRED
SECURITIES.
Section 4.1. SUBSTITUTION OF PREFERRED SECURITIES AND THE ESTABLISHMENT
OF GROWTH PRIDES. At any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Income PRIDES shall
have the right to substitute Treasury Securities for the Pledged Preferred
Securities securing such Holder's obligations under the Purchase Contract(s)
comprising a part of its Income PRIDES in integral multiples of 20 Income PRIDES
by (a) Transferring to the Collateral Agent Treasury Securities having a Value
equal to the Stated Amount of the Pledged Preferred Securities to be released
and (b) delivering the related Income PRIDES to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B hereto, to the
Purchase Contract Agent stating that such Holder has Transferred Treasury
Securities to the Collateral Agent pursuant to clause (a) above (stating the
Value of the Treasury Securities Transferred by such Holder) and requesting that
the Purchase Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Preferred Securities related to such Income PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form provided
in Exhibit A. Upon receipt of Treasury Securities from a Holder of Income PRIDES
and the related instruction from the Purchase Contract Agent, the Collateral
Agent shall release the Preferred Securities and shall promptly Transfer such
Preferred Securities, free and clear of any lien, pledge or security interest
created hereby, to the Purchase Contract Agent.
Section 4.2. PLEDGE OF PREFERRED SECURITIES AND REESTABLISHMENT OF
INCOME PRIDES. At any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Growth PRIDES shall
have the right to establish or reestablish Income PRIDES consisting of the
Purchase Contracts and Preferred Securities in integral multiples of 20 Income
PRIDES by (a) Transferring to the Collateral Agent Preferred Securities having a
Value equal to the Stated Amount of the
12
<PAGE> 17
Pledged Treasury Securities to be released and (b) delivering the related Growth
PRIDES to the Purchase Contract Agent, accompanied by a notice, substantially in
the form of Exhibit B hereto, to the Purchase Contract Agent stating that such
Holder has Transferred Preferred Securities to the Collateral Agent pursuant to
clause (a) above and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release from the Pledge the Pledged Treasury Securities
related to such Growth PRIDES. The Purchase Contract Agent shall instruct the
Collateral Agent in the form provided in Exhibit A. Upon receipt of the
Preferred Securities from such Holder and the instruction from the Purchase
Contract Agent, the Collateral Agent shall release the Treasury Securities and
shall promptly Transfer such Treasury Securities, free and clear of any lien,
pledge or security interest created hereby, to the Purchase Contract Agent.
Section 4.3. TERMINATION EVENT. Upon receipt by the Collateral Agent of
written notice from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Collateral
from the Pledge and shall promptly Transfer any Pledged Preferred Securities and
Pledged Treasury Securities to the Purchase Contract Agent for the benefit of
the Holders of the Income PRIDES and the Growth PRIDES, respectively, free and
clear of any lien, pledge or security interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Preferred Securities or of the Pledged Treasury Securities, as the case may be,
as provided by this Section 4.3, the Purchase Contract Agent shall (i) use its
best efforts to obtain an opinion of a nationally recognized law firm reasonably
acceptable to the Collateral Agent to the effect that, as a result of the
Company's being the debtor in such a bankruptcy case, the Collateral Agent will
not be prohibited from releasing or Transferring the Collateral as provided in
this Section 4.3, and shall deliver such opinion to the Collateral Agent within
ten days after the occurrence of such Termination Event, and if (y) the Purchase
Contract Agent shall be unable to obtain such opinion within ten days after the
occurrence of such Termination Event or (z) the
13
<PAGE> 18
Collateral Agent shall continue, after delivery of such opinion, to refuse to
effectuate the release and Transfer of all Pledged Preferred Securities or of
the Pledged Treasury Securities, as the case may be, as provided in this Section
4.3, then the Purchase Contract Agent shall within fifteen days after the
occurrence of such Termination Event commence an action or proceeding in the
court with jurisdiction of the Company's case under the Bankruptcy Code seeking
an order requiring the Collateral Agent to effectuate the release and transfer
of all Pledged Preferred Securities or of the Pledged Treasury Securities, as
the case may be, as provided by this Section 4.3 or (ii) commence an action or
proceeding like that described in subsection (i)(z) hereof within ten days after
the occurrence of such Termination Event.
Section 4.4. CASH SETTLEMENT. Upon receipt by the Collateral Agent of
(a) notice from the Purchase Contract Agent prior to the Purchase Contract
Settlement Date, as provided in the Purchase Contract Agreement, that a Holder
elects to effect a Cash Settlement with respect to some or all of such Holder's
Purchase Contracts in accordance with the terms of the Purchase Contracts and
the Purchase Contract Agreement and (b) payment by such Holder on or prior to
5:00 p.m., New York City time, on the second Business Day immediately preceding
the Purchase Contract Settlement Date, of the Purchase Price of such Purchase
Contracts by certified or cashiers check payable to or upon the order of the
Company, or wire transfer in immediately available funds, then the Collateral
Agent shall, upon the written direction of the Purchase Contract Agent, promptly
invest any Cash received from a Holder in connection with a Cash Settlement in
Permitted Investments that will mature on the Purchase Contract Settlement Date.
Upon the receipt of the proceeds of any such investment, the Collateral Agent
shall pay such funds to the Company on the Purchase Contract Settlement Date.
After payment of the Purchase Price to the Company on the Purchase Contract
Settlement Date, the Collateral Agent shall release from the Pledge and promptly
Transfer to the Purchase Contract Agent Pledged Preferred Securities or Pledged
Treasury Securities with a principal amount equal to the product of the Stated
Amount and the number of Purchase Contracts as to which such Holder has elected
to effect a Cash Settlement. The Collateral Agent shall distribute, when
received, any funds in respect of the interest earned from any such
14
<PAGE> 19
investment to the Purchase Contract Agent, for payment to the relevant Holders.
Section 4.5. EARLY SETTLEMENT. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities have
elected to effect Early Settlement of their respective obligations under the
Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase Contracts and the Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such Holders have
elected to effect Early Settlement), and that the Purchase Contract Agent has
received from such Holders, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (a) Pledged Preferred Securities in the case of a
holder of Income PRIDES or (b) Pledged Treasury Securities in the case of a
holder of Growth PRIDES, as the case may be, with a principal amount equal to
the product of (i) the Stated Amount times (ii) the number of such Purchase
Contracts as to which such Holders have elected to effect Early Settlement and
shall Transfer all such Pledged Preferred Securities or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge created hereby, to
the Purchase Contract Agent for the benefit of the Holders.
Section 4.6. APPLICATION OF PROCEEDS SETTLEMENT. (a) In the event a
Holder of Income PRIDES has not made an effective Cash Settlement or an Early
Settlement of the Purchase Contract(s) underlying its Income PRIDES, such Holder
shall be deemed to have elected to pay for the shares of Common Stock to be
issued under such Purchase Contract(s) from the Proceeds of the related Pledged
Preferred Securities. The Collateral Agent shall, by 10:00 a.m., New York City
time, on the Business Day immediately preceding the Purchase Contract Settlement
Date, without any instruction from such Holder of Income PRIDES, present the
related Preferred Securities to the Institutional Trustee for repayment at the
Repayment Price. The Collateral Agent shall, at the written direction of the
Purchase Contract Agent, promptly invest any Cash received in respect of the
repayment of the
15
<PAGE> 20
Pledged Preferred Securities in overnight Permitted Investments. On the Purchase
Contract Settlement Date, the Collateral Agent shall apply the proceeds of any
such investment to pay to the Company an amount equal to the product of the
Stated Amount and the number of Preferred Securities repaid by the Institutional
Trustee at the Purchase Price. The Collateral Agent shall distribute any funds
received in respect of the investment earnings from such investment when
received to the Purchase Contract Agent for payment to the relevant Holders.
(b) In the event a holder of Growth PRIDES has not made an Early Settlement of
the Purchase Contract(s) underlying its Growth PRIDES, such holder shall be
deemed to have elected to pay for the shares of Common Stock to be issued under
such Purchase Contract(s) from the Proceeds of the related Pledged Treasury
Securities. On the Business Day immediately prior to the Purchase Contract
Settlement Date, the Collateral Agent shall, at the written direction of the
Purchase Contract Agent, invest the Cash proceeds of the maturing Pledged
Treasury Securities in overnight Permitted Investments. Without receiving any
instruction from the Holder of Growth PRIDES, the Collateral Agent shall apply
the Proceeds of the related Pledged Treasury Securities to the settlement of
such Purchase Contracts on the Purchase Contract Settlement Date.
In the event the sum of the Proceeds from the related Pledged Treasury
Securities and the investment earnings from the investment in overnight
Permitted Investments is in excess of the aggregate Purchase Price of the
Purchase Contracts being settled thereby, the Collateral Agent shall distribute
such excess, when received, to the Purchase Contract Agent for the benefit of
the holder of the related Purchase Contracts.
Section 5. VOTING RIGHTS -- PREFERRED SECURITIES. The Purchase Contract
Agent may exercise, or refrain from exercising, any and all voting and other
consensual rights pertaining to the Pledged Preferred Securities or any part
thereof for any purpose not inconsistent with the terms of this Agreement and in
accordance with the terms of the Purchase Contract Agreement; provided, that the
Purchase Contract Agent shall not exercise or, as the case may be, shall not
refrain from exercising such right if, in the judgment of the Company, such
action would
16
<PAGE> 21
impair or otherwise have a material adverse effect on the value of all or any of
the Pledged Preferred Securities; and provided, further, that the Purchase
Contract Agent shall give the Company and the Collateral Agent at least five
days' prior written notice of the manner in which it intends to exercise, or its
reasons for refraining from exercising, any such right. Upon receipt of any
notices and other communications in respect of any Pledged Preferred Securities,
including notice of any meeting at which holders of Preferred Securities are
entitled to vote or solicitation of consents, waivers or proxies of holders of
Preferred Securities, the Collateral Agent shall use reasonable efforts to send
promptly to the Purchase Contract Agent such notice or communication, and as
soon as reasonably practicable after receipt of a written request therefor from
the Purchase Contract Agent, execute and deliver to the Purchase Contract Agent
such proxies and other instruments in respect of such Pledged Preferred
Securities (in form and substance satisfactory to the Collateral Agent) as are
prepared by the Purchase Contract Agent with respect to the Pledged Preferred
Securities.
Section 6. RIGHTS AND REMEDIES; INVESTMENT COMPANY EVENT
Section 6.1. RIGHTS AND REMEDIES OF THE COLLATERAL AGENT. (a) The
Collateral Agent shall have all of the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code as in effect in
the State of New York (the "Code") (whether or not the Code is in effect in the
jurisdiction where the rights and remedies are asserted), Revised Article 8 and
the TRADES Regulations and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction where any
rights and remedies hereunder may be asserted.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of principal payments of any Pledged
Treasury Securities as provided in Section 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which such Pledged Treasury
Securities is a part under the related Purchase Contracts, the
Collateral Agent shall have and may exercise, with refer-
17
<PAGE> 22
ence to such Pledged Treasury Securities and such obligations of such Holder,
any and all of the rights and remedies available to a secured party under the
Code, Revised Article 8 and the TRADES Regulations after default by a debtor,
and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the Stated Amount of, or
cash distributions on, the Pledged Preferred Securities, or (ii) the principal
of the Pledged Treasury Securities, subject, in each case, to the provisions of
Section 3, and as otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in the
event such Holder becomes the holder of a Growth PRIDES, agrees that, from time
to time, upon the written request of the Collateral Agent, the Purchase Contract
Agent or such Holder shall execute and deliver such further documents and do
such other acts and things as the Collateral Agent may reasonably request in
order to maintain the Pledge, and the perfection and priority thereof, and to
confirm the rights of the Collateral Agent hereunder. The Purchase Contract
Agent shall have no liability to any Holder for executing any documents or
taking any such acts requested by the Collateral Agent hereunder, except for
liability for its own negligent act, its own negligent failure to act or its own
willful misconduct.
Section 6.2. INVESTMENT COMPANY EVENT, ETC. Upon the occurrence of an
Investment Company Event or a liquidation of the Trust, a principal amount of
the Debentures constituting the assets of the Trust and underlying the Preferred
Securities equal to the aggregated Stated Amount of the Pledged Preferred
Securities shall be delivered to the Collateral Agent in exchange for the
Pledged Preferred Securities. In the event the Collateral Agent receives such
Debentures in respect of Pledged Preferred Securities upon the occurrence of an
Investment Company Event or liquidation of the Trust, the Collateral Agent shall
Transfer the Debentures to the Collateral Account in the manner specified herein
for Pledged Preferred Securities to secure the obligations of the Hold-
ers of Income PRIDES to purchase the Company's Common
18
<PAGE> 23
Stock under the related Purchase Contracts. Thereafter, the Collateral Agent
shall have such security interests, rights and obligations with respect to the
Debentures as it had in respect of the Pledged Preferred Securities as provided
in Articles II, III, IV, V and VI hereof.
Section 7. REPRESENTATION AND WARRANTIES; COVENANTS.
Section 7.1. REPRESENTATIONS AND WARRANTIES. The Holders from time to
time, acting through the Purchase Contract Agent as their attorney-in-fact (it
being understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, which representations and warranties shall
be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security
interest in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the
Collateral and, in the case of Collateral delivered
in physical form, is the sole holder of such
Collateral and is the sole beneficial owner of, or
has the right to Transfer, the Collateral it
Transfers to the Collateral Agent, free and clear of
any security interest, lien, encumbrance, calls,
liabilities to pay money or other restrictions other
than the security interest and lien granted under
Section 2 hereof;
(c) upon the Transfer of the Collateral to the Collateral
Account, the Collateral Agent, for the benefit of the
Company, will have a valid and perfected first
priority security interest therein (assuming that
any central clearing operation or any Intermediary
or other entity not within the control of the Holder
involved in the Transfer of the Collateral,
including the Collateral Agent, gives the notices and
takes the action required of
19
<PAGE> 24
it hereunder and under applicable law for perfection
of that interest and assuming the establishment and
exercise of control pursuant to Section 2.2 hereof);
and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in
the creation of any security interest, lien or other
encumbrance on the Collateral other than the security
interest and lien granted under Section 2 hereof or
violate any provision of any existing law or regula-
tion applicable to it or of any mortgage, charge,
pledge, indenture, contract or undertaking to which
it is a party or which is binding on it or any of its
assets.
Section 7.2. COVENANTS. The Holders from time to time, acting through
the Purchase Contract Agent as their attorney-in-fact (it being understood that
the Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders
will create or purport to create or allow to subsist
any mortgage, charge, lien, pledge or any other
security interest whatsoever over the Collateral or
any part of it other than pursuant to this Agreement;
and
(b) neither the Purchase Contract Agent nor such Holders
will sell or otherwise dispose (or attempt to
dispose) of the Collateral or any part of it except
for the beneficial interest therein, subject to the
pledge hereunder, transferred in connection with
the Transfer of the Securities.
Section 8. THE COLLATERAL AGENT. It is hereby agreed as follows:
20
<PAGE> 25
Section 8.1. APPOINTMENT, POWERS AND IMMUNITIES. The Collateral Agent
shall act as agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. The
Collateral Agent: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against the Collateral Agent, nor shall
the Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or other document
referred to or provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value, validity,
effectiveness, genuineness, enforce- ability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or the Purchase
Contract Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person (except the
Collateral Agent) to perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly required hereby,
maintenance of any security interest created hereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder (except pursuant to directions furnished under Section 8.2 hereof,
subject to Section 8.6 hereof); (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection herewith or
therewith, except for its own negligence or willful misconduct; and (e) shall
not be required to advise any party as to selling or retaining, or taking or
refraining from taking any action with respect to, any securities or other
property deposited hereunder. Subject to the foregoing, during the term of this
Agreement, the Collateral Agent shall take all reasonable action in connection
with the safekeeping and preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess
21
<PAGE> 26
of the Value of the Collateral. Notwithstanding the foregoing, the Collateral
Agent and Securities Intermediary in its individual capacity hereby waive any
right of setoff, bankers lien, liens or perfection rights as securities
intermediary or any counterclaim with respect to any of the Collateral.
Section 8.2. INSTRUCTIONS OF THE COMPANY. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by
this Agreement; PROVIDED, HOWEVER, that (i) such direction shall not conflict
with the provisions of any law or of this Agreement and (ii) the Collateral
Agent shall be adequately indemnified as provided herein. Nothing in this
Section 8.2 shall impair the right of the Collateral Agent in its discretion to
take any action or omit to take any action which it deems proper and which is
not inconsistent with such direction.
Section 8.3. RELIANCE BY COLLATERAL AGENT. Each of the Securities
Intermediary and the Collateral Agent shall be entitled to rely upon any
certification, order, judgment, opinion, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex or
facsimile) believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons (without being required to
determine the correctness of any fact stated therein), and upon advice and
statements of legal counsel and other experts selected by the Collateral Agent
and the Securities Intermediary. As to any matters not expressly provided for by
this Agreement, the Collateral Agent and the Securities Intermediary shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
in accordance with instructions given by the Company in accordance with this
Agreement.
Section 8.4. RIGHTS IN OTHER CAPACITIES. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of bank-
22
<PAGE> 27
ing, trust or other business with the Purchase Contract Agent and any Holder of
Securities (and any of their respective subsidiaries or affiliates) as if it
were not acting as the Collateral Agent, and the Collateral Agent and its
affiliates may accept fees and other consideration from the Purchase Contract
Agent and any Holder of Securities without having to account for the same to the
Company; PROVIDED that each of the Securities Intermediary and the Collateral
Agent covenants and agrees with the Company that it shall not accept, receive or
permit there to be created in favor of itself and shall take no affirmative
action to permit there to be created in favor of any other Person, any security
interest, lien or other encumbrance of any kind in or upon the Collateral.
Section 8.5. NON-RELIANCE ON COLLATERAL AGENT. Neither the Securities
Intermediary nor the Collateral Agent shall be required to keep itself informed
as to the performance or observance by the Purchase Contract Agent or any Holder
of Securities of this Agreement, the Purchase Contract Agreement, the Securities
or any other document referred to or provided for herein or therein or to
inspect the properties or books of the Purchase Contract Agent or any Holder of
Securities. The Collateral Agent shall not have any duty or responsibility to
provide the Company with any credit or other information concerning the affairs,
financial condition or business of the Purchase Contract Agent or any Holder of
Securities (or any of their respective affiliates) that may come into the
possession of the Collateral Agent or the Securities Intermediary or any of
their respective affiliates.
Section 8.6. COMPENSATION AND INDEMNITY. The Company agrees: (i) to pay
the Collateral Agent from time to time such compensation as shall be agreed in
writing between the Company and the Collateral Agent for all services rendered
by it hereunder and (ii) to indemnify the Collateral Agent and the Securities
Intermediary for, and to hold each of them harmless from and against, any loss,
liability or expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement, including the
costs and expenses (including reasonable fees and expenses of counsel) of
defending itself against any claim or
23
<PAGE> 28
liability in connection with the exercise or performance of such powers and
duties.
Section 8.7. FAILURE TO ACT. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto and/or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent shall be entitled, after
prompt notice to the Company and the Purchase Contract Agent, at its sole
option, to refuse to comply with any and all claims, demands or instructions
with respect to such property or funds so long as such dispute or conflict shall
continue, and the Collateral Agent shall not be or become liable in any way to
any of the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent shall be
entitled to refuse to act until either (i) such conflicting or adverse claims or
demands shall have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting parties as evidenced in a
writing, satisfactory to the Collateral Agent or (ii) the Collateral Agent shall
have received security or an indemnity satisfactory to the Collateral Agent
sufficient to save the Collateral Agent harmless from and against any and all
loss, liability or expense which the Collateral Agent may incur by reason of its
acting. The Collateral Agent may in addition elect to commence an inter- pleader
action or seek other judicial relief or orders as the Collateral Agent may deem
necessary. Notwithstanding anything contained herein to the contrary, the
Collateral Agent shall not be required to take any action that is in its opinion
contrary to law or to the terms of this Agreement, or which would in its opinion
subject it or any of its officers, employees or directors to liability.
Section 8.8. RESIGNATION OF COLLATERAL AGENT. Subject to the
appointment and acceptance of a successor Collateral Agent as provided below,
(a) the Collateral Agent may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent as attorney-in-fact for the Holders of
Securities, (b) the Collateral Agent may be removed at any time by the Company
and (c) if the Collateral Agent fails to perform any of its material obligations
hereunder in any material respect for a period of not less than 20 days after
receiving written notice of such failure by the Purchase Contract
24
<PAGE> 29
Agent and such failure shall be continuing, the Collateral Agent may be removed
by the Purchase Contract Agent. The Purchase Contract Agent shall promptly
notify the Company of any removal of the Collateral Agent pursuant to clause (c)
of the immediately preceding sentence. Upon any such resignation or removal, the
Company shall have the right to appoint a successor Collateral Agent. If no
successor Collateral Agent shall have been so appointed and shall have accepted
such appointment within 30 days after the retiring Collateral Agent's giving of
notice of resignation or such removal, then the retiring Collateral Agent may
petition any court of competent jurisdiction for the appointment of a successor
Collateral Agent. The Collateral Agent shall be a bank which has an office in
New York, New York with a combined capital and surplus of at least $50,000,000.
Upon the acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, and the retiring Collateral Agent shall take
all appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor Collateral Agent. The retiring
Collateral Agent shall, upon such succession, be discharged from its duties and
obligations as Collateral Agent hereunder. After any retiring Collateral Agent's
resignation hereunder as Collateral Agent, the provisions of this Section 8
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Collateral Agent.
Section 8.9. RIGHT TO APPOINT AGENT OR ADVISOR. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any action
taken or omitted by, or in reliance upon the advice of, such agents or advisors
selected in good faith. The appointment of agents pursuant to this Section 8.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
Section 8.10. SURVIVAL. The provisions of this Section 8 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent.
25
<PAGE> 30
Section 8.11. INDEMNITY. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or the Securities
Intermediary or their officers, employees or agents be liable under this
Agreement to any third party for indirect, special, punitive, or consequential
loss or damage of any kind whatsoever, including lost profits, whether or not
the likelihood of such loss or damage was known to the Collateral Agent or the
Securities Intermediary, or any of them, incurred without any act or deed that
is found to be attributable to gross negligence on the part of the Collateral
Agent or the Securities Intermediary.
Section 9. Amendment.
----------
Section 9.1. AMENDMENT WITHOUT CONSENT OF HOLDERS. Without the consent
of any Holders, the Company, the Collateral Agent and the Purchase Contract
Agent, at any time and from time to time, may amend this Agreement, in form
satisfactory to the Company, the Collateral Agent and the Purchase Contract
Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company so long as such covenants or such surrender do not
adversely affect the validity, perfection or priority of the security
interests granted or created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such
provisions herein, or to make any other provisions with respect to such
matters or questions arising under this Agreement, provided such action
shall not adversely affect the interests of the Holders.
26
<PAGE> 31
Section 9.2. AMENDMENT WITH CONSENT OF HOLDERS. With the consent of the
Holders of not less than 66 2/3% of the Purchase Contracts at the time
outstanding, by act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the Company, when
authorized by a Board Resolution, the Purchase Contract Agent and the Collateral
Agent may amend this Agreement for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in respect of the
Securities; PROVIDED, HOWEVER, that no such supplemental agreement shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the amount or type of Collateral underlying a
Security (except for the rights of holders of Income PRIDES to
substitute the Treasury Securities for the Trust Preferred Securities
or the rights of holders of Growth PRIDES to substitute Trust Preferred
Securities for the Treasury Securities), impair the right of the Holder
of any Security to receive distributions on the underlying Collateral
or otherwise adversely affect the Holder's rights in or to such
Collateral; or
(2) otherwise effect any action that would require the consent
of the Holder of each Outstanding Security affected thereby pursuant to
the Purchase Contract Agreement if such action were effected by an
agreement supplemental thereto; or
(3) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment; or
(4) materially and adversely alter the rights of the holders
of Preferred Securities.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if
such Act shall approve the substance thereof.
Section 9.3. EXECUTION OF AMENDMENTS. In executing any amendment
permitted by this Section, the Collateral Agent and the Purchase Contract Agent
shall be entitled to receive and (subject to Section 6.1 hereof, with
27
<PAGE> 32
respect to the Collateral Agent, and Section 7.1 of the Purchase Contract
Agreement, with respect to the Purchase Contract Agent) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent, if any, to the execution and delivery of such amendment have been
satisfied.
Section 9.4. EFFECT OF AMENDMENTS. Upon the execution of any amendment
under this Section, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated, executed
on behalf of the Holders and delivered under the Purchase Contract Agreement
shall be bound thereby.
Section 9.5. REFERENCE TO AMENDMENTS. Security Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this Section may, and shall if required
by the Collateral Agent or the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent and the Collateral Agent as to any
matter provided for in such amendment. If the Company shall so determine, new
Security Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in accordance with the Purchase Contract Agreement in exchange for Outstanding
Security Certificates.
Section 10. MISCELLANEOUS.
Section 10.1. NO WAIVER. No failure on the part of the Collateral Agent
or any of its agents to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
28
<PAGE> 33
Section 10.2. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without limiting
the foregoing, the above choice of law is expressly agreed to by the Securities
Intermediary, the Collateral Agent and the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, in connection
with the establishment and maintenance of the Collateral Account. The Company,
the Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby submit to
the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
Section 10.3. NOTICES. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 10.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent and the Purchase Contract Agent, and the Holders
from time to time of the Securities, by their
29
<PAGE> 34
acceptance of the same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the grant of the
Pledge hereunder by, the Purchase Contract Agent.
Section 10.5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 10.6. SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or en- forceability of such provision in any other
jurisdiction.
Section 10.7. EXPENSES, ETC. The Company agrees to reimburse the
Collateral Agent for: (a) all reasonable out-of-pocket costs and expenses of the
Collateral Agent (including, without limitation, the reasonable fees and
expenses of counsel to the Collateral Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the terms of
this Agreement; (b) all reasonable costs and expenses of the Collateral Agent
(including, without limitation, reasonable fees and expenses of counsel) in
connection with (i) any enforcement or proceedings resulting or incurred in
connection with causing any Holder of Securities to satisfy its obligations
under the Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document referred to
herein and all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
30
<PAGE> 35
Section 10.8. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders from
time to time hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of the
obligations of Holders of Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase Contract
Agreement or any Purchase Contract or any other agreement or instrument
relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
31
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
OWENS CORNING
By:
-------------------------------------
Name:
Title:
Address for Notices:
Owens Corning
Owens Corning World Headquarters
Toledo, Ohio 45659
Attention: Chief Financial Officer
Telecopy:
The Bank of New York as Purchase
Contract Agent and as
attorney-in-fact of the Holders from
time to time of the Securities
By:
-------------------------------------
Name:
Title:
Address for Notices:
The Bank of New York
101 Barclay Street, 12E
New York, New York 10286
Attention:
Telecopy:
32
<PAGE> 37
The Chase Manhattan Bank
as Collateral Agent and as
Securities Intermediary
By:
----------------------------------
Name: L. O'Brien
Title: Senior Trust Officer
Address for Notices:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust Admin-
istration Department
Telecopy: (212) 946-8159
33
<PAGE> 38
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES of Owens Corning (the "Compa-
ny"), and Owens Corning Capital II
We hereby notify you in accordance with Section 4.1 of the
Pledge Agreement, dated as of ______ __, 1997, (the "Pledge Agreement") among
the Company, yourselves, as Collateral Agent, and ourselves, as Purchase
Contract Agent and as attorney-in-fact for the holders of [Income PRIDES]
[Growth PRIDES] from time to time, that the holder of securities listed below
(the "Holder") has elected to substitute [$_____ aggregate principal amount of
Treasury Securities] [$_______Stated Amount of Preferred Securities] in exchange
for an equal Value of [Pledged Preferred Securities] [Pledged Treasury
Securities] held by you in accordance with the Pledge Agreement and has
delivered to us a notice stating that the Holder has Transferred [Treasury
Securities] [Preferred Securities] to you, as Collateral Agent. We hereby
instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged
Preferred Securities], to release the Preferred Securities] [Treasury
Securities] related to such [Income PRIDES] [Growth PRIDES] to us in accordance
with the Holder's instructions. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.
Date: THE BANK OF NEW YORK
--------------
By:
----------------------------
Name:
Title:
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities] for the [Pledged Preferred
Securities] [Pledged Treasury Securities]:
- --------------------------- -------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
- ---------------------------
Address
- ---------------------------
- ---------------------------
A-1
<PAGE> 39
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
101 Barclay Street, 12E
New York, NY 10286
Attention:
Re: FELINE PRIDES of Owens Corning (the "Compa-
ny"), and Owens Corning Capital II
The undersigned Holder hereby notifies you that it has
delivered to The Chase Manhattan Bank, as Collateral Agent, $_______ aggregate
principal amount of [Treasury Securities] [Preferred Securities] in exchange for
an equal Value of [Pledged Preferred Securities] [Pledged Treasury Securities]
held by the Collateral Agent (the "Pledge Agreement"), in accordance with
Section 4.1 of the Pledge Agreement, dated ________ __, 1997, between you, the
Company and the Collateral Agent. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Preferred Securities] [Pledged Treasury Securities] related
to such [Income PRIDES] [Growth PRIDES]. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.
Dated:
-------------- --------------------------
Signature
Please print name and address of Registered Holder:
- --------------------------- -------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
- ---------------------------
Address
- ---------------------------
- ---------------------------
B-1
<PAGE> 1
Exhibit 4.7.1
FORM OF AMENDED AND RESTATED DECLARATION
OF TRUST
OWENS CORNING CAPITAL II
DATED AS OF SEPTEMBER , 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS............................................................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.......................................... 8
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES............................................ 8
SECTION 2.3 REPORTS BY THE INSTITUTIONAL TRUSTEE...................................... 9
SECTION 2.4 PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE................................. 9
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.......................... 9
SECTION 2.6 EVENTS OF DEFAULT; WAIVER................................................. 9
SECTION 2.7 EVENT OF DEFAULT; NOTICE.................................................. 11
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME...................................................................... 11
SECTION 3.2 OFFICE.................................................................... 11
SECTION 3.3 PURPOSE................................................................... 11
SECTION 3.4 AUTHORITY................................................................. 12
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST............................................ 12
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES................................. 12
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE
TRUSTEES.................................................................. 15
SECTION 3.8 POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE............................ 15
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE
INSTITUTIONAL TRUSTEE..................................................... 17
SECTION 3.10 CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE................................... 19
SECTION 3.11 DELAWARE TRUSTEE.......................................................... 20
SECTION 3.12 EXECUTION OF DOCUMENTS.................................................... 20
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES................................................................ 21
SECTION 3.14 DURATION OF TRUST......................................................... 21
SECTION 3.15 MERGERS................................................................... 21
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES................................... 22
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR........................................... 23
SECTION 4.3 RIGHT TO PROCEED.......................................................... 23
SECTION 4.4 EXPENSES.................................................................. 23
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES........................................................ 24
SECTION 5.2 DELAWARE TRUSTEE.......................................................... 24
SECTION 5.3 INSTITUTIONAL TRUSTEE; ELIGIBILITY........................................ 25
SECTION 5.4 CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND
DELAWARE TRUSTEE GENERALLY................................................ 26
SECTION 5.5 REGULAR TRUSTEES.......................................................... 26
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.......................... 26
SECTION 5.7 VACANCIES AMONG TRUSTEES.................................................. 28
SECTION 5.8 EFFECT OF VACANCIES....................................................... 28
SECTION 5.9 MEETINGS.................................................................. 28
SECTION 5.10 DELEGATION OF POWER....................................................... 28
SECTION 5.11 MERGER, CONVERSION. CONSOLIDATION OR SUCCESSION
TO BUSINESS............................................................... 29
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS............................................................. 29
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES................................... 29
SECTION 7.2 PAYING AGENT.............................................................. 30
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST...................................................... 30
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.................................................... 31
SECTION 9.2 TRANSFER OF CERTIFICATES.................................................. 31
SECTION 9.3 DEEMED SECURITY HOLDERS................................................... 32
SECTION 9.4 BOOK ENTRY INTERESTS...................................................... 32
SECTION 9.5 NOTICES TO CLEARING AGENCY................................................ 33
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.................................. 33
SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES................................ 33
SECTION 9.8 MUTILATED, DESTROYED LOST OR STOLEN CERTIFICATES.......................... 34
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY................................................................. 34
SECTION 10.2 EXCULPATION............................................................... 34
SECTION 10.3 FIDUCIARY DUTY............................................................ 35
SECTION 10.4 INDEMNIFICATION........................................................... 36
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 10.5 OUTSIDE BUSINESSES........................................................ 38
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR............................................................... 38
SECTION 11.2 CERTAIN ACCOUNTING MATTERS................................................ 38
SECTION 11.3 BANKING................................................................... 39
SECTION 11.4 WITHHOLDING............................................................... 39
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS................................................................ 39
SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY
WRITTEN CONSENT........................................................... 41
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL
TRUSTEE................................................................... 42
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE
TRUSTEE................................................................... 44
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES................................................................... 44
SECTION 14.2 GOVERNING LAW............................................................. 45
SECTION 14.3 INTENTION OF THE PARTIES.................................................. 45
SECTION 14.4 HEADINGS.................................................................. 45
SECTION 14.5 SUCCESSORS AND ASSIGNS.................................................... 46
SECTION 14.6 PARTIAL ENFORCEABILITY.................................................... 46
SECTION 14.7 COUNTERPARTS.............................................................. 46
</TABLE>
iii
<PAGE> 5
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
OWENS CORNING CAPITAL II
September , 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and effective as
of September __, 1997, by the Trustees (as defined herein), the Sponsor (as
defined herein) and by the Holders (as defined herein), from time to time, of
the securities representing undivided beneficial interests in the assets of the
Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established Owens Corning Capital
II (the "Trust"), a trust under the Business Trust Act (as defined herein)
pursuant to a Declaration of Trust dated as of April 2, 1997 (the "Original
Declaration") and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on April 2, 1997, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer;
WHEREAS, as of the date hereof, no interests in the Trust have been
issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
and
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the Holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.
Unless the context otherwise requires:
(a) capitalized terms used in this Declaration but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
<PAGE> 6
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning when
used in this Declaration unless otherwise defined in this Declaration or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent.
"Authorized Newspaper" means a daily newspaper, in the English
language, customarily published on each day that is a Business Day in The City
of New York, whether or not published on days that are Legal Holidays, and of
general circulation in The City of New York. The Authorized Newspaper for the
Purposes of the Reset Spread Announcement Date, is currently anticipated to be
The Wall Street Journal.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than Saturday, Sunday or
any day on which banking institutions in New York City, in the State of New
York, are permitted or required by any applicable law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time, or any successor legislation.
"Certificate" means a Common Security Certificate or a
Preferred Security Certificate.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Preferred Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and which
shall undertake to effect book entry transfers and pledges of the Preferred
Securities.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time the
Clearing Agency effects book entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means the "Closing Time" and each "Date of
Delivery" under the Underwriting Agreement.
2
<PAGE> 7
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to
be dated as of September , 1997 of the Sponsor in respect of the Common
Securities.
"Common Security Certificate" means a definitive certificate
in fully registered form representing a Common Security substantially in the
form of Exhibit A-2.
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"Corporate Trust Office" means the office of the Institutional
Trustee at which the corporate trust business of the Institutional Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Declaration is located at
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Owens Corning, a Delaware
corporation, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means Wilmington Trust Company, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Institutional
Trustee, a specimen certificate for such series of Debentures being Exhibit B.
"Debenture Repayment Price" means, with respect to any
Debentures put to the Sponsor on the Purchase Contract Settlement Date or for a
period of ninety days thereafter, at an amount per Debenture equal to $50, plus
accumulated and unpaid distributions, if any.
"Definitive Preferred Security Certificates" has the meaning
set forth in Section 9.4.
"Delaware Trustee" has the meaning set forth in Section 5.2.
3
<PAGE> 8
"Direction" by a Person means a written direction signed:
(g) if the Person is a natural person, by that Person; or
(h) in any other case, in the name of such Person by one or more
Authorized Officers of that Person.
"Direct Action" has the meaning specified in Section 3.8(e).
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Event of Default" in respect of the Securities means an Event
of Default (as defined in the Indenture) has occurred and is continuing in
respect of the Debentures.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"FELINE PRIDES(sm)" means a security which, upon issuance,
will consist of a unit (referred to as an Income PRIDES(sm) comprised of (i) a
stock purchase contract under which (a) the holder of the unit will purchase
from the Sponsor, for an amount in cash, a certain number of shares of common
stock of the Sponsor and (b) the Sponsor will pay the holder contract adjustment
payments, and (ii) a % Preferred Security. After issuance, FELINE PRIDES(sm)
units with respect to which Treasury Securities have been substituted for
Preferred Securities will be referred to as Growth PRIDES(sm)
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" or "holder" means a Person in whose name a
Certificate representing a Security is registered, such Person being a
beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of September , 1997,
among the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Institutional Trustee" means the Trustee meeting the
eligibility requirements set forth in Section 5.3.
"Institutional Trustee Account" has the meaning set forth in
Section 3.8(c).
"Investment Company" means an investment company as defined in
the Investment Company Act.
4
<PAGE> 9
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex
I hereto.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Ministerial Action" has the meaning set forth in the terms of
the Securities as set forth in Annex I.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(i) a statement that the officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(j) a brief statement of the nature and scope of the examination or
investigation undertaken by the officer in rendering the Certificate;
(k) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(l) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Paying Agent" has the meaning specified in Section 7.2.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"Pledge Agreement" means the Pledge Agreement dated as of
September , 1997 among the Sponsor, The Chase Manhattan Bank, as collateral
agent (the "Collateral Agent") and The Bank of New York as purchase contract
agent (the "Purchase Contract Agent").
5
<PAGE> 10
"Preferred Securities Guarantee" means the guarantee agreement
to be dated as of September , 1997, of the Sponsor in respect of the Preferred
Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a
Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate
representing a Preferred Security substantially in the form of Exhibit A-1.
"Pricing Agreement" means the pricing agreement between the
Trust, the Debenture Issuer, and the underwriters designated by the Regular
Trustees with respect to the offer and sale of the Preferred Securities.
"Purchase Contract Agreement" means the Purchase Contract
Agreement dated as of September , 1997 among The First National Bank of
Chicago, as Purchase Contract Agent, and the Sponsor.
"Put Option" has the meaning set forth in Annex I hereto.
"Quorum" means a majority of the Regular Trustees or, if there
are only two Regular Trustees, both of them.
"Regular Trustee" has the meaning set forth in Section 5.1.
"Related Party" means, with respect to the Sponsor, any direct
or indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"Reset Agent" means a nationally recognized investment banking
firm chosen by the Sponsor to determine the Reset Rate. It is currently
anticipated that Merrill Lynch & Co. will act in such capacity.
"Reset Announcement Date" means the fifth (5) Business Day
immediately preceding the Purchase Contract Settlement Date.
"Reset Rate" means the distribution rate per annum (to be
determined by the Reset Agent), equal to the sum of (X) the Reset Spread and (Y)
the rate of interest on the Two-Year Benchmark Treasury in effect on the
Purchase Contract Settlement Date, that the Securities should bear in order for
the Securities to have an approximate market value of 100.5% of their aggregate
liquidation amount on the Purchase Contract Settlement Date; provided, however,
in no event will such rate be higher than the rate in effect on the Two-Year
Benchmark Treasury plus 200 basis points (2%).
6
<PAGE> 11
"Reset Spread" means a spread amount to be determined by the
Reset Agent on the fifth (5) Business Day immediately preceding the Purchase
Contract Settlement Date.
"Responsible Officer" means, with respect to the Institutional
Trustee, any officer within the Corporate Trust Office of the Institutional
Trustee, including any vice-president, any assistant vice-president, any
assistant secretary, the treasurer, any assistant treasurer or other officer of
the Corporate Trust Office of the Institutional Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Securities" means the Common Securities and the Preferred
Securities.
"Securities Guarantees" means the Common Securities Guarantee
and the Preferred Securities Guarantee.
"Securities Act" means the Securities Act of 1933, as amended
from time to time or any successor legislation.
"Investment Company Event" has the meaning set forth in Annex
I hereto.
"Sponsor" means Owens Corning, a Delaware corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"10% in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities or by the Trust Indenture Act,
Holder(s) of outstanding Securities voting together as a single class or, as the
context may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on repayment, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
7
<PAGE> 12
"Two-Year Benchmark Treasury" means direct obligations of the
United States (which may be obligations traded on a when-issued basis only)
having a maturity comparable to the remaining term to maturity of the Trust
Preferred Securities, as agreed upon by the Company and the Reset Agent. The
rate for the Two-Year Benchmark Treasury will be the bid side rate displayed at
10:00 A.M., New York City time, on the Purchase Contract Settlement Date in the
Telerate system (or if the Telerate system is (a) no longer available on the
Purchase Contract Settlement Date or (b) in the opinion of the Reset Agent
(after consultation with the Company) no longer an appropriate system from which
to obtain such rate, such other nationally recognized quotation system as, in
the opinion of the Reset Agent (after consultation with the Company) is
appropriate). If such rate is not so displayed, the rate for the Two-Year
Benchmark Treasury shall be, as calculated by the Reset Agent, the yield to
maturity for the Two-Year Benchmark Treasury, expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and applied on a daily
basis, and computed by taking the arithmetic mean of the secondary market bid
rates, as of 10:30 A.M., New York City time, on the Purchase Contract Settlement
Date of three leading United States government securities dealers selected by
the Reset Agent (after consultation with the Company) (which may include the
Reset Agent or an affiliate thereof).
"Underwriting Agreement" means the Underwriting Agreement for
the offering and sale of Preferred Securities in the form of Exhibit C.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration limits,
qualifies or conflicts with the duties imposed by ss.ss. 310 to 317, inclusive,
of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide the Institutional Trustee (i) within 14 days after each record
date for payment of Distributions, a list, in such form as the Institutional
Trustee may reasonably require, of the names and addresses of the Holders of the
Securities ("List of Holders") as of such record date, provided that neither the
Sponsor nor the Regular Trustees, on behalf of the Trust, shall be obligated to
provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Institutional Trustee by the
Sponsor and the Regular Trustees on behalf of the Trust, and (ii) at any other
time, within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Institutional Trustee. The Institutional Trustee shall preserve, in as
8
<PAGE> 13
current a form as is reasonably practicable, all information contained in Lists
of Holders given to it or which it receives in the capacity as Paying Agent (if
acting in such capacity) provided that the Institutional Trustee may destroy any
List of Holders previously given to it on receipt of a new List of Holders.
(b) The Institutional Trustee shall comply with its obligations under
ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 REPORTS BY THE INSTITUTIONAL TRUSTEE.
Within 60 days after May 15 of each year, commencing May 15, 1998, the
Institutional Trustee shall provide to the Holders of the Preferred Securities
such reports as are required by ss. 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by ss. 313 of the Trust Indenture Act. The
Institutional Trustee shall also comply with the requirements of ss. 313(d) of
the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO INSTITUTIONAL TRUSTEE.
Each of the Sponsor and the Regular Trustees, on behalf of the Trust,
shall provide to the Institutional Trustee such documents, reports and
information as required by ss. 314 (if any) and the compliance certificate
required by ss. 314 of the Trust Indenture Act in the form, in the manner and at
the times required by ss. 314 of the Trust Indenture Act.
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Regular Trustees, on behalf of the Trust,
shall provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration that relate to
any of the matters set forth in ss. 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to ss. 314(c)
(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default
under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority
in principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under
this Declaration may only be waived by the vote of the Holders of at
least the proportion in liquidation amount of the Preferred Securities
that the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of ss. 316(a)
(1)(B) of the Trust Indenture Act and such ss. 316(a) (1) (B) of the Trust
Indenture Act is hereby expressly excluded from this
9
<PAGE> 14
Declaration and the Preferred Securities, as permitted by the Trust Indenture
Act. Upon such waiver, any such default shall cease to exist, and any Event of
Default with respect to the Preferred Securities arising therefrom shall be
deemed to have been cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or an Event of Default
with respect to the Preferred Securities or impair any right consequent thereon.
Any waiver by the Holders of the Preferred Securities of an Event of Default
with respect to the Preferred Securities shall also be deemed to constitute a
waiver by the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under this Declaration as provided below in this Section
2.6(b), the Event of Default under this Declaration shall also not be
waivable; or
(ii) requires the consent or vote of a Super Majority to be
waived, except where the Holders of the Common Securities are deemed to
have waived such Event of Default under this Declaration as provided
below in this Section 2.6(b), the Event of Default under this
Declaration may only be waived by the vote of the Holders of at least
the proportion in liquidation amount of the Common Securities that the
relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Institutional Trustee will be deemed to be acting solely on behalf of the
Holders of the Preferred Securities and only the Holders of the Preferred
Securities will have the right to direct the Institutional Trustee in accordance
with the terms of the Securities. The foregoing provisions of this Section
2.6(b) shall be in lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act and such ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the Trust
Indenture Act are hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Subject to the foregoing
provisions of this Section 2.6(b), upon such waiver, any such default shall
cease to exist and any Event of Default with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default with respect to the Common Securities or impair any right
consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Institutional Trustee at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default with
respect to the Preferred Securities under this Declaration. Any waiver of an
Event of Default under the Indenture by the Institutional Trustee at the
direction of the Holders of the Preferred Securities shall also be deemed to
constitute a waiver by the Holders of the Common Securities of the corresponding
Event of Default under this Declaration with respect to the Common Securities
for all purposes of this
10
<PAGE> 15
Declaration without further act, vote or consent of the Holders of the Common
Securities. The foregoing provisions of this Section 2.6(c) shall be in lieu of
ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Common Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Institutional Trustee shall, within 90 days after the
occurrence of an Event of Default, actually known to a Responsible Officer of
the Institutional Trustee, transmit by mail, first class postage prepaid, to the
Holders of the Securities, notices of all such defaults with respect to the
Securities, unless such defaults have been cured before the giving of such
notice (the term "defaults" for the purposes of this Section 2.7(a) being hereby
defined to be an Event of Default as defined in the Indenture, not including any
periods of grace provided for therein and irrespective of the giving of any
notice provided therein); provided that, except for a default in the payment of
principal of (or premium, if any) or interest on any of the Debentures, the
Institutional Trustee shall be protected in withholding such notice if and so
long as a Responsible Officer of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Securities.
(b) The Institutional Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 501 and 503 of the Indenture; or
(ii) any default as to which the Institutional Trustee shall
have received written notice or of which a Responsible Officer of the
Institutional Trustee charged with the administration of this
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME.
The Trust is named "Owens Corning Capital II," as such name may be
modified from time to time by the Regular Trustees following written notice to
the Holders of the Securities. The Trust's activities may be conducted under the
name of the Trust or any other name deemed advisable by the Regular Trustees.
SECTION 3.2 OFFICE.
The address of the principal office of the Trust is c/o Owens Corning
World Headquarters, Toledo, Ohiho 43659. On ten Business Days written notice to
the Holders of the Securities, the Regular Trustees may designate another
principal office.
SECTION 3.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue and
sell the Securities and use the gross proceeds from such sale to acquire the
Debentures, and (b) except as otherwise set forth herein, to engage in only
those other activities necessary, or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise
11
<PAGE> 16
undertake (or permit to be undertaken) any activity that would cause the Trust
not to be classified for United States federal income tax purposes as a grantor
trust. It is the intent of the parties to this Declaration for the Trust to be
classified as a grantor trust for United States federal income tax purposes
under Subpart E of Subchapter J of the Code, pursuant to which the owners of the
Preferred Securities and the Common Securities will be the owners of the Trust
for United States federal income tax purposes, and such owners will include
directly in their gross income the income, gain, deduction or loss of the Trust
as if the Trust did not exist. By the acceptance of this Trust neither the
Trustees, the Sponsor nor the Holders of the Preferred Securities or Common
Securities will take any position for United States federal income tax purposes
which is contrary to the classification of the Trust as a grantor trust.
SECTION 3.4 AUTHORITY.
Subject to the limitations provided in this Declaration and to the
specific duties of the Institutional Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Institutional Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures and
the Institutional Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 POWERS AND DUTIES OF THE REGULAR TRUSTEES.
The Regular Trustees shall have the exclusive power, duty and authority
to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities and the Common
Securities in accordance with this Declaration; provided, however, that the
Trust may issue no more than one series of Preferred Securities and no more than
one series of Common Securities, and, provided further, that there shall be no
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to a simultaneous issuance of both Preferred Securities and
Common Securities on each Closing Date;
(b) in connection with the issue and sale of the Preferred Securities,
at the direction of the Sponsor, to:
(i) execute and file with the Commission the registration
statement on Form S-3 prepared by the Sponsor, including any amendments
thereto, pertaining to the Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor,
or take any acts as determined by the Sponsor to be necessary in order
to qualify or register all or part of the
12
<PAGE> 17
FELINE PRIDES in any State in which the Sponsor has determined to
qualify or register such Preferred Securities for sale;
(iii) execute and file an application, prepared by the
Sponsor, to the New York Stock Exchange, Inc. or any other national
stock exchange or the Nasdaq Stock Market's National Market for listing
upon notice of issuance of any Preferred Securities;
(iv) execute and file with the Commission a registration
statement on Form 8-A, including any amendments thereto, prepared by
the Sponsor, relating to the registration of the Preferred Securities
under Section 12(b) of the Exchange Act; and
(v) execute and enter into the Underwriting Agreement and
Pricing Agreement providing for the sale of the FELINE PRIDES;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Institutional Trustee for the benefit of the Trust and the
Holders of the Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Institutional Trustee prompt written
notice of the occurrence of an Investment Company Event; provided that the
Regular Trustees shall consult with the Sponsor and the Institutional Trustee
before taking or refraining from taking any Ministerial Action in relation to an
Investment Company Event;
(e) to establish a record date with respect to all actions to be taken
hereunder that require a record date be established, including and with respect
to, for the purposes of ss.316(c) of the Trust Indenture Act, Distributions,
voting rights, repayments and exchanges, and to issue relevant notices to the
Holders of Preferred Securities and Holders of Common Securities as to such
actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Regular Trustees pursuant to the terms of the Securities and this
Declaration;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort to
legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Institutional Trustee
has the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under the
Trust Indenture Act;
(j) to give the certificate required by ss. 314(a)(4) of the Trust
Indenture Act to the Institutional Trustee, which certificate may be executed by
any Regular Trustee;
(k) to incur expenses that are necessary, appropriate, convenient or
incidental to carry out any of the purposes of the Trust;
13
<PAGE> 18
(l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the Securities of
any notice received from the Debenture Issuer of its election to defer payments
of interest on the Debentures by extending the interest payment period under the
Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities or to enable the Trust to effect the purposes for which the Trust was
created;
(o) to take any action, not inconsistent with this Declaration or with
applicable law, that the Regular Trustees determine in their discretion to be
necessary or desirable in carrying out the activities of the Trust as set out in
this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes, provided that such action
does not adversely affect the interests of Holders;
(p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees must exercise the powers set forth in this Section
3.6 in a manner that is consistent with the purposes and functions of the Trust
set out in Section 3.3, and the Regular Trustees shall not take any action that
is inconsistent with the purposes and functions of the Trust set forth in
Section 3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Institutional Trustee set forth in Section
3.8.
Any expenses incurred by the Regular Trustees pursuant to this Section
3.6 shall be reimbursed by the Sponsor.
14
<PAGE> 19
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
(a) The Trust shall not, and the Trustees (including the Institutional
Trustee) shall cause the Trust not to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and the Trustees (including the Institutional Trustee) shall cause the Trust not
to:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of
Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as provided in this Declaration or Annex I,
(A) direct the time, method and place of exercising any trust or power
conferred upon the Debenture Trustee with respect to the Debentures,
(B) waive any past default that is waivable under the Indenture, (C)
exercise any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture
or the Debentures where such consent shall be required unless the Trust
shall have received an opinion of counsel to the effect that such
modification will not cause more than an insubstantial risk that for
United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Trust and the Holders of the Securities. The right, title and interest of the
Institutional Trustee to the Debentures shall vest automatically in each Person
who may hereafter be appointed as Institutional Trustee in accordance with
Section 5.6. Such vesting and cessation of title shall be effective whether or
not conveyancing documents with regard to the Debentures have been executed and
delivered.
(b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Institutional Trustee does not also act as Delaware Trustee).
15
<PAGE> 20
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Institutional Trustee Account") in the name of and
under the exclusive control of the Institutional Trustee on behalf of
the Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Institutional Trustee Account and
make payments to the Holders of the Preferred Securities and Holders of
the Common Securities from the Institutional Trustee Account in
accordance with Section 6.1. Funds in the Institutional Trustee Account
shall be held uninvested until disbursed in accordance with this
Declaration. The Institutional Trustee Account shall be an account that
is maintained with a banking institution the rating on whose long-term
unsecured indebtedness is rated at least "A" or above by a "nationally
recognized statistical rating organization", as that term is defined
for purposes of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the repayment of the Preferred
Securities and the Common Securities to the extent the Debentures
mature or the Put Option is exercised; and
(iii) upon written notice of distribution issued by the
Regular Trustees in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities upon
the occurrence of certain special events (as may be defined in the
terms of the Securities) arising from a change in law or a change in
legal interpretation or other specified circumstances pursuant to the
terms of the Securities.
(d) The Institutional Trustee shall take all actions and perform such
duties as may be specifically required of the Institutional Trustee pursuant to
the terms of the Securities and this Declaration.
(e) The Institutional Trustee shall take any Legal Action which arises
out of or in connection with an Event of Default of which a Responsible Officer
of the Institutional Trustee has actual knowledge or the Institutional Trustee's
duties and obligations under this Declaration, the Business Trust Act or the
Trust Indenture Act; provided, however, that if the Institutional Trustee fails
to enforce its rights under the Debentures after a Holder of Preferred
Securities has made a written request, such holder of record of Preferred
Securities may, to the fullest exent permitted by applicable law, institute a
legal proceeding against the Debenture Issuer without first instituting any
legal proceeding against the Institutional Trustee or any other person or
entity. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest on or principal of the Debentures on the date
such interest or principal is otherwise payable (or in the case of redemption,
on the redemption date), then such holder of Preferred Securities may directly
institute a proceeding for enforcement of payment to such holder of the
principal of or interest on the Debentures having a principal amount equal to
the aggregate liquidation amount of the Preferred Securities of such holder (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the rights of the holders of
Common Securities will be subrogated to the rights of such holders of Preferred
Securities. In connection with such Direct Action, the Debenture Issuer shall be
subrogated to the rights of such holder of Preferred Securities with respect to
payments on the Preferred Securities under this Declaration to the extent of any
payment made by the Debenture Issuer to such holder of Preferred Securities in
such Direct Action. Except as provided in the
16
<PAGE> 21
preceding sentences, the holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
(f) The Institutional Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds
of the liquidation distributed to the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Institutional Trustee has been appointed and
has accepted that appointment in accordance with Section 5.6.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer of
the Institutional Trustee occurs and is continuing, the Institutional Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities and this Declaration.
(h) Subject to this Section 3.8, the Institutional Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.
The Institutional Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 3.3.
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL TRUSTEE.
(a) The Institutional Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and no implied covenants shall be read into this Declaration
against the Institutional Trustee. In case an Event of Default has occurred
(that has not been cured or waived pursuant to Section 2.6) of which a
Responsible Officer of the Institutional Trustee has actual knowledge, the
Institutional Trustee shall exercise such of the rights and powers vested in it
by this Declaration, 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) No provision of this Declaration shall be construed to relieve the
Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Institutional
Trustee shall be determined solely by the express provisions
of this Declaration and the Institutional Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration,
and no implied covenants or obligations shall be read into
this Declaration against the Institutional Trustee; and
17
<PAGE> 22
(B) in the absence of bad faith on the part of the
Institutional Trustee, the Institutional Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Institutional
Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or
opinions that by any provision hereof are specifically
required to be furnished to the Institutional Trustee, the
Institutional Trustee shall be under a duty to examine the
same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Institutional Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Institutional Trustee, unless it shall be proved that the Institutional
Trustee was negligent in ascertaining the pertinent facts;
(iii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Securities relating to the time,
method and place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Institutional Trustee to expend or risk its own funds or otherwise
incur personal financial liability in the performance of any of its
duties or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that the repayment of such funds
or liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Institutional
Trustee against such risk or liability is not reasonably assured to it;
(v) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Institutional Trustee Account shall be to deal with such property
in a similar manner as the Institutional Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Institutional Trustee under
this Declaration, the Business Trust Act and the Trust Indenture Act;
(vi) the Institutional Trustee shall have no duty or liability
for or with respect to the value, genuineness, existence or sufficiency
of the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
with the Sponsor. Money held by the Institutional Trustee need not be
segregated from other funds held by it except in relation to the
Institutional Trustee Account maintained by the Institutional Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(viii) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Regular Trustees or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Regular Trustees or the Sponsor.
SECTION 3.10 CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE.
18
<PAGE> 23
(a) Subject to the provisions of Section 3.9:
(i) the Institutional Trustee may conclusively rely and shall
be fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Regular
Trustees contemplated by this Declaration shall be sufficiently
evidenced by a Direction or an Officer's Certificate;
(iii) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omitting any action
hereunder, the Institutional Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and conclusively rely upon an Officer's Certificate which, upon
receipt of such request, shall be promptly delivered by the Sponsor or
the Regular Trustees;
(iv) the Institutional Trustee shall have no duty to see to
any recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Institutional Trustee may consult with counsel or
other experts and the advice or opinion of such counsel and experts
with respect to legal matters or advice within the scope of such
experts' area of expertise 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 accordance with such advice or opinion,
such counsel may be counsel to the Sponsor or any of its Affiliates,
and may include any of its employees. The Institutional Trustee shall
have the right at any time to seek instructions concerning the
administration of this Declaration from any court of competent
jurisdiction;
(vi) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Institutional Trustee security and indemnity,
reasonably satisfactory to the Institutional Trustee, against the
costs, expenses (including attorneys' fees and expenses and the
expenses of the Institutional Trustee's agents, nominees or custodians)
and liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Institutional Trustee provided, that, nothing
contained in this Section 3.10(a)(vi) shall be taken to relieve the
Institutional Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Declaration;
(vii) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Institutional Trustee,
in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
19
<PAGE> 24
(viii) the Institutional Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or
by or through agents, custodians, nominees or attorneys and the
Institutional Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder;
(ix) any action taken by the Institutional Trustee or its
agents hereunder shall bind the Trust and the Holders of the
Securities, and the signature of the Institutional Trustee or its
agents alone shall be sufficient and effective to perform any such
action and no third party shall be required to inquire as to the
authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration,
both of which shall be conclusively evidenced by the Institutional
Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other
action hereunder, the Institutional Trustee (i) may request
instructions from the Holders of the Securities which instructions may
only be given by the Holders of the same proportion in liquidation
amount of the Securities as would be entitled to direct the
Institutional Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be protected in conclusively relying on or
acting in or accordance with such instructions; and
(xi) except as otherwise expressly provided by this
Declaration, the Institutional Trustee shall not be under any
obligation to take any action that is discretionary under the
provisions of this Declaration.
(b) No provision of this Declaration shall be deemed to impose any duty
or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
SECTION 3.11 DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration other than
Section 5.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Trustees (except as required under the Business Trust Act) described in this
Declaration. Except as set forth in Section 5.2, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of ss.
3807 of the Business Trust Act.
SECTION 3.12 EXECUTION OF DOCUMENTS.
Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, a majority of or, if there are
only two, any Regular Trustee or, if there is only one, such Regular Trustee is
authorized to execute on behalf of the Trust any documents that the Regular
Trustees have the power and authority to execute pursuant to Section 3.6;
provided that, the registration
20
<PAGE> 25
statement referred to in Section 3.6(b)(i), including any amendments thereto,
shall be signed by all of the Regular Trustees.
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration or the Securities.
SECTION 3.14 DURATION OF TRUST.
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have existence for seven (7) years from the Closing Date.
SECTION 3.15 MERGERS.
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees or, if
there are more than two, a majority of the Regular Trustees and without the
consent of the Holders of the Securities, the Delaware Trustee or the
Institutional Trustee, consolidate, amalgamate, merge with or into, or be
replaced by a trust organized as such under the laws of any State; provided
that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities;
or
(B) substitutes for the Preferred Securities other
securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as
the Successor Securities rank the same as the Preferred
Securities rank with respect to Distributions and payments
upon liquidation, repayment and otherwise and substitutes for
the Common Securities other securities having substantially
the same terms as the Common Securities (the "Successor Common
Securities") so long as the Successor Common Securities rank
the same as the Common Securities rank with respect to
Distributions and payments upon liquidation, repayment and
otherwise;
(ii) the Debenture Issuer expressly acknowledges a trustee of
the Successor Entity that possesses the same powers and duties as the
Institutional Trustee as the holder of the Debentures;
(iii) if necessary, the Preferred Securities or any Successor
Securities will be listed, or any Successor Securities will be listed
upon notification of issuance, on any national securities exchange or
with an other organization on which the Preferred Securities are then
listed or quoted;
21
<PAGE> 26
(iv) such merger, consolidation, amalgamation or replacement
does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical
rating organization;
(v) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of the
Holders of the Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of such
Holders' interests in the Preferred Securities as a result of such
merger, consolidation, amalgamation or replacement);
(vi) such Successor Entity has a purpose identical to that of
the Trust;
(vii) prior to such merger, consolidation, amalgamation or
replacement, the Sponsor has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such matters
to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences
and privileges of the Holders of the Securities (including any
Successor Securities) in any material respect (other than with
respect to any dilution of the Holders' interest in the new
entity); and
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will continue to be classified as a grantor trust for
United States federal income tax purposes and such merger,
consolidation, amalgamation, or replacement does not result in
a taxable event to any Holders of Preferred Securities or
FELINE PRIDES or otherwise effect the United States federal
income tax consequences of any investment in the Preferred
Securities or FELINE PRIDES; and
(viii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Preferred Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by any other entity
or permit any other entity to consolidate, amalgamate, merge with or into, or
replace it if such consolidation, amalgamation, merger or replacement would
cause the Trust or Successor Entity to be classified as other than a grantor
trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
22
<PAGE> 27
On the Closing Date the Sponsor will purchase all of the Common
Securities issued by the Trust, in an amount at least equal to 3.0% of the
capital of the Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Preferred Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare for filing by the Trust with the Commission a
registration statement on Form S-3 in relation to the Preferred Securities,
including any amendments thereto;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the FELINE PRIDES and to do any and
all such acts, other than actions which must be taken by the Trust, and advise
the Trust of actions it must take, and prepare for execution and filing any
documents to be executed and filed by the Trust, as the Sponsor deems necessary
or advisable in order to comply with the applicable laws of any such States;
(c) if necessary, to prepare for filing by the Trust of an application
to the New York Stock Exchange or any other national stock exchange or the
Nasdaq National Market for listing upon notice of issuance of any Preferred
Securities;
(d) if necessary, to prepare for filing by the Trust with the
Commission of a registration statement on Form 8-A relating to the registration
of the Preferred Securities under Section 12(b) of the Exchange Act, including
any amendments thereto; and
(e) to negotiate the terms of the Underwriting Agreement and Pricing
Agreement providing for the sale of the FELINE PRIDES.
SECTION 4.3 RIGHT TO PROCEED.
The Sponsor acknowledges the rights of Holders to institute a Direct
Action as set forth in Section 3.8(e) hereto.
SECTION 4.4 EXPENSES.
In connection with the offering, sale and issuance of the Debentures to
the Institutional Trustee and in connection with the sale of the Securities by
the Trust, the Sponsor, in its capacity as borrower with respect to the
Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriter payable
pursuant to the Underwriting Agreement and compensation of the Trustee under the
Indenture in accordance with the provisions of the Indenture;
(b) be responsible for and shall pay all debts and obligations (other
than with respect to the Securities) and all costs and expenses of the Trust
(including, but not limited to, costs and expenses relating to the organization,
maintenance and dissolution of the Trust, the offering, sale and issuance of the
Securities (including commissions to the underwriters in connection therewith),
the fees and expenses
23
<PAGE> 28
(including reasonable counsel fees and expenses) of the Institutional Trustee,
the Delaware Trustee and the Regular Trustees (including any amounts payable
under Article X of this Declaration), the costs and expenses relating to the
operation of the Trust, including, without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets and the enforcement
by the Institutional Trustee of the rights of the Holders of the Preferred
Securities);
(c) be primarily liable for any indemnification obligations arising
with respect to this Declaration; and
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
The Sponsor's obligations under this Section 4.4 shall be for the
benefit of, and shall be enforceable by, any person to whom such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 4.4 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Debenture Issuer agrees to execute such additional
agreements as may be necessary or desirable in order to give full effect to the
provisions of this Section 4.4.
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES.
The number of Trustees initially shall be three (3), and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees may be
increased or decreased by vote of the holders of a majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities; provided, however, that, the number of Trustees shall in
no event be less than two (2); provided further that (1) one Trustee, in the
case of a natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity which has its principal
place of business in the State of Delaware (the "Delaware Trustee"); (2) there
shall be at least one Trustee who is an employee or officer of, or is affiliated
with the Sponsor (a "Regular Trustee"); and (3) one Trustee shall be the
Institutional Trustee for so long as this Declaration is required to qualify as
an indenture under the Trust Indenture Act, and such Trustee may also serve as
Delaware Trustee if it meets the applicable requirements.
SECTION 5.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
24
<PAGE> 29
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place of
business in the State of Delaware, and otherwise meets the requirements of
applicable law, provided that, if the Institutional Trustee has its principal
place of business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Institutional Trustee shall also be the Delaware
Trustee and Section 3.11 shall have no application.
(c) The initial Delaware Trustee shall be:
Wilmington Trust Company
Rodney Square North
Wilmington, DE 19890
SECTION 5.3 INSTITUTIONAL TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination
by Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority referred to above, then for the purposes of this Section
5.3(a)(ii), the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be eligible
to so act under Section 5.3(a), the Institutional Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.6(c).
(c) If the Institutional Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 310(b) of the Trust Indenture Act, the
Institutional Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in ss. 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of ss. 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in Section 310(b) of the Trust Indenture Act.
25
<PAGE> 30
(e) The initial Institutional Trustee shall be:
Wilmington Trust Company
Rodney Square North
110 North Market Street
Wilmington, Delaware 19890
SECTION 5.4 CERTAIN QUALIFICATIONS OF REGULAR TRUSTEES AND DELAWARE
TRUSTEE GENERALLY.
Each Regular Trustee and the Delaware Trustee (unless the Institutional
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 5.5 REGULAR TRUSTEES.
The initial Regular Trustees shall be:
Owens Corning World Headquarters
Toledo, Ohio 43659
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Regular Trustees is called with respect to any matter over which
the Regular Trustees have power to act, any power of the Regular Trustees may be
exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6, provided, that, the registration statement referred to
in Section 3.6, including any amendments thereto, shall be signed by all of the
Regular Trustees; and
(c) a Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents that the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
SECTION 5.6 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.6(b), Trustees may be appointed or removed
without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of any Securities, by vote of the
Holders of a Majority in liquidation amount of the Common Securities
voting as a class at a meeting of the Holders of the Common Securities.
26
<PAGE> 31
(b) (i) The Trustee that acts as Institutional Trustee shall not be
removed in accordance with Section 5.6(a) until a Successor
Institutional Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor
Institutional Trustee and delivered to the Regular Trustees and the
Sponsor; and
(ii) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.6(a) until a successor
Trustee possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his successor
shall have been appointed or until his death, removal or resignation. Any
Trustee may resign from office (without need for prior or subsequent accounting)
by an instrument in writing signed by the Trustee and delivered to the Sponsor
and the Trust, which resignation shall take effect upon such delivery or upon
such later date as is specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the
Institutional Trustee shall be effective:
(A) until a Successor Institutional Trustee has been
appointed and has accepted such appointment by instrument
executed by such Successor Institutional Trustee and delivered
to the Trust, the Sponsor and the resigning Institutional
Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to
the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the Trust,
the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Institutional
Trustee as the case may be if the Institutional Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Institutional Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.6 within 60 days after delivery to the Sponsor and the Trust of an instrument
of resignation, the resigning Institutional Trustee or Delaware Trustee, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Institutional Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Institutional Trustee or Successor Delaware
Trustee, as the case may be.
(f) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
SECTION 5.7 VACANCIES AMONG TRUSTEES.
27
<PAGE> 32
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular Trustees or, if there
are more than two, a majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy shall be filled with a
Trustee appointed in accordance with Section 5.6.
SECTION 5.8 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy, dissolution,
liquidation, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of Regular
Trustees shall occur, until such vacancy is filled by the appointment of a
Regular Trustee in accordance with Section 5.6, the Regular Trustees in office,
regardless of their number, shall have all the powers granted to the Regular
Trustees and shall discharge all the duties imposed upon the Regular Trustees by
this Declaration.
SECTION 5.9 MEETINGS.
If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees or any committee thereof shall be hand delivered or otherwise delivered
in writing (including by facsimile, with a hard copy by overnight courier) not
less than 24 hours before a meeting. Notices shall contain a brief statement of
the time, place and anticipated purposes of the meeting. The presence (whether
in person or by telephone) of a Regular Trustee at a meeting shall constitute a
waiver of notice of such meeting except where a Regular Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees. In the event there is only one Regular
Trustee, any and all action of such Regular Trustee shall be evidenced by a
written consent of such Regular Trustee.
SECTION 5.10 DELEGATION OF POWER.
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to delegate from time to time
to such of their number or to officers of the Trust the doing of such things and
the execution of such instruments either in the name of the Trust or the names
of the Regular Trustees or otherwise as the Regular Trustees may deem expedient,
to the extent such delegation is not prohibited by applicable law or contrary to
the provisions of the Trust, as set forth herein.
28
<PAGE> 33
SECTION 5.11 MERGER, CONVERSION. CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Institutional Trustee or the Delaware
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Institutional Trustee or
the Delaware Trustee, as the case may be, shall be the successor of the
Institutional Trustee or the Delaware Trustee, as the case may be, hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
Holders shall receive Distributions (as defined herein) in accordance
with the applicable terms of the relevant Holder's Securities. Distributions
shall be made on the Preferred Securities and the Common Securities in
accordance with the preferences set forth in their respective terms. If and to
the extent that the Debenture Issuer makes a payment of interest (including
Compounded Interest (as defined in the Indenture) and Additional Interest (as
defined in the Indenture)), premium and/or principal on the Debentures held by
the Institutional Trustee (the amount of any such payment being a "Payment
Amount"), the Institutional Trustee shall and is directed, to the extent funds
are available for that purpose, to make a distribution (a "Distribution") of the
Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Regular Trustees shall, on behalf of the Trust, issue one class
of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Annex I (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I (the "Common Securities"). The Trust shall issue no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities.
(b) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual signature of any present or
any future Regular Trustee. In case any Regular Trustee of the Trust who shall
have signed any of the Securities shall cease to be such Regular Trustee before
the Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Regular Trustee; and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Certificate, shall be the Regular Trustees of the Trust, although at the date of
the execution and delivery of the Declaration any such person was not such a
Regular Trustee. Certificates shall be printed, lithographed or engraved or may
be produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof, and may have such letters,
29
<PAGE> 34
numbers or other marks of identification or designation and such legends or
endorsements as the Regular Trustees may deem appropriate, or as may be required
to comply with any law or with any rule or regulation of any stock exchange on
which Securities may be listed, or to conform to usage.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable.
(e) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration.
SECTION 7.2 PAYING AGENT.
In the event that the Preferred Securities are not in book-entry only
form, the Trust shall maintain in the borough of Manhattan, City of New York,
State of New York, an office or agency where the Preferred Securities may be
presented for payment ("Paying Agent"), and any such Paying Agent shall comply
with Section 317(b) of the Trust Indenture Act. The Trust may appoint the Paying
Agent and may appoint one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Trust may change any Paying Agent without prior notice to any
Holder. The Trust shall notify the Institutional Trustee of the name and address
of any Paying Agent not a party to this Declaration. If the Trust fails to
appoint or maintain another entity as Paying Agent, the Institutional Trustee
shall act as such. The Trust or any of its Affiliates may act as Paying Agent.
The Institutional Trustee shall initially act as Paying Agent for the Preferred
Securities and the Common Securities.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 TERMINATION OF TRUST.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor; the filing of a certificate of
cancellation with respect to the Trust after having obtained the
consent of a majority in liquidation amount of the Securities voting
together as a single class to file such certificate of cancellation or
the revocation of the Sponsor's charter and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor or the Trust;
(iv) upon the occurrence and continuation of an Investment
Company Event pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and
30
<PAGE> 35
all of the Debentures endorsed thereon shall have been distributed to
the Holders of Securities in exchange for all of the Securities; or
(v) before the issuance of any Securities, with the consent of
all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred
to in Section 8.1(a) and upon completion of the winding-up of the Trust and its
termination, the Trustees shall file a certificate of cancellation with the
Secretary of State of the State of Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Preferred Securities shall be freely
transferable.
(c) Subject to this Article IX, the Sponsor and any Related Party may
only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor; provided that, any such transfer is subject to the condition precedent
that the transferor obtain the written opinion of nationally recognized
independent counsel experienced in such matters that such transfer would not
cause more than an insubstantial risk that:
(i) the Trust would not be classified for United States
federal income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company or the
transferee would become an Investment Company.
SECTION 9.2 TRANSFER OF CERTIFICATES.
The Regular Trustees shall provide for the registration of Certificates
and of transfers of Certificates, which will be effected without charge but only
upon payment (with such indemnity as the Regular Trustees may require) in
respect of any tax or other government charges that may be imposed in relation
to it. Upon surrender for registration of transfer of any Certificate, the
Regular Trustees shall cause one or more new Certificates to be issued in the
name of the designated transferee or transferees. Every Certificate surrendered
for registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Regular Trustees duly executed by the
Holder or such Holder's attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer shall be canceled by the Regular
Trustees. A transferee of a Certificate shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Certificate. By
31
<PAGE> 36
acceptance of a Certificate, each transferee shall be deemed to have agreed to
be bound by this Declaration.
SECTION 9.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Certificate shall
be registered on the books and records of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.
SECTION 9.4 BOOK ENTRY INTERESTS.
The Preferred Securities Certificates, on original issuance, in
addition to being issued in the form of one or more definitive, fully registered
Preferred Securities Certificate (each a "Definitive Preferred Securities
Certificate") registered initially in the books and records of the Trust in the
name of The Bank of New York, as Purchase Contract Agent, will be issued in the
form of one or more, fully registered, global Preferred Security Certificates
(each a "Global Certificate"), to be delivered to DTC, the initial Clearing
Agency, by, or on behalf of, the Trust. Such Global Certificate(s) shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of DTC, and no Preferred Security Beneficial Owner will
receive a definitive Preferred Security Certificate representing such Preferred
Security Beneficial Owner's interests in such Global Certificate(s), except as
provided in Section 9.7. Except for the Definitive Preferred Security
Certificates as specified herein and the definitive, fully registered Preferred
Securities Certificates that have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.7:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment of
Distributions on the Global Certificate(s) and receiving approvals, votes or
consents hereunder) as the Holder of the Preferred Securities and the sole
holder of the Global Certificate(s) and shall have no obligation to the
Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict with
any other provisions of this Declaration, the provisions of this Section 9.4
shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants. DTC will make book entry transfers among the
Clearing Agency Participants; provided, that solely for the purposes of
determining whether the Holders of the requisite amount of Preferred Securities
have voted on any matter provided for in this Declaration, so long as Definitive
Preferred Security Certificates have not been issued, the Trustees may
conclusively rely on, and shall be protected in relying on, any written
instrument (including a proxy) delivered to the Trustees by the Clearing Agency
setting froth the
32
<PAGE> 37
Preferred Security Beneficial Owners' votes or assigning the right to vote on
any matter to any other Persons either in whole or in part.
SECTION 9.5 NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, unless and until definitive fully
registered Preferred Security Certificates shall have been issued to the
Preferred Security Beneficial Owners pursuant to Section 9.7 or otherwise, the
Regular Trustees shall give all such notices and communications specified herein
to be given to the Preferred Security Holders to the Clearing Agency, and shall
have no notice obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities, the Regular Trustees may,
in their sole discretion, appoint a successor Clearing Agency with respect to
such Preferred Securities.
SECTION 9.7 DEFINITIVE PREFERRED SECURITY CERTIFICATES.
If:
(a) a Clearing Agency elects to discontinue its services as securities
depositary with respect to the Preferred Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 9.6; or
(b) the Regular Trustees elect after consultation with the Sponsor to
terminate the book entry system through the Clearing Agency with respect to the
Preferred Securities, then:
(c) Definitive fully registered Preferred Security Certificates shall
be prepared by the Regular Trustees on behalf of the Trust with respect to such
Preferred Securities; and
(d) upon surrender of the Global Certificate(s) by the Clearing Agency,
accompanied by registration instructions, the Regular Trustees shall cause
definitive fully registered Preferred Securities Certificates to be delivered to
Preferred Security Beneficial Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust shall be liable for any
delay in delivery of such instructions and each of them may conclusively rely on
and shall be protected in relying on, said instructions of the Clearing Agency.
The definitive fully registered Preferred Security Certificates shall be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Regular Trustees, as evidenced by their execution
thereof, and may have such letters, numbers or other marks of identification or
designation and such legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which Preferred Securities may be listed, or to conform to usage.
33
<PAGE> 38
SECTION 9.8 MUTILATED, DESTROYED LOST OR STOLEN CERTIFICATES.
If:
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Regular Trustees such security or
indemnity as may be required by them to keep each of them harmless,
then, in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, any Regular Trustee on behalf of the Trust shall execute
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like denomination. In connection
with the issuance of any new Certificate under this Section 9.8, the Regular
Trustees may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Certificate issued pursuant to this Section shall constitute conclusive evidence
of an ownership interest in the relevant Securities, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the Debentures,
the Securities Guarantees and the terms of the Securities, the Sponsor shall not
be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders of
the Preferred Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person shall be
34
<PAGE> 39
liable for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between
any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests and
factors as it desires, including its own interests, and shall have no
duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
35
<PAGE> 40
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 10.4 INDEMNIFICATION.
(a) (i) The Sponsor shall indemnify, to the full extent permitted by
law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Trust, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct
was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the Company Indemnified Person did not act in good
faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(ii) The Sponsor shall indemnify, to the full extent permitted
by law, any Company Indemnified Person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in
its favor by reason of the fact that he is or was a Company Indemnified
Person against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement
of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of
the Trust and except that no such indemnification shall be made in
respect of any claim, issue or matter as to which such Company
Indemnified Person shall have been adjudged to be liable to the Trust
unless and only to the extent that the Court of Chancery of Delaware or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of
all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such Court of Chancery or
such other court shall deem proper.
(iii) Any indemnification under paragraphs (i) and (ii) of
this Section 10.4(a) (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination
that indemnification of the Company Indemnified Person is proper in the
circumstances because he has met the applicable standard of conduct set
forth in paragraphs (i) and (ii). Such determination shall be made (1)
by the Regular Trustees by a majority vote of a quorum consisting of
such Regular Trustees who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs,
by independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(iv) Expenses (including attorneys' fees) incurred by a
Company Indemnified Person in defending a civil, criminal,
administrative or investigative action, suit or proceeding referred to
in paragraphs (i) and (ii) of this Section 10.4(a) shall be paid by the
Debenture Issuer in
36
<PAGE> 41
advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Debenture
Issuer as authorized in this Section 10.4(a). Notwithstanding the
foregoing, no advance shall be made by the Debenture Issuer if a
determination is reasonably and promptly made (i) by the Regular
Trustees by a majority vote of a quorum of disinterested Regular
Trustees, (ii) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested Regular Trustees so directs,
by independent legal counsel in a written opinion or (iii) the Common
Security Holder of the Trust, that, based upon the facts known to the
Regular Trustees, counsel or the Common Security Holder at the time
such determination is made, such Company Indemnified Person acted in
bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the Trust, or, with respect to any
criminal proceeding, that such Company Indemnified Person believed or
had reasonable cause to believe his conduct was unlawful. In no event
shall any advance be made in instances where the Regular Trustees,
independent legal counsel or Common Security Holder reasonably
determine that such person deliberately breached his duty to the Trust
or its Common or Preferred Security Holders.
(v) The indemnification and advancement of expenses provided
by, or granted pursuant to, the other paragraphs of this Section
10.4(a) shall not be deemed exclusive of any other rights to which
those seeking indemnification and advancement of expenses may be
entitled under any agreement, vote of shareholders or disinterested
directors of the Debenture Issuer or Preferred Security Holders of the
Trust or otherwise, both as to action in his official capacity and as
to action in another capacity while holding such office. All rights to
indemnification under this Section 10.4(a) shall be deemed to be
provided by a contract between the Debenture Issuer and each Company
Indemnified Person who serves in such capacity at any time while this
Section 10.4(a) is in effect. Any repeal or modification of this
Section 10.4(a) shall not affect any rights or obligations then
existing.
(vi) The Sponsor or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or
not the Debenture Issuer would have the power to indemnify him against
such liability under the provisions of this Section 10.4(a).
(vii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity,
any constituent entity (including any constituent of a constituent)
absorbed in a consolidation or merger, so that any person who is or was
a director, trustee, officer or employee of such constituent entity, or
is or was serving at the request of such constituent entity as a
director, trustee, officer, employee or agent of another entity, shall
stand in the same position under the provisions of this Section 10.4(a)
with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had
continued.
(viii) The indemnification and advancement of expenses
provided by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the successors, heirs, executors and administrators of
such a person.
37
<PAGE> 42
(b) The Sponsor agrees to indemnify the (i) Institutional Trustee, (ii)
the Delaware Trustee, (iii) any Affiliate of the Institutional Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Institutional Trustee and the Delaware Trustee (each of the Persons in (i)
through (iv) being referred to as a "Fiduciary Indemnified Person") for, and to
hold each Fiduciary Indemnified Person harmless against, any loss, liability or
expense incurred without gross negligence( or, in the case of the Institutional
Trustee, pursuant to Section 3.9, negligence) or bad faith on its part, arising
out of or in connection with the acceptance or administration or the trust or
trusts hereunder, including the costs and expenses (including reasonable legal
fees and expenses) of defending itself against or investigating any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder. The provisions of this Section 10.4(b) shall survive the
satisfaction and discharge of this Declaration or the resignation or removal of
the Institutional Trustee or the Delaware Trustee, as the case may be.
SECTION 10.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Institutional Trustee may engage in or possess an interest in other business
ventures of any nature or description, independently or with others, similar or
dissimilar to the business of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the business of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee, or the Institutional Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Institutional
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the
Institutional Trustee may engage or be interested in any financial or other
transaction with the Sponsor or any Affiliate of the Sponsor, or may act as
depositary for, trustee or agent for, or act on any committee or body of holders
of, securities or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.
38
<PAGE> 43
(b) The Regular Trustees shall cause to be duly prepared and delivered
to each of the Holders of Securities, any annual United States federal income
tax information statement, required by the Code, containing such information
with regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Regular Trustees shall endeavor to
deliver all such statements within 30 days after the end of each Fiscal Year of
the Trust.
(c) The Regular Trustees shall cause to be duly prepared and filed with
the appropriate taxing authority, an annual United States federal income tax
return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.
SECTION 11.3 BANKING.
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided however, that all payments of funds in
respect of the Debentures held by the Institutional Trustee shall be made
directly to the Institutional Trustee Account and no other funds of the Trust
shall be deposited in the Institutional Trustee Account. The sole signatories
for such accounts shall be designated by the Regular Trustees; provided,
however, that the Institutional Trustee shall designate the signatories for the
Institutional Trustee Account.
SECTION 11.4 WITHHOLDING.
The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Regular Trustees (or, if there
are more than two Regular Trustees a majority of the Regular Trustees); and
39
<PAGE> 44
(i) if the amendment affects the rights, powers, duties,
obligations or immunities of the Institutional Trustee, also by the
Institutional Trustee; and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, also by the Delaware
Trustee;
(b) no amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Institutional Trustee shall have first received an Officer's
Certificate from each of the Trust and the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the
Institutional Trustee, the Institutional Trustee shall have first
received:
(A) an Officer's Certificate from each of the Trust
and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(iii) to the extent the result of such amendment would be to:
(A) cause the trust to fail to continue to be
classified for purposes of United States federal income
taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers
of the Institutional Trustee in contravention of the Trust
Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company
Act;
(c) at such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities;
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities and;
40
<PAGE> 45
(f) the rights of the holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove Trustees shall not
be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities; and
(g) withstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to conform to any change in Rule 3a-5 or written change
in interpretation or application of Rule 3a-5 by any legislative body,
court, government agency or regulatory authority which amendment does
not have a material adverse effect on the right, preferences or
privileges of the Holders; and
(v) to modify, eliminate and add to any provision of the
Declaration to such extent as may be necessary.
SECTION 12.2 MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN
CONSENT.
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Regular Trustees (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Preferred Securities
are listed or admitted for trading. The Regular Trustees shall call a meeting of
the Holders of such class if directed to do so by the Holders of at least 10% in
liquidation amount of such class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a writing stating that
the signing Holders of Securities wish to call a meeting and indicating the
general or specific purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the Security
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least 7 days
and not more than 60 days before the date of such meeting. Whenever a
vote, consent or approval of the Holders of Securities is permitted or
required under this Declaration or the rules of any stock exchange on
which the Preferred Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders of
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the
41
<PAGE> 46
Holders of Securities owning not less than the minimum amount of
Securities in liquidation amount that would be necessary to authorize
or take such action at a meeting at which all Holders of Securities
having a right to vote thereon were present and voting. Prompt notice
of the taking of action without a meeting shall be given to the Holders
of Securities entitled to vote who have not consented in writing. The
Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the Regular
Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after the
expiration of 11 months from the date thereof unless otherwise provided
in the proxy. Every proxy shall be revocable at the pleasure of the
Holder of Securities executing it. Except as otherwise provided herein,
all matters relating to the giving, voting or validity of proxies shall
be governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if the
Trust were a Delaware corporation and the Holders of the Securities
were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing rules
of any stock exchange on which the Preferred Securities are then listed
or trading, otherwise provides, the Regular Trustees, in their sole
discretion, shall establish all other provisions relating to meetings
of Holders of Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be voted on by any
Holders of Securities, waiver of any such notice, action by consent
without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE.
The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee that:
(a) the Institutional Trustee is a national banking association with
trust powers, duly organized, validly existing and in good standing under the
laws of the United States of America, with trust power and authority to execute
and deliver, and to carry out and perform its obligations under the terms of,
the Declaration;
(b) the Institutional Trustee satisfies the requirements set forth in
Section 5.3(a);
42
<PAGE> 47
(c) the execution, delivery and performance by the Institutional
Trustee of the Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. The Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such remedies
is considered in a proceeding in equity or at law);
(d) the execution, delivery and performance of the Declaration by the
Institutional Trustee does not conflict with or constitute a breach of the
Articles of Organization or By-laws of the Institutional Trustee; and
(e) no consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the execution,
delivery or performance by the Institutional Trustee, of the Declaration.
43
<PAGE> 48
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee is a Delaware corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with power and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, the Declaration;
(b) The Delaware Trustee has been authorized to perform its obligations
under the Certificate of Trust and the Declaration. The Declaration under
Delaware law constitutes a legal, valid and binding obligation of the Delaware
Trustee, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, reorganization, moratorium, insolvency, and other similar
laws affecting creditors' rights generally and to general principles of equity
and the discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(c) No consent, approval or authorization of, or registration with or
notice to, any State or Federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee, of the Declaration; and
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its principal
place of business in the State of Delaware.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.
All notices provided for in this Declaration shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
Owens Corning Capital Trust II
Owens Corning World Headquarters
Toledo, Ohio 43659
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Jack Beeson
44
<PAGE> 49
(c) if given to the Institutional Trustee, at its Corporate Trust
Office to the attention of Corporate Trust Administration (or such other address
as the Institutional Trustee may give notice of to the Holders of the
Securities):
The Bank of New York
101 Barclay Street, 12E
New York, New York 10286
Attention: Corporate Trust Services Division
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
Owens Corning
Owens Corning World Headquarters
Toledo, Ohio 43659
Attention: Corporate Secretary
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be classified
for United States federal income tax purposes as a grantor trust. The provisions
of this Declaration shall be interpreted to further this intention of the
parties.
SECTION 14.4 HEADINGS.
Headings contained in this Declaration are inserted for convenience of
reference only and do not affect the interpretation of this Declaration or any
provision hereof.
45
<PAGE> 50
SECTION 14.5 SUCCESSORS AND ASSIGNS.
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.
SECTION 14.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of the signature
page and this Declaration may be executed by the affixing of the signature of
each of the Trustees to one of such counterpart signature pages. All of such
counterpart signature pages shall be read as though one, and they shall have the
same force and effect as though all of the signers had signed a single signature
page.
46
<PAGE> 51
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
__________________________________________
, as Regular Trustee
__________________________________________
, as Regular Trustee
WILMINGTON TRUST COMPANY.,
as Delaware Trustee
By________________________________________
Name______________________________________
Title_____________________________________
WILMINGTON TRUST COMPANY,
as Institutional Trustee
By________________________________________
Name______________________________________
Title_____________________________________
OWENS CORNING,
as Sponsor
By________________________________________
Name______________________________________
Title_____________________________________
<PAGE> 52
ANNEX I
TERMS AND CONDITIONS OF
% TRUST ORIGINATED PREFERRED SECURITIES
% TRUST ORIGINATED COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of September , 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in the
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
(a) Preferred Securities. Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
Dollars ($ ) and a liquidation amount with respect to the assets
of the Trust of $50 per preferred security, are hereby designated for the
purposes of identification only as " % Trust Originated Preferred Securities
(the "Preferred Securities"). The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form of Exhibit A-1 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice or to conform to the rules
of any stock exchange on which the Preferred Securities are listed.
(b) Common Securities. Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of Dollars
( ) and a liquidation amount with respect to the assets of the Trust of
$50 per common security, are hereby designated for the purposes of
identification only as " % Trust Originated Common Securities" (the "Common
Securities"). The Common Security Certificates evidencing the Common Securities
shall be substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed
initially at a rate per annum of % (the "Coupon Rate") of the stated
liquidation amount of $50 per Security until November 15, 2000, and at the Reset
Rate thereafter, such rates being the rates of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more than one quarter will bear interest thereon compounded quarterly at the
rate of % until November 15, 2000, and at the Reset Rate thereafter (to the
extent permitted by applicable law). The term "Distributions" as used herein
includes such cash distributions and any such interest payable unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year consisting of twelve 30-day
months, and for any period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed on the basis of
the actual number of days elapsed per 30-day month.
(b) Distributions on the Securities will be cumulative, will
accrue from September , 1997, and will be payable quarterly in arrears, on
March 31, June 30, September 30, and December
<PAGE> 53
31 of each year, commencing on September 30, 1997, except as otherwise described
below. The Debenture Issuer has the right under the Indenture to defer payments
of interest by extending the interest payment period from time to time on the
Debentures for a period not extending, in the aggregate, beyond the maturity
date of the Debentures (each an "Extension Period"). During such Extension
Period no interest shall be due and payable on the Debentures. As a consequence
of such deferral, Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at the rate of % until November 15, 2000,
and at the Reset Rate thereafter, compounded quarterly during any such Extension
Period. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed beyond the maturity date
of the Debentures.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust at the
close of business on the Business Day immediately preceding each of the relevant
payment dates on the Debentures. Subject to any applicable laws and regulations
and the provisions of the Declaration, each such payment in respect of the
Preferred Securities will be made as described under the heading "Description of
the Trust Preferred Securities -- Book Entry Only Issuance -The Depository Trust
Company" in the Prospectus dated September , 1997 (the "Prospectus"), of the
Trust included in the Registration Statement on Form S-3 (file no. 333-32145) of
the Sponsor and the Trust. The relevant record dates for the Common Securities
shall be the same record date as for the Preferred Securities. If the Preferred
Securities shall not continue to remain in book-entry only form, the relevant
record dates for the Preferred Securities, shall conform to the rules of any
securities exchange on which the securities are listed and, if none, shall be
selected by the Regular Trustees, which dates shall be at least one Business Day
before the relevant payment dates, which payment dates correspond to the
interest payment dates on the Debentures. Distributions payable on any
Securities that are not punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Person in whose name such Securities
are registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. So long as the Holder of any Preferred
Securities is the Collateral Agent, the payment of Distributions on such
Preferred Securities held by the Collateral Agent will be made at such place and
to such account as may be designated by the Collateral Agent.
(d) The Coupon Rate on the Securities (as well as the interest
rate on the Debentures) will be reset on the Purchase Contract Settlement Date
to the Reset Rate. On the Reset Announcement Date the Reset Spread and the
Two-Year Benchmark Treasury to be used to determine the Reset Rate will be
announced by the Sponsor. On the Business Day immediately following the Reset
Announcement Date, the Holders of Securities will be notified of such Reset
Spread and Two-Year Benchmark Treasury by the Sponsor. Such notice shall be
sufficiently given to Holders of Securities if published in an Authorized
Newspaper.
I-2
<PAGE> 54
(e) Not later than 7 calendar days nor more than 15 calendar
days prior to the Reset Announcement Date, the Sponsor will notify the DTC or
its nominee (or any successor Clearing Agency or its nominee) by first-class
mail, postage prepaid, to notify the Preferred Security Beneficial Owner or
Clearing Agency Participants holding Preferred Securities, Income PRIDES or
Growth PRIDES, of such Reset Announcement Date and in procedures to be followed
by such Holders of Income PRIDES who intend to settle their obligation under the
Purchase Contract with separate cash on the Purchase Contract Settlement Date.
(f) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata (as defined herein) among the Holders of the
Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution, of the Trust,
the Holders of the Securities on the date of the dissolution, will be entitled
to receive Debentures in an aggregate principal amount equal to the aggregate
stated liquidation amount of such Securities, with an interest rate equal to the
rate of %, if on or prior to November 15, 2000, and the Reset Rate thereafter,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, such Securities and which shall be distributed on a Pro
Rata basis to the Holders of the Securities in exchange for such Securities
(such amount being "Liquidation Distribution").
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Securities shall be paid on a Pro Rata basis.
4. Repayment and Distribution.
(a) Upon the repayment of the Debentures in whole (but not in
part), at maturity, the proceeds from such repayment shall be simultaneously
applied to repay Securities having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid at a repayment price of
$50 per Security plus an amount equal to accrued and unpaid Distributions
thereon at the date of the repayment, payable in cash (the "Repayment Price").
Holders will be given not less than 30 nor more than 60 days notice of such
repayment.
(b) Upon the distribution of the Debentures (after
satisfaction of creditors), in whole (but not in part), pursuant to a Investment
Company Event (as described below), Debentures with an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate of %, if on or prior to November 15, 2000, and the Reset Rate
thereafter, and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for payment as the Securities,
shall be distributed to the Holders of the Securities in liquidation of such
Holders' interests in the Trust on a Pro Rata basis, within 90 days following
the occurrence of such Investment Company Event.
(c) If an Investment Company Event (as defined below) shall
occur and be continuing the Regular Trustees shall dissolve the Trust and, after
satisfaction of creditors, cause Debentures held by the Institutional Trustee,
having an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate the rate of %, if on or prior to November 15,
2000, and the Reset Rate thereafter, and accrued and unpaid interest equal to
accrued and unpaid Distributions on, and having
I-3
<PAGE> 55
the same record date for payment as the Securities, to be distributed to the
Holders of the Securities in liquidation of such Holders' interests in the Trust
on a Pro Rata basis, within 90 days following the occurrence of such Investment
Company Event (the "90 Day Period"); and provided, however, that, if at the time
there is available to the Trust the opportunity to eliminate, within the 90 Day
Period, the Investment Company Event by taking some ministerial action, such as
filing a form or making an election, or pursuing some other similar reasonable
measure that has no adverse effect on the Trust, the Debenture Issuer, the
Sponsor or the Holders of the Securities ("Ministerial Action"), the Regular
Trustees will pursue such Ministerial Action in lieu of dissolution.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of a nationally recognized independent counsel experienced
in practice under the Investment Company Act (an "Investment Company Event
Opinion") that, as a result of the occurrence of a change in law or regulation
or a written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is a more than an insubstantial risk that the Trust is
or will be considered an Investment Company which is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus .
On and from the date fixed by the Regular Trustees for any distribution
of Debentures and dissolution of the Trust: (i) the Securities will no longer be
deemed to be outstanding, (ii) The Depository Trust Company (the "DTC") or its
nominee (or any successor Clearing Agency or its nominee) or the Collateral
Agent, as the record Holder of the Preferred Securities, will receive a
registered global certificate or certificates representing the Debentures to be
delivered upon such distribution and any certificates representing Securities,
except for certificates representing Preferred Securities held by the DTC or its
nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent beneficial interests in the Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, with an interest
rate of % if on or prior to November 15, 2000, and at the Reset Rate thereafter,
and accrued and unpaid interest equal to accrued and unpaid Distributions on
such Securities until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(d) Repayment or Distribution Procedures.
(i) Notice of any repayment of, or notice of
distribution of Debentures in exchange for, the Securities (a
"Repayment/Distribution Notice") will be given by the Trust by mail to each
Holder of Securities to be repaid or exchanged not fewer than 30 nor more than
60 days before the date fixed for repayment or exchange thereof which, in the
case of a repayment, will be the date fixed for repayment of the Debentures. For
purposes of the calculation of the date of repayment or exchange and the dates
on which notices are given pursuant to this Section 4(d)(i), a
Repayment/Distribution Notice shall be deemed to be given on the day such notice
is first mailed by first-class mail, postage prepaid, to Holders of Securities.
Each Repayment/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and records
of the Trust. No defect in the Repayment/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall affect the validity of the
repayment or exchange proceedings with respect to any other Holder.
(ii) If Securities are to be repaid and the Trust
gives a Repayment/Distribution Notice, which notice may only be issued if the
Debentures are repaid as set out in this Section 4 (which notice will be
irrevocable), then (A) while the Preferred Securities are in book-entry only
form, with respect to the Preferred Securities, by 12:00 noon, New York City
time, on the repayment date, provided
I-4
<PAGE> 56
that the Debenture Issuer has paid the Institutional Trustee a sufficient amount
of cash in connection with the related repayment on maturity of the Debentures,
the Institutional Trustee will deposit irrevocably with the DTC or its nominee
(or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Repayment Price with respect to the Preferred Securities and will
give the DTC irrevocable instructions and authority to pay the Repayment Price
to the Holders of the Preferred Securities, and (B) with respect to Preferred
Securities issued in definitive form and Common Securities, provided that the
Debenture Issuer has paid the Institutional Trustee a sufficient amount of cash
in connection with the related repayment on maturity of the Debentures, the
Institutional Trustee will pay the relevant Repayment Price to the Holders of
such Securities by check mailed to the address of the relevant Holder appearing
on the books and records of the Trust on the repayment date. If a
Repayment/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on the
date of such deposit, or on the repayment date, as applicable, distributions
will cease to accrue on the Securities so repaid and all rights of Holders of
such Securities so repaid will cease, except the right of the Holders of such
Securities to receive the Repayment Price, but without interest on such
Repayment Price. Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have been
so repaid. If any date fixed for repayment of Securities is not a Business Day,
then payment of the Repayment Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls in
the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date fixed for repayment. If payment of the Repayment Price in respect of any
Securities is improperly withheld or refused and not paid either by the
Institutional Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities will continue to accrue
from the original repayment date to the actual date of payment, in which case
the actual payment date will be considered the date fixed for repayment for
purposes of calculating the Repayment Price.
(iii) Repayment/Distribution Notices shall be sent by
the Regular Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, the DTC or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive Preferred
Security Certificates have been issued, to the Holder thereof, and (B) in
respect of the Common Securities to the Holder thereof.
(iv) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws), provided
the acquiror is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from time
to time purchase outstanding Preferred Securities by tender, in the open market
or by private agreement.
5. Repayment at Option of Holders.
(a) Each Holder of Preferred Securities, including the
Collateral Agent, if applicable, shall have the right to require the Trust to
repay all or a portion of the Preferred Securities owned or pledged with such
Holder (the "Put Option") on November 15, 2000, (the "Put Option Exercise Date")
at a repayment price of $50 per Security plus an amount equal to accrued
Distributions thereon to the date of payment (the "Put Option Repayment Price").
(b) The Trust will obtain funds to pay the Put Option
Repayment Price of Preferred Securities being repaid under the Put Option by
presenting to the Debenture Issuer, pursuant to the
I-5
<PAGE> 57
Trust's right under the Debentures to require the Debenture Issuer to repay all
or a portion of the Debenture on the Put Option Exercise Date, Debentures in an
aggregate principal amount equal to the aggregate stated liquidation amount of
such Preferred Securities for repayment on the Put Option Exercise Date at the
Debenture Repayment Price.
(c) In order for the Preferred Securities to be repaid on the
Put Option Exercise Date, the Trust must receive at the Corporate Trust Office
of the Institutional Trustee, the Preferred Securities to be repaid with the
form entitled "Option to Elect Repayment" on the reverse thereof or otherwise
accompanying such Preferred Security duly completed. Any such notice received by
the Trust shall be irrevocable. All questions as to the validity, eligibility
(including time of receipt) and acceptance of the Preferred Securities for
repayment shall be determined by the Trust, whose determination shall be final
and binding. Notwithstanding the foregoing, so long as the Holder is the
Collateral Agent, such notice to elect repayment may be delivered to the Trust
at any time prior to 10:00 a.m., New York City time, on the Put Option Exercise
Date and in the form and manner as may be designated by the Collateral Agent.
(d) Payment of the Put Option Repayment Price to Holders of
Preferred Securities shall be made at the Corporate Trust Office of the
Institutional Trustee, provided that the Debenture Issuer has paid the
Institutional Trustee a sufficient amount of cash in connection with the related
repayment of the Debenture. Notwithstanding the foregoing, so long as the Holder
of any Preferred Securities is the Collateral Agent, the payment of the Put
Option Repayment Price in respect of such Preferred Securities held by the
Collateral Agent shall be made no later than 1:00 p.m., New York City time, on
the Put Option Exercise Date by check or wire transfer in immediately available
funds at such place and to such account as may be designated by the Collateral
Agent. If the Institutional Trustee holds immediately available funds sufficient
to pay the Put Option Repayment Price of such Preferred Securities, then,
immediately prior to the close of business on the Put Option Exercise Date, such
Preferred Securities will cease to be outstanding and distributions thereon will
cease to accrue, whether or not Preferred Securities are delivered to the
Institutional Trustee, and all other rights of the Holder in respect of the
Preferred Securities, including the Holder's right to require the Trust to repay
such Preferred Securities, shall terminate and lapse (other than the right to
receive the Put Option Repayment Price but without interest on such Put Option
Repayment Price). Neither the Regular Trustees nor the Trust shall be required
to register or cause to be registered the transfer of any Preferred Securities
for which repayment has been elected. If payment of the Put Option Repayment
Price in respect of Preferred Securities is (i) improperly withheld or refused
and not paid either by the Institutional Trustee or by the Sponsor as guarantor
pursuant to the Preferred Securities Guarantee, or (ii) not paid by the
Institutional Trustee as the result of an Event of Default with respect to the
Debentures presented for repayment as described in paragraph 5(b), Distributions
on such Preferred Securities will continue to accrue, from the original Put
Option Exercise Date to the actual date of payment, in which case the actual
payment date will be considered the Put Option Exercise Date for purposes of
calculating the Put Option Repayment Price.
6. Voting Rights - Preferred Securities.
(a) Except as provided under Sections 6(b) and 8 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) Subject to the requirements set forth in this paragraph,
the Holders of a Majority in liquidation amount of the Preferred Securities,
voting separately as a class may direct the time, method,
I-6
<PAGE> 58
and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under the Indenture, or (iii) exercise any right
to rescind or annul a declaration that the principal of all the Debentures shall
be due and payable, provided, however, that, where a consent under the Indenture
would require the consent or act of the Holders of greater than a majority of
the Holders in principal amount of Debentures affected thereby (a "Super
Majority"), the Institutional Trustee may only give such consent or take such
action at the written direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. The
Institutional Trustee shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities. Other than with
respect to directing the time, method and place of conducting any remedy
available to the Institutional Trustee or the Debenture Trustee as set forth
above, the Institutional Trustee shall not take any action in accordance with
the directions of the Holders of the Preferred Securities under this paragraph
unless the Institutional Trustee has obtained an opinion of tax counsel to the
effect that for the purposes of United States federal income tax the Trust will
not be classified as other than a grantor trust on account of such action. If
the Institutional Trustee fails to enforce its rights under the Debentures after
a holder of Preferred Securities has made a written request, such Holder of
Preferred Securities may, to the fullest extent permitted by applicable law,
institute a legal proceeding directly against the Debenture Issuer to enforce
the Institutional Trustee's rights under the Debentures without first
instituting a legal proceeding against the Institutional Trustee or any other
Person. Notwithstanding the foregoing, if a Declaration Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures on the date such
interest or principal is otherwise payable (or in the case of redemption, on the
redemption date), then a holder of Preferred Securities may directly institute a
proceeding for enforcement of payment to such Holder of the principal of or
interest on the Debentures having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder on or after the
respective due date specified in the Debentures. Except as provided in the
preceding sentence, the Holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
will include a statement setting forth (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Preferred Securities will be
required for the Trust to repay and cancel Preferred Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities. Notwithstanding that Holders of Preferred Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
I-7
<PAGE> 59
7. Voting Rights - Common Securities.
(a) Except as provided under Sections 7(b), (c) and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to appoint, remove or
replace any Trustee or to increase or decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only after
the Event of Default with respect to the Preferred Securities has been cured,
waived, or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waive any past default and its
consequences that is waivable under Section 513 of the Indenture, or (iii)
exercise any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable, provided that, where a consent or
action under the Indenture would require the consent or act of the Holders of
greater than a majority in principal amount of Debentures affected thereby (a
"Super Majority"), the Institutional Trustee may only give such consent or take
such action at the written direction of the Holders of at least the proportion
in liquidation amount of the Common Securities which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding.
Pursuant to this Section 7(c), the Institutional Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing the time, method and
place of conducting any remedy available to the Institutional Trustee or the
Debenture Trustee as set forth above, the Institutional Trustee shall not take
any action in accordance with the directions of the Holders of the Common
Securities under this paragraph unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that for the purposes of United States
federal income tax the Trust will not be classified as other than a grantor
trust on account of such action. If the Institutional Trustee fails to enforce
its rights under the Declaration, any Holder of Common Securities may institute
a legal proceeding directly against any Person to enforce the Institutional
Trustee's rights under the Declaration, without first instituting a legal
proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which Holders of Common Securities are entitled to vote, or of any matter upon
which action by written consent of such Holders is to be taken, to be mailed to
each Holder of record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting or the date by which such
action is to be taken, (ii) a description of any resolution proposed for
adoption at such meeting on which such Holders are entitled to vote or of such
matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
I-8
<PAGE> 60
No vote or consent of the Holders of the Common Securities will be
required for the Trust to repay and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 1.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of outstanding Securities as a
class, will be entitled to vote on such amendment or proposal (but not on any
other amendment or proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred to in clause (i) above
would adversely affect only the Preferred Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as
the holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination on the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
the consent of the holders of greater than a majority in aggregate principal
amount of the Debentures (a "Super Majority"), the Institutional Trustee may
only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Institutional Trustee shall not take
any action in accordance with the directions of the Holders of the Securities
under this Section 8(b) unless the Institutional Trustee has obtained an opinion
of tax counsel to the effect that for the purposes of United States federal
income tax the Trust will not be classified as other than a grantor trust on
account of such action.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
of Securities according to the aggregate liquidation amount of the Securities
held by the relevant Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
I-9
<PAGE> 61
10. Ranking.
The Preferred Securities rank pari passu and payment thereon shall be
made Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Debentures held
by the Institutional Trustee, the rights of Holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption
and otherwise are subordinated to the rights to payment of the Holders of the
Preferred Securities.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
12. No Preemptive Rights.
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
I-10
<PAGE> 62
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT - This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "DTC") or a nominee of the Depositary. This Preferred Security is
exchangeable for Preferred Securities registered in the name of a person other
than the Depositary or its nominee only in the limited circumstances described
in the Declaration and no transfer of this Preferred Security (other than a
transfer of this Preferred Security as a whole by the Depositary to a nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary) may be registered except in limited circumstances.
Unless this Preferred Security is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) to the Trust or its agent for registration of transfer, exchange or
payment, and any Preferred Security issued is registered in the name of Cede &
Co. or such other name as requested by an authorized representative of The
Depository Trust Company and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Preferred Securities
CUSIP NO.
Certificate Evidencing Preferred Securities
of
OWENS CORNING CAPITAL II
% Trust Originated Preferred Securities
(liquidation amount $50 per Preferred Security)
Owens Corning Capital II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that __________
(the "Holder") is the registered owner of preferred securities of the Trust
representing preferred undivided beneficial interests in the assets of the Trust
designated the % Trust Originated Preferred Securities (liquidation Amount $50
per Preferred Security) (the "Preferred Securities"). The Preferred Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation rights, privileges, restrictions
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of September , 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration. The
Holder is entitled to the benefits of the Preferred Securities Guarantee to the
extent provided therein. The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Trust at its principal place of business.
I-1
<PAGE> 63
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this _____
day of ________, 1997.
OWENS CORNING CAPITAL II
By________________________________________
Name:_____________________________________
Title: Regular Trustee
<PAGE> 64
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a
rate per annum of % (the "Coupon Rate") of the stated liquidation amount of
$50 per Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more than one quarter will bear interest thereon compounded quarterly at the
rate of % until November 15, 2000, and at the Reset Rate thereafter (to the
extent permitted by applicable law). The term "Distributions" as used herein
includes such cash distributions and any such interest payable unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year consisting of twelve 30-day
months, and for any period shorter than a full quarterly Distribution period for
which Distributions are computed, Distributions will be computed on the basis of
the actual number of days elapsed per 30-day month.
Except as otherwise described below, Distributions on the Preferred
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears, on March 31, June 30, September 30 and
December 31 of each year, commencing on , 1997, to holders of
record, if in book-entry only form, one day prior to such payment date, which
payment dates shall correspond to the interest payment dates on the Debentures.
In the event that the Preferred Securities are not in book-entry form, the
Regular Trustees will have the right to select relevant record dates, which will
be more than one Business Day but less than 60 Business Days prior to the
relevant payment dates. The Debenture Issuer has the right under the Indenture
to defer payments of interest by extending the interest payment period from time
to time on the Debentures for a period not exceeding beyond the date of maturity
of the Debentures (each an "Extension Period") and, as a consequence of such
deferral, Distributions will also be deferred. Despite such deferral, quarterly
Distributions will continue to accrue with interest thereon (to the extent
permitted by applicable law) at the rate of % until November 15, 2000, and at
the Reset Rate thereafter, compounded quarterly during any such Extension
Period. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period; provided that such Extension Period together with all such
previous and further extensions thereof may not exceed beyond the maturity date
of the Debenture.
The Preferred Securities shall be repayable as provided in the
Declaration.
A1-3
<PAGE> 65
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs the Trust to
repay $__________ stated liquidation amount of the within Preferred Security,
pursuant to its terms, on the "Put Option Exercise Date" first occurring after
the date of receipt of the within Preferred Security as specified below,
together with distributions thereon accrued to the date of repayment, to the
undersigned at:
(Please print or type Name and Address of the Undersigned)
and to issue to the undersigned, pursuant to the terms of the Declaration, a new
Preferred Security or Preferred Securities representing the remaining stated
liquidation amount of this Preferred Security.
For this Option to Elect Repayment to be effective, this Preferred Security with
the Option to Elect Repayment duly completed must be received by the Trust at
the Corporate Trust Office of the Institutional Trustee at
Attention: Corporate Trust Administration.
Dated: Signature:_______________________________
Note: The signature to this Option to Elect Repayment must correspond with the
name as written upon the face of the within Preferred Security in every
particular without alternation or enlargement or any change whatsoever.
A1-4
<PAGE> 66
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ____________________________________
Signature:__________________________________
(Sign exactly as your name appears on the other side of
this Preferred Security Certificate)
A1-5
<PAGE> 67
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
OWENS CORNING CAPITAL II
% Trust Originated Common Securities
(liquidation amount $50 per Common Security)
OWENS CORNING CAPITAL II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust"), hereby certifies that_____________
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the % Trust Originated Common Securities (liquidation amount $50
per Common Security) (the "Common Securities"). The Common Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of September ,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Common Securities Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Common Securities Guarantee
and the Indenture to a Holder without charge upon written request to the Sponsor
at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this day of
_________, 1997.
OWENS CORNING CAPITAL II
By________________________________________
Name:_____________________________________
Title: Regular Trustee
<PAGE> 68
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of % (the "Coupon Rate") of the stated liquidation amount of $50
per Common Security, such rate being the rate of interest payable on the
Debentures to be held by the Institutional Trustee. Distributions in arrears for
more than one quarter will bear interest thereon compounded quarterly at the
rate of % until November 15, 2000, and at the Reset Rate thereafter (to the
extent permitted by applicable law). The term "Distributions" as used herein
includes such cash distributions and any such interest payable unless otherwise
stated. A Distribution is payable only to the extent that payments are made in
respect of the Debentures held by the Institutional Trustee and to the extent
the Institutional Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed on the basis of the
actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears, on March 31, June 30, September 30 and
December 31 of each year, commencing on September 30, 1997, to Holders of record
one day prior to such payment dates, which payment dates shall correspond to the
interest payment dates on the Debentures. The Debenture Issuer has the right
under the Indenture to defer payments of interest by extending the interest
payment period from time to time on the Debentures for a period not exceeding
beyond the date of maturity of the Debentures (each an "Extension Period") and,
as a consequence of such deferral, Distributions will also be deferred. Despite
such deferral, quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the rate of % until
November 15, 2000, and at the Reset Rate thereafter, compounded quarterly during
any such Extension Period. Payments of accrued Distributions will be payable to
Holders as they appear on the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due, the Debenture Issuer
may commence a new Extension Period; provided, that such Extension Period
together with all such previous and further extensions thereof may not exceed
beyond the maturity date of the Debentures.
The Common Securities shall be repayable as provided in the
Declaration.
A2-2
<PAGE> 69
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert assignee's social security or tax identification number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ____________________________________
Signature:___________________________________
(Sign exactly as your name appears on the other side of
this Preferred Security Certificate)
A2-3
<PAGE> 70
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE> 71
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE> 1
EXHIBIT 4.7.3
-------------------------------------------
FORM OF PREFERRED SECURITIES GUARANTEE AGREEMENT
OWENS CORNING CAPITAL TRUST II
DATED AS OF SEPTEMBER , 1997
-------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1 Definitions and Interpretation........................... 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application......................... 4
SECTION 2.2 List of Holders of Securities............................ 4
SECTION 2.3 Reports by the Preferred Guarantee Trustee............... 4
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee.......... 5
SECTION 2.5 Evidence of Compliance with Conditions Precedent......... 5
SECTION 2.6 Events of Default; Waiver................................ 5
SECTION 2.7 Event of Default; Notice................................. 5
SECTION 2.8 Conflicting Interests.................................... 5
ARTICLE III
POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee..... 6
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee............ 7
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.... 9
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility................. 9
SECTION 4.2 Appointment, Removal and Resignation of Preferred
Guarantee Trustees.................................... 9
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee................................................ 10
SECTION 5.2 Waiver of Notice and Demand.............................. 10
SECTION 5.3 Obligations Not Affected................................. 10
SECTION 5.4 Rights of Holders........................................ 11
SECTION 5.5 Guarantee of Payment..................................... 12
SECTION 5.6 Subrogation.............................................. 12
SECTION 5.7 Independent Obligations.................................. 12
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions............................... 12
SECTION 6.2 Ranking.................................................. 13
ARTICLE VII
TERMINATION
SECTION 7.1 Termination.............................................. 13
i
<PAGE> 3
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation................................................ 13
SECTION 8.2 Indemnification............................................ 13
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns..................................... 14
SECTION 9.2 Amendments................................................. 14
SECTION 9.3 Notices.................................................... 14
SECTION 9.4 Benefit.................................................... 15
SECTION 9.5 Governing Law.............................................. 15
ii
<PAGE> 4
PREFERRED SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated
as of September , 1997, is executed and delivered by Owens Corning, a Delaware
corporation (the "Guarantor"), and Wilmington Trust Company, as trustee (the
"Preferred Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of
Owens Corning Capital Trust II, a Delaware statutory business trust (the
"Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of September , 1997, among the trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof preferred securities, liquidation amount $50 per
preferred security, having an aggregate liquidation amount of $ designated the %
Trust Originated Preferred Securities (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein;
and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Preferred Securities Guarantee for the benefit of the holders of the
Common Securities (as defined herein), except that if an Event of Default (as
defined in the Indenture), has occurred and is continuing, the rights of holders
of the Common Securities to receive Guarantee Payments under the Common
Securities Guarantee are subordinated to the rights of Holders of Preferred
Securities to receive Guarantee Payments under this Preferred Securities
Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
SECTION 1.1 Definitions and Interpretation
------------------------------
In this Preferred Securities Guarantee, unless the context otherwise
requires:
(a) capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(c) all reference to "the Preferred Securities Guarantee" or "this
Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
<PAGE> 5
(d) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"AFFILIATE" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"AUTHORIZED OFFICER" of a Person means any Person that is authorized to
bind such Person.
"BUSINESS DAY" means any day other than a day on which banking
institutions in the City of New York, New York are authorized or required by any
applicable law to close.
"COMMON SECURITIES" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"CORPORATE TRUST OFFICE" means the office of the Preferred Guarantee
Trustee at which the corporate trust business of the Preferred Guarantee Trustee
shall, at any particular time, be principally administered, which office at the
date of execution of this Agreement is located at Wilmington Trust Company,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890,
Attention: Corporate Trust Administration.
"COVERED PERSON" means any Holder or beneficial owner of Preferred
Securities.
"DEBENTURES" means the series of junior subordinated debt securities of
the Guarantor or designated the % Debentures due 2002 held by the Institutional
Trustee (as defined in the Declaration) of the Issuer.
"DIRECTION" by a person means a written direction signed: (a) if the
Person is a natural person, by that Person; or (b) in any other case in the name
of such Person by one or more Authorized Officers of that Person.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its
payments or other obligations under this Preferred Securities Guarantee.
"GUARANTEE PAYMENTS" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) that are required to be paid on such Preferred Securities to
the extent the Issuer shall have funds available therefor, (ii) the repayment
price, including all accrued and unpaid distributions to the date of repayment
(the "Repayment Price") to the extent the Issuer has funds available therefor,
with respect to any Preferred Securities presented for repayment by the Holders,
and (iii) upon a voluntary or involuntary dissolution, winding-up or termination
of the Issuer (other than in connection with the distribution of Debentures to
the Holders in exchange for Preferred Securities as provided in the
Declaration), the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid Distributions on the Preferred Securities to the date of
payment, to the extent the Issuer shall have funds available therefor, and (b)
the amount of assets of the Issuer remaining available
2
<PAGE> 6
for distribution to Holders in liquidation of the Issuer (in either case, the
"Liquidation Distribution"). If an event of default under the Indenture has
occurred and is continuing, the rights of holders of the Common Securities to
receive payments under the Common Securities Guarantee Agreement are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments.
"HOLDER" shall mean any holder, as registered on the books and records
of the Issuer of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"INDEMNIFIED PERSON" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"INDENTURE" means the Indenture dated as of September , 1997, among the
Guarantor (the "Debenture Issuer" ) and Wilmington Trust Company, as trustee,
and any indenture supplemental thereto pursuant to which certain subordinated
debt securities of the Debenture Issuer are to be issued to the Institutional
Trustee of the Issuer.
"MAJORITY IN LIQUIDATION AMOUNT OF THE SECURITIES" means, except as
provided by the Trust Indenture Act, a vote by Holder(s) of Preferred
Securities, voting separately as a class, of more than 50% of the liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all Preferred Securities.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof, or any other entity of whatever nature.
"PREFERRED GUARANTEE TRUSTEE" means Wilmington Trust Company, until a
Successor Preferred Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Preferred Securities Guarantee and
thereafter means each such Successor Preferred Guarantee Trustee.
3
<PAGE> 7
"RESPONSIBLE OFFICER" means, with respect to the Preferred Guarantee
Trustee, any officer within the Corporate Trust office of the Preferred
Guarantee Trustee, including any vice-president, any assistant vice-president,
any assistant secretary, the treasurer, any assistant treasurer or other officer
of the Corporate Trust Office of the Preferred Guarantee Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"SUCCESSOR PREFERRED GUARANTEE TRUSTEE" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act: Application
--------------------------------
(a) This Preferred Securities Guarantee is subject to the provisions
of the Trust Indenture Act that are required to be part of this Preferred
Securities Guarantee and shall, to the extent applicable, be governed by such
provisions; and
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
SECTION 2.2 List of Holders of Securities
-----------------------------
(a) The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders of the Preferred Securities ("List of
Holders") as of such date, (i) within 1 Business Day after January 1 and July 1
of each year, and (ii) at any other time within 30 days of receipt by the
Guarantor of a written request for a List of Holders as of a date no more than
14 days before such List of Holders is given to the Preferred Guarantee Trustee
provided, that the Guarantor shall not be obligated to provide such List of
Holders at any time the List of Holders does not differ from the most recent
List of Holders given to the Preferred Guarantee Trustee by the Guarantor. The
Preferred Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
(b) The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Preferred Guarantee Trustee
------------------------------------------
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the form
and in the manner provided by Section 313 of the Trust Indenture Act. The
4
<PAGE> 8
Preferred Guarantee Trustee shall also comply with the requirements of Section
313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Preferred Guarantee Trustee
-----------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314 (if any) and the
compliance certificate required by Section 314 of the Trust Indenture Act in the
form, in the manner and at the times required by Section 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent
------------------------------------------------
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set forth
in Section 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) may be given in
the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver
-------------------------
The Holders of a Majority in liquidation amount of Preferred Securities
may, by vote, on behalf of the Holders of all of the Preferred Securities, waive
any past Event of Default and its consequences. Upon such waiver, any such Event
of Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured, for every purpose of this Preferred
Securities Guarantee, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice
------------------------
(a) The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such notice,
provided, that, the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
(b) The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee shall
have received written notice, or of which a Responsible Officer of the
Preferred Guarantee Trustee charged with the administration of the Declaration
shall have obtained actual knowledge.
SECTION 2.8 Conflicting Interests
---------------------
The Declaration shall be deemed to be specifically described in this
Preferred Securities Guarantee for the purposes of clause (i) of the first
proviso contained in Section 310(b) of the Trust Indenture Act.
5
<PAGE> 9
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
PREFERRED GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Preferred Guarantee Trustee
----------------------------------------------------
(a) This Preferred Securities Guarantee shall be held by the Preferred
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Preferred Guarantee Trustee shall not transfer this Preferred
Securities Guarantee to any Person except a Holder of Preferred Securities
exercising his or her rights pursuant to Section 5.4(b) or to a Successor
Preferred Guarantee Trustee on acceptance by such Successor Preferred Guarantee
Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The
right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of
the Preferred Guarantee Trustee has occurred and is continuing, the Preferred
Guarantee Trustee shall enforce this Preferred Securities Guarantee for the
benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall be
read into this Preferred Securities Guarantee against the Preferred Guarantee
Trustee. In case an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6) and is actually known to a Responsible Officer
of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall
exercise such of the rights and powers vested in it by this Preferred
Securities Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any event of Default and after
the curing or waiving of such Events of Default that may have occurred:
(A) the duties and obligations of the Preferred
Guarantee Trustee shall be determined solely by the express provisions
of this Preferred Securities Guarantee, and the Preferred Guarantee
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or obligations shall be
read into this Preferred Securities Guarantee against the Preferred
Guarantee Trustee; and
(B) In the absence of bad faith on the part of the
Preferred Guarantee Trustee, the Preferred Guarantee Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the
6
<PAGE> 10
Preferred Guarantee Trustee and conforming to the requirements of this
Preferred Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are specifically
required to be furnished to the Preferred Guarantee Trustee, the
Preferred Guarantee Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible Officer of
the Preferred Guarantee Trustee, unless it shall be proved that the
Preferred Guarantee Trustee was negligent in ascertaining the pertinent
facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith
in accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Preferred Guarantee Trustee, or exercising any trust
or power conferred upon the Preferred Guarantee Trustee under this
Preferred Securities Guarantee; and
(iv) no provision of this Preferred Securities Guarantee shall
require the Preferred Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the performance of
any of its duties or in the exercise of any of its rights or powers, if
the Preferred Guarantee Trustee shall have reasonable grounds for
believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Preferred Securities
Guarantee or indemnity, reasonably satisfactory to the Preferred
Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 3.2 Certain Rights of Preferred Guarantee Trustee
---------------------------------------------
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may conclusively rely,
and shall be fully protected in acting or refraining from acting upon,
any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Preferred Securities Guarantee shall be sufficiently evidenced by
a Direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Preferred
Securities Guarantee, the Preferred Guarantee Trustee shall deem it
desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Preferred Guarantee
Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have no duty to
see to any recording, filing or registration of any instrument (or any
rerecording, refiling or reregistration thereof).
7
<PAGE> 11
(v) The Preferred Guarantee Trustee may consult with competent
legal counsel, and the written advice or opinion of such counsel with
respect to legal matters 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 accordance with such advice or opinion.
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. The Preferred Guarantee Trustee
shall have the right at any time to seek instructions concerning the
administration of this Preferred Securities Guarantee from any court of
competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in it by this
Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Preferred
Guarantee Trustee such Security and indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against the costs, expenses
(including attorneys' fees and expenses and the expenses of the
Preferred Guarantee Trustees, agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such request
or direction, including such reasonable advances as may be requested by
the Preferred Guarantee Trustee; provided that, nothing contained in
this Section 3.2 (a) (vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document, but the
Preferred Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Preferred Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys,
and the Preferred Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee Trustee or
its agents hereunder shall bind the Holders of the Preferred
Securities, and the signature of the Preferred Guarantee Trustee or its
agents alone shall be sufficient and effective to perform any such
action. No third party shall be required to inquire as to the authority
of the Preferred Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the
Preferred Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Preferred
Securities Guarantee the Preferred Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy
or right or taking any other action hereunder, the Preferred Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Preferred Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in conclusively
relying on or acting in accordance with such instructions.
(b) No provision of this Preferred Securities Guarantee shall be deemed
to impose any duty or obligation on the Preferred Guarantee Trustee to perform
any act or acts or exercise any right, power,
8
<PAGE> 12
duty or obligation conferred or imposed on it in any jurisdiction in which it
shall be illegal, or in which the Preferred Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Preferred Guarantee Trustee shall
be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee
-----------------------------------------------------
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Preferred Guarantee Trustee does not assume
any responsibility for their correctness. The Preferred Guarantee Trustee makes
no representation as to the validity or sufficiency of this Preferred Securities
Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1 Preferred Guarantee Trustee; Eligibility
-----------------------------------------
(a) There shall at all times be a Preferred Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by
the Securities and Exchange Commission to act as an institutional
trustee under the Trust Indenture Act, authorized under such laws to
exercise corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then, for the
purposes of this Section 4.1 (a)(ii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Preferred Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Preferred Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2 Appointment, Removal and Resignation of Preferred Guarantee
Trustees
-----------------------------------------------------------
(a) Subject to Section 4.2(b), the Preferred Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in accordance
with Section 4.2(a) until a Successor Preferred Guarantee Trustee has been
appointed and has accepted such appointment by
9
<PAGE> 13
written instrument executed by such Successor Preferred Guarantee Trustee and
delivered to the Guarantor.
(c) The Preferred Guarantee Trustee appointed to office shall hold
office until a Successor Preferred Guarantee Trustee shall have been appointed
or until its removal or resignation. The Preferred Guarantee Trustee may resign
from office (without need for prior or subsequent accounting) by an instrument
in writing executed by the Preferred Guarantee Trustee and delivered to the
Guarantor, which resignation shall not take effect until a Successor Preferred
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Preferred Guarantee Trustee
and delivered to the Guarantor and the resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Preferred Guarantee Trustee may petition any court of competent
jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such
court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Preferred Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee or removal
or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued
to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee
---------
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 Waiver of Notice and Demand
---------------------------
The Guarantor hereby waives notice of acceptance of this Preferred
Securities Guarantee and of any liability to which it applies or may apply,
presentment, demand for payment, any right to require a proceeding first against
the Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
10
<PAGE> 14
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Repayment Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or
in connection with, the Preferred Securities (other than an extension of time
for payment of Distributions, Repayment Price, Liquidation Distribution or
other sum payable that results from the extension of any interest payment
period on the Debentures or any extension of the maturity date of the
Debentures permitted by the Indenture);
(c) any failure, omission delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent
of this Section 5.3 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders
-----------------
(a) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting of
any proceeding for any remedy available to the Preferred Guarantee Trustee in
respect of this Preferred Securities Guarantee or exercising any trust or power
conferred upon the Preferred Guarantee Trustee under this Preferred Securities
Guarantee.
(b) If the Preferred Guarantee Trustee fails to enforce this Preferred
Securities Guarantee, any Holder of Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce its rights under this
Preferred Securities Guarantee, without first instituting a legal proceeding
against the Issuer, the Preferred Guarantee Trustee or any other Person.
Notwithstanding the foregoing, if the Guarantor has failed to make a Guarantee
Payment, a holder of Preferred Securities may directly institute a proceeding
against the Guarantor for enforcement of the Preferred Security Guarantee for
such payment. The Guarantor waives any right or remedy to require that any
action on this Preferred Securities Guarantee be brought first against the
Issuer or any other person or entity before proceeding directly against the
Guarantor.
11
<PAGE> 15
SECTION 5.5 Guarantee of Payment
--------------------
This Preferred Securities Guarantee creates a guarantee of payment and
not of collection.
SECTION 5.6 Subrogation
-----------
The Guarantor shall be subrogated to all rights, if any, of the Holders
of Preferred Securities against the Issuer in respect of any amounts paid to
such Holders by the Guarantor under this Preferred Securities Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Preferred Securities Guarantee. If any amount shall be
paid to the Guarantor in violation of the preceding sentence, the Guarantor
agrees to hold such amount in trust for the Holders and to pay over such amount
to the Holders.
SECTION 5.7 Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities, and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Preferred
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions
--------------------------
So long as any Preferred Securities remain outstanding, if there shall
have occurred an Event of Default or an event of default under the Declaration,
then (a) the Company shall not declare or pay dividends or make any distribution
with respect to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock (other than (i) purchases or acquisitions
of capital stock of the Company in connection with the satisfaction by the
Company of its obligations under any employee benefit plans or the satisfaction
by the Company of its obligations pursuant to any contract or security
outstanding on the date of such event requiring the Company to purchase capital
stock of the Company, (ii) as a result of a reclassification of the Company's
capital stock or the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the Company's capital
stock, (iii) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (iv) dividends or
distributions in capital stock of the Company and (v) redemptions or purchases
of any rights pursuant to the Rights Agreement or any successor to the Rights
Agreement, and the declaration thereunder of a dividend of rights in the
future), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank junior to the Debentures, and (c) the Company shall not
make any guarantee payments with respect to the foregoing (other than payments
pursuant to the Guarantee or the Common Securities Guarantee).
12
<PAGE> 16
SECTION 6.2 Ranking
-------
This Preferred Securities Guarantee will constitute a senior unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to the liabilities of the Guarantor under the Senior Indebtedness (as
defined in the Indenture), (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any guarantee
now or hereafter entered into by the Guarantor in respect of any preferred or
preference stock of any Affiliate of the Guarantor, and (iii) senior to the
Guarantor's common stock.
ARTICLE VII
TERMINATION
SECTION 7.1 Termination
-----------
This Preferred Securities Guarantee shall terminate upon (i) full
payment of the Repayment Price of all Preferred Securities, (ii) upon the
distribution of the Debentures to the Holders of all of the Preferred Securities
or (iii) upon full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Preferred Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 Exculpation
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters
the Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information, opinions, reports
or statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2 Indemnification
---------------
(a) To the fullest extent permitted by applicable law, the Guarantor
shall indemnify and hold harmless each Indemnified Person from and against any
loss, damage or claim incurred by such
13
<PAGE> 17
Indemnified Person by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee Agreement and
in a manner such Indemnified Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person by this Guarantee Agreement,
except that no Indemnified Person shall be entitled to be indemnified in respect
of any loss, damage or claim incurred by such Indemnified Person by reason of
negligence or willful misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, reasonable
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposition of such claim, demand,
action, suit or proceeding upon receipt by the Guarantor of an undertaking by
or on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized in Section 8.2(a).
(c) The obligation to indemnify as set forth in this Section 8.2 shall
survive the termination of the Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns
----------------------
All guarantees and agreements contained in this Preferred Securities
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
of the Preferred Securities then outstanding.
SECTION 9.2 Amendments
----------
Except with respect to any changes that do not adversely affect the
rights of Holders (in which case no consent of Holders will be required), this
Preferred Securities Guarantee may only be amended with the prior approval of
the Holders of at least a Majority in liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus accrued
and unpaid Distributions to the date upon which the voting percentages are
determined) of all the outstanding Preferred Securities. The provisions of
Section 12.2 of the Declaration with respect to meetings of Holders of the
Securities apply to the giving of such approval.
SECTION 9.3 Notices
-------
All notices provided for in this Preferred Securities Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by registered or certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the Preferred
Guarantee Trustee's mailing address set forth below (or such other address as
the Preferred Guarantee Trustee may give notice of to the Holders of the
Preferred Securities):
14
<PAGE> 18
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Administration
(b) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities):
Owens Corning World Headquarters
Toledo, Ohio 43659
Attention: General Counsel
(c) If given to any Holder of Preferred Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 Benefit
-------
This Preferred Securities Guarantee is solely for the benefit of the
Holders of the Preferred Securities and, subject to Section 3.1(a), is not
separately transferable from the Preferred Securities.
SECTION 9.5 Governing Law.
--------------
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year
first above written.
OWENS CORNING
By:_________________________________
Name
Title
WILMINGTON TRUST COMPANY
By:_________________________________
Name
Title
15
<PAGE> 1
Exhibit 4.8.1
- -------------------------------------------------------------------------------
OWENS CORNING,
AS ISSUER
TO
WILMINGTON TRUST COMPANY,
AS TRUSTEE
- -------------------------------------------------------------------------------
FORM OF INDENTURE
DATED AS OF ________, 1997
- -------------------------------------------------------------------------------
<PAGE> 2
OWENS CORNING
RECONCILIATION AND TIE BETWEEN TRUST
INDENTURE ACT OF 1939, AS AMENDED
AND INDENTURE, DATED AS OF SEPTEMBER , 1997
<TABLE>
<CAPTION>
TRUST INDENTURE INDENTURE SECTION
ACT SECTION
<S> <C> <C>
Section 310 (a)(1)...............................................................................609
(a)(2)...............................................................................609
(a)(3)....................................................................Not Applicable
(a)(4)....................................................................Not Applicable
(b).............................................................................608, 610
Section 311 (a)..................................................................................613
(b)..................................................................................613
Section 312 (a)..........................................................................701, 702(a)
(b)...............................................................................702(b)
(c)...............................................................................702(c)
Section 313 (a)...............................................................................703(a)
(b).......................................................................Not Applicable
(c).......................................................................703(a), 703(b)
(d)...............................................................................703(b)
Section 314 (a)..................................................................................704
(b).......................................................................Not Applicable
(c)(1)...............................................................................102
(c)(2)...............................................................................102
(c)(3)....................................................................Not Applicable
(d).......................................................................Not Applicable
(e)..................................................................................102
Section 315 (a)...............................................................................601(a)
(b)..................................................................................602
(c)...............................................................................601(b)
(d)...............................................................................601(c)
(d)(l)....................................................................601(a), 601(c)
(d)(2)............................................................................601(c)
(d)(3)............................................................................601(c)
(e)..................................................................................514
Section 316 (a)(1)(A)............................................................................512
(a)(1)(B).......................................................................502, 513
(a)(2)....................................................................Not Applicable
(b)..................................................................................508
Section 317 (a)(1)...............................................................................503
(a)(2)...............................................................................504
(b).................................................................................1009
Section 318 (a)..................................................................................107
<FN>
- -----------------------
NOTE: THIS RECONCILIATION AND TIE SHALL NOT, FOR ANY PURPOSE, BE DEEMED TO BE A
PART OF THIS INDENTURE.
</TABLE>
<PAGE> 3
<TABLE>
TABLE OF CONTENTS
PAGE
<CAPTION>
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION................................................. 1
<S> <C>
SECTION 101. Definitions............................................................... 1
Act.................................................................................. 1
Affiliate............................................................................ 1
Authenticating Agent................................................................. 2
Bankruptcy Law....................................................................... 2
Board of Directors................................................................... 2
Board Resolution..................................................................... 2
Business Day......................................................................... 2
Capitalized Lease Obligation......................................................... 2
Capital Stock........................................................................ 2
Commission........................................................................... 2
Common Depositary.................................................................... 2
Company.............................................................................. 2
Company Request...................................................................... 2
Company Order........................................................................ 2
Corporate Trust Office............................................................... 2
Covenant Defeasance.................................................................. 2
Custodian............................................................................ 2
Default.............................................................................. 2
Defaulted Interest................................................................... 2
Defeasance........................................................................... 3
Dollars.............................................................................. 3
Event of Default..................................................................... 3
Exchange Act......................................................................... 3
GAAP................................................................................. 3
Holder............................................................................... 3
Security holder...................................................................... 3
Indebtedness......................................................................... 3
Indenture............................................................................ 3
Interest............................................................................. 3
Interest Payment Date................................................................ 3
Lien................................................................................. 3
Maturity............................................................................. 3
Officer.............................................................................. 3
Officer's Certificate................................................................ 4
Opinion of Counsel................................................................... 4
Original Issue Discount Security..................................................... 4
Outstanding.......................................................................... 4
Paying Agent......................................................................... 4
Person............................................................................... 4
Place of Payment..................................................................... 4
Redemption Date...................................................................... 4
Redemption Price..................................................................... 4
Registered Security.................................................................. 4
Regular Record Date.................................................................. 4
Responsible Officer.................................................................. 5
Securities........................................................................... 5
Security Register.................................................................... 5
Security Registrar................................................................... 5
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
Senior Indebtedness....................................................... 5
Significant Subsidiary.................................................... 5
Special Record Date....................................................... 5
Stated Maturity........................................................... 5
Subsidiary................................................................ 5
Trust Indenture Act....................................................... 5
Trustee................................................................... 5
U.S. Depositary........................................................... 5
U.S. Government Obligations............................................... 5
Vice President............................................................ 6
SECTION 102. Compliance Certificates and Opinions...................................... 6
SECTION 103. Form of Documents Delivered to Trustee.................................... 6
SECTION 104. Acts of Holders........................................................... 7
SECTION 105. Notices, Etc., to Trustee and Company..................................... 7
SECTION 106. Notice to Holders; Waiver................................................. 8
SECTION 107. Conflict with Trust Indenture Act......................................... 8
SECTION 108. Effect of Headings and Table of Contents.................................. 8
SECTION 109. Successors and Assigns.................................................... 8
SECTION 110. Separability Clause....................................................... 8
SECTION 111. Benefits of Indenture..................................................... 8
SECTION 112. Governing Law............................................................. 9
SECTION 113. Legal Holidays............................................................ 9
SECTION 114. No Recourse Against Others................................................ 9
ARTICLE 2
SECURITY FORMS........................................... 9
SECTION 201. Forms Generally........................................................... 9
SECTION 202. Form of Face of Security.................................................. 9
SECTION 203. Form of Reverse of Security............................................... 11
SECTION 204. Form of Trustee's Certificate of Authentication........................... 14
SECTION 205. Securities in Global Form................................................. 14
SECTION 206. CUSIP Number.............................................................. 15
SECTION 207. Form of Legend for the Securities in Global Form.......................... 15
ARTICLE 3
THE SECURITIES........................................... 15
SECTION 301. Amount Unlimited; Issuable in Series...................................... 15
SECTION 302. Denominations............................................................. 17
SECTION 303. Execution, Authentication, Delivery and Dating............................ 17
SECTION 304. Temporary Securities...................................................... 18
SECTION 305. Registration, Registration of Transfer and Exchange....................... 19
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.......................... 20
SECTION 307. Payment of Interest; Interest Rights Preserved............................ 21
SECTION 308. Persons Deemed Owners..................................................... 22
SECTION 309. Cancellation.............................................................. 22
SECTION 310. Computation of Interest................................................... 22
ARTICLE 4
SATISFACTION AND DISCHARGE..................................... 22
SECTION 401. Satisfaction and Discharge of Indenture................................... 22
SECTION 402. Application of Trust Money................................................ 23
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE 5
REMEDIES.............................................. 23
<S> <C> <C>
SECTION 501. Events of Default......................................................... 23
SECTION 502. Acceleration of Maturity; Rescission and Annulment........................ 25
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee........... 25
SECTION 504. Trustee May File Proofs of Claim.......................................... 26
SECTION 505. Trustee May Enforce Claims Without Possession of Securities............... 26
SECTION 506. Application of Money Collected............................................ 26
SECTION 507. Limitation on Suits....................................................... 27
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.................................................................. 27
SECTION 509. Restoration of Rights and Remedies........................................ 27
SECTION 510. Rights and Remedies Cumulative............................................ 28
SECTION 511. Delay or Omission Not Waiver.............................................. 28
SECTION 512. Control by Holders........................................................ 28
SECTION 513. Waiver of Past Defaults................................................... 28
SECTION 514. Undertaking for Costs..................................................... 28
ARTICLE 6
THE TRUSTEE............................................ 29
SECTION 601. Certain Duties and Responsibilities of the Trustee........................ 29
SECTION 602. Notice of Defaults........................................................ 29
SECTION 603. Certain Rights of Trustee................................................. 29
SECTION 604. Not Responsible for Recitals or Issuance of Securities.................... 30
SECTION 605. May Hold Securities....................................................... 30
SECTION 606. Money Held in Trust....................................................... 30
SECTION 607. Compensation and Reimbursement............................................ 30
SECTION 608. Disqualification; Conflicting Interests................................... 31
SECTION 609. Corporate Trustee Required; Eligibility................................... 31
SECTION 610. Resignation and Removal; Appointment of Successor......................... 31
SECTION 611. Acceptance of Appointment by Successor.................................... 32
SECTION 612. Merger, Conversion, Consolidation or Succession to Business............... 33
SECTION 613. Preferential Collection of Claims Against Company......................... 33
SECTION 614. Appointment of Authenticating Agent....................................... 33
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY......................... 35
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders................. 35
SECTION 702. Preservation of Information; Communications to Holders.................... 35
SECTION 703. Reports by Trustee........................................................ 36
SECTION 704. Reports by Company........................................................ 36
ARTICLE 8
CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER........................... 37
SECTION 801. When Company May Merge, Etc............................................... 37
SECTION 802. Opinion of Counsel........................................................ 37
SECTION 803. Successor Corporation Substituted......................................... 37
ARTICLE 9
SUPPLEMENTAL INDENTURES...................................... 37
SECTION 901. Supplemental Indentures Without Consent of Holders........................ 37
SECTION 902. Supplemental Indentures with Consent of Holders........................... 38
SECTION 903. Execution of Supplemental Indentures...................................... 39
SECTION 904. Effect of Supplemental Indentures......................................... 39
SECTION 905. Conformity with Trust Indenture Act....................................... 39
SECTION 906. Reference in Securities to Supplemental Indentures........................ 39
</TABLE>
<PAGE> 6
<TABLE>
ARTICLE 10
COVENANTS............................................. 40
<S> <C> <C>
SECTION 1001. Payments of Securities.................................................... 40
SECTION 1002. Maintenance of Office or Agency........................................... 40
SECTION 1003. Corporate Existence....................................................... 40
SECTION 1004. Payment of Taxes and Other Claims......................................... 40
SECTION 1005. Maintenance of Properties................................................. 41
SECTION 1006. Compliance Certificates................................................... 41
SECTION 1007. Commission Reports........................................................ 41
SECTION 1008. Waiver of Stay, Extension or Usury Laws................................... 42
SECTION 1009. Money for Securities Payments to Be Held in Trust......................... 42
SECTION 1010. Limitation on Liens....................................................... 43
SECTION 1011. Waiver of Certain Covenants............................................... 44
ARTICLE 11
REDEMPTION OF SECURITIES...................................... 44
SECTION 1101. Applicability of Article.................................................. 44
SECTION 1102. Election to Redeem; Notice to Trustee..................................... 44
SECTION 1103. Selection by Trustee of Securities to Be Redeemed......................... 44
SECTION 1104. Notice of Redemption...................................................... 44
SECTION 1105. Deposit of Redemption Price............................................... 45
SECTION 1106. Securities Payable on Redemption Date..................................... 45
SECTION 1107. Securities Redeemed in Part............................................... 46
ARTICLE 12
SINKING FUNDS........................................... 46
SECTION 1201. Applicability of Article.................................................. 46
SECTION 1202. Satisfaction of Sinking Fund Payments with Securities..................... 46
SECTION 1203. Redemption of Securities for Sinking Fund................................. 46
ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE................................. 47
SECTION 1301. Applicability of Article; Company's Option to Effect Defeasance or Covenant
Defeasance................................................................ 47
SECTION 1302. Defeasance and Discharge.................................................. 47
SECTION 1303. Covenant Defeasance....................................................... 47
SECTION 1304. Conditions to Defeasance or Covenant Defeasance........................... 47
SECTION 1305. Deposited Money and Government Obligations To Be Held In Trust............ 49
ARTICLE 14
SUBORDINATION........................................... 49
SECTION 1401. Agreement of Securityholders that Securities Subordinated to Extent
Provided.................................................................. 49
SECTION 1402. Company not to Make Payments with Respect to Securities in Certain
Circumstances............................................................. 49
SECTION 1403. Securities Subordinated to Prior Payment of the Senior Indebtedness on
Dissolution, Liquidation or Reorganization of Company..................... 50
SECTION 1404. Security holders to be Subrogated to Right of Holders of Senior
Indebtedness.............................................................. 50
SECTION 1405. Obligation of the Company Unconditional................................... 51
SECTION 1406. Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice... 51
SECTION 1407. Application by Trustee of Monies Deposited With It........................ 51
SECTION 1408. Subordination Rights not Impaired by Acts or Omissions of Company or
Holders of Senior Indebtedness............................................ 51
SECTION 1409. Security Holders Authorize Trustee to Effectuate Subordination of
Securities................................................................ 52
</TABLE>
<PAGE> 7
<TABLE>
<S> <C> <C>
SECTION 1410. Right of Trustee to Hold Senior Indebtedness.............................. 52
SECTION 1411. Article Fourteen Not to Prevent Events of Default......................... 52
ARTICLE 15
MISCELLANEOUS........................................... 52
SECTION 1501. Miscellaneous............................................................. 52
</TABLE>
<PAGE> 8
Indenture, dated as of _______, 1997, between OWENS CORNING, a
corporation duly organized and existing under the laws of the State of Delaware
(herein called the "Company "), having its principal office at Owens Corning
World Headquarters, Toledo, Ohio 43659 and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (herein called the
"Securities"), to be issued in one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities or of series
thereof, as follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(3) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(4) the word "Including" (and with the correlative meaning "Include")
means including, without limiting the generality of, any description preceding
such term; and
(5) the words "Herein," "Hereof" and "Hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act," when used with respect to any Holder, has the meaning specified
in Section 104.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
<PAGE> 9
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the board of directors of the Company;
provided, however, that when the context refers to actions or resolutions of the
Board of Directors, then the term "Board of Directors" shall also mean any duly
authorized committee of the Board of Directors of the Company or Officer
authorized to act with respect to any particular matter to exercise the power of
the Board of Directors of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day," when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in that Place of Payment are authorized or obligated by law
or regulation to close.
"Capitalized Lease Obligation" means an obligation under a lease that
is required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligation shall
be the capitalized amount of such obligations determined ln accordance with such
principles.
"Capital Stock" of any Person shall mean any and all shares, interests,
participations or other equivalents of or interests in (however designated)
equity of such Person, including any preferred stock, but excluding any debt
securities convertible into such equity.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Depositary" has the meaning specified in Section 304.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor corporation.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its President or
a Vice President, and by its Treasurer, an Assistant Treasurer, its Controller,
an Assistant Controller, its Secretary or an Assistant Secretary, and delivered
to the Trustee.
"Corporate Trust Office" means the office of the Trustee in Wilmington,
Delaware at which at any particular time its corporate trust business shall be
principally administered, which office at the date hereof is located at
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890.
"Covenant Defeasance" has the meaning specified in Section 1303.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
2
<PAGE> 10
"Defeasance" has the meaning specified in Section 1302.
"Dollars" and "$" means lawful money of the United States of America.
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended from time to time, and the rules and regulations promulgated thereunder.
"GAAP" means such accounting principles that are generally accepted in
the United States of America as of the date of any computation required
hereunder.
"Holder" or "Security holder" means a Person in whose name a Security
if registered in the Security Register.
"Indebtedness" of any Person means, without duplication, (i) the
principal of and premium (if any) in respect of (A) indebtedness of such Person
for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or
other similar instruments for the payment of which such Person is responsible or
liable; (ii) all Capitalized Lease Obligations of such Person; (iii) all
obligations of such Person issued or assumed as the deferred purchase price of
property, all conditional sale obligations and all obligations under any title
retention agreement (but excluding trade accounts payable arising in the
ordinary course of business); (iv) all obligations of such Person for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (other than obligations with respect to letters of
credit securing obligations (other than obligations described in (i) through
(iii) above) entered into in the ordinary course of business of such Person to
the extent such letters of credit are not drawn upon or, if and to the extent
drawn upon, such drawing is reimbursed no later than the third Business Day
following receipt by such Person of a demand for reimbursement following payment
on the letter of credit); (v) all obligations of the type referred to in clauses
(i) through (iv) of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable as
obligor, guarantor or otherwise; and (vi) all obligations of the type referred
to in clauses (i) through (v) of other Persons secured by any Lien on any
property or asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 301.
"Interest," when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date," when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Lien" means any lien (statutory or other), mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance or preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, the interest of a vendor or
lessor under any conditional sale, capitalized lease or other title retention
agreement).
"Maturity," when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, the Vice Chairman of the
Board, the President, the Executive Vice President, any Vice President, the
Treasurer, any Assistant Treasurer, the Controller, the Secretary or any
Assistant Secretary of the Company.
3
<PAGE> 11
"Officer's Certificate" means a certificate signed by an Officer and
delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of or counsel for the Company, and who shall be reasonably acceptable
to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding," when used with respect to Securities or Securities of
any series, means, as of the date of determination, all such Securities
theretofore authenticated and delivered under this Indenture, except: (i)
Securities theretofore cancelled by the Trustee or delivered to the Trustee for
cancellation; (ii) Securities, or portions thereof, for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Trustee or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities; provided that, if such Securities are
to be redeemed, notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been made; (iii)
Securities which have been paid pursuant to Section 306 or in exchange for or in
lieu of which other Securities have been authenticated and delivered pursuant to
this Indenture, other than any such Securities in respect of which there shall
have been presented to the Trustee proof satisfactory to it that such Securities
are held by a bona fide purchaser in whose hands such Securities are valid
obligations of the Company; and (iv) Securities which have been defeased
pursuant to Section 1302; provided, however, that in determining whether the
Holders of the requisite principal amount of the Outstanding Securities have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder, (a) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding for such purposes shall be that portion of the
principal amount thereof that could be declared to be due and payable upon the
occurrence of an Event of Default and the continuation thereof pursuant to the
terms of such Original Issue Discount Security as of the date of such
determination and (b) Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or of such other obligor shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which the
Trustee knows to be so owned shall be so disregarded. Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company or of such
other obligor.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company. The Company may act as Paying Agent with respect to any Securities
issued hereunder.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Place of Payment," when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Redemption Date," when used with respect to any Security of any series
to be redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price," when used with respect to any Security of any
series to be redeemed, means the price at which it is to be redeemed pursuant to
this Indenture.
"Registered Security" means any Security issued hereunder and
registered in the Security Register.
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
4
<PAGE> 12
"Responsible Officer," when used with respect to the Trustee, means any
officer of the Trustee in its Corporate Trust Office and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"Securities" has the meaning stated in the first recital of this
Indenture and more particularly means any Securities authenticated and delivered
under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"Senior Indebtedness" means all payment obligations of the Company,
under the lease, dated as of December 1, 1977, between the Ohio Water
Development Authority, as Lessor, and the Company, as Lessee. Senior
Indebtedness shall continue to constitute Senior Indebtedness for all purposes
of the Debentures, and the provisions of Article of the Indenture shall continue
to apply to such Senior Indebtedness, notwithstanding the fact that such Senior
Indebtedness or any claim in respect thereof shall be disallowed, avoided or
subordinated pursuant to the provisions of the United States Bankruptcy Code of
1978, as amended, or other applicable law.
"Significant Subsidiary" means a Subsidiary or Subsidiaries of the
Company possessing assets (including the assets of its own Subsidiaries but
without regard to the Company or any other Subsidiary) having a book value, in
the aggregate, equal to not less than 10% of the book value of the aggregate
assets of the Company and its Subsidiaries calculated on a consolidated basis.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 307.
"Stated Maturity," when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, joint venture or similar business
organization more than 50% of the ownership interests having ordinary voting
power of which shall at the time be so owned or controlled. Unless otherwise
expressly provided, all references herein to a "Subsidiary" shall mean a
Subsidiary of the Company.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was executed;
provided, however, that in the event that such Act is amended after such date,
"Trust Indenture Act" means the Trust Indenture Act of 1939 as so amended.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee hereunder, and
if at any time there is more than one such Person, "Trustee" as used with
respect to the Securities of any series shall mean the Trustee with respect to
Securities of that series.
"U.S. Depositary" means, with respect to the Securities of any series
issuable or issued in whole or in part in the form of one or more permanent
global Securities, the Person designated as U.S. Depositary by the Company
pursuant to Section 301, which must be a clearing agency registered under the
Exchange Act until a successor U.S. Depositary shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "U.S. Depositary"
shall mean or include each Person who is then a U.S. Depositary hereunder, and
if at any time there is more than one such Person, "U.S. Depositary" shall mean
the U.S. Depositary with respect to the Securities of that series.
"U.S. Government Obligations" means 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 timely payment of
5
<PAGE> 13
which is unconditionally guaranteed by the full faith and credit of the United
States of America which, in either case, are not callable or redeemable at the
option of the issuer thereof or otherwise subject to prepayment, and shall also
include a depository receipt issued by a New York Clearing House bank or trust
company as custodian with respect to any such U.S. Government Obligation or a
specific payment or interest on or principal of any such U.S. Government
Obligation 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 or from any amount held by the custodian in respect of the
U.S. Government Obligation or the specific payment of interest on or principal
of the U.S. Government Obligation evidenced by such depository receipt.
"Vice President," when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, other than an action permitted
by Sections 205 and 704 hereof, the Company shall furnish to the Trustee an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein relating
thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such Officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Officer or Officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
6
<PAGE> 14
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. 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 agents 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 the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) 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 a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which the Trustee deems sufficient.
(c) The ownership of Registered Securities shall be proved by the
Security Register.
(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, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(e) If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.
SECTION 105. NOTICES, ETC., TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with,
(a) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or with
the Trustee and received by the Trustee at its Corporate Trust Office,
Attention: Corporate Trust Administration, or
(b) the Company by the Trustee or by any Holder shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to the Company
7
<PAGE> 15
addressed to it at the address of its principal office specified in the first
paragraph of this Indenture, attention: Secretary, or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture or any Security provides for notice to Holders of
any event, such notice shall be deemed sufficiently given (unless otherwise
herein or in such Security expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders or the validity of the proceedings to which such notice relates.
Where this Indenture or any Security provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
Any request, demand, authorization, direction, notice, consent or
waiver required or permitted under this Indenture shall be in the English
language, except that any published notice may be in an official language of the
country of publication.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or shall be
excluded, as the case may be.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
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 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
8
<PAGE> 16
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and construed in
accordance with the laws (other than the choice of law provisions) of the State
of New York.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made at such Place of Payment on such date, but may be made on the next
succeeding Business Day or on such other day as may be set out in the Officer's
Certificate pursuant to Section 301 at such Place of Payment with the same force
and effect as if made on the Interest Payment Date or Redemption Date, or at the
Stated Maturity, provided that no interest shall accrue for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be.
SECTION 114. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company
shall not 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 Security holder, by accepting
a Security, waives and releases all such liability. Such waivers and releases
are part of the consideration for the issuance of the Securities.
ARTICLE 2
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The Securities of each series shall be in substantially the form set
forth in this Article, or in such other form as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
ln each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
Officers executing such Securities, as evidenced by their execution of the
Securities. If the form of Securities of any series is established by action
taken pursuant to a Board Resolution, a copy of an appropriate record of such
action shall be certified by the Secretary or an Assistant Secretary of the
Company and delivered to the Trustee at or prior to the delivery of the Company
Order contemplated by Section 303 for the authentication and delivery of such
Securities.
The Trustee's certificates of authentication shall be in substantially
the form set forth in this Article.
The definitive Securities shall be photocopied, printed, lithographed
or engraved on steel engraved borders or may be produced in any other manner,
all as determined by the Officers executing such Securities, as evidenced by
their execution of such Securities.
SECTION 202. FORM OF FACE OF SECURITY.
(If the Security is an Original Issue Discount Security, insert--FOR
PURPOSES OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE"), THE AMOUNT OF ORIGINAL ISSUE DISCOUNT (AS DEFINED IN SECTION 1273(a)(1)
OF THE CODE AND TREASURY REGULATION SECTION 1.1273-l(a) WITH RESPECT TO THIS
SECURITY IS ____, THE ISSUE PRICE (AS DEFINED IN TREASURY REGULATION SECTION
1.1273-2) OF THIS SECURITY IS ____, THE ISSUE DATE (AS DEFINED IN SECTION
1275(a)(2) OF THE CODE AND TREASURY REGULATION SECTION 1.1273-2) OF THIS
SECURITY IS ____ AND THE YIELD TO MATURITY OF THIS SECURITY IS ____).
9
<PAGE> 17
OWENS CORNING
........................
No. ________ ($)________
OWENS CORNING, a corporation duly organized and existing under the laws
of Delaware (herein called the "Company," which term includes any successor
corporation under the Indenture hereinafter referred to), for value received,
hereby promises to pay to ____, or registered assigns, the principal sum of
$______ on __________. (If the Security is to bear interest prior to Maturity,
insert --, and to pay interest thereon from _______________ or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, (semi-annually) (quarterly) (monthly) on ________ and in each year,
commencing _________, at the rate of ____% per annum, until the principal
hereof is paid or made available for payment (If applicable insert--, and (to
the extent that the payment of such interest shall be legally enforceable) at
the rate of % per annum on any overdue principal and premium and on any overdue
installment of interest). The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the ______ of ________ (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said
Indenture.)
(If the Security is not to bear interest prior to Maturity, INSERT--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of ____% per annum (to the extent that the payment of such
interest shall be legally enforceable), which shall accrue from the date of
such default in payment to the date payment of such principal has been made
or duly provided for. Interest on any overdue principal shall be payable on
demand. Any such interest on any overdue principal that is not so paid on
demand shall bear interest at the rate of____ % per annum (to the extent that
the payment of such interest shall be legally enforceable), which shall accrue
from the date of such demand for payment to the date payment of such interest
has been made or duly provided for, and such interest shall also be payable on
demand.)
Payment of the principal of (and premium, if any) and (if applicable,
insert--any such) interest on this Security will be made at the office or agency
of the Company maintained for that purpose in _____, in Dollars (if applicable,
INSERT--; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register).
Reference is hereby 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.
Unless the certificate of authentication hereon has been executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
10
<PAGE> 18
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
OWENS CORNING
By:
-------------------------------------
Attest:
- --------------------------- (SEAL)
SECTION 203. FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under an Indenture, dated as of September __, 1997 (herein called the
"Indenture"), between the Company and as Trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Securities and of
the terms upon which the Securities are, and are to be, authenticated and
delivered. This Security is one of the series designated on the face hereof
(limited in aggregate principal amount to $ ______).
(If applicable, insert--The Securities of this series are subject to redemption
upon not less than 30 nor more than 45 days' notice by first class mail, (if
applicable, insert--(1) on ____ in any year ______ commencing with the year
_____ and ending with the year _____ through operation of the sinking fund for
this series at a Redemption Price equal to 100% of the principal amount, and
(2)) at any time (on or after ____,), as a whole or in part, at the election of
the Company, at the following Redemption Prices (expressed as percentages of
the principal amount):
If redeemed (on or before ________, ____%, and if redeemed) during
the 12-month period beginning of the years indicated,
Year Redemption Price Year Redemption Price
and thereafter at a Redemption Price equal to _______ of the principal amount,
together in the case of any such redemption (if applicable, insert -- (whether
through operation of the sinking fund or otherwise)) with accrued and unpaid
interest to the Redemption Date, but interest installments whose Stated Maturity
is on or prior to such Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture.)
(If applicable, insert -- The Securities of this series are subject to
redemption upon not less than 30 nor more than 45 days' notice by first class
mail, (1) on ____ in any year commencing with the year ____and ending with the
year ____ through operation of the sinking fund for this series at the
Redemption Prices for redemption through operation of the sinking fund
(expressed as percentages of the principal amount) set forth in the table below,
and (2) at any time (on or after ____________), as a whole or in part, at the
election of the Company,
11
<PAGE> 19
at the Redemption Prices for redemption otherwise than through operation of the
sinking fund (expressed as percentages of the principal amount) set forth in the
table below:
If redeemed during a 12-month period beginning ____ of the years
indicated,
Redemption Price for Redemption Price for
Redemption Through Redemption Otherwise
Operation of the Than Through Operation
Year Sinking Fund of the Sinking Fund
and thereafter at a Redemption Price equal to ____% of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued and unpaid interest to the Redemption
Date, but interest installments whose Stated Maturity is on or prior to such
Redemption Date will be payable to the Holders of such Securities, or one or
more Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.)
(Notwithstanding the foregoing, the Company may not, prior to ____
redeem any Securities of this series as contemplated by (clause (2) of) the
preceding paragraph as a part of, or in anticipation of, any refunding
operation by the application, directly or indirectly, of moneys borrowed
having an interest cost to the Company (calculated in accordance with generally
accepted financial practice) of less than _____% per annum.)
(The sinking fund for this series provides for the redemption on ____
in each year beginning with the year ___ and ending with the year ____ of (not
less than) $_______ (("mandatory sinking fund") and not more than $_____
aggregate principal amount of Securities of this series.) (Securities of this
series acquired or redeemed by the Company otherwise than through (mandatory)
sinking fund payments may be credited against subsequent (mandatory) sinking
fund payments otherwise required to be made--in the (inverse) order in which
they become due.)
(In the event of redemption of this Security in part only a new
Security or Securities of this series for the unredeemed portion hereof will be
issued ln the name of the Holder hereof upon the cancellation hereof.)
(If the Security is not an Original Issue Discount Security, insert --
If any Event of Default with respect to Securities of this series shall occur
and be continuing, the principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.) (If the Security is an Original Issue Discount Security, insert -If
an Event of Default with respect to Securities of this series shall occur and
be continuing, an amount of principal of the Securities of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture. Such amount shall be equal -- insert formula for determining the
amount.) Upon payment (i) of the amount of principal so declared due and
payable and (ii) of interest on any overdue principal and overdue interest (in
each case to the extent that the payment of such interest shall be legally
enforceable), all of the Company's obligations in respect of the payment of the
principal of and interest, if any, on the Securities of this series shall
terminate.
This Security is a general unsecured obligation of the Company and will
be subordinate in right of payment to all existing and future Senior
Indebtedness of the Company.
This Security is subject to Defeasance as described in the Indenture.
The Indenture may be modified by the Company and the Trustee without
consent of any Holder with respect to certain matters as described in the
Indenture. In addition, the Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the
12
<PAGE> 20
Company and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected. The Indenture also contains provisions permitting the Holders of a
majority in principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall bind such Holder and all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not notation
of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, place and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Security are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities of
this series, of authorized denominations and for the same Stated Maturity and
aggregate principal amount, will be issued to the designated transferee or
transferees.
The Securities of this series are issuable only in registered form
without coupons in denominations of ($1,000) and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture imposes certain limitations on the ability of the Company
to, among other things, merge or consolidate with any other Person or sell,
assign, transfer or lease all or substantially all of its properties or assets
(If other covenants are applicable pursuant to the provisions of Section 301,
insert here). All such covenants and limitations are subject to a number of
important qualifications and exceptions. The Company must report periodically to
the Trustee on compliance with the covenants in the Indenture.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under this
Security or the Indenture or for any claim based on, in respect of or by reason
of, such obligations or their creation. Each Holder, by accepting a Security,
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Security.
(If applicable, insert -- Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures ("CUSIP"), the
Company has caused CUSIP numbers to be printed on the Securities of this series
as a convenience to the Holders of the Securities of this series. No
representation is made as to the correctness or accuracy of such numbers as
printed on the Securities of this series and reliance may be placed only on the
other identification numbers printed hereon.)
All capitalized terms used in this Security without definition which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture.
13
<PAGE> 21
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. number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
---------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Your Signature:
-------------------------- ----------------------------
(Sign exactly as your name
appears on the other side
of this Security)
Signature Guaranty:
-----------------------------------------------------------
(Signatures must be guaranteed by an "eligible
guarantor institution" meeting the requirements of
the Transfer Agent, which requirements will
include membership or participation in STAMP or
such other "signature guarantee program" as may be
determined by the Transfer Agent in addition to,
or in substitution for, STAMP all in accordance
with the Exchange Act.)
Social Security Number or Taxpayer Identification Number:
----------------------
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
Dated:
---------------------------
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Wilmington Trust Company
as Trustee
By:
-------------------------------------
Authorized Signatory
SECTION 205. SECURITIES IN GLOBAL FORM.
If Securities of a series are issuable in global form, as contemplated
by Section 301, then, notwithstanding the provisions of Section 302, any such
Security shall represent such of the Outstanding Securities of such series as
shall be specified therein and may provide that it shall represent the aggregate
amount of Outstanding Securities
14
<PAGE> 22
from time to time endorsed thereon and that the aggregate amount of Outstanding
Securities represented thereby may from time to time be reduced to reflect
exchanges. Any endorsement of a Security in global form to reflect the amount,
or any increase or decrease in the amount, of Outstanding Securities represented
thereby shall be made in such manner and upon instructions given by such Person
or Persons as shall be specified therein or in the Company Order to be delivered
to the Trustee pursuant to Section 303 or Section 304. Subject to the provisions
of Section 303 and, if applicable, Section 304, the Trustee shall deliver and
redeliver any Security in permanent global form in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. If a Company Order pursuant to Section 303 or 304 has
been, or simultaneously is, delivered, any instructions by the Company with
respect to endorsement or delivery or redelivery of a Security in global form
shall be in writing but need not comply with Section 102 and need not be
accompanied by an Opinion of Counsel.
The provisions of Section 309 shall apply to any Security represented
by a Security in global form if such Security was never issued and sold by the
Company and the Company delivers to the Trustee the Security in global form
together with written instructions (which need not comply with Section 102 and
need not be accompanied by an Opinion of Counsel) with regard to the reduction
in the principal amount of Securities represented thereby.
Notwithstanding the provisions of Sections 201 and 307, unless
otherwise specified as contemplated by Section 301, payment of principal of,
premium, if any, and interest on any Security in permanent global form shall be
made to the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as provided in
the preceding paragraph, the Company, the Trustee and any agent of the Company
and the Trustee shall treat a Person as the Holder of such principal amount of
Outstanding Securities represented by a permanent global Security as shall be
specified in a written statement of the Holder of such permanent global
Security.
SECTION 206. CUSIP NUMBER.
The Company in issuing Securities of any series may use a "CUSIP"
number, and, if so, the Trustee may use the CUSIP number in notices of
redemption or exchange as a convenience to Holders of such series; provided,
that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed on the notice or on the
Securities of such series, and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP number of any series of
Securities.
SECTION 207. FORM OF LEGEND FOR THE SECURITIES IN GLOBAL FORM.
Any Security in global form authenticated and delivered hereunder shall
bear a legend in substantially the following form:
"This Security is in global form within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Common Depositary or
a U.S. Depositary. Unless and until it is exchanged in whole or in part for
Securities in certificated form, this Security may not be transferred except as
a whole by the Common Depositary or a U.S. Depositary or by a nominee of the
Common Depositary or a nominee of the U.S. Depositary as the case may be."
ARTICLE 3
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be authenticated
and delivered under this Indenture is unlimited.
15
<PAGE> 23
The Securities may be issued from time to time in one or more series.
There shall be established in or pursuant to a Board Resolution, and set forth
in an Officer's Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of Securities of any series:
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture (except
for Securities authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Securities of the series pursuant to
Sections 304, 305, 306, 906 or 1107);
(3) whether any Securities of the series are to be issuable in
permanent global form with or without coupons and, if so, (i) whether beneficial
owners of interests in any such permanent global security may exchange such
interests for Securities of such series and of like tenor of any authorized form
and denomination and the circumstances under which any such exchanges may occur,
if other than in the manner provided in Section 305, and (ii) the name of the
Common Depositary (as defined in Section 304) or the U.S. Depositary, as the
case may be, with respect to any global security;
(4) the date or dates on which the principal of the Securities of the
series is payable;
(5) the rate or rates at which the Securities of the series shall bear
interest, if any, the date or dates from which such interest shall accrue, the
Interest Payment Dates on which such interest shall be payable and the Regular
Record Date for the interest payable on any Interest Payment Date and, if
applicable to such series of Securities, the basis points and United States
Treasury rate(s) and any other rates to be used in calculating the reset rate;
(6) the place or places where the principal of (and premium, if any)
and interest on Securities of the series shall be payable;
(7) the right of the Company, if any, to defer any payment of principal
of or interest on the Securities of the series, and the maximum length of any
such deferral period;
(8) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company, pursuant to any
sinking fund or otherwise;
(9) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous provisions or
at the option of a Holder thereof and the period or periods within which, the
price or prices at which and the terms and conditions upon which Securities of
the series shall be redeemed or purchased, in whole or in part, pursuant to such
obligation, and, where applicable, the obligation of the Company to select the
Securities to be redeemed;
(10) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be issuable;
(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section 502;
(12) additional Events of Default with respect to Securities of the
series, if any, other than those set forth herein;
(13) if either or both of Section 1302 and Section 1303 shall be
inapplicable to the Securities of the series (provided that if no such
inapplicability shall be specified, then both Section 1302 and Section 1303
shall be applicable to the Securities of the series);
16
<PAGE> 24
(14) if other than U.S. dollars, the currency or currencies or units
based on or related to currencies in which the Securities of such series shall
be denominated and in which payments or principal of, and any premium and
interest on, such Securities shall or may by payable;
(15) additional covenants with respect to Securities of the series, if
any, other than those set forth herein;
(16) if other than the Trustee, the identity of the Registrar and any
Paying Agent; and
(17) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution and set forth in such Officer's Certificate or in any
such Indenture supplemental hereto.
If any of the terms of the series are established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officer's
Certificate setting forth, or providing the manner for determining, the terms of
the Securities of such series.
SECTION 302. DENOMINATIONS.
The Securities of each series shall be issuable in registered form
without coupons in such denominations as shall be specified as contemplated by
Section 301. In the absence of any such provisions with respect to the
Securities of any series, the Securities of such series shall be issuable in
denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, its Vice Chairman of the Board, its President or one of
its Vice Presidents, under its corporate seal reproduced thereon attested by its
Secretary or one of its Assistant Secretaries. The signature of any of these
officers on the Securities may be manual or facsimile. The seal of the Company
may be in the form of a facsimile thereof and may be impressed, affixed,
imprinted or otherwise reproduced on the Securities. Typographical and other
minor errors or defects in any such reproduction of the seal or any such
signature shall not affect the validity or enforceability of any security that
has been duly authenticated and delivered by the Trustee.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and make such Securities available for
delivery. If the form or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 201 and 301, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Sections 315(a)
through (d) of the Trust Indenture Act) shall be fully protected in relying
upon, an Opinion of Counsel stating,
(a) if the form of such Securities has been established by or pursuant
to Board Resolution as permitted by Section 201, that such form has been
established in conformity with the provisions of this Indenture;
17
<PAGE> 25
(b) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 301, that such terms have
been established in conformity wit the provisions of this Indenture;
(c) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute valid and legally binding
obligations of the Company, enforceable in accordance With their terms, except
to the extent enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding ln equity or at law); and
(d) that no consent, approval, authorization, order, registration or
qualification of or with any court or any governmental agency or body having
jurisdiction over the Company is required for the execution and delivery of such
Securities by the Company, except such as have been obtained (except that no
opinion need be expressed as to state securities or Blue Sky laws).
If such form or terms have been so established, the Trustee shall not
be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee, or in the written opinion of
counsel to the Trustee (which counsel may be an employee of the Trustee) such
authentication may not lawfully be made or would involve the Trustee in personal
liability.
Notwithstanding the provisions of Section 301 and of the immediately
preceding paragraph, if all Securities of a series are not to be originally
issued at one time, it shall not be necessary to deliver the Officer's
Certificate otherwise required pursuant to Section 301 or the Company Order and
Opinion of Counsel otherwise required pursuant to the immediately preceding
paragraph at or prior to the time of authentication of each security of such
series if such documents are delivered at or prior to the authentication upon
original issuance of the first security of such series to be issued.
If the Company shall establish pursuant to Section 301 that the
Securities of a series are to be issued in the form of one or more global
Securities, then the Company shall execute and the Trustee shall, in accordance
with this Section and the Company Order with respect to the authentication and
delivery of such series, authenticate and deliver one or more global Securities
that (i) shall be in an aggregate amount equal to the aggregate principal amount
specified in such Company Order, (ii) shall be registered in the name of the
Common Depositary or U.S. Depositary, as the case may be, therefor or its
nominee, and (iii) shall be made available for delivery by the Trustee to such
depositary or pursuant to such depositary's instruction.
Each depositary designated pursuant to Section 301 must, at the time of
its designation and at all times while it serves as depositary, be a clearing
agency registered under the Exchange Act and any other applicable statute or
regulation.
Unless otherwise provided for in the form of security, each security
shall be dated the date of its authentication.
No security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
security shall be conclusive evidence, and the only evidence, that such security
has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon Company Order the Trustee shall authenticate and
make available for delivery, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu of
which they are issued and with such appropriate
18
<PAGE> 26
insertions, omissions, substitutions and other variations as the officers
executing such Securities may determine, as evidenced by their execution of such
Securities.
In the case of Securities of any series, such temporary Securities may
be in global form, representing all or a portion of the Outstanding Securities
of such series.
Except in the case of temporary Securities in global form (which shall
be exchanged in accordance with the provisions of Section 305), if temporary
Securities of any series are issued, the Company will cause definitive
Securities of that series to be prepared without unreasonable delay. After the
preparation of definitive Securities of such series, the temporary Securities of
such series shall be exchangeable for definitive Securities of such series upon
surrender of the temporary Securities of such series at the office or agency of
the Company in a Place of Payment for that series, without charge to the Holder.
Upon surrender for cancellation of any one or more temporary Securities of any
series, the Company shall execute and the Trustee shall authenticate and make
available for delivery in exchange therefor a like principal amount of
definitive Securities of the same series of authorized denominations and of like
tenor. Until so exchanged, the temporary Securities of any series shall in all
respects be entitled to the same benefits under this Indenture as definitive
Securities of such series.
If temporary Securities of any series are issued in global form, any
such temporary global Security shall, unless otherwise provided therein, be
delivered to the office of a depositary or common depositary (the "COMMON
DEPOSITARY") for credit to the respective accounts of the beneficial owners of
such Securities (or to such other accounts as they may direct).
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of registration of transfers of Securities. The
Trustee is hereby appointed "Security Register" for the purpose of registering
Securities and transfers of Securities as herein provided.
Upon surrender for registration of transfer of any security of any
series at the office or agency of the Company in Place of Payment for that
series, the Company shall execute, and the Trustee shall authenticate and make
available for delivery, in the name of the designated transferee or transferees,
one or more new Securities of the same series, of any authorized denominations
and of a like aggregate principal amount and Stated Maturity.
At the option of the Holder, Securities of any series may be exchanged
for other Securities of the same series, of any authorized denominations and of
a like aggregate principal amount and Stated Maturity, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities are
so surrendered for exchange, the Company shall execute, and the Trustee shall
authenticate and make available for delivery, the Securities which the Holder
making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise specified as
contemplated by Section 301, any permanent global security shall be exchangeable
only as provided in this paragraph. If the beneficial owners of interests in a
permanent global security are entitled to exchange such interests for Securities
of such series and of like tenor and principal amount of another authorized form
and denomination, as specified and as subject to the conditions contemplated by
Section 301, then without unnecessary delay but in any event not later than the
earliest date on which such interests may be so exchanged, the Company shall
deliver to the Trustee definitive Securities of that series in aggregate
principal amount equal to the principal amount of such permanent global
security, executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such permanent global Securities shall be
surrendered from time to time by the Common Depositary or the U.S. Depositary,
as the case may be, and in accordance with instructions given to the Trustee and
the Common Depositary or the U.S. Depositary, as the case may be (which
instructions shall be in writing but need not comply with Section 102 or be
accompanied by an Opinion of Counsel), as shall be specified in the Company
Order with respect thereto to the Trustee, as the Company's agent for such
purpose, to be exchanged, in whole or in part, for definitive Securities of the
same series without charge. The Trustee shall authenticate and make available
for
19
<PAGE> 27
delivery, in exchange for each portion of such surrendered permanent global
security, a like aggregate principal amount of definitive Securities of the same
series of authorized denominations and of like tenor as the portion of such
permanent global security to be exchanged which shall be in the form of the
Securities of such series; provided, however, that no such exchanges may occur
during a period beginning at the opening of business 15 days before the day of
the mailing of a notice of redemption of Securities of that series selected for
redemption under Section 1103 and ending at the close of business on the day of
such mailing. Promptly following any such exchange in part, such permanent
global Security shall be returned by the Trustee to the Common Depositary or the
U.S. Depositary, as the case may be, or such other Common Depositary or U.S.
Depositary referred to above in accordance with the written instructions of the
Company referred to above. If a Security in the form specified for such series
is issued in exchange for any portion of a permanent global Security after the
close of business at the office or agency where such exchange occurs on (i) any
Regular Record Date and before the opening of business at such office or agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such office or agency on the related proposed
date for payment of interest or Defaulted Interest, as the case may be, such
interest or Defaulted Interest will not be payable on such Interest Payment Date
or proposed date for payment, as the case may be, in respect of such security in
the form specified for such series, but will be payable on such Interest Payment
Date or proposed date for payment, as the case may be, only to the Person to
whom interest in respect of such portion of such permanent global Security is
payable in accordance with the provisions of this Indenture.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligation, of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer or
for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
Unless otherwise provided in the Securities to be transferred or
exchanged, no service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 304, 906 or 1107 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the opening
of business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 1103 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any security so selected for redemption in whole or in
part, except the unredeemed portion of any security being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security and (ii)
such Security or indemnity as may be required by them to save each of them and
any agent of either of them harmless, then, in the absence of notice to the
Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and upon its request the Trustee shall
authenticate and deliver, in lieu of any such destroyed, lost or stolen
Security, a new Security of the same series and of like tenor and principal
amount and bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
20
<PAGE> 28
Upon the issuance of any new Security under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of that series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the Person in
whose name that Security (or one or more Predecessor Securities) is registered
at the close of business on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest, which shall be fixed in
the following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security of such series
and the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the be
fit of the Persons entitled to such Defaulted Interest as in this Section 307
provided. Thereupon the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor to be
mailed, first-class postage prepaid, to each Holder of Securities of such series
at his address as it appears in the security Register, not less than 10 days
prior to such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so mailed,
such Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered at the close of business on such Special Record Date and shall no
longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Securities may be listed,
and upon such notice as may be required by such exchange, if, after notice given
by the Company to the Trustee of the proposed payment pursuant to this Section
307, such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this 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.
21
<PAGE> 29
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal of (and premium, if
any) and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and neither the
Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.
None of the Company, the Trustee or any agent of the Company or the
Trustee shall have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interest of a
Security in global form, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interest. Notwithstanding the
foregoing, with respect to any Security in global form, nothing herein shall
prevent the Company or the Trustee or any agent of the Company or the Trustee
from giving effect to any written certification, proxy or other authorization
furnished by any Common Depositary (or its nominee), as a Holder, with respect
to such Security in global form or impair, as between such Common Depositary and
owners of beneficial interests in such Security in global form, the operation of
customary practices governing the exercise of the right of such Common
Depositary (or its nominee) as holder of such Security in global form.
SECTION 309. CANCELLATION.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly cancelled by it. The Company may at any time deliver to
the Trustee for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in exchange for any
Securities cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Securities shall be held by the Trustee and may
be destroyed (and, if so destroyed, certification of their destruction shall be
delivered to the Company, unless, by a Company Order, the Company shall direct
that cancelled Securities be returned to it).
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a 360-day year consisting of twelve 30-day months.
ARTICLE 4
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall cease to be of further effect (except as to any
surviving rights of registration of transfer or exchange of Securities herein
expressly provided for or in the form of security for such series), when the
Trustee, upon Company Request and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture,
when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 306 and (ii) Securities for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Company and thereafter repaid to the Company or discharged
from such trust, as provided in Section 1009) have been delivered to the Trustee
for cancellation; or
22
<PAGE> 30
(B) all such Securities not theretofore delivered to the Trustee
for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year, or
(iii) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has deposited with the
Trustee as trust funds in trust for the purpose an amount sufficient to pay and
discharge the entire indebtedness on such Securities not theretofore delivered
to the Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which have
become due and payable) or the Stated Maturity or Redemption Date, as the case
may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent provided
for herein relating to the satisfaction and discharge of this Indenture have
been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Company to any Authenticating Agent under Section 614 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1009 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1009, all
money deposited with the Trustee pursuant to Section 401 shall be held in trust
and applied by it, in accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with or
received by the Trustee.
ARTICLE 5
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"EVENT OF DEFAULT," wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or to be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(1) the Company defaults in the payment of interest on any Security of
that series when such interest becomes due and payable and the default continues
for a period of 30 days; provided, however, that if the Company is permitted by
the terms of the Securities of the applicable series to defer the payment in
question, the date on which such payment is due and payable shall be the date on
which the Company is required to make payment following such deferral, if such
deferral has been elected pursuant to the terms of the Securities; or
(2) the Company defaults in the payment of the principal of (or
premium, if any, on) any Security of that series when the same becomes due and
payable at Maturity, upon redemption (including redemptions under Article 11),
or otherwise; provided, however, that if the Company is permitted by the terms
of the Securities of the applicable series to defer the payment in question, the
date on which such payment is due and payable shall be the
23
<PAGE> 31
date on which the Company is required to make payment following such deferral,
if such deferral has been elected pursuant to the terms of the Securities; or
(3) the Company fails to observe or perform any of its other covenants,
warranties or agreements in the Securities of that series or this Indenture
(other than a covenant, agreement or warranty a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of series of
Securities other than that series), and the failure to observe or perform
continues for the period and after the notice specified in the last paragraph of
this Section; or
(4) any Event of Default under any series of Securities issued pursuant
to this Indenture or any event of default, as defined in any other Indenture,
mortgage, indenture, or instrument under which there may be issued, or by which
there may be secured or evidenced, any Indebtedness of the Company or a
Subsidiary (whether such Indebtedness now exists or shall hereafter be created
or incurred) shall occur and shall consist of default in the payment of such
Indebtedness at the maturity thereof (after giving effect to any applicable
grace period) or shall result in Indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and payable,
and such default in payment is not cured or such acceleration shall not be
rescinded or annulled within 10 days after written notice to the Company from
the Trustee or to the Company and to the Trustee from the Holders of at least
10% in aggregate principal amount of the Securities of that series at the time
outstanding; provided that it shall not be an Event of Default if the principal
amount of Indebtedness (other than Indebtedness represented by Securities issued
pursuant to this Indenture) which is not paid at maturity or the maturity of
which is accelerated is less than the amount equal to 1% of the Company's
consolidated total assets (determined as of its most recent fiscal year-end)
provided further that if, prior to a declaration of acceleration of the maturity
of the Securities of that series or the entry of judgment in favor of the
Trustee in a suit pursuant to Section 503, such default shall be remedied or
cured by the Company or waived by the holders of such Indebtedness, then the
Event of Default hereunder by reason thereof shall be deemed likewise to have
been thereupon remedied, cured or waived without further action upon the part of
either the Trustee or any of the Holders of the Securities of that series, and
provided further, that, subject to Sections 601 and 602, the Trustee shall not
be charged with knowledge of any such default unless written notice of such
default shall have been given to the Trustee by the Company, by a holder or an
agent of a holder of any such Indebtedness, by the trustee then acting under any
indenture or other instrument under which such default shall have occurred, or
by the Holders of at least five percent in aggregate principal amount of the
Securities of that series at the time outstanding; or
(5) the Company pursuant to or within the meaning of any Bankruptcy Law
(A) commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (B) consents to the entry of a judgment, decree or order for
relief against it in an involuntary case or proceeding under any Bankruptcy Law,
(C) consents to or acquiesces in the institution of bankruptcy or insolvency
proceedings against it, (D) applies for, consents to or acquiesces in the
appointment of or taking possession by a Custodian of the Company or for any
material part of its property, (E) makes a general assignment for the benefit of
its creditors or (F) takes any corporate action in furtherance of or to
facilitate, conditionally or otherwise, any of the foregoing; or
(6) (i) 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 any material part 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 (ii) any bankruptcy or insolvency petition or application
is filed, or any bankruptcy or insolvency proceeding is commenced against the
Company and such petition, application or proceeding is not dismissed within 60
days; or (iii) a warrant of attachment is issued against any material portion of
the property of the Company which is not released within 60 days of service; or
(7) any other Event of Default provided with respect to Securities of
that series.
A Default under clause (3) above is not an Event of Default until the
Trustee or the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series notify the Company of the Default and the
Company does not cure the Default within 60 days after receipt of the notice.
The notice must specify the
24
<PAGE> 32
Default, demand that it be remedied and state that the notice is a "Notice of
Default." When a Default under clause (3) above is cured within such 60-day
period, it ceases.
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default with respect to Securities of any series (other
than an Event of Default specified in clause (5) or (6) of Section 501) occurs
and is continuing, the Trustee by notice in writing to the Company, or the
Holders of at least 25% in aggregate principal amount of the Outstanding
Securities of that series by notice in writing to the Company and the Trustee,
may declare the unpaid principal of and accrued interest to the date of
acceleration (or, if the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms of that series) on all the Outstanding Securities of that series to be due
and payable immediately and, upon any such declaration, the Outstanding
Securities of that series (or specified principal amount) shall become and be
immediately due and payable.
If an Event of Default specified in clause (5) or (6) of Section 501
occurs, all unpaid principal of and accrued interest on the Outstanding
Securities of that series (or specified principal amount) 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 of any Security of that series.
Upon payment of all such principal and interest, all of the Company's
obligations under the Securities of that series and (upon payment of the
Securities of all series) this Indenture shall terminate, except obligations
under Section 607.
The Holders of a majority in principal amount of the Outstanding
Securities of that series by notice to the Trustee may rescind an acceleration
and its consequences if (i) all existing Events of Default, other than the
nonpayment of the principal and interest of the Securities of that series that
has become due solely by such declaration of acceleration, have been cured or
waived, (ii) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal that has become due
otherwise than by such declaration of acceleration have been paid, (iii) the
rescission would not conflict with any judgment or decree of a court of
competent jurisdiction and (iv) all payments due to the Trustee and any
predecessor Trustee under Section 607 have been made.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if:
(1) default is made in the payment of any interest on any Security of
any series when such interest becomes due and payable and such default continues
for a period of 30 days, or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security of any series at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
or rates prescribed therefor in such Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
25
<PAGE> 33
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series by
such appropriate judicial proceedings as the Trustee shall deem most effectual
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to secure any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such 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 agent and
counsel) and of the Holders allowed in such judicial proceedings, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any custodian,
receiver, assignee, trustee, liquidator, sequestrator or other similar official
in any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS
WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Securities
may be prosecuted and enforced by the Trustee without the possession of any of
the Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery of judgment shall, after
provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article in respect
of the Securities of any series shall be applied in the following order, at the
date or dates fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest, upon
presentation of the Securities in respect of which moneys have been collected
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
First: To the payment of all amounts due the Trustee under Section 607
applicable to such series;
Second: To the payment of the amounts then due and unpaid for principal
of (and premium, if any) and interest on the Securities of such series in
respect of which or for the benefit of which such money has been
26
<PAGE> 34
collected, ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities of such series for principal (and
premium, if any) and interest, respectively; and
Third: To the Company.
The Trustee may fix a record date and payment date for any payment to
Holders pursuant to this Section 506. At least fifteen (15) days before such
record date, the Trustee shall mail to each Holder and the Company a notice that
states the record date, the payment date and the amount to be paid.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this Indenture,
or for the appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default with respect to the Securities of that series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in its own
name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of Holders of Securities of
any series shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or prejudice the
rights of any other of such Holders, or to obtain or to seek to obtain priority
or preference over any other of such Holders or to enforce any right under this
Indenture, except in the manner herein provided and for the equal and ratable
benefit of all Holders of Securities of the affected series.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date) and to institute suit for the enforcement of any such payment, and such
rights shall not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding has been instituted.
27
<PAGE> 35
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Securities in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the Trustee
or to the Holders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or ln equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and remedy given by this Article or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of a majority in principal amount of the Outstanding
Securities of any series shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the
Securities of such series, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; and
(3) subject to Section 601, the Trustee need not take any action which
might involve the Trustee in personal liability or be unduly prejudicial to the
Holders not joining therein.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may by written notice to the Trustee on
behalf of the Holders of all the Securities of such series waive any Default or
Event of Default with respect to such series and its consequences, except a
Default or Event of Default
(1) in respect of the payment of the principal of (or premium, if any)
or interest on any Security of such series, or
(2) in respect of a covenant or other provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder of
each Outstanding Security of such series affected.
Upon any such waiver, such Default or Event of Default shall cease to
exist and shall be deemed to have been cured, for every purpose of this
Indenture and the Securities of such series; but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
SECTION 514. UNDERTAKING FOR COSTS.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant
28
<PAGE> 36
in such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; but the provisions of this Section shall
not apply to any suit instituted by the Company, to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in principal amount of the Outstanding Securities of
any series, or to any suit instituted by any Holder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security on
or after the Stated Maturity or Maturities expressed in such Security (or, in
the case of redemption, on or after the Redemption Date).
ARTICLE 6
THE TRUSTEE
SECTION 601. CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE.
(a) Except during the continuance of an Event of Default, the Trustee's
duties and responsibilities under this Indenture shall be governed by Section
315(a) of the Trust Indenture Act.
(b) In case an Event of Default has occurred and is continuing, and is
known to the Trustee, the Trustee shall exercise the rights and powers vested in
it by this Indenture, and shall use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) None of the provisions of Section 315(d) of the Trust Indenture Act
shall be excluded from this Indenture.
SECTION 602. NOTICE OF DEFAULTS.
Within 30 days after the occurrence of any Default or Event of Default
with respect to the Securities of any series, the Trustee shall give to all
Holders of Securities of such series, as their names and addresses appear in the
Security Register, notice of such Default or Event of Default known to the
Trustee, unless such Default or Event of Default shall have been cured or
waived; provided, however, that, except in the case of a Default or Event of
Default in the payment of the principal of (or premium, if any) or interest on
any Security of such series or in the payment of any sinking fund installment
with respect to Securities of such series, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or directors or Responsible Officers of the Trustee in good faith
determine that the withholding of such notice is in the interest of the Holders
of Securities of such series.
SECTION 603. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) 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;
29
<PAGE> 37
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee security or indemnity to its reasonable satisfaction
against the costs, expenses and liabilities which might be incurred by it in
compliance with such request or direction;
(f) prior to the occurrence of an Event of Default with respect to the
Securities of any series and after the curing or waiving of all such Events of
Default which may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, approval or other paper or document, or the books and records of the
Company, unless requested in writing to do so by the Holders of a majority in
principal amount of the Outstanding Securities of any series; provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is not, in the opinion of the Trustee, reasonably assured to the
Trustee by the security afforded to it by the terms of this Indenture, the
Trustee may require reasonable indemnity against such costs, expenses or
liabilities as a condition to so proceeding; the reasonable expense of every
such investigation shall be paid by the Company or, if paid by the Trustee,
shall be repaid by the Company upon demand;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder; and
(h) the Trustee shall not be required to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder, or in the exercise of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 604. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company,
and the Trustee or any Authenticating Agent assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by the
Company of Securities or the proceeds thereof.
SECTION 605. MAY HOLD SECURITIES.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to Sections
608 and 613, may otherwise deal with the Company with the same rights it would
have if it were not Trustee, Authenticating Agent, Paying Agent, Security
Registrar or such other agent.
SECTION 606. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder (including amounts held by
the Trustee as Paying Agent) need not be segregated from other funds except to
the extent required by law. The Trustee shall be under no liability for interest
on any money received by it hereunder except as otherwise agreed upon in writing
with the Company.
SECTION 607. COMPENSATION AND REIMBURSEMENT.
The Company agrees
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an express
trust);
30
<PAGE> 38
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability, damage, claim or expense, including taxes (other than taxes
based upon or determined or measured by the income of the Trustee), incurred
without gross negligence or bad faith on its part, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder.
When the Trustee incurs expenses or renders services in connection with
an Event of Default specified in Section 501(5) or Section 501(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section 607 shall survive this Indenture.
SECTION 608. DISQUALIFICATION; CONFLICTING INTERESTS.
The Trustee shall be disqualified only where such disqualification is
required by Section 310(b) of the Trust Indenture Act. Nothing shall prevent the
Trustee from filing with the Commission the application referred to in the
second to last paragraph of Section 310(b) of the Trust Indenture Act.
SECTION 609. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be eligible
to act as Trustee under Section 310(a)(1) of the Trust Indenture Act having a
combined capital and surplus of at least $50,000,000 subject to supervision or
examination by federal or State authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. Neither the Company nor any Person directly or indirectly
controlling, controlled by, or under common control with the Company may serve
as Trustee. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 610. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the Securities
of one or more series by giving w it en notice thereof to the Company. If the
instrument of acceptance by a successor Trustee required by Section 611 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect to the
Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
31
<PAGE> 39
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310(b) of the
Trust Indenture Act after written request therefor by the Company or by any
Holder who has been a bona fide Holder of a Security for at least six months; or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request here for by the Company or by any
such Holder of a Security who has been a bona fide Holder of a Security for at
least six months; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 315(e) of the
Trust Indenture Act, any Holder who has been a bona fide Holder of a security
for at least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause, with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or more
or all of such series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply with the
applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount of the
Outstanding Securities of such series delivered to the Company and the retiring
Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance
of such appointment in accordance with the applicable requirements of Section
611, become the successor Trustee with respect to the Securities of such series
and to that extent supersede the successor Trustee appointed by the Company with
respect to such Securities. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company or the
Holders and accepted appointment in the manner required by Section 611, any
Holder who has been a bona fide Holder of a security of such series for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal
of the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses appear in the
security Register. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
SECTION 611. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
32
<PAGE> 40
(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee, and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing herein or
in such supplemental Indenture shall constitute such Trustees co-trustees of the
same trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee shall become
effective to the extent provided therein and each such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company or any successor Trustee, such
retiring Trustee shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee hereunder with
respect to the Securities of that or those series to which the appointment of
such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts referred
to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under the Trust Indenture Act.
SECTION 612. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any 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 with the same effect
as if such successor Trustee had itself authenticated such Securities.
SECTION 613. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship listed in Section 311(b) of the Trust
Indenture Act. A Trustee who has resigned or been removed shall be subject to
Section 311(a) of the Trust Indenture Act to the extent indicated therein.
SECTION 614. APPOINTMENT OF AUTHENTICATING AGENT.
At any time when any of the Securities remain Outstanding the Trustee
may appoint an Authenticating Agent or Agents with respect to one or more series
of Securities which shall be authorized to act on behalf of, and subject to the
direction of, the Trustee to authenticate Securities of such series issued upon
exchange, registration of transfer or partial redemption thereof or pursuant to
Section 306, and Securities so authenticated shall be entitled to the benefits
of this Indenture and shall be valid and obligatory for all purposes as if
authenticated by the Trustee hereunder. Wherever reference is made in this
Indenture to the authentication and delivery of Securities by the Trustee or the
Trustee's certificate of authentication, such reference shall be deemed to
include authentication and
33
<PAGE> 41
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the United
States of America, any State thereof or the District of Columbia, authorized
under such laws to act as Authenticating Agent, having a combined capital and
surplus of not less than $50,000,000 and subject to supervision or examination
by federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time terminate
the agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall mail written notice of
such appointment by first-class mail, postage prepaid, to all Holders of
Securities of the series with respect to which such Authenticating Agent will
serve, as their names and addresses appear in the security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
Form of Authenticating Agent's
Certificate of Authentication
Dated:
---------------------------
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
Wilmington Trust Company
As Trustee
By:
-------------------------------------
As Authenticating Agent
By:
-------------------------------------
Authorized Signatory
34
<PAGE> 42
ARTICLE 7
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not later than January 1 and July 1 in each year, a
list, in such form as the Trustee may reasonably require, of the names and
addresses of the Holders as of the preceding December 15 or June 15, as the case
may be; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
provided, however, that so long as the Trustee is the Security Registrar, no
such list shall be required to be furnished.
SECTION 702. PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 701 and the names and
addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants") apply
in writing to the Trustee, and furnish to the Trustee reasonable proof that each
such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Indenture or under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to transmit
then the Trustee shall, within five Business Days after the receipt of such
application, at its election, either
(i) afford such applicants access to the information preserved
at the time by the Trustee in accordance with Section 702(a); or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information preserved at the
time by the Trustee in accordance with Section 702(a), and as to the approximate
cost of mailing to such Holders the form of proxy or other communication, if
any, specified in such application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Holder whose name and address appears in the information preserved
at the time by the Trustee in accordance with Section 702(a) a copy of the form
of proxy or other communication which is specified in such request, with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Trustee, such mailing would be contrary to the best interest of the Holders
or would be in violation of applicable law. Such written statement shall specify
the basis of such opinion. If the Commission, after opportunity for a hearing
upon the objections specified in the written statement so filed, shall enter an
order refusing to sustain any of such objections or if, after the entry of an
order sustaining one or more of such objections, the Commission shall find,
after notice and opportunity for hearing, that all objections so sustained have
been met and shall enter an order so declaring, the Trustee shall mail copies of
such material to all such Holders with reasonable promptness after the entry of
such order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
35
<PAGE> 43
(c) Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that neither the Company nor the Trustee
nor any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with Section 702(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 702(b).
SECTION 703. REPORTS BY TRUSTEE.
(a) Within 60 days after May 15 of each year commencing with the year
1998, the Trustee shall transmit by mail to all Holders of Securities as
provided in Section 313(c) of the Trust Indenture Act, a brief report dated as
of May 15, if required by and in compliance with Section 313(a) of the Trust
Indenture Act.
(b) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Trustee with each stock exchange upon which any
Securities are listed, with the Commission and with the Company. The Company
will notify the Trustee when any Securities are listed on any stock exchange.
SECTION 704. REPORTS BY COMPANY.
The Company shall:
(1) file with the Trustee, within 30 days after the Company is required
to file the same with the Commission, 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 from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to either of
said Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic information, documents and
reports which may be required pursuant to Section 13 of the Exchange Act in
respect of a security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations;
(3) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, (a) concurrently with furnishing the same to
its shareholders, the Company's annual report to shareholders, containing
certified financial statements, and any other financial reports which the
Company generally furnishes to its shareholders, and (b) within 30 days after
the filing thereof with the Trustee, such summaries of any other information,
documents and reports required to be filed by the Company pursuant to paragraphs
(1) and (2) of this Section as may be required by rules and regulations
prescribed from time to time by the Commission; and
(4) furnish to the Trustee, on or before May 1 of each year, a brief
certificate from the principal executive officer, principal financial officer or
principal accounting officer as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Indenture. For purposes
of this paragraph, such compliance shall be determined without regard to any
period of grace or requirement of notice provided under this Indenture. Such
certificate need not comply with Section 102.
36
<PAGE> 44
ARTICLE 8
CONSOLIDATION, MERGER, LEASE, SALE OR TRANSFER
SECTION 801. WHEN COMPANY MAY MERGE, ETC.
The Company shall not consolidate with, or merge with or into any other
corporation (whether or not the Company shall be the surviving corporation), or
sell, assign, transfer or lease all or substantially all of its properties and
assets as an entirety or substantially as an entirety to any Person or group of
affiliated Persons, in one transaction or a series of related transactions,
unless:
(1) either the Company shall be the continuing Person or the Person (if
other than the Company) formed by such consolidation or with which or into which
the Company is merged or the Person (or group of affiliated Persons) to which
all or substantially all the properties and assets of the Company as an entirety
or substantially as an entirety are sold, assigned, transferred or leased shall
be a corporation (or constitute corporations) organized and existing under the
laws of the United States of America or any State thereof or the District of
Columbia and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of the Company under the Securities and this Indenture; and
(2) immediately before and after giving effect to such transaction or
series of related transactions, no Event of Default, and no Default, shall have
occurred and be continuing.
SECTION 802. OPINION OF COUNSEL.
The Company shall deliver to the Trustee prior to the proposed
transaction(s) covered by Section 801 an Officer's Certificate and an Opinion of
Counsel stating that the transaction(s) and such supplemental indenture comply
with this Indenture and that all conditions precedent to the consummation of the
transaction(s) under this Indenture have been met.
SECTION 803. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company with or merger by the Company
into an other corporation or any lease, sale, assignment, or transfer of all or
substantially all of the property and assets of the Company in accordance with
Section 801, the successor corporation formed by such consolidation or into
which the Company is merged or the successor corporation or affiliated group of
corporations to which such lease, sale, assignment, or transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture with the same effect as if such successor
corporation or corporations had been named as the Company herein, and
thereafter, except in the case of a lease, the predecessor corporation or
corporations shall be relieved of all obligations and covenants under this
Indenture and the Securities and in the event of such conveyance or transfer,
except in the case of a lease, any such predecessor corporation may be dissolved
and liquidated.
ARTICLE 9
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without notice to or the consent of any Holders, the Company, when authorized by
a Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to the Company
and the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
37
<PAGE> 45
(2) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to be for
the benefit of less than all series of Securities, stating that such covenants
are expressly being included solely for the benefit of series) or to surrender
any right or power herein conferred upon the Company; or
(3) to add any additional Events of Default with respect to all or any
series of Securities; or
(4) to add or change any of the provisions of this Indenture to such
extent as shall be necessary to permit or facilitate the issuance of Securities
in bearer form, registrable or not registrable as to principal, and with or
without interest coupons; or
(5) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only when
there is no Security Outstanding of any series created prior to the execution of
such supplemental Indenture which is entitled to the benefit of such provision;
or
(6) to secure the Securities; or
(7) to establish the form or terms of Securities of any series as
permitted by Sections 201 and 301; or
(8) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee with respect to the Securities of one or more series and
to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, pursuant to the requirements of Section
611(b); or
(9) to cure any ambiguity, defect or inconsistency or to correct or
supplement any provision herein which may be inconsistent with any other
provision herein; or
(10) to make any change that does not materially adversely affect the
interests of the Holders of Securities of any series.
Upon request of the Company, accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon receipt
by the Trustee of the documents described in (and subject to the last sentence
of) Section 903, the Trustee shall join with the Company in the execution of any
supplemental indenture authorized or permitted by the terms of this Indenture.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the written consent of the Holders of a majority in principal
amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
shall, subject to Section 903, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding security affected
thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof or extend the time for payment thereof, or reduce the amount
of the principal of an Original Issue Discount security that would be due and
payable upon a declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or currency in
which, any security or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on or after
the Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date);
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
38
<PAGE> 46
any waiver of compliance with certain provisions of this Indenture or Defaults
or Events of Default hereunder and their consequences provided for in this
Indenture; or
(3) change the redemption provisions (including Article Eleven) hereof
in a manner adverse to such Holder; or
(4) modify any of the provisions of this Section or Section 513, except
to increase any such percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the consent of the Holder of
each Outstanding Security affected thereby; provided, however, that this clause
shall not be deemed to require the consent of any Holder with respect to changes
in the references to "the Trustee" and concomitant changes in this Section, or
the deletion of this proviso, in accordance with the requirements of Sections
611(b) and 901(8).
A supplemental indenture which changes or eliminates any covenant or
other provisions of this Indenture which as expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
The Trustee shall sign any supplemental indenture authorized pursuant
to this Article, subject to the last sentence of this Section 903. In executing,
or accepting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Trustee shall be entitled to receive, and (subject to
Section 601) shall be fully protected in relying upon, an Officer's Certificate
and an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
Indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company shall
so determine, new Securities of any series so modified as to conform, ln the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticate and delivered by the
Trustee in exchange for Outstanding Securities of such series.
39
<PAGE> 47
ARTICLE 10
COVENANTS
SECTION 1001. PAYMENTS OF SECURITIES.
With respect to each series of Securities, the Company will duly and
punctually pay the principal of (and premium, if any) and interest on such
Securities in accordance with their terms and this Indenture, and will duly
comply with all the other terms, agreements and conditions contained in, or made
in the Indenture for the benefit of, the Securities of such series.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain an office or agency in each Place of Payment
where Securities may be surrendered for registration of transfer or exchange or
for presentation for payment,where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change ln
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the address of the Trustee as set forth in Section 105
hereof.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
Unless otherwise set forth in, or pursuant to, a Board Resolution or
indenture supplemental hereto with respect to a series of Securities, the
Company hereby initially designates the office of Wilmington Trust Company,
Corporate Trust Administration located in One First National Plaza, Mail Suite
0126, Chicago, Illinois 60670-0126 as such office of the Company.
SECTION 1003. CORPORATE EXISTENCE.
Subject to Article 8 hereof, 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 that of each of its Subsidiaries and the rights (charter and
statutory) of the Company and its Subsidiaries; provided, however, that (a) the
Company shall not be required to preserve any such right, license or franchise
or the corporate existence of any of its Subsidiaries if the Board of Directors,
or the board of directors of the Subsidiary concerned, as the case may be, shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or any of its Subsidiaries and that the loss thereof
is not materially disadvantageous to the Holders, and (b) nothing herein
contained shall prevent any Subsidiary of the Company from liquidating or
dissolving, or merging into, or consolidating with the Company (provided that
the Company shall be the continuing or surviving corporation) or with any one or
more Subsidiaries if the Board of Directors or the board of directors of the
Subsidiary concerned, as the case may be, shall so determine.
SECTION 1004. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge, or cause to be paid or discharged,
before the same shall become delinquent, (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 material lien upon the property of the Company or any Subsidiary;
provided, however, that the Company shall not be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which adequate provision has been made.
40
<PAGE> 48
SECTION 1005. MAINTENANCE OF PROPERTIES.
The Company will cause all material properties used or useful in the
conduct of its business or the business of any of its Subsidiaries to be
maintained and kept in good condition, repair and working order (normal wear and
tear excepted) and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary, so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section shall
prevent the Company from discontinuing the operation or maintenance of any of
such properties, or disposing of any of them, if such discontinuance or disposal
is, in the judgment of the Board of Directors or of the board of directors of
the Subsidiary concerned, as the case may be, desirable in the conduct of the
business of the Company or any Subsidiary of the Company and not materially
disadvantageous to the Holders.
SECTION 1006. COMPLIANCE CERTIFICATES.
(a) The Company shall deliver to the Trustee within 90 days after the
end of each fiscal year of the Company (which fiscal year currently ends on
December 31), an Officer's Certificate stating whether or not the signer knows
of any Default or Event of Default by the Company that occurred prior to the end
of the fiscal year and is then continuing. If the signer does know of such a
Default or Event of Default, the certificate shall describe each such Default or
Event of Default and its status and the specific section or sections of this
Indenture in connection with which such Default or Event of Default has
occurred. The Company shall also promptly notify the Trustee in writing should
the Company's fiscal year be changed so that the end thereof is on any date
other than the date on which the Company's fiscal year currently ends. The
certificate need not comply with Section 102 hereof.
(b) The Company shall deliver to the Trustee, within 10 days after the
occurrence thereof, notice of any acceleration which with the giving of notice
and the lapse of time would be an Event of Default within the meaning of Section
501(4) hereof.
(c) The Company shall deliver to the Trustee forthwith upon becoming
aware of a Default or Event of Default (but in no event later than 10 days after
the occurrence of each Default or Event of Default that is continuing), an
Officer's Certificate setting forth the details of such Default or Event of
Default and the action that the Company proposes to take with respect thereto
and the specific section or sections of this Indenture in connection with which
such Default or Event of Default has occurred.
SECTION 1007. COMMISSION REPORTS.
(a) The Company shall file with the Trustee, within 30 days after it
files them with the Commission, copies of the quarterly and 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)
which the Company is required to file with the Commission pursuant to Section 13
or 15(d) of the Exchange Act. If the Company is not subject to the requirement
of such Section 13 or 15(d) of the Exchange Act, the Company shall file with the
Trustee, within 30 days after it would have been required to file such
information with the Commission, financial statements, including any notes
thereto and, with respect to annual reports, an auditors' report by an
accounting firm of established national reputation and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations," both
comparable to that which the Company would have been required to include in such
annual reports, information, documents or other reports if the Company had been
subject to the requirements of such Sections 13 or 15(d) of the Exchange Act.
The Company also shall comply with the other provisions of Section 314(a) of the
Trust Indenture Act.
(b) So long as the Securities remain outstanding, the Company shall
cause its annual report to shareholders and any other financial reports
furnished by it to shareholders generally, to be mailed to the Holders at their
addresses appearing in the register of Securities maintained by the Security
Registrar in each case at the time of such mailing or furnishing to
shareholders. If the Company is not required to furnish annual or quarterly
reports to its shareholders pursuant to the Exchange Act, the Company shall
cause its financial statements, including any notes thereto and, with respect to
annual reports, an auditors' report by an accounting firm of established
national
41
<PAGE> 49
reputation and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," to be so filed with the Trustee and mailed to the
Holders within 90 days after the end of each of the Company's fiscal years and
within 45 days after the end of each of the first three quarters of each fiscal
year.
(c) The Company shall provide the Trustee with a sufficient number of
copies of all reports and other documents and information that the Company may
be required to deliver to the Holders under this Section 1007.
SECTION 1008. WAIVER OF STAY, EXTENSION OR USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim, and will actively resist any and all efforts to be compelled to take the
benefit or advantage of, any stay or extension law or any usury law or other
law, which would prohibit or forgive the Company from paying all or any portion
of the principal of and/or interest on the Securities as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 1009. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, prior to each due date of the principal of (and
premium, if any) or interest on any Securities of that series, deposit with a
Paying Agent a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due, such sum to be held in trust for the benefit of the
Persons entitled to such principal, premium or interest, and (unless such Paying
Agent is the Trustee) the Company will promptly notify the Trustee of its action
or failure to so act.
The Company will cause each Paying Agent for any series of Securities
(other than the Trustee) to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of the principal of (and
premium, if any) or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(ii) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities of that series) in the making of any payment
of principal (and premium, if any) or interest on the Securities of that series;
and
(iii) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of (and premium, if
any) or interest on any security of any series and remaining unclaimed
42
<PAGE> 50
for two years after such principal (and premium, if any) or interest has become
due and payable shall be paid to the Company on Company Request, or (if then
held by the Company) shall be discharged from such trust; and the Holder of such
security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee of
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in New York, New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
SECTION 1010. LIMITATION ON LIENS.
Neither the Company will, nor will it permit any Significant Subsidiary
to, create, incur, or suffer to exist any Lien in, of or on the property of the
Company or any of its Subsidiaries, except:
(i) Liens for taxes, assessments or governmental charges or levies on
its property if the same shall not at the time be delinquent or thereafter can
be paid without penalty or are being contested in good faith and by appropriate
proceedings and for which adequate reserves in accordance with generally
accepted principles of accounting shall have been set aside on its books.
(ii) Liens imposed by law, such as carriers', warehousemen's and
mechanics' liens and other similar liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books.
(iii) Liens arising out of pledges or deposits under worker's
compensation laws, unemployment insurance, old age pensions, or other social
security or retirement benefits, or similar legislation.
(iv) Utility easements, building restrictions and such other
encumbrances or charges against real property as are of a nature generally
existing with respect to properties of a similar character and which do not in
any material way affect the marketability of the same or interfere with the use
thereof in the business of the Company or its Subsidiaries.
(v) Liens on the capital stock, partnership interest, or other evidence
of ownership of any Subsidiary or such Subsidiary's assets that secure
financings for such Subsidiary.
(vi) Purchase money liens upon or in property now owned or hereafter
acquired in the ordinary course of business (consistent with the Company's
business practices) to secure (A) the purchase price of such property or (B)
Indebtedness incurred solely for the purpose of financing the acquisition,
construction, or improvement of any such property to be subject to such liens,
or Liens existing on any such property at the time of acquisition, or
extensions, renewals, or replacements of any of the foregoing for the same or a
lesser amount; provided that no such lien shall extend to or cover any property
other than the property being acquired, constructed, or improved and
replacements, modifications, and proceeds of such property, and no such
extension, renewal, or replacement shall extend to or cover any property not
theretofore subject to the Lien being extended, renewed, or replaced.
(vii) Liens existing on the date Securities are first issued hereunder.
(viii) Liens for no more than 90 days arising from a transaction
involving accounts receivable or third-party reimbursements of the Company
(including the sale of such accounts receivable or third-party reimbursements),
where such accounts receivable or third-party reimbursements arose in the
ordinary course of the Company's business.
43
<PAGE> 51
SECTION 1011. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
covenant or condition set forth in Sections 1010 or 1011 hereof, if before or
after the time for such compliance the Holders of not less than a majority in
principal amount of the Securities at the time Outstanding of each series which
is affected thereby, shall, by consent in writing of such Holders, either waive
such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or conditions except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such covenant or condition shall remain in full
force and effect.
ARTICLE 11
REDEMPTION OF SECURITIES
SECTION 1101. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any series)
in accordance with this Article.
SECTION 1102. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Company
of less than all the Securities of any series, the Company shall, at least 45
days prior to the Redemption Date fixed by the Company (unless a shorter notice
shall be satisfactory to the Trustee), notify the Trustee of such Redemption
Date and of the principal amount of Securities of such series to be redeemed. In
the case of any redemption of Securities prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officer's Certificate evidencing compliance with such restriction.
SECTION 1103. SELECTION BY TRUSTEE OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 90 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, substantially pro rata, by lot
or by any other method as the Trustee considers fair and appropriate and that
complies with the requirements of the principal national securities exchange, if
any, on which such Securities are listed, and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series; provided that
in case the Securities of such series have different terms and maturities, the
Securities to be redeemed shall be selected by the Company and the Company shall
give notice thereof to the Trustee.
The Trustee shall promptly notify the Company in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of the Securities shall
relate, in the case of any Securities redeemed or to be redeemed only in part,
to the portion of the principal amount of such Securities which has been or is
to be redeemed.
SECTION 1104. NOTICE OF REDEMPTION.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 45 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at this address appearing in
the security Register.
44
<PAGE> 52
All notices of redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any series are to be
redeemed, the identification (and, in the case of partial redemption, the
principal amounts) of the particular Securities to be redeemed;
(4) that on the Redemption Date the Redemption Price will be come due
and payable upon each such security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date;
(5) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(6) that the redemption is for a sinking fund, if such is the case;
(7) the CUSIP number, if any, of the Securities to be redeemed; and
(8) unless otherwise provided as to a particular series of Securities,
if at the time of publication or mailing of any notice of redemption the Company
shall not have deposited with the Trustee or Paying Agent and/or irrevocably
directed the Trustee or Paying Agent to apply, from money held by it available
to be used for the redemption of Securities, an amount in cash sufficient to
redeem all of the Securities called for redemption, including accrued interest
to the Redemption Date, such notice shall state that it is subject to the
receipt of the redemption moneys by the Trustee or Paying Agent before the
Redemption Date (unless such redemption is mandatory) and such notice shall be
of no effect unless such moneys are so received before such date.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
SECTION 1105. DEPOSIT OF REDEMPTION PRICE.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1009) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued interest on, all the Securities
which are to be redeemed on that date.
SECTION 1106. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such security for redemption in accordance with said notice, such security shall
be paid by the Company at the Redemption Price, together with 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, or one or more Predecessor Securities, registered as
such at the close of business on the relevant Regular or Special Record Dates
according to their terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
thereof or in the security.
45
<PAGE> 53
SECTION 1107. SECURITIES REDEEMED IN PART.
Any Security which is to be redeemed only in part shall be surrendered
at an office or agency of the Company at a Place of Payment therefor (with, if
the Company or the Trustee so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in writing), and
the Company shall execute, and the Trustee shall authenticate and deliver to the
Holder of such security without service charge, a new Security or Securities of
the same series and Stated Maturity, of any authorized denomination as requested
by such Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the security so surrendered.
ARTICLE 12
SINKING FUNDS
SECTION 1201. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series, except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "Mandatory Sinking
Fund Payment," and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "Optional
Sinking Fund Payment." If provided for by the terms of Securities of any series,
the cash amount of any sinking fund payment may be subject to redemption as
provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1202. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (1) may deliver Securities of a series (other than any
Securities previously called for redemption) and (2) may apply as a credit
Securities of a series which have been redeemed either at the election of the
Company pursuant to the terms of such Securities or through the application of
permitted optional sinking fund payments pursuant to the terms of such
Securities, in each case in satisfaction of all or any part of any sinking fund
payment with respect to the Securities of such series required to be made
pursuant to the terms of such Securities as provided for by the terms of such
series; provided that such Securities have not been previously so credited. Such
Securities shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in such Securities for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
SECTION 1203. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officer's
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1104. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in the
manner stated in Sections 1106 and 1107.
46
<PAGE> 54
ARTICLE 13
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. APPLICABILITY OF ARTICLE; COMPANY'S OPTION TO
EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
Unless pursuant to Section 301 provision is made for the
inapplicability of either or both of (a) Defeasance of the Securities of a
series under Section 1302 or (b) Covenant Defeasance of the Securities of a
series under Section 1303, then the provisions of such Section or Sections, as
the case may be, together with the other provisions of this Article, shall be
applicable to the Securities of such series, and the Company may at its option
by Board Resolution, at any time, with respect to the Securities of such series,
elect to have either Section 1302 (unless inapplicable) or Section 1303 (unless
inapplicable) be applied to the Outstanding Securities of such series upon
compliance with the applicable conditions set forth below in this Article.
SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise of the option provided in Section 1301 to
defease the Outstanding Securities of a particular series, the Company shall be
discharged from its obligations with respect to the Outstanding Securities of
such series on the date the applicable conditions set forth in Section 1304 are
satisfied (hereinafter, "Defeasance"). Defeasance shall mean that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the Outstanding Securities of such series and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, shall execute
proper instruments acknowledging the same); provided, however, that the
following rights, obligations, powers, trusts, duties and immunities shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities of such series to receive, solely from the
trust fund provided for in Section 1304, payments in respect of the principal of
(and premium, if any) and interest on such Securities when such payments are
due, (B) the Company's obligations with respect to such Securities under
Sections 304, 305, 306, 1002 and 1009, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and (D) this Article. Subject to
compliance with this Article, the Company may exercise its option with respect
to Defeasance under this Section 1302 notwithstanding the prior exercise of its
option with respect to Covenant Defeasance under Section 1303 in regard to the
Securities of such series.
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise of the option provided in Section 1301 to
obtain a Covenant Defeasance with respect to the Outstanding Securities of a
particular series, the Company shall be released from its obligations under this
Indenture (except its obligations under Sections 304, 305, 306, 506, 509, 610,
1001, 1002, 1006, 1008 and 1009) with respect to the Outstanding Securities of
such series on and after the date the applicable conditions set forth in Section
1304 are satisfied (hereinafter, "Covenant Defeasance"). Covenant Defeasance
shall mean that, with respect to the Outstanding Securities of such series, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in this Indenture (except its
obligations under Sections 304, 305, 306, 506, 509, 610, 1001, 1002, 1006, 1008
and 1009), whether directly or indirectly by reason of any reference elsewhere
herein or by reason of any reference to any other provision herein or in any
other document, and such omission to comply shall not constitute an Event of
Default under Section 501(4) with respect to Outstanding Securities of such
series, and the remainder of this Indenture and of the Securities of such series
shall be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to Defeasance under Section 1302
and Covenant Defeasance under Section 1303 with respect to the Outstanding
Securities of a particular series:
(1) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 609 who shall agree to comply with the provisions of this Article
applicable to it), under the terms of an irrevocable trust agreement in form and
substance reasonably
47
<PAGE> 55
satisfactory to such Trustee, as trust funds in trust for the purpose of making
the following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities, (A) Dollars in an
amount, or (B) U.S. Government Obligations which through the scheduled payment
of principal and interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, money in an amount, or (C)
a combination thereof, in each case sufficient, 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 delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, (i) the principal of (and
premium, if any, on) and each installment of principal of (and premium, if any)
and interest on the Outstanding Securities of such series on the Stated Maturity
of such principal or installment of principal or interest and (ii) any mandatory
sinking fund payments or analogous payments applicable to the Outstanding
Securities of such series on the day on which such payments are due and payable
in accordance with the terms of this Indenture and of such Securities.
(2) No Default or Event of Default with respect to the Securities of
such series shall have occurred and be continuing on the date of such deposit or
shall occur as a result of such deposit, and no Default or Event of Default
under clause (5) or (6) of Section 501 hereof shall occur and be continuing, at
any time during the period ending on the 31st day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until the
expiration of such period).
(3) Such deposit, Defeasance or Covenant Defeasance shall not result in
a breach or violation of, or constitute a default under, any other agreement or
instrument to which the Company is a party or by which it is bound.
(4) Such Defeasance or Covenant Defeasance shall not cause any
Securities of such series then listed on any national securities exchange
registered under the Exchange Act to be delisted.
(5) In the case of an election with respect to Section 1302, the
Company shall have delivered to the Trustee either (A) a ruling directed to the
Trustee received from the Internal Revenue Service to the effect that the
Holders of the Outstanding Securities of such series will not recognize income,
gain or loss for federal income tax purposes as a result of such 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 Defeasance had not
occurred or (B) an Opinion of Counsel, based on such ruling or on a change in
the applicable federal income tax law since the date of this Indenture, in
either case to the effect that, and based thereon such opinion shall confirm
that, the Holders of the Outstanding Securities of such series will not
recognize income, gain or loss for federal income tax purposes as a result of
such 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
Defeasance had not occurred.
(6) In the case of an election with respect to Section 1303, the
Company shall have delivered to the Trustee an Opinion of Counsel or a ruling
directed to the Trustee received from the Internal Revenue Service to the effect
that the Holders of the Outstanding Securities of such series will not recognize
income, gain or loss for federal income tax purposes as a result of such
Covenant 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 Covenant Defeasance had not occurred.
(7) Such Defeasance or Covenant Defeasance shall be effected in
compliance with any additional terms, conditions or limitations which may be
imposed on the Company in connection therewith pursuant to Section 301.
(8) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the Defeasance under Section 1302 or
the Covenant Defeasance under Section 1303 (as the case may be) have been
complied with.
48
<PAGE> 56
SECTION 1305. DEPOSITED MONEY AND GOVERNMENT OBLIGATIONS
TO BE HELD IN TRUST.
Subject to the provisions of the last paragraph of Section 1009, all
money and Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee--collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 in respect of the
Outstanding Securities of a particular series shall be held in trust and applied
by the Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Holders of such Securities of all sums due and to become due
thereon in respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Government Obligations deposited
pursuant to Section 1304 or the principal and interest received in respect
thereof, other than any such tax, fee or other charge which by law is for the
account of the Holders of the Outstanding Securities of such series.
Anything in this Article to the contrary notwithstanding, the Trustee
shall deliver to pay to the Company from time to time upon Company Request any
money or Government Obligations held by it as provided ln Section 1304 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited for
the purpose for which such money or Government Obligations were deposited.
ARTICLE 14
SUBORDINATION
SECTION 1401. AGREEMENT OF SECURITYHOLDERS THAT SECURITIES
SUBORDINATED TO EXTENT PROVIDED.
The Company, for itself, its successors and assigns, covenants and
agrees and each Holder of the Securities by his acceptance thereof likewise
covenants and agrees that the payment of the principal of, premium, if any, and
interest on each and all of the Securities is hereby expressly subordinated, to
the extent and in the manner hereinafter set forth, to the prior payment in full
of the Senior Indebtedness. The provisions of this Article shall constitute a
continuing offer to all persons who continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are hereby made obligees hereunder the same as if their names
were written herein as such, and they and/or each of them may proceed to enforce
such provisions.
SECTION 1402. COMPANY NOT TO MAKE PAYMENTS WITH RESPECT
TO SECURITIES IN CERTAIN CIRCUMSTANCES.
(a) Upon the maturity of the Senior Indebtedness by lapse of time,
acceleration or otherwise, all principal thereof and premium, if any, and
interest thereon shall first be paid in full, or such payment duly provided for
in cash or in a manner satisfactory to the holder or holders of such Senior
Indebtedness, before any payment is made on account of the principal of or
premium, if any, or interest on the Securities or to acquire any of the
Securities or on account of any sinking fund (except sinking fund payments made
in Securities acquired by the Company before the maturity of such Senior
Indebtedness).
(b) Upon the happening of (i) an event of default with respect to the
Senior Indebtedness, as such event of default is defined therein or in the
instrument under which it is outstanding, permitting the holders to accelerate
the maturity thereof, or (ii) an event which, with the giving of notice, or
lapse of time, or both, would constitute such an event of default, then, unless
and until such event shall have been cured or waived or shall have ceased to
exist, no payment shall be made by the Company with respect to the principal of
or premium, if any, or interest on the Securities or to acquire any of the
Securities or on account of any sinking fund for the Securities (except sinking
fund payments made in Securities acquired by the Company before such default and
notice thereof).
49
<PAGE> 57
(c) In the event that notwithstanding the provisions of this Section
1402 the Company shall make any payment to the Trustee on account of the
principal of or premium, if any, or interest on the Securities, or on account of
any sinking fund, or the Holders of the Securities shall receive any such
payment, after the happening of a default in payment of the principal of or
premium, if any, or interest on the Senior Indebtedness, then, unless and until
such default or event of default shall have been cured or waived or shall have
ceased to exist, such payment (subject to the provisions of Section 1406) shall
be held by the Trustee or the Holders of the Securities, as the case may be, in
trust for the benefit of, and shall be paid forthwith over and delivered to, the
holders of Senior Indebtedness (pro rata as to each of such holders on the basis
of the respective amounts of Senior Indebtedness held by them) or their
representative or the trustee under the agreement (if any) pursuant to which any
instruments evidencing the Senior Indebtedness was issued, as their respective
interests may appear, for application to the payment of the Senior Indebtedness
remaining unpaid to the extent necessary to pay the Senior Indebtedness in full
in accordance with the terms of such Senior Indebtedness. The Company shall give
prompt written notice to the Trustee of any default under the Senior
Indebtedness or under any agreement pursuant to which such Senior Indebtedness
was issued.
SECTION 1403. SECURITIES SUBORDINATED TO PRIOR PAYMENT OF THE SENIOR
INDEBTEDNESS ON DISSOLUTION, LIQUIDATION OR
REORGANIZATION OF COMPANY.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company (whether in bankruptcy,
insolvency or receivership proceedings or upon an assignment for the benefit of
creditors or otherwise):
(a) the holders of the Senior Indebtedness shall first be entitled to
receive payment in full of the principal thereof, premium, if any, and interest
due thereon before the Holders of the Securities are entitled to receive any
payment on account of the principal of, premium, if any, or interest on the
Securities;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to which the Holders of the
Securities or the Trustees would be entitled except for the provisions of this
Article Fourteen, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or other trustee or agent, directly to the
holders of the Senior Indebtedness or their representative or representatives,
or to the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, to the extent
necessary to make payment in full of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution or provision
therefor to the holders of such Senior Indebtedness;
(c) in the event that notwithstanding the foregoing provisions of this
Section 1403, any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, shall be received by the
Trustee or the Holders of the Securities on account of principal, premium, if
any, or interest on the Securities before the Senior Indebtedness is paid in
full, or effective provision made for its payment, such payment or distribution
(subject to the provisions of Section 1406 and 1407) shall be received and held
in trust for and shall be paid over to the holders of the Senior Indebtedness
remaining unpaid or unprovided for or their representative or representatives,
or to the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, for application
to the payment of such Senior Indebtedness until all such Senior Indebtedness
shall have been paid in full.
SECTION 1404. SECURITY HOLDERS TO BE SUBROGATED TO RIGHT OF HOLDERS
OF SENIOR INDEBTEDNESS.
Subject to the payment in full of the Senior Indebtedness, the Holders
of the Securities shall be subrogated to the rights of the holders of Senior
Indebtedness to receive payments or distributions of assets of the Company
applicable to the Senior Indebtedness until all amounts owing on the Securities
shall be paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Company or by or on behalf of the Holders of the Securities by virtue of this
Article which otherwise would have been made to the Holders of the Securities
shall, as between the Company and the Holders of the Securities,
50
<PAGE> 58
be deemed to be payment by the Company to or on account of the Senior
Indebtedness, it being understood that the provisions of this Article Fourteen
are and are intended solely for the purpose of defining the relative rights of
the Holders of the Securities, on the one hand, and the holders of the Senior
Indebtedness, on the other hand.
SECTION 1405. OBLIGATION OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article Fourteen or elsewhere in this
Indenture or in the Securities is intended to or shall impair as between the
Company and the Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the Securities 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 of the Securities and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or the Holder of any
security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
Fourteen of the holders of Senior Indebtedness in respect of cash, property, or
securities of the Company received upon the exercise of any such remedy. Upon
any distribution of assets of the Company referred to in this Article Fourteen,
the Trustee, subject to the provisions of Section 601, and the Holders of the
Securities shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending, or a certificate of the liquidating
trustee or agent or other person making any distribution to the Trustee or to
the Holders of the Securities, for the purpose of ascertaining the persons
entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Fourteen.
SECTION 1406. TRUSTEE ENTITLED TO ASSUME PAYMENTS NOT PROHIBITED
IN ABSENCE OF NOTICE.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment of monies
to or by the Trustee, unless and until a Responsible Officer of the Trustee
shall have received written notice thereof from the Company or from one or more
holders of Senior Indebtedness or from any trustee therefor; and, prior to the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 601, shall be entitled to assume conclusively that no such facts exist.
SECTION 1407. APPLICATION BY TRUSTEE OF MONIES DEPOSITED WITH IT.
Anything in this Indenture to the contrary notwithstanding, any deposit
of monies by the Company with the Trustee or any Paying Agent (whether or not in
trust) for the payment of the principal of or premium, if any, or interest on
any Securities shall be subject to the provisions of Sections 1401, 1402, 1403
and 1404 except that, if prior to the date on which by the terms of this
Indenture any such monies may become payable for any purpose (including, without
limitation, the payment of either the principal of or the interest or premium,
if any, on any Security) a Responsible Officer of the Trustee shall not have
received with respect to such monies the notice provided for in Section 1406,
then, anything herein contained to the contrary notwithstanding, the Trustee
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 affected by any
notice to the contrary which may be received by it on or after such date.
SECTION 1408. SUBORDINATION RIGHTS NOT IMPAIRED BY ACTS OR OMISSIONS OF
COMPANY OR HOLDERS OF SENIOR INDEBTEDNESS.
No right of any present or future holders of 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 on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
51
<PAGE> 59
SECTION 1409. SECURITY HOLDERS AUTHORIZE TRUSTEE TO EFFECTUATE
SUBORDINATION OF SECURITIES.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article Fourteen and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or otherwise)
tending towards liquidation of the business and assets of the Company, the
immediate filing of a claim for the unpaid balance of its or his Securities in
the form required in said proceedings and cause said claim to be approved. If
the Trustee does not file a proper claim or proof of debt in the form required
in such proceeding prior to 30 days before the expiration of the time to file
such claim or claims, then the holder or holders of Senior Indebtedness are
hereby authorized to and have the right to file an appropriate claim for and on
behalf of the holders of said Securities.
SECTION 1410. RIGHT OF TRUSTEE TO HOLD SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all of the rights set forth in this
Article Fourteen in respect of the Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in
Section 613 or elsewhere in this Indenture shall be construed to deprive the
Trustee of any of its rights as such holder.
SECTION 1411. ARTICLE FOURTEEN NOT TO PREVENT EVENTS OF DEFAULT.
The failure to make a payment on account of principal, interest or
sinking fund by reason of any provision in this Article Fourteen shall not be
construed as preventing the occurrence of an Event of Default under Section 501.
ARTICLE 15
MISCELLANEOUS
SECTION 1501. MISCELLANEOUS.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
OWENS CORNING
By /s/
----------------------------------------
Name:
Title:
Attest:
/s/
- ----------------------------------
Name:
Title:
(Signatures continued on following page)
52
<PAGE> 60
WILMINGTON TRUST COMPANY, as Trustee
By /s/
----------------------------------------
Name:
Title:
Attest:
/s/
-----------------------------
Name:
Title:
53
<PAGE> 1
Exhibit 4.8.3
------------------------------------------
FORM OF FIRST SUPPLEMENTAL INDENTURE
DATED AS OF ________ , 1997
BETWEEN
OWENS CORNING,
AS ISSUER
AND
WILMINGTON TRUST COMPANY,
AS TRUSTEE
------------------------------------------
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.1. Definition of Terms....................................................................1
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. Designation and Principal Amount ......................................................2
SECTION 2.2. Maturity .............................................................................2
SECTION 2.3. Form of Payment........................................................................3
SECTION 2.4. Global Debenture.......................................................................3
SECTION 2.5. Interest ..............................................................................4
SECTION 2.6 No Sinking Fund........................................................................5
ARTICLE III
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.1. Extension of Interest Payment Period...................................................5
SECTION 3.2 Notice of Extension....................................................................6
SECTION 3.3. Limitation of Transactions.............................................................6
SECTION 3.4 Option to Put Debentures...............................................................6
SECTION 3.5 Repurchase Procedure for Debentures....................................................7
ARTICLE IV
EXPENSES
SECTION 4.1 Payment of Expenses....................................................................8
SECTION 4.2 Payment Upon Resignation or Removal....................................................8
ARTICLE V
NOTICE
SECTION 5.1 Notice by the Company..................................................................8
ARTICLE VI
FORM OF DEBENTURE
SECTION 6.1. Form of Debenture......................................................................9
ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.1. Original Issue of Debentures..........................................................15
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
ARTICLE VIII
MISCELLANEOUS
<S> <C> <C>
SECTION 8.1. Ratification of Indenture.............................................................15
SECTION 8.2. Trustee Not Responsible for Recitals..................................................15
SECTION 8.3. Governing Law.........................................................................15
SECTION 8.4. Separability..........................................................................15
SECTION 8.5. Counterparts .........................................................................15
</TABLE>
ii
<PAGE> 4
FIRST SUPPLEMENTAL INDENTURE, dated as of , 1997 (the "First Supplemental
Indenture"), between OWENS CORNING, a corporation duly organized and existing
under the laws of the State of Delaware, having its principal office at Owens
Corning World Headquarters, Toledo, Ohio 43659 (the "Company" ), and Wilmington
Trust Company, as trustee (the "Trustee").
WHEREAS, the Company executed and delivered the indenture dated as of ,
1997 (the "Base Indenture"), to the Trustee to provide for the future issuance
of the Company's unsecured debentures, notes or other evidence of indebtedness
(the "Securities" ), to be issued from time to time in one or more series as
might be determined by the Company under the Base Indenture;
WHEREAS, pursuant to the terms of the Base Indenture, the Company desires
to provide for the establishment of a new series of its Securities to be known
as its Debentures due _______ (the "Debentures"), the form and substance of such
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in the Base Indenture and this First Supplemental Indenture (together,
the "Indenture");
WHEREAS, Owens Corning Capital Trust II, a Delaware statutory business
trust (the "Trust"), has offered to the public $___ million aggregate
liquidation amount of its __% Trust Originated Preferred Securities (the
"Preferred Securities"), representing undivided beneficial interests in the
assets of the Trust and proposes to invest the proceeds from such offering,
together with the proceeds of the issuance and sale by the Trust to the Company
of $___ million aggregate liquidation amount of its __% Trust Originated Common
Securities (the "Common Securities" and together with the Preferred Securities,
the "Trust Securities"), in $___ million aggregate principal amount of the
Debentures; and
WHEREAS, the Company has requested that the Trustee execute and deliver
this First Supplemental Indenture and all requirements necessary to make this
First Supplemental Indenture a valid instrument in accordance with its terms,
and to make the Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed, and the execution and delivery of this First Supplemental Indenture
has been duly authorized in all respects:
NOW THEREFORE, in consideration of the purchase and acceptance of the
Debentures by the Holders thereof, and for the purpose of setting forth, as
provided in the Indenture, the form and substance of the Debentures and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS.
Unless the context otherwise requires:
(a) a term defined in the Indenture has the same meaning when used in this
First Supplemental Indenture;
(b) a term defined anywhere in this First Supplemental Indenture has the
same meaning throughout;
(c) the singular includes the plural and vice versa;
(d) headings are for convenience of reference only and do not affect
interpretation;
(e) the following terms have the meanings given to them in the
Declaration: (i) Authorized Newspaper; (ii) Business Day; (ii) Clearing Agency;
(iii) Delaware Trustee; (iv) DTC; (v) Growth PRIDES; (vi) Income PRIDES; (vii)
Institutional Trustee; (viii) Investment Company Event; (ix) Preferred Security
Certificate; (x) Pricing
<PAGE> 5
Agreement; (xi) Regular Trustees; (xii) Reset Agent; (xiii) Reset Announcement
Date; (xiv) Reset Spread; (xv) Two-Year Benchmark Treasury; and (xvi)
Underwriting Agreement;
(f) the following terms have the meanings given to them in this Section
1.11(f):
"Additional Interest" shall have the meaning set forth in Section 2.5.
"Compounded Interest" shall have the meaning set forth in Section 3.1.
"Coupon Rate" shall have the meaning set forth in Section 2.5.
"Debenture Repayment Price" shall have the meaning set forth in Section
3.4.
"Declaration" means the Amended and Restated Declaration of Trust of Owens
Corning Capital Trust II, a Delaware statutory business trust, dated as of
_____________, 1997.
"Deferred Interest" shall have the meaning set forth in Section 3.1
hereof.
"Dissolution Event" means that, as a result of the occurrence and
continuation of an Investment Company Event, the Trust is to be dissolved in
accordance with the Declaration, and the Debentures held by the Institutional
Trustee are to be distributed to the holders of the Trust Securities issued by
the Trust pro rata in accordance with the Declaration.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 3.1.
"Global Debentures" shall have the meaning set forth in Section 2.4.
"Maturity Date" means the date on which the Debentures mature and on which
the principal shall be due and payable together with all accrued and unpaid
interest thereon including Compounded Interest and Additional Interest, if any.
"Non Book-Entry Preferred Securities" shall have the meaning set forth in
Section 2.4.
"Purchase Contract" means the Purchase Contract Agreement, dated as of
_______, 1997, between the Company and Wilmington Trust Company, as purchase
contract agent.
"Put Option" shall have the meaning set forth in Section 3.4.
(g) the following terms shall have the meanings given to them in the
Purchase Contract: (i) Collateral Agent and (ii) Purchase Contract Settlement
Date.
ARTICLE II
GENERAL TERMS AND CONDITIONS OF THE DEBENTURES
SECTION 2.1. DESIGNATION AND PRINCIPAL AMOUNT.
There is hereby authorized a series of Securities designated the
Debentures due _______, 2002", limited in aggregate principal amount to $___
million, which amount shall be as set forth in any written order of the Company
for the authentication and delivery of Debentures pursuant to Section 303 of the
Indenture.
SECTION 2.2. MATURITY. The Maturity Date will be , 2002.
2
<PAGE> 6
SECTION 2.3. FORM AND PAYMENT.
Except as provided in Section 2.4, the Debentures shall be issued in fully
registered certificated form without interest coupons. Principal and interest on
the Debentures issued in certificated form will be payable, the transfer of such
Debentures will be registrable and such Debentures will be exchangeable for
Debentures bearing identical terms and provisions at the office or agency of the
Institutional Trustee; provided, however, that payment of interest may be made
at the option of the Company by check mailed to the Holder at such address as
shall appear in the Security Register. Notwithstanding the foregoing, so long as
the Holder of any Debentures is the Institutional Trustee, the payment of the
principal of and interest (including Compounded Interest and Additional
Interest, if any) on such Debentures held by the Institutional Trustee will be
made at such place and to such account as may be designated by the Institutional
Trustee.
SECTION 2.4. GLOBAL DEBENTURE.
(a) In connection with a Dissolution Event,
(i) the Debentures in certificated form may be presented to the
Trustee by the Institutional Trustee in exchange for a global Debenture in an
aggregate principal amount equal t the aggregate principal amount of all
outstanding Debentures (a "Global Debenture"), to be registered in the name of
the DTC, or its nominee, and delivered by the Institutional Trustee to the DTC
for crediting to the accounts of its participants pursuant to the instructions
of the Regular Trustees. The Company upon any such presentation shall execute a
Global Debenture in such aggregate principal amount and deliver the same to the
Trustee for authentication and delivery in accordance with the Indenture and
this First Supplemental Indenture. Payments on the Debentures issued as a Global
Debenture will be made to the DTC; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, the Debentures in certificated form may be presented to the
Trustee by the Institutional Trustee and any Preferred Security Certificate
which represents Preferred Securities other than Preferred Securities held by
the Clearing Agency or its nominee ("Non Book-Entry Preferred Securities") will
be deemed to represent beneficial interests in Debentures presented to the
Trustee by the Institutional Trustee having an aggregate principal amount equal
to the aggregate liquidation amount of the Non Book-Entry Preferred Securities
until such Preferred Security Certificates are presented to the Security
Registrar for transfer or reissuance at which time such Preferred Security
Certificates will be cancelled and a Debenture, registered in the name of the
holder of the Preferred Security Certificate or the transferee of the holder of
such Preferred Security Certificate, as the case may be, with an aggregate
principal amount equal to the aggregate liquidation amount of the Preferred
Security Certificate cancelled, will be executed by the Company and delivered to
the Trustee for authentication and delivery in accordance with the Indenture and
this First Supplemental Indenture. On issue of such Debentures, Debentures with
an equivalent aggregate principal amount that were presented by the
Institutional Trustee to the Trustee will be deemed to have been cancelled.
(b) Unless and until it is exchanged for the Debentures in registered
form, a Global Debenture may be transferred, in whole but not in part, only to
another nominee of the DTC, or to a successor DTC selected or approved by the
Company or to a nominee of such successor DTC.
(c) If at any time the DTC notifies the Company that it is unwilling or
unable to continue as DTC or if at any time the DTC for such series shall no
longer be registered or in good s anding under the Securities Exchange Act of
1934, as amended, or other applicable statute or regulation, and a successor DTC
for such series is not appointed by the Company within 90 days after the Company
receives such notice or becomes aware of such condition, as the case may be, the
Company will execute, and, subject to Article III of the Indenture, the Trustee,
upon written notice from the Company, will authenticate and deliver the
Debentures in definitive registered form without coupons, in authorized
denominations, and in an aggregate principal amount equal to the principal
amount of the Global Debenture in exchange for such Global Debenture. In
addition, the Company may at any time determine
3
<PAGE> 7
that the Debentures shall no longer be represented by Global Debenture. In such
event the Company will execute, and subject to Section 301 of the Indenture, the
Trustee, upon receipt of an Officers Certificate evidencing such determination
by the Company, will authenticate and deliver the Debentures in definitive
registered form without coupons, in authorized denominations, and in an
aggregate principal amount equal to the principal amount of the Global Debenture
in exchange for such Global Debenture. Upon the exchange of the Global Debenture
for such Debentures in definitive registered form without coupons, in authorized
denominations, the Global Debenture shall be cancelled by the Trustee. Such
Debentures in definitive registered form issued in exchange for the Global
Debenture shall be registered in such names and in such authorized denominations
as the DTC, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall deliver such Securities
to the DTC for delivery to the Persons in whose names such Securities are so
registered.
SECTION 2.5. INTEREST.
(a) Each Debenture will bear interest initially at the rate of __% per
annum (the Coupon Rate") from the original date of issuance until November 15,
2000, and at the Reset Rate thereafter until the principal thereof becomes due
and payable, and on any overdue principal and (to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the rate of ____% until November 15, 2000 and at the Reset Rate
thereafter, compounded quarterly, payable (subject to the provisions of Article
IV) quarterly in arrears on March 31, June 30, September 30, and December 31 of
each year (each, an "Interest Payment Date," commencing on _______, 1997), to
the Person in whose name such Debenture or any predecessor Debenture is
registered, at the close of business on the regular record date for such
interest installment, which, in respect of (i) Debentures of which the
Institutional Trustee is the Holder and the Preferred Securities are in
book-entry only form or (ii) a Global Debenture, shall be the close of business
on the Business Day next preceding that Interest Payment Date. Notwithstanding
the foregoing sentence, if (i) the Debentures are held by the Institutional
Trustee and the Preferred Securities are no longer in book-entry only form or
(ii) the Debentures are not represented by a Global Debenture, the Company may
select a regular record date for such interest installment which shall be any
date at least ten Business Days before an Interest Payment Date.
(b) The Coupon Rate on the Debentures will be reset on November 16, 2000
to the Reset Rate. On the fifth (5) Business Day immediately preceding the
Purchase Contract Settlement Date, the Reset Announcement Date, the Reset Spread
and the relevant Two-Year Benchmark Treasury will be announced by the Company.
On the Business Day immediately following such Reset Announcement Date, the
Holders of Debenture will be notified of such Reset Spread and Two-Year
Benchmark Treasury by the Company. Such notice shall be sufficiently given to
such Holders of Debentures if published in an Authorized Newspaper.
(c) Not later than 7 calendar days nor more than 15 calendar days
immediately preceding the Purchase Contract Settlement Date the Company will
notify the DTC or its nominee (or any Successor Clearing Agency or its nominee)
or the Institutional Trustee, to notify the Holders of Debentures of such Reset
Announcement Date and the procedures to be followed by such Holders of Debenture
who do not intend to exercise their Put Option.
(d) The amount of interest payable for any period will be computed on the
basis of a 360-day year consisting of twelve 30-day months. Except as provided
in the following sentence, the amount of interest payable for any period shorter
than a full quarterly period for which interest is computed, will be computed on
the basis of the actual number of days elapsed in such a 90-day period. In the
event that any date on which interest is payable on the Debentures is not a
Business Day, then payment of interest payable on such date will be made on the
next succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
(e) If, at any time while the Institutional Trustee is the Holder of any
Debentures, the Trust or the Institutional Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
4
<PAGE> 8
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company will pay as additional interest ("Additional
Interest") on the Debentures held by the Institutional Trustee, such additional
amounts as shall be required so that the net amounts received and retained by
the Trust and the Institutional Trustee after paying such taxes, duties,
assessments or other governmental charges will be equal to the amounts the Trust
and the Institutional Trustee would have received had no such taxes, duties,
assessments or other government charges been imposed.
SECTION 2.6. NO SINKING FUND.
The Debentures are not entitled to the benefit of any sinking fund.
ARTICLE III
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 3.1. EXTENSION OF INTEREST PAYMENT PERIOD.
The Company shall have the right at any time, and from time to time,
during the term of the Debentures, to defer payments of interest by extending
the interest payment period of such Debentures for a period not extending, in
the aggregate, beyond the Maturity Date of the Debentures (the "Extended
Interest Payment Period"), during which Extended Interest Payment Period no
interest shall be due and payable. To the extent permitted by applicable law,
interest, the payment of which has been deferred because of the extension of the
interest payment period pursuant to this Section 3.1, will bear interest thereon
at the rate of __% until November 15, 2000, and at the Reset Rate thereafter
compounded quarterly for each quarter of the Extended Interest Payment Period
("Compounded Interest"). At the end of the Extended Interest Payment Period, the
Company shall pay all interest accrued and unpaid on the Debentures, including
any Additional Interest and Compounded Interest (together, "Deferred Interest")
that shall be payable to the Holders of the Debentures in whose names the
Debentures are registered in the Security Register on the first record date
after the end of the Extended Interest Payment Period; provided, however, that
during any such Extended Interest Payment Period, (a) the Company shall not
declare or pay dividends or make any distribution with respect to, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of its
capital stock (other than (i) purchases or acquisitions of capital stock of the
Company in connection with the satisfaction by the Company of its obligations
under any employee benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase capital stock of the Company, (ii) as a
result of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of the Company and
(v) redemptions or purchases of any rights pursuant to the Rights Agreement or
any successor to the Rights Agreement, and the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank junior to the Debentures, and
(c) the Company shall not make any guarantee payments with respect to the
foregoing (other than payments pursuant to the Guarantee or the Common
Securities Guarantee). Prior to the termination of any Extended Interest Payment
Period, the Company may further extend such period, provided that such period
together with all such previous and further extensions thereof shall not extend
beyond the maturity date of the Debentures. Upon the termination of any Extended
Interest Payment Period and upon the payment of all Deferred Interest then due,
the Company may commence a new Extended Interest Payment Period, subject to the
foregoing requirements. No interest shall be due and payable during an Extended
Interest Payment Period, except at the end thereof, but the Company may prepay
at any time all or any portion of the interest accrued during an Extended
Interest Payment Period.
5
<PAGE> 9
SECTION 3.2. NOTICE OF EXTENSION.
(a) If the Institutional Trustee is the only registered Holder of the
Debentures at the time the Company selects an Extended Interest Payment Period,
the Company shall give written notice to the Regular Trustees, the Institutional
Trustee and the Trustee of its selection of such Extended Interest Payment
Period one Business Day before the earlier of (i) the next succeeding date on
which Distributions on the Trust Securities issued by the Trust are payable, or
(ii) the date the Trust is required to give notice of the record date, or the
date such Distributions are payable, to the New York Stock Exchange or other
applicable self-regulatory organization or to holders of the Preferred
Securities issued by the Trust, but in any event at least one Business Day
before such record date.
(b) If the Institutional Trustee is not the only Holder of the Debentures
at the time the Company selects an Extended Interest Payment Period, the Company
shall give the Holders of the Debentures and the Trustee written notice of its
selection of such Extended Interest Payment Period at least 10 Business Days
before the earlier of (i) the next succeeding Interest Payment Date, or (ii) the
date the Company is required to give notice of the record or payment date of
such interest payment to the New York Stock Exchange or other applicable
self-regulatory organization or to Holders of the Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs (a) or
(b) of this Section 3.2 shall be counted as one of the 20 quarters permitted in
the maximum Extended Interest Payment Period permitted under Section 3.1.
SECTION 3.3. LIMITATION OF TRANSACTIONS.
If (i) the Company shall exercise its right to defer payment of interest
as provided in Section 3.1, or (ii) there shall have occurred any Event of
Default, as defined in the Indenture, then (a) the Company shall not declare or
pay dividends or make any distribution with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (i) purchases or acquisitions of capital stock of the Company in
connection with the satisfaction by the Company of its obligations under any
employee benefit plans or the satisfaction by the Company of its obligations
pursuant to any contract or security outstanding on the date of such event
requiring the Company to purchase capital stock of the Company, (ii) as a result
of a reclassification of the Company's capital stock or the exchange or
conversion of one class or series of the Company's capital stock for another
class or series of the Company capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (iv) dividends or distributions in capital stock of the Company and
(v) redemptions or purchases of any rights pursuant to the Rights Agreement or
any successor to the Rights Agreement, and the declaration thereunder of a
dividend of rights in the future), (b) the Company shall not make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Company that rank junior to the Debentures, and
(c) the Company shall not make any guarantee payments with respect to the
foregoing (other than payments pursuant to the Guarantee or the Common
Securities Guarantee).
SECTION 3.4. OPTION TO PUT DEBENTURES.
(a) Each Holder of Debentures, including the Institutional Trustee and the
Collateral Agent, shall have the right to require the Company to repurchase the
Debentures on the Purchase Contract Settlement Date (the "Put Option"), either
in whole r in part, at an amount per Debenture equal to $50, plus accumulated
and unpaid distributions, if any (the "Debenture Repayment Price").
(b) On the Business Day immediately preceding the Purchase Contract
Settlement Date, each holder of Debentures that has not settled its Purchase
Contract with cash will be deemed to have requested the Trust to put the
aggregate principal amount of its Debentures to the Company for an mount equal
to the Debenture Repayment Price. Upon such repurchase by the Company, the Trust
shall use simultaneously the proceeds from such
6
<PAGE> 10
repurchase to redeem the Preferred Securities of such holder having an aggregate
Stated Amount equal to the aggregate principal amount of the Debentures so
repurchased and shall be applied to satisfy in full such holder's obligation to
purchase Common Securities under the Purchase Contract and any accumulated and
unpaid distributions with respect to the Debentures so repurchased shall be paid
to the holder thereof in cash.
(c) Each holder of Debentures that has settled its Purchase Contract with
cash shall have the right to require the Company to repurchase the Debentures on
the Business Day immediately preceding the Purchase Contract Settlement Date for
an amount equal to the Debenture Repayment Price. Upon such repurchase by the
Company the Trust shall use simultaneously the proceeds from such repurchase to
redeem in cash of such holder having an aggregate Stated Amount equal to the
aggregate principal amount of the Debentures so repurchased and shall pay in
cash any accumulated and unpaid distributions to the holder thereof.
SECTION 3.5. REPURCHASE PROCEDURE FOR DEBENTURES.
(a) In order for the Debentures to be repurchased on the Business Day
immediately preceding the Purchase Contract Settlement Date, the Company must
receive at the Corporate Trust Office in the City of Wilmington, Delaware the
Debentures to be repurchased with the form entitled "Option to Elect Repayment"
on the reverse of or otherwise accompanying such Debentures duly completed. All
questions as to the validity, eligibility (including time of receipt) and
acceptance of the Debentures for repayment shall be determined by the Company,
whose determination shall be final and binding. Notwithstanding the foregoing,
so long as the Holder is the Institutional Trustee or the Collateral Agent, such
Debentures may be received at the Corporate Trust Office at any time prior to
11:00 a.m., New York City time, on the Business Day immediately preceding the
Purchase Contract Settlement Date, in the form and manner as may be designated
by the Institutional Trustee or the Collateral Agent and acceptable to the
Trustee.
(b) Payment of the Debentures Repayment Price to Holders of Debentures
shall be made through the Trustee, subject to the Trustee's receipt of payment
from the Company in accordance with the terms of the Indenture. Notwithstanding
the foregoing, so long as the Holder of any Debentures presented for repayment
is the Institutional Trustee or the Collateral Agent, the payment of the
Debentures Repayment Price in respect of such Debentures shall be made, either
through the Trustee or the Company acting as Paying Agent, no later than 12:00
noon, New York City time, on the Business Day immediately preceding the Purchase
Contract Settlement Date, and to such account as may be designated by the
Institutional Trustee or the Collateral Agent, as the case may be. If the
Trustee holds immediately available funds sufficient to pay the Debentures
Repayment Price of the Debentures presented for repayment (or, if the Company is
acting as Paying Agent or the Institutional Trustee has received the Debentures
Repayment Price), then, immediately prior to the close of business on the
Business Day immediately preceding the Purchase Contract Settlement Date, such
Debentures will cease to be outstanding and interest thereon will cease to
accrue, whether or not such Debentures have been received by the Company, and
all other rights of the Holder in respect of the Debentures, including the
Holder's right to require the Company to repay such Debentures, shall terminate
and lapse (other than the right to receive the Debentures Repayment Price upon
delivery of such debentures but without interest on such Debentures Repayment
Price). Neither the Institutional Trustee nor the Company will be required to
register or cease to be registered the transfer of any Debentures for which
repayment has been elected.
7
<PAGE> 11
ARTICLE IV
EXPENSES
SECTION 4.1. PAYMENT OF EXPENSES.
In connection with the offering, sale and issuance of the Debentures to
the Institutional Trustee and in connection with the sale of the Trust
Securities by the Trust, the Company, in its capacity as borrower with respect
to the Debentures, shall:
(a) pay all costs and expenses relating to the offering, sale and issuance
of the Debentures, including commissions to the underwriters payable pursuant to
the Underwriting Agreement and the Pricing Agreement and compensation of the
Trustee under the Indenture in accordance with the provisions of Section 607 of
the Indenture;
(b) pay all costs and expenses of the Trust (including, but not limited
to, costs and expenses relating to the organization of the Trust, the offering,
sale and issuance of the Trust Securities (including commissions to the
underwriters in connection therewith), the fees and expenses of the
Institutional Trustee and the Delaware Trustee, the costs and expenses relating
to the operation of the Trust, including without limitation, costs and expenses
of accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying agent(s),
registrar(s), transfer agent(s), duplicating, travel and telephone and other
telecommunications expenses and costs and expenses incurred in connection with
the acquisition, financing, and disposition of Trust assets).
(c) be primarily liable for any indemnification obligations arising with
respect to the Declaration; and
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Trust or its assets) a d all liabilities, costs and expenses
with respect to such taxes of the Trust.
SECTION 4.2. PAYMENT UPON RESIGNATION OR REMOVAL.
Upon termination of this First Supplemental Indenture or the Indenture or
the removal or resignation of the Trustee pursuant to this Section 4.2, the
Company shall pay to the Trustee all amounts accrued to the date of such
termination, removal or resignation. Upon termination of the Declaration or the
removal or resignation of the Delaware Trustee or the Institutional Trustee, as
the case may be, pursuant to Section 4.6 of the Declaration, the Company shall
pay to the Delaware Trustee or the Institutional Trustee, as the case may be,
all amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
NOTICE
SECTION 5.1. NOTICE BY THE COMPANY.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment of monies to or by the Trustee in respect of the Debentures pursuant
to the provisions of this Article V. Notwithstanding the provisions of Article
Fourteen of the Indenture or any other provision of the Indenture and this First
Supplemental Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment of monies
to or by the Trustee in respect of the Debentures pursuant to the provisions of
Article Fourteen of the Indenture, unless and until a Responsible Officer of the
Trustee shall have received written notice thereof from the Company or a holder
or holders of Senior Indebtedness or from any trustee therefor and before the
receipt of any such written notice, the Trustee, subject to the provisions of
Section 601 of the Indenture, shall be entitled in all respects to assume that
no such facts exist; provided, however, that if the Trustee shall not have
received the notice provided
8
<PAGE> 12
for in this Article V at least two Business Days prior to the date upon which by
the terms hereof any money may become payable for any purpose (including,
without limitation, the payment of the principal of (or premium, if any) or
interest on any Debenture), then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive such
money and to apply the same to the purposes for which they were received, and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to such date.
The Trustee, subject to the provisions of Section 601 of the Indenture,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness of the
Company, as the case may be (or a trustee on behalf 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 or holders. In the event
that the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article V, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article V, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
ARTICLE VI
FORM OF DEBENTURE
SECTION 6 1. FORM OF DEBENTURE.
The Debentures and the Trustee's Certificate of Authentication to be
endorsed thereon are to be substantially in the following forms:
9
<PAGE> 13
(FORM OF FACE OF DEBENTURE)
[IF THE DEBENTURE IS TO BE A GLOBAL DEBENTURE, INSERT - This Debenture is
a Global Debenture within the meaning of the Indenture hereinafter referred to
and is registered in the name of a DTC or a nominee of a DTC. This Debenture is
exchangeable for Debentures registered in the name of a person other than the
DTC or its nominee only in the limited circumstances described in the Indenture,
and no transfer of this Debenture (other than a transfer of this Debenture as a
whole by the DTC to a nominee of the DTC or by a nominee of the DTC to the DTC
or another nominee of the DTC) may be registered except in limited
circumstances.
Unless this Debenture is presented by an authorized representative of The
Depository Trust Company (55 Water Street, New York, New York) to the issuer or
its agent for registration of transfer, exchange or payment, and any Debenture
issued is registered in the name of Cede & Co. or such other name as requested
by an authorized representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner hereof, Cede &
Co., has an interest herein.]
No. _____________________
$________________________
CUSIP No._______________
OWENS CORNING
% DEBENTURE
DUE
OWENS CORNING, a Delaware corporation (the "Company", which term includes
any successor corporation under the Indenture hereinafter referred to), for
value received, hereby promises to pay to, or registered assigns, the principal
sum of _______ Dollars ($______ ) on _______, 2002, and to pay interest on said
principal sum from _____, 1997, or from the most recent interest payment date
(each such date, an "Interest Payment Date") to which interest has been paid or
duly provided for, quarterly (subject to deferral as set forth herein) in
arrears on March 31, June 30, September 30 and December 31 of each year
commencing _______, 1997, initially at the rate of __% per annum until November
15, 2000, and at the Reset Rate thereafter until the principal hereof shall
have become due and payable, and on any overdue principal and premium, if any,
and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
rate of __% until November 5, 2000 and at the Reset Date thereafter, compounded
quarterly. The interest rate will be reset on November 16, 2000 to the Reset
Rate (as determined by the Reset Agent). The amount of interest payable on any
Interest Payment Date shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. In the event that any date on which
interest is payable on this Debenture is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Indenture, be paid to the person
in whose name this Debenture (or one or more Predecessor Securities, as defined
in said Indenture) is registered at the close of business on the regular record
date for such interest installment which shall be the close of business on the
business day next preceding such Interest Payment Date. [IF PURSUANT TO THE
PROVISIONS OF THE INDENTURE THE DEBENTURES ARE NO LONGER REPRESENTED BY A
GLOBAL Debenture -- which shall be the close of business on the ___ business
day next preceding such Interest Payment Date.] Any such interest installment
not punctually paid or duly provided for shall forthwith cease to be payable to
the registered Holders on such regular record date and may be paid to the
Person in whose name this Debenture (or one or more Predecessor Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered Holders of this series of
10
<PAGE> 14
Debentures not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Debentures may be listed,
and upon such notice as may be required by such exchange all as more fully
provided in the Indenture. The principal of (and premium, if any) and the
interest on this Debenture shall be payable at the office or agency of the
Trustee maintained for that purpose in any coin or currency of the United States
of America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
option of the Company by check mailed to the registered Holder at such address
as shall appear in the Security Register. Notwithstanding the foregoing, so long
as the Holder of this Debenture is the Institutional Trustee or the Collateral
Agent, the payment of the principal of (and premium, if any) and interest on
this Debenture will be made at such place and to such account as may be
designated in writing by the Institutional Trustee or the Collateral Agent.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and junior in right of payment to the prior payment
in full of all Senior Indebtedness, and this Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Debenture
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to acknowledge or effectuate the subordination
so provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side hereof
and such continued provisions shall for all purposes have the same effect as
though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
Dated______________________________
OWENS CORNING
By:_____________________________________________
Name:
Title:
Attest:
By:________________________________
Name:
Title:
11
<PAGE> 15
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures described in the
within-mentioned Indenture.
Dated_________________________
WILMINGTON TRUST COMPANY
as Trustee
By___________________________
Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of Securities of the
Company (herein sometimes referred to as the "Securities"), specified in the
Indenture, all issued or to be issued in one or more series under and pursuant
to an Indenture dated as of _______, 1997 (the "Base Indenture"), duly executed
and delivered between the Company and Wilmington Trust Company, as Trustee (the
"Trustee") (as supplemented by a First Supplemental Indenture, dated _______,
1997, (the Base Indenture as so supplemented, the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the Holders of the
Securities. By the terms of the Indenture, the Securities are issuable in series
that may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Indenture. This series of Securities is limited in
aggregate principal amount as specified in said First Supplemental Indenture.
The Debentures are not entitled to the benefit of any sinking fund.
The Holder of this Debenture, including the Institutional Trustee and the
Collateral Agent, shall have the right to require the Company to repurchase this
Debenture on the Business Day immediately preceding the Purchase Contract
Settlement Date (the "Put Option"), either in whole or in part, at an amount per
Debenture equal to $50, plus accumulated and unpaid distributions, if any (the
"Debenture Repurchase Price"). On the Business Day immediately preceding the
Purchase Contract Settlement Date, each Holder of Debentures that has not
settled its Purchase Contract with cash will be deemed to have requested the
Trust to put the aggregate principal amount of its Debentures to the Company for
an amount equal to the Debenture Repayment Price. Upon such repurchase by the
Company, the Trust shall use simultaneously the proceeds from such repurchase to
redeem the Preferred Securities of such Holder having an aggregate Stated Amount
equal to the aggregate principal amount of the Debentures so repurchased and
shall be applied to satisfy in full such Holder's obligation to purchase Common
Securities under the Purchase Contract and any accumulated and unpaid
distributions with respect to the Debentures so repurchased shall be paid to the
Holder thereof in cash. Each Holder of Debentures that has settled its Purchase
Contract with cash shall have the right to request the Company to repurchase the
Debentures on the Purchase Contract Settlement Date for an amount equal to the
Debenture Repayment Price. Upon such repurchase by the Company the Trust shall
use simultaneously the proceeds from such repurchase to redeem in cash the
Preferred Securities of such Holder having an aggregate Stated Amount equal to
the aggregate principal amount of the Debentures so repurchased and shall pay in
cash any accumulated and unpaid distributions to the Holder thereof. In order
for the Debentures to be repurchased on the Purchase Contract Settlement Date or
for a period of ninety days thereafter, the Company must receive at the
Corporate Trust Office in the City of Wilmington, Delaware the
12
<PAGE> 16
Debentures to be repurchased with the form entitled "Option to Elect Repayment"
on the reverse of or otherwise accompanying such Debentures duly completed. All
questions as to the validity, eligibility (including time of receipt) and
acceptance of the Debentures for repurchase shall be determined by the Company,
whose determination shall be final and binding. Notwithstanding the foregoing,
so long as the Holder is the Institutional Trustee or the Collateral Agent this
Debenture may be received at the Corporate Trust Office at any time prior to
11:00 a.m., New York City time, on the Business Day immediately preceding the
Purchase Contract Settlement Date in the form and manner as may be designated by
the Institutional Trustee or the Collateral Agent and acceptable to the Trustee.
So long as the Holder of any Debentures presented for repayment is the
Institutional Trustee or the Collateral Agent, the payment of the Debentures
Repayment Price in respect of such Debentures shall be made, either through the
Trustee or the Company acting as Paying Agent, no later than 12:00 noon, New
York City time, on the Business Day immediately preceding the Purchase Contract
Settlement Date.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the Holders of not less than a majority in aggregate
principal mount of the Debentures of each series affected at the time
outstanding, as defined in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the Holders of the Debentures; provided,
however, that no such supplemental indenture shall (i) reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any premium payable upon the redemption thereof, without the
consent of the Holder of each Debenture so affected, or (ii) reduce the
aforesaid percentage of Debentures, the Holders of which are required to consent
to any such supplemental indenture, without the consent of the Holders of each
Debenture then outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount of
the Securities of any series at the time outstanding affected thereby, on behalf
of all of the Holders of the Debentures of such series, to waive Default or
Event of Default with respect to such series, and its consequences, except a
Default or Event of Default in the payment of the principal of or premium, if
any, or interest on any of the Securities of such series. Any such consent or
waiver by the registered Holder of this Debenture (unless revoked as provided in
the Indenture) shall be conclusive and binding upon such Holder and upon all
future Holders and owners of this Debenture and of any Debenture issued in
exchange he for or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
So long as the Company is not in default in the payment of interest on the
Debenture, the Company shall have the right at any time during the term of the
Debentures from time to time to extend the interest payment period of such
Debentures for a period not extending, in the aggregate, beyond the maturity
date of the Debentures (an "Extended Interest Payment Period"). At the end of an
Extended Interest Payment Period, the Company shall pay all interest then
accrued and unpaid (together with the interest thereon at the rate of ___% until
November 15, 2000 and at the Reset Rate thereafter to the extent that payment of
such interest is enforceable under applicable law). In the event that the
Company exercises this right, then (a) the Company shall not declare or pay
dividends or make any distribution with respect to, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of its capital stock (other
than (i) purchases or acquisitions of capital stock of the Company in connection
with the satisfaction by the Company of its obligations under any employee
benefit plans or the satisfaction by the Company of its obligations pursuant to
any contract or security outstanding on the date of such event requiring the
Company to purchase capital stock of the Company, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the
13
<PAGE> 17
Company capital stock, (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (iv) dividends
or distributions in capital stock of the Company and (v) redemptions or
purchases of any rights pursuant to the Rights Agreement or any successor to the
Rights Agreement, and the declaration thereunder of a dividend of rights in the
future), (b) the Company shall not make any payment of interest, principal or
premium, if any, on or repay, repurchase or redeem any debt securities issued by
the Company that rank junior to the Debentures, and (c) the Company shall not
make any guarantee payments with respect to the foregoing (other than payments
pursuant to the Guarantee or the Common Securities Guarantee). Prior to the
termination of any such Extended Interest Payment Period, the Company may
further extend the interest payment period; provided, that such Extended
Interest Payment Period, together with all such previous and further extensions
thereof, may not extend beyond the maturity date of the Debenture. At the
termination of any such Extended Interest Payment Period and upon the payment of
all accrued and unpaid interest and any additional amount then due, the Company
may commence a new Extended Interest Payment Period, subject to the above
requirements.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered Holder hereof on the
Security Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Trustee in the City of
Wilmington and State of Delaware accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the registered Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Debentures of authorized denominations
and for the same aggregate principal amount and series will be issued to the
designated transferee or transferees. No service charge will be made for any
such transfer, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of his Debenture,
the Company, the Trustee, any paying agent and the Security Registrar may deem
and treat the registered holder hereof as the absolute owner hereof (whether or
not this Debenture shall be overdue and notwithstanding any notice of ownership
or writing hereon made by anyone other than the Security Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
premium, if any, and interest due hereon and for all other purposes, and neither
the Company nor the Trustee nor any paying agent nor any Security Registrar
shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, shareholder, off cer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Indenture imposes certain limitations on the ability of the Company
to, among other things, merge or consolidate with any other Person or sell,
assign, transfer or lease all or substantially all of its properties or assets.
All such covenants and limitations are subject to a number of important
qualifications and exceptions. The Company must report periodically to the
Trustee on compliance with the covenants in the Indenture.
The Debentures of this series a e issuable only in registered form without
coupons in denominations of $50 and any integral multiple thereof. This Global
Debenture is exchangeable for Debentures in definitive form only under certain
limited circumstances set forth in the Indenture. Debentures of this series so
issued are issuable only in registered form without coupons in denominations of
$50 and any integral multiple thereof. As provided in the Indenture and subject
to certain limitations therein set forth, Debentures of this series so issued
are exchangeable for a like aggregate principal amount of Debentures of this
series of a different authorized denomination, as requested by the Holder
surrendering the same.
14
<PAGE> 18
All terms used in this Debenture that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
ARTICLE VII
ORIGINAL ISSUE OF DEBENTURES
SECTION 7.1. ORIGINAL ISSUE OF DEBENTURES.
Debentures in the aggregate principal amount of $______ may, upon
execution of this First Supplemental Indenture, be executed by the Company and
delivered to the Trustee for authentication, and the Trustee shall thereupon
authenticate and deliver said Debentures to or upon the written order of the
Company, signed by its Chairman, its Vice Chairman, its President, or any Vice
President and its Treasurer or an Assistant Treasurer, without any further
action by the Company.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. RATIFICATION OF INDENTURE. The Indenture as supplemented by this
First Supplemental Indenture, is in all respects ratified and confirmed, and
this First Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
SECTION 8.2. TRUSTEE NOT RESPONSIBLE FOR RECITALS.
The recitals herein contained are made by the Company and not by the
Trustee, and the Trustee assumes no responsibility for the correctness thereof.
The Trustee makes no representation as to the validity or sufficiency of this
First Supplemental Indenture.
SECTION 8.3. GOVERNING LAW.
This First Supplemental Indenture and each Debenture shall be deemed to be
a contract made under the internal laws of the State of New York, and for all
purposes shall be construed in accordance with the laws of said State.
SECTION 8.4 SEPARABILITY.
In case any one or more of the provisions contained in this First
Supplemental Indenture or in the Debentures shall for any reason be held to be
invalid illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this First
Supplemental Indenture or of the Debentures, but this First Supplemental
Indenture and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 8.5. COUNTERPARTS.
This First Supplemental Indenture may be executed in any number of
counterparts each of which shall be an original; but such counterparts shall
together constitute but one and the same instrument.
15
<PAGE> 19
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
berwind affixed and attested, on the date or dates indicated in the
acknowledgments and as of the day and year first above written.
OWENS CORNING
as Issuer
By_________________________________________
Name:
Title:
Attest:
By:___________________________________
WILMINGTON TRUST COMPANY
as Trustee
By_________________________________________
Name:
Title:
Attest:
By:___________________________________
16
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
January 18, 1997, included in Owens Corning's Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
Registration Statement.
ARTHUR ANDERSEN LLP
Toledo, Ohio
September 15, 1997
<PAGE> 1
Exhibit 25.1
Registration No.
================================================================================
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) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
OWENS CORNING
(Exact name of obligor as specified in its charter)
Delaware 34-4323452
(State of incorporation) (I.R.S. employer identification no.)
Owens Corning World Headquarters
Toledo, Ohio 43659
(Address of principal executive offices) (Zip Code)
Subordinated Debentures of Owens Corning
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section
321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 12th day
of September, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ Norma P. Closs
------------------------ -----------------------
Assistant Secretary Name: Norma P. Closs
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or
other evidences of debt, to receive deposits of money, or
securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and
generally to use, exercise and enjoy all the powers, rights,
privileges and franchises incident to a corporation which
are proper or necessary for the transaction of the business
of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in
the promotion of its said corporate business of investment
and to the extent authorized by law, to lease, purchase,
hold, sell, assign, transfer, pledge, mortgage and convey
real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be
6
<PAGE> 10
issued by reason of any increase of the authorized capital stock
of the Corporation of any class or series, or bonds, certificates
of indebtedness, debentures or other securities convertible into
or exchangeable for stock of the Corporation of any class or
series, or carrying any right to purchase stock of any class or
series, but any such unissued stock, additional authorized issue
of shares of any class or series of stock or securities
convertible into or exchangeable for stock, or carrying any right
to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and
upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not
7
<PAGE> 11
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors
constituting the whole Board shall be twenty-four until otherwise
fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the ByLaws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of
8
<PAGE> 12
stock of the Corporation which are beneficially owned by each
such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
9
<PAGE> 13
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
<PAGE> 14
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E)
of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
11
<PAGE> 15
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation
12
<PAGE> 16
or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of
2
<PAGE> 20
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee shall
be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever
the majority of its members shall deem it to be proper for the transaction of
its business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors from
its own members who
4
<PAGE> 22
are not officers of the Company and who shall hold office during the pleasure of
the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called
at any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform
5
<PAGE> 23
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
6
<PAGE> 24
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange
7
<PAGE> 25
of capital stock shall go into effect, or a date in connection with obtaining
such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
9
<PAGE> 27
(D) The rights conferred on any person by this Article X
shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 12, 1997 By: /s/ Norma P. Closs
------------------
Name: Norma P. Closs
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- --------------------------------------------------- -------------------------
Name of Bank City
in the State of DELAWARE , at the close of business on June 30, 1997.
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................208,942
Interest-bearing balances........................................................................... 0
Held-to-maturity securities............................................................................... 403,700
Available-for-sale securities...............................................................................905,200
Federal funds sold and securities purchased under agreements to resell......................................151,700
Loans and lease financing receivables:
Loans and leases, net of unearned income ............ 3,816,484
LESS: Allowance for loan and lease losses .......... 54,535
LESS: Allocated transfer risk reserve .............. 0
Loans and leases, net of unearned income, allowance, and reserve..............................3,761,949
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases).....................................................95,762
Other real estate owned...................................................................................... 1,751
Investments in unconsolidated subsidiaries and associated companies............................................ 42
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets.............................................................................................3,572
Other assets................................................................................................108,295
Total assets..............................................................................................5,640,913
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C>
In domestic offices.......................................................................................3,864,774
Noninterest-bearing ............... 875,081
Interest-bearing .................. 2,989,693
Federal funds purchased and Securities sold under agreements to repurchase................................. 337,784
Demand notes issued to the U.S. Treasury.....................................................................95,000
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................775,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G)..................................................................... 84,197
Total liabilities.........................................................................................5,199,755
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................376,212
Net unrealized holding gains (losses) on available-for-sale securities................................... (2,328)
Total equity capital........................................................................................441,158
Total liabilities, limited-life preferred stock, and equity capital.......................................5,640,913
</TABLE>
2
<PAGE> 1
Exhibit 25.2
Registration No.
===============================================================================
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) X
---
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
OWENS CORNING
OWENS CORNING CAPITAL II
(Exact name of obligor as specified in its charter)
Delaware 34-4323452
Delaware 31-6560375
(State of incorporation) (I.R.S. employer identification no.)
Owens Corning World Headquarters
Toledo, Ohio 43659
(Address of principal executive offices) (Zip Code)
Preferred Securities of Owens Corning Capital II
(Title of the indenture securities)
===============================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by
Section 321(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 12th day
of September, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ Norma P. Closs
------------------------- ---------------------------
Assistant Secretary Name: Norma P. Closs
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or
other evidences of debt, to receive deposits of money, or
securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and
generally to use, exercise and enjoy all the powers, rights,
privileges and franchises incident to a corporation which
are proper or necessary for the transaction of the business
of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of interest,
dividends and income upon and from any of the bonds,
mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and in
the promotion of its said corporate business of investment
and to the extent authorized by law, to lease, purchase,
hold, sell, assign, transfer, pledge, mortgage and convey
real and personal property of any name and nature and any
estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article FOURTH), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be
6
<PAGE> 10
issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any
class or series of stock or securities convertible into or
exchangeable for stock, or carrying any right to purchase stock, may
be issued and disposed of pursuant to resolution of the Board of
Directors to such persons, firms, corporations or associations,
whether such holders or others, and upon such terms as may be deemed
advisable by the Board of Directors in the exercise of its sole
discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not
7
<PAGE> 11
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors
constituting the whole Board shall be twenty-four until otherwise
fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the ByLaws of the Corporation),
any director or the entire Board of Directors of the Corporation may
be removed at any time without cause, but only by the affirmative
vote of the holders of two-thirds or more of the outstanding shares
of capital stock of the Corporation entitled to vote generally in
the election of directors (considered for this purpose as one class)
cast at a meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of
8
<PAGE> 12
stock of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
9
<PAGE> 13
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
<PAGE> 14
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on such business
combination, or immediately prior to the consummation of any such
transaction:
(A) is the beneficial owner, directly or indirectly, of
more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
11
<PAGE> 15
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation
12
<PAGE> 16
or its stockholders for monetary damages for breach of fiduciary
duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of
2
<PAGE> 20
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the
principal office of the Company or elsewhere in its discretion at such times
to be determined by a majority of its members, or at the call of the Chairman
of the Executive Committee or at the call of the Chairman of the Board of
Directors. The majority of its members shall be necessary to constitute a
quorum for the transaction of business. Special meetings of the Executive
Committee may be held at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or hereafter passed from time to time for that purpose, and
any provisions of these By-Laws (other than this Section) and any resolutions
which are contrary to the provisions of this Section or to the provisions of any
such implementary Resolutions shall be suspended during such a disaster period
until it shall be determined by any interim Executive Committee acting under
this section that it shall be to the advantage of the Company to resume the
conduct and management of its affairs and business under all of the other
provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to
appoint Committees and/or designate officers or employees of the Company to
whom supervision over the investment of trust funds may be delegated when the
Trust Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of
not more than five (5) members who shall be selected by the Board of Directors
from its own members who
4
<PAGE> 22
are not officers of the Company and who shall hold office during the pleasure of
the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a
Committee
(A) In the absence or disqualification of any member
of any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform
5
<PAGE> 23
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
6
<PAGE> 24
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange
7
<PAGE> 25
of capital stock shall go into effect, or a date in connection with obtaining
such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
9
<PAGE> 27
(D) The rights conferred on any person by this
Article X shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 12, 1997 By: /s/ Norma P. Closs
------------------
Name: Norma P. Closs
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ----------------------------------------------------------- ---------------
Name of Bank City
in the State of DELAWARE , at the close of business on June 30, 1997.
------------
<TABLE>
ASSETS
<CAPTION>
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins.............................................208,942
Interest-bearing balances ........................................................................... 0
Held-to-maturity securities ................................................................................403,700
Available-for-sale securities...............................................................................905,200
Federal funds sold and securities purchased under agreements to resell......................................151,700
Loans and lease financing receivables:
Loans and leases, net of unearned income ..............3,816,484
LESS: Allowance for loan and lease losses ............ 54,535
LESS: Allocated transfer risk reserve ................ 0
Loans and leases, net of unearned income, allowance, and reserve..............................3,761,949
Assets held in trading accounts...................................................................................0
Premises and fixed assets (including capitalized leases).....................................................95,762
Other real estate owned ......................................................................................1,751
Investments in unconsolidated subsidiaries and associated companies .............................................42
Customers' liability to this bank on acceptances outstanding......................................................0
Intangible assets.............................................................................................3,572
Other assets................................................................................................108,295
Total assets..............................................................................................5,640,913
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<S> <C>
LIABILITIES
Deposits:
In domestic offices.......................................................................................3,864,774
Noninterest-bearing .................. 875,081
Interest-bearing ..................... 2,989,693
Federal funds purchased and Securities sold under agreements to repurchase................................. 337,784
Demand notes issued to the U.S. Treasury.....................................................................95,000
Trading liabilities (from Schedule RC-D)..........................................................................0
Other borrowed money:.......................................................................................///////
With original maturity of one year or less......................................................775,000
With original maturity of more than one year.....................................................43,000
Bank's liability on acceptances executed and outstanding..........................................................0
Subordinated notes and debentures.................................................................................0
Other liabilities (from Schedule RC-G)..................................................................... 84,197
Total liabilities.........................................................................................5,199,755
EQUITY CAPITAL
Perpetual preferred stock and related surplus.....................................................................0
Common Stock....................................................................................................500
Surplus (exclude all surplus related to preferred stock).....................................................62,118
Undivided profits and capital reserves......................................................................376,212
Net unrealized holding gains (losses) on available-for-sale securities................................... (2,328)
Total equity capital........................................................................................441,158
Total liabilities, limited-life preferred stock, and equity capital.......................................5,640,913
</TABLE>
2
<PAGE> 1
Exhibit 25.3
Registration No.
================================================================================
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) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
OWENS CORNING
(Exact name of obligor as specified in its charter)
Delaware 34-4323452
(State of incorporation) (I.R.S. employer identification no.)
Owens Corning World Headquarters
Toledo, Ohio 43659
(Address of principal executive offices) (Zip Code)
Guarantee by Owens Corning with respect to
Preferred Securities of Owens Corning Capital II
(Title of the indenture securities)
================================================================================
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321
(b) of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 12th day
of September, 1997.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Emmett R. Harmon By: /s/ Norma P. Closs
-------------------------- ---------------------------
Assistant Secretary Name: Norma P. Closs
Title: Vice President
2
<PAGE> 3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE> 4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is WILMINGTON
TRUST COMPANY whose address is Rodney Square North, in said City. In
addition to such principal office, the said corporation maintains
and operates branch offices in the City of Newark, New Castle
County, Delaware, the Town of Newport, New Castle County, Delaware,
at Claymont, New Castle County, Delaware, at Greenville, New Castle
County Delaware, and at Milford Cross Roads, New Castle County,
Delaware, and shall be empowered to open, maintain and operate
branch offices at Ninth and Shipley Streets, 418 Delaware Avenue,
2120 Market Street, and 3605 Market Street, all in the City of
Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to time
by the agency or agencies of the government of the State of Delaware
empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any
Court of law or equity and to make and use a common seal,
and alter the seal at pleasure, to hold, purchase, convey,
mortgage or otherwise deal in real and personal estate and
property, and to appoint such officers and agents as the
business of the Corporation shall require, to make by-laws
not inconsistent with the Constitution or laws of the
<PAGE> 5
United States or of this State, to discount bills, notes or
other evidences of debt, to receive deposits of money, or
securities for money, to buy gold and silver bullion and
foreign coins, to buy and sell bills of exchange, and
generally to use, exercise and enjoy all the powers,
rights, privileges and franchises incident to a corporation
which are proper or necessary for the transaction of the
business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other instrument issued by any state, municipality,
body politic, corporation, association or person, either
alone or in conjunction with any other person or persons,
corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
2
<PAGE> 6
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
11) To purchase, receive, hold and own bonds,
mortgages, debentures, shares of capital stock, and other
securities, obligations, contracts and evidences of
indebtedness, of any private, public or municipal
corporation within and without the State of Delaware, or of
the Government of the United States, or of any state,
territory, colony, or possession thereof, or of any foreign
government or country; to receive, collect, receipt for, and
dispose of interest, dividends and income upon and from any
of the bonds, mortgages, debentures, notes, shares of
capital stock, securities, obligations, contracts, evidences
of indebtedness and other property held and owned by it, and
to exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds,
3
<PAGE> 7
as and when the Board of Directors shall determine, and
in the promotion of its said corporate business of
investment and to the extent authorized by law, to lease,
purchase, hold, sell, assign, transfer, pledge, mortgage and
convey real and personal property of any name and nature and
any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other negotiable or transferable
instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
4
<PAGE> 8
FOURTH: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one
or more series as may from time to time be determined by the Board
of Directors each of said series to be distinctly designated. All
shares of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative.
The voting powers and the preferences and relative, participating,
optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, if any, may
differ from those of any and all other series at any time
outstanding; and, subject to the provisions of subparagraph 1 of
Paragraph (c) of this Article FOURTH, the Board of Directors of the
Corporation is hereby expressly granted authority to fix by
resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers
and the designations, preferences and relative, optional and other
special rights, and the qualifications, limitations and restrictions
of such series, including, but without limiting the generality of
the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
5
<PAGE> 9
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article FOURTH), if any, shall
have been met and after the Corporation shall have complied with all
the requirements, if any, with respect to the setting aside of sums
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
FOURTH), and subject further to any conditions which may be fixed in
accordance with the provisions of section (b) of this Article
FOURTH, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential
amount, if any, (fixed in accordance with the provisions of
section (b) of this Article FOURTH), to be distributed to
the holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article FOURTH, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be
6
<PAGE> 10
issued by reason of any increase of the authorized capital
stock of the Corporation of any class or series, or bonds,
certificates of indebtedness, debentures or other securities
convertible into or exchangeable for stock of the Corporation of
any class or series, or carrying any right to purchase stock of
any class or series, but any such unissued stock, additional
authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed
of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such
holders or others, and upon such terms as may be deemed advisable
by the Board of Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of Directors in the
resolution or resolutions adopted pursuant to authority granted in
section (b) of this Article FOURTH and the consent, by class or
series vote or otherwise, of the holders of such of the series of
Preferred Stock as are from time to time outstanding shall not be
required for the issuance by the Board of Directors of any other
series of Preferred Stock whether or not the powers, preferences and
rights of such other series shall be fixed by the Board of Directors
as senior to, or on a parity with, the powers, preferences and
rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in the resolution
or resolutions as to any series of Preferred Stock adopted pursuant
to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be
therein fixed) of the outstanding shares of such series voting
thereon shall be required for the issuance of any or all other
series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a
majority of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not
7
<PAGE> 11
be reduced so as to shorten the term of a director at the time in
office, and provided further, that the number of directors
constituting the whole Board shall be twenty-four until otherwise
fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office
for a term expiring at the next succeeding annual meeting, directors
of the second class shall be elected to hold office for a term
expiring at the second succeeding annual meeting and directors of
the third class shall be elected to hold office for a term expiring
at the third succeeding annual meeting. Any vacancies in the Board
of Directors for any reason, and any newly created directorships
resulting from any increase in the directors, may be filled by the
Board of Directors, acting by a majority of the directors then in
office, although less than a quorum, and any directors so chosen
shall hold office until the next annual election of directors. At
such election, the stockholders shall elect a successor to such
director to hold office until the next election of the class for
which such director shall have been chosen and until his successor
shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter
or Act of Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law, this Charter or Act of Incorporation or the ByLaws
of the Corporation), any director or the entire Board of Directors
of the Corporation may be removed at any time without cause, but
only by the affirmative vote of the holders of two-thirds or more of
the outstanding shares of capital stock of the Corporation entitled
to vote generally in the election of directors (considered for this
purpose as one class) cast at a meeting of the stockholders called
for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of
8
<PAGE> 12
stock of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in
accordance with the foregoing procedure, and if he should so
determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent in
writing, without a meeting, to the taking of any action is
specifically denied.
SIXTH: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time
to time find necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and shall
have power to authorize the seal of the Corporation to be affixed to
all papers which may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of
the world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation
by a vote of the majority of the entire Board. The stockholders may
make, alter or repeal any By-Law whether or not adopted by them,
provided however, that any such additional By-Laws, alterations or
repeal may be adopted only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class).
9
<PAGE> 13
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the State of Delaware at such places as may be
from time to time designated by them.
FIFTEENTH: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b)
and (c) of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the
liquidation or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
10
<PAGE> 14
(2) The term "business combination" as used in this
Article FIFTEENTH shall mean any transaction which is
referred to any one or more of clauses (A) through (E)
of paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article FIFTEENTH
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the determination
of stockholders entitled to notice of and to vote on
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own, directly
or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
11
<PAGE> 15
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement,
or upon exercise of conversion rights, warrants or options or
otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and Regulations
under the Securities Exchange Act of 1934, as in effect on December
31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article FIFTEENTH on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,00,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this Charter
or Act of Incorporation by the By-Laws), the affirmative vote of the
holders of at least two-thirds of the outstanding shares of the
capital stock of the Corporation entitled to vote generally in the
election of directors (considered for this purpose as one class)
shall be required to amend, alter or repeal any provision of
Articles FIFTH, THIRTEENTH, FIFTEENTH or SIXTEENTH of this Charter
or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable
to the Corporation
12
<PAGE> 16
or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption
from liability or limitation thereof is not permitted under the
Delaware General Corporation Laws as the same exists or may
hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
13
<PAGE> 17
EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE> 18
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given
by mailing to each stockholder at least ten (10) days before said meeting, at
his last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
<PAGE> 19
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or division of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section I. Executive Committee
(A) The Executive Committee shall be composed of not more than nine
members who shall be selected by the Board of Directors from its own members and
who hall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the Board
of
2
<PAGE> 20
Directors when it is not in session to transact all business for and in behalf
of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall be kept
and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity to
prevent the conduct and management of the affairs and business of the Company by
its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
3
<PAGE> 21
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than thirteen
members who shall be selected by the Board of Directors, a majority of whom
shall be members of the Board of Directors and who shall hold office during the
pleasure of the Board.
(B) The Trust Committee shall have general supervision over the
Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of the
Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be kept and
promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint Committees
and/or designate officers or employees of the Company to whom supervision over
the investment of trust funds may be delegated when the Trust Committee is not
in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who shall
be selected by the Board of Directors from its own members, none of whom shall
be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over the
Audit Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more than
ive (5) members who shall be selected by the Board of Directors from its own
members who
4
<PAGE> 22
are not officers of the Company and who shall hold office during the pleasure of
the Board.
(B) The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at any time
by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by the
Board of Directors as an associate director, to serve during the pleasure of the
Board.
(B) An associate director shall be entitled to attend all directors
meetings and participate in the discussion of all matters brought to the Board,
with the exception that he would have no right to vote. An associate director
will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absence or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board ofirectors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform
5
<PAGE> 23
such duties as the Board of Directors or the Chairman of the Board may from time
to time confer and direct.
Section 3. The President shall have the powers and duties pertaining
to the office of the President conferred or imposed upon him by statute or
assigned to him by the Board of Directors in the absence of the Chairman of the
Board the President shall have the powers and duties of the Chairman of the
Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
6
<PAGE> 24
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange
7
<PAGE> 25
of capital stock shall go into effect, or a date in connection with obtaining
such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar
year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
8
<PAGE> 26
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in defending any
proceeding in advance of its final disposition, provided, however, that the
payment of expenses incurred by a Director officer in his capacity as a Director
or officer in advance of the final disposition of the proceeding shall be made
only upon receipt of an undertaking by the Director or officer to repay all
amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of expenses, under
this Article X is not paid in full within ninety days after a written claim
therefor has been received by the Corporation the claimant may file suit to
recover the unpaid amount of such claim and, if successful in whole or in part,
shall be entitled to be paid the expense of prosecuting such claim. In any such
action the Corporation shall have the burden of proving that the claimant was
not entitled to the requested indemnification of payment of expenses under
applicable law.
9
<PAGE> 27
(D) The rights conferred on any person by this Article X shall not
be exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the Charter or Act of Incorporation, these
By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of this
Article X shall not adversely affect any right or protection hereunder of any
person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
10
<PAGE> 28
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: September 12, 1997 By: /s/ Norma P. Closs
------------------------
Name: Norma P. Closs
Title: Vice President
<PAGE> 29
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings banks with
state publication requirements. It has not been approved by any state banking
authorities. Refer to your appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
--------------------------- -------------
Name of Bank City
in the State of DELAWARE , at the close of business on June 30, 1997.
-----------
<TABLE>
CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins............... 208,942
Interest-bearing balances ........................................ 0
Held-to-maturity securities .......................................... 403,700
Available-for-sale securities......................................... 905,200
Federal funds sold and securities purchased under agreements
to resell........................................................... 151,700
Loans and lease financing receivables:
Loans and leases, net of unearned income .......... 3,816,484
LESS: Allowance for loan and lease losses ........ 54,535
LESS: Allocated transfer risk reserve ............ 0
Loans and leases, net of unearned income, allowance, and reserve.. 3,761,949
Assets held in trading accounts....................................... 0
Premises and fixed assets (including capitalized leases).............. 95,762
Other real estate owned .............................................. 1,751
Investments in unconsolidated subsidiaries and associated companies .. 42
Customers' liability to this bank on acceptances outstanding.......... 0
Intangible assets..................................................... 3,572
Other assets.......................................................... 108,295
Total assets.......................................................... 5,640,913
</TABLE>
CONTINUED ON NEXT PAGE
<PAGE> 30
<TABLE>
<CAPTION>
LIABILITIES
Deposits:
<S> <C>
In domestic offices................................................. 3,864,774
Noninterest-bearing . . . . . . . . 875,081
Interest-bearing. . . . . . . . . . 2,989,693
Federal funds purchased and Securities sold under agreements to
repurchase........................................................ 337,784
Demand notes issued to the U.S. Treasury............................ 95,000
Trading liabilities (from Schedule RC-D)............................ 0
Other borrowed money:............................................... ///////
With original maturity of one year or less..................... 775,000
With original maturity of more than one year................... 43,000
Bank's liability on acceptances executed and outstanding............ 0
Subordinated notes and debentures................................... 0
Other liabilities (from Schedule RC-G).............................. 84,197
Total liabilities................................................... 5,199,755
EQUITY CAPITAL
Perpetual preferred stock and related surplus....................... 0
Common Stock........................................................ 500
Surplus (exclude all surplus related to preferred stock)............ 62,118
Undivided profits and capital reserves.............................. 376,212
Net unrealized holding gains (losses) on available-for-sale
securities........................................................ (2,328)
Total equity capital................................................ 441,158
Total liabilities, limited-life preferred stock, and equity capital. 5,640,913
</TABLE>
2
